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d5c4a387bc9abb316a50caac45e06578
|
Everyone got a raise to them same amount, lost my higher pay than the newer employees
|
[
{
"docid": "2c1db64900a52c3955c2764c082d6f9f",
"text": "\"Why do you think you are entitled to \"\"fairness\"\"? In this world you get what you get. I am pretty sure your employer is not paying you for how you \"\"feel\"\" either. And by-the-way turning up on time and not leaving early is not exceptional behaviour; it is expected behaviour. Bottom line: do you add more value to your employer's business then the new hires? If so, ask for a raise, if not find a way to add more value and then ask for a raise or keep doing what you're doing and accept what you get.\"",
"title": ""
},
{
"docid": "fd55eafab83e4c8afa36a967e9070fd5",
"text": "This is one effect of rising minimum wages: compression of lower pay tiers. The new employees might have been offered a lower starting rate than the result of your raise, but your employer did not have that option as a matter of law.",
"title": ""
},
{
"docid": "31496e1c14efe5aa8e9b57f8e3bdc216",
"text": "The same thing happened to me when I worked retail during my college years. I agree that it is unfair however, it is what it is. With that being said, there may be several factors that you should consider: the new employees might have more experience or qualifications then you, your work performance based on your manager's perspective, and like in my situation when I worked retail, I started out as a cashier which get paid less than sales associates but when I moved to a sales associate position I still got paid less and when I got my raise I got the same pay a new sales associate would get. I suggest you suck it up and ride it through until you get a real job because in retail, in my opinion, you are expendable, if you don't like their pay they will find someone else.",
"title": ""
},
{
"docid": "aff8e17440380d920b44d463b54b40a0",
"text": "This question is largely opinion based but I wanted to balance out the people jumping on you. There are lots of factors that go into salary/pay, such as what you contribute to the company and whather you go above or beyond whats expected of you. I would say seniority is one factor, or at least there is a case to be made that it is important. If someone has worked 5 years for me, that is five years that I have not had to search, interview, and train a replacement. I am not a business owner but I do employ people and when someone quits its an extremely stressful process. Not having to go through that, again in my opinion, is worth a small bump in pay. I cant comment on if its fair or not. That is opinion. What is fact is that whenever a broad group of people are given a pay raise for arbitrary reasons and other employees arent, its creates discontent, it hurts morale, employees leave, and in severe cases the business becomes crippled. So Im not sure if its fair, but is it a bad idea? Generally. See here and I highly recommend going here for anyone who thinks dramatically raising pay 'because its the right thing to do' is a good idea",
"title": ""
},
{
"docid": "0aa72b91c66ff91b5239a0b79f97e831",
"text": "\"You didn't get laid off or have your hours cut back when the minimum wage was raised? I guess you have much to be grateful for, including a higher hourly rate. An excellent record is its own reward. When you finish your degree you will be grateful for the good habits you have established. You won't ever lose a nights sleep looking back and thinking \"\"I wish I didn't do the right thing.\"\" It's sad that there isn't a more immediate reward for doing more than average, but that's life, doing the right thing over a long period of time does eventually lead to the reward you're looking for. Sometimes those rewards aren't tangible.\"",
"title": ""
}
] |
[
{
"docid": "3d9e47dfe276467632aef41fcc905740",
"text": "I'm okay if the union sticks up for those only in the Union. If I get a pay raise because of my union affiliation, you don't deserve the same benefits. For what it's worth, in many other countries they've always sided with the Union. To me this is a a direct attack on the middle class. If it hasn't already eroded enough it's only going to get worse.",
"title": ""
},
{
"docid": "9a7887111d180b192e1dc766ff08c4c0",
"text": "\"The only thing worse than finding out you are paid less than a co-worker is finding out that you are paid more than all of your co-workers. A lot of people who *think* they would prefer an open and transparent pay-scale (as in unions), change their minds, when placed in one. I have worked in and implemented both types, as both an employee and as an owner/manager. There are pluses and minuses to both. - \"\"Transparent\"\" pay-scale is most effective in a high-turnover, aggressively performance-metric-oriented environment where you expect people to be competing for jobs, including their own job, every day. For example, a pool of commissioned sales-agents: the more you sell, the more you make. Winner gets a Cadillac. Runner-up gets a set of steak knives. Loser gets fired, that kind of thing. If you can't meet your numbers, we let other people start poaching your territory/clients and see what they can do. - Where it doesn't work is in a salary-type position where people are expected to have multiple \"\"soft\"\" duties outside of core performance metrics. The reasons are multi-fold: - One immediate effect of implementing performance-based pay for salary-type employees is that people who are in the office for 8 hours a day, five days a week, immediate start devoting their time and energy towards getting another notch up on the pay-scale, even at the expense of their co-workers, or the company. It intrinsically incentivizes \"\"gaming the system\"\", finding ways to attach your name to easy metrics, and to remove yourself from the most difficult problems. The people who are best at hitting metrics are often not even close to the MVPs. - If instead you take a \"\"soft metrics\"\" or subjective/holistic approach to evaluation, then you get a culture of brown-nosing and office-politics. People start sabotaging the \"\"boss's favorite\"\" and pursuing approval and credit, rather than performance. Instead of fostering a team-oriented, problem-solving approach, it fosters a counter-productive buck-passing, credit-grabbing, and blame-avoidance approach. Note that both of the above intrinsically incentivize risk-avoidance. If you get paid for the number of projects that have your name on them, you find some way to get your name attached to every project, and then move on to the next one, whether the last one was done or not. If you get based on how \"\"successful\"\" the projects bearing your name are, then you avoid anything challenging and make sure only to be attached to the easy ones with the best co-workers. And so on. - Alternately, let's say we keep the same, generic, salary-oriented pay-structure, we just make everyone in a certain \"\"tier\"\" get equal salary, that everyone knows. That sucks all the life out of everyone's sails so fast it will make your head spin: you cannot get a raise for doing a better job, you get paid the same raise as your worst co-worker, every year, for as long as you work here. We will never cut your pay, all you have to do is not be the canary in the coalmine-- so long as you can identify the worst performer in your group, and so long as it's not you, your job is safe. What time do you have to arrive? 5 minutes earlier than the latest-arriving person. How early can you leave? 5 minutes after the earliest one to check out. How much work do you have to get done? Only as much as anyone else is doing. What will you get for being the hardest-working, earliest-to-arrive, latest-to-leave? The same as the worst performer gets: you'll be splitting your raise with him, since we don't credit individuals here, just job-titles. Most jobs that can be easily automated, are automated. If you need a human employee to do it, it's usually because it involves a nontrivial amount of \"\"soft\"\" skills and fuzzy-logic type thinking and behavior. A machine programmed purely to make as many widgets per hour as possible, and motivated to so with human-style skills, ingenuity, and incentives, will tear down the whole factory and dismantle all its co-workers and ignore all quality-controls in order to keep producing widgets. You can't reduce human beings to input-process-output flowcharts (or rather you can, but they will invariably find unintended ways to outsmart your design criteria, with unintended consequences). The reason you need a person instead of an automated process is because you need a whole host hard-to-define, soft/fuzzy/flexible critical-thinking type skills. **Everyone's job seems easier to the people who don't have to do it, and there is a tremendous hidden danger to de-valuing personal desire to do a subjectively \"\"good job\"\" by quantifying/genericizing the value of their contribution.** Personnel management is very difficult to reduce to an engineering problem. You usually need good managers who can identify and motivate good employees, who will feel lucky to have the job and the salary they have, and who will come in every day trying to earn it. Posting everyone's pay on a bulletin-board negates all those \"\"soft\"\" skills, by putting a quantified, black-and-white, relative value on everyone's contribution. Even in a very large organization, the \"\"marketplace\"\" of employees is rarely large enough, and the quality of real-time metrics is almost never good enough to \"\"digitize\"\" the bell-curve of employee performance. You end up making it a square-wave that demotivates all but the most extreme outliers.\"",
"title": ""
},
{
"docid": "2affc10785332c9954c413bcfa677e8f",
"text": "\"To add to MrChrister's answer: Canada also has a Consumer Price Index (CPI) used to measure inflation that is distinct and separate from that maintained by the United States. There are differences in inflation between the U.S. and Canada because our currencies are different, and there may be different items in the \"\"basket\"\" of goods that constitutes the index. You can find current information on the Canadian CPI at Statistics Canada, here: Latest release from the Consumer Price Index. Also, the Bank of Canada – our central bank – maintains a free online Inflation Calculator. The BoC's inflation calculator is handy because you can enter a dollar amount for a past date and it will figure out what that would be in today's dollars. For instance, $100 in 1970 dollars had the same purchasing power (under the CPI) as $561.76 in 2009 dollars! And you're right – if you get a salary increase that is less than the rate of inflation, then in theory you have lost purchasing power. So, anybody really looking for a raise ought to make an effort to get more than the increase in CPI. Of course, some employers are counting on you not knowing that, because any increase that's less than CPI is effectively a salary decrease; which could mean more profit for them, if they are able to increase their prices / revenues at inflation or better. Finally, consider that salary & wage increases also contribute to inflation! Perhaps you've heard of the wage/price inflation spiral. If you haven't, there's more on that here and here.\"",
"title": ""
},
{
"docid": "9452c0d753736f741583048c7893c6fd",
"text": "Keep in mind that unless you have a contract that says you get a certain amount of raise every year, the employer is not required to give you any raise. The quality of a raise is too subjective for anyone to tell you how to judge it. You either get a raise you can live with, it makes you content/happy, and you continue working there, or you get a raise that does not satisfy you, and you jump ship to get more money. Some (most?) employers know that raises can be the tipping point for employees deciding to leave. If you consistently receive raises greater than inflation rate, the message is that the employer values you. If the opposite, they value you enough to continue your employment, but are willing to replace you if you decide to leave. Key thing here is there are three ways of getting increased pay with your current employer. Cost of living or annual raise is the one that we are discussing. Merit based raises are a second way. If you think you deserve a raise, due to loyal consistent contribution, or contributing above your duty, or for whatever reason, then ask for a raise. The third way is to be promoted or transferred to a higher paying position. Often times, you should also make your case to your supervisor why you should have the new position, similar to asking for a merit raise.",
"title": ""
},
{
"docid": "4d031a7f86ad55631c6d625512021e17",
"text": "It would make sense to refuse a raise when it pushes your effective marginal 'tax' (including reduced benefits) above 100%. The working poor (family of 4, 20K-40K in the US) often face marginal rates above 100% when you consider the phase out of various government benefits (EITC, insurance, housing,etc.) You can see the research here and here.",
"title": ""
},
{
"docid": "0c8901a7fde21e478a733ba05babf551",
"text": "\"So you are saying the game is rigged. You said that the average raise has to be 4% and that is pre-decided. So that means the game is rigged. Also you discussed good and bad managers. Well over 90% of managers I have had were horrible. The good ones were great but they were few and far between. Also you mentioned about how money is not everything. The reason money is not everything is because the employees know they are not gonna get any more money. So that is why they settle for \"\"casual friday\"\" and other bullshit perks.\"",
"title": ""
},
{
"docid": "f45d60687a920869bffe60def6a09e7d",
"text": "The prices would only rise proportionally if labor was the only cost at play and everyone made minimum wage. If you look at major expenses such as rent, gas, utilities and food there is literally no reason to conclude their prices would change proportionally to minimum wage.",
"title": ""
},
{
"docid": "7117f06ab3c85be892ecb72ac468a340",
"text": "I work as a state employee and I can look at my coworkers' salaries and their title online. At first my coworkers were shocked that I would do such a thing, but they quickly realized it was of benefit to them when I told them that from my analysis, no one at my department ever gets raises. Prior to this, they were led to believe that there actually were opportunities for advancement here. Knowing typical salaries can also help when looking at going into a new industry in which you are unfamiliar, otherwise, you have no idea if a job offer you get is in line with others' compensation. So yes, I believe that knowing others' salaries can be helpful to the average employee and keeping it secret is par for the course because it's detrimental to the company.",
"title": ""
},
{
"docid": "d6d82a258299f90b61d43321099e9e57",
"text": "\"Problem is, my CEO told me I would \"\"get a raise every 12 days\"\" \"\"dollar here, dollar there\"\". It's been 5 months of excellent work on my part, no bonus, no raise, nothing. I mean, I'm upset, but I wish I at least got recognized for my work. If it weren't for me doing something that got the attention of his wife (who also works here), he wouldn't even recognize me.\"",
"title": ""
},
{
"docid": "dea1a2c3d9dde75823e01547e7a286d1",
"text": "\"TLDR: You will probably need to move to a different employer to get the raise you want/need/deserve. Some employers, in the US, punish longevity through a number of practices. My wife worked as a nurse for about 20 years. During that time she had many employers, leveraging raises with job changes. She quit nursing about 6 years ago and was being paid $38/hour at the time. She had a friend that worked in the same system for 18 years. They had the same position in the same hospital that friend's current rate of pay: $26/hour. You probably don't want to be that person. Given your Stack Overflow participation, I would assume you are some type of web developer. I would recommend updating your resume, and moving for a 20% increase or more. You'll get it as it is a great time to be a web developer. Spending on IT tends to go in cycles, and right now budgets are very healthy for hiring new talent. While your current company might not have enough money in the budget to give you a raise, they would not hesitate hiring someone with your skills at 95K if they had an opening. Its common, but frustrating to all that are involved except the bean counters that looks at people like us as commodities. Think about this: both sides of the table agree that you deserve a 5K raise. But lets say next year only 3k is in the budget. So you are out the 5k you should have been given this year, plus the 2k that you won't get, plus whatever raise was fair for you next year. That is a lot of money! Time to go! Don't bother on holding onto any illusions of a counter offer by your current employer. There will be too much resentment. Shake the dust off your feet and move on. Edit: Some naysayers will cite short work histories as problems for future employment. It could happen in a small number of shops, but short work histories are common in technology that recruiters rarely bat an eye. If they do, as with any objection, it is up to you to sell yourself. In Cracking the Code Interview the author cites that no one is really expecting you to stay beyond 5 years. Something like this would work just fine: \"\"I left Acme because there were indications of poor financial health. Given the hot market at the time I was able to find a new position without the worry of pending layoffs.\"\" If you are a contractor six month assignments are the norm. Also many technology resumes have overlapping assignments. Its what happens when someone is in demand.\"",
"title": ""
},
{
"docid": "5876fe659421be016297957a9782b95a",
"text": "So how do we get the money from the people that did not earn it, to the people that did earn it without the government redistributing it? I think you may be thinking that I am saying everyone should always be equal when I am saying that we need to have a more proportional income distribution which, if done correctly, would make things way more equal than they are now.",
"title": ""
},
{
"docid": "c0331cbe108667ea6af23e241063914c",
"text": "...and why is that? Almost every job out there has competition. It may take some time, but if you are really unhappy with your salary or work situation, you can find a job somewhere else. I'm in the IT industry and that's pretty much the only way I've been able to get a raise higher than 1%.",
"title": ""
},
{
"docid": "215dc7dad7674e2dfac95e80a8d3df64",
"text": "\"Many in management seem to live in an alternate reality from those who work for a living. When IBM shunted some techs into another company they put them on probation for a year (even though they were high performers - some with 25+ years at IBM = no job security) and cut their pay 25%. The next time they went to move workers the first question was \"\"how much is the pay cut this time\"\". Management's reply, \"\"No pay cut because we found when we did it before it negatively affected morale.\"\" I thought: \"\"No kidding. They had to actually cut people's pay 25% to figure that out? What planet DO they live on?\"\"\"",
"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": "a02d314be40e2de7566d5585bb79ddf7",
"text": "\"And that is my point: without specific dollar amounts...this is USELESS information. The problem with this crap information is that some crappy operation will find a reason to pay themselves more for being a \"\"good boss\"\" thinking that will make up for any raises. I'd take a better boss over a 5-cent an hour raise (and yes, I worked at McDonalds when raises were 0-5-10 cents an hour...and yeah, I would have liked a better boss for 5 cents). However, for an annual job that pays $500/hr I'll gladly work in horrid conditions with a horrible boss doing awful things.\"",
"title": ""
}
] |
fiqa
|
4ff3d800c7514df78fef62e54143e374
|
Is there any way to buy a new car directly from Toyota without going through a dealership?
|
[
{
"docid": "55ecbdac9f18f81e364770a802b869ce",
"text": "No you can't buy direct from Toyota. Largely because of many states' laws (assuming you're in the US) requiring a dealer relationship for car purchasing, read about Tesla's struggles with direct to customer sales. Secondly because Toyota corporate simply isn't set up to sell a car directly to a customer. I know there are services that help people through the buying process. If you're finding Toyota dealerships to be this difficult you may consider just buying something from someone who wants to sell to you. If the buying process is this difficult imagine the service relationship. Edit: Additionally, it's important to remember when financing a car that there are essentially two transactions taking place. First you're negotiating the price of the car. Then you negotiate the price of the money (the interest rate). The money does not need to come from the dealership, you can secure your financing rate from a separate bank or local credit union. You should definitely pursue alternate financing if they're quoting you 7.99% with a FICO of 710. But don't tell the dealership you've already got your financing lined up until you're happy with the price of the car.",
"title": ""
},
{
"docid": "8cb7522d6ca3e9bda5671deadac30edc",
"text": "I feel your pain. It probably depends on your state, but two things we've tried with some benefit:",
"title": ""
},
{
"docid": "2d233f6bf99fad1cc8751ba1049fd362",
"text": "You could consider buying a fairly recent used car from CarMax. They have fixed pricing, and you'd save a good amount of money on the car (since cars lose tons of value in their first year or so).",
"title": ""
},
{
"docid": "10b547be9d05268240b4754171364205",
"text": "Any car manufacturer that undercuts their own dealer network would have that network fall apart quickly. Tesla is using a dealer-free distribution model from the start, so they don't have that problem. Toyota doesn't work that way, though. GM imposed a uniform no-haggling policy with their Saturn brand, but that policy was coupled with local monopolies for dealers to make it work. Lexus has also experimented with no-haggling and online ordering (with delivery still taking place at a dealership). The rest of Toyota doesn't work that way, though. Some car manufacturers, such as BMW and Audi, allow you to take delivery of your new car at the factory for a discount. But even then, the transaction still takes place through a dealer. Toyota doesn't work that way, though. For one thing, they work at a different scale. If you buy a Camry in the US, it might be produced in Kentucky, Indiana, or Aichi, depending on business conditions. You say that you want to cut out the middleman, but the fact is that you do require someone to deliver a Toyota to you, like it or not. If you're interested in saving money, consider trying various well documented tips, such as negotiating by e-mail before showing up, pitting dealerships against each other. If you don't want to negotiate, you might be able to take advantage of pre-negotiated dealer prices through Costco. You mentioned that the dealership offered you a 7.99% interest rate for your 710 FICO score. That sounds insanely high — I'd expect deals more like 2% advertised by buyatoyota.com. (Remember, Toyota Motor Credit Corporation exists to help Toyota Motor Corporation sell more cars cheaply.) You can also seek alternate financing online (example) or through your own bank.",
"title": ""
},
{
"docid": "742133d583b237c209e3e151a9afde1f",
"text": "\"If there's one reasonably close to you, you could go to a no-haggle dealership. Instead of making you haggle the price downward, they just give a theoretically fixed price that's roughly what the average customer could negotiate down to at a conventional dealer. Then just do your best broken record impression if they still try to sell you dubious addons: \"\"No. No. No. No. No...\"\" The last time I bought a new car (06), a no haggle dealer offered the second best deal I got out of 4 dealerships visited. The one I ended up buying with made an exceptional offer on my trade (comparable to 3rd party sale bluebook value). - My guess is they had a potential customer looking for something like my old car and were hoping to resell it directly instead of flipping it via auction.\"",
"title": ""
},
{
"docid": "546e467b6c8c0761735740fb3cae79cf",
"text": "sadly, it is illegal in most states to buy a car directly from the manufacturer. as such, most manufacturers do not offer the option even where it is legal. if you really do know exactly what you want (model, color, options, etc.) i recommend you write down your requirements and send it to every dealer in town (via email or fax). include instructions that if they want your business, they are to reply via email (or fax) with a price within 7 days. at least one dealer will reply, and you can deal with whoever has the best price. notes:",
"title": ""
},
{
"docid": "3afa01632d0806e42be788925051b20c",
"text": "You can buy a new Toyota from a non-dealer, but not from Toyota directly as they have no retail distribution capability. There is no need to buy directly from Toyota if you want to get a new car without going through a dealer. In many cases people buy new cars but have to sell them immediately for one reason or another.",
"title": ""
},
{
"docid": "2a4035dd53cf08a9a1e6622434653193",
"text": "As someone who was just recently a salesman at Honda, I'd recommend buying a Honda instead :). If you really prefer your Toyota, I always found quote-aggregation services (Truecar, I'm blanking on others) very competitive in their pricing. Alternatively, you could email several dealerships requesting a final sale price inclusive of taxes and tags with the make, model, and accessories you'd wish to purchase, and buy the vehicle from them if your local dealership won't match that price. Please keep in mind this is only persuasive to your local dealership if said competitors are in the same market area (nobody will care if you have a quote from out-of-state). As many other commenters noted, you should arrange your own financing. A staple of the sales process is switching a customer to in-house financing, but this occurs when the dealership offers you better terms than you are getting on your own. So allow them the chance to earn the financing, but don't feel obligated to take it if it doesn't make sense fiscally.",
"title": ""
},
{
"docid": "9e0ebf802f468d7208c1171a500b2fb2",
"text": "As others have addressed the legality in their answers, I want to address the idea of the dealership being 'a middleman'. A dealership serves more of a purpose than just 'middlemanning' a car to a consumer. Actually, they consume a great deal of risk. Let's remember that a dealership is really an extension of the OEM, albeit independently owned and operated, the dealership must still answer to the brand they represent, if people have a bad experience with a dealership, a customer might go to another of the same brand, but more often than not they will go to the competition out of spite. Therefore, it's in the dealership's best interest to represent the brand as best as possible, but unfortunately that doesn't always happen. While the internet has made a certain part of a salesman's role null and void, and since this is a finance (read money) Q/A site let's take a moment to consider the risk assume and therefore the value added by a dealership: Test Drive. A car is a huge purchase, and while it's okay to buy a pair of shoes online without trying them on, a car is a bit different of course, we want to make sure it 'fits' before we shell out several thousand dollars. Yes, you (meaning consumers) can look at car pictures and specs online, but if you want to see how that vehicle handles on your town's roads, if it fits in your garage and/or driveway, then you need to take it for a test drive. It's not feasible for OEMs to have millions of people showing up to car plants for a test drive, right? Scalability aside, some business that is handled in automotive plants are confidential and not for the general public to know about. A dealership provides an opportunity for those who live locally to see and experience the car without flying or driving wherever the car was assembled. They provide this at a risk, banking on the fact that a good experience with the vehicle will lead to a sale. Service. A car is a machine, and no machine is perfect, neither will it last forever without proper service. A dealership provides a place for people to bring their vehicles when they need to be serviced. Let's set aside the fact that the service prices are higher than we'd like, because the fact remains most of it is skilled (and warrantied) labor that the majority of people don't want to do themselves. Trade Ins. It is not in an OEMs best interest to accept a vehicle just to sell you another vehicle, especially if that vehicle is from another brand. Dealership's assume this risk, and often offer incentives to do so, hoping it will lead to a sale. That trade in was an asset to you, but is a liability to them, because they now have to liquidate that trade in, just so that you can purchase a car. Sure, you could sell your car yourself, and now you would assume that risk: What if your car is not in perfect shape, or has a lot of miles for it's age? Would it do well in the used car market? What if it takes too long to sell and you miss that Memorial Day car sale at the dealer? This might be okay for some, but generally speaking most people would rather avoid the risk and trade it in at the dealer toward the purchase of a new car rather than the headache of selling it themselves. I'm sure there are more, but those are the one's that immediately sprung to mind. Just like Starbucks, there are terrible dealerships out there and there are great ones, and very few of us venture to farms and jungles just for fresh coffee beans :-)",
"title": ""
},
{
"docid": "d41d8cd98f00b204e9800998ecf8427e",
"text": "",
"title": ""
},
{
"docid": "37049d5b4651ff2d2b07af518e8d9f81",
"text": "You already got good answers on why you can't buy a Toyota from the factory, but my answer is regarding to the implied second part of your question: how to avoid haggling. I found a good way to avoid the haggling at a car dealership can be simply to not haggle. Go in with a different attitude. The main reason car dealers list inflated prices and then haggle is that they expect the customers to haggle. It is fundamentally based on distrust on both sides. Treat the sales person as your advisor, your business partner, as somebody you trust as an expert in his field, and you'll be surprised how the experience changes. Of course, make sure that the trust is justified. Sales reps have a fine line to walk. Of course they like to sell a car for more money, but they also do not want a reputation of overcharging customers. They'd rather you recommend them to your friends and post good reviews on Yelp. In the end, all reputable dealers effectively have a fixed-price policy, or close to it, even those who don't advertise it, and even for used cars. Haggling just prolongs the process to get there. And sales reps are people. Often people who hate the haggling part of their job as much as you do. I was in the market for a new (used) car a few months ago. In the end, it was between two cars (one of them a Toyota), both from the brand-name dealer's respective used car lots. In both cases, I went in knowing in advance what the car's fair market value was and what I was willing to pay (as well as details about the car, mileage, condition etc. - thanks to the Internet). Both cars were marked significantly higher. As soon as the sales rep realized that I wasn't even trying to haggle - the price dropped to the fair value. I didn't even have to ask for it. The rep even offered some extras thrown into the deal, things I hadn't even asked for (things like towing my old car to the junk yard).",
"title": ""
},
{
"docid": "b4ad89634ccd5f55d903dad9e63ee78e",
"text": "Yes, nothing is impossible! :) You can buy it directly from the factory of manufacturer, but then you will have to pay for sea shipping of this car. E.g. you can buy it directly from Japanese Toyota but then you will have to pay to sea cargo ship to deliver your car in container from Japan. Since this car is already your property, before importing to US, I doubt that you would need to pay any custom fees. In the end, the total payment might be a lot cheaper that you can buy there, but you need to be prepared to all this hassle",
"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": "c7577a8c25ed9cc6e1deef21bd12ed1a",
"text": "One point I don't see above: Consumer's Union (the nonprofit which publishes Consumer Reports) has a service where, for a small fee, they'll send you information about how much the car and each option cost the dealer, how much the dealer is getting back in incentive money from the manufacturer, and some advice about which features are worthwhile, which aren't, and which you should purchase somewhere other than the dealer. Armed with that info, you can discuss the price on an equal footing, negotiating the dealer's necessary profit rather than hiding it behind bogus pricing schemes. Last time I bought a new car, I got this data, walked into the dealer with it visible on my clipboard, offered them $500 over their cost, and basically had the purchase nailed down immediately. It helped that I as willing to accept last year's model and a non-preferred color; that helped him clear inventory and encouraged him to accept the offer. ($500 for 10 minutes' work selling to me, or more after an hour of playing games with someone else plus waiting for that person to walk in the door -- a good salesman will recognize that I'm offering them a good deal. These days I might need to adjust that fair-profit number up a bit; this was about 20 years ago on an $8000 car... but I'm sure CU's paperwork suggests a current starting number.) It isn't quite shelf pricing. But at least it means any haggling is based on near-equal knowledge, so it's much closer to being a fair game.",
"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": "ee60151939fc8a15f134d44755e021c1",
"text": "$27,000 for a car?! Please, don't do that to yourself! That sounds like a new-car price. If it is, you can kiss $4k-$5k of that price goodbye the moment you drive it off the lot. You'll pay the worst part of the depreciation on that vehicle. You can get a 4-5 year old Corolla (or similar import) for less than half that price, and if you take care of it, you can get easily another 100k miles out of it. Check out Dave Ramsey's video. (It's funny that the car payment he chooses as his example is the same one as yours: $475! ;) ) I don't buy his take on the 12% return on the stock market (which is fantasy in my book) but buying cars outright instead of borrowing or (gasp) leasing, and working your way up the food chain a bit with the bells/whistles/newness of your cars, is the way to go.",
"title": ""
},
{
"docid": "af8b96a7087be6ba42486f0208c688a7",
"text": "I have had it two way now: I got pre-approval from my credit union which just so happened to be one of the bigger vehicle lenders in the metro area. What I found out was that the dealership (which was one of the bigger ones in the metro area) had a computer system that looked up my deal with the credit union. Basically, I signed some contracts and the CU and the dealership did whatever paperwork they needed to without me. I bought a used car and drove it off of the lot that night, and I didn't ever go back (for anything financial) Both my wife and her sister received blank checks that were valid up to a certain amount. In the case of my sister in law, she signed the check, the dealership called to confirm funds and she drove off. In the case of my wife, she ended up negotiating a better deal with dealer finance, but I was assured she only had to sign the check, get it verified and drive the car home.",
"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": "438bad75d87d85c9b5fcb2144e7da298",
"text": "Ideally you would negotiate a car price without ever mentioning: And other factors that affect the price. You and the dealer would then negotiate a true price for the car, followed by the application of rebates, followed by negotiating for the loan if there is to be one. In practice this rarely happens. The sales rep asks point blank what rebates you qualify for (by asking get-to-know-you questions like where you work or if you served in the armed forces - you may not realize that these are do-you-qualify-for-a-rebate questions) before you've even chosen a model. They take that into account right from the beginning, along with whether they'll make a profit lending you money, or have to spend something to subsidize your zero percent loan. However unlike your veteran's status, your loan intentions are changeable. So when you get to the end you can ask if the price could be improved by paying cash. Or you could try putting the negotiated price on a credit card, and when they don't like that, ask for a further discount to stop you from using the credit card and paying cash.",
"title": ""
},
{
"docid": "fea3ea7f147f19c235bfbfaee7241797",
"text": "They'll refund your money (though maybe with a small service charge). I'm sure they regularly deal with new car sales gone wrong.",
"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": ""
},
{
"docid": "16696d4e713c86fc723d4c7c989523ee",
"text": "I have in the last few years purchased several used cars from dealers. They have handled it two different ways. They accepted a small check ~$1,000 now, and then gave me three business days to bring the rest as a cashiers check. They also insisted that I submit a application for credit, in case I needed a loan. They accepted a personal check on the spot. Ask them before you drive to the dealer. Of course they would love you to get a loan from them.",
"title": ""
},
{
"docid": "ec6e5622ee2d1e17cd611a3b30c31072",
"text": "My suggestion would be to keep it. The value of a new car is that you get to drive it around when it's still new and shiny, and that you know its history. If you maintain it in good condition, both mechanically and cosmetically, then you can have both of those benefits for the life of the car. Your question merges the old car sale and new car purchase transactions together, but that's not correct. The value of your 2010 car has no relationship to the value of any new car you might buy, except incidentally through the market forces that act on each. The car dealership is likely to be skilled at making you feel like your most important criteria are satisfied, but they will try to construct the deal to maximize the money you pay them while making you feel like you're the one maximizing your value. Also note that the dealership cannot give you maximum value for your car, because it costs them money to sell it and they take all the risk. Some of the difference between typical direct-sale and trade-in prices is the commission you are paying them to both sell it for you and absorb the risks in the transaction.",
"title": ""
},
{
"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": "d548dfab650da351f25dd51212badb2e",
"text": "Sounds like 'up-selling'. You can harden yourself into being a 'tough sell' but it takes time and a lot of shopping. The quickest way to put up a defense is to never ever make a purchase over $100 without 'sleeping on it'. Just walk away, tell them you'll think it over, and go do some more research. Don't go back into a dealership or store that has hit you with guilt or pressure or a crazy price or whatever. Find a no-haggle or no-frills source, or even a source to buy a used version of the item you want.",
"title": ""
},
{
"docid": "5948efbabe7fdd53df8937b6699b9306",
"text": "Many reasons So in general you are paying more for peace of mind when you buy a new car. You expect everything to be working and if not you can take it back to the dealer to have them fix it for free.",
"title": ""
},
{
"docid": "e82d50ce566fea13d4c4b7bd3bb77f65",
"text": "I still think it will be rather difficult. Best bet is to call around to the five or so closest dealers and express you are considering the car contingent on price (NOT PAYMENT). Ask for them to send you their best out-the-door price on a base model. Then when you get quotes from each of them, shop the lowest price around. Usually dealers will budge a few hundred bucks to beat other dealers. But a 2018 STI will be difficult, if not impossible, to negotiate a few grand under MSRP. Understand that the people that buy this car are not doing so because it is a great bargain. So dealers can usually push this car at or near MSRP. Lastly, do not set foot in a dealership until you have a firm out-the-door price. They will play sales tricks until you give up on negotiation and will pay anything just to get out of there. The only time you should go to the location is to sign papers and drive away with the car. Do not worry about being nice and congenial with the salesperson. This advice got me my current vehicle at about 15% below the lowest True Car estimate. I don't claim this is the best advice out there but it works.",
"title": ""
}
] |
fiqa
|
8faa349691d00fb8eea39b2aa66e1a0b
|
Pending euro payment to a usd account
|
[
{
"docid": "7d9579caffe876adaaec0604f08c7549",
"text": "Currency exchange is rather the norm than the exception in international wire transfers, so the fact that the amount needs to be exchanged should have no impact at all. The processing time depends on the number of participating banks and their speeds. Typically, between Europe and the US, one or two business days are the norm. Sending from Other countries might involve more steps (banks) which each takes a bit of time. However, anything beyond 5 business days is not normal. Consider if there are external delays - how did you initiate the sending? Was it in person with an agent of the bank, who might have put it on a stack, and they type it in only a day later (or worse)? Or was it online, so it is in the system right away? On the receiver side, how did you/your friend check? Could there be a delay by waiting for an account statement? Finally, and that is the most common reason, were all the numbers, names, and codes absolutely correct? Even a small mismatch in name spelling might trigger the receiving bank to not allocate the money into the account. Either way, if you contact the sender bank, you will be able to make them follow up on it. They must be able to trace where they money went, and where it currently is. If it is stuck, they will be able to get it ‘unstuck’.",
"title": ""
}
] |
[
{
"docid": "36094ade5ebd58a72431950f9e483f7d",
"text": "This is not allowed, and there is a name for it: IBAN discrimination. Searching for that term will give you some pointers what to do about it. The EU regulation that prohibits this is 260/2012, article 9, paragraph 2: A payee accepting a credit transfer or using a direct debit to collect funds from a payer holding a payment account located within the Union shall not specify the Member State in which that payment account is to be located, provided that the payment account is reachable in accordance with Article 3. You can report this at the relevant national authorities. In the Netherlands, this is De Nederlandsche Bank, which has a special e-mail address for this: [email protected]",
"title": ""
},
{
"docid": "43a9b92312ba34413f5070c89cd8da50",
"text": "I live in europe but have been paid in usd for the last few years and the best strategy I've found is to average in and average out. i.e. if you are going in August then buy some Euro every few weeks until you go. At least this way you mitigate the risk involved somewhat.",
"title": ""
},
{
"docid": "5b213dd622dfb92ca43339dad0d9a256",
"text": "\"Your bank is maintaining different states for transactions, and changing the state depending on real-world events and the passage of time. withdraw €100 from my bank account on 30 September […] my bank does not process the transaction until 2 October. The bank probably have that transaction marked as “pending” on 30 September, and “cleared” on 2 October. transfer €100 from Bank A to Bank B, Bank A's statement dates the transaction on 20 September, but Bank B dates it as coming in on 22 September. Similarly, bank A will have the transaction marked as “pending” initially. Bank B won't have a corresponding transaction at all, until later; they'll have it “pending” too, until they confirm the transfer. Then (probably at different times from each other) the banks will each mark the corresponding transactions “cleared”. The bookkeeping software that I use doesn't seem to allow for this \"\"transfer time\"\" between accounts. When I enter a transfer from one account to another, they both have to have the same date. You may want to learn about different bases of accounting. The simpler option is “cash-based” accounting. The simplification comes from assuming transactions take no time to transfer from one account to another, and are instantly available after that. Your book-keeping software probably books using this simpler basis for your personal finances. The more complex “accrual-based” accounting tracks each individual transaction through multiple states – “pending”, “transfer”, “cleared”, etc. – with state changes at different times – time of trade, time of settlement, etc. – to more accurately reflect the real world agreements between parties, and different availability of the money to each party. So if your book-keeping program uses “cash basis”, you'll need to pick which inaccuracy you want: book the transfer when you did it, or book the transfer when the money is available at the other end.\"",
"title": ""
},
{
"docid": "14a8a916279398241896fc0082a61796",
"text": "I don't see how Paypal can stop you from transferring USD funds from your paypal account to a USD account held with a bank. Just tell them to do the transfer to your account. The issue could be around USD onshore / offshore regulation. Is the US government preventing EU citizens from taking USD income offshore? If that's the case then you need a correspondent bank. So in other words, like using your friend. But what you can do is ask your bank who is their correspondent bank in the US, and whether they have the license required to transfer USD funds offshore. So you shift the regulation issues to your bank, and then you have to accept your bank's exchange rate - which is going to be better than paypal, who charges too much for FX transactions.",
"title": ""
},
{
"docid": "513c294394934b6882b8506b9d15ffa4",
"text": "All Indian Banks are offering USD accounts known as multicurrency account, where you can hold your fund, this account also permits you to book the USD to INR rates in advance if you require. You can keep your money in this account and also can remit the same back to source or other destination country.",
"title": ""
},
{
"docid": "9fbd618f21167b6f2ca0204c0cb3d4ed",
"text": "I ended up just trying. I gave A the IBAN of B's account, which I calculated online based on the bank code and account number (because B claimed IBAN won't work, so didn't give it to me), and B's name. A was able to transfer the money apparently without extra difficulties, and it appeared on B's account on the same day. Contrary to some other posts here, IBAN has nothing to do with the Euro zone, nor is it a European system. It started in Europe, but it has been adopted as an ISO standard (link). As usual of course some countries don't see the urgency to follow an international standard :) XE.com has a list of all IBAN countries; quite a few are non-European. Here is even the list formatted specially for the European-or-not discussion: link.",
"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": "aebb3e042d059f38512e55259f13f42e",
"text": "Deutsche Bank states here (couldn't find it in english) that SEPA transfers (all transfers in EUR to EU states that have EUR) are free. So you could just transfer the money. Your custom daily transfer limit (by default 1000€ for online banking transfers) applies. You can change the limit online or by going to one of their branches. You would then transfer your money over the course of several days. You need the SWIFT and BIC code of your new account.",
"title": ""
},
{
"docid": "8c4294b7324da19af5e25ba706f728e5",
"text": "Are you sure this is not a scam. It is expensive to transfer 10 EUR by SWIFT. It will cost 30 EUR in Banks fees. If this is genuine ask them to use remittance service or western union or you open a PayPal account and ask them to transfer money.",
"title": ""
},
{
"docid": "e1dac56971cd12de901cc898d434ef11",
"text": "Why not open an USD account or subaccount in Czechia and then transfer the money using an UAE bank that supports transfers in USD. If you don't want to open an USD account in Czechia, it'll get converted when received there into the currency of your account but at their conversion rate which probably isn't good. Alternatively, use Transferwise which might or might not be cheaper.",
"title": ""
},
{
"docid": "56a51834c97003723af0acd774fa6198",
"text": "My account is with Indian Bank, if that's relevant. Indian Bank already has SWIFT BIC. Is there any way I can receive such international transfers in my account if the bank branch itself is not SWIFT enabled? The Branch need not be SWIFT enabled. However the Bank needs to be SWIFT enabled. Indian Bank is SWIFT enabled and has several Correspondent Banks in US. See this link on Indian Bank Website Select USD as filter in bottom page. It will list quite a few Banks that are correspondent to the Indian Bank. Click on the Link and it will give you more details. For example with Citi Bank as Correspondent. In the Beneficiary account details fill in your account details etc and send this to the company and they should be able to send you a payment based on this.",
"title": ""
},
{
"docid": "28e02a87e6118dfc2685339589467995",
"text": "The best way to do this would be to exchange the funds into USD and wire the funds to your bank account in the US. It is up to you whether you want to hold USD or Euros. Depends if you plan to invest money in the US.",
"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 $100 from a non-US bank. Worked great, no fees, and ACH'd it to my main back, no problems/fees. No outgoing international wires, alas.",
"title": ""
},
{
"docid": "017a7de71720f3ddd4ec7b363fcd2bec",
"text": "Transfer it as International wire, there will be some fees. Check with your Bank in Turkey. Turkey has not yet joined SEPA, else this would have been a low cost alternative.",
"title": ""
},
{
"docid": "0878af8aa13a09e310192c9020de479d",
"text": "For those who are interested, I am answering my own question: We used Postbank and transferred 6000 Euro, we chose to Transfer in US$, 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": ""
}
] |
fiqa
|
3d9a3615e3060a698bbde653c8e74c17
|
Why would my job recruiter want me to form an LLC?
|
[
{
"docid": "6325c6917fcb839f3924dfd764e8cc8a",
"text": "Your recruiter is likely trying to avoid having to pay the employer's side of employment taxes, and may even be trying to avoid having to file a 1099 for you by treating your relationship as a vendor/service provider that he is purchasing services from, which would make your pay just a business expense. It's definitely in his best interest for you to do it this way. Whether it's in your best interest is up to you. You should consult a licensed legal/tax professional to help you determine whether this is a good arrangement for you. (Most of the time, when someone starts playing tax avoidance games, they eventually get stung by it.) The next big question: If you already know this guy is a snake, why are you still working with him? If you don't trust him, why would you take legal/tax advice from him? He might land you a high-paying job. But he also might cause you years of headaches if his tax advice turns out to be flawed.",
"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": "2d4eb245ae641d59c1a8781dcb1ccca0",
"text": "\"There are a few sites out there that can give you some reasoning behind the request. LegalZoom, for instance. To quote the LZ doc in case the link dies: Employee vs. Independent Contractor If a worker is an employee, the employer is responsible for paying Social Security, unemployment insurance, Medicare, and possibly other costs like workers' compensation insurance for the employee; at the end of the tax year, the employer is responsible for compiling all necessary payroll reports, including W-2 forms. If a worker is an independent contractor, the employer is not responsible for any of the above taxes or payments, and the only added paperwork is the issuing of a 1099 to the independent contractor at the end of the tax year, if he or she has made more than $600 with the employer. As Kent suggested, you should speak with an attorney (really you need one if setting up an LLC). There are a lot of companies out there these days that try to classify people as contractors rather than full-time employees as it gets them out of paying benefits and dealing with taxes. This is being heavily cracked down on, and several \"\"contractor\"\" employees are winning lawsuits to get full-time status. If you are truly acting as a contractor, then setting up an LLC can help with a few items such as taxes and protection on certain business aspects (see comments below regarding this). It's easy and relatively cheap (cost me about $250 with extra legal advice tacked on). If you are reporting directly to a manager with the company, or really working in any way that isn't consistent with the definition of a contractor, then I'd turn down the offer and ask to be made a FT employee. Additional information: https://www.sba.gov/content/hire-contractor-or-employee\"",
"title": ""
},
{
"docid": "ced865df0eb2464f46ff31ca887ed471",
"text": "I don't know about the US, but in the UK this is common practice, even required in some situations, and not sketchy at all. It's perfectly legal, saves you tax, and protects you from a legal standpoint. (i.e. what if you break something and your employer wants to sue you?) This is what companies are for, they are legal entities that are separate from an individual. There is no requirement for a company to have more than one employee.",
"title": ""
},
{
"docid": "9fe39059905ec8dc96ad3b388e818b19",
"text": "\"The \"\"independent contractor\"\" vs. \"\"employee\"\" distinction is a red herring to this discussion and not at all important just because someone suggested you use your LLC to do the job. Corp-2-Corp is a very common way to do contracting and having an LLC with business bank accounts provides you with more tax deductions (such as deducting interest on credit lines). Some accounting practices prefer to pay entities by their Tax ID numbers, instead of an individual's social security number. The actual reasoning behind this would be dubious, but the LLC only benefits you and gives you more advantages by having one than not. For example, it is easier for you to hire subcontractors through your LLC to assist with your job, due to the opaqueness of the private entity. Similarly, your LLC can sign Non Disclosure and Intellectual Property agreements, automatically extending the trade secrets to all of its members, as opposed to just you as an individual. By signing whatever agreement with the company that is paying you through your LLC, your LLC will be privy to all of this. Next, assuming you did have subcontractors or other liability inducing assets, the LLC limits the liability you personally have to deal with in a court system, to an extent. But even if you didn't, the facelessness of an LLC can deter potential creditors, for example, your client may just assume you are a cog in a wheel - a random employee of the LLC - as opposed to the sole owner. Having a business account for the LLC keeps all of your expenses in one account statement, making your tax deductions easier. If you had a business credit line, the interest is tax deductible (compared to just having a personal credit card for business purposes). Regarding the time/costs of setting up and managing an LLC, this does vary by jurisdiction. It can negligible, or it can be complex. You also only have to do it once. Hire an attorney to give you a head start on that, if you feel that is necessary. Now back to the \"\"independent contractor\"\" vs. \"\"employee\"\" distinction: It is true that the client will not be paying your social security, but they expect you to charge more hourly than an equivalent actual employee would, solely because you don't get health insurance from them or paid leave or retirement plans or any other perk, and you will receive the entire paycheck without any withheld by the employer. You also get more tax deductions to utilize, although you will now have self employment tax (assuming you are a US citizen), this becomes less and less important the higher over $105,000 you make, as it stops being counted (slightly more complicated than that, but self employment tax is it's own discussion).\"",
"title": ""
},
{
"docid": "6f2d89c8eae4640911385df7d8e221b8",
"text": "This is pretty normal. I am in the UK and currently doing the exact same thing. As some answers state there is additional tax law called IR35. But thats all it is, an additional tax law that may be applicable to your situation (it very well may not). It is all perfectly legal and common (all my university friends now do it). You will be the director of a company, and invoice the recruiters company. This has benefits and disadvantages. Personally I love it, but each to their own. Don't do it if you don't want to.",
"title": ""
},
{
"docid": "de2a1de2c247e1e573b8f28fcf9f1b28",
"text": "\"LLC is, as far as I know, just a US thing, so I'm assuming that you are in the USA. Update for clarification: other countries do have similar concepts, but I'm not aware of any country that uses the term LLC, nor any other country that uses the single-member LLC that is disregarded for income tax purposes that I'm referring to here (and that I assume the recruiter also was talking about). Further, LLCs vary by state. I only have experience with California, so some things may not apply the same way elsewhere. Also, if you are located in one state but the client is elsewhere, things can get more complex. First, let's get one thing out of the way: do you want to be a contractor, or an employee? Both have advantage, and especially in the higher-income areas, contractor can be more beneficial for you. Make sure that if you are a contractor, your rate must be considerably higher than as employee, to make up for the benefits you give up, as well as the FICA taxes and your expense of maintaining an LLC (in California, it costs at least $800/year, plus legal advice, accounting, and various other fees etc.). On the other hand, oftentimes, the benefits as an employee aren't actually worth all that much when you are in high income brackets. Do pay attention to health insurance - that may be a valuable benefit, or it may have such high deductibles that you would be better off getting your own or paying the penalty for going uninsured. Instead of a 401(k), you can set up an IRA (update or various other options), and you can also replace all the other benefits. If you decide that being an employee is the way to go, stop here. If you decide that being a contractor is a better deal for you, then it is indeed a good idea to set up an LLC. You actually have three fundamental options: work as an individual (the legal term is \"\"sole proprietorship\"\"), form a single-member LLC disregarded for income tax purposes, or various other forms of incorporation. Of these, I would argue that the single-member LLC combines the best of both worlds: taxation is almost the same as for sole proprietorship, the paperwork is minimal (a lot less than any other form of incorporation), but it provides many of the main benefits of incorporating. There are several advantages. First, as others have already pointed out, the IRS and Department of Labor scrutinize contractor relationships carefully, because of companies that abused this status on a massive scale (Uber and now-defunct Homejoy, for instance, but also FedEx and other old-economy companies). One of the 20 criteria they use is whether you are incorporated or not. Basically, it adds to your legal credibility as a contractor. Another benefit is legal protection. If your client (or somebody else) sues \"\"you\"\", they can usually only sue the legal entity they are doing business with. Which is the LLC. Your personal assets are safe from judgments. That's why Donald Trump is still a billionaire despite his famous four bankruptcies (which I believe were corporate, not personal, bankrupcies). Update for clarification Some people argue that you are still liable for your personal actions. You should consult with a lawyer about the details, but most business liabilities don't arise from such acts. Another commenter suggested an E&O policy - a very good idea, but not a substitute for an LLC. An LLC does require some minimal paperwork - you need to set up a separate bank account, and you will need a professional accounting system (not an Excel spreadsheet). But if you are a single member LLC, the paperwork is really not a huge deal - you don't need to file a separate federal tax return. Your income will be treated as if it was personal income (the technical term is that the LLC is disregarded for IRS tax purposes). California still does require a separate tax return, but that's only two pages or so, and unless you make a large amount, the tax is always $800. That small amount of paperwork is probably why your recruiter recommended the LLC, rather than other forms of incorporation. So if you want to be a contractor, then it sounds like your recruiter gave you good advice. If you want to be an employee, don't do it. A couple more points, not directly related to the question, but hopefully generally helpful: If you are a contractor (whether as sole proprietor or through an LLC), in most cities you need a business license. Not only that, but you may even need a separate business license in every city you do business (for instance, in the city where your client is located, even if you don't live there). Business licenses can range from \"\"not needed\"\" to a few dollars to a few hundred dollars. In some cities, the business license fee may also depend on your income. And finally, one interesting drawback of a disregarded LLC vs. sole proprietorship as a contractor has to do with the W-9 form and your Social Security Number. Generally, when you work for somebody and receive more than $600/year, they need to ask you for your Social Security Number, using form W-9. That is always a bit of a concern because of identity theft. The IRS also recognizes a second number, the EIN (Employer Identification Number). This is basically like an SSN for corporations. You can also apply for one if you are a sole proprietor. This is a HUGE benefit because you can use the EIN in place of your SSN on the W-9. Instant identity theft protection. HOWEVER, if you have a disregarded LLC, the IRS says that you MUST use your SSN; you cannot use your EIN! Update: The source for that information is the W-9 instructions; it specifically only excludes LLCs.\"",
"title": ""
}
] |
[
{
"docid": "8c53d1b2149e29a06ade529876aca990",
"text": "An LLC is a very flexible company when it comes to taxation. You have three basic tax options: There are other good reasons to create an LLC (mainly to protect your personal assets) so even if you decide that you don't want to deal with the complications of an S-Corp LLC, you should still consider creating a sole proprietorship LLC.",
"title": ""
},
{
"docid": "d4f7f19177888a1ddbce1e8f98d891ee",
"text": "\"The biggest problem with this that others seem to have missed is that a corporation must have a profit motive. Meaning at some point after a \"\"startup phase\"\" your company needs to turn a profit to not be considered a hobby. Will your employer be paying your corporation for your salary? Is that the company's business endeavor? If you run profits through the company and treat it like a true business, this may be technically possible, but as others have mentioned probably will cost more than any benefits you'd receive. And at every step you'll be throwing tons of audit flags. Rich Dad Poor Dad advocates a light version of this. Essentially running a business like Real Estate through an LLC, and then using that LLC for \"\"business trips\"\" (vacation with some justifiable business motive) or capital purchases (laptop, etc...) and the like, such that you're paying with \"\"Pre-tax\"\" money instead of \"\"Post tax\"\", but again the business needs a revenue source.\"",
"title": ""
},
{
"docid": "aeb855264aec4f98e952b57307284244",
"text": "I'm in connecticut and I have met with RobertHalf and another recruiting firm. They both said they would be in constant contact with me yet I haven't heard from either so far. I have emailed and called and haven't gotten much. I try to apply to at least 4 or 5 new positions a day but never hear anything back. [This](http://www.w3schools.com/sql/default.asp) is what I have been trying to familiarize myself with just to get the gist of SQL.",
"title": ""
},
{
"docid": "6b80141754cd9c7da3082116071ec001",
"text": "\"S-Corp are taxed very different. Unlike LLC where you just add the profit to your income with S-Corp you have to pay yourself a \"\"reasonable\"\" salary (on w-2) which of course is a lot more paperwork. I think the advantage (but don't hold me accountable for this) is if your S-Corp makes a lot more than a reasonable salary, then the rest of the money can be passed through on your personal return at a lower (corp) rate.\"",
"title": ""
},
{
"docid": "faa4701b0b2b3ae331c0e76afa727a6a",
"text": "\"I work in the legal services industry, selling these products for a competitor of theirs who shall remain nameless. The LLC filing itself in most cases is a simple fill in the blank form. You can likely file yourself either online or through the mail, depending on the state. Only a handful require an original document. You can apply for the EIN for free on the IRS website and usually have it within a few minutes. If you already have someone assisting with your annual LLC taxes you wouldn't need their services for that either. If their compliance kit involves any business licensing research, it may be worthwhile - but you can also order those services a la carte from vendors like LLX and BusinessLicenses.com. What you're really paying for is the registered agent service - the address for public record with the state so they know where to send any service of process - and you're paying for the convenience of a \"\"one stop shop\"\" instead of handling all the legwork yourself.\"",
"title": ""
},
{
"docid": "1a5e0d894cd75c85c0f41c7ac82bcbcb",
"text": "\"Get some professional accounting help. You're going to have to pay for everything out of the fee you charge: taxes, retirement, health care, etc. You'll be required to pay quarterly. I don't think you should base your fee on what \"\"this\"\" company will pay as a full-time employee, but what you can expect in your area. They're saving a lot of money not going through an established employment firm and essentially, making you create your own. There are costs to setting up and maintaining a company. They have less risk hiring you because there are no unemployment consequences for letting you go. Once you're hired, they'll probably put you on salary, so you can forget about making more money if you work over 40 hrs. IMHO - there have to be better jobs in your area than this one.\"",
"title": ""
},
{
"docid": "30081f2e3fe18ac9db6deacb9f772b8a",
"text": "\"The primary advantage is protection of your personal assets. If your LLC gets sued, they can't take your house/car/dog/wife. There aren't really any financial incentives to be an LLC; because of the pass-thru taxing structure, you wind up paying the same in taxes either way. \"\"The cost\"\" will depend on where you're located, and usually involves a few factors -- Expect to pay $300-500 to start it, depending on your state and who you register with (technically, you can usually register for free at the secretary of state, but wouldn't you rather pay an expert?), and \"\"State Franchise Tax\"\", which will can be a minimum of up to $1000/year depending on the state, plus even more if your LLC earns more than $xxx,000. EDIT -- As an aside, I'll mention that I'm based in California, and our state franchise tax starts at $800/yr. I'm all-web-based, so I've been investigating incorporating in Nevada or Delaware instead (no franchise tax, lower filing fees), but from what I've found, it's hardly worth the trouble. In addition to having to pay a Registered Agent (someone to act as my permanent mailing address in that state for ~$100/yr), apparently California likes to search for people just like me, and charge them $800 anyway. You can fight that, of course, and claim that your business really is done in Nevada, but do you really want to?\"",
"title": ""
},
{
"docid": "fb4538721131cc3f19655a02ffa66286",
"text": "\"If you start an LLC with you as the sole member it will be considered a disregarded entity. This basically means that you have the protection of being a company, but all your revenues will go on your personal tax return and be taxed at whatever rate your personal rate calculates to based on your situation. Now here is the good stuff. If you file Form 2553 you can change your sole member LLC to file as an S Corp. Once you have done this it changes the game on how you can pay out what your company makes. You will need to employ yourself and give a \"\"reasonable\"\" salary. This will be reported to the IRS and you will file your normal tax returns and they will be taxed based on your situation. Now as the sole member you can then pay yourself \"\"distribution to share holders\"\" from your account and this money is not subject to normal fica and social security tax (check with your tax guy) and MAKE SURE to document correctly. The other thing is that on that same form you can elect to have a different fiscal year than the standard calendar IRS tax year. This means that you could then take part of profits in one tax year and part in another so that you don't bump yourself into another tax bracket. Example: You cut a deal and the company makes 100,000 in profit that you want to take as a distribution. If you wrote yourself a check for all of it then it could put you into another tax bracket. If your fiscal year were to end say on sept 30 and you cut the deal before that date then you could write say 50,000 this year and then on jan 1 write the other check.\"",
"title": ""
},
{
"docid": "4c34950d70128d7f29add7428d89fdbf",
"text": "If I understand you right, people are giving the LLC money for an ownership share. That is NOT income - it would go under equity on the balance sheet. It is analogous to getting a loan from the bank. It is not income - you get cash (an asset) and have an increase to debt (a liability)",
"title": ""
},
{
"docid": "f1d749c90d303dc35e09b27a73a39ee8",
"text": "There's no reason to keep the California LLC if you don't intend to do business in California. If you'll have sales in California then you'll need to keep it and file taxes accordingly for those sales. You can just as easily form a new LLC in Washington state and even keep the same name (if it's available in Washington, that is). Keeping the California LLC just creates paperwork for whatever regulatory filings California will require for no purpose at all. As for your question about it looking suspicious that you just set up an LLC and then are shutting it down, nobody's going to care, to be honest. As with your situation, plans change, so it isn't really all that unusual. If you're concerned the government will say something, don't.",
"title": ""
},
{
"docid": "8d28aa994d28e9404b96d8ac04f34c79",
"text": "LLC doesn't explain the tax structure. LLCs can file as a partnership (1065) Scorp (1120S) or nothing at all, if it's a SMLLC. (Single Member LLC). I really enjoy business, and helping people get started. If you PM me your contact information, id be more than happy to go over any issues you may have, and help you with your current issue.",
"title": ""
},
{
"docid": "ceefd9186fbe63a649c1b841cd61d71d",
"text": "It makes no difference for tax purposes. If you are 1099, you will pay the same amount of taxes as if you formed a corporation and then paid yourself (essentially you are doing this as a 1099 contractor, just not formally). Legally, I don't know the answer. I would assume you have some legal protections by forming an LLC but practically I think this won't make any difference if you get sued.",
"title": ""
},
{
"docid": "0493d4f827147a296d9f105fe8748726",
"text": "They might be concerned with having to charge sales tax in California if they have a single employee in California, creating a nexus situation with CA. If that's the case, or even if there is some other issue, you might be able to switch from being a W2 employee to being a 1099 independent contractor. There's a host of additional issues this could cause, but it alleviate the nexus problem (if THAT is the problem). Here's a terrible solution you can bring up, but shouldn't do under any circumstances: offer to set up a mailing address in an allowed State, and give your company plausible deniability with regards to your legal residence. Obviously, this is a terrible idea, but exploring that option with your employer would help you suss out what the actual objection is. Ultimately, anything said here about the reason is just conjecture. You need to talk to the decision maker(s) about the real reason behind the denial. Then you can talk through solutions. Also - don't forget that you can get another job. If you are serious about a future with your girlfriend, you should put that relationship ahead of your current employment comfort and security. If you are willing to walk away from your position, you are in a much better situation to negotiate.",
"title": ""
},
{
"docid": "c63354cffacbd0dd596f593b412164d3",
"text": "\"There are very few circumstances where forming an out of state entity is beneficial, but a website is within these circumstances in certain instances. Businesses with no physical operations do not need to care what jurisdiction they are registered in: your home state, a better united state or non-united state. The \"\"limited liability\"\" does it's job. If you are storing inventory or purchasing offices to compliment your online business, you need to register in the state those are located in. An online business is an example of a business with no physical presence. All states want you to register your LLC in the state that you live in, but this is where you need to read that state's laws. What are the consequences of not registering? There might be none, there might be many. In New York, for example, there are no consequences for not registering (and registering in new york - especially the city - is likely the most expensive in the USA). If your LLC needs to represent itself in court, New York provides retroactive foreign registrations and business licenses. So basically, despite saying that you need to pay over $1000 to form your LLC \"\"or else\"\", the reality is that you get the local limited liability protection in courts whenever you actually need it. Check your local state laws, but more times than not it is analogous to asking a barber if you need a haircut, the representative is always going to say \"\"yes, you do\"\" while the law, and associated case law, reveals that you don't. The federal government doesn't care what state your form an LLC or partnership in. Banks don't care what state you form an LLC or partnership in. The United States post office doesn't care. Making an app? The Apple iTunes store doesn't care. So that covers all the applicable authorities you need to consider. Now just go with the cheapest. In the US alone there are 50 states and several territories, all with their own fee structures, so you just have to do your research. Despite conflicting with another answer, Wyoming is still relevant, because it is cheap and has a mature system and laws around business entity formation. http://www.incorp.com has agents in every state, but there are registered agents everywhere, you can even call the Secretary of State in each state for a list of registered agents. Get an employer ID number yourself after the business entity is formed, it takes less than 5 minutes. All of this is also contingent on how your LLC or partnership distributes funds. If your LLC is not acting like a pass through entity to you and your partner,but instead holding its own profits like a corporation, then again none of this matters. You need to form it within the state you live and do foreign registrations in states where it has any physical presence, as it has becomes its own tax person in those states. This is relevant because you said you were trying to do something with a friend.\"",
"title": ""
},
{
"docid": "b642eb854449d0c4e04bb13fc651c04b",
"text": "I am in complete agreement with you. The place i have found with the sort of charts you are looking for is stockcharts.com. To compare the percentage increase of several stocks over a period of 2 market-open days or more, which is quite useful to follow the changes in various stocks… etc., an example: Here the tickers are AA to EEEEE (OTC) and $GOLD / $SILVER for the spot gold / silver price (that isn't really a ticker). It is set to show the last 6 market days (one week+)...the '6' in '6&O'. You can change it in the URL above or change it on the site for the stocks you want... up to 25 in one chart but it gets really hard to tell them apart! By moving the slider just left of the ‘6’ at the bottom right corner of the chart, you can look at 2 days or more. For a specific time period in days, highlight the ‘6’ and type any number of market-open days you want (21 days = about one month, etc.). By setting a time period in days, and moving the entire slider, you can see how your stocks did in the last bull/bear run, as an example. The site has a full how-to, for this and the other types of charts they offer. The only problem is that many OTC stocks are not charted. Save the comparison charts you use regularly in a folder in your browser bookmarks. Blessings. I see the entire needed link isn't in blue... but you need it all.",
"title": ""
}
] |
fiqa
|
4077a94b66af04d414f99862cd53313c
|
Meaning of capital market
|
[
{
"docid": "c9835dfc7ec0b879d7bda361cc073ffa",
"text": "\"Just to clarify, In wikipedia when it says It is defined as a market in which money is provided for periods longer than a year They are referring to the company which is asking for money. So for example the stock market provides money to the issuing company of an IPO, indefinitely. Meaning the company that just went public is provided with money for a period longer than a year. The definition in Investopedia basically says the same thing Wikipedia does it is just phrased slightly different and leaves out the \"\"for periods longer than a year\"\". For example Wikipedia uses the term \"\"business enterprises\"\" and \"\"governments\"\" while Investopedia uses the term private sector and public sector, in this context \"\"business enterprise\"\" is \"\"private sector\"\" and \"\"governments\"\" is \"\"public sector\"\" So in the sense of the length debt is issued yes, money market would be the opposite of a capital market but both markets still offer a place for governments and companies to raise money and both are classified as financial markets.\"",
"title": ""
},
{
"docid": "86002c2881dc80cdb1d691a332a2557e",
"text": "\"1) Are the definitions for capital market from the two sources the same? Yes. They are from two different perspectives. Investopedia is looking at it primarily from the perspective of a trader and they lead-off with the secondary market. This refers to the secondary market: A market in which individuals and institutions trade financial securities. This refers to the primary market: Organizations/institutions in the public and private sectors also often sell securities on the capital markets in order to raise funds. Also, the Investopedia definition leaves much to be desired, but it is supposed to be pithy. So, you are comparing apples and oranges, to some extent. One is an article, as short as it may be, this other one is an entry in a dictionary. 2) What is the opposite of capital market, according to the definition in investopedia? It's not quite about opposites, this is not physics. However, that is not the issue here. The Investopedia definition simply does not mention any other possibilities. The Wikipedia article defines the term more thoroughly. It talks about primary/secondary markets in separate paragraph. 3) According to the Wikipedia's definition, why does stock market belong to capital market, given that stocks can be held less than one year too? If you follow the link in the Wikipedia article to money market: As money became a commodity, the money market is nowadays a component of the financial markets for assets involved in short-term borrowing, lending, buying and selling with original maturities of one year or less. The key here is original maturities of one year or less. Here's my attempt at explaining this: Financial markets are comprised of money markets and capital markets. Money is traded as if it were a commodity on the money markets. Hence, the short-term nature in its definition. They are more focused on the money itself. Capital markets are focused on the money as a means to an end. Companies seek money in these markets for longer terms in order to improve their business in some way. A business may go to the money markets to access money quickly in order to deal with a short-term cash crunch. Meanwhile, a business may go to the capital markets to seek money in order to expand its business. Note that capital markets came first and money markets are a relatively recent development. Also, we are typically speaking about the secondary (capital) market when we are talking about the stock or bond market. In this market, participants are merely trading among themselves. The company that sought money by issuing that stock/bond certificate is out of the picture at that point and has its money. So, Facebook got its money from participants in the primary market: the underwriters. The underwriters then turned around and sold that stock in an IPO to the secondary market. After the IPO, their stock trades on the secondary market where you or I have access to trade it. That money flows between traders. Facebook got its money at the \"\"beginning\"\" of the process.\"",
"title": ""
}
] |
[
{
"docid": "26add6882c3b0f92d535fd869f8d55ee",
"text": "\"Market caps is just the share price, multiplied by the number of shares. It doesn't represent any value (if people decide to pay more or less for the shares, the market cap goes up or down). It does represent what people think the company is worth. NAV sounds very much like book value. It basically says \"\"how much cash would we end up with if we sold everything the company owns, paid back all the debt, and closed down the business? \"\" Since closing down the business is rarely a good idea, this underestimates the value of the business enormously. Take a hairdresser who owns nothing but a pair of scissors, but has a huge number of repeat customers, charges $200 for a haircut, and makes tons of money every year. The business has a huge value, but NAV = price of one pair of used scissors.\"",
"title": ""
},
{
"docid": "22f70c08e60d9f5b1375bca604d8599f",
"text": "It is ALWAYS possible for a company's valuation in the market to be larger than the market it serves, and in fact it is not uncommon. There's valid argument that Uber would be a good example of this, with a market cap of more than $60 billion. Market cap is the total value of all shares outstanding. Keep in mind that what a company's shares trade for is less a reflection of its past (or, to some degree, even present) revenue activity and more of a speculative bet on what the company will do in the future.",
"title": ""
},
{
"docid": "02d1f2933881ff961545fe3768fdee86",
"text": "\"This is the best tl;dr I could make, [original](https://jacobinmag.com/2017/10/finance-capital-shareholders-profit-market) reduced by 81%. (I'm a bot) ***** > The term financialization is used all over the place, but it's usually defined in a pretty circular way: financialization means "More finance," more things controlled by finance. > The role of finance in enforcing a certain kind of policy on the state, a certain kind of logic, a certain kind of organization - whether it's the bond market or whoever else we imagine here - is even more clear-cut. > To me, that's a narrower, more specific, and maybe more fruitful way of thinking about financialization than just "There's more finance.\"\" ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/78t6so/the_disruptors_jacobin_magazine_via/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~235206 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*: **logic**^#1 **More**^#2 **finance**^#3 **way**^#4 **corporation**^#5\"",
"title": ""
},
{
"docid": "66e0f00ac4ddfe238ea77d6e34291c88",
"text": "Stock markets are supposed to be about investment and providing capital to companies for operations and research. High frequency trading is only about gaming the market and nothing else. Arguments that this provides more capital or liquidity don't make any sense because the speed of trading is such that listed companies cannot take advantage and only high frequency traders are served.",
"title": ""
},
{
"docid": "6f0cb1b299c8902d05de659c56af9285",
"text": "\"In finance, form is function, and while a reason for a trade could be anything, but since the result of a trade is a change in value, it could be presumed that one seeks to receive a change in value. Stock company There may have been more esoteric examples, but currently, possession of a company (total ownership of its' assets actually) is delineated by percentage or a glorified \"\"banknote\"\" frequently called a \"\"share\"\". Percentage companies are usually sole proprietorship and partnerships, but partnerships can now trade in \"\"units\"\". Share companies are usually corporations. With shares, a company can be divided into almost totally indistinguishable units. This allows for more flexible ownership, so individuals can trade them without having to change the company contract. Considering the ease of trade, it could be assumed that common stock contract provisions were formulated to provide for such an ease. Motivation to trade This could be anything, but it seems those with the largest ownership of common stock have lots of wealth, so it could be assumed that people at least want to own stocks to own wealth. Shorting might be a little harder to reason, but I personally assume that the motivation to trade is still to increase wealth. Social benefit of the stock market Assuming that ownership in a company is socially valuable and that the total value of ownership is proportional to the social value provided, the social benefit of a stock market is that it provided the means to scale ownership through convenience, speed, and reliability.\"",
"title": ""
},
{
"docid": "52fa2db38c2736e1635ef757ef6cea8a",
"text": "\"As someone that works in and with the ag and commodity markets, my understanding, is limited but I hope it helps. Aside from needing an infrastructure built to maintain the vast amounts of data, communication, pricing, banking information, having a closing time for our markets helps to ensure value and fair trade. Capitalism is centralized around creating a fair value for ventures to sell, where prospective buyers opt to purchase or invest. For example, where I attended university, there were many coffee shops close to campus, but only one stayed open all night, and as such had operational cost much higher than other shops, forcing them to charge more for a cup of coffee. While this example is crude, the idea is the same. By maintaining\"\"bank\"\" hours, product or strategies and developments meant to increase projected value are allowed to occur. I imagine that if the markets did not close, my coffee prices would skyrocket for an increased demand, that of which the supply chsin, and farmers, would struggle to meet. The same would be said of grain, salt, oils, etcetera.\"",
"title": ""
},
{
"docid": "26bc7f91b8e382b3c90f5c302e9fee61",
"text": "\"Very often, the word secondary market is used synonymously with the stock market as we all know it. In this case, the primary market would be the \"\"closed\"\" world of VCs, business angels, etc to which stock market investors do not have access, e.g. the securities are not trading on a public stock market.\"",
"title": ""
},
{
"docid": "796e59cd78f34a9c70642f63ecf4b371",
"text": "\"Buying (or selling) a futures contract means that you are entering into a contractual agreement to buy (or sell) the contracted commodity or financial instrument in the contracted amount (the contract size) at the price you have bought (or sold) the contract on the contract expire date (maturity date). It is important to understand that futures contracts are tradeable instruments, meaning that you are free to sell (or buy back) your contract at any time before the expiry date. For example, if you buy 1 \"\"lot\"\" (1 contract) of a gold future on the Comex exchange for the contract month of December 2016, then you entering into a contract to buy 100 ounces (the contract size) of gold at the price at which you buy the contract - not the spot price on the day of expiry when the contract comes to maturity. The December 2016 gold futures contract has an expiry date of 28 December. You are free to trade this contract at any time before its expiry by selling it back to another market participant. If you sell the contract at a price higher than you have purchased it, then you will realise a profit of 100 times the difference between the price you bought the contract and the price you sold the contract, where 100 is the contract size of the gold contract. Similarly, if you sell the contract at a price lower than the price you have purchased it, then you will realise a loss. (Commissions paid will also effect your net profit or loss). If you hold your contract until the expiry date and exercise your contract by taking (or making) delivery, then you are obliged to buy (or sell) 100 ounces of gold at the price at which you bought (or sold) the contract - not the current spot price. So long as your contract is \"\"open\"\" (i.e., prior to the expiry date and so long as you own the contract) you are required to make a \"\"good faith deposit\"\" to show that you intend to honour your contractual obligations. This deposit is usually called \"\"initial margin\"\". Typically, the initial margin amount will be about 2% of the total contract value for the gold contract. So if you buy (or sell) one contract for 100 ounces of gold at, say, $1275 an ounce, then the total contract value will be $127,500 and your deposit requirement would be about $2,500. The initial margin is returned to you when you sell (or buy) back your futures contract, or when you exercise your contract on expiry. In addition to initial margin, you will be required to maintain a second type of margin called \"\"variation margin\"\". The variation margin is the running profit or loss you are showing on your open contract. For the sake of simplicity, lets look only at the case where you have purchased a futures contract. If the futures price is higher than your contract (buy) price, then you are showing a profit on your current position and this profit (the variation margin) will be used to offset your initial margin requirement. Conversely, if the futures price has dropped below your contracted (buy) price, then you will be showing a loss on your open position and this loss (the variation margin) will be added to your initial margin and you will be called to put up more money in order to show good faith that you intend to honour your obligations. Note that neither the initial margin nor the variation margin are accounting items. In other words, these are not postings that are debited or credited to the ledger in your trading account. So in some sense \"\"you don't have to pay anything upfront\"\", but you do need to put up a refundable deposit to show good faith.\"",
"title": ""
},
{
"docid": "8accfe15c696a664fe3605ddf9390c52",
"text": "Most likely economics then. What I'm looking to gain is an understanding of how the market works so that I may take that knowledge and use it to make investments, buy stocks, or possibly start a business. I have a very large amount of time between my studies for my classes and I think it would be a waste to not learn these tools (to give you a reason for my interest in this).",
"title": ""
},
{
"docid": "5871566697910ffc03fc7f607eb651c9",
"text": "\"Market cap is speculative value, M = P * W, where W is stock (or other way of owning) percentage of ownership, P - price of percentage of ownership. This could include \"\"outside of exchange\"\" deals. Some funds could buy ownership percentage directly via partial ownership deal. That ownership is not stock, but fixed-type which has value too. Stock market cap is speculative value, M2 = Q * D, where D is free stocks available freely, Q - price of stock, in other words Quote number (not price of ownership). Many stock types do NOT provide actual percentage of ownership, being just another type of bond with non-fixed coupon and non-fixed price. Though such stocks do not add to company's capitalization after sold to markets, it adds to market capitalization at the moment of selling via initial price.\"",
"title": ""
},
{
"docid": "0390f2d24db9cccefd2200541646e809",
"text": "\"Market cap is the current value of a company's equity and is defined as the current share price multiplied by the number of shares. Please check also \"\"enterprise value\"\" for another definition of a company`s total value (enterprise value = market cap adjusted for net nebt). Regarding the second part of your question: Issuing new shares usually does not affect market cap in a significant way because the newly issued shares often result in lower share prices and dilution of the existing share holders shares.\"",
"title": ""
},
{
"docid": "f8192a8b59e7dc34d8ba75d13043d01f",
"text": "\"So, the term \"\"ready market\"\" simply means that a market exists in which there are legitimate buy/sell offers, meaning there are investors willing to own or trade in the security. A \"\"spot market\"\" means that the security/commodity is being delivered immediately, rather at some predetermined date in the future (hence the term \"\"futures market\"\"). So if you buy oil on the spot market, you'd better be prepared to take immediate delivery, where as when you buy a futures contract, the transaction doesn't happen until some later date. The advantage for futures contract sellers is the ability to lock in the price of what they're selling as a hedge against the possibility of a price drop between now and when they can/will deliver the commodity. In other words, a farmer can pre-sell his grain at a set price for some future delivery date so he can know what he's going to get regardless of the price of grain at the time he delivers it. The downside to the farmer is that if grain prices rise higher than what he sold them for as futures contracts then he loses that additional money. That's the advantage to the buyer, who expects the price to rise so he can resell what he bought from the farmer at a profit. When you trade on margin, you're basically borrowing the money to make a trade, whether you're trading long (buying) or short (selling) on a security. It isn't uncommon for traders to pledge securities they already own as collateral for a margin account, and if they are unable to cover a margin call then those securities can be liquidated or confiscated to satisfy the debt. There still may even be a balance due after such a liquidation if the pledged securities don't cover the margin call. Most of the time you pay a fee (or interest rate) on whatever you borrow on margin, just like taking out a bank loan, so if you're going to trade on margin, you have to include those costs in your calculations as to what you need to earn from your investment to make a profit. When I short trade, I'm selling something I don't own in the expectation I can buy it back later at a lower price and keep the difference. For instance, if I think Apple shares are going to take a steep drop at some point soon, I can short them. So imagine I short-sell 1000 shares of AAPL at the current price of $112. That means my brokerage account is credited with the proceeds of the sale ($112,000), and I now owe my broker 1000 shares of AAPL stock. If the stock drops to $100 and I \"\"cover my short\"\" (buy the shares back to repay the 1000 I borrowed) then I pay $100,000 for them and give them to my broker. I keep the difference ($12,000) between what I sold them for and what I paid to buy them back, minus any brokerage fees and fees the broker may charge me for short-selling. In conclusion, a margin trade is using someone else's money to make a trade, whether it's to buy more or to sell short. A short trade is selling shares I don't even own because I think I can make money in the process. I hope this helps.\"",
"title": ""
},
{
"docid": "5b7df2f8533eb68741d6c2c8395f6fd4",
"text": "The economic utility of markets results from price discovery (and the corresponding capital allocation.) Information which changes the material value of a business can come to light, be processed by sentient beings capable of rational thought, and conveyed to the market in the form of a price in an hour. That can't happen in a millisecond. And don't try to argue about liquidity, because HFT liquidity evaporates in milliseconds in adverse conditions (i.e. when liquidity matters.)",
"title": ""
},
{
"docid": "8586796e8d64cc6ebeb5ef6bc6cc0f27",
"text": "Yes and no, P2P Capital Markets is similar concept but is more geared towards business loans. Community Lend used to offer this service but has stopped.",
"title": ""
},
{
"docid": "55cc730f8d9d75acf4c420503348d4c4",
"text": "HFT allows those with access to leverage sub-second propagation delays in pricing, which screws those without access to HFT systems. And since market-based capital gains are a ponzi scheme, this means that HFT essentially creates a money funnel from those without to those with. I honestly don't see how HFT benefits the market at all - it only benefits those with HFT systems to the detriment of those without. A transaction tax that makes HFT untenable simply removes HFT systems from the equation. The markets stay liquid; stocks stay fungible. The markets ran just fine for almost a century without HFT.",
"title": ""
}
] |
fiqa
|
2c5a958f2efe42987fe096fc52e3a9cb
|
Effective returns on investment in housing vs other financial instruments
|
[
{
"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": "0574b5b0f9213013d170ade61b82d319",
"text": "Thinking of personal residence as investment is how we got the bubble and crash in housing prices, and the Great Recession. There is no guarantee that a house will appreciate, or even retain value. It's also an extremely illiquid item; selling it, especially if you're seeking a profit, can take a year or more. ' Housing is not guaranteed to appreciate constantly, or at all. Tastes change and renovations rarely pay for themselves. Things wear out and have costs. Neighborhoods change in popularity. Without rental income and the ability to write off some of the costs as business expense, it isn't clear the tax advantage closes that gap, especislly as the advantage is limited to the taxes upon your mortgage interest (by deducting that from AGI). If this is the flavor of speculation you want to engage in, fine, but I've seen people screw themselves over this way and wind up forced to sell a house for a loss. By all means hope your home will be profitable, count it as part of your net wealth... but generally Lynch is wrong here, or at best oversimplified. A house can be an investment (or perhaps more accurately a business), or your home, but -- unless you're renting out the other half of a duplex,which splits the difference -- trying to treat it as both is dangerous accounting.",
"title": ""
},
{
"docid": "9cb8d2713786a67c691618f992ccd148",
"text": "The assumption that house value appreciates 5% per year is unrealistic. Over the very long term, real house prices has stayed approximately constant. A house that is 10 years old today is 11 years old a year after, so this phenomenon of real house prices staying constant applies only to the market as a whole and not to an individual house, unless the individual house is maintained well. One house is an extremely poorly diversified investment. What if the house you buy turns out to have a mold problem? You can lose your investment almost overnight. In contrast to this, it is extremely unlikely that the same could happen on a well-diversified stock portfolio (although it can happen on an individual stock). Thus, if non-leveraged stock portfolio has a nominal return of 8% over the long term, I would demand higher return, say 10%, from a non-leveraged investment to an individual house because of the greater risks. If you have the ability to diversify your real estate investments, a portfolio of diversified real estate investments is safer than a diversified stock portfolio, so I would demand a nominal return of 6% over the long term from such a diversified portfolio. To decide if it's better to buy a house or to live in rental property, you need to gather all of the costs of both options (including the opportunity cost of the capital which you could otherwise invest elsewhere). The real return of buying a house instead of renting it comes from the fact that you do not need to pay rent, not from the fact that house prices tend to appreciate (which they won't do more than inflation over a very long term). For my case, I live in Finland in a special case of near-rental property where you pay 15% of the building cost when moving in (and get the 15% payment back when moving out) and then pay a monthly rent that is lower than the market rent. The property is subsidized by government-provided loans. I have calculated that for my case, living in this property makes more sense than purchasing a market-priced house, but your situation may be different.",
"title": ""
}
] |
[
{
"docid": "b2f2dc9071e084e677614bd296b2ff87",
"text": "It depends on your tax rate. Multiply your marginal rate (including state, if applicable) by your 3.1% to figure out how much you are saving through the deduction, then subtract that from the 3.1% to get the effective rate on the mortgage. For example, if you are in the 28% bracket with no state tax impact from the mortgage, your effective rate on the mortgage is 2.232%. This also assumes you'd still itemize deductions without the mortgage, otherwise, the effective deduction is less. Others have pointed out more behavioral reasons for wanting to pay off the car first, but from a purely financial impact, this is the way to analyze it. This is also your risk-free rate to compare additional investing to (after taking into account taxes on investments).",
"title": ""
},
{
"docid": "033272001584b44ca78b60db0b437eab",
"text": "\"I think your analysis is very clear, it's a sensible approach, and the numbers sound about right to me. A few other things you might want to think about: Tax In some jurisdictions you can deduct mortgage interest against your income tax. I see from your profile that you're in Texas, but I don't know the exact situation there and I think it's better to keep this answer general anyway. If that's the case for you, then you should re-run your numbers taking that into account. You may also be able to make your investments tax-advantaged, for example if you save them in a retirement account. You'll need to apply the appropriate limits for your specific situation and take an educated guess as to how that might change over the next 30 years. Liquidity The money you're not spending on your mortgage is money that's available to you for other spending or emergencies - i.e. even though your default assumption is to invest it and that's a sensible way to compare with the mortgage, you might still place some extra value on having more free access to it. Overpayments Would you have the option to pay extra on the mortgage? That's another way of \"\"investing\"\" your money that gets you a guaranteed return of the mortgage rate. You might want to consider if you'd want to send some of your excess money that way.\"",
"title": ""
},
{
"docid": "7cfd122bd9fab80baa3b6d76c8f2a0c1",
"text": "Lucky you - here where I live that does not work, you put money on the table year 1. Anyhow... You HAVE to account for inflation. THat is where the gain comes from. Not investment increase (value of item), but the rent goes higher, while your mortgage does not (you dont own more moeny in 3 years if you keep paying, but likely you take more rent). Over 5 or 10 years the difference may be significant. Also you pay back the mortgage - that is not free cash flow, but it is a growth in your capital base. Still, 1 flat does not make a lot ;) You need 10+, so go on earning more down payments.",
"title": ""
},
{
"docid": "1d5e53ab2855fd2ab6a6e5876d1781fa",
"text": "There is the opportunity cost. Let's say it cost you $1000 to buy 0.25% discount. Over N number of years that saves you let's say $2000 thus your profit is $1000. What if you took that $1000 and invested it? Would you have more than $2000 after N number of years? Obviously answering this question is not easy but you can make some educated guesses. For example, you can compare the return you'll likely get from investing in CD or treasury bond. A bit more risky is to invest in the stock market but an index fund should be fairly safe and you can easily find the average return over 5 - 10 year period. For example, if your loan is $200,000 at 0.25% per year you'll get $500 in savings. Over 10 years that's $5000 - $1000 to buy the point, you end up with $4000. Using the calculator on this site, I calculated that if you invested in the Dow Jones industrial average between 2007 and 2017 you total return would have been 111% (assuming dividends are reinvested) or you would've had a total of $2110. I'm not sure how accurate those numbers are but it seems likely that buying points is a pretty good investment if you stay in the house for 10 years or more.",
"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": ""
},
{
"docid": "6470741c89540d9d5adea1af37740f9b",
"text": "\"I don't follow the numbers in your example, but the fundamental question you're asking is, \"\"If I can borrow money for a low cost, and if I think I can invest it and receive returns greater than that cost, should I do it?\"\" It doesn't matter where that money comes from, a mortgage that's bigger than it needs to be, a credit card teaser rate, or a margin line from your stock broker. The answer is \"\"maybe\"\" - depending on the certainty you have about the returns you'd receive on your investments and your tolerance for risk. Only you can answer that question for yourself. If you make less than your mortgage rates on the investments, you'll wish you hadn't! As an aside, I don't know anything about Belgian tax law, but in US tax law, your deductions can be limited to the actual value of the home. Your law may be similar and thus increase the effective mortgage interest rate.\"",
"title": ""
},
{
"docid": "74b3f1e58bda2b062d3ad816837fd262",
"text": "Certainly, paying off the mortgage is better than doing nothing with the money. But it gets interesting when you consider keeping the mortgage and investing the money. If the mortgage rate is 5% and you expect >5% returns from stocks or some other investment, then it might make sense to seek those higher returns. If you expect the same 5% return from stocks, keeping the mortgage and investing the money can still be more tax-efficient. Assuming a marginal tax rate of 30%, the real cost of mortgage interest (in terms of post-tax money) is 3.5%*. If your investment results in long-term capital gains taxed at 15%, the real rate of growth of your post-tax money would be 4.25%. So in post-tax terms, your rate of gain is greater than your rate of loss. On the other hand, paying off the mortgage is safer than investing borrowed money, so doing so might be more appropriate for the risk-averse. * I'm oversimplifying a bit by assuming the deduction doesn't change your marginal tax rate.",
"title": ""
},
{
"docid": "71146df668f12b055a8d5912ca96a59b",
"text": "It depends on the relative rates and relative risk. Ignore the deduction. You want to compare the rates of the investment and the mortgage, either both after-tax or both before-tax. Your mortgage costs you 5% (a bit less after-tax), and prepayments effectively yield a guaranteed 5% return. If you can earn more than that in your IRA with a risk-free investment, invest. If you can earn more than that in your IRA while taking on a degree of risk that you are comfortable with, invest. If not, pay down your mortgage. See this article: Mortgage Prepayment as Investment: For example, the borrower with a 6% mortgage who has excess cash flow would do well to use it to pay down the mortgage balance if the alternative is investment in assets that yield 2%. But if two years down the road the same assets yield 7%, the borrower can stop allocating excess cash flow to the mortgage and start accumulating financial assets. Note that he's not comparing the relative risk of the investments. Paying down your mortgage has a guaranteed return. You're talking about CDs, which are low risk, so your comparison is simple. If your alternative investment is stocks, then there's an element of risk that it won't earn enough to outpace the mortgage cost. Update: hopefully this example makes it clearer: For example, lets compare investing $100,000 in repayment of a 6% mortgage with investing it in a fund that pays 5% before-tax, and taxes are deferred for 10 years. For the mortgage, we enter 10 years for the period, 3.6% (if that is the applicable rate) for the after tax return, $100,000 as the present value, and we obtain a future value of $142,429. For the alternative investment, we do the same except we enter 5% as the return, and we get a future value of $162,889. However, taxes are now due on the $62,889 of interest, which reduces the future value to $137,734. The mortgage repayment does a little better. So if your marginal tax rate is 30%, you have $10k extra cash to do something with right now, mortgage rate is 5%, IRA CD APY is 1%, and assuming retirement in 30 years: If you want to plug it into a spreadsheet, the formula to use is (substitute your own values): (Note the minus sign before the cash amount.) Make sure you use after tax rates for both so that you're comparing apples to apples. Then multiply your IRA amount by (1-taxrate) to get the value after you pay future taxes on IRA withdrawals.",
"title": ""
},
{
"docid": "1021105f9b691a94f55193b46aa9d692",
"text": "Lets do the math, using your numbers. We start off with $100K, a desire to buy a house and invest, and 30 years to do it. Scenario #1 We buy a house for $100K mortgage at 5% interest over 30 years. Monthly payment ends up being $536.82/month. We then take the $100K we still have and invest it in stocks, earning an average of 9% annually and paying 15% taxes. Scenario #2 We buy a house for our $100K cash, and then, every month, we invest the $536.82 we would have paid for the mortgage. Again, investments make 9% annually long term, and we pay 15% taxes. How would it look in 30 years? Scenario #1 Results: 30 years later we would have a paid off house and $912,895 in investments Scenario #2 Results: 30 years later we would have a paid off house and $712,745 in investments Conclusion: NOT paying off your mortgage early results in an additional $200,120 in networth after 30 years. That's 28% more. Therefore, not paying off your mortgage is the superior scenario. Caveats/Notes/Things to consider Play with the numbers yourself:",
"title": ""
},
{
"docid": "516c2d122e4ea621f52e35fbf8647cce",
"text": "My figuring (and I'm not an expert here, but I think this is basic math) is: Let's say you had a windfall of $1000 extra dollars today that you could either: a. Use to pay down your mortgage b. Put into some kind of equity mutual fund Maybe you have 20 years left on your mortgage. So your return on investment with choice A is whatever your mortgage interest rate is, compounded monthly or daily. Interest rates are low now, but who knows what they'll be in the future. On the other hand, you should get more return out of an equity mutual fund investment, so I'd say B is your better choice, except: But that's also the other reason why I favour B over A. Let's say you lose your job a year from now. Your bank won't be too lenient with you paying your mortgage, even if you paid it off quicker than originally agreed. But if that money is in mutual funds, you have access to it, and it buys you time when you really need it. People might say that you can always get a second mortgage to get the equity out of it, but try getting a second mortgage when you've just lost your job.",
"title": ""
},
{
"docid": "f18fc365689652e6ace8938a416fef9d",
"text": "\"In most cases of purchases the general advice is to save the money and then make the purchase. Paying cash for a car is recommended over paying credit for example. For a house, getting a mortgage is recommended. Says who? These rules of thumb hide the actual equations behind them; they should be understood as heuristics, not as the word of god. The Basics The basic idea is, if you pay for something upfront, you pay some fixed cost, call it X, where as with a loan you need to pay interest payments on X, say %I, as well as at least fixed payments P at timeframe T, resulting in some long term payment IX. Your Assumption To some, this obviously means upfront payments are better than interest payments, as by the time the loan is paid off, you will have paid more than X. This is a good rule of thumb (like Newtonian's equations) at low X, high %I, and moderate T, because all of that serves to make the end result IX > X. Counter Examples Are there circumstances where the opposite is true? Here's a simple but contrived one: you don't pay the full timeframe. Suppose you die, declare bankruptcy, move to another country, or any other event that reduces T in such a way that XI is less than X. This actually is a big concern for older debtors or those who contract terminal illnesses, as you can't squeeze those payments out of the dead. This is basically manipulating the whole concept. Let's try a less contrived example: suppose you can get a return higher than %I. I can currently get a loan at around %3 due to good credit, but index funds in the long run tend to pay %4-%5. Taking a loan and investing it may pay off, and would be better than waiting to have the money, even in some less than ideal markets. This is basically manipulating T to deal with IX. Even less contrived and very real world, suppose you know your cash flow will increase soon; a promotion, an inheritance, a good market return. It may be better to take the loan now, enjoy whatever product you get until that cash flows in, then pay it all off at once; the enjoyment of the product will make the slight additional interest worth it. This isn't so much manipulating any part of the equation, it's just you have different goals than the loan. Home Loan Analysis For long term mortgages, X is high, usually higher than a few years pay; it would be a large burden to save that money for most people. %I is also typically fairly low; P is directly related to %I, and the bank can't afford to raise payments too much, or people will rent instead, meaning P needs to be affordable. This does not apply in very expensive areas, which is why cities are often mostly renters. T is also extremely long; usually mortgages are for 15 or 30 years, though 10 year options are available. Even with these shorter terms, it's basically the longest term loan a human will ever take. This long term means there is plenty of time for the market to have a fluctuation and raise the investments current price above the remainder of the loan and interest accrued, allowing you to sell at a profit. As well, consider the opportunity cost; while saving money for a home, you still need a place to live. This additional cost is comparable to mortgage payments, meaning X has a hidden constant; the cost of renting. Often X + R > IX, making taking a loan a better choice than saving up. Conclusion \"\"The general advice\"\" is a good heuristic for most common human payments; we have relatively long life spans compared to most common payments, and the opportunity cost of not having most goods is relatively low. However, certain things have a high opportunity cost; if you can't talk to HR, you can't apply for jobs (phone), if you can't get to work, you can't eat (car), and if you have no where to live, it's hard to keep a job (house). For things with high opportunity costs, the interest payments are more than worth it.\"",
"title": ""
},
{
"docid": "ce932128386e9ac1e3bdbe0c347a0ad7",
"text": "If annualized rate of return is what you are looking for, using a tool would make it a lot easier. In the post I've also explained how to use the spreadsheet. Hope this helps.",
"title": ""
},
{
"docid": "c517ef7ba52c41d23492de2239036a19",
"text": "Investing in property hoping that it will gain value is usually foolish; real estate increases about 3% a year in the long run. Investing in property to rent is labor-intensive; you have to deal with tenants, and also have to take care of repairs. It's essentially getting a second job. I don't know what the word pension implies in Europe; in America, it's an employer-funded retirement plan separate from personally funded retirement. I'd invest in personally funded retirement well before buying real estate to rent, and diversify my money in that retirement plan widely if I was within 10-20 years of retirement.",
"title": ""
},
{
"docid": "50150ac90b2de391daae4d1c1855ce12",
"text": "\"A home is an investment, but the value it returns isn't primarily financial ($$) - they are consumption (a place to live). This gives it different characteristics than other investments (e.g. increasing the amount invested by buying a more expensive home doesn't do much to assist your financial well-being and future income, and isn't necessarily the \"\"responsible\"\" thing to do). You may get some capital gains, typically in line with inflation, sometimes less, sometimes more, but those aren't the most reliable, and it's difficult to realize them (it involves selling your house and moving). Its main value as a hedge is a hedge against rising rent. But if you're still working full-time and can expect cost-of-living increases, that hedge may not be as valuable to you as it would to, say, someone living on a fixed income. But as for treating it as a \"\"low-risk investment\"\"? That's very problematic. Real low-risk investments are things like government bonds, where you can't lose principal. Unless you're going to live into your house until the day you die, the real estate crash should have disabused you of any notion that housing values never go down. Rather, your house is a single, indivisible, undiversified, illiquid investment. Imagine, if you will, going to your brokerage and borrowing a hundred thousand dollars or more on margin to invest in a single real estate investment trust... then take away whatever diversification the trust offered by holding multiple properties. Also, you can't sell any of it until you move away, and the transaction fee will take something like 3%. Still sound \"\"safe\"\"? Moreover, it's exactly the wrong kind of risk. Your house's value is tied to what people are willing to pay for housing where your house is, which is usually subject to the whims of the local economy. This means that in a recession and housing bust in the local economy, you can lose your job and have your mortgage go underwater at the same time. It totally makes sense to treat your house as an investment to some extent, and it makes double sense for a financial adviser to consider it as part of your investment recommendations. \"\"Safety\"\" is not the way you should be thinking of it, though.\"",
"title": ""
},
{
"docid": "104851bebfcd64861002248134924b53",
"text": "The finance sector is comprised of such enterprises as banks, investment funds, insurance companies and real estate. It is traditionally contrasted with what has been called the 'real economy' because funds created and utilized in this sector produce neither goods, services or fixed capital. The unproductive nature of transactions can easily be seen in such things as real estate. When a company undertakes to build a house or whatever its input goes directly to the labor and goods necessary for such a project. At its worst the financial sector mobilizes funds not just for production but for simple acquisition. Should a company raise the funds to buy an already existing building or the mortgage on same quite obviously nothing is produced. Same building on day one as when it was owned by another. That, of course, is an extreme example as are corporate takeovers via private equity. In that case the efforts of the financial sector are not just non-productive but are often in fact ''anti-productive'' as they destroy or prevent the use of real factors of production. This 'anti-productive' action was demonstrated on a massive global scale during the last financial crisis. The basically parasitic nature of the financial sector isn't always so blatant. There are some that argue that its 'services' can be valuable to the real economy. Perhaps, but that has to be determined on a case by case examination **and** while keeping the idea ''is there a better way to do this** in one's mind.",
"title": ""
}
] |
fiqa
|
7c9fd2412551a474223c579549055bb2
|
Apartment lease renewal - is this rate increase normal?
|
[
{
"docid": "a2b34353f037de897b420fd6ac257afe",
"text": "\"Should you negotiate? Yes, what harm can it possibly do? The landlord is unlikely to come back and say \"\"Because you tried to negotiate, I'm putting the rent up by 10% instead.\"\", or to evict a paying tenant merely because they tried to negotiate. Is the proposed rent increase \"\"normal\"\"? Yes. Landlords will generally try to get as high a rent as they can.\"",
"title": ""
},
{
"docid": "161d32c11caf8d199a69bc1f6f0a40e0",
"text": "There could be a number of reasons for a rent increase. The only information I can offer is how I calculate what rent I will charge. The minimum I would ever charge per unit (Mortgage payment + Water) / Number of units This number is the minimum because it's what I need to keep afloat. Keep in mind these are ballpark numbers The target rent ((Mortgage payment + Water) / Number of units)*1.60 I mark up the price 60% for a few reasons. First, the building needs a repair budget. That money has to come from somewhere. Second, I want to put away for my next acquisition and third I want to make a profit. These get me close to my rental price but ultimately it depends on your location and the comparables in the area. If my target rent is 600 a month but the neighbors are getting 700-800 for the same exact unit I might ask more. It also depends on the types of units. Some of my buildings, all of the units are identical. Other buildings half of the units are bigger than the other half so clearly I wouldn't charge a equal amount for them. Ultimately you have to remember we're not in the game to lose money. I know what my renters are going to pay before I even put an offer in on a building because that's how I stay in business. It might go up over the years but it will always outpace my expenses for that property.",
"title": ""
},
{
"docid": "c548c8f369622eaa6e0093a5f0b5d4ea",
"text": "\"There has been almost no inflation during 2014-2015. do you mean rental price inflation or overall inflation? Housing price and by extension rental price inflation is usually much higher than the \"\"basket of goods\"\" CPI or RPI numbers. The low levels of these two indicators are mostly caused by technology, oil and food price deflation (at least in the US, UK, and Europe) outweighing other inflation. My slightly biased (I've just moved to a new rental property) and entirely London-centric empirical evidence suggests that 5% is quite a low figure for house price inflation and therefore also rental inflation. Your landlord will also try to get as much for the property as he can so look around for similar properties and work out what a market rate might be (within tolerances of course) and negotiate based on that. For the new asked price I could get a similar apartment in similar condos with gym and pool (this one doesn't have anything) or in a way better area (closer to supermarkets, restaurants, etc). suggests that you have already started on this and that the landlord is trying to artificially inflate rents. If you can afford the extra 5% and these similar but better appointed places are at that price why not move? It sounds like the reason that you are looking to stay on in this apartment is either familiarity or loyalty to the landlord so it may be time to benefit from a move.\"",
"title": ""
},
{
"docid": "21e37b58efe357aa7b863ccf54074853",
"text": "Yes, automatic rate increases are typical in my experience (and I think it's very greedy, when it's based on nothing except that your lease is up for renewal, which is the situation you are describing). Yes, you should negotiate. I've had success going to the apartment manager and having this conversation: Make these points: Conclude: I am not open to a rate increase, though I will sign a renewal at the same rate I am paying now. This conversation makes me very uncomfortable, but I try not to show it. I was able to negotiate a lease renewal at the same rate this way (in a large complex in Sacramento, CA). If you are talking to a manager and not an owner, they will probably have to delay responding until they can check with the owner. The key really is that they want to keep units rented, especially when units are staying empty. Empty units are lost income for the owner. It is the other empty units that are staying empty that are the huge point in your favor.",
"title": ""
},
{
"docid": "722fd08d51966a10d0d4d086565ddc80",
"text": "What happened in the past, the rent you paid last year, is in the past. You shouldn't be concerned with the percentage increase, but with whether you want that apartment at the new rent for the coming year. If your rent had been half what it was last year and the new proposal were to double it, you would be outraged at the doubling, but really you got a steal last year. Going forward, you have three options. You can accept the new rent, you can decline it and move, or you can try to negotiate a better rate. It sounds like the landlord is hoping you will find the hassle of moving enough to accept the new rent. If you do negotiate, you should know what your preferred alternative is, which you should use to set your walkaway point. If you make a counterproposal, it is often useful to show what a comparable apartment is renting for to justify the rent you suggest.",
"title": ""
},
{
"docid": "27ea2555942f63ee9fc3405229350cb3",
"text": "\"If it is true that for the same price, you could get a better place (or that for a lower price you could get an equivalent place), you should do some soul-searching to decide what monetary value you would place on the hassle of moving to such an alternative. You should then negotiate aggressively for a rent that is no more than the rent of the alternative place plus your hassle costs, and if the landlord does not meet your price, you should refuse to renew your lease, and instead move out to an alternative. (Of course, you might also want to double-check your research to ensure you really can get such a good alternative, and that your new landlords won't try a similar bait-and-switch and force you to move again in a year.) Barring local ordinances such as rent control laws, I don't think it's worth it to worry about whether the increase is \"\"normal\"\". If you can get a better deal somewhere else, then what your landlords are asking is too much. If you have a good relationship with them on a personal level you may be able to tell them this in a nice way and thus get them to make a more reasonable offer. Otherwise, the landlords will learn that their expectations are unreasonable when all their tenants move out to cheaper places.\"",
"title": ""
},
{
"docid": "856face9300fed062ca0ae3aed648da1",
"text": "I think people are missing the most obvious thing. The yearly rate increases are just part of the landlord schtick and it is good business for them. My grandmother owned several large apartment complexes. She would raise rates for any resident that had been there between 1-5 years by 5-7% a year. Even when she had vacancies and property values didn't go up. For the following reasons: So yes it is not only normal but just part of the business. If there are better apartments for less money I suggest you move there. Soon those other apartments will even out and if they are better they will be much more. So if you see a gap take advantage of it. If you would rather stay, then simply say you will not pay the increase. There is no use arguing about why. The landlord will either be OK with it or say no. Probably the biggest factors include whether you will tell other tenants (or their perception if you would) and how good of a tenant/risk they feel you are.",
"title": ""
},
{
"docid": "7b34c71355beffb1257541b77c01a297",
"text": "Absolutely yes. Just because a lease provides an option for renewal does not mean that a tenant cannot try to re-negotiate for better terms. You should always negotiate the rent. And start this conversation as soon as possible. Offer to pay three months’ rent in advance (of course, if you have enough means).",
"title": ""
}
] |
[
{
"docid": "5143aeb0b0a00bf3eeba177754bca3aa",
"text": "\"Without the specifics of the contract, as well as the specifics of the country/state/city you're moving to, it's hard to say what's legal. But this also isn't law.se, so I'll answer this from the point of view of personal finance, and what you can/should do as next steps. Whenever paying an application fee or a deposit, you need to ensure that you have in writing exactly what you're applying for or putting a deposit in for. Whether this is an apartment, a car, or a loan, before any money changes hands, you need to get in writing exactly what you're putting that money to. So for a car, you'd want to have the complete specifications - make, model, year, color, extra packages, and any relevant loan information if applicable. You wouldn't just hand a dealer $2000 for \"\"a Toyota Camry\"\", you'd make sure it was specified which one, in writing, as well as the total you're expecting to pay. Same for an apartment: you should have, in writing (email is fine) the specific unit you are putting a deposit for, and the specific rate you'll be paying, and the length of time the lease is for. This is to avoid a common tactic: bait and switch, which is what it looks like you've run into. A company puts forth a \"\"nice\"\" model, everything looks good, you get far enough in that it seems like you're locked in - and then it turns out you're really getting a less nice model that's not as ideal as whatever you signed up for. Now if you want to get what you originally signed up for you need to pay extra - presumably \"\"something was wrong in the original ad\"\", or something like that. And all you can hear in the background is Darth Vader... \"\"I am altering the deal. Pray I don't alter it any further.\"\" So; what do you do when you've been bait-and-switched? The best thing to do is typically to walk away. Try to get your application fee back; you may or may not be able to, but it's worth a shot, and even if you cannot, walk away anyway. Someone who is going to bait-and-switch on you is probably not going to be a good landlord; my guess is that rent is going to keep going up beyond the level of the market, and you probably can kiss your security deposit goodbye. Second, if walking away isn't practical for whatever reason, you can find out what the local laws are. Some locations (though very few, sadly) require advertised prices to be accurate; particularly the fact that they re-advertised the unit again for the same rate suggests they are falling afoul of that. You can ask around, search the internet, or best yet talk to a lawyer who specializes in this sort of thing; some of them will be willing to at least answer a few questions for free (hoping to score your business for an easy, profitable lawsuit). Be aware that it's not exactly a good situation to be in, to be suing your landlord; second only to suing your employer, in my opinion, in terms of bad things to do while hoping to continue the relationship. Find an alternative as soon as you can if you go this route. In the future, pay a lot of attention to detail when making application fees. Often the application fee is needed before you get into too much detail - but pick a location that has reasonable application fees, and no extras. For example, in my area, it's typical to pay a $25 application fee, nonrefundable, to do the credit check and background check, and a refundable $100-$200 deposit to hold the unit while doing that; a place that asks for a non-refundable deposit is somewhere I'd simply not apply at all.\"",
"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": "07c4b462447a984829ccd4f74b9b84a2",
"text": "\"Everyone buys different kinds of goods. For example I don't smoke tobacco so I'm not affected by increased tobacco prices. I also don't have a car so I'm not affected by the reduced oil prices either. But my landlord increased the monthly fee of the apartment so my cost of living per month suddenly increased more than 10% relative to the same month a year before. This is well known, also by the statistical offices. As you say, the niveau of the rent is not only time- but also location specific, so there are separate rent indices (German: Mietspiegel). But also for the general consumer price indices at least in my country (Germany) statistics are kept for different categories of things as well. So, the German Federal Statistical Office (Statistisches Bundesamt) not only publishes \"\"the\"\" consumer price index for the standard consumer basket, but also consumer price indices for oil, gas, rents, food, public transport, ... Nowadays, they even have a web site where you can put in your personal weighting for these topics and look at \"\"your\"\" inflation: https://www.destatis.de/DE/Service/InteraktiveAnwendungen/InflationsrechnerSVG.svg Maybe something similar is available for your country?\"",
"title": ""
},
{
"docid": "316aaea6c0c834ddb9550880f0674583",
"text": "In any case, for sure, the wages went up... a lot... and most likely wage increases are most of the 30% increase in costs. As for consumers paying more, maybe they will get better quality, maybe they will be able to afford it now with extra income and maybe they will not raise the prices as they already have huge margins, people have choices and the real estate prices is only based on relative price of neighboring houses, used or new.",
"title": ""
},
{
"docid": "84b029911c2abe552de6f08d3481d437",
"text": "Funny all the landlord forums are all giddy about raising rents to eat up that extra income, but Im sure you know better being all what is it you do again arm chair economist? https://www.forbes.com/sites/modeledbehavior/2015/08/23/the-minimum-wage-in-cities/#11e65f016153 http://www.latimes.com/opinion/opinion-la/la-ol-minimum-wage-housing-20150327-story.html http://www.phillyvoice.com/does-raising-minimum-wage-raise-rents/ https://www.ezlandlordforms.com/articles/news/556/how-does-raising-the-minimum-wage-affect-rents/",
"title": ""
},
{
"docid": "b3e94cc42dcf1f9e62f72f804069018e",
"text": "Seems like a bad deal to me. But before I get to that, a couple of points on your expenses: Onward. You value a property by calculating its CAP rate. This is what you're calculating, except it does NOT include interest like you did -- that's a loan to you, and has no bearing on whether the unit itself is a good investment. It also includes estimations of variable expenses like maintenance and lack of income from vacancies. People argue vociferously on exactly how much to calculate for those. Maintenance will vary by age of the building and how damaging your tenets are. Vacancies vary based on how desirable the location is, how well you've done the maintenance, and how low the rent is. Doing the math based on your numbers, with just the fixed expenses: 8400 rent - 2400 management fee - 100 insurance = 5900/year income. 5900/150000 = 0.0393 = 3.9% CAP rate. And that's not even counting the variable expenses yet! So, what's a good CAP rate? Generally, 10% CAP rate is a good deal, and higher is a great deal. Below that you have to start to get cautious. Some places are worth a lower rate, for instance when the property is new and in a good location. You can do 8% on these. Below 6% CAP rate is usually a really bad investment. So, unless you're confident you can at least double the rent right off the bat, this is a terrible deal. Another way to think about it You're looking to buy with your finances in just about the best position possible -- a huge down payment and really low interest. Plus you haven't accounted for maintenance, taxes (if any), and vacancies. And still you'd make only a measly 1.2% profit? Would you buy a bond that only pays out 1.2%? No? What about a bond that only pays 1.2%, but also from time to time can force YOU to pay into IT a much larger amount every month?",
"title": ""
},
{
"docid": "b91d9fa21e5371a5211d87591ab49f95",
"text": "\"Average rent rates will typically rise and fall, and are market-dependent just like real estate. In the short term, a collapse in housing like the one we saw in 2008 can induce a spike in rental costs as people walk away or get foreclosed on, and move back into apartments. That then tends to self-adjust, as the people who had been in the apartments find a deal on a foreclosed house and move out. However, one thing I've seen to be near-constant in the apartment business is that a landlord will offer you a deal to get in, then increase the rent on you from year to year until you get fed up and move. This is a big reason I didn't have the same address for two years in a row until I bought my house. The landlord is basically betting that you won't want to deal with the hassle of moving, and so will pay the higher rent rate, even if, when you do the math, it makes more sense to move even to maintain the same rent rate. Eventually though, you do get fed up, look around, find the next good deal, and move, \"\"resetting\"\" your rent rate. I have never, not once in my life, seen or heard of any landlord offering a drop in rent as a \"\"loyalty\"\" move to keep you from going somewhere else. It's considered part of the game; retailers will price match, but most service providers (landlords, but also utility providers) expect a large amount of \"\"churn\"\" in their customer base as people shop around. It averages out.\"",
"title": ""
},
{
"docid": "f7aef2095e5f82842bc4a94843166f5c",
"text": "IMO this means one of two things: the bank thinks that 3 months from now, the interest rates it plans to offer will be lower than 1%; after 180 days, it will go up again. the bank needs more short-term cash than mid-term cash right now, so it offers you a better deal. In either case, it is unlikely that your 90 day intrest rate will be available 90 days from now, and most likely it will be below 1% unless the bank yet again needs short-term cash from its customers. With those proposed rates, I would go for half in 90 days and half in 270 days. Disclaimer: am no economist, just spent a lot of time the past year fretting over the same kind of questions. Feel free to tell me where I'm wrong if you think I am.",
"title": ""
},
{
"docid": "5462c5440487993203311af78d85f3d5",
"text": "\"We change it every so often to reduce fraud. If you're absolutely sure you didn't just send money to a scammer impersonating a landlord, this has nothing to do with fraud-- they're playing a game with you. By changing the account number frequently, it makes it more likely you make a mistake in entering the payment account. When they come back to you a few days past due saying \"\"we never received your rent,\"\" you'll eventually realize it got sent to the wrong account. Now you owe them late fees, and there's really nothing you can do about it-- you did not in fact pay them on time; you sent it to the wrong account! It's an easy way for them to collect an additional few thousand dollars a year. Anytime a small business or landlord says they have to do something \"\"weird\"\" to reduce fraud, chances are it's a pretense to you getting hosed in some way.\"",
"title": ""
},
{
"docid": "309c10f2a6884e26bd4a929c0c333744",
"text": "\"Things I would specifically draw your attention to: the contract typically allows for an \"\"option\"\" to purchase; it does not typically compel purchase, although this is seen the purchase price is negotiated before anything gets signed the option to buy is typically available to the renter for the period of the lease contract (ie., if it's a 12 month contract the renter can opt to buy at any time in that 12 months) the amount of rent paid over time that will be applied to the purchase price is negotiated up-front before anything gets signed rent is paid at a slight premium (as Joe notes, if the rent should be $1000 per month, expect to pay $1200 per month) if the renter walks away they walk away empty handed; they do not get back the premium Having said all that - it's a contract negotiated between renter and seller and all of this is negotiable. See also, ehow for a good overview.\"",
"title": ""
},
{
"docid": "cb6f6bc4fa9e00b4ee5c1c7be3883648",
"text": "\"Thanks to the joint lease, I guess you're still contractually on the hook for the remainder of the rent. Did the apartment owners actually contact you before sending the debt collectors after you? As you do technically owe the money, they can sue you if you don't pay, so it's not \"\"just\"\" on your credit report. That said, if they haven't contacted you before sending the goons in, I'd try to negotiate the collection fee - 40% sounds a tad excessive to me.\"",
"title": ""
},
{
"docid": "4052d02b9a2b396dffce36705c050f28",
"text": "\"Basically, you have purchased 25% of the condo for $40,000, and your parents bought 75% of the condo for another $115,000. We imagine for a moment that it wasn't you who lived in the condo, but some unrelated person paying rent. You are paying $7,500 a year for tax and fees, plus $6,000 a year, so there is $13,500 leaving your wallet. If $15,500 a year was a reasonable rent, then the tax and fee would be paid out of that, there would be $8,000 left, of which you would get 25% = $2,000. If you were officially \"\"renting\"\" it, you would pay $15,500 a year, and get $2,000 back, again $13,500 leaving your wallet. So you are in exact the same situation financially as you would be if you paid $15,500 rent. Question: Is $15,500 a year or $1,290 a month an appropriate rent for your condo? If a neighbour is renting his condo, is he or she paying $1,290 or more or less? Could you rent the same place for the same money? If $1,290 is the correct rent then you are fine. If the rent should be lower, then you are overpaying. If the rent should be higher, then you are making money. Keep in mind that you will also be winning if rents go up in the future.\"",
"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": "c5d854e67e9fba192599f0a95bde7d7e",
"text": "It's so that your total mortgage payment stays the same every month. Obviously, the interest due each month decreases over time, as part of the principal is paid off each month, and so if the proportion of interest and principal repayments were to stay the same then your first payment would be very large and your last payment would be almost nothing.",
"title": ""
},
{
"docid": "5ce9dc303f7b78f4535fe5dc72d28a7d",
"text": "It is a fool's errand to attribute abnormal option volume or volatility to any meaningful move in the stock. One side of the chain is frequently more expensive than the other. The relationship between historical volatility and implied volatility is dubious at best, and also a big area of study.",
"title": ""
}
] |
fiqa
|
a926ca5bc5e62bfdb175e8d713038ba2
|
Why would I choose a 40-Year depreciation instead of the standard 27.5-Year?
|
[
{
"docid": "659a7dbe5b9c30df88486020468b4540",
"text": "There are specific cases where you are required to use ADS: Required use of ADS. You must use ADS for the following property. Listed property used 50% or less in a qualified business use. See chapter 5 for information on listed property. Any tangible property used predominantly outside the United States during the year. Any tax-exempt use property. Any tax-exempt bond-financed property. All property used predominantly in a farming business and placed in service in any tax year during which an election not to apply the uniform capitalization rules to certain farming costs is in effect. Any property imported from a foreign country for which an Executive Order is in effect because the country maintains trade restrictions or engages in other discriminatory acts. See publication 946. If none of those apply to your property - you may elect ADS. Why would you elect ADS when you're not required to use it? If you can't think of a reason, then don't elect it. For most people the shorter the depreciation period - the more they can deduct (or accumulate in passive losses) each year, and that is usually the desirable case. If you plan on selling in 10 years, keep in mind the depreciation recapture and consider whether the passive losses (offsetting regular income) are worth the extra tax in this case.",
"title": ""
}
] |
[
{
"docid": "a1c94491cc27aa9195b884d40836d527",
"text": "\"You've laid out a strategy for deciding that the top of the market has passed and then realizing some gains before the market drops too far. Regardless of whether this strategy is good at accomplishing its goal, it cannot by itself maximize your long-term profits unless you have a similar strategy for deciding that the bottom of the market has passed. Even if you sell at the perfect time at the top of the market, you can still lose lots of money by buying at the wrong time at the bottom. People have been trying to time the market like this for centuries, and on average it doesn't work out all that much better than just plopping some money into the market each week and letting it sit there for 40 years. So the real question is: what is your investment time horizon? If you need your money a year from now, well then you shouldn't be in the stock market in the first place. But if you have to have it in the market, then your plan sounds like a good one to protect yourself from losses. If you don't need your money until 20 years from now, though, then every time you get in and out of the market you're risking sacrificing all your previous \"\"smart\"\" gains with one mistimed trade. Sure, just leaving your money in the market can be psychologically taxing (cf. 2008-2009), but I guarantee that (a) you'll eventually make it all back (cf. 2010-2014) and (b) you won't \"\"miss the top\"\" or \"\"miss the bottom\"\", since you're not doing any trading.\"",
"title": ""
},
{
"docid": "6ea3dd82fb6abfa05b79a0792d10c71f",
"text": "Your math is not wrong. That's why banks want these points. They did the same math too. There may be some immediate tax advantages for points though, in that case you can get return of your tax rate for the year of the points (which may make it worth it, if you don't want to keep the mortgage for more than, say, 10 years). Check here for details.",
"title": ""
},
{
"docid": "3e9ced915f7fb7931adc0b6e4a27c9f3",
"text": "If you're looking for some formula, I don't think one exists. People talk about this all the time and give conflicting advice. If there was a proven-accurate formula, they wouldn't be debating it. There are basically 3 reasons to do a home improvement project: (a) Correct a problem so that you prevent on-going damage to your home. For example, have a leaking roof patched or replaced, or exterminate termites. Such a job is worthwhile if the cost of fixing the problem is less than the cost of future damage. In the case of my termite and leaking roof examples, this is almost always worth doing. Lesser maintenance problems might be more debatable. Similarly, some improvements may reduce expenses. Like replacing an old furnace with a newer model may cut your heating bills. Here the question is: how long does it take to repay the investment, compared to other things you might invest your money in. Just to make up numbers: Suppose you find that a new furnace will save you $500 per year. If the new furnace costs $2000, then it will take 4 years to pay for itself. I'd consider that a good investment. If that same $2000 furnace will only cut your heating bills by $100 per year, then it will take 20 years to pay for itself. You'd probably be better off putting the $2000 into the stock market and using the gains to help pay your heating bill. (b) Increase the resale value of your home. If you are paying someone else to do the work, the harsh reality here is: Almost no job will increase the resale value by more than the cost of getting the job done. I've seen many articles over the years citing studies on this. I think most conclude that kitchen remodeling comes closet to paying for itself, and bathrooms come next. New windows are also up there. I don't have studies to prove this, but my guesses would be: Replacing something that is basically nice with a different style will rarely pay for itself. Like, replacing oak cabinets with cherry cabinets. Replacing something that is in terrible shape with something decent is more likely to pay back than replacing something decent with something beautiful. Like if you have an old iron bathtub that's rusting and falling apart, replacing it may pay off. If you have a 5-year-old bathtub that's in good shape but is not premium, top of the line, replacing it with a premium bathtub will probably do very little for resale value. If you can do a lot of the work yourself, the story changes. Many home improvement jobs don't require a lot of materials, but do require a lot of work. If you do the labor, you can often get the job done very cheaply, and it's likely that the increase in resale value will be more than what you spend. For example, most of my house has hardwood floors. Lots of people like pretty hardwood floors. I just restained the floors in two rooms. It cost me, I don't know, maybe $20 or $30 for stain and some brushes. I'm sure if I tried to sell the house tomorrow I'd get my twenty bucks back in higher sale value. Realtors often advise sellers to paint. Again, if you do it yourself, the cost of paint may be a hundred dollars, and it can increase the sale price of the house by thousands. Of course if you do the work yourself, you have to consider the value of your time. (c) To make your home more pleasant to live in. This is totally subjective. You have to make the decision on the same basis that you decide whether anything that is not essential to survival is worth buying. To some people, a bottle of fancy imported wine is worth thousands, even millions, of dollars. Others can't tell the difference between a $10,000 wine and a $15 wine. The thing to ask yourself is, How important is this home improvement to me, compared to other things I could do with the money? Like, suppose you're considering spending $20,000 remodeling your kitchen. What else could you do with $20,000? You could buy a car, go on an elaborate vacation, eat out several times a week for years, retire a little earlier, etc. No one can tell you how much something is worth to you. Any given home improvement may involve a combination of these factors. Like say you're considering that $20,000 kitchen remodeling. Say you somehow find out that this will increase the resale value by $15,000. If the only reason you were considering it was to increase resale value, then it's not worth it -- you'd lose $5,000. But if you also want the nicer kitchen, then it is fair to say, Okay, it will cost me $20,000, but ultimately I'll get $15,000 of that back. So in the long run it will only cost me $5,000. Is having a nicer kitchen worth $5,000 to me? Note, by the way, that resale value only matters if and when you sell the house. If you expect to stay in this house for 20 years, any improvements done are VERY long-term investments. If you live in it until you die, the resale value may matter to your heirs.",
"title": ""
},
{
"docid": "fc239a35be77409464db2aaa455acd86",
"text": "You mentioned 15-20 years in your comment on mhoran_psprep's response. This is the most important factor to consider in the points vs. rate question. With a horizon that long it sounds like the points are probably a better option for you. There is a neat comparison tool at The Mortgage Professor's website that may help you build your spreadsheet or simply check the numbers you are getting.",
"title": ""
},
{
"docid": "18b79cd0bd218a253049cfab75afeb3a",
"text": "There is an opportunity cost of your future insurance needs, Here, the savings vs risks ratio is difficult to figure out. Hence it is always worth that extra cost to buy the larger and longer policy if you can afford it. Basically if you can afford it today, it will cost peanuts after 20 years.",
"title": ""
},
{
"docid": "1a55e6ac7a7a6ff0ea4a5e2d951c59ee",
"text": "\"A primary residence can be an admirable investment/retirement vehicle for a number of reasons. The tax savings on the mortgage are negligible compared to these. A $200,000 mortgage might result in a $2000 annual savings on your taxes -- but a $350,000 house might easily appreciate $20,000 (tax free!) in a good year. Some reasons to not buy a larger house. Getting into or out of a house is tremendously expensive and inconvenient. It can make some life-changes (including retirement) more difficult. There is no way to \"\"diversify\"\" a primary residence. You have one investment and you are a hostage to its fortunes. The shopping center down the street goes defunct and its ruins becomes a magnet for criminals and derelicts? Your next-door neighbor is a lunatic or a pyromaniac? A big hurricane hits your county? Ha-ha, now you're screwed. As they say in the Army, BOHICA: bend over, here it comes again. Even if nothing bad happens, you are paying to \"\"enjoy\"\" a bigger house whether you enjoy it or not. Eating spaghetti from paper plates, sitting on the floor of your enormous, empty dining room, may be romantic when you're 27. When you're 57, it may be considerably less fun. Speaking for myself, both my salary and my investment income have varied wildly, and often discouragingly, over my life, but my habit of buying and renovating dilapidated homes in chic neighborhoods has brought me six figures a year, year after year after year. tl;dr the mortgage-interest deduction is the smallest of many reasons to invest in residential real-estate, but there are good reasons not to.\"",
"title": ""
},
{
"docid": "e134c8e2dc970331adafc60acda2ed44",
"text": "\"Welcome to the 'what should otherwise be a simple choice turns into a huge analysis' debate. If the choice were actually simple, we've have one 'golden answer' here and close others as duplicate. But, new questions continue to bring up different scenarios that impact the choice. 4 years ago, I wrote an article in which I discussed The Density of Your IRA. In that article, I acknowledge that, with no other tax favored savings, you can pack more value into the Roth. In hindsight, I failed to add some key points. First, let's go back to what I'd describe as my main thesis: A retired couple hits the top of the 15% bracket with an income of $96,700. (I include just the standard deduction and exemptions.) The tax on this gross sum is $10,452.50 for an 'average' rate of 10.8%. The tax, paid or avoided, upon deposit, is one's marginal rate. But, at retirement, the withdrawals first go through the zero bracket (i.e. the STD deduction and exemptions), then 10%, then 15%. The above is the simplest snapshot. I am retired, and our return this year included Sch A, itemized deductions. Property tax, mort interest, insurance, donations added up fast, and from a gross income (IRA withdrawal) well into the 25% bracket, the effective/average rate was reported as 7.3%. If we had saved in Roth accounts, it would have been subject to 25%. I'd suggest that it's this phenomenon, the \"\"save at marginal 25%, but withdraw at average sub-11%\"\" effect that account for much of the resulting tax savings that the IRA provides. The way you are asking this, you've been focusing on one aspect, I believe. The 'density' issue. That assumes the investor has no 401(k) option. If I were building a spreadsheet to address this, I'd be sure to consider the fact that in a taxable account, long term gains are taxed at 15% for higher earners (I take the liberty to ignore that wealthier taxpayers will pay a maximum 20% tax on long-term capital gains. This higher rate applies when your adjusted gross income falls into the top 39.6% tax bracket.) And those in the 10 or 15% bracket pay 0%. With median household income at $56K in 2016, and the 15% bracket top at $76K, this suggests that most people (gov data shows $75K is 80th percentile) have an effective unlimited Roth. So long as they invest in a way that avoids short term gains, they can rebalance often enough to realize LT gains and pay zero tax. It's likely the $80K+ earner does have access to a 401(k) or other higher deposit account. If they don't, I'd still favor pretax IRAs, with $11K for the couple still 10% or so of their earnings. It would be a shame to lose that zero bracket of that first $20K withdrawal at retirement. Again working backwards, the $78K withdrawal would take nearly $2M in pretax savings to generate. All in today's dollars.\"",
"title": ""
},
{
"docid": "92ddf93cca4d189ba8ce70dfe60f64a3",
"text": "There's several different trade-offs wrapped up in your question. In general, refinancing a mortgage to a lower interest rate makes sense if you are certain you'll be living in the house for N years. N depends on your closing costs and points. Basically you need to calculate the break-even point for when the savings from the reduced interest rate exceeds the cost of the re-fi. When I refinanced, the broker did the calculations for me for a range of options, maybe yours could as well. The trade off in selecting 30-year vs. 15-year is between monthly payment and total outlay. A 15-year mortgage will have a higher monthly payment, but the total money that is paid out the bank (rather than to your equity) will be less. Using the Heloc to do the down payment seems sketchy; plus then you have two loan payments you're making each month. Why not keep it simple and look for a $250k loan with 5% down? Presumably with the current mortgage you already put in a good down payment, and have built some equity up.",
"title": ""
},
{
"docid": "5f4bc1e354155fce7135692aa703dd66",
"text": "The first method is the correct one. You bought an asset worth of $1000 and you put it on your depreciation schedule. What it means is that you get to write off the $1000 over a certain period of time (and not at once, as you do with expenses). But the value you're writing off is the $1000 regardless of how much you've written off already. Assume you depreciate in straight line over 5 years (that's how you depreciate computers for Federal tax purposes, most states follow). For the simplicity of the calculation, assume you depreciate each year as a whole year (no mid-year/mid-quarter conventions). The calculation is like this: If you sell the computer - the proceeds above the adjusted basis amount are taxed as depreciation recapture up to the accumulated depreciation amount, and as capital gains above that. So in your case - book value is the adjusted basis at the end of the year (EOY), depreciation this year is the amount you depreciate in the year in question out of the total of the original cost, and the accumulated depreciation is the total depreciation including the current year. In Maryland they do not allow depreciating to $0, but rather down to 25% of the original cost, so if you bought a $1000 computer - you depreciate until your adjusted basis is $250. Depreciation rates are described here (page 5). For computers (except for large mainframes) you get 30% depreciation, with the last year probably a bit less due to the $250 adjusted basis limitation.",
"title": ""
},
{
"docid": "4da246c3a095b426a18e8407d3ed5a39",
"text": "The rev rec rule allows companies to fully restate transition years, but doesn't actually require it. It allows them to just do a one time adjustment to retained earning instead, which is what most companies are doing/will do. Lots of huge companies have adopted earlier than they had to, so they clearly saw some benefit in doing so. I think some are absolutely considering the benefits of a superficial bump in the transition year. Obviously not a huge shift in long term earnings though.",
"title": ""
},
{
"docid": "4f6ed8bf407fec3f473e98f309f972ee",
"text": "The breakeven amount isn't at 8 years. You calculated how many years of paying $500 it would take to break even with one year of paying $4000. 8 x 10 years = 80 years. So by paying $500/year it will take you 80 years to have spent the same amount ($40000 total) as you did in 10 years. At this point it may seem obvious what the better choice is. Consider where you'll be after 10 years: In scenario #1 you've spent $5000 ($500*10) and have to continue spending $500/year indefinitely. In scenario #2 you've spent $40000 ($4000*10) and don't have to pay any more, but you currently have $35000 ($40000 - $5000) less than you did in scenario #1. If you had stayed with scenario #1 you could invest that $35000 at a measly 1.43% annual return and cover the $500 payments indefinitely without ever dipping into your remaining $35000. Most likely over the long term you'll do better than 1.43% per year and come out far ahead.",
"title": ""
},
{
"docid": "c3fc3676bcfce9f6180fd4bcae1ef59b",
"text": "Contributions are post-tax, so there's no direct tax benefit to choosing a year. I just made a 2010 contribution today, and the institution's form explicitly asks me if I want it on 2010 or 2011. The primary advantage of backdating like this is being able to contribute 5k more over your lifetime than otherwise possible, under the timing constraints. While there may be a year in the future which you don't contribute the max, contributing now lets you build up earnings tax free. For '10 vs '11, you're probably holding cash so it's not a big deal, but over five years is a long time to hold cash or invest with tax penalty.",
"title": ""
},
{
"docid": "d4349c26f0d1b7638e5d334c9d495060",
"text": "\"Buy term and invest the difference is certainly the standard recommendation, and for good reason. When you start looking at some sample numbers the \"\"buy term and invest the difference\"\" strategy starts to look very good. Here are the rates I found (27 yr old in Texas with good health, non-smoker, etc): $200k term life: $21/month $200k whole life: $177/month If you were to invest the difference in a retirement account for 40 years, assuming a 7% rate of return (many retirement planning estimates use 10%) you would have $411,859 at the end of that period. (If you use 10% that figure jumps to over $994k.) Needless to say, $400k in a retirement account is better than a $200k death benefit. Especially since you can't get the death benefit AND the cash value. Certainly one big difficulty is making sure you invest that difference. The best way to handle that is to set up a direct deposit that goes straight from your paycheck to the retirement account before it even touches your bank account. The next best thing would be an automatic transfer from your bank account. You may wonder 'What if I can no longer afford to invest that money?' First off, take a second and third look at your finances before you start eating into that. But if financial crisis comes and you truly can't afford to fund your own life insurance / retirement account then perhaps it will be a good thing you're not locked into a life insurance policy that forces you to pay those premiums. That extra freedom is another benefit of the \"\"buy term and invest the difference\"\" strategy. It is great that you are asking this question now while you are young. Because it is much easier to put this strategy into play now while you are young. As far as using a cash value policy to help diversify your portfolio: I am no expert in how to allocate long term investments after maxing out my IRA and 401k. (My IRA maxes out at $5k/year, another $5k for my wife's, another $16.5k for my 401k.) Before I maxed that out I would have my house paid for and kid's education saved for. And by then it would make sense to pay a financial adviser to help you manage all those investments. They would be the one to ask about using a cash value policy similar to @lux lux's description. I believe you should NEVER PUT YOUR MONEY INTO SOMETHING YOU DON'T UNDERSTAND. Cash value policies are complex and I don't fully understand them. I should add that of course my calculations are subject to the standard disclaimer that those investment returns aren't guaranteed. As with any financial decision you must be willing to accept some level of risk and the question is not whether to accept risk, but how much is acceptable. That's why I used 7% in my calculation instead of just 10%. I wanted to demonstrate that you could still beat out whole life if you wanted to reduce your risk and/or if the stock market performs poorly.\"",
"title": ""
},
{
"docid": "4a6861c5a6ac2146025b8a13d9207d3c",
"text": "That's pretty typical for introductory problems. It's leading you into an NPV question. They're keeping the cash flows the same to illustrate the time value of money to show you that even though the free cash flow is the same in year 1 and year 4 or whatever when you discount it to present value today's stream is worth more than tomorrow's",
"title": ""
},
{
"docid": "085a94a725d272cdc5a10c0e125a378b",
"text": "I realize this question is a few years old now, but I wanted to address one of the OP's questions that hadn't been answered yet (my answer is framed as though the question were recent): However, on the plus side, the monthly payment would likely be $200 less/mo with this house vs our current rent. On a 30 year mortgage it would be almost $3-400 less. This makes me think that I could use the difference to pay directly toward the principal each month. Is my logic sound? The way amortization works, if the interest rate between 30 and 15 were the same, then making principal-only prepayments on the 30 year to cover the difference in monthly payments would result in the exactly the same schedule as if you did minimum payments on the 15-year - i.e. the numbers would be practically indistinguishable. Of course, in practice the interest rate is slightly better on the 15-year, which makes the 30-year with prepayments compare slightly less favorably. If you're confident that you'll be able to reliably keep up with the monthly payments, the 15-year would minimize the total amount of interest you pay, and help you get off of PMI slightly faster. But the 30-year w/ prepayments gives you the option to skip a prepayment or two if you run into any financial difficulty, which is a nice option to have. But you do have to be disciplined about making the prepayments every month.",
"title": ""
}
] |
fiqa
|
a8ccecb6ffa78b9d99799a79338225e0
|
Investor returns from crowdfunding
|
[
{
"docid": "809e241fbfea8c8199c5d2883dee43b6",
"text": "\"Crowdfunding can be a legitimate means of funding very small startups. It is an innovative, but obviously risky, method of raising small amounts of money. As such it is now regulated by the SEC under \"\"Regulation Crowdfunding\"\" They have published guides for these types of business startups to help them with required disclosures and reporting requirements: https://www.sec.gov/info/smallbus/secg/rccomplianceguide-051316.htm Here's the introduction to the relevant regulatory authority of the SEC: Under the Securities Act of 1933, the offer and sale of securities must be registered unless an exemption from registration is available. Title III of the Jumpstart Our Business Startups (JOBS) Act of 2012 added Securities Act Section 4(a)(6) that provides an exemption from registration for certain crowdfunding transactions.[2] In 2015, the Commission adopted Regulation Crowdfunding to implement the requirements of Title III.[3] Under the rules, eligible companies will be allowed to raise capital using Regulation Crowdfunding starting May 16, 2016. It is obviously a new form of investment but you should be able to get historical data on the SEC's real time Edgar reporting system once there is some history. This is a search for all Form C's filed as of 12/2/16\"",
"title": ""
}
] |
[
{
"docid": "c1402c618145c984650ff00198caab0f",
"text": "Remember that unless you participate in the actual fund that these individuals offer to the public, you will not get the same returns they will. If you instead do something like, look at what Warren Buffet's fund bought/sold yesterday (or even 60 minutes ago), and buy/sell it yourself, you will face 2 obstacles to achieving their returns: 1) The timing difference will mean that the value of the stock purchased by Warren Buffet will be different for your purchase and for his purchase. Because these investors often buy large swathes of stock at once, this may create large variances for 2 reasons: (a) simply buying a large volume of a stock will naturally increase the price, as the lowest sell orders are taken up, and fewer willing sellers remain; and (b) many people (including institutional investors) may be watching what someone like Warren Buffet does, and will want to follow suit, chasing the same pricing problem. 2) You cannot buy multiple stocks as efficiently as a fund can. If Warren Buffet's fund holds, say, 50 stocks, and he trades 1 stock per day [I have absolutely no idea about what diversification exists within his fund], his per-share transaction costs will be quite low, due to share volume. Whereas for you to follow him, you would need 50 transactions upfront, + 1 per day. This may appear to be a small cost, but it could be substantial. Imagine if you wanted to invest 50k using this method - that's $1k for each of 50 companies. A $5 transaction fee would equal 1% of the value of each company invested [$5 to buy, and $5 to sell]. How does that 1% compare to the management fee charged by the actual fund available to you? In short, if you feel that a particular investor has a sound strategy, I suggest that you consider investing with them directly, instead of attempting to recreate their portfolio.",
"title": ""
},
{
"docid": "3451c2779bca4a3422a1edf0de832b52",
"text": "At this time, Google Finance doesn't support historical return or dividend data, only share prices. The attributes for mutual funds such as return52 are only available as real-time data, not historical. Yahoo also does not appear to offer market return data including dividends. For example, the S&P 500 index does not account for dividends--the S&P ^SPXTR index does, but is unavailable through Yahoo Finance.",
"title": ""
},
{
"docid": "94fd0ac68a72a65937095c6edeaedb74",
"text": "Thanks very much. 12b1 is a form that explains how a fund uses that .25-1% fee, right? So that's part of the puzzle im getting at. I'm not necessarily trying to understand my net fees, but more who pays who and based off of what. For a quick example, betterment bought me a bunch of vanguard ETFs. That's cool. But vanguard underperformed vs their blackrock and ssga etfs. I get that vanguard has lower fees, but the return was less even taking those into account. I'm wondering, first what sort of kickback betterment got for buying those funds, inclusive of wholesale deals, education fees etc. I'm also wondering how this food chain goes up and down the sponsor, manager tree. I'm sure it's more than just splitting up that 1%",
"title": ""
},
{
"docid": "a2dd5540db63905132ff6419c895d1df",
"text": "\"Because I'll be investing time, effort, energy and take some initial risks I would like to receive more shares (more than just purely financial contribution would suggest) I don't see money in that list. How much money will you be contributing to your own project? Mutual understanding, focusing on big image, rather that covering each and every edge case. These kinds of one page agreements are an excellent \"\"idea\"\" and they work just fine when everyone is happy and everything is working well; they are an utter nightmare if anything goes sideways. Coincidently, the reason you write anything down at all is to have everyone agree on the same big picture at the same time. People's memory of the original big picture gets fuzzy when their money might not come back to them. You don't need to cover all edge cases, but you need to cover obvious negative outcomes. What if you can't find a renter? What if you're late paying someone back? What if your vendor \"\"repairs\"\" something incorrectly? What if you forget to get a permit and the vendor needs to come back to tear it all apart and redo the work? What if your project needs more money, who is required to contribute, who has the option to contribute, who gets diluted? Who is doing the work of managing the project, how much is that person getting paid, how is that person's pay determined, how can it be adjusted? Is any work expected from any other investor, on what terms, who decides the terms? What if you get an offer to buy the building, who decides to sell, etc and so forth and on and on and on... You write down an agreement so everyone's understanding of the agreement is recorded. You write down what will happen in XYZ event so you don't argue about what you all should do when that event does ultimately occur. You take as much equity as your other investors will allow you to have, and you give them as much as required to get their money. Understand that the more cooks there are in the kitchen the more difficult it is to act on a problem when one arises; when not if. Your ego-stroking play to \"\"open source crowd-sourced wisdom\"\" is nothing more than a silly request for vague advice at no cost. Starting a project on trust, transparency and integrity is naive. This is about money. Why on earth should anyone trust you with their money if you won't do the most basic step of stewardship and spend a couple hundred pounds to talk to a local professional about organizing your first ever project. To answer your question directly, the first precaution you should take is not taking money from any of your friends or family.\"",
"title": ""
},
{
"docid": "a839d22bdaca27f1edc720c15bf63782",
"text": "They return capital to investors every year to keep the fund size smaller, since there are a set number of money-making opportunities in the space. In other words, if they will make $1 billion per year regardless of invested capital, why not lever up a few times so you don't have to put as much in?",
"title": ""
},
{
"docid": "c9ee0e3065b8cff148fbeed83d6a7226",
"text": "\"i realize the required rate will need to be below the expected growth rate. not really the issue. i'm also not looking for insight into how i model these two possible options, i'm really just interested in how people would think about producing a discount rate for the projects. \"\"but you determine the required return(discount rate) based on the perceived risk of the investment and your particular views\"\" this was the ultimate question i was getting at. what would YOU use?\"",
"title": ""
},
{
"docid": "88cfe5b26b7ecbb169b03835ec119a19",
"text": "TK didnt lose investor tens of billions of dollars. Also, for the past several years the whole market rewards growth over earnings, so that helped guys like Musk and Kalanick quite a lot and to a lessor degree, Bezos and Reddings. For all assets, investor profits come from either earnings or valuation growth and Kalanick provided quite a bit of the latter.",
"title": ""
},
{
"docid": "3d9a087db7ac36a435de1783db63916d",
"text": "\"What you are seeking is termed \"\"Alpha\"\", the mispricing in the market. Specifically, Alpha is the price error when compared to the market return and beta of the stock. Modern portfolio theory suggests that a portfolio with good Alpha will maximize profits for a given risk tolerance. The efficient market hypotheses suggests that Alpha is always zero. The EMH also suggests that taxes, human effort and information propagation delays don't exist (i.e. it is wrong). For someone who is right, the best specific answer to your question is presented Ben Graham's book \"\"The Intelligent Investor\"\" (starting on page 280). And even still, that book is better summarized by Warren Buffet (see Berkshire Hathaway Letters to Shareholders). In a great disservice to the geniuses above it can be summarized much further: closely follow the company to estimate its true earnings potential... and ignore the prices the market is quoting. ADDENDUM: And when you have earnings potential, calculate value with: NPV = sum(each income piece/(1+cost of capital)^time) Update: See http://finance.fortune.cnn.com/2014/02/24/warren-buffett-berkshire-letter/ \"\"When Charlie Munger and I buy stocks...\"\" for these same ideas right from the horse's mouth\"",
"title": ""
},
{
"docid": "972cada0712bdb15c5249e2fca6cd7a2",
"text": "Disclosure - I love Jack Bogle. Jack basically invented the index fund, and as a result, let the common investor have an opportunity to choose a long term return of (S&P-.05%) instead of losing nearly 2% that many funds in that day charged. The use of index investing has saved investors many billions of dollars. The 1% round trip, total cost to buy/sell, was common. Fees for trading have since dropped. I happen to use Schwab who charges $9 for a trade. On $100,000, this is not .5% ($500) but less than .01%. I think it's safe to say that billion dollar mutual funds are paying even less for trades that I do. I believe Jack's example here is a combination of old data and hyperbole. The cost is not so much for the trades, per se, but for the people managing the fund. An index fund has a manager of course, but it's pretty much run by a computer.",
"title": ""
},
{
"docid": "b39141e13117ae594047e1e04dc08ae2",
"text": "What's a good proxy for the return of the market when utilizing CAPM for a WACC build up? I know I could rip data from Domadaran, but I'd like to calculate it for myself. Maybe S&P 500 earnings yield plus the 10yr? Also don't like taking the round assumption of 7%.",
"title": ""
},
{
"docid": "b92089939e283a69c66535a345f7ecee",
"text": "Ah, pardon me, so it's not *either* 10x return or zero, but also includes points in between there? Is it path dependent? Do you have any history on the asset? The usual crutches for dealing with unknown probabilities are using risk neutrality or arbitrage pricing, but if the market is inefficient then that will be an estimation at best.",
"title": ""
},
{
"docid": "d59301acd1b942e879c09beefec5df5d",
"text": "tl;dr: The CNN Money and Yahoo Finance charts are wildly inaccurate. The TD Ameritrade chart appears to be accurate and shows returns with reinvested dividends. Ignoring buggy data, CNN most likely shows reinvested dividends for quoted securities but not for the S&P 500 index. Yahoo most likely shows all returns without reinvested dividends. Thanks to a tip from Grade Eh Bacon, I was able to determine that TD Ameritrade reports returns with reinvested dividends (as it claims to do). Eyeballing the chart, it appears that S&P 500 grew by ~90% over the five year period the chart covers. Meanwhile, according to this S&P 500 return estimator, the five year return of S&P 500, with reinvested dividends, was 97.1% between July 2012 to July 2017 (vs. 78.4% raw returns). I have no idea what numbers CNN Money is working from, because it claims S&P 500 only grew about 35% over the last five years, which is less than half of the raw return. Ditto for Yahoo, which claims 45% growth. Even stranger still, the CNN chart for VFINX (an S&P 500 index fund) clearly shows the correct market growth (without reinvesting dividends from the S&P 500 index), so whatever problem exists is inconsistent: Yahoo also agrees with itself for VFINX, but comes in a bit low even if your assume no reinvestment of dividends (68% vs. 78% expected); I'm not sure if it's ever right. By way of comparison, TD's chart for VFINX seems to be consistent with its ABALX chart and with reality: As a final sanity check, I pulled historical ^GSPC prices from Yahoo Finance. It closed at $1406.58 on 27 Aug 2012 and $2477.55 on 28 Aug 2017, or 76.1% growth overall. That agrees with TD and the return calculator above, and disagrees with CNN Money (on ABALX). Worse, Yahoo's own charts (both ABALX and VFINX) disagree with Yahoo's own historical data.",
"title": ""
},
{
"docid": "0722e905b79687713fca6967cb3942c8",
"text": "Currently reading Peter Thiel's *Zero to One*, and he discusses just that. He knew the bubble was about to burst so he got as much investment as quickly as he could for Pay Pal. $100 million dollars raised the month before the bubble burst, according to him.",
"title": ""
},
{
"docid": "a990852a5fbc94b6c23aa4c32112c7c2",
"text": "There are two obvious cases in which your return is lower with a heavily leveraged investment. If a $100,000 investment of your own cash yields $1000 that's a 1% return. If you put in $50,000 of your own money and borrow $50,000 at 2%, you get a 0% return (After factoring in the interest as above.) If you buy an investment for $100,000 and it loses $1000, that's a -1% return. If you borrow $100,000 and buy two investments, and they both lose $1000, that's a -2% return.",
"title": ""
},
{
"docid": "974ddb2aa065fb9d2f460b6cea10bad0",
"text": "Depends entirely on the stock and your perception of it. Would you buy it at the current price? If so, keep it. Would you buy something else? If so, sell it and buy that.",
"title": ""
}
] |
fiqa
|
41d834b5971555878fa3a1ee3a27e522
|
Should I be claiming more than 1 exemption?
|
[
{
"docid": "ece04d2bd05cd3126ea8db90f178fe7e",
"text": "\"It's not possible to determine whether you can \"\"expect a refund\"\" or whether you are claiming the right number of exemptions from the information given. If your wife were not working and you did not do independent contracting, then the answer would be much simpler. However, in this case, we must also factor in how much your contracting brings in (since you must pay income tax on that, as well as Medicare and, probably, Social Security), whether you are filing jointly or separately, and your wife's income from her business. There are also other factors such as whether you'll be claiming certain child care expenses, and certain tax credits which may phase out depending on your income. If you can accurately estimate your total household income for the year, and separate that into income from wages, contracting, and your wife's business, as well as your expenses for things like state and local income and property taxes, then you can make a very reasonable estimate about your total tax burden (including the self-employment taxes on your non-wage income) and then determine whether you are having enough tax withheld from your paycheck. Some people may find that they should have additional tax withheld to compensate for these expenses (see IRS W-4 Line #6).\"",
"title": ""
},
{
"docid": "dc1e070074bf5d6aebec9e63615dea20",
"text": "\"J - Approaching the answer from the W4 perspective (for calculation purposes) may be more trouble that it's worth. I'd strongly suggest you use tax software, whether it's the 2016 SW or a current year one, on line, to get an estimate of your total tax bill for the year. You can then look at your current run rate of tax paid in to see if you are on track. If you have a large shortfall, you can easily adjust your withholdings. If you are on track to get a large refund, make the adjustment so next year will track better. Note, a withholding allowance is equal to a personal exemption. Some think that \"\"4\"\" means 4 people in the house, but it actually means \"\"don't tax 4 x $4050\"\" as I have $16200 in combined people or tax deductions.\"",
"title": ""
}
] |
[
{
"docid": "6936be415fe93cd7e0a9c018dfd788e4",
"text": "The difference is that if you end up owing more than $1k in taxes come April, you **will** be mandated for withholding next year (that's at the federal level, I don't know CA law in particular); and if this isn't the first time you've done it, you may owe additional penalties as well. Your actual tax liability comes out the same either way; you're *probably* better off just letting Uncle Sam have an interest-free loan for a few months and getting the difference back in April, than risking it; but if you've done the math and know you'll only owe exactly $999.99, you can do what you want. :)",
"title": ""
},
{
"docid": "18709a398b2b7066a205463a07181a42",
"text": "There's a couple issues to consider: When you sell your primary home, the IRS gives you a $500k exemption (married, filing jointly) on gain. If you decide not to sell your current house now, and you subsequently fall outside the ownership/use tests, then you may owe taxes on any gains when you sell the house. Rather than being concerned about your net debt, you should be concerned about your monthly debt payments. Generally speaking, you cannot have debt payments of more than 36% of your monthly income. If you can secure a renter for your current property, then you may be able to reach this ratio for your next (third) property. Also, only 75% of your expected monthly rental income is considered for calculating your 36% number. (This is not an exhaustive list of risks you expose yourself to). The largest risk is if you or your spouse find yourself without income (e.g. lost job, accident/injury, no renter), then you may be hurting to make your monthly debt payments. You will need to be confident that you can pay all your debts. A good rule that I hear is having the ability to pay 6 months worth of debt. This may not necessarily mean having 6 months worth of cash on hand, but access to that money through personal lines of credit, borrowing against assets, selling stocks/investments, etc. You also want to make sure that your insurance policies fully cover you in the event that a tenant sues you, damages property, etc. You also don't want to face a situation where you are sued because of discrimination. Hiring a property management company to take care of these things may be a good peace-of-mind.",
"title": ""
},
{
"docid": "b069d22b7c968294f963f273dd8ee0a9",
"text": "Yes, if you can split your income up over multiple years it will be to your advantage over earning it all in one year. The reasons are as you mentioned, you get to apply multiple deductions/credits/exemptions to the same income. Rather than just 1 standard deduction, you get to deduct 2 standard deductions, you can double the max saved in an IRA, you benefit more from any non-refundable credits etc. This is partly due to the fact that when you are filing your taxes in Year 1, you can't include anything from Year 2 since it hasn't happened yet. It doesn't make sense for the Government to take into account actions that may or may not happen when calculating your tax bill. There are factors where other year profit/loss can affect your tax liability, however as far as I know these are limited to businesses. Look into Loss Carry Forwarded/Back if you want to know more. Regarding the '30% simple rate', I think you are confusing something that is simple to say with something that is simple to implement. Are we going to go change the rules on people who expected their mortgage deduction to continue? There are few ways I can think of that are more sure to cause home prices to plummet than to eliminate the Mortgage Interest Deduction. What about removing Student Loan Interest? Under a 30% 'simple' rate, what tools would the government use to encourage trade in specific areas? Will state income tax deduction also be removed? This is going to punish those in a state with a high income tax more than those in states without income tax. Those are all just 'common' deductions that affect a lot of people, you could easily say 'no' to all of them and just piss off a bunch of people, but what about selling stock though? I paid $100 for the stock and I sold it for $120, do I need to pay $36 tax on that because it is a 'simple' 30% tax rate or are we allowing the cost of goods sold deduction (it's called something else I believe when talking about stocks but it's the same idea?) What about if I travel for work to tutor individuals, can I deduct my mileage expenses? Do I need to pay 30% income tax on my earnings and principal from a Roth IRA? A lot of people have contributed to a Roth with the understanding that withdrawals will be tax free, changing those rules are punishing people for using vehicles intentionally created by the government. Are we going to go around and dismantle all non-profits that subsist entirely on tax-deductible donations? Do I need to pay taxes on the employer's cost of my health insurance? What about 401k's and IRA's? Being true to a 'simple' 30% tax will eliminate all 'benefits' from every job as you would need to pay taxes on the value of the benefits. I should mention that this isn't exactly too crazy, there was a relatively recent IRS publication about businesses needing to withhold taxes from their employees for the cost of company supplied food but I don't know if it was ultimately accepted. At the end of the day, the concept of simplifying the tax law isn't without merit, but realize that the complexities of tax law are there due to the complexities of life. The vast majority of tax laws were written for a reason other than to benefit special interests, and for that reason they cannot easily be ignored.",
"title": ""
},
{
"docid": "29079941bcf673433726120d468485ea",
"text": "If you have multiple accounts, you have to empty them all before you can deduct any losses. Your loss is not a capital loss, its a deduction. It is calculated based on the total amount you have withdrawn from all your Roth IRA's, minus the total basis. It will be subject to the 2% AGI treshhold (i.e.: if your AGI is > 100K, none of it is deductible, and you have to itemize to get it). Bottom line - think twice. Summarizing the discussion in comments: If you have a very low AGI, I would guess that your tax liability is pretty low as well. Even if you deduct the whole $2K, and all of it is above the other deductions you have (which in turn is above the standard deduction of almost $6K), you save say $300 if you're in 15% tax bracket. That's the most savings you have. However I'm assuming something here: I'm assuming that you're itemizing your deductions already and they're above the standard deduction. This is very unlikely, with such a low income. You don't have state taxes to deduct, you probably don't spend a lot to deduct sales taxes, and I would argue that with the low AGI you probably don't own property, and if you do - you don't have a mortgage with a significant interest on it. You can be in 15% bracket with AGI between (roughly) $8K and $35K, i.e.: you cannot deduct between $160 and $750 of the $2K, so it's already less than the maximum $300. If your AGI is $8K, the deduction doesn't matter, EIC might cover all of your taxes anyway. If your AGI is $30K, you can deduct only $1400, so if you're in the 15% bracket - you saved $210. That, again, assuming it's above your other deductions, which in turn are already above the standard deduction. Highly unlikely. As I said in the comments - I do not think you can realistically save on taxes because of this loss in such a manner.",
"title": ""
},
{
"docid": "4cf29d950fdc42da450810e87d3e1eac",
"text": "\"I am not aware of any place that the tax forms ask, \"\"How many people live in your house?\"\" They ask how many dependants you have, and not everyone who lives in your house is your dependant. There are very specific rules about that. If your girlfriend is being claimed as a dependent on her parents' tax return, then she cannot also be claimed on anyone else's return, and there's no need to investigate further. To claim someone as a dependent, they have to meet a number of conditions. I am not a lawyer. See IRS Publication 17. But the gist of it is that they must, (a) either be a relative (there's a list of what sorts of relatives qualify) or live with you all year; (b) Living with you must not violate local law; (c) Must make less than $4000 per year; and (d) You must provide over half of their support. Your girlfriend may meet the \"\"live with you all year\"\" or maybe not. But the real stumper is likely to be (d). Unless your parents are paying her tuition, they almost certainly don't meet this test.\"",
"title": ""
},
{
"docid": "b19b22ee8d55cec0980dff641e6ca784",
"text": "I would not expect any problems. Your interest will have tax deducted at 20% which I don't think you would be entitled to reclaim because you don't get a personal allowance if you aren't resident in the UK, and unless you have a huge amount of UK earnings you would not be legally liable to any higher rates of tax so there would be no issues there. If you were liable to more tax you would be obliged to inform the Inland Revenue.",
"title": ""
},
{
"docid": "ba1e15889ae2cea42d3c1ef7f74f9ef1",
"text": "Many reasons mentioned already. The reason why I have multiple is missing: I have a personal card for my private use and a company card for company use.",
"title": ""
},
{
"docid": "848f96c11dba0694cc5c7388bd4ed21b",
"text": "I am a very light TurboTax user and have expensed a laptop in the past (since it was used exclusively for work) and used the itemized deduction there and has no issues. Just not sure if there was a limit or anything of note to realize ahead of time. Thanks!",
"title": ""
},
{
"docid": "c4da0f6689c697989f3e85d5e528ac56",
"text": "\"It says that you are exempt \"\"as long as such interest income is not effectively connected with a United States trade or business\"\". So the interest is from money earned from doing business with/through AirBnb, a US company. So you will have to report it. Even if your bank doesn't send you a 1099-INT, you have to report it, unless it is under $0.49 because the IRS allows rounding.\"",
"title": ""
},
{
"docid": "a1041cb736e051ec679ade47727045f5",
"text": "\"Yes, this is a miscellaneous itemized deduction. https://www.irs.gov/publications/p529/ar02.html For this to impact your taxes, you have to be itemizing deductions (have total deductions greater than standard deduction), and the total of all miscellaneous deductions needs to exceed the \"\"2% floor\"\" described in the IRS link above.\"",
"title": ""
},
{
"docid": "b4bdf77bd6c433338ae2798676b50331",
"text": "\"There are many people who have deductions far above the standard deduction, but still don't itemize. That's their option even though it comes at a cost. It may be foolish, but it's not illegal. If @littleadv citation is correct, the 'under penalty of perjury' type issue, what of those filers who file a Schedule A but purposely leave off their donations? I've seen many people discuss charity, and write that they do not want to benefit in any way from their donation, yet, still Schedule A their mortgage and property tax. Their returns are therefore fraudulent. I am curious to find a situation in which the taxpayer benefits from such a purposeful oversight, or, better still, a cited case where they were charged with doing so. I've offered advice on filings return that wasn't \"\"truthful\"\". When you own a stock and cannot find cost basis, there are times that you might realize the basis is so low that just entering zero will cost you less than $100 in extra tax. You are not truthful, of course, but this kind of false statement isn't going to lead to any issue. If it gets noticed within an audit, no agent is going to give it more than a moment of time and perhaps suggest, \"\"you didn't even know the year it was bought?\"\" but there would be no consequence. My answer is for personal returns, I'm sure for business, accuracy to the dollar is actually important.\"",
"title": ""
},
{
"docid": "e629aeec2a87432b98553c98ecbe93d9",
"text": "Ask the company if they can make an adjustment for the next paycheck. If they can't then do the following: Increase the number of Federal exemptions by 1. In 2014 a personal exemption reduces your apparent income by $3950. If you are in the 10 % tax bracket and you are paid every two weeks you will see the amount of taxes withheld drop by ($3950*0.10/26) or ~$15. The 13 Paychecks later change it back. If you are in the 15 % tax bracket and you are paid every two weeks you will see the amount of taxes withheld drop by ($3950*0.15/26) or ~$23. Then 9 Paychecks later change it back If you are in the 25 % tax bracket and you are paid every two weeks you will see the amount of taxes withheld drop by ($3950*0.10/26) or ~$38. Then 5 paychecks later change it back. Remember the money isn't gone, it has just been transferred prematurely to the federal treasury. You could also wait until you complete your taxes this spring, then see if you needed to make an adjustment to your exemptions. If you normally get a large refund then you should be increasing your exemptions anyway. If you are always writing a check to the IRS then you weren't getting enough withheld. Also make sure that payroll has the correct numbers. Most companies include the number of federal and state exemptions on the paycheck stub, or the pdf of the stub.",
"title": ""
},
{
"docid": "088598ffdbbf738ec5c4f533240a86ac",
"text": "I understand that if I have multiple health insurance policies, I can only make claim from only one of them if ever I incur medical expenses (I'm from the Philippines). In the US, you cannot simultaneously submit a claim for payment of a medical bill, or request reimbursement for a bill already paid, to multiple insurance companies, but if you are covered by more than one policy, then any part of a claim not paid by one company can be submitted to another company that is also covering you. In fact, if you have employer-paid or employer-provided coverage, most insurance companies will want your employer-provided insurance company to be billed first, and will cover whatever is not paid by the employer coverage. For example, if the employer coverage pays 80% of your doctor's bill, the private insurance will pay the remaining 20%. But, the private insurance policies are also quite expensive. Some professional groups in the US offer major medical coverage to their US members, and might be offering this to non-US members as well (though I suspect not). These policies have large deductibles so that coverage kicks in only when the total medical expenses in that year (whether wholly or partially reimbursed, or not reimbursed at all) exceed the large deductible. These types of policies actually pay out to only a few people - if you have more than, say, $20,000 of medical expenses in a year, you have been quite ill, and thus the premiums are usually much smaller than full-fledged coverage insurance policies which pay out much more frequently because of much smaller deductibles.",
"title": ""
},
{
"docid": "bd143bca25c6456b86a9972ccf736e22",
"text": "Also, is seems the wife that's doing the taxes is very reluctant on giving me access to the statements. As an owner, I do have the legal right to those statements do I not? What power would a majority owner of a bar (40%) hold over the other two minority owners (each with 30%)? According to her, she's broken even on her investment, whereas I've collected not even half of my initial investment. The fact that you feel this is fishy reconfirms my belief that she not being truthful to some degree.",
"title": ""
},
{
"docid": "4c892cba300873f5baeab9eae1e8c11f",
"text": "I appreciate all the responses, but again, I have NO experience or education in the field. I haven't started any major related college courses yet and do not have a job in the field. I am looking for beginner, introduction level reading material to start reading up on to start understanding the field before I even start school.",
"title": ""
}
] |
fiqa
|
575e2612b210843011891d0356cdc9d2
|
Can I transfer my West Australian rock lobster quota units into my SMSF?
|
[
{
"docid": "15e97da772c632dd4122a70b3431aac5",
"text": "SMSFs are generally prohibited from acquiring assets from related parties (whether it is purchased by the SMSF or contributed into the fund). There are some exceptions to the above rule for acquiring related party assets, including: • Listed securities (ie shares, units or bonds listed on an approved stock exchange, such as the ASX) acquired at market value. • Business real property (ie freehold or leasehold interests in real property used exclusively in one or more businesses) acquired at market value. • An in-house asset where the acquisition would not result in the level of the fund’s in-house assets exceeding 5%. • Units in a widely held unit trust, such as a retail ,managed fund. In-house asset rules An ‘in-house asset’ is generally defined as: • An investment by an SMSF in a related company or trust (ie a fund owns shares in a related company or units in a related trust). • An asset of an SMSF that is leased to a related party. • A loan made by an SMSF to a related company or trust. An investment, lease or loan that is an in-house asset is not prohibited, but is limited to 5% of the market value of the fund’s assets. The Answer: If your pre-owned Western Australian Rock Lobster fishery quota units are not included in the exceptions then you cannot transfer them into your SMSF.",
"title": ""
}
] |
[
{
"docid": "b6457cfdb5e67f41d9270a82b34af5ee",
"text": "If so how to do it. Ask CIBC to open the new RRSP account, and ask CIBC to contact GWL to tell GWL to move your money from the GWL account into the CIBC account.",
"title": ""
},
{
"docid": "001308bb6898cc328653575ba51889b7",
"text": "Not to my knowledge. Often the specific location is diversified out of the fund because each major building company or real estate company attempts to diversify risk by spreading it over multiple geographical locations. Also, buyers of these smaller portfolios will again diversify by creating a larger fund to sell to the general public. That being said, you can sometimes drill down to the specific assets held by a real estate fund. That takes a lot of work: You can also look for the issuer of the bond that the construction or real estate company issued to find out if it is region specific. Hope that helps.",
"title": ""
},
{
"docid": "dc36a99ffea70f0b1e78475c3ad6fcb7",
"text": "Yes. You incur income tax on the RSU on they date they vest. At this point you own the actual shares and you can decide to sell them or to hold them. If you hold them for the required period, and sell them later, the difference between your price at vesting and the sales price would be taxed as long term capital gains. Caution: if you decide to hold, you are still liable to pay income tax in the year they vest. You have to pay taxes on income that you haven't made yet. This is fairly dangerous: if the stock goes down, you may lose a lot of this tax payment. Technically you could recover some of this through claiming capital losses, but that this is severely restricted: the IRS makes it much easier to increase taxes through gains than reducing taxes through losses.",
"title": ""
},
{
"docid": "5e43d052df5460eb9c1e6625c9febeee",
"text": "Here are your options. While you remain an Australian citizen you cannot withdraw super just because you are residing overseas. You could renounce your citizenship - just make sure you have another one to fall back on.",
"title": ""
},
{
"docid": "b96a22753213aa47f8e72a5c927db89c",
"text": "\"How do I get my money from India to UAE account – what are the options, can I do bank transfer from my mom SB account to my international account. As you have transferred money directly to your Mothers account, getting the money back would need some paper work. Consult a CA and Bank in India, they should be able to help you. There are various limits under FEMA that would be applicable. As the amount is small a self declaration would also suffice. If yes how much do I loose in case of 20 lac due to currency conversion and commission (approximate) Not sure I understand this question, are you asking if you had converted X AED into Rs 20 lacs and now you have 20 lacs will you get back \"\"x\"\" AED or how much less? If you Buy and Sell on the same day, typically there is a spread of 3-5% depending on the currency pair. However rates would have move up or down since then and hence this cannot be answered. You would have to see what the rates are. b. can exchange with Friends in UAE and deposit the same in INR to their SB account in india. Stick to Banks or authorized remittance services [like Western Union / Money Gram / etc]. Any other method you are circumventing law. One is not authorized to convert currency outside the normal Banking Channel.\"",
"title": ""
},
{
"docid": "2beabeee5253deb288ef55349de184f8",
"text": "\"A lot of ISA's allow both shares and funds as well as gilts, Hargreaves Lansdown comes to mind as does the Alliance Trust. Some penalise (charging wise) securities vs UT (unit trusts) funds but in that case just go for a low cost IT (Investment Trust) ISA and hold individual shares as well as pooled investments in the Big IT's. I think you might have to be an \"\"approved investor\"\" to buy gilts.\"",
"title": ""
},
{
"docid": "792e994786ab815266aae52e7b5afef9",
"text": "The $500 minimum is a policy of the ASX. As such any broker that offered a different policy would not be offering direct purchase of exchange traded shares. Note however that this policy applies only to the initial purchase. From the CMC FAQs: The ASX requires a minimum parcel of $500 to be traded if you don’t currently hold that particular security. Once you have $500 worth of an individual security, you can purchase any value of shares you like.",
"title": ""
},
{
"docid": "bd76b9c659a84acc192bdc6541303df9",
"text": "the pots will be negligible, however this capital could be used better elsewhere if I was to withdraw them. You won't be able to withdraw the money. Notwithstanding the recent 'pension freedom' changes, money put into a pension is still inaccessible until age 55 at the very earliest, and probably later by the time you get there. You should have been Advised of this every time you enrolled into a scheme, although it may well have been buried in something you were given to read. The best you can do (and what I would recommend, although of course this post isn't Advice) is to transfer the pensions to a personal pension, for example a SIPP, wherein you will be able to control where the money is invested. Most SIPP providers will gladly help you with such transfers. Would it be beneficial to keep these smaller pots with their respected schemes The reason I suggest transferring is that leaving the funds in workplace schemes that are no longer being contributed to is a surefire way of finding yourself invested in poorly-performing neglected funds, earning money for no one beyond the scheme provider.",
"title": ""
},
{
"docid": "1c06d4979519343b62cea20210071cd7",
"text": "It depends on the exact level of risk that you want, but if you want to keep your risk close to zero you're pretty much stuck with the banks (and those rates don't look to be going up any time soon). If you're willing to accept a little more risk, you can invest in some index tracking ETFs instead, with the main providers in Australia being Vanguard, Street State and Betashares. A useful tool for for an overview of the Australian ETF market is offered by StockSpot. The index funds reduce your level of risk by investing in an index of the market, e.g. the S&P 200 tracked by STW. If the market as a whole rises, then your investment will too, even though within that index individual companies will rise and fall. This limits your potential rate of return as well, and is still significantly more risky than leaving your cash in an Aussie bank (after all, the whole market can fall), but it might strike the right balance for you. If you're getting started, HSBC, Nabtrade, Commsec and Westpac were all offering a couple of months of free trades up to a certain value. Once the free trades are done, you'll do better to move to another broker (you can migrate your shares to the others to take advantage of their free trades too) or to a cheaper broker like CMC Markets.",
"title": ""
},
{
"docid": "7d96ffa27caec8d874570b6eff6a9c68",
"text": "\"The portfolio described in that post has a blend of small slices of Vanguard sector funds, such as Vanguard Pacific Stock Index (VPACX). And the theory is that rebalancing across them will give you a good risk-return tradeoff. (Caveat: I haven't read the book, only the post you link to.) Similar ETFs are available from Vanguard, iShares, and State Street. If you want to replicate the GFP exactly, pick from them. (If you have questions about how to match specific funds in Australia, just ask another question.) So I think you could match it fairly exactly if you wanted to. However, I think trying to exactly replicate the Gone Fishin Portfolio in Australia would not be a good move for most people, for a few reasons: Brokerage and management fees are generally higher in Australia (smaller market), so dividing your investment across ten different securities, and rebalancing, is going to be somewhat more expensive. If you have a \"\"middle-class-sized\"\" portfolio of somewhere in the tens of thousands to low millions of dollars, you're cutting it into fairly small slices to manually allocate 5% to various sectors. To keep brokerage costs low you probably want to buy each ETF only once every one-two years or so. You also need to keep track of the tax consequences of each of them. If you are earning and spending Australian dollars, and looking at the portfolio in Australian dollars, a lot of those assets are going to move together as the Australian dollar moves, regardless of changes in the underlying assets. So there is effectively less diversification than you would have in the US. The post doesn't mention the GFP's approach to tax. I expect they do consider it, but it's not going to be directly applicable to Australia. If you are more interested in implementing the general approach of GFP rather than the specific details, what I would recommend is: The Vanguard and superannuation diversified funds have a very similar internal split to the GFP with a mix of local, first-world and emerging market shares, bonds, and property trusts. This is pretty much fire-and-forget: contribute every month and they will take care of rebalancing, spreading across asset classes, and tax calculations. By my calculations the cost is very similar, the diversification is very similar, and it's much easier. The only thing they don't generally cover is a precious metals allocation, and if you want that, just put 5% of your money into the ASX:GOLD ETF, or something similar.\"",
"title": ""
},
{
"docid": "92a7a528eaa4f83c37ae06739846b0d0",
"text": "In international transfers there are quite a few charges that come into picture. 1. Your Bank's charges, you mentioned its GBP 20. 2. The Fx conversion margin. So your GBP 317.90 became 500 AUD 3. The Charges of St. George's. Normally it is recovered from Beneficiary. Typically it would show up as 2 entries, one credit for AUD 500 and second a debit. Typically in the range of AUD 10 to 25. However incaes of return, St George will deduct 2 charges from AUD 500; - The Original Charges for transfer that it would have recovered from Beneficiary. - Additional Return charges, again in the range of AUD 10 to 20. Thus the amount they would have sent back to your Bank would be less than AUD 500. Your Bank would have converted and possibly again charged you a return fee. Since these are cross border payments there is no regulation and Bank are free to charge as they please and at time do charge excess. What you can do is disptue with the Bank on the points that; - The Beneficiary account was not closed, and its a deficiency of service. - Request for an itemized statement as to what was the amount returned by St George.",
"title": ""
},
{
"docid": "ea582ead73b55789e8dd68ef14643254",
"text": "I don't believe you can do that. From the IRS: Finally, certain types of property are specifically excluded from Section 1031 treatment. Section 1031 does not apply to exchanges of: I highlighted the relevant items for emphasis.",
"title": ""
},
{
"docid": "42419f06c71eda63a7955d18a0d1cd59",
"text": "You've mostly got it figured out, but there are a couple of more points to consider: You'll be permanently losing a corresponding amount of your RRSP contribution room allowance, because the re-deposit of your funds into the new RRSP would count as a new contribution, the way you're proposing to things. For a small amount, it might not matter much, and if you're like a lot of people, you may have more accumulated RRSP room than you can reasonably use up. There may be complications if spousal contributions were made into your account during the previous three years.",
"title": ""
},
{
"docid": "4abdf55b8e3aee2b6ddfaed7e3f5b5ee",
"text": "Your biggest concern will be what happens during the transition period. In the past when my employer made a switch there has been a lockout period where you couldn't move money between funds. Then over a weekend the money moved from investment company A to investment Company B. All the moves were mapped so that you knew which funds your money would be invested in, then staring Monday morning you could switch them if you didn't like the mapping. No money is lost because the transfer is actually done in $'s. Imagine both investment companies had the same S&P 500 fund, and that the transfer takes a week. If when the first accounts are closed the S&P500 fund has a share value of $100 your 10 hares account has a value of $1000. If the dividend/capital gains are distributed during that week; the price per share when the money arrives in the second investment company will now be $99. So that instead of 10 shares @ $100 you now will buy 10.101 shares @ $99. No money was lost. You want that lookout period to be small, and you want the number of days you are not invested in the market to be zero. The lockout limits your ability to make investment changes, if for instance the central bank raises rates. The number of days out of the market is important if during that period of time there is a big price increase, you wouldn't want to miss it. Of course the market could also go lower during that time.",
"title": ""
},
{
"docid": "2fcd7fb040ef740738e216a493f8cccd",
"text": "You have to file an application with PF Office. Normally your existing Organisation [which you just quit] helps you with the formalities. If not you would have to complete the same and submit it to the EPFO.",
"title": ""
}
] |
fiqa
|
71bcef2e882b95a5b4d93cea0bb535bf
|
Do I need to prove 'Garage Sale' items incurred a loss
|
[
{
"docid": "a17707555387cb5ceb0dd41a193f5ae5",
"text": "\"This is what this sounds like to me: https://www.thebalance.com/having-a-garage-sale-or-yard-sale-what-to-do-first-399030 also: http://blogs.hrblock.com/2012/07/25/garage-sale-money-does-the-irs-need-to-know/ Selling a personal item at a loss is generally not a taxable event. You cannot report it as a loss, and the IRS can't tax a transaction like that. If you really want to include these as sales as part of your LLC, you'll probably have to pay tax if you list it as income. I'm just confused as to why you'd want to do that, if you know that you're selling these particular items at a loss, and you also know that you have no documentation for them. I just wouldn't report anything you sold at a loss and treat it as \"\"garage sale items\"\" separate from your business.\"",
"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": "345c2baf918ace1490b4ed2bc707d123",
"text": "Even if you can afford the loss of the boat because you have other housing options available, can you also afford to lose all your possessions if the boat sinks or is stolen? All of your clothing, electronics, etc can add up to thousands of dollars easily. A significant fraction of that amount are things you'd need to replace quickly, even if you're confident of having somewhere else to live for as long as it takes you get a new boat/apartment/etc.",
"title": ""
},
{
"docid": "aa831d64b6ce98632cf7a569efbab6f6",
"text": "Unfortunately this is something that should have been determined prior to the book tour. Your tax advisor or accountant could have assisted you in making sure you collected the documentation you needed. You are going to have to sit down with your advisor with the documentation you have and determine what you can prove.",
"title": ""
},
{
"docid": "0831ba49c07783c11cda19799c2448d6",
"text": "If I sell it for $50 can I write off the $50 loss. Only if you can establish that it is a normal part of your business and that you did not get $50 worth of use out of it. That's the technical, legal argument. As a practical matter, it's unlikely that they'll ding you for selling something after using it, as they won't know. If they did catch you, you would be in trouble. You can't deduct loss due to personal use. The larger problem is that if you sell one TV for a $50 loss, they aren't going to believe that you are in the business of selling TVs. If you sell a larger amount for a loss, then they still are unlikely to believe that you are in business. If you sell a large amount for an overall gain, they are unlikely to notice that you took a loss on one TV. They could only notice that if they were already auditing you, as that wouldn't be visible in your tax forms.",
"title": ""
},
{
"docid": "3cef4b15724a32fdbb940c05a10463e0",
"text": "I don't think there's much you can do. Losses from the sale of personal-use automobiles (used for pleasure, commuting, etc) are not deductible as capital losses. See IRS Tax Topic 409, end of the first paragraph. The expenses you incurred in owning and operating the car (insurance, fuel, maintenance, service plans, etc) are not deductible either. If you used it partly for business, then some of your expenses might be deductible; see IRS Tax Topic 510. This includes depreciation (decline in value), but only according to a standard schedule; you don't generally just get to deduct the difference between your buying and selling price. Also, you'd need to have records to verify your business use. But anyway, these deductions would apply (or not) regardless of whether you sell the car. You don't get your sales tax refunded when you resell the vehicle. That's why it's a sales tax, not a value-added tax. Note, however, that if you do sell it, the sales tax on this new transaction will be the buyer's responsibility, not yours. You do have the option on your federal income tax return to deduct the state sales tax you paid when you bought the car; in fact, you can deduct all the sales taxes you paid in that year. (If you have already filed your taxes for that year, you can go back and amend them.) However, this takes the place of your state income tax deduction for the year; you can't deduct both. See Tax Topic 503. So this is only useful if your sales taxes for that year exceeded the state income tax you paid in that year. Also, note that state taxes are not deductible on your state income tax return. Again, this deduction applies whether you sell the car or not.",
"title": ""
},
{
"docid": "afde488a531ae9dc216700acfc01f10a",
"text": "I was not able to find any authority for the opinion you suggest. Wash sale rules should, IMHO, apply. According to the regulations, you attribute the newly purchased shares to the oldest sold shares for the purposes of the calculation of the disallowed loss and cost basis. (c) Where the amount of stock or securities acquired within the 61-day period is less than the amount of stock or securities sold or otherwise disposed of, then the particular shares of stock or securities the loss from the sale or other disposition of which is not deductible shall be those with which the stock or securities acquired are matched in accordance with the following rule: The stock or securities acquired will be matched in accordance with the order of their acquisition (beginning with the earliest acquisition) with an equal number of the shares of stock or securities sold or otherwise disposed of. You can resort to the claim that you have not, in fact, entered into the contract within 30 days, but when you gave the instructions to reinvest dividends. I don't know if such a claim will hold, but to me it sounds reasonable. This is similar to the rules re short sales (in (g) there). In this case, wash sale rules will not apply (unless you instructed to reinvest dividends within the 30 days prior to the sale). But I'd ask a tax professional if such a claim would hold, talk to a EA/CPA licensed in your state.",
"title": ""
},
{
"docid": "915ee91396f3b08a0d4af728c8f3d5da",
"text": "\"According to the IRS, you must have written confirmation from your broker \"\"or other agent\"\" whenever you sell shares using a method other than FIFO: Specific share identification. If you adequately identify the shares you sold, you can use the adjusted basis of those particular shares to figure your gain or loss. You will adequately identify your mutual fund shares, even if you bought the shares in different lots at various prices and times, if you: Specify to your broker or other agent the particular shares to be sold or transferred at the time of the sale or transfer, and Receive confirmation in writing from your broker or other agent within a reasonable time of your specification of the particular shares sold or transferred. If you don't have a stockbroker, I'm not sure how you even got the shares. If you have an actual stock certificate, then you are selling very specific shares and the purchase date corresponds to the purchase date of those shares represented on the certificate.\"",
"title": ""
},
{
"docid": "ed78f35d2db90200e5a3c241f8caba8d",
"text": "In addition to the adjustment type in NL7's answer, there are a host of others. If there are any adjustments, form 8949 is required, if not, the gains can be separated into short and long-term and added together to be entered on Schedule D. Anything requiring an adjustment code in column F of the 8949 requires an entry in column G. Some other example entries for column F include: (see the 8949 instructions for a complete list) **A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you: Buy substantially identical stock or securities, Acquire substantially identical stock or securities in a fully taxable trade, Acquire a contract or option to buy substantially identical stock or securities, or Acquire substantially identical stock for your individual retirement account (IRA) or Roth IRA. (from Pub17)",
"title": ""
},
{
"docid": "2d258d9865dc769c64e985ecef06366c",
"text": "1: Gambling losses not in excess of gambling winnings can be deducted on Schedule A, line 28. See Pub 17 (p 201). Line 28 catches lots of deductions, and gambling losses are one of them. See Schedule A instructions. 2: If the Mississippi state tax withheld was an income tax (which I assume it was), then it goes on Schedule A, line 5a. In the unlikely event it was not a state or local tax on income, but some sort of excise on gambling, then it may be deductible on line 8 as another deductible tax. It probably is not a personal property tax, which is generally levied against the value of things like cars and other movable property but not on receipts of cash; line 7 probably is not appropriate. The most likely result, without researching Mississippi SALT, is that it was an income tax. See Sched A Instructions for more on the differences between the types of taxes paid. Just to be clear, these statements hold if you are not engaging in poker as a profession. If you are engaging in poker as a business, which can be difficult to establish in the IRS' eyes, then you would use Schedule C and also report business and travel expenses. But the IRS is aware that people want to reduce their gambling income by the cost of hotels and flights to casinos, so it's a relatively high hurdle to be considered a professional poker player.",
"title": ""
},
{
"docid": "ae96ebf7c42b5aa8611e7c1b9890c299",
"text": "First - get a professional tax consultation with a NY-licensed CPA or EA. At what point do I need to worry about collecting sales taxes for the city and state of New York? Generally, from the beginning. See here for more information on NYS sales tax. At what point do I need to worry about record-keeping to report the income on my own taxes? From the beginning. Even before that, since you need the records to calculate the costs of production and expenses. I suggest starting recording everything, as soon as possible. What sort of business structures should I research if I want to formalize this as less of a hobby and more of a business? You don't have to have a business structure, you can do it as a sole proprietor. If you're doing it for-profit - I suggest treating it as a business, and reporting it on your taxes as a business (Schedule C), so that you could deduct the initial losses. But the tax authorities don't like business that keep losing money, so if you're not expecting any profit in the next 3-4 years - keep it reported as a hobby (Misc income). Talk to a licensed tax professional about the differences in tax treatment and reporting. You will still be taxed on your income, and will still be liable for sales tax, whether you treat it as a hobby or as a business. Official business (for-profit activity) will require additional licenses and fees, hobby (not-for-profit activity) might not. Check with the local authorities (city/county/State).",
"title": ""
},
{
"docid": "df72925f51029c060510200978db244d",
"text": "Yes. This income would be reported on schedule SE. Normally, you will not owe any tax if the amount is less than $400. Practically, $100 in a garage sale is not why the IRS created the form SE. I wouldn't lose sleep over keeping track of small cash sales over the course of a year. However, if you have the information I'm not going to tell you not to report it.",
"title": ""
},
{
"docid": "69244fe41231d70ad9024bb0c7344d57",
"text": "It sounds like the items shipped directly from the vendor need to be recorded into your system when the order is confirmed, that way cost of goods sold and revenue don't get lost. You'll have a record of re-orders and cancels and other such things too.",
"title": ""
},
{
"docid": "998c6bb64e219b1c2a9fa3c93102ef7f",
"text": "If you were a business, all your assets would have a dollar value, so when you sold them you'd decrease the amount of assets by that amount and increase in cash, and if there was a profit on the sale it would go in as income, if there was loss it would count as a cost (or a loss)... so if there was a profit it would increase Equity, a loss then it would decrease Equity. Since it's not really worthwhile doing a estimated cost for everything that you have, I'd just report it as income like you are doing and let the amount of equity increase proportionately. So, implicitly you always had roughly that amount of equity, but some of it was in the form of assets, and now you're liquidating those assets so the amount shows up in GnuCash. When you buy new things you might sell later, you could consider adding them as assets to keep track of this explicitly (but even then you have problems-- the price of things changes with time and you might not want to keep up with those price changes, it's a lot of extra work for a family budget) -- for stuff you already have it's better to treat things as you are doing and just treat the money as income-- it's easier and doesn't really change anything-- you always had that in equity, some of it was just off the books and now you are bringing it into the books.",
"title": ""
},
{
"docid": "c9ce99cbf2297731cc659b420f44965c",
"text": "Could be. I haven't read the law or how its written nor am I a lawyer. Just saying there's usually a way around these things. They could also make the business decision that the risk of lost sales is worth the potential lawsuit loss. We're all just pontificating here ¯\\_(ツ)_/¯",
"title": ""
},
{
"docid": "8e68970aacbf14e3736a013bdb688412",
"text": "In the terms of profit, you're most likely not going to make any. The other posters had good suggestions about donating and I say the same. The fact that you had no business insurance leads me to believe that you may just have an expensive hobby and not an actual business. Talk to your accountant/tax preparer and see what and how much loss can be deducted, although that doesn't help in the present. This is a hard lesson to learn but I hope it sticks. **Always** have business insurance, especially in an area such as yours where hurricanes are relatively normal. It's absurdly foolish and unacceptable not to have insurance. I hope all works out.",
"title": ""
},
{
"docid": "9d1a7f1944348ed00e9367a5fcb54ad7",
"text": "\"Well, I'd probably need to buy a lot more [Tide](http://nymag.com/news/features/tide-detergent-drugs-2013-1) to hide any purchases I don't want Uncle Sam to know about (not just drugs, either - When's the last time you paid sales tax at a yard sale?). Other than that, I doubt it would matter much. 99.9% of my financial transactions are *already* on plastic, and I regularly keep the same \"\"emergency $20 bill\"\" in my wallet for months at a time.\"",
"title": ""
}
] |
fiqa
|
5f8bb341fa74065e28374670d69d6b43
|
Does investing money in other currencies help pad losses in case of a stock market crash?
|
[
{
"docid": "5fc6449416d4cd15fa5c851bc0040ca0",
"text": "If the equity market in the USA crashed, its very likely equity markets everywhere else would crash. The USA has a high number of the world's largest businesses and there are correlations between equity markets. So you need to think of equities as a global asset class, not regional. Your question is then a question about the correlation between equity markets and currency markets. Here's a guess: If equity markets crashed, you would see a lot of panic selling of stocks denominated in many currencies, but probably the most in USD, due to the large number of the world's largest businesses trading on US stock exchanges. Therefore, when the rest of the world sells US equities they receive cash USD, which they might sell for their local currency. That selling pressure would cause USD to fall. But, when equity markets crash there's a move to safety of the bond markets. The world's largest bond markets are denominated in which currency? Probably USD. So those who receive USD for their equities are going to spend that USD on bonds. In which case there is probably no correlation between equity markets and currency markets at all. A quick google search shows this kind of thing",
"title": ""
}
] |
[
{
"docid": "45c3cb28491d6b35f3219f442d3100a6",
"text": "\"These have the potential to become \"\"end-of-the-world\"\" scenarios, so I'll keep this very clear. If you start to feel that any particular investment may suddenly become worthless then it is wise to liquidate that asset and transfer your wealth somewhere else. If your wealth happens to be invested in cash then transferring that wealth into something else is still valid. Digging a hole in the ground isn't useful and running for the border probably won't be necessary. Consider countries that have suffered actual currency collapse and debt default. Take Zimbabwe, for example. Even as inflation went into the millions of percent, the Zimbabwe stock exchange soared as investors were prepared to spend ever-more of their devaluing currency to buy stable stocks in a small number of locally listed companies. Even if the Euro were to suffer a critical fall, European companies would probably be ok. If you didn't panic and dig caches in the back garden over the fall of dotcom, there is no need to panic over the decline of certain currencies. Just diversify your risk and buy non-cash (or euro) assets. Update: A few ideas re diversification: The problem for Greece isn't really a euro problem; it is local. Local property, local companies ... these can be affected by default because no-one believes in the entirety of the Greek economy, not just the currency it happens to be using - so diversification really means buying things that are outside Greece.\"",
"title": ""
},
{
"docid": "7847578cee6631c25a5d983b43d22e33",
"text": "\"On contrary of what Mike Scott suggested, I think in case of EURO DOOM it's a lot safer if your savings were changed into another currency in advance. Beware that bringing your money into an EURO CORE country (like Finland, Austria, Germany, Nethereland) it's useful if you think those banks are safer, but totally useless to avoid the conversion of your saving from Euro into your national currency. In case of EURO CRASH, only the Central Bank will decide what happens to ALL the Euro deposited wherever, single banks, even if they are Deutsche Bank or BNP or ING, can not decide what to do on their own. ECB (European Central Bank) might decide to convert EURO into local currencies based on the account's owner nationality. Therefor if you are Greek and you moved your saving in a German bank, the ECB might decide that your Euro are converted into New Dracma even if they sit in a German bank account. The funniest thing is that if you ask to a Finland bank: \"\"In case of Euro crash, would you convert my Euro into New Dracma?\"\", they sure would answer \"\"No, we can't!\"\", which is true, they can not because it's only the ECB (Europe Central Bank) the one that decides how an ordered Euro crash has to be manged, and the ECB might decide as I explained you above. Other Central Banks (Swiss, FED, etc.) would only follow the decisions of the ECB. Moreover in case of EURO DOOM, it's highly probable that the Euro currency looses a tremendous value compared to other currencies, the loss would be huge in case the Euro Crash happens in a disordered way (i.e. a strong country like Germany and their banks decides to get out and they start printing their own money w/o listening to the ECB anymore). So even if your saving are in Euro in Germany they would loose so much value (compared to other currencies) that you will regreat forever not to have converted them into another currency when you had the time to do it. Couple of advises: 1) If you want to change you savings into another currency you don't need to bring them into another bank/country (like US), you could simply buy US Shares/Bonds at your local bank. Shares/Bonds of a US company/US gov will always be worth their value in dollars no matter in what new pathetic currency your account will be converted. 2) But is there a drawback in converting my saving into another currency (i.e. buying dollars in the form of US treasury bonds)? Unfortunately yes, the drawback is that in case this Euro drama comes finally to an happy ending and Germans decide to open their wallets for the nth time to save the currency, the Euro might suddenly increase its value compared to other currencies, therefor if you changed your saving into another currency you might loose money (i.e. US dollars looses value against the Euro).\"",
"title": ""
},
{
"docid": "b1226b18f17ae68a16316ef098513605",
"text": "Very likely this refers to trading/speculating on leverage, not investing. Of course, as soon as you put leverage into the equation this perfectly makes sense. 2007-2009 for example, if one bought the $SPX at its highs in 2007 at ~$1560.00 - to the lows from 2009 at ~$683.00 - implicating that with only 2:1 leverage a $1560.00 account would have received a margin call. At least here in Europe I can trade index CFD's and other leveraged products. If i trade lets say >50:1 leverage it doesn’t take much to get a margin call and/or position closed by the broker. No doubt, depending on which investments you choose there’s always risk, but currency is a position too. TO answer the question, I find it very unlikely that >90% of investors (referring to stocks) lose money / purchasing power. Anyway, I would not deny that where speculators (not investors) use leverage or try to trade swings, news etc. have a very high risk of losing money (purchasing power).",
"title": ""
},
{
"docid": "39992fa71ba6c1794c6d2f65443b5d45",
"text": "\"Unless you are buying a significant value of your goods in USD then the relative strength of USD versus your local currency will have little to no effect on what the value of your investments is worth to you. In fact only (de|in)flation will effect your purchasing power. If your investments are in your local currency and your future expenses (usage of the returns on the investments) will be in your local currency FX has no effect. To answer your question, however, since all investments involve flows of money there can be no investment (other than perhaps gold which is really a form of currency) that isn't bound to at least one currency. In general investments are expected to be valued against the investor's home currency (I tend to call it \"\"fund currency\"\" as I work with hedge funds) as the return on the investment will be paid out in the fund currency and returns will be compared on the same basis. If investments are to be made internationally then it is necessary to reduce, or \"\"hedge\"\" the exchange rate risk. This is normally done using FX swaps or futures that allow an exchange rate in the future to be locked in today. Far from being unbound from FX moves these derivatives are closely bound to any moves but crucially are bound in the opposite direction to the hoped for FX move. an example of this would be if I'm investing 100GBP (my local currency) in a US company XYZ corp which I expect to do well. Suppose I get 200USD for my 100GBP and so buy 1 * 200USD shares in XYZ. No matter what happens to XYZ stock any move in GBP/USD will affect my P&L so I buy a future that allows me to exchange 200USD for 100GBP in 6 month's time. If GBP rises I can sell the future and make money on both the higher exchange rate and the increase in XYZ corp. If GBP falls I can keep the future until maturity and exchange the 200USD from XYZ corp for 100GBP so I only take the foreign exchange hit on any profits. If I expect my profits to be 10USD I can even buy futures such that I can lock in the exchange rate for 110USD in 6 months so that I will lose even less of my profit from the exchange rate move.\"",
"title": ""
},
{
"docid": "e92639dfe3b96ba834caa1456ea2c9d2",
"text": "Cash would be the better alternative assuming both stocks take a major hit in ALL categories AND the Fed raise rates at the same time for some reason. Money market funds that may have relatively low yields at the moment would likely be one of the few securities not to be repriced downward as interest rates rising would decrease bond values which could be another crash as I could somewhat question how broad of a crash are you talking here. There are more than a few different market segments so that while some parts may get hit really hard in a crash, would you really want to claim everything goes down? Blackrock's graphic shows in 2008 how bonds did the best and only it and cash had positive returns in that year but there is something to be said for how big is a crash: 20%, 50%, 90%?",
"title": ""
},
{
"docid": "d62e3a39316e279e4ee8a1655d33359f",
"text": "\"If you don't use leverage you can't lose more than you invested because you \"\"play\"\" with your own money. But even with leverage when you reach a certain limit (maintenance margin) you will receive a margin call from your broker to add more funds to your account. If you don't comply with this (meaning you don't add funds) the broker will liquidate some of the assets (in this case the currency) and it will restore the balance of the account to meet with his/her maintenance margin. At least, this is valid for assets like stocks and derivatives. Hope it helps! Edit: I should mention that\"",
"title": ""
},
{
"docid": "a86ac339b5503e4547a79a0d3386e8dc",
"text": "There are also currency hedged ETFs. These operate similarly to what gengren mentioned. For example, a currency hedged Japan equities ETF has an inherent short yen/usd position on it in addition to the equity position, so the effects of a falling yen are negated. Note that it will still be denominated in dollars, however. AED is pegged to the dollar though, isnt it? If your broker is charging you a crazy price maybe try again a different day, or get a new broker. http://www.ishares.com/us/strategies/hedge-currency-impact",
"title": ""
},
{
"docid": "f6b490195aee0c5351658b1edfd90ba3",
"text": "If you're referring to investment hedging, then you should diversify into things that would profit if expected event hit. For example alternative energy sources would benefit greatly from increased evidence of global warming, or the onset of peak oil. Preparing for calamities that would render the stock market inaccessible, the answer is quite different. Simply own more of things that people would want than you need. A list of possibilities would include: Precious metals are also a way to secure value outside the financial markets, but would not be readily sellable until the immediate calamity had passed. All this should be balanced on an honest evaluation of the risks, including the risk of nothing happening. I've heard of people not saving for retirement because they don't expect the financial markets to be available then, but that's not a risk I'm willing to take.",
"title": ""
},
{
"docid": "b7b84c856eb772803ebfa337eef126f3",
"text": "\"Yes, you're still exposed to currency risk when you purchase the stock on company B's exchange. I'm assuming you're buying the shares on B's stock exchange through an ADR, GDR, or similar instrument. The risk occurs as a result of the process through which the ADR is created. In its simplest form, the process works like this: I'll illustrate this with an example. I've separated the conversion rate into the exchange rate and a generic \"\"ADR conversion rate\"\" which includes all other factors the bank takes into account when deciding how many ADR shares to sell. The fact that the units line up is a nice check to make sure the calculation is logically correct. My example starts with these assumptions: I made up the generic ADR conversion rate; it will remain constant throughout this example. This is the simplified version of the calculation of the ADR share price from the European share price: Let's assume that the euro appreciates against the US dollar, and is now worth 1.4 USD (this is a major appreciation, but it makes a good example): The currency appreciation alone raised the share price of the ADR, even though the price of the share on the European exchange was unchanged. Now let's look at what happens if the euro appreciates further to 1.5 USD/EUR, but the company's share price on the European exchange falls: Even though the euro appreciated, the decline in the share price on the European exchange offset the currency risk in this case, leaving the ADR's share price on the US exchange unchanged. Finally, what happens if the euro experiences a major depreciation and the company's share price decreases significantly in the European market? This is a realistic situation that has occurred several times during the European sovereign debt crisis. Assuming this occurred immediately after the first example, European shareholders in the company experienced a (43.50 - 50) / 50 = -13% return, but American holders of the ADR experienced a (15.95 - 21.5093) / 21.5093 = -25.9% return. The currency shock was the primary cause of this magnified loss. Another point to keep in mind is that the foreign company itself may be exposed to currency risk if it conducts a lot of business in market with different currencies. Ideally the company has hedged against this, but if you invest in a foreign company through an ADR (or a GDR or another similar instrument), you may take on whatever risk the company hasn't hedged in addition to the currency risk that's present in the ADR/GDR conversion process. Here are a few articles that discuss currency risk specifically in the context of ADR's: (1), (2). Nestle, a Swiss company that is traded on US exchanges through an ADR, even addresses this issue in their FAQ for investors. There are other risks associated with instruments like ADR's and cross-listed companies, but normally arbitrageurs will remove these discontinuities quickly. Especially for cross-listed companies, this should keep the prices of highly liquid securities relatively synchronized.\"",
"title": ""
},
{
"docid": "28fed650e9e4cc59a4dba20e8648f303",
"text": "Typically, the higher interest rates in local currency cover about the potential gain from the currency exchange rate change - if not, people would make money out of it. However, you only know this after the fact, so either way you are taking a risk. Depending on where the local economy goes, it is more secure to go with US$, or more risky. Your guess is as good as anyone. If you see a chance for a serious meltdown of the local economy, with 100+% inflation ratios and possibly new money, you are probably better off with US$. On the other hand, if the economy develops better than expected, you might have lost some percentage of gain. Generally, investing in a more stable currency gets you slightly less, but for less risk.",
"title": ""
},
{
"docid": "0f7e3492cf4cc9b19031d374d516784f",
"text": "You have currency risk either way. The only question is deal with it now or later. No one can tell you which action is better until we look at it in hindsight. You could hedge and move some now, some later. Invest your USD in US equities and move some to EUR and invest that in EUR companies. I'd suggest having your money in the same currency as where you are living, since for the most part, you'll be in the same boat as your peers and neighbors. If you have high inflation, so will your friends and neighbors and you won't feel so bad. And if your currency gets stronger, then so will the currency of the people you are hanging out with. It's similar to betting on Don't Pass in craps. If you bet against the rest of the table, you could win when they lose, but then all your friends will be sad and you'll be happy. And vice versa, when your friends are high-fiving, you'll be in the dumps. I'd say it's better to be in the same boat as your peers since that's usually how we judge our happiness when we compare our situation to others.",
"title": ""
},
{
"docid": "df23c140202eec107b9a1e27a3e56147",
"text": "This is the exactly wrong thing to do especially in the age of algorithmic trading. Consider this event from 2010: Chart Source Another similar event occurred in 2015 and there was also a currency flash crash in that year. As you can see the S&P 500 (and basically the entire market) dropped nearly 7% in a matter of minutes. It regained most of that value within 15 minutes. If you are tempted to think that 7% isn't that big of a deal, you need to understand that specific securities will have a much bigger drop during such events. For example the PowerShares S&P 500 Low Volatility ETF (SPLV) was down 45% at one point on Aug 24, 2015 but closed less than 6% down. Consider what effect a stop loss order would have on your portfolio in that circumstance. You would not be able to react fast enough to buy at the bottom. The advantage of long-term investing is that you are immune to such aberrations. Additionally, as asked by others, what do you do once you've pulled out your money. Do you wait for a big jump in the market and hop back in? The risk here is that you are on the sidelines for the gains. By missing out on just a small number of big days, you can really hurt your long-term returns.",
"title": ""
},
{
"docid": "51876fb7fa8f2f1b1c5fc654650a5ef4",
"text": "The other obvious suggestion I guess is to buy cheap stocks and bonds (maybe in a dollar denominated fund). If the US dollar rises you'd then get both the fund's US gains plus currency gains. However, no guarantee the US dollar will rise or when. Perhaps a more prudent approach is to simply diversify. Buy both domestic and foreign stocks and bonds. Rebalance regularly.",
"title": ""
},
{
"docid": "e9479291259074533e355387dc6805eb",
"text": "\"The difference is in the interrelation between the varied investments you make. Hedging is about specifically offsetting a possible loss in an investment by making another related investment that will increase in value for the same reasons that the original investment would lose value. Gold, for instance, is often regarded as the ultimate hedge. Its value is typically inversely correlated to the rest of the market as a whole, because its status as a material, durable store of value makes it a preferred \"\"safe haven\"\" to move money into in times of economic downturn, when stock prices, bond yields and similar investments are losing value. That specific behavior makes investing in gold alongside stocks and bonds a \"\"hedge\"\"; the increase in value of gold as stock prices and bond yields fall limits losses in those other areas. Investment of cash in gold is also specifically a hedge against currency inflation; paper money, account balances, and even debt instruments like bonds and CDs can lose real value over time in a \"\"hot\"\" economy where there's more money than things to buy with it. By keeping a store of value in something other than currency, the price of that good will rise as the currencies used to buy it decrease in real value, maintaining your level of real wealth. Other hedges are more localized. One might, for example, trade oil futures as a hedge on a position in transportation stocks; when oil prices rise, trucking and airline companies suffer in the short term as their margins get squeezed due to fuel costs. Currency futures are another popular hedge; a company in international business will often trade options on the currencies of the companies it does business in, to limit the \"\"jitters\"\" seen in the FOREX spot market caused by speculation and other transient changes in market demand. Diversification, by contrast, is about choosing multiple unrelated investments, the idea being to limit losses due to a localized change in the market. Companies' stocks gain and lose value every day, and those companies can also go out of business without bringing the entire economy to its knees. By spreading your wealth among investments in multiple industries and companies of various sizes and global locations, you insulate yourself against the risk that any one of them will fail. If, tomorrow, Kroger grocery stores went bankrupt and shuttered all its stores, people in the regions it serves might be inconvenienced, but the market as a whole will move on. You, however, would have lost everything if you'd bet your retirement on that one stock. Nobody does that in the real world; instead, you put some of your money in Kroger, some in Microsoft, some in Home Depot, some in ALCOA, some in PG&E, etc etc. By investing in stocks that would be more or less unaffected by a downturn in another, if Kroger went bankrupt tomorrow you would still have, say, 95% of your investment next egg still alive, well and continuing to pay you dividends. The flip side is that if tomorrow, Kroger announced an exclusive deal with the Girl Scouts to sell their cookies, making them the only place in the country you can get them, you would miss out on the full possible amount of gains you'd get from the price spike if you had bet everything on Kroger. Hindsight's always 20/20; I could have spent some beer money to buy Bitcoins when they were changing hands for pennies apiece, and I'd be a multi-millionaire right now. You can't think that way when investing, because it's \"\"survivor bias\"\"; you see the successes topping the index charts, not the failures. You could just as easily have invested in any of the hundreds of Internet startups that don't last a year.\"",
"title": ""
},
{
"docid": "30152e0feec6c0a9cef953d3c3199026",
"text": "The collapse of the US economic system is one of the many things I am preparing for. To answer the how, me personally I am doing some investing in gold and silver. However I am investing more in the tools, goods and gear that will help me be independent of the system around me. In short nothing will change for me if the US dollar goes belly up. A book I recommend is Possum Living (http://www.possumliving.net/). Other than that I am investing in trade goods such as liquor, cigarettes, medical supplies.",
"title": ""
}
] |
fiqa
|
e53d5904e1d823cc79de1d134bad620b
|
how does one start an investing club (as a company)?
|
[
{
"docid": "35ed04b2dace3b1397574bc03dc60917",
"text": "\"As for the letting the \"\"wise\"\" people only make the decisions, I guess that would be a bit odd in the long run. Especially when you get more experienced or when you don't agree with their decision. What you could do, is make an agreement that always 3/4 (+/-) of the partners must agree with an investment. This promotes your involvement in the investments and it will also make the debate about where to invest more alive, fun and educational). As for the taxes I can't give you any good advice as I don't know how tax / business stuff works in the US. Here in The Netherlands we have several business forms that each have their own tax savings. The savings mostly depend on the amount of money that is involved. Some forms are better for small earnings (80k or less), other forms only get interesting with large amounts of money (100k or more). Apart from the tax savings, there could also be some legal / technical reasons to choose a specific form. Again, I don't know the situation in your country, so maybe some other folks can help. A final tip if your also doing this for fun, try to use this investment company to learn from. This might come in handy later.\"",
"title": ""
},
{
"docid": "57a608e57064a2ed2676dd2ae33d92f7",
"text": "\"+1 for noting that you are in it for the long haul. I also think this is a great project and activity to do with friends. Setting up and start-up investment company could be done as a simple LLC. The decision making process can be decided among the members -- if you want to defer to the others then so be it. Make it flexible so that you can change your mind in the future. If this is not intended to be a source of revenue or income for you (note your \"\"in it for the long haul\"\") One way of sourcing the capital and managing the resulting taxes you might want to consider is setting up a self-directed retirement account and making the investment from there. proceeds as you and your friends choose to take them would flow back into the retirement account. As with most investment and tax related questions we should all take the little extra time and money to follow up on internet-based advice with your own lawyer, investment adviser and accountant. These licensed individuals when under contract assume a degree of responsibility for their answer which is not available online. :)\"",
"title": ""
},
{
"docid": "d71807b2da44a71b83e294ae53cad7f1",
"text": "Taxes are the least of your concerns. Your friends need licenses. Although this COULD be avoided entirely with certain craftily worded disclaimers and exemptions and the WAY that money is given to them.",
"title": ""
}
] |
[
{
"docid": "824ed0c6128435f4ed078a8c39c90d8c",
"text": "Sounds like you are starting an investment club. What you need is an investment club partnership agreement. Have a look at this free document. EDIT Based on OP's comments, it appears that the OP will be acting as an adviser/manager of a private investment fund. If the fund is not open to the public, it may still be treated as a type of investment club, but different rules -- including possibly having to register with the SEC -- may apply (quoted from the first link): If the adviser is compensated for providing the advice regarding the club's investments, the adviser may need to register according to the Investment Advisers Act of 1940. Also, if one person selects investments for the club, that person may have to register as an investment adviser. In general, a person who has $25 million or more in assets under management is required to register with the SEC under the Investment Advisers Act of 1940. A person managing less than $25 million may be required to register under the securities laws of the state or states in which the adviser transacts business.",
"title": ""
},
{
"docid": "164f357b28487a92dd220457fa1bda24",
"text": "\"I tell you how I started as an investor: read the writings of probably the best investor of the history and become familiarized with it: Warren Buffett. I highly recommend \"\"The Essays of Warren Buffett\"\", where he provides a wise insight on how a company generates value, and his investment philosophy. You won't regret it! And also, specially in finance, don't follow the advice from people that you don't know, like me.\"",
"title": ""
},
{
"docid": "88c45e03f8757aab8fc52372a58788df",
"text": "I had the same experience as Jeremy: made investments in both Prosper and Lending Club and got a much better returns with Lending Club, although in my cases both investments were ok: after 18 months i made 4-5% on prosper and 11-12% on Lending Club. I think they just have better underwriting standards.",
"title": ""
},
{
"docid": "9d73a1100303910d8ada4b30274fd5f9",
"text": "Yes. Private companies have shares, they're just not liquid and there may be restrictions around selling them; founders get shares when they found a company (not options), as do VCs that invest. An options pool is oftentimes created as a result of a VC financing (when the cap table is being carved up and the existing owners are being diluted, anyway) for the purposes of attracting future employees.",
"title": ""
},
{
"docid": "43544cf49d9103aa148b03b6f70b5ce4",
"text": "Ask your colleagues! I know that sounds obvious, but just go to where people who do your sort of business hang out (or better, find some venture capital firms and ask their portfolio companies). It's not something people would keep secret from you...",
"title": ""
},
{
"docid": "60a9f5107226f646e8d26736cf930801",
"text": "\"Don't do it until you have educated yourself enough to know what you are doing. I hope you won't take this personally, but given that you are wandering around asking random strangers on the Internet how to \"\"get into investing,\"\" I feel safe in concluding that you are by no means a sophisticated enough investor to be choosing individual investments, nor should you be trusting financial advisors to choose investments for you. Believe me, they do not have your interests at heart. I usually advise people in your position to start by reading one book: A Random Walk Down Wall Street by Burton Malkiel. Once you've read the book by Malkiel you'll understand that the best strategy for all but the most sophisticated investors is to buy an index fund, which simply purchases a portfolio of ALL available stocks without trying to pick winners and losers. The best index funds are at Vanguard (there is also a Vanguard site for non-US residents). Vanguard is one of the very, very, very few honest players in the business. Unlike almost any other mutual fund, Vanguard is owned by its investors, so it has no profit motive. They never try to pick individual stocks, so they don't have to pay fancy high-priced analysts to pick stocks. If you find it impossible to open a Vanguard account from wherever you're living, find a local brokerage account that will allow you to invest in the US stock market. Many Vanguard mutual funds are available as ETFs which means that you buy and sell them just like any other stock on the US market, which should be easy to do from any reasonably civilized place.\"",
"title": ""
},
{
"docid": "06983316e10baed1be3506c87865051b",
"text": "In theory you can buy shares directly from someone else who owns them. In practise, if the stock is listed on an exchange, they are unlikely to own them directly, they are likely to own them through an intermediary. You will have to pay fees to that intermediary to transfer the shares to your name. There are thousands of small companies owned by the guy who started it and a few other investors. You can buy stock in that kind of company directly from the existing owners, as long as they are willing to sell you some. It's a super-high risk investment strategy, though. This is the kind of deal that happens on Dragons Den.",
"title": ""
},
{
"docid": "e30c1a9481ded4a26c6feb5502718faa",
"text": "My understanding is you can create a company 0 value. Then you need to either loan the company the money to buy the building (it will still have 0 value as it will have a debt equal to it's assets) or sell share to investors at any price you like to raise the money to buy the building. Once shares have value (as valued by a chartered accountant - not anyone can do this) then anyone recieving shares will have to pay income tax. This is why keeping the shares as no value for as long as possible can be preferable. Also a benefit of using share options. talk to your investors, see what they require.",
"title": ""
},
{
"docid": "a3ead6164c50ccbd9cdb1398b9d611c2",
"text": "I don't know if this is exactly what you're looking for but Seedrs sorta fits what you're looking for. Private companies can raise money through funding rounds on Seedrs website. It wouldn't necessarily be local companies though. I've only recently found it myself so not sure if it has a uk or European slant to it. Personally I think it's a very interesting concept, private equity through crowd funding.",
"title": ""
},
{
"docid": "b8a12e44cf5ee98e06bdcd04d98f3b1e",
"text": "\"There obviously is not such a list of companies, because if there were the whole world would immediately invest in them. Their price would rise like a rocket and they would not be undervalued anymore. Some people think company A should be worth x per share, some people think it should be worth y. If the share price is currently higher than what someone thinks it should be, they sell it, and if it is lower than they think it should be they buy it. The grand effect of this all is that the current market price of the share is more or less the average of what all investors together think it should currently be worth. If you buy a single stock, hoping that it's undervalued and will rise, you may be right but you may equally well be wrong. It's smarter to diversify over lots of stocks to reduce the impact of this risk, it evens out. There are \"\"analysts\"\" who try to make a guess of which stocks will do better, and they give paid advice or you can invest in their funds -- but they invariably do worse than the average of the market as a whole, over the long term. So the best advice for amateurs is to invest in index funds that cover a huge range of companies and try to keep their costs very low.\"",
"title": ""
},
{
"docid": "1836169d4b281e472f6b660492a5e2ed",
"text": "\"Question 1: How do I start? or \"\"the broker\"\" problem Get an online broker. You can do a wire transfer to fund the account from your bank. Question 2: What criticism do you have for my plan? Dividend investing is smart. The only problem is that everyone's currently doing it. There is an insatiable demand for yield, not just individual investors but investment firms and pension funds that need to generate income to fund retirements for their clients. As more investors purchase the shares of dividend paying securities, the share price goes up. As the share price goes up, the dividend yield goes down. Same for bonds. For example, if a stock pays $1 per year in dividends, and you purchase the shares at $20/each, then your yearly return (not including share price fluctuations) would be 1/20 = 5%. But if you end up having to pay $30 per share, then your yearly return would be 1/30 or 3.3% yield. The more money you invest, the bigger this difference becomes; with $100K invested you'd make about $1.6K more at 5%. (BTW, don't put all your money in any small group of stocks, you want to diversify). ETFs work the same way, where new investors buying the shares cause the custodian to purchase more shares of the underlying securities, thus driving up the price up and yield down. Instead of ETFs, I'd have a look at something called closed end funds, or CEFs which also hold an underlying basket of securities but often trade at a discount to their net asset value, unlike ETFs. CEFs usually have higher yields than their ETF counterparts. I can't fully describe the ins and outs here in this space, but you'll definately want to do some research on them to better understand what you're buying, and HOW to successfully buy (ie make sure you're buying at a historically steep discount to NAV [https://seekingalpha.com/article/1116411-the-closed-end-fund-trifecta-how-to-analyze-a-cef] and where to screen [https://www.cefconnect.com/closed-end-funds-screener] Regardless of whether you decide to buy stocks, bonds, ETFs, CEFs, sell puts, or some mix, the best advice I can give is to a) diversify (personally, with a single RARE exception, I never let any one holding account for more than 2% of my total portfolio value), and b) space out your purchases over time. b) is important because we've been in a low interest rate environment since about 2009, and when the risk free rate of return is very low, investors purchase stocks and bonds which results in lower yields. As the risk free rate of return is expected to finally start slowly rising in 2017 and gradually over time, there should be gradual downward pressure (ie selling) on the prices of dividend stocks and especially bonds meaning you'll get better yields if you wait. Then again, we could hit a recession and the central banks actually lower rates which is why I say you want to space your purchases out.\"",
"title": ""
},
{
"docid": "be5ac44a62ef5e8e8fc134d8b6c29b90",
"text": "\"It is such a touchy subject for many people, I have to say that simple \"\"set it and forget it\"\" kind of investing isn't likely in the near term. Instead, if this is something you believe in, treat it like any other business opportunity and do some detailed research into people operating in the field. Look into their business plans and visit their operations. If there is a plan, and idea, a team and the intangible it you might consider doing some direct investing with a local company. Basically become a small business owner, silent partner or investor. If you believe in it go for it. If you don't believe in it that much, I think this is a market somebody else needs to develop before we invest.\"",
"title": ""
},
{
"docid": "45f75f318140ab32ba09e27eb9b885aa",
"text": "\"Investing in an existing company is almost like buying a house, or even becoming an \"\"Angel investor\"\" in a start-up. Before you start the process, decide how much you want to be involved in the day-to-day and which industries you would feel most comfortable in. The latter is an important consideration since you would have to know sufficient about the industry in order to evaluate the quality of your prospective investment. Searching for a suitable business is a time-consuming process: The guidance for evaluating any company has been answered in another question, so I'll simply link. Most business owners are looking to their businesses to provide them a pension, so they often look to sell around retirement age. Buying such a business is tricky - you may be assisting the next generation to finance the purchase which can have it's own struggles. Ideally you'll be looking for a young(ish) company with proven sales and which is looking to finance growth in an optimal way. Such a company may have many options for raising capital so you'll be competing to invest. As to whether or not it's a good idea... KFC only became a household name and global franchise after Pete Harman joined Harland Sanders as a partner. Richard and Maurice McDonald may have founded McDonald's but it was Ray Kroc who made it a success. New partners bring in new ideas and fresh energy which the original entrepreneurs may have lost during the difficulties of starting out. But that goes back to my first query; just how much do you want to get involved?\"",
"title": ""
},
{
"docid": "2e53928f128307a21a43fe26ba4fc132",
"text": "\"You can learn very little from it. Company directories are often given share options or shares as a bonus, and because of that they are unlikely to buy shares. When they sell shares, you'll hear people shouting \"\"so-and-so sold his or her shares, they must know something bad about the company\"\". The truth is that you can't eat or drink shares. If that company director owning shares worth a million dollars wants to buy a new Ferrari, he will find that Ferrari doesn't give free cars to people owning lots of shares. He actually has to sell the shares to get the money for the car, and that's what he does.\"",
"title": ""
},
{
"docid": "150b659334d280ebad2c703db5e3618f",
"text": "At this point the cost of borrowing money is very low. For the sake of argument, say it is 1% per year for a large institution. I can either go out and find a client to invest 100,000$ and split profit and loss with them. Or, I could borrow 50,000$, pay 500$/year in interest, and get the same return and loss, while moving the market half as much (which would let me double my position!) In both cases the company is responsible for covering all fixed costs, like paying for traders, trades, office space, branding, management, regulatory compliance, etc. For your system to work, the cost to gather clients and interact with them has to be significantly less than 1% of the capital they provide you per year. At the 50% level, that might actually be worth it for the company in question. Except at the 50% level you'd have really horrible returns even when the market went up. So suppose a more reasonable level is the client keeps 75% of the returns (which compares to existing companies which offer larger investors an 80% cut on profits, but no coverage on losses). Now the cost to gather and interact with clients has to be lower than 2500$ per million dollars provided to beat out a simple loan arrangement. A single sales employee with 100% overhead (office, all marketing, support, benefits) earning 40,000$/year has to bring in 32 million dollar-years worth of investment every year to break even. Cash is cheap. Investment houses sell cash management, and charge for it. They don't sell shared investment risk (at least not to retail investors), because it would take a lot of cash for it to be worth their bother. More explicitly, for this to be viable, they'd basically have to constantly arrange large hedges against the market going down to cover any losses. That is the kind of thing that some margin loans may require. That would all by itself lower their profits significantly, and they would be exposed to counter-party risk on top of that. It is much harder to come up with a pile of cash when the markets go down significantly. If you are large enough to be worthwhile, finding a safe counterparty may be nearly impossible.",
"title": ""
}
] |
fiqa
|
f9e6bbb7699c548260d821aee2c0e1a2
|
Is a debt collector allowed to make a hard inquiry on your credit report?
|
[
{
"docid": "30901c7d3c65259b32942bbbe49329e5",
"text": "\"According to the Fair Credit Reporting Act: any consumer reporting agency may furnish a consumer report [...] to a person which it has reason to believe [...] intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer See p12 (section 604). The usual interpretation of this that I've heard is that a debt collection agency that owns or has been assigned a debt can make hard pulls on your credit report without your consent. This link seems to support that (and references the same part of the act, among others): According to the Fair Credit Reporting Act, [...], any business can access your credit history without your permission provided the business has a valid \"\"permissible purpose.\"\" The FCRA notes that one such permissible purpose is to review your credit information in connection with the collection of a debt. Thus, if you owe money to a debt collector, the debt collector has the legal right to pull and review your credit report. If they haven't been assigned the debt or own it outright, I believe you have a legal right to dispute it. Consult a lawyer if this is actually a situation you face. Once use for this is if the debt collection agency has trouble locating you; since your credit report normally contains current and past addresses, this is one way to locate you.\"",
"title": ""
}
] |
[
{
"docid": "a3dfc8d4608c3715d2c372bb7b0d5384",
"text": "\"I don't know of a guideline to how often you can ask for an increase. You can ask as often as you like. As for consequences, refer to Is there a downside to asking for a credit increase?, where the consensus is that, aside from a possible (temporary) hard pull on your credit report, there's probably no risk to asking. Depending on your credit score/history, and especially in the current economy, you may get \"\"no\"\" as an answer most often. You can try talking to your card's Credit Department or even Customer Retention Department as they may have more leverage. They may say yes or no or that they need to review your account. When you do ask for an increase, I would make sure to ask if there will be a hard pull on your report, if there is any cost or downside to applying, and to make sure that this would be an increase to your current credit line, not a new account.\"",
"title": ""
},
{
"docid": "cf5e1d8139cc9fd9701f60f3b7da9db8",
"text": "To answer the specific question of whether you can get the bill reduced without hurting your credit, yes, as long as the bill never goes to collections, there's no reason it should ever show up on your credit report. Will they reduce your bill without sending it to collections first? Maybe. All you can do is ask.",
"title": ""
},
{
"docid": "8b6208d0c7eb4a079df32842d7a7bcb2",
"text": "I've seen my score dip a little bit after every hard pull. (Admittedly, a fako score.) You apply for credit or for a credit increase and your score is going to dip. Any check that is not intended to grant credit (either an existing creditor rechecking, or when you check your own credit) has no effect on your score. Likewise, a check done to screen for a solicitation have no effect as you are not trying to borrow. (Taking them up on the offer will normally cause a hit, though.)",
"title": ""
},
{
"docid": "bd63fb8c9a8b8010a09f1855e43f0082",
"text": "I froze my credit online yesterday. Last page of process confirmed I had frozen credit and told me to print last page because it has information I will need to unfreeze it. Page was blank. So I waited. Then I got timed out. Then I got a page telling me I had not frozen my credit. I had called a few times yesterday but always got a busy signal. So, at 5:06 est I called them again. Before patching me through to a live person that asked if I'd be willing to take a short survey after speaking with rep, which I agreed to do. When my call was transferred I got a message saying they worked nine to five and to call back later. Then the survey started. Needless to say, the scores were the lowest possible. And apparently unfreezing my credit will be problematic. Yippee!",
"title": ""
},
{
"docid": "70f6f18a80e1fa19ca1422a3f614d813",
"text": "\"Use with moderation. Powerful stuff. Your caller could be an offshore scammer too. Summarizing from http://www.creditinfocenter.com/rebuild/debt-validation.shtml: You can dispute the debt, and demand that the collector give you the name and address of the original creditor and show that it isn't past the statute of limitations. If they can't \"\"validate\"\" the debt by providing that info, in writing, they must drop it until they can do so. You can sue (though generally not for very much) if they don't. You may have to make this request in writing, so it has a paper trail. A valid verification respond must include: If they don't respond within 30 days, they are in violation of the Fair Credit Reporting Act (FDCPA section 809b), and you can send registered mail threatening them with a lawsuit if they don't immediately drop it and remove it from your credit report. They should respond to that within two weeks, and if they don't have darned good evidence will probably cave. If they can prove you do owe the money ... Well, you can hope they aren't licensed to collect in your state; if they aren't you can try to challenge them on that basis. Unlikely to work. If they agree, remember to send a copy of the letter to the credit reporting agencies to make sure it's taken off your record. If this isn't enough to resolve it, you'll probably need to bring suit. That's another long list of steps; I'm going to refer you to the linked site rather than summarize them here since at that point you should get a lawyer involved to make sure it's done promptly.\"",
"title": ""
},
{
"docid": "c9dc5d9adefc54650c4af8dcbc26666a",
"text": "\"Assuming I don't need any other new lines of credit, can I get pre-qualified repeatedly (and with different banks) with impunity? Yes, but only for a limited period. FICO says: Hard inquiries are inquiries where a potential lender is reviewing your credit because you've applied for credit with them. These include credit checks when you've applied for an auto loan, mortgage or credit card. Each of these types of credit checks count as a single inquiry. One exception occurs when you are \"\"rate shopping\"\". That's a smart thing to do, and your FICO score considers all inquiries within a 45 period for a mortgage, an auto loan or a student loan as a single inquiry. However for your situation, since you won't be getting a loan for several months, getting inquiries more than 45 days apart will each count as a separate inquiry.\"",
"title": ""
},
{
"docid": "cf48406e0cb79263a44382dd3c5badb0",
"text": "All three credit bureaus allow you to file a dispute online. Some allow you to upload documentation at the same time, others will ask you to mail it to them. Send them the letter you got from your bank, they will then return to the collection company. For $300.00 most likely they will not pursue it any further and the credit bureaus will delete the entry from your file. If the collection company want to make a case out of it they will have to view to cost of trying to get a Court Judgment against the value of the amount they are claiming. Almost certainly they will view at not cost effective and your credit rating will return to where it was prior to the negative impact",
"title": ""
},
{
"docid": "3acca10d41687e5e59f35a6dc6401349",
"text": "\"It won't hurt your credit score, but it may hurt your ChexSystems score. ChexSystems is another consumer reporting agency that doesn't keep track of your debts, but of your bank accounts. Banks (most but not all) check ChexSystems before you open an account to see if you bounce checks, overdraft, make a lot of teller visits, lose ATM cards, etc. They use this to estimate your profitability. Banks aren't allowed to discriminate against a protected class, but \"\"unprofitable\"\" is not a protected class. BTW, most banks don't make much money on checking accounts; they view them as \"\"get-you-in-the-door\"\" inducements so they can sell you the things they really want to like mortgages and investments.\"",
"title": ""
},
{
"docid": "e44c5d2b7d58ef5deec63a6f93095785",
"text": "\"From what I understand, they basically hold on to your money while you stop paying your debt. They keep it in an account and negotiate on your behalf. The longer you go without paying, the less the debt collector is willing to take and at some point, they will settle. So they take the money you've been putting into their \"\"account\"\" and pay it down. Repeat the process for all your accounts. I basically did this, without using a service. I had $17,000 on one card and they bumped the interest rate to 29%, and I had lost my job. I didn't pay it for 7 months. I just planned on filing bankruptcy. They finally called me up and said, if you can pay $250 a month, until it's paid off, we will drop the interest to 0% and forgive all your late fees. I did that, and five years later it was paid off. Similar situation happened on my other cards. It seems once they realize you can't pay, is when they're willing to give you a break. It'd be nice they just never jacked up your rate to 30% though. So, forget the service, just do it yourself. Call them up and ask, and if they don't budge, don't pay it. Of course your credit will be shot. But I'm back in the 700s, so anything is possible over time.\"",
"title": ""
},
{
"docid": "133383e907a8124467af4d047c235890",
"text": "I would keep the letter in a file for follow-up, and I would do what you are already planning to do and wait to see what shows up on the credit report. If this does reflect an identity theft attempt, chances are that others will follow, so vigilance is key here. If there is a hard credit check, then you can dispute that on your credit report. If there is not a hard credit check, there is nothing further this credit card company can do to help you anyway.",
"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": "4d6937810c10c24969fcd83f1852c5c1",
"text": "No credit bureau wants incorrect data, for obvious reasons, but it happens. That's one reason why they let you get access to your credit score, to check it the data is correct and make the 'product' (data about you) better. Nope, that's not why you can get free access to your credit report. The Fair Credit Reporting Act (FCRA) is why. FCRA requires any credit reporting agency to provide you a free report upon request every 12 months. Prior to this law, credit agencies made you pay to see your report including if you wanted it to dispute errors. They only care about the dollars they get from having this data. FCRA removed one of their revenue streams. If free locking moves forward, that will remove another. So expect them to fight it.",
"title": ""
},
{
"docid": "3a63d03786cd064808fb119a8a7f559e",
"text": "\"You should hire a lawyer. The fact that they told you your personal information shows that they actually had it, and are not imposters, which is a good thing. The fact that they mislead you means that their intentions are not pure (which is not surprising coming from a collection agency of course). When dealing with collections (or any matter of significance for that matter), don't rely on their recording of the call, because they can always conveniently lose it. Make sure to write down every single detail discussed, including the date and time of the call, and the ID/name of the person on the other side. If possible - make your own recording (notifying them of it of course). It's too late to record the calls now, but do try to reconstruct as much information as possible to provide to your lawyer to deal with it. In the end of the day they will either provide you with the recording (and then you might be surprised to hear that what they said was not in fact what you thought they said, and it was just your wishful thinking, it is very possible to be indeed the case), or claim \"\"we lost it\"\" and then it will be a problem to either of you to prove who said what, but they'll have the better hand (having better lawyers) in convincing the court that you're the one trying to avoid paying your debts. That is why proper representation at all stages is important. As to the bankruptcy - it won't help for student loans, student loans is one of the very few types of debts you can't really run away from. You have to solve this, the sooner the better. Get a professional advice. For the future (and for the other readers) - you should have gotten the professional advice before defaulting on these loans, and certainly after the first call.\"",
"title": ""
},
{
"docid": "18204c9083646cc9aa4682d0f5d23764",
"text": "Collections companies buy debt for a fraction of the face value of the debt (as little as 5-7 cents on the dollar), and you can often settle debt for a fraction of the face amount (perhaps 10-25 cents on the dollar). But there are several considerations. Do you owe the debt (is it a legitimate debt), can you afford to pay the debt, what is the age of the debt (remember, there is a statute of limitations on debt, varies by state), and what are the consequences of non-payment or settlement of the debt. Rather than confirm that you owe the debt, tell the debt collector that you need proof that the debt is yours (you should do this by certified letter). Be careful not to confirm the debt, or agree to pay it, or make any payments (yet). You said that your doctor ordered the product for you. You said the company sent you a product (you have the product). Once you have confirmed that the debt is yours, you should determine the age of the debt (when was the last time you paid on the debt). Each state has statute of limitations on debt, depending upon the age of the debt (this is why it is important not to send the collector money until you have verified the debt). You did not state when the debt was incurred (assume under SoL). Ask yourself whether you can afford to pay the debt. The amount of the debt, and your ability to pay, and whether you want to avoid the time and expense of dealing with the collector (they are trained to be annoying) are all factors to consider. You should also consider the negative consequences (credit score effects), and whether the cost of a derogatory entry is worth fighting the debt. You did not explain your financial situation; paying the $55 may be trivial, or it may be a hardship. Before you settle any debt, you should send a letter (keep a copy and proof you sent it, certified), and demand that the debt collector provide proof that you owe the debt. Often this proof does not exist, or is insufficient to gain a judgement (you would need legal help here). And should a debt collector agree to settle the debt for a lower amount, you need to get that agreement in writing. Be aware that when you settle a debt, the collector can (and will) send you a 1099 for the portion of the debt which has been forgiven, and can report to the credit bureaus that you settled a debt for less than the full amount (negative mark against credit). Derogatory credit items will haunt you for years. Decide whether saving $20, $30 or even $55 is worth the trouble. Probably not. Learn from this. When a company sends you something you did not order, contact them, and send it back or demand they pay shipping, and send them a letter demanding $5/day storage and $20 handling fee to ship it back to them. Disclaimer: Heed the insane ravings of a deranged heretic at your peril... hire a lawyer.",
"title": ""
},
{
"docid": "7c5c80b89c7a12c454f67efe2fd2f61a",
"text": "\"Typically, the CC company itself won't follow the customer very far upon a default (though it certainly can act as its own debt collector, or hire an agency for a fee to do the collection). What most often happens: Once they do that, assuming they win the lawsuit, they can do the following: They cannot \"\"force\"\" you into bankruptcy, but they might make it so you have no better options (if bankruptcy is less painful than the above, which it often is). They certainly can (and will) report to the credit bureaus, of course. For more information, Nolo has a decent help site on this subject. Different jurisdictions have slightly different rules, so look up yours. Here is an example (this is from Massachusetts). Not every debt is sued for, of course; particularly, pay attention to the statute of limitations in your state. (In mine, it's seven years, for example.) And it's probably worth contacting someone locally (a legitimate non-profit debt relief agency, or your state's help agency if they have one) to find local rules and regulations.\"",
"title": ""
}
] |
fiqa
|
979271796533e194facb1b23fe28c062
|
Bank will not accept loose change. Is this legal?
|
[
{
"docid": "d3a3089e2ce15824c40e5d7da0c02e29",
"text": "Is this even legal? How can a bank refuse to deposit legal tender in the United States? Legal for all debts, public or private, doesn't mean quite what I used to think, either. Per The Fed: This statute means that all United States money as identified above is a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law which says otherwise. Yes, they can refuse loose change. Also, they aren't refusing your deposit, just requiring that it be rolled. What do I do with my change? I do not want to spend the time rolling it, and I am not going to pay a fee to cash my change. There aren't many other options, change is a nuisance. I believe Coinstar machines reduce/remove their fee if you exchange coins for gift cards, so that might be the best option for convenience and retaining value.",
"title": ""
},
{
"docid": "c3c2aed57ee5fbf0d1db32a4a7e0c190",
"text": "They cannot refuse to accept coins and demand some other payment after providing a good or service. Legal tender is legal tender for all debts. But until they provide the good or service, they don't have to accept it. In this case, you want the service of depositing money. But by its nature, they have to accept the payment first. In that situation, they can refuse it. There is no law that banks have to accept your deposits. If they don't want you as a customer, that's their problem. Consider switching banks. Historically this was easier and some banks may still do things the old way. Call your local banks and ask. Perhaps you'll find someone happy to do business with you, on your terms. As already said, some coin rolling machines will pay you with gift certificates. If you plan to buy a sufficient amount from the place that accepts the gift certificate, this can get that place to play the fee. That may help you, although it is obviously a limited solution. The goal is to make it so that you only make purchases that you would have anyway. The seller obviously has a different goal. It's possible to buy coin sorters. Heck, you could buy one with a gift certificate from a public machine. Cheap ones require extra work to get the coins rolled and may jam a lot. More expensive ones do more of the work for you. Note that a given sorter that works better may be cheaper than another that doesn't work as well. Cheap is more of a qualitative judgment than a financial measure in this case. If you carry a small amount of change with you, pretty much everywhere accepts small amounts of change for purchases. So if you have been always paying with dollars and dumping the change in a jar, instead always give the correct change (coins). They may still give you dollars in change, but at least you won't get new coins. And you'll use some of your existing coins. Of course, this doesn't scale well. For small purchases, say $1.50, you can often pay the whole thing in change without argument. Or if something is $18.50, you might give them $10, $5, two $1 bills, and the rest in change. If you are buying something and can see that they have little change in one of the coin buckets, offer to swap some change for bills. Sometimes places find that easier than breaking a roll. With vending machines, use change instead of dollar bills. Especially use exact change so as not to convert bills to change. They usually don't take pennies, but they're great with nickels and above. This won't allow you to use change as a way to force yourself to save. But it will keep your change down to a manageable level going forward. And you might be able to use up your existing store. I'm assuming that this isn't a fifty year coin collection that you are just now starting to process. But if you have six months of change, you should be able to use it up in a year or so. I tend to do this. So I rarely have more than a couple dollars in change. No one ever tells me that they don't take change, because I don't give anyone a lot. Maybe $.99 here but more likely $.43 there. Sometimes I give them, e.g., $.07 so as to get $.25 in change rather than $.18. It's a little more work at every transaction, but it saves the big clump of work of rolling the coins. And you don't have to buy wrappers.",
"title": ""
},
{
"docid": "f1aaa74c59276c42b007d62864909bd5",
"text": "The bank certainly doesn't have to take it for a deposit; that's not a debt. There have been several cases where disgruntled debtors have attempted deliberately annoying ways to pay their debts; the apocryphal example being pennies. Courts are not likely to support such efforts since it's obvious that a) the action is malicious and (relevant to you) b) it's really on you to maintain your money in a wieldy form. If you allow your money to become unwieldy, nobody owes you anything. I wonder about the meta-meaning of that. And whether, in that light it really makes sense to worry about 5% or rolling. As far as getting rid of it, when I bought out a girlfriend's piggybank at par, I just made sure to walk out of the house with $5 in change in my pocket and unload $2-3 at every retailer, none ever objected and some appreciated. Quarters were traded to coin laundry users. When going on transit I brought a bunch, the machines never grumbled. I burned through the cache much faster than expected.",
"title": ""
}
] |
[
{
"docid": "fa70890a59cb856eb8e66c48a3ef4e05",
"text": "I was forced to give my bank permission to cover any overdrafts out of my savings accounts. Or pay the bank a fee. After 6 months I discovered they were still taking out a fee, when I confronted them they said it wasn't the overdraft fee it was just an administrative fee. Banks need to burn in hell.",
"title": ""
},
{
"docid": "d81ccba684d73402c54dbdbd18286fb3",
"text": "Once you declare the amount, the CBP officials will ask you the source and purpose of funds. You must be able to demonstrate that the source of funds is legitimate and not the proceeds of crime and it is not for the purposes of financing terrorism. Once they have determined that the source and purpose is legitimate, they will take you to a private room where two officers will count and validate the amount (as it is a large amount); and then return the currency to you. For nominal amounts they count it at the CBP officer's inspection desk. Once they have done that, you are free to go on your way. The rule (for the US) is any currency or monetary instrument that is above the equivalent of 10,000 USD. So this will also apply if you are carrying a combination of GBP, EUR and USD that totals to more than $10,000.",
"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": "979874a2e7d72457723c267c0fd231de",
"text": "\"Yes, your privacy is invaded, that's the law in many jurisdictions. The goal is to make money laundering and financing Evil Things harder. That's why banks are required to request proof for every money transfer larger than a specific sum. This is only a minor issue most of the time. You will have some kind of agreement with that Money Management company and this agreement (or a copy of it) will serve as a proof of your lawful reason to transfer money. It works just like that - you get to the bank and say you want to initiate a money transfer, the clerk asks you to show the \"\"proof\"\", you give them your agreement or a bill that requests you to pay or whatever else document you may have that proves that you're bound by some kind of contract with the recipient of money. The clerk then makes a copy of the \"\"proof\"\" and it stays in the bank to back the transfer until it is completed. The copy is then stored for some time and later destroyed - that's up to how the bank handles documents.\"",
"title": ""
},
{
"docid": "c94c26639d33108d45b4df3e1118d66c",
"text": "\"You've touched on a very abstract concept that exist partly due to fractional-reserves and directly due to currency having no base (ex. not backed by gold), money can and does just pop into existence. To answer your question, we have to understand that the criminal is irrelevant. \"\"Can't a cyber criminal increase/decrease a bank's holdings just by changing a number in a computerized ledger book?\"\" The bank wouldn't need the cyber criminal's aid, they could change their own holdings. They have their own computers after all. Money's value is derived from trust. A bank that would change its own books would be black-balled. Similarly, a bank that un/consciously allows a cyber criminal change their holdings would lose trust. If this was a small transaction, they bank bottom line is unaffected. If these scandal is large enough to affect a bank's bottom line, the difference would be noticeable and raise suspicion.\"",
"title": ""
},
{
"docid": "929c9780f0983ec66c646c287e974ea4",
"text": "\"Congratulations! You see the problem. You can't get away from unstable currencies. The other problem is that the US will shut down anything that appears to be providing a replacement for the US Dollar. Once a token or medallion or gift certificate or whatever starts being used outside the confines of one business or one network of businesses, it will be shut down, quickly. It happened with Las Vegas gambling tokens. Another more recent attempt was with the Liberty Dollar, gold and silver coins and certificates that not only had precious metal backing, but whose proponents encouraged taking them to retailers and paying with them as if they were US Dollars. There were other problems with this idea, but it was the competitive stature of the Liberty dollar that got the headquarters raided and the main site shut down. Basically, all signs point toward dealing with currencies and their state of being systematically eroded over time. If you do find one that appears to exist, be wary, because the rules can change at any time, and the \"\"money\"\" will be nowhere near as liquid as a proper currency.\"",
"title": ""
},
{
"docid": "109ca3b612a0ed712240453010ca9c4f",
"text": "This happened to me in the mid 90's. I wanted to withdraw enough cash from my account to buy a new car and they nearly panicked. I took a bank draft instead. I discovered afterward that they can require up to a week's notice for any withdrawl.",
"title": ""
},
{
"docid": "825156a90272a528d94fe4809b03d1ff",
"text": "\"Since all the other answers thus far seem to downplay the risk (likelihood) of the money being seized, I figure I may as well make my comment an answer. Unless you happen to have your legal team travelling with you and your suitcase of cash, you should expect that you'll be questioned extensively, so that any sign of nervousness, inconsistency in your answers or anything you say that doesn't \"\"make sense\"\" to the officer will be used as an excuse to seize your money, and you'll learn an expensive lesson in civil asset forfeiture. The government will file a complaint against your money, leading to a ridiculously named case, such as United States v. $124,700 in U.S. Currency. Worth noting that while the outcome in this case was not in the government's favor, in the vast majority of cases, the government keeps the cash. Between 9/11 and 2014, U.S police forces have seized over 2.5 billion dollars in cash without search warrants or indictments and returned the money in less than 10% of cases. That last link is kind of a long read, but contains cases where people with completely legitimate money and documentation for their money had it seized anyway, and were only able to recover it after months or years in court.\"",
"title": ""
},
{
"docid": "5ffeb4e741fb823d17a81aa85e8c2ea3",
"text": "Once, back when I had a bank account, I tried to pay a large emergency dental bill with my debit card. It rejected it as it turned out the bill was less than a dollar over what I had in the account. I thought there was enough money so I tried again, 3 times. They charged me an overdraft for each attempt even though the debit never went through. This was without overdraft protection, as overdraft protection would have allowed the debit and charged me one overdraft. I don't know the details but federal regulations have changed how they do this. To me overdraft protection rejects any debit that attempts to overdraft my account and doesn't charge me with an overdraft that didn't actually occur as a result of the charge being rejected, but that's not how it works.",
"title": ""
},
{
"docid": "2ad51e8c65e69992273de0ca51db38e6",
"text": "I had great difficulty buying my $17,000 truck for cash. One TD Canada Trust branch only let me have $5,000, the other branch down the street only $3,000. They both said they were low on cash. They kept trying to convince me to use a bank draft, but I didn't have a name or total amount as I was still shopping around. I don't think banks carry much cash and it wouldn't take much to clean them out.",
"title": ""
},
{
"docid": "a65fc91a3ca55f1c0bd429d5487b7e8c",
"text": "The laws of the United States of America require that the federal currency issued is accepted as legal tender for all goods and services anywhere within this country. One really has to wonder what the motivation behind this story is. VISA obviously knows that such a move is illegal. I am skeptical that there's any truth to the article at all.",
"title": ""
},
{
"docid": "f5827ececad5a61f0f7966888a3a9d00",
"text": "\"You state \"\"Any info will be appreciated\"\", so here's some background information on my answer (you can skip to my answer): When I worked for banks, I was required to submit suspicious activity to the people above me by filling out a form with a customer's name, SSN, account number(s) and ID. You may hear in media that it is $10K or sometimes $5K. The truth is that it could be lower than that, depending on what the institution defines as suspicious. Every year we were required to take a \"\"course\"\" which implied that terrorists and criminals use cash regularly - whether we agree or disagree is irrelevant - this is what the course implied. It's important to understand that many people use cash-only budgets because it's easier than relying on the banking system which charges overdraft fees for going over, or in some cases, you pay more at merchants because of card usage (some merchants give discounts for cash). If someone has a budget of $10K a month and they choose to use cash, that's perfectly fine. Also, why is it anyone's business what someone does with their private property? This created an interesting contrast among differently aged Americans - older Americans saw the banking system as tyrannical busybodies whereas young Americans didn't care. This is part of why I eventually left the banking system; I felt sick that I had to report this information, but it's amazing how quick everyone is to accept the new rules. Notice how one of the comments asks you what you intend to do with the money, as if it's any of their business. Welcome to the New America©! My answer: If you withdraw $100,000, here is what will more than likely happen: Now, watch the anger at this answer because I'm telling you the truth. This article will explain why. Your very question had a negative 1, as if asking what you're asking is wrong (see the absurdity)! If Joseph Stalin ran for president in the United States, the majority of Americans would welcome him. You have good reason to be concerned; others at this site have noticed this as well.\"",
"title": ""
},
{
"docid": "90a56315d20bf81e78a7647eb7bea497",
"text": "While on a completely different scale to what you boys are talking about couple of years ago I was a relationship manager in retail banking and would on the reg have to sign away ~400k out of the tellers boxes and into the safe. After a few months of that you kind of view it as lego to fuck around with... [Australian money](https://www.google.com.au/search?q=australian+money&hl=en&prmd=imvns&source=lnms&tbm=isch&sa=X&ei=OquAUO2SD82ciAfSnoDgCA&ved=0CAoQ_AUoAQ&biw=1006&bih=502)",
"title": ""
},
{
"docid": "bb31aa53139708b7c3827e7e98a67dc2",
"text": "\"As others have noted, US law says that if you have over half the bill, it's worth the full value, under half is worth nothing. I presume if it is very close to half, if even careful measurements show that you have 50.5%, you'll have difficulty cashing it in, precisely because the government and the banking system aren't going to allow themselves to be easily fooled by someone cutting bills in half and then trying to redeem both halves. I've seen several comments on here about how you'd explain to the bank how so many bills were cut in half. What if you just told them the truth? Not the part about killing someone, of course, but tell them that you made a deal, neither of you wanted to bother with complex contracts and having to go to court if the other side didn't pay up, so your buddy cut all the bills in half, etc. As you now have both halves and they clearly have the same serial number, this no real evidence of fraud. Okay, this is technically illegal -- 18 US Code Section 333, \"\"Whoever mutilates, CUTS, defaces, disfigures, or perforates, or unites or cements together, or does any other thing to any bank bill, draft, note, or other evidence of debt issued by any national banking association, or Federal Reserve bank, or the Federal Reserve System, with intent to render such bank bill, draft, note, or other evidence of debt unfit to be reissued, shall be fined under this title or imprisoned not more than six months, or both.\"\" But you didn't do it, the other guy did. I presume the point of this law is to say that you can't get a hold of currency belonging to someone else and mutilate it so as to make it worthless. As he's now given you both halves, I doubt anyone would bother to track him down and prosecute him. Just BTW, while checking up on the details of the law, I stumbled across 18 USC 336, which says that it's illegal to write a check for less than $1, with penalties of 6 months in prison. I just got a check from AT&T for 15 cents for one of those class action suits where the lawyers get $100 million and the victims get 15 cents each. Apparently that was illegal.\"",
"title": ""
},
{
"docid": "6bcd6fc62d1f29e86f26fab0153d16a1",
"text": "> From what I hear and know you sell when you're up and buy when it's down. That *is* how profit is attained. However, if you're looking to *invest,* both buy and sell decisions should be made after extensive research and, generally, there should be some time between the two offsetting transactions. If you personally decide to *trade*, which is more often and less likely to succeed (per se), that's up to you.",
"title": ""
}
] |
fiqa
|
7e3be371ae5e138c2da41c1538febd51
|
How to measure the cost/value of an Asset in the Financial Statement
|
[
{
"docid": "aba782590d5f1712aaaa8e5e9895a03b",
"text": "I suggest that you use your own judgement on this. You can assign a reasonable percentage since it is impossible to monitor the hours using those assets. Example: 40 personal and 60 for business. It's really your call. I also suggest that you should be conservative on valuing the assets. Record the assets at it's lowest value. This is one of the most difficult scenarios in making your own financial statements. You can also use this approach, i will record the assets at its original cost then use a higher depreciation rate or double declining method of depreciation. If the assets have a depreciation rate of 20% per year (useful life of 5 years), i will make it 30%. the other 10% will add more expense and helps you not to overstate your Financial Statement. You can also use the residual value of the asset, but if you do this, you should figure out the reliable amount. I understand that this is not for tax reporting purposes. Therefore, there's no harm if you overstate your Financial statement. And even if you overstate, you can still adjust the cost of the asset. Along the way (in the middle of the year or year end), you will figure out the cost of the asset if it's over valued once the financial statement is done.",
"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": "680f18bf6027e733e8d1925af9eb13b8",
"text": "Understandably, it appears as if one must construct the flows oneself because of the work involved to include every loan variation. First, it would be best to distinguish between cash and accrued, otherwise known as the economic, costs. The cash cost is, as you've identified, the payment. This is a reality for cash management, and it's wise that you wish to track it. However, by accruals, the only economic cost involved in the payment is the interest. The reason is because the rest of the payment flows from one form of asset to another, so if out of a $1,000 payment, $100 is principal repayment, you have merely traded $100 of cash for $100 of house. The cash costs will be accounted for on the cash flow statement while the accrued or economic costs will be accounted on the income statement. It appears as if you've accounted for this properly. However, for the resolution that you desire, the accounts must first flow through the income statement followed next instead of directly from assets to liabilities. This is where you can get a sense of the true costs of the home. To get better accrual resolution, credit cash and debit mortgage interest expense & principal repayment. Book the mortgage interest expense on the income statement and then cancel the principal repayment account with the loan account. The principal repayment should not be treated as an expense; however, the cash payment that pays down the mortgage balance should be booked so that it will appear on the cash flow statement. Because you weren't doing this before, and you were debiting the entire payment off of the loan, you should probably notice your booked loan account diverging from the actual. This proper booking will resolve that. When you are comfortable with booking the payments, you can book unrealized gains and losses by marking the house to market in this statement to get a better understanding of your financial position. The cash flow statement with proper bookings should show how the cash has flowed, so if it is according to standards, household operations should show a positive flow from labor/investments less the amount of interest expense while financing will show a negative flow from principal repayment. Investing due to the home should show no change due to mortgage payments because the house has already been acquired, thus there was a large outflow when cash was paid to acquire the home. The program should give some way to classify accounts so that they are either operational, investing, or financing. All income & expenses are operational. All investments such as equities, credit assets, and the home are investing. All liabilities are financing. To book the installment payment $X which consists of $Y in interest and $Z in principal: To resolve the reduction in principal: As long as the accounts are properly classified, GnuCash probably does the rest for you, but if not, to resolve the expense: Finally, net income is resolved: My guess is that GnuCash derives the cash flow statement indirectly, but you can do the entry by simply: In this case, it happily resembles the first accrued entry, but with cash, that's all that is necessary by the direct method.",
"title": ""
},
{
"docid": "1dbb5cae6181f36ed255b92b5c7e7977",
"text": "You should also update your Net Worth Statement as well as an inventory of all your assets. Unfortunately these are extremely time consuming, but in the event that you pass away your loved ones will know all of your finances and it will be easier for them in a very difficult time. The Net Worth Statement compiles just that, your net worth. The net worth is compiled by subtracting your liabilities from you assets. Assets include things such as cash, money in accounts, all estimated value of your household items, any life insurance, bonds, mutual bonds, and retirement money. The liabilities include amounts such as your mortgage, second mortgage, car loans, unsecured loans, credit cards, student loans, and life insurance loans. This statement is a great way to track year to year how you are doing on your finances and if you are where you need to be in order to retire when you would like. The Inventory is also very important. This is used in the event that you have a fire or some sort of disaster that requires you to give a statement of any items you had in your home. This is a very difficult thing to go through, and having this statement ready to hand over only makes thing easier. There are a couple ways to do this. Some people take pictures of everything they have in their house and make notes of prices and values, some people take a video of the whole house, and some people write down item by item on the computer or on a piece of paper. Whatever way you would like to do it is fine, what works for one person does not necessarily work for the other.",
"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": "9d0de6281da77f43b6d511b19cad05f9",
"text": "\"Putting a dollar amount on the valuation of a start up business is an art form that often has very little at all to do with any real numbers and more to do with your \"\"salesman\"\" abilities when talking with the VC. That said, there are a few starting points: First is past sales, the cost of those sales and a (hopefully) realistic growth curve. However, you don't have that so this gets harder. Do you have any actual assets? Machinery, computers, desks, patents, etc. Things that you actually own. If so, then add those in. If this is a software start-up, \"\"code\"\" is an asset, but without sales it's incredibly hard to put a value on it. The best I've come up with is \"\"How much would it cost for someone else to build it .. after they've seen yours\"\". Yes, you may have spent 5,000 hours building something but could someone else duplicate it, or at least the major parts, in 200 hours after seeing a demo? Use the lower number. If I was you, I'd look hard at my business plan. Hopefully you were as honest as you can be when writing it (and that it is as researched as possible). What is it going to take to get that first sale? What do you actually need to get there? (hint: your logo on the side of a building is NOT a necessary expense. Nor is really nice office space.) Once you have that first sale, what is the second going to take? Can you extrapolate out to 3 years? How many key members are there? How much is their contribution worth? At what point will you be profitable? Next is to look at risks. You haven't done this before, that's huge - I'm assuming simply because you asked this question. Another is competitors - hopefully they already exist because opening a new market is incredibly hard and expensive; on the flip side, hopefully there aren't that many because entering a crowded market is equally hard and expensive. Note: each are possible, but take radically different approaches and sums of money - and $200k isn't going to cut it no matter what it is you are selling. That said, competition should be able to at least point you in the direction of a price point and estimate for how long sales take. If any are publicly traded then you have additional info to help you set a valuation. Are there any potential regulatory or legal issues? What happens if a key member leaves, dies or is otherwise no longer available? Insurance only helps so much if the one guy that knows everything literally gets run over. God help you if this person likes to go skydiving. I bring risks up because you will have to surmount them during this negotiation. For example, asking for $200k with zero hard assets, while trying to sell software to government agencies assuming a 3 week sales cycle will have you laughed at for naivety. Whereas asking for $10m in the same situation, with a team that has governmental sales experience would likely work. Another big question is exit strategy: do you intend to IPO or sell to a competitor or a business in a related category? If selling, do you have evidence that the target company actually buys others, and if so, how did those deals work out? What did they look for in order to buy? Exit strategy is HUGE to a VC and they will want to make several multiples of their money back in a relatively short amount of time. Can you realistically support that for how much you are asking for? If not then going through an Angel group would be better. They have similar questions, but very different expectations. The main thing is that no one knows what your business is worth because it is 100% unproven after 2 years and is therefore a huge financial risk. If the money you are asking for is to complete product development then that risk factor just went up radically as you aren't even talking about sales. If the money is purely for the sales channel, then it's likely not enough. However if you know what it's going to take to get that first sale and have at least an educated idea on how much it's going to cost to repeat that then you should have an idea for how much money you want. From there you need to decide how much of the business it is worth to you to give up in order to get that money and, voila, you have a \"\"pre money valuation\"\". The real trick will be to convince the VC that you are right (which takes research and a rock solid presentation) and negotiating from there. No matter what offer a small percentage of the business for the money you want and realize you'll likely give up much more than that. A few things you should know: usually by year 3 it's apparent if a start-up is going to work out or not. You're in year 2 with no sales. That doesn't look good unless you are building a physical product, have a competent team with hard experience doing this, have patents (at least filed), a proven test product, and (hopefully) have a few pre-orders and just need cash to deliver. Although in that situation, I'd probably tell you to ask your friends and family before talking to a VC. Even kickstarter.com would be better. $200k just isn't a lot of money and should be very easy to raise from Friends or Angels. If you can't then that speaks volumes to an institutional VC. A plus is having two or three people financially invested in the company; more than that is sometimes a problem while having only 1 is a red flag. If it's a web thing and you've been doing this for 2 years with zero sales and still need another $200k to complete it then I'd say you need to take a hard look at what you've built and take it to market right now. If you can't do that, then I'd say it might be time to abandon this idea and move on as you'll likely have to give up 80%+ to get that $200k and most VCs I've run into wouldn't bother at that level. Which begs the question: how did the conversation with the VC start? Did you approach them or did they approach you? If the latter, how did they even find out about you? Do they actually know anything about you or is this a fishing expedition? If the latter, then this is probably a complete waste of your time. The above is only a rough guide because at the end of the day something is only worth what someone else is willing to pay. $200k in cash is a tiny sum for most VCs, so without more information I have no clue why one would be interested in you. I put a number of hard questions and statements in here. I don't actually want you to answer me, those are for you to think about. Also, none of this shouldn't be taken as a discouragement, rather it should shock you into a realistic viewpoint and, hopefully, help you understand how others are going to see your baby. If the VC has done a bit of research and is actually interested in investing then they will bring up all the same things (and likely more) in order to convince you to give up a very large part of it. The question you have to ask yourself is: is it worth it? Sometimes it is, often it's not.\"",
"title": ""
},
{
"docid": "134a2b54f8d2ddefd07691afbcb16bc6",
"text": "The short answer is that you would want to use the net inflow or net outflow, aka profit or loss. In my experience, you've got a couple different uses for IRR and that may be driving the confusion. Pretty much the same formula, but just coming at it from different angles. Thinking about a stock or mutual fund investment, you could project a scenario with an up-front investment (net outflow) in the first period and then positive returns (dividends, then final sale proceeds, each a net inflow) in subsequent periods. This is a model that more closely follows some of the logic you laid out. Thinking about a business project or investment, you tend to see more complicated and less smooth cashflows. For example, you may have a large up-front capital expenditure in the first period, then have net profit (revenue less ongoing maintenance expense), then another large capital outlay, and so on. In both cases you would want to base your analysis on the net inflow or net outflow in each period. It just depends on the complexity of the cashflows trend as to whether you see a straightforward example (initial payment, then ongoing net inflows), or a less straightforward example with both inflows and outflows. One other thing to note - you would only want to include those costs that are applicable to the project. So you would not want to include the cost of overhead that would exist even if you did not undertake the project.",
"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": "c1140caa8335ae427e6326430838e159",
"text": "\"Market cap is synonymous with equity value, which is one way of thinking of a company's \"\"worth.\"\" The alternative would be enterprise value, which is calculated as follows: Enterprise Value = Market Value of Equity + Market Value of Debt - Cash and Equivalents - Non-Operating Assets Enterprise value is essentially \"\"how much is the firm worth to ALL providers of capital.\"\" It can be viewed as \"\"if I wanted to buy the *entire* company, debt and all, what would I have to pay?\"\"\"",
"title": ""
},
{
"docid": "983e84eb31d74702554938415b8ccc43",
"text": "One approach would be to create Journal Entries that debit asset accounts that are associated with these items and credit an Open Balance Equity account. The value of these contributions would have to be worked out with an accountant, as it depends on the lesser of the adjusted basis vs. the fair market value, as you then depreciate the amounts over time to take the depreciation as a business expense, and it adjusts your basis in the company (to calculate capital gains/losses when you sell). If there were multiple partners, or your accountant wants it this way, you could then debit open balance equity and credit the owner's contribution to a capital account in your name that represents your basis when you sell. From a pure accounting perspective, if the Open Balance Equity account would zero out, you could just skip it and directly credit the capital accounts, but I prefer the Open Balance Equity as it helps know the percentages of initial equity which may influence partner ownership percentages and identify anyone who needs to contribute more to the partnership.",
"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": "a9fbbddf99ada47cb3317b4673d6b8ca",
"text": "This is fine, but I'd probably spend a moment introducing WACC and it's estimation. It's also useful to link up the enterprise value to share price, so just also mentioning the debt subtraction to get equity value and division by shares for price. Keep in mind you're usually given like a minute to answer this, so you can afford to be a bit more detailed in some parts.",
"title": ""
},
{
"docid": "2737555cec11157babb0aff5bd578d75",
"text": "\"the \"\"how\"\" all depends on your level of computer savvy. Are you an Excel spreadsheet user or can you write in programming languages such as python? Either approach have math functions that make the calculation of ROI and Volatility trivial. If you're a python coder, then look up \"\"pandas\"\" (http://pandas.pydata.org/) - it handles a lot of the book-keeping and downloading of end of day equities data. With a dozen lines of code, you can compute ROI and volatility.\"",
"title": ""
},
{
"docid": "2062d8a92e3151241257c925fd0c2a15",
"text": "One way that is common is to show the value over time of an initial investment, say $10,000. The advantage of this is that it doesn't show stock price at all, so handles splits well. It can also take into account dividend reinvestment. Fidelity uses this for their mutual funds, as can be seen here. Another option would be to compute the stock price as if the split didn't happen. So if a stock does a 2:1 split, you show double the actual price starting at that point.",
"title": ""
},
{
"docid": "2c0ae24ba33f029d528764a03af25505",
"text": "Yep, but it you didn't answer my question (edit: I know it was phrased as a question, but I do know youre supposed to model changes in cash). When bankers calculate all three approaches, how do they compare them? From what I see, the conclusion of each approach gives us: * Public Company Approach: Enterprise Value * Transaction Approach: Enterprise Value * Discounted Cash Flow Approach: Enterprise Value + Minimum Level of Operating Cash Does an investment banker subtract out that minimum level of operating cash at the end of the calculation to get to a value that he can then compare?",
"title": ""
},
{
"docid": "50f1ca05abaa0bcb89d9ef694f692a8d",
"text": "Broadly, there's a bunch of stuff you need to be accounting for that's not reflected in the above, which will impact the A/D profile of an acquisition: * Consideration paid (all cash on substantially the same terms is going to be more accretive than an all-stock transaction...because in the latter, your denominator is much bigger) * Shares outstanding (including repurchases, in-kind dividends and option exercise) * Financing / interest expense * Upside / base / downside case for all of your assumptions - best to have a toggle based on a CHOOSE function that will allow the user to easily toggle between these I'm not sure what EBITDA is getting you. EPS accretion/dilution typically looks at earnings, but you could also look at Cash EPS A/D which measures OCF/shares outstanding. The point is, this really depends on how back of the envelope you want the A/D computation to be. At a minimum, you need an earnings schedule projected over the next 2-3 years, and you need a schedule reflecting outstanding shares over the same time period. Your earnings buildout can have varying degrees of granularity. You can project cost synergies over the forecast period, which most obviously is going to affect your earnings, but you can also drill down further. Financing, transaction fees, etc. Your writeups and writedowns from your B/S combination may result in certain deferred tax items that will affect your bottom line over the forecast period. Your share schedule can also have varying degrees of complexity. One way to do it is to just presume that the company will not issue any more shares, and will not repurchase any shares, and that there will be no options exercised, over the forecast period. This is a bad series of assumptions. It is likely that as options vest, if in the money, they will be exercised, resulting in dilution for existing shareholders. It is also likely that certain preferred shareholders and optionholders are going to experience adjustments to the conversion prices based on antidilution provisions in their securities. These may be but are not always disclosed in the 10K. Last point - models are tools. What are you trying to build an accretion/dilution model for? This will affect and determine the degree of granularity you'll want to go into.",
"title": ""
},
{
"docid": "6d19500998654ae4a95b5adbfe8450b8",
"text": "\"P/E is price to earnings, or the price of the company divided by annual earnings. Earnings, as reported, are reported on accrual basis. Accrual basis accounting is...without going too deep, like taking a timeline, chopping it up and throwing different bits and pieces of every year into different piles. Costs from 2008 might show up in 2011, or the company might take costs in 2011 that aren't necessarily costs until 2012. Examples would include one-time charges for specific investments, like new shipping centers, servers for their hosting services, etc. Free cash flow is the amount of cash Amazon is generating from its operations. Free cash flow is almost always different from earnings because it's the amount of Earnings + adjustments for non-cash activities - capital expenditures (long-term investments.) Earnings is one thing. Cash generation is a completely different animal. There are plenty of companies that \"\"earn\"\" billions, but only have a few hundred million in cash to show for it because their earnings have to be reinvested into new stuff to grow/maintain the business. To have a free cash flow yield of 2.5% is to have a company valued at $40 for each $1 of free cash flow that the company generates each year. $1/$40 = 2.5%. SGA = Selling, General, & Administrative expenses. These are the costs of running the company - paying salaries, advertising, etc. This cost is second only to COGS, which is Cost of Goods Sold. Currently, Amazon pays $.774 for every $1 product it sells. Its operations add another ~$.20 to that total. After taxes, Amazon keeps about 2 cents of every dollar's worth of product it sells. This 2 cents is Amazon's net margin of 2%. Net margin is (net income)/(sales). If Amazon earned $3 for every $100 in sales it would have a net margin of 3%. Let me know if this makes no sense. If there's anything in particular that is especially confusing, definitely reply and I'll better clarify on specific items. Fire away with any questions, also. I love to discuss finance and accounting.\"",
"title": ""
}
] |
fiqa
|
ac2d16cb54806c32216e133a8007f9bc
|
60% Downpayment on house?
|
[
{
"docid": "44aaaaed94c2fcc169b1218230d3f12f",
"text": "Keep in mind, this is a matter of preference, and the answers here are going to give you a look at the choices and the member's view on the positive/negative for each one. My opinion is to put 20% down (to avoid PMI) if the bank will lend you the full 80%. Then, buy the house, move in, and furnish it. Keep track of your spending for 2 years minimum. It's the anti-budget. Not a list of constraints you have for each category of spending, but a rear-view mirror of what you spend. This will help tell you if, in the new house, you are still saving well beyond that 401(k) and other retirement accounts, or dipping into that large reserve. At that point, start to think about where kids fit into your plans. People in million dollar homes tend to have child care that's 3-5x the cost the middle class has. (Disclosure - 10 years ago, our's cost $30K/year). Today, your rate will be about 4%, and federal marginal tax rate of 25%+, meaning a real cost of 3%. Just under the long term inflation rate, 3.2% over the last 100 years. I am 53, and for my childhood right through college, the daily passbook rate was 5%. Long term government debt is also at a record low level. This is the chart for 30 year bonds. I'd also suggest you get an understanding of the long term stock market return. Long term, 10%, but with periods as long as 10 years where the return can be negative. Once you are at that point, 2-3 years in the house, you can look at the pile of cash, and have 3 choices. We are in interesting times right now. For much of my life I'd have said the potential positive return wasn't worth the risk, but then the mortgage rate was well above 6-7%. Very different today.",
"title": ""
},
{
"docid": "5efb6240c4f3e22fb6f64f933cf1d4dc",
"text": "\"I put about that down on my place. I could have purchased it for cash, but since my investments were returning more interest than the loan was costing me (much easier to achieve now!), this was one of the safest possible ways of making \"\"leverage\"\" work for me. I could have put less down and increased the leverage, but tjis was what I felt most comfortable with. Definitely make enough of a down payment to avoid mortgage insurance. You may want to make enough of a down payment that the bank trusts you to handle your property insurance and taxes yourself rather than insisting on an escrow account and building that into the loan payments; I trust myself to mail the checks on time much more than I trust the bank. Beyond that it's very much a matter of personal preference and what else you might do with the money.\"",
"title": ""
},
{
"docid": "e60aa8f39c72585636d736297b6773ed",
"text": "Voluntarily assuming a loan is a bad idea, especially for a non-investment purpose. It would be one thing to take on a loan to operate a business or buy a piece of capital equipment, like a machine that would make you money. Borrowing money to have a more luxurious house is foolish. The smart move is to buy a good quality home that will meet your needs for as little as possible. Having $800,000 leaves a quit a bit of leeway in that department. You don't say where you live, but if this occurred in my area (eastern Massachusetts) I would buy a house for $500,000 and then invest the remaining $300,000. If I lived in the California bay area, it might be necessary to spend the whole $800,000. Either way there should be no need to borrow money. Also, if you buy a house for cash, often you can get a substantially better deal than if you have to involve a bank. Not owing anyone money is a huge psychological advantage in business and in life in general. View being debt-free as a springboard to success and happiness.",
"title": ""
},
{
"docid": "9950469cf36e87e3363ce390d3a061af",
"text": "Strictly by the numbers, putting more than 20% down is a losing proposition. With interest rates still near all time lows, you're likely able to get a mortgage for less than 4%. The real rate of a return on the market (subtracting inflation and taxes) is going to be somewhere around 5-6%. So by this math, you'd be best off paying the minimum to get out of PMI, and then investing the remainder in a low fee index fund. The question becomes how much that 1-2% is worth to you vs how much the job flexibility is worth. It boils down to your personal risk preference, life conditions, etc. so it is difficult to give good advice. The 1-2% difference in your rate of return is not going to be catastrophic. Personally, I would run the numbers with your fiance. Build a spreadsheet tracking your estimated net worth under the assumption that you make a 20% down payment and invest the rest. Then hold all other factors equal, and re-build the spreadsheet with the higher down payment. Factor in one of you losing your job for a few years, or one of you taking off for a while to raise the kids. You can make a judgement call based how the two of you feel about those numbers.",
"title": ""
},
{
"docid": "9de8f0783ba1c957f67372755fbe0cdf",
"text": "I would lean towards making a smaller down payment and hanging onto savings for flexibility. Questions to think about: If you have enough cash that you can make a huge down payment and still have all the other bases covered, then it comes down to your risk tolerance and personal style. You can almost definitely build a portfolio that will beat your mortgage rate on average over the long term, but with more risk and volatility. Heck, you could make a 20% down payment on another house and rent it out.",
"title": ""
},
{
"docid": "2afd676bda3cbc1e3c24aac9c5a2ab01",
"text": "If you decide you need the extra money, you can always go refinance and get more cash out. At the end of the day, though, if you pay off your house sooner you can invest more of your income sooner; that's just a matter of discipline.",
"title": ""
},
{
"docid": "f77bea6504e2658ecacee68247b78a63",
"text": "Peace of mind is the key to your question. Just before the US housing bust of 2007, I had someone try to convince me to take all the equity from my house which was overvalued in an overheated market. The idea was to put that money in the stock market for a bigger return than the interest on the house. Many people did that and found themselves out of jobs as the economy crashed. Unfortunately, they couldn't sell their homes because they owed more than they were worth. I never lost a night of sleep over the money I didn't make in the stock market. I did manage to trade up to a house twice the size by buying another when the housing market bottomed out, but waiting for a market recovery to sell the smaller house. The outcome of my good fortune is a very nice house with no mortgage worth about 1/3 of my total net worth. That's probably a larger percentage than most money managers would recommend, but it is steadily decreasing because now, all the money that would go to a mortgage payment instead gets deposited in retirement accounts, and it still has 30 years to grow before I start drawing it down. I almost don't remember the burden of a mortgage hanging over my head each month. Almost.",
"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": "b068ed80d2622176669138ee89886956",
"text": "\"Your Spidey senses are good. A good friend would not put you in such a position. It's simple, to skirt some issue (we'll get to that in a second) you are being asked to lie. All for a 15% return on your $$$$. <<< How much is that? You can easily lend him the money, and have a better paper trail. But the bank is not going to like that, and requires this money from friends or family to be a gift. I've heard mortgage guys at the bank say \"\"It's just a formality, we need this paperwork to sell the loan to the investors.\"\" These bankers belong in jail, or at least fired and barred from the industry. They broke the economy in 2008, and should be stopped from doing it again.\"",
"title": ""
},
{
"docid": "ba86c7f1bf3e182b2c65610c2a93369b",
"text": "Just echoing the other answers here. You're not ready yet. 3% down, or no money down loans are what got so many of us into trouble these last few years. It sounds like you make a pretty good living and are able to squirrel away money despite paying rent. Let me suggest something that I haven't seen here yet. Save up for a 20% down payment. You will get better rates, won't have to buy mortgage insurance and it will give you enough of a cushion on your payment that you could better weather a job loss or other loss of income. Your priority for saving are, in order: Home prices aren't going up any time soon, so you're not going to miss out on a great deal. Keep your expenses low, treat yourself and your kids once in a while and keep saving.",
"title": ""
},
{
"docid": "d1341e48962baac52755c3d92cdd4d9c",
"text": "the total principal is also dropping - you mean you're paying it down, right? All else the same, if you found a house whose payments are less than rent, and planned to stay long term, buying can make sense. But let's not forget the other costs and risks. How badly do you want to be a homeowner? Adding image from another post here: This shows that housing prices have fallen below the long term trend line and equilibrium level.",
"title": ""
},
{
"docid": "1ae3cb543558e6c150f706998416094c",
"text": "You want to buy a house for $150,000. It may be possible to do this with $10,000 and a 3.5% downpayment, but it would be a lot better to have $40,000 and make a 20% downpayment. That would give you a cushion in case house prices fall, and there are often advantages to a 20% downpayment (lower rate; less mandatory insurance). You have an income of $35,000 and expenses of $23,000 (if you are careful with the money--what if you aren't?). You should have savings of either $17,500 or $11,500 in case of emergencies. Perhaps you simply weren't mentioning that. Note that you also need at least $137 * 26 = $3562 more to cover mortgage payments, so $15,062 by the expenses standard. This is in addition to the $40,000 for downpayment and closing costs. What do you plan to do if there is a problem with the new house, e.g. you need a new roof? Or smaller expenses like a new furnace or appliance? A plumbing problem? Damages from a storm? What if the tenants' teenage child has a party and trashes the place? What if your tenants stop paying rent but refuse to move out, trashing the place while being evicted? Your emergency savings need to be able to cover those situations. You checked comps (comparable properties). Great! But notice that you are looking at a one bathroom property for $150,000 and comparing to $180,000 houses. Consider that you may not get the $235 for that house, which is cheaper. Perhaps the rent for that house will only be $195 or less, because one bathroom doesn't really support three bedrooms of people. While real estate can be part of a portfolio, balance would suggest that much more of your portfolio be in things like stocks and bonds. What are you doing for retirement? Are you maxing out any tax-advantaged options that you have available? It might be better to do that before entering the real estate market. I am a 23 year old Australian man with a degree in computer science and a steady job from home working as a web developer. I'm a bit unclear on this. What makes the job steady? Is it employment with a large company? Are you self-employed with what has been a steady flow of customers? Regardless of which it is, consider the possibility of a recession. The company can lay you off (presumably you are at the bottom of the seniority). The new customers may be reluctant to start new projects while their cash flow is restrained. And your tenants may move out. At the same time. What will you do then? A mortgage is an obligation. You have to pay it regardless. While currently flush, are you the kind of flush that can weather a major setback? I would feel a lot better about an investment like this if you had $600,000 in savings and were using this as a complementary investment to broaden your portfolio. Even if you had $60,000 in savings and would still have substantial savings after the purchase. This feels more like you are trying to maximize your purchase. Money burning a hole in your pocket and trying to escape. It would be a lot safer to stick to securities. The worst that happens there is that you lose your investment (and it's more likely that the value will be reduced but recover). With mortgages, you can lose your entire investment and then some. Yes, the price may recover, but it may do so after the bank forecloses on the mortgage.",
"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": "97ee126f81b81e9394033cbffba6ed84",
"text": "Since I have 10k in my account after down-payment, will I get a good interest rate on the loan? When the bank considers your loan, they will see $70K. Regardless, they will want to see certain amount of savings that would allow you to continue paying your loan in case of an emergency, and $10K might not be enough. I was planning to put down 15%, but I have been told that I should buy something called PMI to satisfy the rest 5% and if I take that my interest will be more and sometimes, bank will not go for anybody who pays less than 20%. Is that true? Yes. After downpayment + closing costs, how much money in the savings accounts, is the bank looking for to say that I am a good buyer? Depends on the bank, my wild guess would be they're looking for several months' worth of loan payments (you should have ~6 months worth of savings for emergencies, regardless of loans).",
"title": ""
},
{
"docid": "d9f61c3c251be6934c53b4e584cac7d1",
"text": "\"This doesn't say the whole story (like the length of the HELOC). if you have 15 years left on a mortgage and \"\"refinance\"\" into a 30 year HELOC then yes, your payments maybe 20% lower, but you add 15 years to pay it off. Just remember that interest occurs daily on what you owe. If you move 100K of debt from 5% mortgage to 6% HELOC you'll be paying more to the banks no matter how you slice it.\"",
"title": ""
},
{
"docid": "dd865e96fd492e3189f843200cf4f59a",
"text": "Lenders pay attention to where your down payment money comes from. If they see a large transfer of money into your bank account within about a year before your purchase, this WILL cause an issue for you. Down payments are not just there to make the principal smaller; they are primarily used as an underwriting data-point to assess your quality as a borrower. If you take the money as loan, it will count against your credit worthiness. If you take the money as a gift, it will raise some other red flags. All of this is done for a reason: if you can't get a down payment, you are a higher credit risk (poor discipline, lack of consistent income), even if you can (currently) pay the monthly cost of a mortgage. (PS - The cost of home ownership is much higher than the monthly mortgage payment.) Will all this mean you WON'T get a loan? Of course not. You can almost always get SOME loan. But it will likely be at a higher rate than you otherwise would qualify for if you just waited a little bit and saved money for a down payment. (Another option: cheaper house.) EDIT: The below comments provide examples where gifts were/are NOT a problem. My experience from buying a house just a few years ago (and my several friends who bought house in the same period, some with family gifts and some without) is that it IS an issue. Your best bet is to TALK, IN PERSON with an actual mortgage broker in your area who can go through the options with you, and the downsides to various approaches.",
"title": ""
},
{
"docid": "2496a1379b1d804b89bcf3e6c0b4205c",
"text": "Sorry, I don't think a bounty is the issue here. You seem to understand LTV means the bank you are talking to will lend you 60% of the value of the home you wish to purchase. You can't take the dollars calculated and simply buy a smaller house. To keep the numbers simple, you can get a $600K mortgage on a $1M house. That's it. You can get a $540K mortgage on a $900K house, etc. Now, 60% LTV is pretty low. It might be what I'd expect for rental property or for someone with bad or very young credit history. The question and path you're on need to change. You should understand that the 'normal' LTV is 80%, and for extra cost, in the form of PMI (Private Mortgage Insurance) you can even go higher. As an agent, I just sold a home to a buyer who paid 3% down. The way you originally asked the question has a simple answer. You can't do what you're asking.",
"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": "51c48c3c858a292ef20050113ff62cf3",
"text": "There is some element of truth to what your realtor said. The seller takes the house off the market after the offer is accepted but the contract is contingent upon, among other things, buyer securing the financing. A lower down payment can mean a higher chance of failing that. The buyer might be going through FHA, VA or other programs that have additional restrictions. If the buyer fails to secure a financing, that's weeks and months lost to the seller. In a seller's market, this can be an important factor in how your bid is perceived by the seller. Sometimes it even helps to disclose your credit score, for the same reason. Of course for your situation you will have to assess whether this is the case. Certainly do not let your realtor push you around to do things you are not comfortable with. Edit: A higher down payment also helps in the situation where the house appraisal does not fare well. As @Dilip Sarwate has pointed out, the particular area you are interested in is probably a seller's market, thus giving sellers more leverage in picking bids. All else equal, if you are the seller with multiple offers coming in at similar price level, would you pick the one with 20% down or 5% down? While it is true that realtors have their own motives to push through a deal as quickly as possible, the sellers can also be in the same boat. One less mortgage payment is not trivial to many. It's a complicated issue, as every party involved have different interests. Again, do your own due diligence, be educated, and make informed decisions.",
"title": ""
},
{
"docid": "33b302d80d4aec200d913ed4957c9d97",
"text": "If your debt will all be less than 25% gross (yes, I see you said take home) you are in great shape. I'd get the car and not worry. The well written mortgage is 20% down, with a housing payment (which of course includes prop tax and insurance, as noted by mhoran, below) under 28% and total debt under 36%. You are well within the limits, not even close. That's great.",
"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": "d8d5943e8a900961f65f90ebb0a258e2",
"text": "\"You can't get a HELOC, to the best of my knowledge, without actually \"\"owning\"\" the house. If you get an 80% mortgage (of the purchase price - not the appraised value, btw), you still need 20% as a down payment. Once you own the home, you can apply for a HELOC ... presuming you have enough equity (eg, the purchase price is $40k less than the appraised value). We haven't looked at the norm, at least where I live, of 5% down for a traditional mortgage and 3.5% for an FHA (which your question touches on). If you can do 5% down, on a $1,000,000 mortgage you need $50,000 on the day of closing. If the home is worth (ie appraises for) $1,250,000, you're getting 20% of the house \"\"for free\"\". Presuming the bank(s) will go for it, you could likely then open a HELOC for as much as $250,000 (again, depending on individual lender rules). tl;dr: If you don't have the money ready on the day of signing (via seasoning, if it is a loan/gift, or because you have been saving), you cannot afford the house. To clarify from comments with the OP, I am in no way speaking to the buyer's ability to afford the monthly payments - this is only about affording the initial costs associated with the home buying process (down payment, closing, whatever else the bank(s) require, etc).\"",
"title": ""
},
{
"docid": "ff1b45edc4eca37b570b308f78dab670",
"text": "\"The house that sells for $200,000 might rent for a range of monthly numbers. 3% would be $6000/yr or $500/mo. This is absurdly low, and favors renting, not buying. 9% is $1500/mo in which case buying the house to live in or rent out (as a landlord) is the better choice. At this level \"\"paying rent\"\" should be avoided. I'm simply explaining the author's view, not advocating it. A quote from the article - annual rent / purchase price = 3% means do not buy, prices are too high annual rent / purchase price = 6% means borderline annual rent / purchase price = 9% means ok to buy, prices are reasonable Edit to respond to Chuck's comment - Mortgage rates for qualified applicants are pretty tight from low to high, the 30 year is about 4.4% and the 15, 3.45%. Of course, a number of factors might mean paying more, but this is the average rate. And it changes over time. But the rent and purchase price in a given area will be different. Very different based on location. See what you'd pay for 2000 sq feet in Manhattan vs a nice town in the Mid-West. One can imagine a 'heat' map, when an area might show an $800 rent on a house selling for $40,000 as a \"\"4.16\"\" (The home price divided by annual rent) and another area as a \"\"20\"\", where the $200K house might rent for $1667/mo. It's not homogeneous through the US. As I said, I'm not taking a position, just discussing how the author formulated his approach. The author makes some assertions that can be debatable, e.g. that low rates are a bad time to buy because they already pushed the price too high. In my opinion, the US has had the crash, but the rates are still low. Buying is a personal decision, and the own/rent ratios are only one tool to be added to a list of factors in making the decision. Of course the article, as written, does the math based on the rates at time of publication (4%/30years). And the ratio of income to mortgage one can afford is tied to the current rate. The $60K couple, at 4%, can afford just over a $260K mortgage, but at 6%, $208K, and 8%, $170K. The struggle isn't with the payment, but the downpayment. The analysis isn't too different for a purchase to invest. If the rent exceeds 1% of the home price, an investor should be able to turn a profit after expenses.\"",
"title": ""
}
] |
fiqa
|
ef0f5c6830bc11cea00fe31476e96961
|
Why don't banks give access to all your transaction activity?
|
[
{
"docid": "3d17c4cd520f8c8bed8d2c98273ceedb",
"text": "\"Things are the way they are because they got that way. - Gerald Weinberg Banks have been in business for a very long time. Yet, much of what we take for granted in terms of technology (capabilities, capacity, and cost) are relatively recent developments. Banks are often stuck on older platforms (mainframe, for instance) where the cost of redundant online storage far exceeds the commodity price consumers take for granted. Similarly, software enhancements that require back-end changes can be more complicated. Moreover, unless there's a buck (or billion) to be made, banks just tend to move slowly compared to the rest of the business world. Overcoming \"\"but we've always done it that way\"\" is an incredible hurdle in a large, established organization like a bank — and so things don't generally improve without great effort. I've had friends who've worked inside technology divisions at big banks tell me as much. A smaller bank with less historical technical debt and organizational overhead might be more likely to fix a problem like this, but I doubt the biggest banks lose any sleep over it.\"",
"title": ""
},
{
"docid": "c8ef0a6ddc2b556d22d6fdc4b4396f57",
"text": "\"All the other answers here are correct, but I'll add one more perspective. I am a business architect at one of the world's largest retail banks. Every day I experience the frustration of trying to get large-scale corporate IT to do anything, so I feel that your question is just one facet of the wider question: \"\"why are banks so old and busted?\"\" While it's true that the cost of online, redundant, performant, secure data storage is significantly higher than you anticipate in the question, it should still be well within the capacity of a large enterprise. The true cost is the cost of change. Nothing at a bank is a green field development. Everything is a bolt-on to existing systems. Any change brings the risk that existing functionality will be affected, therefore vast schemes of regression testing (largely manually executed) spring up around even the most trivial developments. Costs scale exponentially with the number of platforms affected (often utterly distinct, decades-old, incompatible platforms that have arisen out of historical mergers and acquisitions). Only statutory, revenue-generating and critical maintenance change is approved. Any form of cost-cutting that increases risk is quickly extinguished. This is because when things go wrong, IT get blamed by their business colleagues. This is because the business colleagues in turn get blamed by the regulators, the media, the customers, and the public at large. Who doesn't cuss their bank when the ATM is unavailable? The bank's IT organization develops a kind of management sclerosis, risk averse in the extreme. Banks can't ship a beta version and patch it later. This ultra-low-innovation approach is a direct result of market and regulatory forces. If you were happy with a bank account that played fast and loose with your money the way Facebook plays with your data, then banking would be much cheaper, much more innovative, and much riskier. To get back to your specific question, some banks actually do offer a much longer back catalog of transactions for download (usually only a few key fields of each transaction though), and the ones that don't most likely don't see it as a revenue generating selling point, and it therefore falls above their innovation appetite.\"",
"title": ""
},
{
"docid": "6abcf621e523ee65aa7dd404b9f5ea6b",
"text": "\"I would say a lot of the answers here aren't quite right. The main issue here is that banking is a highly oligopolous industry - there are few key players (the UK, for example, has only 5 major banks operating under a variety of brands: it's all the same companies underneath) and the market is very, very hard to enter owing to the immense regulatory burden. Because the landscape is so narrow and it's possible to keep close tabs on all your competitors, there's no incentive to spend money on shiny new things to keep up with the competition - the industry is purely reactive. If nobody else has an awesome, feature-filled online portal, there's no need for any one bank to make one. If everybody is reactive, and nobody proactive, then it's a short logical deduction that improvements happen at a glacial pace. Also take into account that when you've got this toxic \"\"bare-minimum\"\" form of competition, the question for these people soon turns to \"\"what can we get away with?\"\" which results in things like subpar online portals with as much information as you like delivered on paper for a hefty charge, and extortionate, price fixed administrative fees. Furthermore your transaction history is super valuable information. There are one or two highly profitable companies who collate international transaction data and whose sole job in life is to restrict access to that information to the highest bidders. Your transaction history is an asset in a multibillion dollar per year industry, and as such it is not surprising that banks don't want to give it out for free.\"",
"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": "d64099471aa35102fd9efc062d5d8077",
"text": "Although if you count only your data, it would be quite less 10 MB, multiply this by 1 million customers and you can see how quickly the data grows. Banks do retain data for longer period, as governed by country laws, typically in the range of 7 to 10 years. The online data storage cost is quite high 5 to 10 times more than offline storage. There are other aspects, Disaster recover time, the more the data the more the time. Hence after a period of time Banks move the data into Archive that are cheaper to store but are not available to online query, plus the storage is not optimized for search. Hence retrieval of this data often takes few days if the regulator demands or court or any other genuine request for data retrieval.",
"title": ""
},
{
"docid": "714cbf0959a01bd8086850098ef9a72d",
"text": "To add technical detail to other answers, your (and some commenters') estimates of storing that data is woefully (many orders of magnitude) off. Let's take your 10MB of transaction data per user. You're only estimating text records like in Quicken. Now add on the volume of storing everye check's image. That's 100K (if not 500Kb depending on resolution of the scan) per check. If you have 100 checks per year (not unrealistic, if you pay all utility/morgage bills by check, as well as purchases), you now have 10Mb/year to 50MB/year. Now you're asking for 10 years of this, so you have 100-500MB per customer. NOT 10MB-70MB as you initially assumed. Let's take a mid-range figure, 300 MB. You were estimating using consumer grate cheap-o storage (which Facebook can afford for their data, as they don't store transaction data). Now let's up that to enterprise server hard drives. Your storage costs just rose 2x-5x. Now, typically you'd have RAID. So 2x more. Most large financial institutions have multiple data centers. You typically store all data's copies in those data centers for DR purposes. Your multiplier added another 2x-4x Most production data servers have multiple copies (Write DB server + one or more read-only copies). Multiply by 2x-4x With some rare exceptions, most banks don't just have one central database server. Each major app / business line would have its own DB, so you multiply that by 2x-20x depending on the bank, especially if it's arrived at its size by merging with other banks and has dozens of inherited legacy systems. multiple backups. Regulatory backup requirements means you don't just back up your data once a year. You do it daily, till the data is purged from DB. Meaning, you don't store ONE copy of your transaction in backup. You stored, say, 10*365 copies, assuming 10 year retention) So, at the low end, your cost estimates are 30*2*2*2*2*2 = 900 times off (3 orders of magnitude) just for live database storage, and 3500 times off for backup costs. At the high end, they could be 50*5*2*4*4*20=16,000 times off (4-5 orders of magnitude) At this range, no, it isn't worth it for the bank to keep your transactions available in DB and online any longer than bare-bones absolutely critically necessary.",
"title": ""
},
{
"docid": "35ebd369a1b94b3ffd96d97d051ce1de",
"text": "Many good points have been brought up, and I'll just link to them here, for ease. Source: I work at a credit/debit card transaction processing company on the Database and Processing Software teams. See mhoran_psprep's answer. See Chris' answer. Believe it or not, banks don't expose their primary (or secondary) database to end users. They don't expose their fastest / most robust database to end users. By only storing x days of data in that customer-facing database and limiting the range of any one query, any query run against it is much less likely to cause system-wide slowness. They most definitely have database archives which are kept offline, and most definitely have an employee-facing database which allows employees to query larger ranges of data. What would a bank have to gain by allowing you to query a full year of transactions?",
"title": ""
},
{
"docid": "03930b7b11dd077c077ccfc6adeae95e",
"text": "A big issue for historical data in banking is that they don't/can't reside within a single system. Archives of typical bank will include dozen(s) of different archives made by different companies on different, incompatible systems. For example, see http://www.motherjones.com/files/images/big-bank-theory-chart-large.jpg as an illustration of bank mergers and acquisitions, and AFAIK that doesn't include many smaller deals. For any given account, it's 10-year history might be on some different system. Often, when integrating such systems, a compromise is made - if bank A acquires bank B that has earlier acquired bank C, then if the acquisition of C was a few years ago, then you can skip integrating the archives of C in your online systems, keep them separate, and use them only when/if needed (and minimize that need by hefty fees). Since the price list and services are supposed to be equal for everyone, then no matter how your accounts originated, if 10% of archives are an expensive enough problem to integrate, then it makes financial sense to restrict access to 100% of archives older than some arbitrary threshold.",
"title": ""
},
{
"docid": "08779e8c2ebc378095806f40072fea64",
"text": "Well, I know why the Rabobank in the Netherlands does it. I can go back around one year and a half with my internet banking. But I can only go further back (upto 7 years) after contacting the bank and paying €5,- per transcript (one transcript holds around a month of activities). I needed a year worth of transcripts for my taxes and had to cough up more than €50. EDIT It seems they recently changed their policy in a way that you can request as many transcripts as you like for a maximum cost of €25,- so the trend to easier access is visible.",
"title": ""
},
{
"docid": "bbf3a539284894f75bb060a84d055235",
"text": "If you need access to your data beyond the online availability, you download the transactions and manage the archive yourself. Six months to eighteen months is generally enough time for most people to manage their own archived data. Big banks have the power to store and retrieve all the data online. Unfortunately, the older records are not frequently accessed. Why have these records online when they will be rarely accessed? Backing up data will take longer. Queries to retrieve data will take longer. Everything will take longer just so you can have records that 99% of customers will never access.",
"title": ""
}
] |
[
{
"docid": "9102b28680803096847734691b1c9fe0",
"text": "http://www.mint.com attaches to all your accounts and lists all your transactions. I love it.",
"title": ""
},
{
"docid": "14f6c5ee4bcdb17b63ff8518e5ff0858",
"text": "Banks need to provide a free mechanism to deposit and withdrawal money. Banks are free to charge fees as long as it is well published. If you are not happy with services you can complain to Banking ombudsman.",
"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": ""
},
{
"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": "bd79b85d692bf9e419a41ca027831ac8",
"text": "You don't have much choice other than to open an account in your business name, then do a money transfer, as @DJClayworth says. You will not without providing your name and street address and possibly other information that you may consider to be of a private nature. This is due to laws about fraud, money laundering and consumer protection. I'm not saying that's what you have in mind! But without accountability of the sort provided by names and street addresses, banks would be facilitating crimes of many sorts, which is why regulatory agencies enforce disclosure requirements.",
"title": ""
},
{
"docid": "5f53938fe4acef1c5ca2cc4e5bb639f7",
"text": "\"TLDR: Why can't banks give me my money? We don't have your money. Who has my money? About half a dozen different people all over the world. And we need to coordinate with them and their banks to get you your money. I love how everyone seems to think that the securities industry has super powers. Believe me, even with T+3, you won't believe how many trades fail to settle properly. Yes, your trade is pretty simple. But Cash Equity trades in general can be very complicated (for the layman). Your sell order will have been pushed onto an algorithmic platform, aggregated with other sell order, and crossed with internal buy orders. The surplus would then be split out by the algo to try and get the best price based on \"\"orders\"\" on the market. Finally the \"\"fills\"\" are used in settlement, which could potentially have been filled in multiple trades against multiple counterparties. In order to guarantee that the money can be in your account, we need 3 days. Also remember, we aren't JUST looking at your transaction. Each bank is looking to square off all the different trades between all their counter parties over a single day. Thousands of transactions/fills may have to be processed just for a single name. Finally because, there a many many transactions that do not settle automatically, our settlements team needs to co-ordinate with the other bank to make sure that you get your money. Bear in mind, banks being banks, we are working with systems that are older than I am. *And all of the above is the \"\"simplest\"\" case, I haven't even factored in Dark Pools/Block trades, auctions, pre/post-market trading sessions, Foreign Exchange, Derivatives, KYC/AML.\"",
"title": ""
},
{
"docid": "8d56cfae504a707bd1c0f2c20e57adc0",
"text": "\"Do you think that your bank has a separate vault for just your money? Of course not. The bank just has one big pot of money that everything gets dumped into. They know exactly how much money each person is supposed to have. The problem is when they add up all the money in the vault... well lets just say a lot of it is missing. That's why they are supposed to have two vaults, one with the customer's money and one with the investor's money. But since all the account tracking is done internally it becomes real easy to \"\"borrow\"\" from one vault to fund the other. Vault: MF Global's at another bank\"",
"title": ""
},
{
"docid": "003dc2a0ae85bd705c711d4568f67aec",
"text": "This is why financial industry rules reform and stricter oversight is so necessary. Information is money and information should be universally accessible or off limits for use. People knowing things others can't makes them money and costs money for the people not in the know. This is the antithesis of free markets.",
"title": ""
},
{
"docid": "cecb611496cca6b62da8005849636d21",
"text": "You need to track every buy and sell to track your gains, or more likely, losses. Yes, you report each and every transactions. Pages of schedule D.",
"title": ""
},
{
"docid": "fd85e1239b99dadd7cdbc25218e54df4",
"text": "God, if the last **[partial audit that revealed trillions in secret loans](http://www.goldstockbull.com/articles/federal-reserve-secret-bank-bailouts-topped-16-trillion/)** wasn't enough- I can't see why we wouldn't give them a full audit. 31 USC § 714 - AUDIT OF FINANCIAL INSTITUTIONS EXAMINATION COUNCIL, FEDERAL RESERVE BOARD, FEDERAL RESERVE BANKS, FEDERAL DEPOSIT INSURANCE CORPORATION, AND OFFICE OF COMPTROLLER OF THE CURRENCY (a) In this section, “agency” means the Financial Institutions Examination Council, the Board of Governors of the Federal Reserve System (in this section referred to as the “Board”), Federal reserve banks, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency. (b) Under regulations of the Comptroller General, the Comptroller General shall audit an agency, but may carry out an onsite examination of an open insured bank or bank holding company only if the appropriate agency has consented in writing. **Audits of the Board and Federal reserve banks may not include—** (1) transactions for or with a foreign central bank, government of a foreign country, or nonprivate international financing organization; (2) deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, and open market operations; (3) transactions made under the direction of the Federal Open Market Committee; or (4) a part of a discussion or communication among or between members of the Board and officers and employees of the Federal Reserve System related to clauses (1)–(3) of this subsection. (c) (1) Except as provided in this subsection, an officer or employee of the Government Accountability Office may not disclose information identifying an open bank, an open bank holding company, or a customer of an open or closed bank or bank holding company. The Comptroller General may disclose information related to the affairs of a closed bank or closed bank holding company identifying a customer of the closed bank or closed bank holding company only if the Comptroller General believes the customer had a controlling influence in the management of the closed bank or closed bank holding company or was related to or affiliated with a person or group having a controlling influence. (2) An officer or employee of the Office may discuss a customer, bank, or bank holding company with an official of an agency and may report an apparent criminal violation to an appropriate law enforcement authority of the United States Government or a State. (3) Except as provided under paragraph (4), an officer or employee of the Government Accountability Office may not disclose to any person outside the Government Accountability Office information obtained in audits or examinations conducted under subsection (e) and maintained as confidential by the Board or the Federal reserve banks. (4) This subsection shall not— (A) authorize an officer or employee of an agency to withhold information from any committee or subcommittee of jurisdiction of Congress, or any member of such committee or subcommittee; or (B) limit any disclosure by the Government Accountability Office to any committee or subcommittee of jurisdiction of Congress, or any member of such committee or subcommittee. ... http://www.law.cornell.edu/uscode/text/31/714 The people here who are under an illusion the federal reserve has any sort of meaningful audit, and that it is coincidental that the last audit outside of this limited scope resulted in the information related to trillions of secret loans is very deluded or brainwashed. Open your fucking eyes, world! The federal reserve bank exists to rob you of the country your fathers conquered!",
"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": "543f4652e82ee1c5329dcd9006612b55",
"text": "As a merchant I can tell you that the only thing the bank gets from me. Is the total amount and a category for my business. No detail, not ever.",
"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": "5232906d5fcb1e681404c9f7621ed299",
"text": "I wonder if there are times (like when BofA bought Merrill) when it might be alright to not disclose everything right away. Particularly if what needs to be disclosed are losses and the government has told you that they'd cover them.",
"title": ""
},
{
"docid": "d608f482e2617e674cae8ec514453434",
"text": "\"There is no \"\"reason why this cannot be done\"\", but you can tell your friend that these actions are officially shady in the eyes of the US government. Any bank transactions with a value of $10,000 or more are automatically reported to the government as a way to prevent money laundering, tax evasion, and other criminal shenanigans. \"\"Structuring\"\" bank deposits to avoid this monetary limit is a crime in and of itself. https://en.wikipedia.org/wiki/Currency_transaction_report\"",
"title": ""
}
] |
fiqa
|
062731520aa117caa0bf0d178fe69d5c
|
Why do people buy stocks that pay no dividend?
|
[
{
"docid": "8522a4026f4105bb39f46152a4d3b71f",
"text": "Instead of giving part of their profits back as dividends, management puts it back into the company so the company can grow and produce higher profits. When these companies do well, there is high demand for them as in the long term higher profits equates to a higher share price. So if a company invests in itself to grow its profits higher and higher, one of the main reasons investors will buy the shares, is in the expectation of future capital gains.",
"title": ""
},
{
"docid": "4ce1510db724098278202fb69a59c5a2",
"text": "people buy stocks because there is more to Return on Investment than whether dividends are issued or not. Some people want ownership and the ability to influence decisions by using the rights associated with their class of stock. Another reason would be to park capital in a place that would grow faster than the rate of inflation. these are only a few of many reasons why people would buy stock.",
"title": ""
},
{
"docid": "c90632e5a5534cfb491f783708f5b0c9",
"text": "There are many stocks that don't have dividends. Their revenue, growth, and reinvestment help these companies to grow, and my share of such companies represent say, one billionth of a growing company, and therefore worth more over time. Look up the details of Berkshire Hathaway. No dividend, but a value of over $100,000. Not a typo, over one hundred thousand dollars per share.",
"title": ""
},
{
"docid": "2b20ae0b7a53427e84f1435189b93ec3",
"text": "Nobody is going to buy a stock without returns. However, returns are dividends + capital gains. So long as there is enough of the latter it doesn't matter if there is none of the former. Consider: Berkshire Hathaway--Warren Buffet's company. It has never paid dividends. It just keeps going up because Warren Buffet makes the money grow. I would expect the price to crash if it ever paid dividends--that would be an indication that Warren Buffet couldn't find anything good to do with the money and thus an indication that the growth was going to stop.",
"title": ""
},
{
"docid": "764624b0e84789c70bc3f1b715a280c3",
"text": "Shares in a company represent a portion of a company. If that company takes in money and doesn't pay it out as a dividend (e.g. Apple), the company is still more valuable because it has cold hard cash as an asset. Theoretically, it's all the same whether your share of the money is inside the company or outside the company; the only immediate difference is tax treatment. Of course, for large bank accounts that means that an investment in the company is a mix of investment in the bank account and investment in the business-value of the company, which may stymie investors who aren't particularly interested in buying larve amounts of bank accounts (known for low returns) and would prefer to receive their share of the cash to invest elsewhere (or in the business portion of the company.) Companies like Apple have in fact taken criticism for this. Your company could also use that cash to invest in itself (growing the value of its profits) or buy other companies that are worth money, essentially doing the job for you. Of course, they can do the job well or they can do it poorly... A company could also be acquired by a larger company, or taken private, in exchange for cash or the stock of another company. This is another way that the company's value could be returned to its shareholders.",
"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": "bccb2ad622d8dc8ba8b3cb146cbd4d41",
"text": "\"I don't know why there is so much confusion on such a simple concept. The answer is very simple. A stock must eventually pay dividends or the whole stock market is just a cheap ponzi scheme. A company may temporarily decided to reinvest profits into R&D, company expansion, etc. but obviously if they promised to never pay dividends then you can never participate in the profits of the company and there is simply no intrinsic value to the stock. For all of you saying 'Yeah but the stock price will go up!', please people get a life. The only reason the price goes up is in anticipation of dividend yield otherwise WHY would the price go up? \"\"But the company is worth more and the stock is worth more\"\" A stocks value is not set by the company but by people who buy and sell in the open market. To think a stock's price can go up even if the company refuses to pay dividends is analogous to : Person A says \"\"Hey buy these paper clips for $10\"\". But those paper clips aren't worth that. \"\"It doesn't matter because some fool down the line will pay $15\"\". But why would they pay that? \"\"Because some fool after him will pay $20\"\" Ha Ha!\"",
"title": ""
}
] |
[
{
"docid": "012503b8167ce91b6e004e7ff6370191",
"text": "IBM is famous for spending lots of money on stock buyback to keep the stock price higher. The technique works, and investors in growth stocks generally prefer a high market prices to a taxable dividend payment. Dividends are ways to return shareholder value when a company generates a lot of cash, but doesn't have alot of growth. Electric and gas companies are a classic example of high-dividend companies.",
"title": ""
},
{
"docid": "51a19c3ec2b20ff8db1f6607bf091252",
"text": "I would say that the answer is yes. Investors may move on purchasing a stock as a result of news that a stock is set to pay out their dividend. It would be interesting to analyze the trend based on a company's dividend payouts over 10 or so years to see what/how this impacts the market value of a given company.",
"title": ""
},
{
"docid": "69923fb1d6e6e062c5b30216a5600c26",
"text": "Even with non-voting shares, you own a portion of the company including all of its assets and its future profits. If the company is sold, goes out of business and liquidates, etc., those with non-voting shares still stand collect their share of the funds generated. There's also the possibility, as one of the comments notes, that a company will pay dividends in the future and distribute its assets to shareholders that way. The example of Google (also mentioned in the comments) is interesting because when they went to voting and non-voting stock, there was some theoretical debate about whether the two types of shares (GOOG and GOOGL) would track each other in value. It turned out that they did not - People did put a premium on voting, so that is worth something. Even without the voting rights, however, Google has massive assets and each share (GOOG and GOOGL) represented ownership of a fraction of those assets and that kept them highly correlated in value. (Google had to pay restitution to some shareholders of the non-voting stock as a result of the deviation in value. I won't get into the details here since it's a bit of tangent, but you could easily find details on the web.)",
"title": ""
},
{
"docid": "3ce1b8ea4794c2ad88e45f2f68c45be1",
"text": "\"Yes, I agree with you. Saying that the value of the stock will grow as the company grows and acquires more assets ... I don't see why. Okay, I'm a nice guy and I want to see other people do well, but what do I care how much money they're making if they're not giving any of it to ME? Frankly I think it's like people who buy commemorative plates or beanie babies or other \"\"collectibles\"\" as an investment. As long as others are also buying them as an investment, and buying and reselling at a profit, the value will continue to go up. But one day people say, Wait, is this little stuffed toy really worth $10,000? and the balloon bursts. Confer Dutch tulips: http://www.damninteresting.com/the-dutch-tulip-bubble-of-1637/ As I see it, what gives a non-dividend-paying stock value is mostly the expectation that at some time in the future it will pay dividends. This is especially true of new start-up companies. As you mentioned, there's also the possibility of a takeover. It wouldn't have to be a hostile takeover, any takeover would do. At that point the buying company either buys the stock or exchanges it for shares of their own. In the first case you now have cash for your investment and in the second case you now have stock in a dividend-paying company -- or in another non-dividend-paying company and you start the cycle over.\"",
"title": ""
},
{
"docid": "18371125025cdff3789257454829bd7f",
"text": "There's not usually a point to issuing new stock as a dividend, because if you issue new stock, it dilutes the existing shareholders by the exact same amount as the dividend: so now they have a few more shares, great, but they're worth the exact same amount. (This assumes that all stockholders are equal. If there are multiple share classes, or people whose rights to a stock are tied to the stock price in some manner - options, warrants, or something - then a properly structured stock dividend could serve to enrich one set of shareholders and other rights-holders at the expense of another. But this is usually illegal.) If this sort of dividends are popular in China, I suspect it is due to some freaky regulatory or tax-related circumstances which are not present in the United States markets. China is kind of notorious for having unusual capital controls, limitations on the exchange of currency, and markets which are not very transparent.",
"title": ""
},
{
"docid": "3f55bb3f3499c894a67cb3c1ac0d20ce",
"text": "If you assume the market is always 100% rational and accurate and liquid, then it doesn't matter very much if a company pays dividends, other than how dividends are taxed vs. capital gains. (If the market is 100% accurate and liquid, it also doesn't really matter what stock you buy, since they are all fairly priced, other than that you want the stock to match your risk tolerance). However, if you manage to find an undervalued company (which, as an investor, is what you are trying to do), your investment skill won't pay off much until enough other people notice the company's value, which might take a long time, and you might end up wanting to sell before it happens. But if the company pays dividends, you can, slowly, get value from your investment no matter what the market thinks. (Of course, if it's really undervalued then you would often, but not always, want to buy more of it anyway). Also, companies must constantly decide whether to reinvest the money in themselves or pay out dividends to owners. As an owner, there are some cases in which you would prefer the company invest in itself, because you think they can do better with it then you can. However, there is a decided tendency for C level employees to be more optimistic in this regard than their owners (perhaps because even sub-market quality investments expand the empires of the executives, even when they hurt the owners). Paying dividends is thus sometimes a sign that a company no longer has capital requirements intense enough that it makes sense to re-invest all of its profits (though having that much opportunity can be a good thing, sometimes), and/or a sign that it is willing, to some degree, to favor paying its owners over expanding the business. As a current or prospective owner, that can be desirable. It's also worth mentioning that, since stocks paying dividends are likely not in the middle of a fast growth phase and are producing profit in excess of their capital needs, they are likely slower growth and lower risk as a class than companies without dividends. This puts them in a particular place on the risk/reward spectrum, so some investors may prefer dividend paying stocks because they match their risk profile.",
"title": ""
},
{
"docid": "684ffa8fa0acf0bc94ef340c7b1a78f2",
"text": "I would say the most important thing to consider is the quality of the company relative to the price you pay for it. No dividend also means that you will not pay taxes on dividends.",
"title": ""
},
{
"docid": "8251000cc2c3e8b95abfb04205e6fcc7",
"text": "\"The answer is Discounted Cash Flows. Companies that don't pay dividends are, ostensibly reinvesting their cash at returns higher than shareholders could obtain elsewhere. They are reinvesting in productive capacity with the aim of using this greater productive capacity to generate even more cash in the future. This isn't just true for companies, but for almost any cash-generating project. With a project you can purchase some type of productive assets, you may perform some kind of transformation on the good (or not), with the intent of selling a product, service, or in fact the productive mechanism you have built, this productive mechanism is typically called a \"\"company\"\". What is the value of such a productive mechanism? Yes, it's capacity to continue producing cash into the future. Under literally any scenario, discounted cash flow is how cash flows at distinct intervals are valued. A company that does not pay dividends now is capable of paying them in the future. Berkshire Hathaway does not pay a dividend currently, but it's cash flows have been reinvested over the years such that it's current cash paying capacity has multiplied many thousands of times over the decades. This is why companies that have never paid dividends trade at higher prices. Microsoft did not pay dividends for many years because the cash was better used developing the company to pay cash flows to investors in later years. A companies value is the sum of it's risk adjusted cash flows in the future, even when it has never paid shareholders a dime. If you had a piece of paper that obligated an entity (such as the government) to absolutely pay you $1,000 20 years from now, this $1,000 cash flows present value could be estimated using Discounted Cash Flow. It might be around $400, for example. But let's say you want to trade this promise to pay before the 20 years is up. Would it be worth anything? Of course it would. It would in fact typically go up in value (barring heavy inflation) until it was worth very close to $1,000 moments before it's value is redeemed. Imagine that this \"\"promise to pay\"\" is much like a non-dividend paying stock. Throughout its life it has never paid anyone anything, but over the years it's value goes up. It is because the discounted cash flow of the $1,000 payout can be estimated at almost anytime prior to it's payout.\"",
"title": ""
},
{
"docid": "8a1da1decc09e1158d46e7961ff60b4c",
"text": "For XOM if you were lucky enough to purchase on 20 Jan 16, at 73.18/share and sold on 15 July at 94.95 you would achieve a 29% return in six months. Awesome. You'd also get a dividend payment or two adding another percentage point per to your returns. The one year chart for FB shows it increasing from ~95/share to ~129. Yet no dividend was paid. However, the 35.7% YTD for 2016 should make anyone happy. Both of these require excellent timing, and those kind of returns are unsustainable over the long haul. Many people simply hold stocks. Having the dividend is a nice bonus to some growth. Why to people buy stocks? For profit. Sometimes dividend payers offer the best option, sometimes not.",
"title": ""
},
{
"docid": "53da041e5b8c1a6f7148e4d5b1358ea5",
"text": "It depends on your investment profile but basically, dividends increase your taxable income. Anyone making an income will effectively get 'lower returns' on their investments due to this effect. If you had the choice between identical shares that either give a dividend or don't, you'll find that stock that pays a dividend has a lower price, and increases in value more slowly than stock that doesn't. (all other things being equal) There's a whole bunch of economic theory behind this but in short, the current stock price is a measure of how much the company is worth combined with an estimation of how much it will be worth in the future (NPV of all future dividends is the basic model). When the company makes profit, it can keep those profits, and invest in new projects or distribute a portion of those profits to shareholders (aka dividends). Distributing the value to shareholders reduces the value of the company somewhat, but the shareholders get the money now. If the company doesn't give dividends, it has a higher value which will be reflected in a higher stock price. So basically, all other things being equal (which they rarely are, but I digress) the price and growth difference reflects the fact that dividends are paying out now. (In other words, if you wanted non-dividend shares you could get them by buying dividend shares and re-investing the dividend as new shares every time there was a payout, and you could get dividend-share like properties by selling a percentage of non-dividend shares periodically). Dividend income is taxable as part of your income right away, however taxes on capital gains only happen when you sell the asset in question, and also has a lower tax rate. If you buy and hold Berkshire Hatheway, you will not have to pay taxes on the gains you get until you decide to sell the shares, and even then the tax rate will be lower. If you are investing for retirement, this is great, since your income from other sources will be lower, so you can afford to be taxed then. In many jurisdictions, income from capital gains is subject to a different tax rate than the rest of your income, for example in the US for most people with money to invest it's either 15% or 20%, which will be lower than normal income tax would be (since most people with money to invest would be making enough to be in a higher bracket). Say, for example, your income now is within the 25% bracket. Any dividend you get will be taxed at that rate, so let's say that the dividend is about 2% and the growth of the stock is about 4%. So, your effective growth rate after taxation is 5.5% -- you lose 0.5% from the 25% tax on the dividend. If, instead, you had stock with the same growth but no dividend it would grow at a rate of 6%. If you never withdrew the money, after 20 years, $1 in the dividend stock would be worth ~$2.92 (1.055^20), whereas $1 in the non-dividend stock would be worth ~$3.21 (1.06^20). You're talking about a difference of 30 cents per dollar invested, which doesn't seem huge but multiply it by 100,000 and you've got yourself enough money to renovate your house purely out of money that would have gone to the government instead. The advantage here is if you are saving up for retirement, when you retire you won't have much income so the tax on the gains (even ignoring the capital gains effect above) will definitely be less then when you were working, however if you had a dividend stock you would have been paying taxes on the dividend, at a higher rate, throughout the lifetime of the investment. So, there you go, that's what Mohnish Pabrai is talking about. There are some caveats to this. If the amount you are investing isn't large, and you are in a lower tax bracket, and the stock pays out relatively low dividends you won't really feel the difference much, even though it's there. Also, dividend vs. no dividend is hardly the highest priority when deciding what company to invest in, and you'll practically never be able to find identical companies that differ only on dividend/no dividend, so if you find a great buy you may not have a choice in the matter. Also, there has been a trend in recent years to also make capital gains tax progressive, so people who have a higher income will also pay more in capital gains, which negates part of the benefit of non-dividend stocks (but doesn't change the growth rate effects before the sale). There are also some theoretical arguments that dividend-paying companies should have stronger shareholders (since the company has less capital, it has to 'play nice' to get money either from new shares or from banks, which leads to less risky behavior) but it's not so cut-and-dried in real life.",
"title": ""
},
{
"docid": "0619eb0ed1ee60b67556347fb051ff16",
"text": "There are many reasons for buying stock for dividends. You are right in the sense that in theory a stock's price will go down in value by the amount of the dividend. As the amount of dividend was adding to the value of the company, but now has been paid out to shareholder, so now the company is worth less by the value of the dividend. However, in real life this may or may not happen. Sometimes the price will drop by less than the value of the dividend. Sometimes the price will drop by more than the dividend. And other times the price will go up even though the stock has gone ex-dividend. We can say that if the price has dropped by exactly the amount of the dividend then there has been no change in the stockholders value, if the price has dropped by more than the value of the dividend then there has been a drop to the stockholder's value, and if the price has gone up or dropped by less than the value of the dividend then there has been a increase to the stockholder's value. Benefits of Buying Stocks with Good Dividends: What you shouldn't do however, is buy stocks solely due to the dividend. Be aware that if a company starts reducing its dividends, it could be an early warning sign that the company may be heading into financial troubles. That is why holding a stock that is dropping in price purely for its dividend can be a very dangerous practice.",
"title": ""
},
{
"docid": "30efae6efc1fb61ee20dfa28f371a625",
"text": "A stock dividend converts some of the reserves and surplus on the company's balance sheet into paid-up capital and securities premium account without involving any actual cash outflow to the shareholders. While cash dividends are eyed by the investors due to their cash yield, issuance of stock dividends are indicators of growing confidence of the management and the shareholders in the company. The fact that shareholders want to convert free cash sitting on the balance sheet (which can ideally be taken out as dividends) into blocked money in exchange for shares is symbolic to their confidence in the company. This in turn is expected to lead to an increase in market price of the stock.",
"title": ""
},
{
"docid": "2c22c52e4aaebff770a0c2e1acd89cf3",
"text": "\"A share of stock is a share of the underlying business. If one believes the underlying business will grow in value, then one would expect the stock price to increase commensurately. Participants in the stock market, in theory, assign value based on some combination of factors like capital assets, cash on hand, revenue, cash flow, profits, dividends paid, and a bunch of other things, including \"\"intangibles\"\" like customer loyalty. A dividend stream may be more important to one investor than another. But, essentially, non-dividend paying companies (and, thus, their shares) are expected by their owners to become more valuable over time, at which point they may be sold for a profit. EDIT TO ADD: Let's take an extremely simple example of company valuation: book value, or the sum of assets (capital, cash, etc) and liabilities (debt, etc). Suppose our company has a book value of $1M today, and has 1 million shares outstanding, and so each share is priced at $1. Now, suppose the company, over the next year, puts another $1M in the bank through its profitable operation. Now, the book value is $2/share. Suppose further that the stock price did not go up, so the market capitalization is still $1M, but the underlying asset is worth $2M. Some extremely rational market participant should then immediately use his $1M to buy up all the shares of the company for $1M and sell the underlying assets for their $2M value, for an instant profit of 100%. But this rarely happens, because the existing shareholders are also rational, can read the balance sheet, and refuse to sell their shares unless they get something a lot closer to $2--likely even more if they expect the company to keep getting bigger. In reality, the valuation of shares is obviously much more complicated, but this is the essence of it. This is how one makes money from growth (as opposed to income) stocks. You are correct that you get no income stream while you hold the asset. But you do get money from selling, eventually.\"",
"title": ""
},
{
"docid": "88bad5cf03d3a2c8d04785fcf5589fec",
"text": "\"One way to value companies is to use a Dividend discount model. In substance, it consists in estimating future dividends and calculating their present value. So it is a methodology which considers that an equity is similar to a bond and estimates its current value based on future cash flows. A company may not be paying dividends now, but because its future earnings prospects are good may pay some in the future. In that case the DDM model will give a non-zero value to that stock. If on the other hand you think a company won't ever make any profits and therefore never pay any dividends, then it's probably worth 0! Take Microsoft as an example - it currently pays ~3% dividend per annum. The stock has been listed since 1986 and yet it did not pay any dividends until 2003. But the stock has been rising regularly since the beginning because people had \"\"priced in\"\" the fact that there was a high chance that the company would become very profitable - which proved true in the long term (+60,000% including dividends since the IPO!).\"",
"title": ""
},
{
"docid": "b4930ad8b4477424986d9bb08fd76f2b",
"text": "The risk in a divident paying stock can come from 2 sources. The business of the company, or the valuation of the stock at the time you buy. The business of the company relates to how they are running things, the risks they are taking with the company, innovations in their pipeline, and their competitive landscape. You can find all sorts of examples of companies that paid nice dividends but didn't end so well... Eastman Kodak, Enron, Lehman brothers, all used to pay very nice dividends at some point... On the other hand you have the valuation. The company is running great, but the market has unrealistic expectations about it. Think Amazon and Yahoo back in 2001... the price was way too high for the company's worth. As the price of a stock goes up, the return that you get from its future cash flows (dividends) goes down (and viceversa). If you want to go deep into the subject, check out this course from Chicago U they spend a lot of time talking about dividends, future returns from stocks and the risk rewards of finding stocks by methods such as these.",
"title": ""
}
] |
fiqa
|
ad4660bd5a1b7db887a3ebea36348ae0
|
Is building a corporation a good option?
|
[
{
"docid": "537d0a768beb6bac683f1268f73aaecf",
"text": "Creating a corporation is not necessarily less taxes. In fact, you'll face the problem of double taxation, and since you must pay yourself a reasonable salary, if your corporation doesn't earn much to give you as dividend after the salary, and/or your tax bracket is low, you'll in fact may end up paying more taxes. Also there's a lot of bureaucracy involved in managing a corporation. Liability on the other hand is important, and what's more important - is asset separation and limiting the liability to the corporation assets, keeping your personal assets safe. To achieve that, you don't have to create a corporation, but you can create a Limited Liability Company (LLC). LLC are disregarded entities for tax purposes (i.e.: you won't have to pay taxes twice, only once as a sole proprietor/partner), but provide the liability limitation and asset separation. LLC's are much less formal, and require much less paperwork reducing the risk of corporate veil piercing because of non-compliance. I myself decided to manage my investments through LLC's for that very reason (asset separation).",
"title": ""
},
{
"docid": "b1d966d38507f2431e2031ce742cfa87",
"text": "Compared with a Sole Proprietorship, the main disadvantages of an S-Corporation or an LLC are that it adds a lot of management overhead (time, and possibly money if you don't do it all yourself), and there are fees you must pay to incorporate, as well as additional yearly maintenance fees which vary by state. You should be able to weigh the tax savings and liability protection against the extra costs and hassle, and see which way the scales tip. As a rule of thumb, the bigger your business gets or the more income you make, the more attractive incorporating becomes. Note there are some additional taxes that certain jurisdictions impose on business income. For example, IL and CA charge 1.5% tax, NY is less, but NYC is 8.85%! In NYC specifically, you could actually end up paying slightly more tax as an S-Corp than you would as a Sole Proprietorship. In most places though, the nominal local taxes will still be less than the FICA taxes you could potentially save.",
"title": ""
}
] |
[
{
"docid": "f38781d51f018d03d48fa9ad598f6afa",
"text": "And more than that it would encourage people to invest in companies for the long term, allowing Executives and CEO's and such the breathing space to make a tough decision that's bad in the short term but good in the long term... Rather than hiring a psychopath CEO that's only trying to boost short term stock value for his own bonus/salary",
"title": ""
},
{
"docid": "bb4dc2382fe36b9c9d01a1e44edaee35",
"text": "IANAL (and nor am I an accountant), so I can't give a definitive answer as to legality, but AFAIK, what you propose is legal. But what's the benefit? Avoiding corporation tax? It's simplistic – and costly – to think in terms like that. You need to run the numbers for different scenarios, and make a plan. You can end up ahead of the game precisely by choosing to pay some corporate tax each year. Really! Read on. One of the many reasons that self-employed Canadians sometimes opt for a corporate structure over being a sole proprietor is to be able to not pay themselves everything the company earns each year. This is especially important when a business has some really good years, and others, meh. Using the corporation to retain earnings can be more tax effective. Example: Imagine your corporation earns, net of accounting & other non-tax costs except for your draws, $120,000/year for 5 years, and $0 in year 6. Assume the business is your only source of income for those 6 years. Would you rather: Pay yourself the entire $120,000/yr in years 1-5, then $0 in year 6 (living off personal savings you hopefully accumulated earlier), subjecting the $120,000/yr to personal income tax only, leaving nothing in the corporation to be taxed? Very roughly speaking, assuming tax rates & brackets are level from year to year, and using this calculator (which simplifies certain things), then in Ontario, then you'd net ~$84,878/yr for years 1-5, and $0 in year 6. Overall, you realized $424,390. Drawing the income in this manner, the average tax rate on the $600,000 was 29.26%. vs. Pay yourself only $100,000/yr in years 1-5, leaving $20,000/yr subject to corporation tax. Assuming a 15.5% combined federal/provincial corporate tax rate (includes the small business deduction), then the corp. is left with $16,900/yr to add to retained earnings in years 1-5. In year 6, the corp. has $84,500 in retained earnings to be distributed to you, the sole owner, as a dividend (of the non-eligible kind.) Again, very roughly speaking, you'd personally net $73,560/yr in years 1-5, and then on the $84,500 dividend in year 6, you'd net $73,658. Overall, you realized $441,458. Drawing the income in this manner, the average tax rate on the $600K was 26.42%. i.e. Scenario 2, which spreads the income out over the six years, saved 2.84% in tax, or $14,400. Smoothing out your income is also a prudent thing to do. Would you rather find yourself in year 6, having no clients and no revenue, with nothing left to draw on? Or would you rather the company had saved money from the good years to pay you in the lean one?",
"title": ""
},
{
"docid": "56af5c7d291d4343dcfe0da0f6194335",
"text": "How about having him make you CEO (and/or president, depending on structure), and keep him as an advisor. Then over the next year you can evaluate if you want to be the owner and/or if costs justify it. You can use your first year as training.",
"title": ""
},
{
"docid": "4b1d182c75a57338e88d245630fdb6c2",
"text": "If you happen to be looking around one of the most secured business investment Opportunity, Franchise Business investment Opportunity is one of the best options to look at. A franchise is a single platform where you can explore your area of interest and nurture it safely. Moreover, it gives you the opportunity to step ahead with the world's leading companies, and earn a market reputation easily.",
"title": ""
},
{
"docid": "42bb64664ad39c4ddb15eb14658076b3",
"text": "We offer a variety of business enterprise formation applications designed to make putting in a private organization as simple and straightforward as feasible. They range from the simple Digital Package - providing the minimum prison requirements for reputable Company formation - to the All Inclusive, which includes a variety of beneficial extras, including a prestigious registered office, a commercial enterprise provider. This corporation shape is usually utilized by non-earnings Company inside the United States. It protects the private finances of the business enterprise owners in a comparable manner as a corporation limited via stocks. Instead of getting shareholders and stocks.",
"title": ""
},
{
"docid": "3def845bcb1297284720017265a548ac",
"text": "Crony capitalism isn't capitalism. It is basically a case where the government turns a blind eye to wealthy individuals breaking the law, or is even complicit in giving away taxpayer money in the form of no-bid contracts. This is much more prevalent in China's state-sponsored capitalism. Their system is textbook crony capitalism. We still have it but to a lesser degree. Don't blame capitalism for the government's failure. Crony capitalism absolutely requires a complicit strong central government in order to flourish. And there is a difference between the suburbs around Las Vegas and Chinese ghost cities. The Las Vegas suburbs were at least built with buyers in mind, even though this turned out to be a mistake. It was a mistake on the part of a few individuals. Absolutely a mis-allocation of capital, and I didn't mean to imply that capitalism is perfectly efficient in allocating capital. But the Chinese ghost cities are a centrally planned project made for the intention of moving rural Chinese people into them in future 5-year plans. Whether that turns out to be a good investment has yet to be seen, but it seems like it will involve moving lots of people against their will. But does it not make more sense to gradually build up a city according to what is currently needed, as capitalism tries to do, rather than spend lots of money building an entire city, much of which may never be needed? There are so many imbalances brewing under the surface in China, it seems like only a matter of time before they all come to a head.",
"title": ""
},
{
"docid": "0eaa489227b57eec5f75fc86beefaa81",
"text": "You are absolutely correct, incorporation and the fiduciary responsibility that comes with it almost always leads to a sacrifice in product quality and long-term business principles. I always think of the difference between McDonalds and In-n-Out hamburgers as examples of where each road leads.",
"title": ""
},
{
"docid": "c14b4881f89e813dcec5a551b30856b2",
"text": "2 very viable options. Real Estate is cheap now and if you hold a few properties for the long term the price should rise. You can use them as rental properties to supplement your income. In addition agriculture is also very viable. How else you gunna feed 7 billion? Might as well cash in on that.",
"title": ""
},
{
"docid": "dec41fd2fd4de93670cbe6efed4c292d",
"text": "On a company level ROCE over WACC would be more meaningful in my view but the end result should be be pretty much the same. This concept is closely related to value creation. Value can only be created when a company's ROCE is exceeding its cost of funding - WACC. This is also tightly related with the NPV concept. Value is only created when the NPV on a project is >0. And to directly answer OP. Study in detail WACC. (weighted average cost of capital). Focus on the Modigliani–Miller theorem with taxes and financial distress costs. Good luck.",
"title": ""
},
{
"docid": "a8cf9eff8d6d8222f23e1649b7d3e58e",
"text": "\"You'd be mistaken to this there is any morality involved in (most) corporations - neither positive nor negative; running a business is amoral. Some business missions have a moral intent - such as pharmaceuticals, health organization, etc. - but all have an amoral underbelly. It's fairly simplistic - the purpose of a business is to produce a profit. At some point, all successful, well functioning businesses will work down their list of ways to produce a profit - after they've established market share, a lasting brand, customer loyalty, finances well in the black - and eventually look towards capital preservation. In most bodies with a large monetary wealth, capital preservation becomes a key focus (in other words, once you master the art of making money, you then need to master the art of keeping it). Thus the ability to then focus on these things. To continue to just pay taxes is like running an efficient, but leaky ship. The more you preserve, the longer you'll be around and the more power you'll yield to stick around. This last point is also important to keep in mind - unlike you or I - a company will basically last forever (well at least until society collapses). You or I are only here until we die - and whatever wealth we have we may try to preserve for our kids or next of kin. A corporation is always here, the people in the corporation & it's owners change hands, but the corporation survives. Frankly any business that isn't aiming to make a profit, is either going to fail quickly or is by definition a \"\"non-profit\"\". Here is where I would believe the government plays a balancing role - to reign in the power of corporations (lest they rival their own). But, any good corporation will handle that problem as well (Regulatory capture, anyone?). Also, consider that for the most wealthy among us, it's probably not about the money anymore. It's now probably about the game. This is certainly where the psychopaths get that manic edge on the rest of us.\"",
"title": ""
},
{
"docid": "cc7f67e8b4e045efd3adf0d6e8579c9b",
"text": "In addition to asking an accountant, I would also ask a lawyer. When exploring the same question for myself, I found that one of the benefits of incorporating or forming an LLC is that your personal assets are better protected. Including asset protection, here are 5 reasons to incorporate: Initially, I thought that as I had so few assets, I should not be concerned. I was glad I was able to do a free consult with a lawyer who advised me to look into forming an LLC. (Ultimately, my planned business idea never panned out. So, I never went the incorporation/LLC route.) Hope this helps!",
"title": ""
},
{
"docid": "cbd83f94ead8881e137fb659c8babb07",
"text": "I would listen to chrissundberg below. Most professionals I meet and interact with in accounting firms, law firms, lending, and others are by the book, smart, professional, and honest in their business dealings. Of course I have also run into a small minority that try to avoid contractual obligations or pull a fast one on the auditors, but these guys are known quickly throughout the business community and avoided. You need to reevaluate your thoughts on government's role in business and the finance industry, which you are clearly interested in joining. Quite frankly you won't last a week coming in most companies if you vocalize the government should do audits and business is amoral.",
"title": ""
},
{
"docid": "e30c1a9481ded4a26c6feb5502718faa",
"text": "My understanding is you can create a company 0 value. Then you need to either loan the company the money to buy the building (it will still have 0 value as it will have a debt equal to it's assets) or sell share to investors at any price you like to raise the money to buy the building. Once shares have value (as valued by a chartered accountant - not anyone can do this) then anyone recieving shares will have to pay income tax. This is why keeping the shares as no value for as long as possible can be preferable. Also a benefit of using share options. talk to your investors, see what they require.",
"title": ""
},
{
"docid": "01dd98454df723d9121bf03883bafa71",
"text": "* Yes, you should incorporate if you plan on seriously investing in real estate. This not only limits liability in terms of paying back the debt but also in case your tenants sue you. * Pass-through entities. Typically an LLC but it depends on the state if they have good or bad LLC laws. Pennsylvania is a state where you would not want to incorporate as an LLC. Other options include S-corps and LPs. * Loans are taken out by corporations against the property. Typically mortgage loans are non-recourse. If you set up a company for each property, this further insulates you against the bank capturing other properties within the pool. However, recourse carveouts can still end up getting you on the hook personally for the loans. These typically include voluntary bankruptcy. You would very rarely have to file for bankruptcy anyway for your real estate investments. At worst, it will end in foreclosure but banks typically would prefer deed-in-lieu just because it is faster and easier for them too. You just turn over the keys and walk away. It will have very little impact on your personal finances or record. Everyone in real estate walks away from properties and leaves them with the bank. It's a fact of doing business and your lender should have been comfortable owning your property at the basis they lent money to you. If they weren't, they were just stupid. * Yes, every real estate investment requires equity in the property. Typically it's a 20% equity check but if the lender underwrites the property to a lower value than what you purchased it for, you may have to line up more expensive financing.",
"title": ""
},
{
"docid": "f70e9b1546375e881102b39de8ec53ba",
"text": "Whether it's wise or not depends on what you think and what you should consider are the risks both ways. What are the risks? For Let's say that the company produces great value and its current price and initial price are well below what it's worth. By investing some of your money in the company, you can take advantage of this value and capitalize off of it if the market recognizes this value too, or when the market does (if it's a successful company it will be a matter of when). Other reasons to be for it are that the tech industry is considered a solid industry and a lot of money is flowing into it. Therefore, if this assumption is correct, you may assume that your job is safe even if your investment doesn't pay off (meaning, you don't lose income, but your investment may not be a great move). Against Let's say that you dump a lot of money into your company and invest in the stock. You're being paid by the company, you're taking some of that money and investing it in the company, meaning that, depending on how much you make outside the company, you are increasing your risk of loss if something negative happens to the company (ie: it fails). Other reasons to be against it are just the opposite as above: due to the NSA, some analysts (like Mish, ZeroHedge, and others) think that the world will cut back on doing IT business with the United States, thus the tech industry will take a major hit over the next decade. In addition to that, Jesse Colombo (@TheBubbleBubble) on Twitter is predicting that there's another tech bubble and it will make a mess when it pops (to be fair to Colombo, he was one of analysts who predicted the housing bubble and his predictions on trading are often right). Finally, there is a risk of lost money and there is also a risk of lost opportunity. Looking at your past investments, which generally hurt more? That might give you a clue what to do.",
"title": ""
}
] |
fiqa
|
1544187f5844bed2952fcfbb0477a052
|
Why credit cards are sold through banks and not from Visa or MasterCard directly
|
[
{
"docid": "1d0e3cb5d03fee6a794f1471c18fe1e8",
"text": "Visa and Mastercard are not consumer-oriented companies. They do not consider individual consumers as their direct clients, and do not sell directly to them. Instead, their clients are financial institutions who participate in their networks (which is what they're selling). The institutions target the individual consumers (merchants and credit card holders). American Express, for example, has a different business model. AX doesn't only sell network services to financial institutions, but also services to individual consumers. You can get a AX credit card/merchant account directly with AX, or through their client bank.",
"title": ""
}
] |
[
{
"docid": "288aee3cde90d68f08dfb90dda778a6b",
"text": "\"You are correct. Credit card companies charge the merchant for every transaction. But the merchant isn't necessarily going to give you discount for paying in cash. The idea is that by providing more payment options, they increase sales, covering the cost of the transaction fee. That said, some merchants require a minimum purchase for using a credit card, though this may be against the policies of some issuers in the U.S. (I have no idea about India.) Also correct. They hope that you'll carry a balance so that they can charge you interest on it. Some credit cards are setup to charge as many fees as they possibly can. These are typically those low limit cards that are marketed as \"\"good\"\" ways to build up your credit. Most are basically scams, in the fact that the fees are outrageous. Update regarding minimum purchases: Apparently, Visa is allowing minimum purchase requirements in the U.S. of $10 or less. However, it seems that MasterCard still does not allow them, for the most part. Moral of the story: research the credit card issuers' policies. A further update regarding minimum purchases: In the US, merchants will be allowed to require a minimum purchase of up to $10 for credit card transactions. (I am guessing that prompted the Visa rule change mentioned above.) More detail can be found here in this answer, along with a link to the text of the bill itself.\"",
"title": ""
},
{
"docid": "ce7c0d1463f54bb3023002cd4b68a3ca",
"text": "Think about the credit card business model... they have two revenue generators: interest and fees from borrowers and commissions and fees to merchants. The key to a successful credit card is to both sign up lots of borrowers AND lots of merchants. Credit card fortunes have improved dramatically since the 1990's when formerly off-limits merchants like grocery stores began to accept cards. So when a credit card lets you just pull cash out of any ATM, there are a few costs they need to account for when pricing the cost for such a service: Credit card banks have managed to make cash advances both a profit center and a self-serving perk. Knowing that you can always draw upon your credit line for an emergency when cash is necessary makes you less likely to actually carry cash and more likely to just rely on your credit card.",
"title": ""
},
{
"docid": "bc736a0253f9ea442158e48f5bc98ccb",
"text": "\"I thought I'd see if the credit card companies had anything to say about this while trying to get merchants to sign up. I went to visa.com, clicked \"\"Run Your Business\"\" in the top nav, then \"\"Accept Visa Payments\"\". This page has a \"\"More benefits of accepting Visa\"\" link with an overlay (which I can't easily link directly to), which includes these lines: While the average cash transaction is $17, credit card purchases average $70 while debit card purchases average $36.² ² Visa Payment Panel Study (2Q11 to 1Q12 time period); Visa MARS Data: March 2015 – May 2015 That obviously doesn't tell the entire story (I suspect people are more likely to pull out cash when they're just buying a stick of gum, and more more likely to pull out a card when they're buying large electronics), but certainly there is some evidence from the credit card companies themselves that people spend more when using cards, which is one of the aspects they use to convince merchants to accept cards. I think the best evidence that people spend more is that more and more merchants accept cards. Accepting cards comes with some significant costs (though it's important to keep in mind that accepting cash can come with some significant costs as well). I suspect that merchants wouldn't do so unless the increased sales that they get for accepting cards makes up for the fees that they need to pay and the equipment they need to buy to accept them (not to mention the risks of chargebacks and the like).\"",
"title": ""
},
{
"docid": "90db26b89e8f2d04c74b31b6bfdaecf1",
"text": "\"When you buy something with your credit card, the store pays a fee to the credit card company, typically a base fee of 15 to 50 cents plus 2 to 3% of the purchase. At least, that's what it was a few years back when I had a tiny business and I wanted to accept credit cards. Big chain stores pay less because they are \"\"buying in bulk\"\" and have negotiating power. Just because you aren't paying interest doesn't mean the credit card company isn't making money off of you. In fact if you pay your monthly bill promptly, they're probably making MORE off of you, because they're collecting 2 or 3% for a month or less, instead of the 1 to 2% per month that they can charge in interest. The only situation I know where you can get money from a credit card company for free is when they offer \"\"convenience checks\"\" or a balance transfer with no up-front fee. I get such an offer every now and then. I presume the credit card company does that for the same reason that stores give out free samples: they hope that if you try the card, you'll continue using it. To them, it's a marketing cost, no different than the cost of putting an ad on television.\"",
"title": ""
},
{
"docid": "6f04c572febf901d91fa7fbf164c5f1f",
"text": "Your chief problem seems to be that you're mixing Visa (credit cards) and Step2 (a European Automated Clearing House). Credit cards are primarily an American concept, but do work worldwide especially in travel&tourism industry. The Credit Card companies are financial institutions themselves and operate similar to international banks They're typically acting as intermediaries between the customer's bank and the retailer's bank, so this works even if those two banks have no existing agreements. This is expensive, though. Step2 is a cheaper European system which eliminates the middle man. It allows the consumer's bank to directly pay the retailer's bank. VISA is not a member of Step2.",
"title": ""
},
{
"docid": "1c2e7a012cf98e72641115df9ad2d8bf",
"text": "A few reasons make sense: They have a defined process for rentals, risk assessment, and customer credit. Especially for a large corporation, making changes to that process is not trivial, adds risk/uncertainty, and will be costly. Such changes for a relatively small customer base might not makes sense. Many rental companies DO allow you to rent with a debit card. Why do some businesses take cash only? With a debit card, there is no third party guarantee. With a credit card, the cash is coming from a well-established third party who will pay (assuming no disputes) and has a well-established history of paying. Even if the merchant holds your account, it is still your cash under the control of you and your bank until the deposit clears the merchants bank. It is not surprising they view that as more risk and potentially not worth hassling with debit.",
"title": ""
},
{
"docid": "890b0d4599ec10abf87cae7906c16e78",
"text": "Cash back from credit cards is handled separately than the rest of the purchase, i.e. interest begins accumulating on that day, and likely at a higher rate, and usually comes out of a lower limit than the credit allotted to that card. Given all these differences, and the obvious revenue-generation situation for the lender, it makes sense for them to give the store an incentive, rather than penalize them further, for the use of such a feature. Note: I am not privy to the inner-workings or agreements between large stores and credit lenders, so I cannot guarantee any of this.",
"title": ""
},
{
"docid": "dbb3ec715d8b422ce3e1ee805b3c85dc",
"text": "Interchange fees. Every time a customer buys something on credit, the seller pays a fee. They're not allowed to itemize that fee and pass it on to the buyer, but they can offer a cash payment discount. In short, rewards cards are a system of collective bargaining for buyers versus sellers. Some argue it drives prices up for everyone who isn't a cardholder, but I think the evidence is mixed.",
"title": ""
},
{
"docid": "f34d15ac316ea041a8bbb7aad7fce72c",
"text": "I am not sure if this is the actual reason or not, but all of the major credit cards (Visa, Mastercard, Amex, Discover) provide damage insurance coverage on car rentals. Debit cards do not usually provide this coverage. So, if you use a credit card, the car company knows it will be able to recover the cost of any damage to the car. Of course, this doesn't explain some of the odd debit card policies out there. For example, Alamo will not let you use a debit card unless you provide proof of round trip travel (like a plane or cruise ticket). But you can use a credit card without having a travel ticket. I'm not sure how having a travel ticket makes debit card users less of a risk, but apparently it does somehow.",
"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": "c067b0a743d2aaf8960e75893f99eff0",
"text": "Each company that has an account with the credit card network has to classify themselves as a particular type of business. The credit card company uses that classification to catagorize the transaction on your statement. If you buy a T-shirt at a grocery, amusement park, gas station, or resturant; the transaction will be labeled by the vendor type. Look at recent credit card statements, even if they are from different cards, to see how the stores you want to know about are classified.",
"title": ""
},
{
"docid": "b7f05c59befb3907f059b801dc96e45b",
"text": "I'm surprised by all the pro-credit answers here, debit has some definite advantages. Most importantly, when you pay with a credit card, the merchant pays around 3% of the transaction to the credit company. In many states, they are forced to charge you the same amount, and this is frequently toted as ''consumer protection''. But consider what this means for the business: they loose money for every credit transaction, and they're legally forbidden to do anything about it. So you're taking 3% from a business and handing it over to a massive cooperation. To make matters worse, the buisness is inevitably going to have to raise their prices (albiet by a small amount), so in the end the average consumer has gained nothing. On the other hand, the credit card company wins big, and they use their profits to pay lobbyists and lawyers to keep these rules in place. To put in the worst possible light, it's essentially legal extortion, verging on corruption. As for the fraud protection offered, while it may be true that credit cards will offer a more hassle-free reimbursement (i.e. you just don't have to pay the bill) if your card is stolen, consumer protection laws also extend to debit: in many cases your bank is legally required to cut you a check for all the money you lost.",
"title": ""
},
{
"docid": "19db7d1ea4440024576bf59019233a4a",
"text": "Debit cards do not earn the bank any interest from you whereas credit cards do, so they want to give incentive to use credit over debit.",
"title": ""
},
{
"docid": "2180f91615b9d9c4599b3ab34e79b69e",
"text": "1) Every credit card company charges vendors a fee. That's sufficient to make an acceptable profit per charge even if some of that money goes into marketing expenses -- and the cash-back offer is a marketing expense. 2) Many if not most consumers pay interest; probably everyone does so occasionally when we get distracted and miss a payment. 3) The offer encourages you to put more payments on the card -- and in particular on their card -- than you might otherwise. See #1; that increases net income.",
"title": ""
},
{
"docid": "1a6eca859a7f7153d84029bc32cdfaff",
"text": "There are numerous reasons that go beyond the immediate requirement for access to credit. Many people just plain don't like carrying cash. Before electronic debit cards became mainstream about the only way to pay for online services was with a credit card. This has now changed just about everywhere except a large number of airlines which still only sell online tickets via a credit card payment. And then there are all those countries where governments (and some banks) have decided to charge merchants more when customers use debit cards. If you don't like carrying cash then you may find that the only card you can use is a credit card. These concerns are gradually disappearing and at some stage someone is likely to offer a combined debit-credit card. At which point you'll probably get credit whether you like it or not.",
"title": ""
}
] |
fiqa
|
de35212d222bbda52102fed318f7bbfb
|
In a competitive market, why is movie theater popcorn expensive?
|
[
{
"docid": "d7bb1920277a6e3077f9af827c5ce15d",
"text": "One explanation is that movie patrons are considering their total willingness to pay for the movie experience so that if the ticket price plus the market price of popcorn is less than their willingness to pay (WTP), the theater has an opportunity to extract more consumer surplus by charging higher than market prices for the popcorn (that is, price discrimination). There is a working paper on the subject by Gill and Hartmann (2008), the abstract of which reads: Prices for goods such as blades for razors, ink for printers and concessions at movies are often set well above cost. Theory has shown that this could yield a profitable price discrimination strategy often termed “metering.” The idea is that a customer’s intensity of demand for aftermarket goods (e.g. the concessions) provides a meter of how much the customer is willing to pay for the primary good (e.g. admission). If this correlation in tastes for the two goods is positive, a high price on the aftermarket good allows firms to extract a greater total price (admissions plus concessions) from higher type customers. This paper develops a simple aggregate model of discrete-continuous demand to motivate how this correlation can be tested using simple regression techniques and readily available firm data. Model simulations illustrate that the regressions can be used to predict whether aftermarket prices should be above, below or equal to their marginal cost. We then apply the approach to box-office and concession data from a chain of Spanish theaters and find that high priced concessions do extract more surplus from customers with a greater willingness to pay for the admission ticket. Locay and Rodriquez (1992) make a similar argument in a JPE article. They essentially argue that purchases of things like movie tickets are made by groups; once individuals are constrained by the group's choice, the firm has additional market power: We present models in which price discrimination in the context of a two-part price can occur in some competitive markets. Purchases take place in groups, which choose which firms to patronize. While firms are perfectly competitive with respect to groups, they have some market power over individual consumers, who are constrained by their groups' choices. We find that firms will charge an entry fee that is below marginal cost, and the second part of the price is marked up above marginal cost. The markup not only is positive but increases with the quality of the product. The quote you are looking for is similar, and again attributes the discrepancy to price discrimination. From the Armchair Economist (p. 159): The purpose of expensive popcorn is not to extract a lot of money from customers. That purpose would be better served by cheap popcorn and expensive movie tickets. Instead, the purpose of expensive popcorn is to extract different sums from different customers. Popcorn lovers, who have more fun at the movies, pay more for their additional pleasure. That is, some people like popcorn more than others. The latter idea is that the movie experience for popcorn lovers is worth more than the sum of its parts: that a movie ticket + popcorn is worth more than either of them separately for some people.",
"title": ""
},
{
"docid": "84b575d8fb24b84aca6dfd02fb8cbd46",
"text": "\"A multiplex is a concession stand which happens to show movies in order to lure you into range of the smell of their popcorn. It has nothing to do with movie theater monopolies. As it was explained to me by my manager, back when I worked in a movie theater in a small Midwestern chain, for every movie, the studios take some percentage cut of gross ticket sales, varying from movie to movie. Star Wars: The Phantom Menace in 1999 was the first film for which the studio demanded 90% of gross ticket price — continuing a long-standing trend of raising the take which possibly began with the original first Star Wars movie. The other studios quickly followed suit and raised their take to 90%, especially for the big blockbusters — the textbook term is \"\"oligopoly pricing\"\" — and since then the percentage has inched ever closer to 100%. I forget exactly what it was on the second Matrix movie or Lord of the Rings: Return of the King, both of which premiered while I was at the theater, but the number that sticks in my head is 94%. Obviously the studios can't directly capture any revenue from the sale of popcorn — unlike the movie, it's not their product — so every time they raise their take, the theater compensates for lost revenue by raising the price of popcorn. This trend hasn't reversed with 3D and IMAX and all the new technologies coming down the pike. The only reason they're attractive to the theaters is that the theater can charge $15 a ticket rather than $10. Even on a small percentage share, that's a 50% jump in revenue, and covers the not insignificant cost of the projection equipment. 3D is also currently getting more butts in seats than 2D was, leading to somewhat more concessions sales — going to the movies is an outing and an event again — though that's tapering off as it becomes less and less of a novelty. The ticket prices aren't coming down, though. Moral of the story: like razors or printers, theaters lose a ton of money to show you movies due to studio oligopoly pricing, and make it up on popcorn.\"",
"title": ""
},
{
"docid": "1125a00e20fcce7a54f20f4a30e98c35",
"text": "\"To add to Jason's answer; a further mechanism is that of monopoly rents which you mention in your question. Movie theatres are often in shopping complexes (which themselves may offer a particular cinema exclusivity), or physically remote from each other, making price comparison more difficult. Different companies may not offer the same movies (similar to the way phone companies offer difficult-to-compare contract pricing). Once you've paid for your movie ticket, if you're suddenly thirsty or peckish, the theatre is the only place selling snacks. Many theatres (including film theatres) discourage (or refuse) patrons from consuming products purchased elsewhere on site. A sense of \"\"capture\"\" is reinforced with ticket collection at the entrance or some form of barrier (inside vs outside the cordon). A theatre can thus capture their patrons and then leverage that access in order to discriminate amongst the higher-paying consumers mentioned by Jason.\"",
"title": ""
},
{
"docid": "bac6fb82079eb594958328de09f62c77",
"text": "Movie theater popcorn concessions are not really a competitive market.",
"title": ""
},
{
"docid": "615805aad595c950ff380c27d30f25b0",
"text": "\"With all due respect to economics everywhere and the armchair economist. I think they overlook one very basic fact. The alternative to buying popcorn at the cinema is buying it cheaper at the store, or making your own and bringing it to the cinema. Cinemagoing is something you tend to do with a date (and sometimes your friends) and who wants to look cheap to their date (and perhaps their spouse/friends) bringing popcorn to the cinema? This \"\"cheapo-gentlemens\"\" effect together with convenience is probably the reason why popcorn can remain so expensive at cinemas.\"",
"title": ""
},
{
"docid": "f67d16b648ae2dcaddcbc3ecf9201539",
"text": "I think this question has more to do with the business model of cinema. If I remember correctly. Most of the money from ticket sales goes back to the studios. Something like the newer a movie is the greater percentage goes back to the movie studios and the older a movie is the greater percentage of ticket price goes to the cinema. So high priced popcorn and candy is often the only place where the individual theaters make any money. This may not be true for every movie but I believe it was the case for films like James Cameron's Avatar.",
"title": ""
},
{
"docid": "aa6ea3cedd16816577a2685b74d5c499",
"text": "\"It's called extracting consumer surplus. Basically I have a bunch of movie goers (who have paid a lot for their tickets). Some of them don't like popcorn, and some do. Of the people in the latter group, there are some who are willing to pay a lot for it. That's partly because I have a select group (rich movie goers) and partly because some of these people would be willing to pay more for popcorn with a movie than without. If I were just selling \"\"popcorn,\"\" I'd have to charge a competitive price. But I'm really selling movies, which have more than covered my costs (rent, heat, etc.) So my costs of selling popcorn are less than that of a non-movie popcorn seller, and I don't really \"\"need\"\" to sell it. Ironically, it means that I can \"\"take my chances\"\" and sell a relatively small amount at a high price, thereby maximizing my UNIT profit. I don't mind having people NOT buy popcorn because I've already made my profit from them with the movie. From the point of view of the consumer, most consumers see popcorn as an \"\"afterthought.\"\" They will seldom think, \"\"I can buy popcorn $2.00 cheaper at Theater A than Theater B, and there's a 20 percent chance that I will want to buy popcorn, so Theater A is 40 cents ($2.00*.20) cheaper than Theater B.\"\" Instead, most make the decision to buy the popcorn after they've arrived at Theater B, because it as \"\"impulse item.\"\" And even if they do the \"\"40 cents\"\" calculation, Theater B might be selected because other factors (convenience, location, etc.) outweigh the 40 cent extra cost of popcorn (purchased \"\"sometimes\"\"). Put another way, the cost of popcorn is (usually) heavily discounted because of its \"\"remoteness\"\" to other facets of the decision.\"",
"title": ""
},
{
"docid": "35e20f6d7121dc7b7980251dbd5f8b8b",
"text": "Theaters make pennies off the tickets if any money at all. Their profits come from the concession stand. If a theater priced their popcorn 50 cents less than a nearby competing theater the few if any customers that notice and seek those small savings would be far less than the losses due to charging less. They compete to get you there: providing better sound systems, seating, screens -- even taking a loss on tickets with special deals (like Tuesday bargains). Once inside profit is made by customers willing to pay the concession price premium, and sour patch kids for 15 cents more isn't going to be a deal breaker.",
"title": ""
},
{
"docid": "2a734a8af4ec3f4733f7c46d5e0dbfd2",
"text": "In my experience, there's usually only one or two theatres within a small city. Maybe a few more in larger cities, but those are also larger areas. So there really isn't much competition. Sure, there are other places to get popcorn, but not movie theatre popcorn. It won't be lathered with 4000 calories worth of tasty butter and salt. Even if you make it at home that can be difficult to accomplish (and then you have to invest the time to make it). Besides, when I go to the movies, I don't go just to see a movie. If I just want to see a movie I can watch it at home. The junk food they sell is part of the experience. Even then, people do smuggle their own food into theatres all the time - but it's hard to smuggle in a bag of popcorn, and again, ordinary popcorn just isn't the same. So, I think the answer boils down to: it's expensive because people are willing to pay for it. And they're willing to pay for it because it's not really available elsewhere at any better price, and it's part of what they come for.",
"title": ""
},
{
"docid": "2adcc92518c75e466df647a816251f3a",
"text": "I'm kind of shocked that no formal behavioral modeling has been proposed as an explanation yet. One such model would be steep (hyperbolic, quasi-hyperbolic) discounting. Consumers would rather pay for popcorn later than for an expensive movie ticket now. For instance, consumers might when purchasing the ticket see a low value of popcorn and view the ticket price as the whole price because they do not predict purchasing popcorn. Then when entering the theater, the present value of popcorn is very high and they purchase it. There might therefore be a market for a commitment device (such as a popcornless theater) to make the appropriate decision ex-ante. Another commitment device that seems to be practiced is when individuals sneak their own popcorn into the theater. They may not actually want the popcorn, but by bringing their own they ensure they do not purchase the theater's.",
"title": ""
},
{
"docid": "e3f5abd2acfb1265fc3d3a319711a1c4",
"text": "You're looking at this too rationally. People can not resist eating junk food, especially when they have to sit for 2-3 hours to watch a movie. It's pure biology, not economics. People don't always act according to economic logic.",
"title": ""
},
{
"docid": "4358e99254d6af312389bce07cbf9e75",
"text": "I think a labor management issue explains the high cost of popcorn. Some weeks theaters are loaded with patrons and other weeks there are many fewer patrons. If popcorn were priced so that most patrons bought some the theater manager would have to have lots of employees to sell popcorn on the really busy days. The manager would have to cover the cost of wages on the slow days. A simple solution would be to adjust employee hours. To a certain extent I suspect this is done. If you look at the situation from the standpoint of the employee being sent home early or being told not to work tomorrow or, perhaps for the next week because the theater has a bunch of bombs, is not a good situation. A job in popcorn sales is probably not a high paying job so the employees may just quit and they may do this, not by giving notice, but rather by not showing up for a scheduled shift. The result of this is that managers determine the maximum number of employees they can hire if there theater has low drawing movies and they set the price of popcorn so that when the theater is filled this number of employees will not be overwhelmed by patron buying popcorn. At least not to the extent that the start of the movie has to be delayed.",
"title": ""
},
{
"docid": "472746e140cc4590c6522725079cff7d",
"text": "John R. Lott, Jr. and Russell D. Roberts argue that popcorn in movie theaters has a price commensurate with its much higher cost. See also Lott's criticism of the Gil and Hartmann paper.",
"title": ""
},
{
"docid": "0c91f424b67f5a8969c651b558c8d18a",
"text": "The cost of the popcorn is simply the hidden extension of the price the consumer pays for the movie ticket. Similar to the tips in the restaurant. And movie theaters do not compete by lowering the unit price. Instead to maintain the revenue per customer they try to offer more value - bigger screen, better sound, more comfortable seats, etc. That is why the price of the popcorn just like the price of the ticket itself does not go down in the competitive market.",
"title": ""
},
{
"docid": "f437c961113c02977dce3155993b2a5c",
"text": "In the theater, it's a person who can afford to buy expensive pop corn, cause he can buy the expensive movie ticket too... Also sitting at one place will make him feel hungry and buy something to eat... So maximum chances are that in the theater, that guy is your potential customer... Otherwise if the popcorn seller is somewhere outside the theater, they may charge you less. That's because of a different target audience... They would be targeting anyone who comes near the theater, who would not be willing to pay for expensive snacks or movie tickets... So very few customers around will be actually potential customers... To maximize their profits, they will keep the prices low and supply as much as they can... I know this is going against the normal Price Elasticity of Demand and Supply graph, but if the prices are low there will be high demand, so if the PED is more than 1, the supplier should supply as much as they can, to maximize profits... Its all based on the target audience... That's what I think should be the case of expensive popcorn in movie theaters...",
"title": ""
},
{
"docid": "148b802970bd102897d3ec2d9f9fd92d",
"text": "It's because true competition does not exist in the movie theater business. If you wanted to open up a competing theater whose competitive advantage was cheaper popcorn, you couldn't do it - the studios would never give you rights to screen popular new release movies. I know this because there are indie movie theaters that constantly struggle to acquire screening rights, because the Regals and AMCs of the world work hard to maintain their monopoly by having exclusive licensing deals with studios. Effectively, studios and a couple major theater chains have gotten together and agreed to fix the price of popcorn. So if you want cheaper popcorn, there are theaters where you'll find it - you just won't be watching Hollywood blockbuster new releases while you're eating it.",
"title": ""
},
{
"docid": "fa01bf9e3616fae31adabfd6b920145b",
"text": "\"A better question would be to ask \"\"Why don't movie theaters charge to use the bathroom?\"\", or \"\"Why don't movie theaters charge for parking?\"\". In America, either government regulation or the mall itself forbids charging for parking, or limits the amount that can be charged for parking. This tends to be more true in suburban areas where land is cheap, but less true downtown in cities. The nearest theater to me is in a mall that is also on a metro line. Those who arrive by metro to see the movie are effectively subsidizing those who arrive via automobile and park. I don't know of any place in America that charges to use the bathroom, but the practice is still common in Europe. I saw the second The Matrix film in Brussels, and had to pay to pee. I'm not sure why this isn't the case in the U.S. Maybe there are widespread regulations against this. Or maybe it's a cultural thing, that we would be so offended by this that we would never go back to the theater.\"",
"title": ""
},
{
"docid": "b32243e607432b727df4fd2d87fdc4a2",
"text": "I think because that high price and the fact that you anyway have a limited time to buy it before the movie starts maximizes their revenue.",
"title": ""
},
{
"docid": "30bdd6c7622b38d322cb6dfd4202f5d4",
"text": "While many answers correctly cite the effect of monopoly power.... there is a cost issue that no one has yet posted. I first recall seeing this cost effect in a managerial econ textbook, perhaps Ivan Png's. The theater must clean up the popcorn mess. The sales of popcorn elsewhere does not usually include the costs of disposal because that cost is not borne by the vendor. In a theater the cost of disposal -- which is a variable cost depending on the amount and type of foodstuff sold -- is borne by the vendor, who must pay employees to clean up between shows and at the end of the night. While most people are responsible with popcorn, there is a long tail of more and more costly messes left by the customer... and if the theater shirks the cost of cleaning the messes then rats with long tails will bite into future customer demand for tickets. Whether this cost effect is as large as the monopoly power effect and the synergy in willingness-to-pay between entertainment and refreshments is not clear. All of these effects may be in operation.",
"title": ""
},
{
"docid": "a928b3d680b32ac10d860d1f71d28168",
"text": "People have moods, that mean they don't have the same level of demand for luxuries every day. There might be some days when I'm feeling a bit poor, or feel like I need to save money, and the price I'm prepared to pay for a box of popcorn might be 50c. There might be other days, for example, the day after I receive my wages, when I feel rich and I don't care how much I spend on things. On such a day, the price I'm prepared to pay for a box of popcorn might be $10. Now, when a supermarket sells popcorn, they're not really able to price discriminate between these two groups. People come through their doors in all kinds of mood, so the profit-maximising price for popcorn is going to be somewhere in the middle. But the only people who go to a movie theatre are people who are already in the right mood to spend money on needless luxuries. So the very fact of being in a movie theatre means that a popcorn stall, whether affiliated to the theatre or not, is open only to the high-spending end of the market. They have already caught me when I'm in the mood to spend, so their profit-maximising price will be much higher than that of the supermarket.",
"title": ""
}
] |
[
{
"docid": "a386d52e8820cd77a4acb592f43dbff4",
"text": "A subsidy is a payment made by a group (usually the state) to individuals or corporations in order to shift the balance if the rational economic decision for the individual would be detrimental to the group as a whole otherwise. For example, if there are different quality kinds of crops that can be planted, for example a GM maize that brings in high yields but can only be processed to High Fructose Corn Syrup or a naturally bred corn that brings lower yields but tastes well enough for direct consumption, then if demand for both exceeds supply, the economic choice for the individual farmer is to plant the former. If the claims that HFCS contribute to obesity are founded, then it is in the public interest to produce less of it, and more alternative foods. Given that a market rather than a planned economy is desired, this cannot be achieved by decree, but rather money is used as an incentive. In the long term, this investment may very well pay off through reduced health care costs, so it is a rational economic decision from the state's point of view. In a world where all actors make decisions that are fully in their self interest, in principle subsidies would not be needed as consumers would demand healthy rather than cheap foods, and market mechanisms would provide these.",
"title": ""
},
{
"docid": "98be0b7da15a614bf57d1e37be2a0bd3",
"text": "Generally I drink the free water that they provide. What I am saying is that if they lowered the price of the food and drinks, they might get more people in the door. When it costs $50+ to go to the movies for a family of three, that family tends to not go out much.",
"title": ""
},
{
"docid": "8309ae39d299c5eb07bed04b95508f21",
"text": "At the base of it all is the massive demand side subsidization of the health care industry primarily through Medicaid and Medicare. It's econ 101 that massive demand side subsidization drives prices up, but nobody wants to emphasize this point because too many pockets are being filled by the subsidization.",
"title": ""
},
{
"docid": "f7faca27d33ae3ecfe15a85dd4e6d74b",
"text": "\"McDonalds has some more expensive items, but their \"\"Dollar Menu\"\" is ridiculously popular and supposedly a huge draw. They've been trying to get rid of it for years because it's really hard to get anything decent for $1, but it's just too popular to cut. (According to the random articles I've read about it.) Other places don't really have anything like it. At McDonalds you can get two $1.xx cheeseburgers and fill up pretty good for the cost of going to a vending machine. While I very rarely go to any of these places, I do not agree that food is bad. Tastes are subjective and what you get used to eating tastes good to you. I remember that I used to absolutely love Taco Bell. Then - after a few years of not going there - I went there and found everything to be absolutely disgusting. But for a time, I thought it was the best stuff out there and there are a lot of people who like so called \"\"fast food\"\". I do think the overarching point is true; customer tastes are fluid. In the past 10-ish years, we've come to see a lot of \"\"gourmet\"\" burger places spreading like wildfire, for example. But as long as fast food is cheap, they will continue to fill the market for cheap food.\"",
"title": ""
},
{
"docid": "306972ad346f16ce6a4b32a1864311fb",
"text": "> It costs as much to project for one guy as for a packed house. I don't have specific knowledge about movie licensing, but I'd be VERY surprised if the number of tickets to a given showing didn't factor into the actual price paid to the rights holder. I mean, we live in a world where ASCAP charges bars for jukebox plays based on an estimate of how many people in the bar could hear the song.....",
"title": ""
},
{
"docid": "c95a3f96955c131806f5b56e19a89780",
"text": "That is true. Since commodities are basically a futures contract, their actual price is not reflected in grocery stores. It is more of a supply and demand issue with your grocer.",
"title": ""
},
{
"docid": "646958d497c01038e06c9619f0169def",
"text": "In some country's even retail competitors set up a cartel like scheme and they pressure the fuck out of farmer and producers to drop prices, and obey to their promotion's. It's like they give them the volume to expand, and now that you are in a whole other level of production cut down prices or you'll be left with perishable goods with a limited shelf life, and no one to buy them.",
"title": ""
},
{
"docid": "c9e20507bb9e2bcaf472d84fa53290d5",
"text": "It's not actually fighting the paradox of choice, it's lowering the costs of supply chain management. A regular supermarket, for example, has to source 50 different varieties of hot sauce from different manufacturers. Trader Joe's has a couple of varieties of their own sauce, and it's delivered in the same truck that delivers 99% of their food. People overlook this fact a lot - Trader Joes is a business that is vertically integrated, unlike any other supermarket.",
"title": ""
},
{
"docid": "a683aa7dc1eeb98a212a8cfccf42858b",
"text": "It's the combination of lower earning power and new technologies/trends. Like you said, why spend $100 on a sit down meal for two and cinema tickets, when you can spend 1/3 of that, get an online delivery and watch Netflix (and chill)?",
"title": ""
},
{
"docid": "87f0b86fbb1c384cb4dbca3819c29e0a",
"text": "\"This is known as \"\"Zone Pricing\"\" or \"\"Geographical Pricing\"\". http://articles.latimes.com/2005/jun/19/business/fi-calprice19 Such price variations may seem odd, but they are not unique to Anaheim. On any given day, in any major U.S. city, a single brand of gasoline will sell for a wide range of prices even when the cost to make and deliver the fuel is the same. The primary culprit is zone pricing, a secret and pervasive oil company strategy to boost profits by charging dealers different amounts for fuel based on traffic volume, station amenities, nearby household incomes, the strength of competitors and other factors. It's a controversial strategy, but the courts have thus far deemed it legal, and the Federal Trade Commission recently said the effect on consumers was ambiguous because some customers got hurt by higher prices while others benefited from lower ones. http://en.wikipedia.org/wiki/Geographical_pricing Zone pricing, as practiced in the gasoline industry in the United States, is the pricing of gasoline based on a complex and secret weighting of factors, such as the number of competing stations, number of vehicles, average traffic flow, population density, and geographic characteristics. This can result in two branded gas stations only a few miles apart selling gasoline at a price differential of as much as $0.50 per gallon. But the short answer is \"\"because they can\"\". It's legal, provided that some people are paying less while others are paying more. Essentially the larger, richer audience is subsidizing the product for other areas. It's not terribly different than the way most drugs are priced in the world.\"",
"title": ""
},
{
"docid": "73546c29cd824959056a3bf34e60ee69",
"text": "I think they have a solid model, most theaters are empty most hours, so if this puts butts in seats, it's better than them going empty, and the theater mainly makes its money at the concession stand, so more people into the theater, more chances of making money off the concession. Only thing is that it might be too cheap. I enjoy going to the movies and I'd have paid upwards of $50 for this even if I'd only go two-five times a month. This is just far too cheap and would necessitate having a ridiculous amount of people signed up for it.",
"title": ""
},
{
"docid": "5147a957c33e626687cd2ef5cccf6fea",
"text": "Don't discount regulatory issues (the mess that was CableCard, Tru2Way, tuning adapters, and the lack of AllVid) and monopolistic pressure (the cable companies liked receiving $5/box/month and don't want to give any of that income up, combined with fear of becoming the dumb pipe they really are so they applied as much pressure as possible against good regulations).",
"title": ""
},
{
"docid": "25c24377f1738666a0983f2ecea7887a",
"text": "The key is that you need to use your debit card to earn the higher interest rate. The bank can offer a higher interest rate on accounts connected with a debit card because: They earn additional income through debit card fees charged towards account holders, among other things. They offer the higher interest rate specifically to encourage people to use their debit cards. By offering a joint checking/savings account that requires you to use your debit card, the bank is assuming that you'll keep more money in your account than you would in a standard checking-only account. Your higher balance translates into more money the bank can loan out or invest, which usually leads to higher profit for them. Businesses pay fees to the bank to accept debit cards. These fees represent another source of profit for the bank. The more you use your debit card, the more the bank earns in fees, so the bank encourages you to use your debit card more frequently through incentives like a higher interest rate or waiving fees on your account if you use your card enough. Plus, since it's likely that an individual who maintains a fairly high balance in an account linked to a debit card is going to spend more (simply because they can spend more), banks will sometimes waive fees on the consumer side for balances over a certain amount.",
"title": ""
},
{
"docid": "6913ee4ec4b8cc12d1a45e16e86dc931",
"text": "\"E) Spend a small amount of that money on getting advice from a paid financial planner. (Not a broker or someone offering you \"\"free\"\" advice; their recommendations may be biased toward what makes them the most money). A good financial planner will talk to you about your plans and expectations both short and long term, and about your risk tolerance (would a drop in value panic you even if you know it's likely to recover and average out in the long run, that sort of thing), and about how much time and effort you want to put into actively managing your portfolio. From those answers, they will generate an initial proposed plan, which will be tested against simulations of the stock market to make sure it holds up. Typically they'll do about 100 passes over the plan to get a sense of its probable risk versus growth-potential versus volatility, and tweak the plan until the normal volatility is within the range you've said you're comfortable with while trying to produce the best return with the least risk. This may not be a perfect plan for you -- but at the very least it will be an excellent starting point until you decide (if you ever do decide) that you've learned enough about investing that you want to do something different with the money. It's likely to be better advice than you'll get here simply because they can and will take the time to understand your specific needs rather than offering generalities because we're trying to write something that applies to many people, all of whom have different goals and time horizons and financial intestinal fortitude. As far as a house goes: Making the mistake of thinking of a house as an investment is a large part of the mindset that caused the Great Recession. Property can be an investment (or a business) or it can be something you're living in; never make the mistake of putting it in both categories at once. The time to buy a house is when you want a house, find a house you like in a neighborhood you like, expect not to move out of it for at least five years, can afford to put at least 20% down payment, and can afford the ongoing costs. Owning your home is not more grown-up, or necessarily financially advantageous even with the tax break, or in any other way required until and unless you will enjoy owning your home. (I bought at age 50ish, because I wanted a place around the corner from some of my best friends, because I wanted better noise isolation from my neighbors, because I wanted a garden, because I wanted to do some things that almost any landlord would object to, and because I'm handy enough that I can do a lot of the routine maintenance myself and enjoy doing it -- buy a house, get a free set of hobbies if you're into that. And part of the reason I could afford this house, and the changes that I've made to it, was that renting had allowed me to put more money into investments. My only regret is that I didn't realise how dumb it was not to max out my 401(k) match until I'd been with the company for a decade ... that's free money I left on the table.)\"",
"title": ""
}
] |
fiqa
|
9701e7fdf4b29a7491ded870a4907ce1
|
Can I do periodic rollovers from my low-perfoming 401k to an IRA?
|
[
{
"docid": "a05b4763ad0d4ff9cd08035c8bbfd6ed",
"text": "\"There are certain allowable reasons to withdraw money from a 401K. The desire to free your money from a \"\"bad\"\" plan is not one of them. A rollover is a special type of withdrawal that is only available after one leaves their current employer. So as long as you stay with your current company, you cannot rollover. [Exception: if you are over age 59.5] One option is to talk to HR, see if they can get a expansion of offerings. You might have some suggestions for mutual funds that you would like to see. The smaller the company the more likely you will have success here. That being said, there is some research to support having few choices. Too many choices intimidates people. It's quite popular to have \"\"target funds\"\" That is funds that target a certain retirement year. Being that I will be 50 in 2016, I should invest in either a 2030 or 2035 fund. These are a collection of funds that rebalances the investment as they age. The closer one gets to retirement the more goes into bonds and less into stocks. However, I think such rebalancing is not as smart as the experts say. IMHO is almost always better off heavily invested in equity funds. So this becomes a second option. Invest in a Target fund that is meant for younger people. In my case I would put into a 2060 or even 2065 target. As JoeTaxpayer pointed out, even in a plan that has high fees and poor choices one is often better off contributing up to the match. Then one would go outside and contribute to an individual ROTH or IRA (income restrictions may apply), then back into the 401K until the desired amount is invested. You could always move on to a different employer and ask some really good questions about their 401K. Which leads me back to talking with HR. With the current technology shortage, making a few tweaks to the 401K, is a very cheap way to make their employees happy. If you can score a 1099 contracting gig, you can do a SEP which allows up to a whopping 53K per year. No match but with typically higher pay, sometimes overtime, and a high contribution limit you can easily make up for it.\"",
"title": ""
},
{
"docid": "87f96a57de6244ee43f16b4d81204083",
"text": "You need to check with your employer. It is called an in-service rollover and it is up to your employer on whether or not it is allowed. There are a lot of articles on it but I would still talk to a professional before making the decision. And there are some new laws in place that put at least some responsibility on your employer to provide a 401k with reasonable options and fees. http://www.latimes.com/business/la-fi-court-edison-401k-fees-20150519-story.html We'll see if it has legs.",
"title": ""
},
{
"docid": "0eb36cb23e54bb663852701290267fcd",
"text": "My two-cents, read your plan document or Summary Plan Description. The availability of in-service withdrawals will vary by document. Moreover, many plans, especially those compliant with 404(c) of ERISA will allow for individual brokerage accounts. This is common for smaller plans. If so, you can request to direct your own investments in your own account. You will likely have to pay any associated fees. Resources: work as actuary at a TPA firm",
"title": ""
},
{
"docid": "56aca2aa766b7e980642a5b02da78a3b",
"text": "\"If the difference in performance is worth it, consider \"\"borrowing\"\" from your 401k to put into the Roth. You pay it back, but you can stretch it out over time, and the interest charged is actually yours, because you borrowed from yourself. But you can only borrow half of the account and you have to pay it back before you can do another loan.\"",
"title": ""
}
] |
[
{
"docid": "753edf69dcb054f73313522bf717bcc9",
"text": "There isn't a general reason why you should not be able to do this, but it is hard to answer without knowing the specifics of your variable annuity. I would start by calling Hartford and asking them how to go about rolling your money to a different IRA and what fees would be assessed.",
"title": ""
},
{
"docid": "5dddeefab58515aa461298ae819ed1ce",
"text": "401k choices are awful because: The best remedy I have found is to roll over to an IRA when changing jobs.",
"title": ""
},
{
"docid": "290c7fe6754d823f4f4597f866625b86",
"text": "It is typically very easy to roll a 401(k) into an IRA. Companies that provide IRA's are very experienced with it, and I would expect that they will take your calls from overseas. You will likely be able to do it over the internet without using a phone at all. Just open an IRA with any brokerage company (Scottrade, Vanguard, Fidelity, Schwab, Ameritrade, etc.) and follow instructions to roll your 401(k) into it. Most likely they will need your signature, but usually a scan of a form you have filled out will do. Be sure to have information on your 401(k) provider, including your account number there, on hand. These companies are all very reputable and this is not a difficult transaction. There's really no downside to rolling into an IRA. 401(k) plans usually have more limited options and/or worse fee structures and are frequently harder to work with, as you have observed.",
"title": ""
},
{
"docid": "4d8b600a339bc3767cbf7600ce233f7b",
"text": "No. Your deposits should not have been accepted in the first place. No legit rollover opportunity exists. Related - Can excess 401K contributions returned with 1099-R be rolled over to a Traditional IRA?",
"title": ""
},
{
"docid": "2164e8c58b0d0fb51e5b3005e5e0fb0b",
"text": "Okay thanks, let's hope it's a relatively painless process to correct my mistake! Really odd that my 401(k)s are traditional, I was so sure they weren't. Maybe it's better then to open up a traditional IRA alongside the Roth, use that for rollovers, and just kick a few bucks into the Roth on occasion?",
"title": ""
},
{
"docid": "da87ad09f8ea417326955b272c8086e8",
"text": "\"To answer, I'm going to make a few assumptions. First, the ideal scenario for a pre-tax 401(k) is the deposit goes in at a 25% tax rate (i.e. the employee is in that bracket) but withdrawn at 15%. This may be true for many, but not all. It's to illustrate a point. The SPY (S&P 500 index ETF) has a cost of .09% per year. If your 401(k) fees are anywhere near 1% per year total, over 10 years you've paid nearly 10% in fees, vs less than 1% for the ETF. Above, I suggest the ideal is that the 401(k) saves you 10% on your taxes, but if you pay 10% over the decade, the benefit is completely negated. I can add to the above that funds outside the retirement accounts give off dividends which are tax favored, and if you were to sell ETFs held over a year, they receive favorable cap-gains rates. The \"\"deposit to get the matching funds\"\" should always be good advice, it would take many years of high fees to destroy that. But even that seemingly reasonable 1% fee can make any other deposits a bad approach. Keep in mind, when retired you will have a zero bracket (in 2011, the combined standard deduction and exemption) adding to $9500, as well as a 10% bracket (the next $8500), so having some pretax money to take advantage of those brackets will help. Last, the average person changes jobs now and then. The ability to transfer the funds from the (bad) 401(k) to an IRA where you can control the investments is an option I'd not ignore in the analysis. I arbitrarily picked 1% to illustrate my thoughts. The same math will show a long time employee will get hurt by even .5%/yr if enough time passes. What are the fees in your 401(k)? Edit - Study of 401(k) fees - put out by the Dept of Labor. Unfortunately, it's over 10 years old, but it speaks to my point. Back then, even a 2000 participant plan with $60M in assets had 110 basis points (this is 1.1%) in fees on average. Whatever the distribution is, those above this average shouldn't even participate in their plans (except for matching) and those on the other side should look at their expenses. As Radix07 points out below, yes, for those just shy of retirement, the fee has less impact, and of course, they have a better idea if they will retire in a lower bracket. Those who have some catching up to do, may benefit despite the fees.\"",
"title": ""
},
{
"docid": "566f05e9449bb06f1efcf50438c9f274",
"text": "You should never roll a 401(k) to a Roth IRA. If the intention is to do so, you are better off rolling to a traditional IRA, and then converting. (Per the comment below, I should add - if the 401(k) contained post tax money, this portion rolls to a Roth, not a Tradition IRA. You then have the exercise of converting/recharacterizing just the TIRA money, as the Roth stands aside) This preserves the ability to recharacterize back to a traditional IRA. You might wish to do this if: The answers so far are great, but I'll add what I see missing -",
"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": "c1deecfbe9951e08bdc507a92496fe83",
"text": "I'm a series 24 securities principle and have explained and trained people on questions like these more times than I can count. Although, my first recommendation is to speak to a qualified tax professional for the appropriate answer for each individual scenario. Disclosure aside, the source of truth for these questions is always the IRS publications. In this case it's IRS pub 590b: When Must You Withdraw Assets? (Required Minimum Distributions). IRA stands for Individual Retirement Arrangement. Basically it's an arrangement between you a the government to encourage retirement savings. Tax payers(up to a define taxable income amount) agree to receive a deduction during your working years lowering your taxable income in the present. Your taxable income should drop in retirement because you're not working anymore and any withdraws would most likely be taxed at a lower rate. To be clear the require minimum distribution is based on a life expectancy factor and the ending balance of your pre-tax retirement accounts from the prior year(for ex. 2016 ending balance for a 2017 rmd). The rmd works out to be somewhere around 3-4% of your total balance. Most retirement account providers(if not all) have established several conveniences to automate the withdraw process. I've believe that moving funds directly to bank deposits or moving the funds to another taxable investment account are most common. Retirement account providers are required by law to give you notifications about RMDs. Some big firms allow you to setup an auto-distribution a year before you turn 70.5 to start when they need to. Because of the 50% penalty you're given so many notifications about an RMD that it's hard to forget about it.",
"title": ""
},
{
"docid": "5067249e6b8ae4300dbac7cb050b5742",
"text": "Call up vanguard and tell them you want to do a rollover. They walk you through the process. Spend some time on reading up on asset allocation and benefits of indexing. 1.5% every year is steep and what do you have in return? The advisor's word that he'll make it up. How much did he manage to return during the last lost decade? It's a lose-win situation. He'll get his 1.5% no matter how the market does but that's not the deal you are getting. Go with Vanguard. You are already thinking correctly - diversification, rebalancing, low cost!",
"title": ""
},
{
"docid": "6a17e74a3d67faa9e2afbcbf1b45754a",
"text": "I would always suggest rolling over 401(k) plans to traditional IRAs when possible. Particularly, assuming there is enough money in them that you can get a fee-free account at somewhere like Fidelity or Vanguard. This is for a couple of reasons. First off, it opens up your investment choices significantly and can allow you significantly reduced expenses related to the account. You may be able to find a superior offering from Vanguard or Fidelity to what your employer's 401(k) plan allows; typically they only allow a small selection of funds to choose from. You also may be able to reduce the overhead fees, as many 401(k) plans charge you an administrative fee for being in the plan separate from the funds' costs. Second, it allows you to condense 401(k)s over time; each time you change employers, you can rollover your 401(k) to your regular IRA and not have to deal with a bunch of different accounts with different passwords and such. Even if they're all at the same provider, odds are you will have to use separate accounts. Third, it avoids issues if your employer goes out of business. While 401(k) plans are generally fully funded (particularly for former employers who you don't have match or vesting concerns with), it can be a pain sometimes when the plan is terminated to access your funds - they may be locked for months while the bankruptcy court works things out. Finally, employers sometimes make it expensive for you to stay in - particularly if you do have a very small amount. Don't assume you're allowed to stay in the former employer's 401(k) plan fee-free; the plan will have specific instructions for what to do if you change employers, and it may include being required to leave the plan - or more often, it could increase the fees associated with the plan if you stay in. Getting out sometimes will save you significantly, even with a low-cost plan.",
"title": ""
},
{
"docid": "980789da5abf6464c0e7ff07ef72bc5e",
"text": "\"You have several questions in your post so I'll deal with them individually: Is taking small sums from your IRA really that detrimental? I mean as far as tax is concerned? Percentage wise, you pay the tax on the amount plus a 10% penalty, plus the opportunity cost of the gains that the money would have gotten. At 6% growth annually, in 5 years that's more than a 34% loss. There are much cheaper ways to get funds than tapping your IRA. Isn't the 10% \"\"penalty\"\" really to cover SS and the medicare tax that you did not pay before putting money into your retirement? No - you still pay SS and medicare on your gross income - 401(k) contributions just reduce how much you pay in income tax. The 10% penalty is to dissuade you from using retirement money before you retire. If I ... contributed that to my IRA before taxes (including SS and medicare tax) that money would gain 6% interest. Again, you would still pay SS and Medicare, and like you say there's no guarantee that you'll earn 6% on your money. I don't think you can pay taxes up front when making an early withdrawal from an IRA can you? This one you got right. When you file your taxes, your IRA contributions for the year are totaled up and are deducted from your gross income for tax purposes. There's no tax effect when you make the contribution. Would it not be better to contribute that $5500 to my IRA and if I didn't need it, great, let it grow but if I did need it toward the end of the year, do an early withdrawal? So what do you plan your tax withholdings against? Do you plan on keeping it there (reducing your withholdings) and pay a big tax bill (plus possibly penalties) if you \"\"need it\"\"? Or do you plan to take it out and have a big refund when you file your taxes? You might be better off saving that up in a savings account during the year, and if at the end of the year you didn't use it, then make an IRA contribution, which will lower the taxes you pay. Don't use your IRA as a \"\"hopeful\"\" savings account. So if I needed to withdrawal $5500 and I am in the 25% tax bracket, I would owe the government $1925 in taxes+ 10% penalty. So if I withdrew $7425 to cover the tax and penalty, I would then be taxed $2600 (an additional $675). Sounds like a cat chasing it's tail trying to cover the tax. Yes if you take a withdrawal to pay the taxes. If you pay the tax with non-retirement money then the cycle stops. how can I make a withdrawal from an IRA without having to pay tax on tax. Pay cash for the tax and penalty rather then taking another withdrawal to pay the tax. If you can't afford the tax and penalty in cash, then don't withdraw at all. based on this year's W-2 form, I had an accountant do my taxes and the $27K loan was added as earned income then in another block there was the $2700 amount for the penalty. So you paid 25% in income tax for the earned income and an additional 10% penalty. So in your case it was a 35% overall \"\"tax\"\" instead of the 40% rule of thumb (since many people are in 28% and 35% tax brackets) The bottom line is it sounds like you are completely unorganized and have absolutely no margin to cover any unexpected expenses. I would stop contributing to retirement today until you can get control of your spending, get on a budget, and stop trying to use your IRA as a piggy bank. If you don't plan on using the money for retirement then don't put it in an IRA. Stop borrowing from it and getting into further binds that force you to make bad financial decisions. You don't go into detail about any other aspects (mortgage? car loans? consumer debt?) to even begin to know where the real problem is. So you need to write everything down that you own and you owe, write out your monthly expenses and income, and figure out what you can cut if needed in order to build up some cash savings. Until then, you're driving across country in a car with no tires, worrying about which highway will give you the best gas mileage.\"",
"title": ""
},
{
"docid": "c40d3c9349b7d236127280fc7b9dc354",
"text": "Think about contributing to both a Traditional IRA and a Roth IRA if you have the funds. In theory, you could receive the lowest tax rates by depositing money into a regular IRA during years of democratic rule, depositing money into a Roth during years of Republic rule, and then withdrawing from the Roth during democratic rule and the tradition during Republican rule. Then you would be depositing with lower tax rates and withdrawing with lower tax rates. Granted this method would involve some speculation.",
"title": ""
},
{
"docid": "d891b17a4ba041626126c90c2c58810c",
"text": "If your SIMPLE IRA is over two years old then you can roll your money to another qualified account such as a rollover IRA. The usual rollover rules apply. You have 60 days to deposit the funds in another qualified account and you are only allowed one such rollover in a 12 month window. If you are still within two years of opening your SIMPLE IRA, you can roll your funds to a SIMPLE IRA with another vendor, but you would then have to wait until that account is two years old before rolling it elsewhere. If you roll the money another type of IRA before your SIMPLE IRA account is two-years old, and under 59 1/2 years old, you will be subject to a 25% penalty (which is much higher than for other types of accounts). Many of the early distribution exceptions apply such as disability, etc. Edit: The first document linked above covers rules for running a SIMPLE IRA. All the specific regulations linked in the second document apply to all IRAs of all types. There is no specific prohibition from rolling only a portion of the money to another qualified account. There are prohibitions against rolling money more than one time in a 12 month period. The usual obstacle to rolling money from a retirement account--like a 401(k)--is that the 401(k) plan is written to prohibit withdrawals while the employee is still employed at the company.",
"title": ""
},
{
"docid": "eef9aedb0ad4b895b7f771712e625179",
"text": "If you are making regular periodic investments (e.g. each pay period into a 401(k) plan) or via automatic investment scheme in a non-tax-deferred portfolio (e.g. every month, $200 goes automatically from your checking account to your broker or mutual fund house), then one way of rebalancing (over a period of time) is to direct your investment differently into the various accounts you have, with more going into the pile that needs bringing up, and less into the pile that is too high. That way, you can avoid capital gains or losses etc in doing the selling-off of assets. You do, of course, take longer to achieve the balance that you seek, but you do get some of the benefits of dollar-cost averaging.",
"title": ""
}
] |
fiqa
|
a6074411372244c07684e2fa471c32b2
|
As an American working in the UK, do I have to pay taxes on foreign income?
|
[
{
"docid": "706cab9010b11714da53588d1d51bd40",
"text": "Short answer: it's complicated. The UK govt pages on foreign income are probably your best starting point: http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/LeavingOrComingIntoTheUK/DG_10027480 As you can see, it depends on your precise residence status here. (There is a tax treaty between the UK and the US so you wouldn't be double taxed on the income either way. But there might still be reporting obligations).",
"title": ""
},
{
"docid": "326e509907a0cd7a78e5cf4f2abef8db",
"text": "A) a tax treaty probably covers this for the avoidance of double taxation. Tax treaties can be very cryptic and have little precedence clarifying them http://www.irs.gov/businesses/international/article/0,,id=169552,00.html B) I'm going to say NO since the source of your income is going to be US based. But the UK tax laws might also have specific verbage for resident source income. sorry it is an inconclusive answer, but should be some factors to consider and point you in the right direction.",
"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": "04b3ee3f698ca5b4f450524d8a56f4aa",
"text": "\"Am I eligible for declaring my earnings to the IRS? You're always eligible. You're probably asking whether you're required. In the US it doesn't matter where you deposit the money, it matters where you earn it. Money is earned where the services are provided. This is called \"\"sourcing\"\". So if you are working in a foreign country - you're only subject to the US laws to the extent you're a US citizen/permanent resident or qualify for the substantial presence test.\"",
"title": ""
},
{
"docid": "4fb23bd799c61ed8b37fa617d8ef07d1",
"text": "\"Can the companies from USA give job to me (I am from New Zealand)? Job as being employee - may be tricky. This depends on the labor laws in New Zealand, but most likely will trigger \"\"nexus\"\" clause and will force the employer to register in the country, which most won't want to do. Instead you can be hired as a contractor (i.e.: being self-employed, from NZ legal perspective). If so, what are the legal documents i have to provide to the USA for any taxes? If you're employed as a contractor, you'll need to provide form W8-BEN to your US employer on which you'll have to certify your tax status. Unless you're a US citizen/green card holder, you're probably a non-US person for tax purposes, and as such will not be paying any tax in the US as long as you work in New Zealand. If you travel to the US for work, things may become tricky, and tax treaties may be needed. Will I have to pay tax to New Zealand Government? Most likely, as a self-employed. Check how this works locally. As for recommendations, since these are highly subjective opinions that may change over time, they're considered off-topic here. Check on Yelp, Google, or any local NZ professional review site.\"",
"title": ""
},
{
"docid": "cbcd9ea50347e19d0428f324b99d1f49",
"text": "The PAYE tax and NI will be deducted as usual. Send HMRC a P85 form to tell them you're emigrating, and they will refund the tax.",
"title": ""
},
{
"docid": "328d9ea0fda297f04389a4d04d3ab323",
"text": "It is unlikely that UK tax will be due on the money -- see here: Foreign students usually don’t pay UK tax on foreign income or gains, as long as they’re used for course fees or living costs But if the UK doesn't tax you on the money then double-taxation agreements probably won't apply, and so any Italian tax due will be payable.",
"title": ""
},
{
"docid": "8872ea7a2ea65d86a4e2086ad3fcac2d",
"text": "In both the US and UK you are taxed on your income. Transferring your own money from one country to another does not count as income, so you won't be taxed on it. If it's not your money you are transferring that will be different. You may have to report transfers to comply with money laundering rules. You have to report large amounts of cash you bring with you.",
"title": ""
},
{
"docid": "cbc909847ba684c0856d3df9be9f5403",
"text": "If you're a US citizen/resident - you pay taxes on your worldwide income regardless of where you live. The logic is that Americans generally don't agree to the view that there's more than one country in the world. If you're non-US person, not physically present in the US, and provide contract work for a US employer - you generally don't pay taxes in the US. The logic is that the US doesn't actually have any jurisdiction over that money, you didn't earn it in the US. That said, your employer might withheld tax and remit it to the IRS, and you'll have to chase them for refund. If you receive income from the US rental property or dividends from a US company - you pay income tax to the US on that income, and then bargain with your home tax authority on refunds of the difference between what you paid in the US and what you should have paid at home. You can also file non-resident tax return in the US to claim what you have paid in excess. The logic is that the money sourced in the US should be taxed in the US. You earned that money in the US. There are additional rules to more specific situation, and there are also bilateral treaties between countries (including a US-Canadian treaty) that supersede national laws. Bottom line, not only that each country has its own laws, there are also different laws for different situations, and if some of the international treaties apply to you - it further complicates the situation. If something is not clear - get a professional advice form a tax accountant licensed in the relevant jurisdictions (in your case - any of the US states, and the Canadian province where you live).",
"title": ""
},
{
"docid": "f395c55d7f9fd1f519a973966956ddbe",
"text": "The relevant IRS publication is pub 463. Note that there are various conditions and exceptions, but it all starts with business necessity. Is it necessary for you to work from the UK? If you're working from the UK because you wanted to take a vacation, but still have to work, and would do the same work without being in the UK - then you cannot deduct travel expenses. It sounds to me like this is the case here.",
"title": ""
},
{
"docid": "810d4842bdc077402c3b1d10247a8e7f",
"text": "If your gross income is only $3000, then you don't need to file: https://www.irs.gov/pub/irs-pdf/p501.pdf That said, pay careful attention to: https://www.irs.gov/individuals/international-taxpayers/taxpayers-living-abroad You should be reporting ALL income, without regard to WHERE you earned it, on your US taxes. Not doing so could indeed get you in trouble if you are audited. Your level of worry depends on how much of the tax law you are willing to dodge, and how lucky you feel.",
"title": ""
},
{
"docid": "e9b1750861a184a70777dda66fa97951",
"text": "\"Be careful here: If ACME were in California, I would pay taxes on USD 17,000 because I had revenue of 20,000 and expenses of 3,000. To CALIFORNIA. And California taxes S-Corps. And, in addition, you'd pay $800 for the right of doing business in the State. All that in addition to the regular Federal and State taxes to the State where you're resident. Suppose that ACME is in Britain (or anywhere else for that matter). My revenue and expenses are the same, but now my money has been earned and my expenses incurred in a foreign country. Same thing exactly. Except that you'll have to pay taxes to the UK. There may be some provision in the tax treaty to help you though, so you may end up paying less taxes when working in the UK than in California. Check with a licensed tax adviser (EA/CPA licensed in your State) who won't run away from you after you say the words \"\"Tax Treaty\"\". Does it even make sense to use my S-Corporation to do business in a foreign country? That should be a business decision, don't let the tax considerations drive your business.\"",
"title": ""
},
{
"docid": "0aca48ad4b9f2b175753f2e40374432f",
"text": "You will have to pay your taxes in the UK not USA. For tax purposes it is the company's tax residency not where the server is located. You are just hiring a server in USA. Take for example a CDN being used for your same service then would you pay taxes in 300 different countries if you use Akamai? Does not work that way.",
"title": ""
},
{
"docid": "feb2ecb57b9ac11c3fe943205c63ea0f",
"text": "As the name says, its for income earned in a Foreign country. If you have been paying US income tax on this while living in the US, nothing is going to change here. You should be informing yourself on how to avoid double taxation in your new country of residence. Passive income earned abroad (dividends, interest) also do not fall under this exemption. The purpose of the Foreign Earned Income Exclusion is to make it easy for expats who work abroad to avoid double income taxation without going through the complicated process of applying for tax credits. The US is the only industrial country that taxes its residents regardless of where they reside. That is also why it only goes to about $100,000 a year. If you are a high earner, they want to make it more difficult. Also as a side note, since you are going to be abroad for a year. I will point out that if you have more than $10,000 in foreign accounts at any point in the year you need to declare this in an FBAR form. This is not advertised as well as it should be and carries ridiculous penalties for non-compliance. I can't count the number of times I have heard a US expat say that they were unaware of this.",
"title": ""
},
{
"docid": "2cd770682f25805fc6be5eea23b57d81",
"text": "I see no reason why a US ID would be mandatory anywhere in the UK. I'm sure they have their own tax IDs in the UK. However, if the gallery requires US persons to submit US W-9 - then yes, you're covered under that requirement.",
"title": ""
},
{
"docid": "22b5a58c9b402f5d89f7f3c5801e101a",
"text": "Hi u/Sagiv1, Short answer: Yes, you do have to pay taxes in Israel for all your worldincome. Long answer: All countries within the OCDE consider you as a fiscal resident in the country where you spend over half a year in (183 days and up). If you do not spend that much time in any country, there are other tying measures to avoid people not being fiscal residents in any country. Since you are living in Israel, you will have to pay all your worlwide generated income in Israel, following the tax regulation that is in place there. I am no Isarely Tax Lawyer so I cannot help you there. Having a lot of business internationally brings other headaches with it. Taking for example the U.S. there is a possibility that they withold taxes in their payments. It is unlikely, though, as they have a Tax Treaty to prevent double taxation. You can ask for this witholded money to be returned from the U.S. or other countries through each country's internal process. Another thing to take into account is that you can be taxed in other countries for any revenue you generate in said country. This is especially relevant for revenue that comes from Real Estate. The country where the real estate is will tax you in the country and you will have to deduct these taxes paid in your country, Israel in this case. If there is no tax treaty you might possibly be paying twice. I know you said you do promotion, but I have to warn you about this, because I ignore what other countries tax or do not tax. So been giving more info won't hurt. If the US is the main and/or only country you will be doing business with, I strongly recommend you real the Tax treaty with lots of love and patience. You can find it here: https://www.irs.gov/pub/irs-trty/israel.pdf or here: Treaty:http://mfa.gov.il/Style%20Library/AmanotPdf/005118.pdf Amendment: http://mfa.gov.il/Style%20Library/AmanotPdf/005120.pdf If you are from Israel and prefer it in Hebrew, here are the treaties in your language: Treaty: http://mfa.gov.il/Style%20Library/AmanotPdf/005119.pdf Amendment: http://mfa.gov.il/Style%20Library/AmanotPdf/005121.pdf Normally most IRS Departments have sections with very uselful help on these sort of matters. I'd recomment you to take a look at yours. Last, what I've explained is the normal process that applies almost all over the world. But each country has their own distinctions and you need to look carefully. Take what I said as a starting point and do your own research or ideally try to find a tax consultant/lawyer who helps you. Best of luck.",
"title": ""
},
{
"docid": "253a71e92dc2a0871bdb22b4423e3a6d",
"text": "Generally all the countries have similar arrangement regarding Income Tax, if you live in the UK for more than you stay in India for a given year then the Indian authorities won't be able to tax you but you might come under the UK Tax Law.",
"title": ""
},
{
"docid": "7f272dff1e0d553e55b5cbe51aea5d43",
"text": "If what you are paying in interest on the debt is a higher percentage than what your investments are returning, the best investment you can make is to pay off the debt. If you're lucky enough to be paying historically low rates (as I am on my mortgage) and getting good returns on the investments so the latter is the higher percentage, the balance goes the other way and you'd want to continue paying off the debt relatively slowly -- essentially treating it as a leveraged investment. If you aren't sure, paying off the debt should probably be the default prefrence.",
"title": ""
}
] |
fiqa
|
1bd8dfdc5e715028ab09ebe8b2cfebf2
|
How can I find out what category a merchant falls into for my credit card's cashback program? [duplicate]
|
[
{
"docid": "91f34247bc67b655147818357c2d75d3",
"text": "Not clear what you're asking. Are you trying to figure out their SIC/NAISC classification? That tells you the business category they fall into, but there's no simple, instant way to find that out. Much also depends on how the credit card issuer has classified them and how they arrived at that information. They may have a different means of classifying merchants, so you might try to call your bank and ask them, if they're able/willing to tell you. That'll give you a starting point to figure it out, anyway.",
"title": ""
}
] |
[
{
"docid": "620a5771bda356a45fa859b57aeae7f0",
"text": "The banks don't have to pay for credit card rewards. The merchants end up footing the bill. The merchants that accept credit cards pay from 2-4% in fees on the credit card purchase. Those fees go to support the rewards programs. The merchants also take on most of the risk during a credit card transaction (although the credit card companies would have you believe otherwise). If a thief uses a stolen card to purchase a camera from Mike's Camera Shop for instance, any funds the merchant received will be taken away from the merchant. In addition, the merchant will be hit with a chargeback fee (usually around $20-$60). Finally, since the card was stolen, the merchant will never get their merchandise returned, so Mike's Camera is out the camera as well. No camera, no funds, and a $60 fee to boot. The credit card issuers make $60 on the chargeback fees and have no liability.",
"title": ""
},
{
"docid": "bc736a0253f9ea442158e48f5bc98ccb",
"text": "\"I thought I'd see if the credit card companies had anything to say about this while trying to get merchants to sign up. I went to visa.com, clicked \"\"Run Your Business\"\" in the top nav, then \"\"Accept Visa Payments\"\". This page has a \"\"More benefits of accepting Visa\"\" link with an overlay (which I can't easily link directly to), which includes these lines: While the average cash transaction is $17, credit card purchases average $70 while debit card purchases average $36.² ² Visa Payment Panel Study (2Q11 to 1Q12 time period); Visa MARS Data: March 2015 – May 2015 That obviously doesn't tell the entire story (I suspect people are more likely to pull out cash when they're just buying a stick of gum, and more more likely to pull out a card when they're buying large electronics), but certainly there is some evidence from the credit card companies themselves that people spend more when using cards, which is one of the aspects they use to convince merchants to accept cards. I think the best evidence that people spend more is that more and more merchants accept cards. Accepting cards comes with some significant costs (though it's important to keep in mind that accepting cash can come with some significant costs as well). I suspect that merchants wouldn't do so unless the increased sales that they get for accepting cards makes up for the fees that they need to pay and the equipment they need to buy to accept them (not to mention the risks of chargebacks and the like).\"",
"title": ""
},
{
"docid": "7c3f579b87cbfc4c757f73a01266ff8a",
"text": "\"(I agree with the answers above; would just like to make a couple of additional points.) It's a good and simple strategy to try it out with a small amount as suggested by @JoeTaxpayer♦. It's also generally safe to assert that card issuers currently don't receive or actively look at itemized transaction details. But that does not mean they cannot in the future. Some stores utilize level 3 data processing, which tells the card issuers exactly what you bought in a transaction. An example of level 3 data being utilized to reject rewards is with Discover, which announced a 10% cashback reward for any transactions made with Apple Pay last year. It later introduced an additional term to exclude gift card purchases. And this has been verified to be effective - no more reward on gift card purchases; clawback of cashback on existing gift card transactions. As far as I know, Amex does receive and look at some level 3 data retrospectively. That does not necessarily mean they will claw back your cashback after initially rewarding the 6%. But it might show up if you ever trigger an account review, and be used as evidence of your \"\"abuse\"\" of the program (which BTW is defined rather subjectively). There has been many cases of account shutdowns because of this. Card issuers are also trying to do a better job preventing \"\"abuses\"\" by proactively setting caps on rewards (as opposed to closing those accounts afterwards and taking the rewards away altogether). Given the trend in recent years, I have to speculate that at some point the card issuers would put clear language in the terms against gift card purchase and enforce it effectively (if they haven't already). This reward game is constantly changing. It's good while it lasts. Just be prepared and don't get surprised when things go south.\"",
"title": ""
},
{
"docid": "67c49f7c2aef677814f0bbc12dcfe05d",
"text": "\"Most people are aware of the existence of merchant processing fees. If this really bothers anyone: * Get a rewards credit card * Pay the bill off in full every month * Redeem your points for cash back You've now recovered a good portion of the fees back and have still had the convenience of not carrying cash and all of the other random \"\"benefits\"\" (extended warranty, travel protection, etc) cards carry these days. Some of the programs with 5% cash back will put more back in your pocket than what the fees are since they generally run around 2-4%.\"",
"title": ""
},
{
"docid": "a8eb6f1b403c5bdc542f7288b4ed7b86",
"text": "Is your credit card spending on things outside the categories listed in your question? I generally don't put credit card expenditures in their own category of spending because I'm buying things like gas and groceries, etc. I track all spending whether from my checking account (bill autopay) or credit card account as spending in budget categories, and I just transfer money from my checking account to my credit card account to cover anything that was spent there during the previous month.",
"title": ""
},
{
"docid": "b427ead79d6bc0ca641b104f8705fd3c",
"text": "I would presume this goes entirely through the credit card network rather than the banking network. I am guessing that it's essentially the same operation as if you had returned something purchased on a card to the store for credit, but I'm not sure whether it really looks like a vendor credit to the network or if it is marked as a different type of transaction.",
"title": ""
},
{
"docid": "8d8d1ca1f1ac2f7f965dc501cd5c996e",
"text": "My bank charges me on my statement for debit transactions, but rewards me with bogo points when I run transactions as credit. AFAIK, retailers are prevented by contract with VISA et all from recouping the merchant fee from you (instead they can mark up all prices and offer a 'cash discount'), not that you'll be able to convince your vietnamese grocer of this. The difference between debit and credit fees is large enough that even these small tricks by the bank can mean a lot of money for them. Since most retailers accept either, they recruit me into their profit game with carrots and sticks. I've since moved to an actual cash back credit card and haven't regretted it yet.",
"title": ""
},
{
"docid": "dac5b86f380989b690c52d2169211410",
"text": "Some large merchants do not give discounts for cash payments as this does not work out any cheaper for them, vs Credit Card payments. In Credit Card typically fees given to all the 3 parties (Merchant bank, Issuer Bank and Visa) would be around 3%. If cash payment is made, and the amounts are large (say at Walmart / K-Mart they have to deposit such cash at Banks, Have a provision to Storing Cash at Stores, People to count the cash. So essentially they will have to pay for Cash Officer to count, Bigger Safe to store, Transport & Security & Insurance to take Cash to Bank Plus Banks charge around 1% charge for counting the large cash being deposited. This cash would be in local branch where as the operations are centralized and Walmart/K-Mart would need the money in central account, it takes time to get it transferred to a central account, and there is a fee charged by Bank to do this automatically. On the other hand, smaller merchants would like cash as they are operated stand-alone and most of their purchases are also cash. Hence they would tend to give a discount for cash payment if any.",
"title": ""
},
{
"docid": "36320d5d3ef4f2c73640925da28ba1b3",
"text": "Generally, credit card networks (as opposed to debit/ATM cards that may or may not have Visa/MC logos) have a rule that a merchant must accept any credit card with their logo. Visa rules for merchants in the US say it explicitly: Accept all types of valid Visa cards. Although Visa card acceptance rules may vary based on country specific requirements or local regulations, to offer the broadest possible range of payment options to cardholder customers, most merchants choose to accept all categories of Visa debit, credit, and prepaid cards.* Unfortunately the Visa site for China is in Chinese, so I can't find similar reference there. You can complain against a merchant who you think had violated Visa rules here. That said, its not a law, its a contract between the merchant processor and the Visa International organization, and merchants are known to break these rules here and there (most commonly - refusing to accept foreign cards, including in the US). Also, local laws may affect these contracts (for example, in the US it is legal to set minimum amount requirements when accepting credit cards). This only affects credit card processing, and merchants that don't accept credit cards may still accept debit cards since those work in different networks, under a different set of rules. Those who accept credit cards, are also required to accept debit cards (at least if used as credit).",
"title": ""
},
{
"docid": "229dcdc4c02910101ea85c81c214c263",
"text": "\"The statement is (in laymans terms - if not in real terms) correct. Most credit cards (I know this to be true for VISA and Mastercard) have dispute processes and will do a chargeback on the merchant - ie take the money back from the supplier in cases where you don't receive the goods or other fraud - Particularly if they can't produce a signature and (for transactions which are not face-to-face) a tracking number. Your exact rights will vary by bank, but mostly they need to follow the guidelines set by the Credit Card company - and you do need to be a bit careful - if you received goods which were fake or a dispute arises you may be up for shipping the goods back to the merchant - and you have a limited - but reasonable time - in which to make the dispute. (The statement \"\"the money is the banks\"\" is not technically true, there is no money involved until you pay it, only credit [ they are very different, but almost no-one knows that, I communicated with a Minister of Finance on the topic], but this is quite technical and as a layman not something you need to worry about here)\"",
"title": ""
},
{
"docid": "23f69c6eab821c50c9174ecd592240a8",
"text": "I thought this was because credit card companies charge the retailer a fee to accept credit card payments. If you spend $100, the retailer pays $1 (or whatever percentage they have negotiated) to the credit card provider. Handing over $100 cash and paying $1 fee to Visa means a loss to the retailer. The same transaction on $100 worth of product means the loss is accepted out of the profit margin which the retailer accepts to attract custom.",
"title": ""
},
{
"docid": "bdf2fe80ac62aabbb8aa1b4e141e49d6",
"text": "My guess would be for small merchants there could be a small difference. For large merchants, the cash is also at a cost equivalent to the card fees. Check for my other answer at How do credit card companies make profit?",
"title": ""
},
{
"docid": "6cc787c66286e2c2fb1e5324f4a23d80",
"text": "\"From my days in e-commerce they break down like this? The company doesn't know a debit from a credit card. Got the Visa logo, then it is a Visa through the company's payment gateway. The gateway talks to the bank and that is where the particulars for money is figured out. When I programmed gateway interfaces, I had the option to \"\"authorize\"\" or check for funds (which didn't reserve anything, just verified funds existed), run for batch (which put a hold on the funds and collected them at the end of the night) or just take the money. Most places did a verify during the early checkout stages and then did a batch at the end of the night. The nightly batch allows a merchant to cancel a transaction without getting charged a fee. The \"\"authorize\"\" doesn't mean the money is tied up, although that might be your banks policy. Furthermore, an authorize can only last for so many days. This also explains why most of your banks don't report your transactions to you the day of. There is a bunch more activity on your card than the transactions that complete.\"",
"title": ""
},
{
"docid": "d8ece65eb6ec4ccdf42ad3ecc6bfaf9a",
"text": "Merchants are only supposed to verify the presence of a signature, which signifies that the card owner has accepted the terms and conditions of the card / account. It was never really intended to be used to authenticate the card holder, nor is it used as such in practice.",
"title": ""
},
{
"docid": "39ce77a9a6f73da8194f996943405e13",
"text": "\"It's very straightforward for an honest vendor to refund the charge, and the transaction only costs him a few pennies at most. If you initiate a chargeback, the merchant is immediately charged an irreversible fee of about $20 simply as an administrative fee. He'll also have to refund the charge if it's reversed. To an honest merchant who would've happily refunded you, it's unfair and hurtful. In any case, now that he's out-of-pocket on the administrative fee, his best bet is to fight the chargeback - since he's already paid for the privilege to fight. Also, a chargeback is a \"\"strike\"\" against the merchant. If his chargeback rate is higher than the norm in his industry, they may raise his fees, or ban him entirely from taking Visa/MC. For a small merchant doing a small volume, a single chargeback can have an impact on his overall chargeback rate. The \"\"threshold of proof\"\" for a chargeback varies by patterns of fraud and the merchant's ability to recover. If you bought something readily fungible to cash - like a gift card, casino chips, concert tickets etc., forget it. Likewise if you already extracted the value (last month's Netflix bill). Credit card chargeback only withdraws a payment method. Your bill is still due and payable. The merchant is within his rights to \"\"dun\"\" you for payment and send you to collections or court. Most merchants don't bother, because they know it'll be a fight, an unpleasant distraction and bad for business. But they'd be within their rights. Working with the merchant to settle the matter is a final resolution.\"",
"title": ""
}
] |
fiqa
|
19f63ca3120193acfafd9b048eb021f2
|
Gift card fraud: To whom to report? How to recover funds? Is the party which issued me the card liable?
|
[
{
"docid": "a2c8ee8ee3ef896bb3dc414204aa9de5",
"text": "Citibank just sent me a $100 check. Here's how I got it:",
"title": ""
},
{
"docid": "b6d8ecadbd9030bfa54936e96161faef",
"text": "Question 1: Who do I report such fraud to? Walmart, or their card processor. They may be in their right to require the original purchaser to do the report. Generally, credit card and debit card fraud must be reported to the bank within 60 days of the statement for them to take responsibility. I don't see why gift cards would be different. You can also report it to the police, but I believe you'll be asked to file a report in the jurisdiction where the card was used. Again - time is of the essence, and there's nothing much they could do with your report now. Question 2: How can I recover the $100 value of my Walmart gift card? At this point, 2.5 years later when the card was used to buy prepaid cards, there's no way to catch the thief and recover the funds. Had you reported it promptly, Wlamart could have block the prepaid cards sold or track their usage, but now is too late. Question 3: Is Citibank in any way liable? (The gift card was fraudulently used shortly after---within the same month---I received it from Citibank.) I doubt it unless you can show a pattern. It could be someone working for the Citibank, someone working for the USPS, or someone just stole a bunch of numbers and waited until they became activated.",
"title": ""
},
{
"docid": "625750d37c5b96688e16f19219c37aef",
"text": "Have you checked to see if anything else went missing? Walmart says that because I was not the original purchaser of the gift card, they could not help me directly Just to build on what @littleadv already gave you, my personal experience on this is that none of the companies that you'll likely be dealing with in a situation like this will be falling over themselves to help you out. Unless it also helps them for some reason, or if they're compelled by consumer laws. If you think you should be protected from this sort of thing happening, feel free to reference the FCRA to see if you might get any consumer protections. But just from what you've said here, it doesn't sound like you do. So if anything else went missing (or even if not), it might have been someone working for Citi, who may have had access to more of your personal information than just your card. ID theft is unfortunately common, as a fairly easy crime to commit, a hard one to protect yourself against, and a very hard one to prosecute. When did you last check your credit report?",
"title": ""
}
] |
[
{
"docid": "3312927a897a17d987ee717046acdb5b",
"text": "Typically you can not buy gift cards with gift cards but in most stores this is a function built into the cash register, I find it hard to believe that targets system would not restrict it if it was in fact against their policy. I worked for Home Depot for 5 years, they have a strict gift card/store credit policy that prevents such things from happening.",
"title": ""
},
{
"docid": "288d276228f14c790a00ed38f2cbcab0",
"text": "Go to the police. This is fraud and is illegal. Sure, this will hurt your friend but better now then when he starts abusing of his position to fraud even more people... Original comment by Bakuriu sorry for not giving credit",
"title": ""
},
{
"docid": "966da705506d56b54d1c66e47f230783",
"text": "In addition to what has been said, gift cards with a credit card logo (which is what I am assuming you mean here) do not have an address associated with them. That means that if you try to use one at a merchant that users address verification (common in online purchases), the transaction will fail. In my experience with an American Express branded gift card, I was able to call the number on the back and they added an address to the card so that it would work. It seemed like this was a common and well known issue. Because the gift card is not associated with any person, no verification is needed to add that address, you can give them any address you want. Also I believe that the card numbers in use for gift cards are specific, that is you could tell that a card is a gift card based on the number alone. That means it is likely possible for a merchant to reject those gift cards while still accepting other cards from that network. This is likely for certain transactions. For example, a hotel or car rental agency requires a credit card for incidentals, and it's likely that the system itself will outright reject a gift card even if it has enough on it for the initial hold. As for debit cards, I think there are far fewer issues with acceptance, other than the aforementioned hold issues described in another answer.",
"title": ""
},
{
"docid": "294510fe572c3ddf5b5c5e1ebf224450",
"text": "I accidentally bought gems on Clash of Clans due to the finger print id, and I bought it on an american express gift card. But when I remembered I used up the gift card until it was at $0 and I still got the gems? Do I tell apple or what? Also could the gift card be overdrafted?",
"title": ""
},
{
"docid": "c78c7ad755e34be77c564bf31073b601",
"text": "I'm guessing you're in the US? If so, yes, you can be prosecuted, but it's unlikely. Fraud crimes are up to a prosecutor to pursue, there are a lot of fraud cases and bystanders take low priority, I'm assuming you're passively complicit, not actively. If this is the case it's best to work with the bank to get your situation cleaned up and move on. These days, most banks have dealt with wire fraud at least once, and they're familiar with cashiers check fraud. A fair warning, the bank will report you, if they think you're involved, so if you are not a complete bystander, you may want to lawyer up. So hopefully you didn't try to spend any of the fraudulent money and hopefully you have proof of a third party, because they will want a connection to that person (name/number/other) to file their report.",
"title": ""
},
{
"docid": "8f854d13fe6e7e7454888e7e8e944c9d",
"text": "The credit card company isn't the one losing money here. It's the airline. The airline credited you back twice (once with the fraud report, once with the credit from the thief). Maybe you should call them if you want it resolved sooner. In any case, if/when they do come looking for their money, they will have the paperwork to prove that it belongs to them. You can spend the money now and risk paying it back later, you can watch and wait, or you can be proactive and ask the airline to fix it. They may or may not care about that sum.",
"title": ""
},
{
"docid": "b22c43df93a0084679c59c07aac9a9f1",
"text": "\"You should immediately tell your bank you've been scammed, request for the transactions' cancellation or revocation and get back most - if not all - of the money transferred. I've placed numerous orders online in the past and was always very careful about their trace-ability but I have to admit once I acted carelessly and got scammed. I didn't think of it much before placing an order for a very low priced laptop through a private seller on Amazon. I'd never purchased anything this way before but thought \"\"Amazon will protect me if anything goes wrong...\"\" so I sent an e-mail to the seller. He gave me his bank details (with Spanish IBAN) via a non-suspicious e-mail with the usual logos and e-mail address domain name, made the payment and guy came back to me saying he'll ship the laptop once he sees the funds received. Waited max. 2 days, trying to contact him but no response. Contacted Amazon giving the seller's ID and the \"\"transaction\"\"'s ID I'd received from him and they told me there's nothing they can do as that transaction is not recorded on their systems. Immediately after realizing I've been scammed and done my goof, I contacted my bank via e-mail explaining the situation. I was informed that the transaction can be cancelled but they cannot guarantee the return of the entire amount. After 2-3 days, I saw my balance richer by €950 and the payment I'd made to the scum was €1,000. I'd highly recommend that you check the fraud protection policy of your bank and in case there's something that can be done, then just get in contact with them explaining the situation.\"",
"title": ""
},
{
"docid": "41faca718c8433eb62c37726c8cf2c99",
"text": "\"As far as the banker himself goes, it's a customer service issue. WF is not going to tell you about their internal discipline (or oughtn't, anyway), other than potentially to confirm that the banker does or does not still work there; that's the closest they should get to telling you about it. I'm a (very) former retail manager, and that's absolutely the most I'd ever do in a case like this; and trust me, even with good customer service reps, you get requests to fire someone a lot, sometimes valid, sometimes not. You did the correct thing from your end: you brought the issue to their attention. Despite the quota, it's (hopefully) not permitted to sign people up without their permission (since that's illegal!), and I can say that in my retail experience, with these promotions with great incentive to cheat in this manner, one of the main things our loss prevention department did was to monitor data to see if people were illicitly signing people up for cards or otherwise cheating the system. That could be a very bad thing from a customer service point of view and from a legal point of view. What you should have done (or possibly did, but it's not clear in your post) is, after you reported the issue, asked for a re-contact on a particular date in the future - not \"\"after you've looked into it\"\", but \"\"Next friday I would like to get a call from you to discuss the resolution.\"\" Again, they're not going to tell you the discipline, but they should tell you at least that they've investigated it and will make sure it doesn't happen again, or similar. It's possible they will want more information from you at this point, and this is a useful way to make sure that request doesn't fall off of their plate. They should be able to, at least, tell you if there was a perceived issue on their end - it might be something meaningless to you, like \"\"He thought you said to sign up\"\", or something more descriptive, like \"\"He pushed the button to send you a notice, but our computer system screwed that up and made it an application\"\". You never know these days how easy it is to screw these things up. Now, they certainly should have fixed the issues on your end. Hopefully they did whatever you needed them to do banking-wise, or else you withdrew your money and went somewhere else. If not, follow up with that supervisor's supervisor, or go up a level or two to a regional director or equivalent. They may not be able to cancel the card for you, but the other banking-related things they certainly should fix. The card you probably just have to cancel and be done with. As far as the misuse of personal information, one thing I'd consider doing is placing a freeze on your credit report. Then this could never have happened - you would have to lift it to have your report pulled to be given the card. This is not free, though, so consider this before doing this.\"",
"title": ""
},
{
"docid": "18210fbf126f9cf8c9f7c3dff57363f8",
"text": "If possible, I would disable online payment on the card, immediately (reduce the limit of online payment to zero). I think you should also demand the photocopy back, immediately. It is tad confrontational, and maybe he did get it without any ill will, but even in this case, he should be made aware of the fact that this is wrong. Note that if he genuinely did it with ill will, he will have likely made multiple copies (who knows how many), so it will not really protect you from fraud (in this case). Then you should call or e-mail the card company (and/or your bank) and tell them what happened. I think they would consider the card stolen and maybe advise you on what you should do next. Note that if he uses the card, you might (and should) try to chargeback the money (through the card company), but it might be argued that you did not sufficiently protect the details of your card. And even if you succeed, the process can be long and you will not have access to your money in the meantime (this is one of the downsides of a debit card vs credit card...). You may also consider moving away the money from the associated bank account (so that there's not much to steal). Of course, the situation (on that front) gets more complicated if account overdrawing is enabled in your account.",
"title": ""
},
{
"docid": "1e616445929e3d5e3b84b6470c8bf021",
"text": "But this isn't cash though, its credit card. They'll just chargeback and we have to now report it to the police for stolen items. But we followed the general procedure, and the thieves had the pin of the CC which is why I'm a bit confused. Now we still have to verify the signature, but if the signature ends up being right should we get the money back? Because at this point the CC holder should be a lot more responsible about the CC and other people shouldn't know their PIN. If anything the signature is understandable cause you can just forge it since its in the back of the card.",
"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": "ab9f280a4c83f71970a17ce68cebc63f",
"text": "\"This is a very trivial scam. Flow is like this: Send money to Mr. X (you, in this case). Call Mr. X and ask for the money back, because mistake. Usually they ask for a wire transfer/cash/gift cards/prepaid cards or something else irreversible/untraceable. Mr. X initiates transfer back to Scammer. Accept the transfer from Mr. X Dispute the original transfer or otherwise cancel it through the netbank Mr. X cannot dispute his transfer to the Scammer, since it was genuinely and intentionally initiated by Mr. X. End up with twice the money, at the expense of Mr. X In other countries this is usually done with forged checks, but transfers can work just as well. As long as the transfer can be retroactively canceled or reversed - the scam works. You mentioned money laundering - this is definitely a possibility as well. They transfer dirty money to you from unidentified sources, and you send a \"\"gift\"\" to them with a clear paper trail. When the audit comes - the only proof is that you actually sent them the gift, and no-one will believe your story. You'll have to explain why the Mr. Z who's now in jail sent you a $1K of his drug money. However, in this case I think it is more likely a scam, and the scammer didn't really know what he was doing...\"",
"title": ""
},
{
"docid": "4799ffdf4d513d06b4b626ce9b3d6aeb",
"text": "Do they even know how to find these people, short of using facial recognition or somesuch wizardry? I mean I'm assuming they paid for the gift cards with cash. Do you have to provide identifying information to activate them?",
"title": ""
},
{
"docid": "2bd0c2408cb8de6d38d8017d313bae7a",
"text": "\"Actually, you started the crime before \"\"doing [the] mutually volunteer transactions\"\". You started by violating the terms of the contract which are clearly stated on the coupon: 1 offer per household and no reproduction. You used the same coupon over and over again. That may not be a criminal offense, but the company could still find you liable for it. It's what happens after you do the initial defrauding that'll get you in the biggest trouble.\"",
"title": ""
},
{
"docid": "058ad1ea518225eb4329429395e5e93a",
"text": "For about six months now, every 3-4 weeks, I get a misdelivered packaged from those idiots. It's to the same person. They have the same house number, Asian name like myself, but ten streets away. First couple of times I reported this to Amazon, but I got real tired of spending my own time to help fix their problem. I figure let Amazon keep sending replacement packages and maybe they'll finally get the hint. Meanwhile, my housekeepers have been enjoying these gifts.",
"title": ""
}
] |
fiqa
|
355a81720ada853326aab7b5336e5a5b
|
How does on-demand insurance company Trov prevent insurance fraud or high prices?
|
[
{
"docid": "f1995ca1fbceee023309ccebb5e0b007",
"text": "Anything can be insured for the right price... this product is offered for devices at higher risk, which would be logical purpose of owner needing coverage for a specific length of time. Typically this would be a type of adverse selection, but TROV targets customers that typically would not require insurance on their device, but as you said they may be traveling and putting their devices at added risk. Like all insurance companies, their Loss Ratio (Losses/Premiums) will depend on the law of large numbers and spread of risk. As we know, the majority of the time trips are taken, electronics make it back home safely. Like many tech companies, their advantage over conventional insurers is likely low overhead costs. Being on a mobile platform, they likely have a fraction of the claims handling cost of a conventional insurer. Payments are likely automated by linking bank accounts, so there is little transaction cost burden on this company. In short, their operation is likely highly automated with few staff and low expenses, allowing them to take on a higher loss ratio than conventional insurers and still leave room for profit. Without having ever used this service, I can tell you they likely price in anticipated fraud, the same way Walmart prices in inventory loss (shoplifting) into their prices. I personally would share your concern that it'd be difficult to combat fraud on such a platform, especially with no claims adjusters whom are typically the first line of defense. Again, I answer this never having used their service, but I work as an Analyst at a large insurer and these would be my assumptions based on what I know of TROV.",
"title": ""
},
{
"docid": "a7d82cccee4da724a6800ad82c18e73c",
"text": "For example, it is not allowed to buy flood insurance at peak flood season and then cancel it when it is over. They are not offering this right now. So it would be interesting to see if they offer this and how they offer this. For example, you can insure your camera for a week when you are going on vacation. They call it on-demand insurance. They segment Trov is targeting consumer electronics. More often people don't take insurance in this segment as the insurance cost is high and benefits low. However if going on vacation, most are afraid of loosing / damaging equipments. Generally although we are afraid, most often nothing happens. It is this segment; you make the insurance cheap and easy to buy and create a new segment. Insurance fraud detection is an important part of insurance process such that insurance companies allocate a lot of resources to detect improper insurance claims. The website does not mention how they process claims. Although it looks easy, they may have a more stringent process. For example what is stopping me from buying an insurance after event; i.e. break my phone Monday, buy insurance on Monday and make a claim on Tuesday saying the phone broke on Tuesday.",
"title": ""
},
{
"docid": "8b3fafaa967083f6341aed5116b52e70",
"text": "There is not necessarily a need to prevent what you describe - 'turning insurance on before high risk situations'. They just need to calculate the premiums accordingly. For example, if an insurance needs to take 50$/year for insuring your house against flood, and a flood happens in average every 10 years, if you just insure the two weeks in the ten years where heavy rain is predicted, you might pay 500$ for the two weeks. The total is the same for the insurance - they get 500$, and you get insurance for the dangerous period. In the contrary; if a flooding (unexpectedly) happens outside your two weeks, they are out. From the home owners view, 500$ for two weeks when heavy rains and floods are expected, and nothing otherwise sounds pretty good, compared to 50$ every year. It is the same of course, but psychology works that way.",
"title": ""
},
{
"docid": "b634f9d34707808a743bffec4a10c1d0",
"text": "I am not familiar with the startup you mentioned, but in general there are three approaches to avoid losing money in insurance business: review before policy is issued (underwriting) review before claim is paid (claims handling) setting high enough rates to cover underwriting losses The fact that Trov is customer friendly / lax (make your choice of term) when issuing a policy says nothing about their rates or claims payment. It is even possible they are building a portfolio for sale, and do not really care about the claims performance (policies are sold / customers acquired now, and it takes a time for claims to arrive).",
"title": ""
}
] |
[
{
"docid": "2447d62ff04c16cf8ef4f21ba6dfaf57",
"text": "\"You have to realize that you're trying to have your cake and eat it too. You want to do things \"\"unofficially\"\" by not reporting the accident (to insurance companies and/or police), but you want to do it \"\"officially\"\" in that you want to have legal recourse if they try to hit you up for more money. The only way to have it both ways is to trust the other person. From a financial perspective, ultimately you need to decide if the monetary cost of your raised insurance premiums, etc., outweighs the cost of whatever money the other party in the accident will try to squeeze out of you (factoring in the likelihood that they will do so). You also would need to factor in the likelihood that, rather than trying to scam you, they'll pursue legal action against you. In short, from a purely monetary perspective, if the legitimate cost of repairs is $700 and the cost to you of doing it by the book via insurance is $2000, you should be willing to be scammed for up to $1300, because you'll still come out ahead. Of course, there are psychological considerations, like whether someone unscrupulous enough to scam you will stop at $1300. But those numbers are the baseline for whatever outcome calculations you want to do. On the more qualitative side of things, it is possible they're trying to scam you, but also possible they're just trying to hustle you into doing everything quickly without thinking about it. They may not be trying to gouge you monetarily, they just want to pressure you so they get their money. I agree with other answerers here that the ideal way would be for them to send you an actual bill after repairs are complete. However, you could ask them to send you a written copy of the repair shop estimate, along with a written letter in which they state that they will consider payment of that amount to resolve the issue and won't pursue you further. The legal strength of that is dubious, but at least you have some documentation that you didn't just try to stiff them. If they won't give you some form of written documentation, I would read that as a red flag, bite the bullet, and contact your insurance company.\"",
"title": ""
},
{
"docid": "7c1674dbe0971d64da0bdbd3313c7196",
"text": "\"There are (at least) two problems with the argument suggested in the OP. First, the ability to cover the cost, doesn't mean willingness, ease, or no major side effects of doing so. Second is the mitigation of \"\"upside risk\"\". It might be true that the most usual loss is small and manageable, but 10% of incidents could be considerably larger and 1% may be very much larger - without limit. Your own attitude to risk and loss will determine how much these are seen as unlikely+ignore, or worst case situation+avoid.\"",
"title": ""
},
{
"docid": "2298ebfb5de33ae737aa535599ebd79f",
"text": "My dad runs an AV labor company (trade show setups etc) and his insurance company called him as they were finalizing his workers comp. They asked when he was submitting all of his employees drug screenings. My dad laughed at them and said he would not be submitting any. They told him his premium would be higher to which my dad replied that if he drug tested, he would have 4 people working for him and thus wouldn't even have a business - just send the bill.",
"title": ""
},
{
"docid": "7abffd4c1dbacf9d526c136028c8ade6",
"text": "\"The PMI premium you pay is dependent on a very large number of variables in the finance market. Mortgage insurance, at the higher inter-bank levels, is handled with credit default swaps (the ones you've been hearing about on the news for the past 4 years), where the lender bundles a block of mortgages, takes them to a guarantor like AIG or Freddie Mac, and says \"\"We bet you that these mortgages will default this month, because the homeowners have little or no equity to deter them; if we win, you agree to swap these debts for their current face value\"\". The lender examines the mortgages, calculates the odds of a default severe enough that the bank would come to collect, using complex environmental heuristics, multiplies by the value of the potential payout, adds a little for their trouble, and says \"\"well, we'll take that bet if you pay us $X\"\". The bank takes the deal, then divvies up that cost among the mortgages and bills the homeowner for their share. The amount you pay for PMI can therefore depend on pretty much anything in this entire process; the exact outstanding amount and equity status of your loan, the similar status of other mortgages your loan will be bundled with for assessment, who the guarantor is, what exact heuristic they use to come up with an amount, the weighting the bank uses to divvy it up, and how much they actually pass on to you. Most of these same variables are at play when you shop for actual insurance for your car or home, which is why your premiums will go up or down with the same insurer and why someone else always seems to have a better deal (pretty much every insurer can say that \"\"drivers who switched saved an average of $X\"\"; of course they did, otherwise they wouldn't have switched). Thinking of it in those terms, it's easy to see how this number can vary widely based on numbers you can't see. You're free to say no, and it will cost you nothing right up until you sign something that says you agree to be penalized for saying no. While the overall amount of the payments does decrease, the PMI has gone up, and that's money you'll never see again just like interest (except you can deduct interest; not PMI). I would do the tax math; find out how much you could deduct over the next year in interest on your current loan, then on their proposed terms, and what the resulting tax bills will be from both. You may save monthly only to pay more than you saved to Uncle Sam at the end of the year. You're also free to negotiate. The worst they can do is stay firm on their offer, but they may take a second look and say \"\"you're right, that PMI is rather high, we'll try again and see if we can do better\"\". They can either negotiate with their insurer, or they can eat some of the PMI cost that they're currently passing on to you.\"",
"title": ""
},
{
"docid": "bc9736300627a5a9469e0cc63d941993",
"text": "As someone who has worked for both an insurance carrier and an insurance agent, the reason people buy insurance is two fold: to spread risk out, and to get the benefits (when applicable) of approaching risk as a group. What you are really doing when you buy insurance is you are buying in to a large group of people who are sharing risk. You put money in that will help people when they take a loss, and in exchange get a promise of having your losses covered. There is an administrative fee taken by the company that runs the group in order to cover their costs of doing business and their profits that they get for running the group well (or losses they take if they run it poorly.) Some insurances are for profit, some are non-profit; all work on the principle of spreading risk around though and taking risk as a larger group. So let's take a closer look at each of the advantages you get from participating in insurance. The biggest and most obvious is the protection from catastrophic loss. Yes, you could self-insure with a group size of one, by saving your money and having no overhead (other than your time and the time value of your money) but that has a cost in itself and also doesn't cover you against risk up front if you aren't already independently wealthy. A run of bad luck could wipe you out entirely since you don't have a large group to spread the risk around. The same thing can still happen to insurance companies as well when the group as a whole takes major losses, but it's less likely to occur because there are more rare things that have to go wrong. You pay an administrative overhead for the group to be run for you, but you have less exposure to your own risks in exchange for a small premium. Another significant but less visible advantage is the benefit of being part of a large group. Insurance companies represent a large group of people and lots of business, so they can get better rates on dealing with recovering from losses. They can negotiate for better health care rates or better repair rates or cheaper replacement parts. This can potentially save more than the administrative overhead and profit that they take off the top, even when compared to self-insuring. There is an element of gambling to it, but there are also very real financial benefits to having predictable costs. The value of that predictability (and the lesser need for liquid assets) is what makes insurance worth it for many people. The value of this group benefit does decrease a lot as the value of the insurance coverage (the amount it pays out) decreases. Insurance for minor losses has a much smaller impact on liquidity and is much easier to self insure. Cheaper items that have insurance also tend to be high risk items, so the costs tend to be very high relative to the amount of protection. If you are financially able, it may make more sense to self-insure in these cases, particularly if you tend to be more cautious. It may make sense for those who are more prone to accidents with their devices to buy insurance, but this selection bias also drives the cost up further. Generally, the reason to buy insurance on something like a cellphone is because you expect you will break it. You are going to end up paying for an entire additional phone over time anyway and most such policies stop paying out after the first replacement anyway. The reason why people buy the coverage anyway, even when it really isn't in their best interest is due to two factors: being risk averse, as base64 pointed out, and also being generally bad at dealing with large numbers. On the risk averse side, they think of how much they are spending on the item (even if it is less compared to large items like cars or houses) and don't want to lose that. On the bad at dealing with large numbers side, they don't think about the overall cost of the coverage and don't read the fine print as to what they are actually getting coverage for. (This is the same reason that you always see prices one cent under the dollar.) People often don't really subconsciously get that they are paying more even if they would be able to eat the loss, so they pay what feels like a small amount to offset a large risk. The risk of loss is a higher fear than the known small, easy payment that keeps the risk away and the overall value proposition isn't even considered.",
"title": ""
},
{
"docid": "2e8c80dffb78f1f16f07f91f6b655194",
"text": "That is exactly how the insurance companies work. What you described here falls under P/L. If you are buying insurances you are betting that you might get sick. Same as when insurance companies sells you insurance they are betting that you won't get sick. No one will sell you insurance if you are oreads sick. That's why you have government to take of you. Of course there are pools of healthy and unhealthy people. The healthier the better for the company. No one is in it to loose money.",
"title": ""
},
{
"docid": "fde7f24cd4ccccf7f3fbe82607eb1e79",
"text": "Answer all of their questions honestly and as accurately as you can, but don't stress too much about it. If you don't know the answer to something, ask the insurance agent what it means; that's what they're there for. (If you're doing this online, email the support, or the 'live chat' feature many of them have. Or, don't do it online, if you feel better having an agent in person; nowadays, most of the major insurers are similar on price so it's not a massive savings to skip the agent.) As far as whether it's important to pick a specific insurer - that's really your call. Read reviews, understanding that folks with bad experiences are more likely to write reviews than the 90% of folks who get no benefit from homeowner's insurance. You need to make the decision as to how important reputation and ease of claims process is versus price. That's why there are multiple insurers, after all - you can decide how important it is to you. It sounds like you would prefer a simpler claims process, so perhaps you should go with someone who is known for an easier claims process (understanding that no insurer is always going to agree with every claimant 100%).",
"title": ""
},
{
"docid": "bbf0fc4b67ce83fe17f8e66cbbb2f0d4",
"text": "This argument appears to assume that premiums will remain the same. You have to ask: If autonomy reduces the frequency of accidents, why would you consider to pay the same insurance premium for the product? If Geico was selling a product that had a $1000 premium with a 50% margin, but is now selling a $200 product with a 75% margin, it's making a heck of a lot less in aggregate. Can't say that's a good thing.",
"title": ""
},
{
"docid": "2fad58094dff5fc338f65e7c6a7e0b9c",
"text": "This depends on the jurisdiction, but such companies are typically subject to regulations (and audits) that require them to keep the customers' accumulated premiums very strictly separated from the company's own assets, liabilities and expenses. Additionally, they are typically only allowed to invest the capital in very safe things like government bonds. So, unless something truly catastrophic happens (like the US government defaulting on its bonds) or people in the company break the regulations (which would invovle all kinds of serious crimes and require complicity or complete failure of the auditors), your premiums and the contractual obligation to you would still be there, and would be absorbed by a different insurance company that takes over the defunct company's business. Realistically, what all this means is that insurance companies never go bankrupt; if they do badly, they are typically bought up by a competitor long before things get that bad.",
"title": ""
},
{
"docid": "080d0f2b00d0613a800275de5fabfde1",
"text": "This greatly depends on the local laws and the insurance contract terms. If I remember correctly, my own life insurance policy does also have special terms in case I die within a year of applying, so it doesn't sound totally bogus. For car loan insurance, the amount of coverage and premiums were probably low enough for the insurer not to want to spend the money upfront on the thorough investigation, but they probably do have a clause that covers them in case the insured passes away unreasonably quickly (unreasonably for a healthy person of the given age, that is).",
"title": ""
},
{
"docid": "60c15e38c1f6fc5e587b25638c68d5e1",
"text": "The cost of insurance very well may swing the opposite direction. Last year premiums jumped 50% across the board because there were so many drivers on the road that accident rates increased. So autonomous vehicles may have lower (or zero) premiums while human driven vehicles might see triple digit increases in premiums.",
"title": ""
},
{
"docid": "0f3f868eb39f299c09b943e77bb8b3d0",
"text": "Protect competition, not protect competitors. In a lot of cases in the tech world no one knows who the competitors is a few quarters/years down the road. Also, enforce regulations against regulation-arbitrage companies like Uber/Lyft, AirBnB, or reg-arb tech like ICO, all of which relied on regulatory leeways allowing them to crush existing companies that's been saddled w/ regulations. In countries where regulatory arbitrage doesnt exist these 'innovators' fail, e.g., Uber in South Korea.",
"title": ""
},
{
"docid": "8862161d023090a19e10c93cd537f166",
"text": "@Jeremy Using CVV doesn't decrease the transaction cost. I know this because I have quotes for CC transactions and the cost/transaction doesn't depend on using CVV. That said we don't plan to use CVV because we sell insurance and the likelihood that someone who steals CC will buy insurance is very low.",
"title": ""
},
{
"docid": "10d4bf01e17c812fc8e72a843b096553",
"text": "\"Some people are better drivers than others. A collision can happen to anybody, even good drivers. The collision might not be your fault at all; it might be entirely the fault of the other party. However, the best drivers do a better job of avoiding collisions in situations where the other drivers on the road are doing the wrong things. The \"\"no claims discount\"\" is a way to identify and reward those good drivers, as they have a lower likelihood of claims in the future.\"",
"title": ""
},
{
"docid": "042b242265023ff11bf09c68b010334d",
"text": "If you can qualify for two mortgages, this is certainly possible. For this you can talk to a banker. However, most people do not qualify for two mortgages so they go a different route. They make offers on a new home with a contingency to sell the existing home. A good Realtor will walk you through this and any possible side effects. Keep in mind that the more contingencies in an offer the less attractive that offer is to sellers. This is how cash buyers can get a better deal (no contingencies and a very fast close). Given the hotness of your market a seller might reject your offer as opposed to first time home buyer that does not need to sell an old home. On the other hand, they may see your contingency as low risk as the market is so hot. This is why you probably need a really good agent. They can frame the contingency in a very positive light.",
"title": ""
}
] |
fiqa
|
13b50a034942842b8a6ef6ca6d2e0a4b
|
I'm currently unemployed and have been offered a contract position. Do I need to incorporate myself? How do I do it?
|
[
{
"docid": "51e6e3e10f79c24b51da4146112d853d",
"text": "In short - if you can't get the job without incorporating, then incorporate! Some clients will require you to be incorporated (which is why I did it 10 years ago). Essentially, for them, it's a way of distancing themselves from you to ensure they are not responsible for any monies if you don't pay your taxes. For you, there is also this idea of distancing company assets from your personal assets. If they are not requiring you to incorporate, you can simply act as a sole proprietorship. A good place to start reading up could be the sites below (for Canada/Ontario): Canada Business http://sbinfocanada.about.com/ http://sbinfocanada.about.com/od/incorporation/Incorporating_A_Business_In_Canada.htm http://sbinfocanada.about.com/cs/startup/a/incorporatadv.htm When I registered, I simply bought a book at Grand&Toy, with all the required forms for Ontario. These forms would also be available at a local Government service centre. You walk in, give the government money, and shortly thereafter you are incorporated. There are a number of others things that are required (having a minutes book, writing resolutions, creating shares, setting up a bank account, etc) - all discussed in the guide For Ontario you can start here: http://www.ontario.ca/en/services_for_business/index.htm At a high level, there are some costs for being incorporated, and some tax savings. At a minimum, costs would include: You may need the help of an account to help set things up, but it's quite easy to maintain all the records, etc that are required. Some other minor things I enjoy are writing myself expense cheques so that I get money back immediately (and effectively only pay 60% of the cost after writing it off in the company). I can decide how much to pay myself and push income from year to year.",
"title": ""
},
{
"docid": "84722d62eebbcb7adb23220fa92244a1",
"text": "Do you need to incorporate? This depends on whether the company prefers you to be incorporated. If you are going through a recruiting company, some of them are willing to deal with non-incorporated people (Sole Proprietor) and withhold taxes from your cheques for you. If you do want to incorporate, you can do it yourself, go through a paralegal, or you can even do it online. I did mine in Ontario for about $300 (no name search - i just have a numbered corporation like 123456 Ontario Inc.) through www.oncorp.com - there are other sites that do it as well. Things to consider - if you're contracting through a corporation you most likely need to: Talk to an accountant about these for clarification - most of them will give you an initial consultation for free. Generally speaking, accountant fees for corporate filing taxes averages about $1000-2000 a year.",
"title": ""
},
{
"docid": "5d2ec93801f732a7b1f981a20c83d003",
"text": "\"I am co-owner of a business, and we incorporated federally. (Mostly to limit liability.) There is some excellent information above, and most of my wisdom I got from a trusted lawyer and accountant (find experts you trust in these two areas, they will prove invaluable in so many areas.) The one point I would add is that if you decide to incorporate, you can do so federally or provincially. We were all set to go provincially, when our lawyer asked \"\"Is there any chance you might move the business? Any chance you might want to do work in other provinces? What about next year? Five years?\"\" If you are going through the expenses to set up a corporation, consider doing so federally, the extra costs were insignificant, but someday you might be glad you don't have to start from scratch. In this day and age, many people end up moving out of province for work, family concerns, etc.\"",
"title": ""
},
{
"docid": "7370a33a0e00e3ab8b244ef51854982a",
"text": "\"I know this is a little late but here is my answer. No. You do not \"\"need\"\" to incorporate. In fact, incorporating in your situation will cost you in legal fees, administrative headaches, and a fair bit in taxes. The CRA would probably look at your corporation as a personal services corporation and it would not be allowed to claim a number of tax reductions. The tax rate would end up being over the top range (unless you are in Quebec where it would be just under the top marginal range).\"",
"title": ""
},
{
"docid": "e8edffa2e7f767881481e995bd8dca08",
"text": "\"My late answer is: Be aware of the difference of being a contractor and being an employee. I am not sure of the laws in Canada, but in the United States lots of small companies like to hire people as \"\"contractors\"\" but make them work under rules that fall into employee. The business is trying to avoid paying payroll taxes, which is fine, but make sure you know your rights and responsibilities as a contractor vs employee. You can check with your state's Bureau of Labor and Industry in the US, but I am sure wherever you are from there is a government agency to do the same thing.\"",
"title": ""
}
] |
[
{
"docid": "a50bdd1c690e8f51635351fed8dee322",
"text": "\"Your employment status is not 100% clear from the question. Normally, consultants are sole-proprietors or LLC's and are paid with 1099's. They take care of their own taxes, often with schedule C, and they sometimes can but generally do not use \"\"employer\"\" company 401(k). If this is your situation, you can contact any provider you want and set up your own solo 401(k), which will have great investment options and no fees. I do this, through Fidelity. If you are paid with a W2, you are not a consultant. You are an employee and must use your employer's 401(k). Figure out what you are. If you are a consultant, open a solo 401(k) at the provider of your choice. Make sure beforehand that they allow incoming rollovers. Roll all of your previous 401(k)s and IRA's into it. When you have moved your 401(k) to a better provider, you won't be paying any extra fees, but you will not recoup any fees your original provider charged. I'm not sure why you mention a Roth IRA. If you try to roll your 401(k) into a Roth instead of a traditional IRA or 401(k), be aware that you will be taxed on everything you roll. ---- Edit: a little info about IRA's in response to your comment ---- Tax advantaged retirement accounts come in two flavors: one is managed by your company and the money is taken out of your paycheck. This is usually a 401(k) or 403(b). You can contribute up to $18K per year and your company can also contribute to it. The other flavor is an IRA. You can contribute $5,500 per year to this for you and $5,500 for your spouse. These are outside of your company and you make the deposits yourself. You choose your own provider, so competition has driven prices way down. You can have both a 401(k) and an IRA and contribute the max to both (though at high incomes you lose the ability to deduct IRA contributions). These accounts are tax advantaged because you only pay taxes once. With a regular brokerage account, you pay income tax in the year in which you earn money, then you pay tax every year on dividends and any capital gains that have been realized by selling. There are two types of tax-advantaged accounts: Traditional IRA or Traditional 401(k). You do not pay income tax on this money in the year you earn it, nor do you pay capital gains tax. Instead you pay tax only in the year in which you take the money out (in retirement). Roth IRA or Roth 401(k). You do pay income tax on money on this money in the year in which you earn it. But then you don't pay tax on any gains or withdrawals ever again. When you leave your job (and sometimes at other times) you can move your money out of a 401(k) into your IRA, where you can do a better job managing it. You can also move money from your IRA into a 401(k) if your 401(k) provider will allow you to. Whether traditional or Roth is better depends on your tax rate now and your tax rate at retirement. However, if you choose to move money from a traditional account into a Roth account, you must pay tax on it in that year as if it was income because traditional and Roth accounts are taxed at different times. For that reason, if you are just trying to move money out of your 401(k) to save on fees, the logical place to put it is in a traditional IRA. Moving money from a traditional to a Roth may make sense, for example, if your tax rate is temporarily low this year, but that would be a separate decision from the one you are looking at. You can always roll your traditional IRA into a Roth later if that does become the case. Otherwise, there's no reason to think your traditional 401(k) should be rolled into a Roth IRA according to what you have described.\"",
"title": ""
},
{
"docid": "be8d414a0fd1c029f1c9ad663a449c4d",
"text": "I do NOT know the full answer but I know here are some important factors that you need to consider : Do you have a physical location in the United States? Are you working directly from Canada? With a office/business location in the United States your tax obligation to the US is much higher. Most likely you will owe some to the state in which your business is located in Payroll Tax : your employer will likely want to look into Payroll tax, because in most states the payroll tax threshold is very low, they will need to file payroll tax on their full-time, part-time employees, as well as contractor soon as the total amount in a fiscal year exceeds the threshold Related to No.1 do you have a social security number and are you legally entitled to working in the States as an individual. You will be receiving the appropriate forms and tax withholding info Related to No.3 if you don't have that already, you may want to look into how to obtain permissions to conduct business within the United States. Technically, you are a one person consulting service provider. You may need to register with a particular state to obtain the permit. The agency will also be able to provide you with ample tax documentations. Chances are you will really need to piece together multiple information from various sources to resolve this one as the situation is specific. To start, look into consulting service / contractor work permit and tax info for the state your client is located in. Work from state level up to kick start your research then research federal level, which can be more complex as it is technically international business service for Canada-US",
"title": ""
},
{
"docid": "9d86d2dee6b62b0b7c9130b5bfe2fd4f",
"text": "To be honest I don't know how any of this work in the US so my answer will be of very limited value to yourself, I suspect, but when it comes to the UK if you're going to get the same pay gross either way than being independent makes very little sense. Running your own business is hassle, is generally more risky (although possibly not in your case) and costs money. Some of the most obvious costs are the added NI, probably the need for an accountant, at around £1200 p/a for basic accountancy service, you are obliged by law to have liability insurance and you probably want professional indemnity insurance, this will be around £600 p/a minmum, and so on and so forth. On top of that, oficially anyway, as a contractor, you really shouldn't be getting any benefits from the client, and so health insurance, company car, even parking are all meant to be arranged by, and paid by, your company, and can't (or rather - shouldn't) be charged to the client. So - I would say - if you're seriously thinking about setting up a consultancy company, and this client is first of many - set up a company, but take into account the sums you need to earn. If you're really thinking about employment - be an employee.",
"title": ""
},
{
"docid": "fa9290fe5300a24c04c6f8ab01f18f66",
"text": "Sounds you need to read up on S corp structures. I think this would benefit you if you generate income even after you physically stopped working which is incomes from membership fees, royalties % of customer revenue, middle man etc... Under the Scorp, you as the sole member must earn a wage that fair and at current market value. You pay social security and Medicare on this wage. The interesting thing here is that an Scorp can pay out earning dividends without having to pay payroll taxes but the catch is that you, as the sole employee must earn a fair wage. As for paying the other member you may want to look into 1099 contract work plus a finders fee. The 1099 hourly wage does not require you to pay Medicare and SS. The common fee I'm used to is 5% of gross invoice. Then you would pay her an hourly wage. The company then bills these hours multiplied by 2 or 3 (or whatever you think is fair) to the client. Deduct expenses from this and that's your profit. Example. Contractor brings Client A which is estimated as a 100 hour project with $100 cost in supplies and requires 2 hours of your time @ $40/hr. You quote 100 hours @ $50 to client, client agrees and gives you down payment. You then present the contract work to your contractor, they complete the work in 100 hours and bill you at $25. You pay your contractor 2500 plus the 5% ($250) and your company earns $2070 (5000 - 2500 - 100-80) And you'll earn $80 minus the payroll tax. Then at the end of the quarter or year or however you want to do earning payouts your LLC- Scorp will write you a check for $2070 or whatever earning % you want to take. This is then taxed at your income tax bracket. One thing to keep in mind is what is preventing this other person from becoming your competition? A partnership would be great motivation to try and bring in as much work under the LLC. But if you start shafting people then they'll just keep the work and cut you out.",
"title": ""
},
{
"docid": "7fd6d379a23acdd8369d63e87fb51d0e",
"text": "You're not physically present in the US, you're not a US citizen, you're not a green card holder, and you don't have a business that is registered in the US - US laws do not apply to you. You're not in any way under the US jurisdiction. Effectively connected income is income effectively connected to your business in the US. You're not in the US, so there's nothing to effectively connect your income to. Quote from the link: You usually are considered to be engaged in a U.S. trade or business when you perform personal services in the United States. You ask: If I form an LLC or C corp am I liable for this withholding tax? If you form a legal entity in a US jurisdiction - then that entity becomes subjected to that jurisdiction. If you're physically present in the US - then ECI may become an issue, and you also may become a resident based on the length of your stay.",
"title": ""
},
{
"docid": "7a3f8ebf79930ff7c1b9ee7fc2544f09",
"text": "You'd have to file to be incorporated (in Canada at least). It's mostly done for tax purposes. You can't just go and call yourself an corporation without filing legal papers (and be approved) with the tax agency of your country. In my experience, it'd be with the CRA. The rules at least here, there's a bunch of leeway that mostly any business can be classed as an corporation if you see fit. Hope it helps!",
"title": ""
},
{
"docid": "b3f0ca1c55796d246ab3a301c04a4176",
"text": "More than likely you have signed an NDA with your employer with a non-compete clause within it. From what I have seen this clause would be in place for two years following the date you left your firm. So, leaving your firm and consulting as a 1099 for your current client is more than likely a violation of your NDA for 2 years or some period of time. With that being said, there is nothing keeping you from going off on your own as an independent and finding work, so long as that work isn't from one of the current clients of your firm. I am not a lawyer and everything above is what I have seen in my personal experience.",
"title": ""
},
{
"docid": "2ff2c8d04f80b637da2b51de86a1c16e",
"text": "First, determine the workload he will expect. Will you have to quit your other work, either for time or for competition? How much of your current business will be subsumed into his business, if any? Make sure to understand what he wants from you. If you make an agreement, set it in writing and set some clear expectations about what will happen to your business (e.g. it continues and is not part of your association with the client). Because he was a client for your current business, it can blur the lines. Second, if you join him, make sure there is a business entity. By working together for profit, you will have already formed a partnership for tax purposes. Best to get an entity, both for the legal protection and also for the clarity of law and accounting. LLCs are simplest for small ventures; C corps are useful if you have lots of early losses and owners that can't use them personally, or if you want to be properly formed for easy consumption by a strategic. Most VCs and super-angels prefer everybody be a straight C. Again, remember to define, as necessary, what you are contributing to be an owner and what you are retaining (your original business, which for simplicity may already be in an entity). As part of this process, make sure he defines the cap table and any outstanding loans. Auntie June and Cousin Steve might think their gifts to him were loans or equity purchases; best to clear this issue up early before there's any more money in it. Third, with regard to price, that is an intensely variable question. It matters what the cap table looks like, how early you are, how much work he's already done, how much work remains to be done, and how much it will pay off. Also, if you do it, expect to be diluted by other employees, angels, VCs, other investors, strategics, and so on. Luckily, more investors usually indicates a growing pie, so the dilution may not be at all painful. But it should still be on your horizon. You also need to consider your faith in your prospective partner's ability to run the business and to be a trustworthy partner (so you don't get Zuckerberg'd), and to market the business and the product to customers and investors. If you don't like the prospects, then opt for cash. If you like the business but want to hedge, ask for compensation plus equity. There are other tricks you could use to get out early, like forced redemption, but they probably wouldn't help either because it'd sour your relationship or the first VC or knowledgeable angel to come along will want you to relinquish that sort of right. It probably comes down to a basic question of your need for cash, his willingness to let you pursue outside work (hopefully high) and your appraisal of the business' prospects.",
"title": ""
},
{
"docid": "cf1c0c8f4ce07239858da167fbbcade1",
"text": "You can and are supposed to report self-employment income on Schedule C (or C-EZ if eligible, which a programmer likely is) even when the payer isn't required to give you 1099-MISC (or 1099-K for a payment network now). From there, after deducting permitted expenses, it flows to 1040 (for income tax) and Schedule SE (for self-employment tax). See https://www.irs.gov/individuals/self-employed for some basics and lots of useful links. If this income is large enough your tax on it will be more than $1000, you may need to make quarterly estimated payments (OR if you also have a 'day job' have that employer increase your withholding) to avoid an underpayment penalty. But if this is the first year you have significant self-employment income (or other taxable but unwithheld income like realized capital gains) and your economic/tax situation is otherwise unchanged -- i.e. you have the same (or more) payroll income with the same (or more) withholding -- then there is a 'safe harbor': if your withholding plus estimated payments this year is too low to pay this year's tax but it is enough to pay last year's tax you escape the penalty. (You still need to pay the tax due, of course, so keep the funds available for that.) At the end of the first year when you prepare your return you will see how the numbers work out and can more easily do a good estimate for the following year(s). A single-member LLC or 'S' corp is usually disregarded for tax purposes, although you can elect otherwise, while a (traditional) 'C' corp is more complicated and AIUI out-of-scope for this Stack; see https://www.irs.gov/businesses/small-businesses-self-employed/business-structures for more.",
"title": ""
},
{
"docid": "24b0b013a3385858eda59f1359a4f523",
"text": "You can't do what you would like to do, unless your business has another, unrelated investor or is willing to invest an equal amount of funds + .01 into a corporation which will employ you. You will then need to set up a self-directed IRA. Additionally, you will need a trustee to account for all the disbursements from your IRA.",
"title": ""
},
{
"docid": "1406ad7d12bc3a17399d0be238045b5b",
"text": "I am surprised no one has mentioned the two biggest things (in my opinion). Or I should say, the two biggest things to me. First, 1099 have to file quarterly self employment taxes. I do not know for certain but I have heard that often times you will end up paying more this way then even a W-2 employees. Second, an LLC allows you to deduct business expenses off the top prior to determining what you pay in taxes as pass-through income. With 1099 you pay the same taxes regardless of your business expenses unless they are specifically allowed as a 1099 contractor (which most are not I believe). So what you should really do is figure out the expense you incur as a result of doing your business and check with an accountant to see if those expenses would be deductible in an LLC and if it offsets a decent amount of your income to see if it would be worth it. But I have read a lot of books and listened to a lot of interviews about wealthy people and most deal in companies not contracts. Most would open a new business and add clients rather than dealing in 1099 contracts. Just my two cents... Good luck and much prosperity.",
"title": ""
},
{
"docid": "ef325af95e1dfafaa8396f9a31045429",
"text": "\"I've been in a similar situation before. While contracting, sometimes the recruiting agency would allow me to choose between being a W2 employee or invoicing them via Corp-2-Corp. I already had a company set up (S-Corp) but the considerations are similar. Typically the C2C rate was higher than the W2 rate, to account for the extra 7.65% FICA taxes and insurance. But there were a few times where the rate offered was identical, and I still choose C2C because it enabled me to deduct many of my business expenses that I wouldn't have otherwise been able to deduct. In my case the deductions turned out to be greater than the FICA savings. Your case is slightly different than mine though in that I already had the company set up so my company related costs were \"\"sunk\"\" as far as my decision was concerned. For you though, the yearly costs associated with running the business must be factored in. For example, suppose the following: Due to these expenses you need to make up $3413 in tax deductions due to the LLC. If your effective tax rate on the extra income is 30%, then your break even point is approximately $8K in deductions (.3*(x+3413)=3413 => x = $7963) So with those made up numbers, if you have at least $8K in legitimate additional business expenses then it would make sense to form an LLC. Otherwise you'd be better off as a W2. Other considerations:\"",
"title": ""
},
{
"docid": "2af033af3f8b981e4e7147ebc864cc28",
"text": "\"You probably don't need S-Corp. There's no difference between what you can deduct on your Schedule C and what you can deduct on 1120S, it will just cost you more money. Since you're gambling yourself, you don't need to worry about liability - but if you do, you should probably go LLC route, much cheaper and simpler. The \"\"reasonable salary\"\" trick to avoid FICA won't work. Don't even try. Schedule C for professional gamblers is a very accepted thing, nothing extraordinary about it.\"",
"title": ""
},
{
"docid": "7631499e373cae1204e353f7b36277e8",
"text": "Welcome to the wonderful but oft confusing world of self-employment. Your regular job will withhold income for you and give you a W2, which tells you and the government how much is withheld. At the end of the year uber will give you and the government a 1099-misc, which will tell you how much they paid you, but nothing will be withheld, which means you will owe the government some taxes. When it comes to taxes, you will file a 1040 (the big one, not a 1040EZ nor 1040A). In addition you will file a schedule C (self-employed income), where you will report the gross paid to you, deduct your expenses, and come up with your profit, which will be taxable. That profit goes into a line in the 1040. You need to file schedule SE. This says how much self-employment tax you will pay on your 1099 income, and it will be more than you expect. Self employment tax is SS/Medicare. There's a line for this on the 1040 as well. You can also deduct half of your self-employment tax on the 1040, there's a line for it. Now, you can pay quarterly taxes on your 1099 income by filing 1040-ES. That avoids a penalty (which usually isn't that large) for not withholding enough. As an alternative, you can have your regular W2 job withhold extra. As long as you don't owe a bunch at tax time, you won't be a fined. When you are self-employed your taxes aren't as simple. Sorry. You can either spend some time becoming an expert by studying the instructions for the 1040, pay for the expensive version of tax programs, or hire someone to do it for you. Self-employed taxes are painful, but take advantage of the upsides as well. You can start a solo 401(k) or SEP IRA, for example. Make sure you are careful to deduct every relevant business expense and keep good records in case you get audited.",
"title": ""
},
{
"docid": "f377bf8b7f5ca4193644635caed01974",
"text": "Firstly if you've formed a limited company you don't need to register as self-employed. You're an employee and shareholder of the company and your taxes will be handled that way. Registering as self-employed is only necessary if you're operating as a sole trader (i.e. without a company). Secondly you absolutely do want to get set-up correctly with HMRC as soon as possible, whether you're a company or a sole trader. Ignoring the legal question your worry about paying taxes when you have no income is groundless - if you're not making any money there won't be any tax to pay. Furthermore it seems likely that the business is currently losing money. Those losses, if correctly recorded, can be carried forward and offset against future profits so not only do you not have to pay tax now, but you can reduce the tax you pay later when the money does start rolling in.",
"title": ""
}
] |
fiqa
|
3dfd54eb831138d7e12b87b07d66632d
|
How can I estimate the value of private stock behind employee stock options?
|
[
{
"docid": "15f7e3886208561d239ceac550001b11",
"text": "\"Okay, I'm going to give you my opinion based on experience; not any technical understanding. The options - by themselves - are pretty meaningless in terms of determining their value. The business plan going forward, their growth expectations, the additional options to be authorized, the additional preferred stock offers they anticipate, even current estimated value of the company are some of the pieces of data you will be needing. I also want to say something cynical, like \"\"to hell with the stock options give me cold hard\"\" but that's just me. (My experience two-times so far has shown stock options to be worth very very little.)\"",
"title": ""
},
{
"docid": "98ec745c6a8e74d555e9e026298ed9a2",
"text": "It is difficult to value a private company. Most of the valuations is based on how one feels the idea would translate into revenue in some future time. The VC firms take into account various factors to determine the price, but more often then not, its their hunch. Even VC don't make money on all picks, very few picks turn out to be stars, most picks lose money they have invested. Few picks just return their money. So if you feel that the idea/product/brand/people are great and would someday make good money, invest into it. Else stay away.",
"title": ""
}
] |
[
{
"docid": "e5596aaa914b3cd07b025cc9086d4f7a",
"text": "\"An option is a financial instrument instrument that gives you the right, but not the obligation, to do some transaction in the future at a given price. An employee stock option is a kind of \"\"call option\"\" -- it gives you the right, but not the obligation, to buy the stock at a certain price (the \"\"exercise price\"\", usually set as the price of the stock when the option was granted). The idea is that you would \"\"exercise\"\" the option (buy the stock at the given price as provided by the option), if the value of the stock is higher than the exercise price, and not if it is lower. The option is gifted to you. But that does not mean you get any stock. If and when you choose to exercise the option, you would buy the stock with your own money. At what time you can exercise the option (and how many shares you can exercise at a given time) will be specified in the agreement. Usually, you can only exercise a particular share after it has \"\"vested\"\" (according to some vesting schedule), and you lose the ability to exercise after you no longer work for the company (plus perhaps a grace period), or after the option expires.\"",
"title": ""
},
{
"docid": "c2b46f3a5cbcb74f41b3770d96231ea4",
"text": "You could look up their old SEC filings before they were placed in conservatorship. Derive WACC from that. Comp to peer financials from the same timeframe; see how they compare. Assume some sort of size premium if you so desire. That might give you a picture of the business's cost of capital were it an independent entity. Since it's a GSE, you could make the case that its cost of capital is the rate on US treasury securities. In reality, it's current cost of capital is probably a mix of the two.",
"title": ""
},
{
"docid": "f245448cef4bd0cb4b082095362b7a41",
"text": "Your best bet is to just look at comparative balance sheets or contact the company itself. Otherwise, you will need access to a service like PrivCo to get data.",
"title": ""
},
{
"docid": "13d3ff4d6b707032209f25ea78e8e020",
"text": "Nobody here really answered your question. The custodian of the 401k determines what funds and investment options are available within that 401k. So if they're eliminating company stock as an option then they can absolutely make you sell out of it. You may be able to do an in service rollover and transfer your funds to an individual ira but that's not particularly common among 401k administrators. Aside from that I'd ask why do you want to hold company stock anyway? Generally I'd advise against this as its imposing a ton of risk on your financial future. If your company tanks you're out of a job, which sucks. But it sucks even more if your company tanks and your 401k loses a ton of value at the same time. Edit: I see you asked who benefits as well. It may just be a situation of no benefit at all. Perhaps the plan didn't have enough people investing in company stock to make the option cost effective. Maybe the administrator decided that allowing people to take on that amount of risk was not in their best interest(it's not). Could be a ton of reasons but it's unlikely the company did so out of greed. There isn't a lot of financial benefit for them there.",
"title": ""
},
{
"docid": "94ca522ac3e692fc40a81e334445cace",
"text": "\"Many companies (particularly tech companies like Atlassian) grant their employees \"\"share options\"\" as part of their compensation. A share option is the right to buy a share in the company at a \"\"strike price\"\" specified when the option is granted. Typically these \"\"vest\"\" after 1-4 years so long as the employee stays with the company. Once they do vest, the employee can exercise them by paying the strike price - typically they'd do that if the shares are now more valuable. The amount they pay to exercise the option goes to the company and will show up in the $2.3 million quoted in the question.\"",
"title": ""
},
{
"docid": "8389f755320da15a711c925902a2d0fd",
"text": "Not applicable. Or, at least totally unrealistic. Lots of assumptions about returns, no discussion of time frames, and no discussion of volatility. If it's a personal choice you wouldn't do it this way, plus there are other factors to consider. As far as the math of the question, you use a discount rate that allows you to account for alternatives, typically a RFR, but again, that doesn't apply to an individual quite in the same way since it's not a debt vs equity question.",
"title": ""
},
{
"docid": "f2bee9d464e259fa7b7b4558c1080986",
"text": "I'm assuming this was a cashless exercise because you had income show up on your w-2. When I had a similar situation, I did the following: If you made $50,000 in salary and $10,000 in stock options then your W-2 now says $60,000. You'll record that on your taxes just like it was regular income. You'll also get a form that talks about your stock sale. But remember, you bought and sold the stock within seconds. Your forms will probably look like this: Bought stock: $10,000 Sold stock: $10,000 + $50 commission Total profit (loss): ($50) From the Turbotax/IRS view point, you lost $50 on the sale of the stock because you paid the commission, but the buy and sell prices were identical or nearly identical.",
"title": ""
},
{
"docid": "dcbaac0fc87e4020f573ccdc19177f29",
"text": "The general rule with stock options is that it's best to wait until expiration to exercise them. The rationale depends on a few factors and there are exceptions. Reasons to wait: There would be cases to exercise early: Tax implications should be checked with a professional advisor specific to your situation. In the employee stock option plans that I have personally seen, you get regular income tax assessed between exercise price and current price at the time you exercise. Your tax basis is then set to the current price. You also pay capital gains tax when you eventually sell, which will be long or short term based on the time that you held the stock. (The time that you held the options does not count.) I believe that other plans may be set up differently.",
"title": ""
},
{
"docid": "8e99f14ffed8f409ea84518036cfbd1d",
"text": "You have only sold 200 shares for $4.75 from those bought for $3.15. So your profit on those 200 shares is $1.60 per share or $320 or 51%. From that you have 110 shares left that cost you $3.15 and 277 shares that cost you $3.54. So the total cost of your remaining shares is $1,327.08 (110 x $3.15 + 277 x $3.54). So your remaining shares have a average cost of $3.429 per share ($1,327.08/387). We don't know what the current share price is as you haven't provided it, nor do we know what the company is, so lets say that the current price is $5 (or that you sell the remaining 387 shares for $5 per share). Then the profit on these 387 shares would be $1.571 per share or $607.92 or 46%. Your total profit would then be $320 + $ 607.92 = $927.92 or 47% (note that this profit neglects any brokerage or other fees, as you have not provided any). Edit due to new info. provided in question With the current share price at $6.06 then the profit on these 387 shares would be $2.631 per share or $1018.20 or 77%. Your total profit would then be $320 + $1018.20 = $1338.20 or 75% (note that this profit neglects any brokerage or other fees, as you have not provided any).",
"title": ""
},
{
"docid": "6102ca35a6adf578632c2b0f37dadc2f",
"text": "\"Below I will try to explain two most common Binomial Option Pricing Models (BOPM) used. First of all, BOPM splits time to expiry into N equal sub-periods and assumes that in each period the underlying security price may rise or fall by a known proportion, so the value of an option in any sub-period is a function of its possible values in the following sub period. Therefore the current value of an option is found by working backwards from expiry date through sub-periods to current time. There is not enough information in the question from your textbook so we may assume that what you are asked to do is to find a value of a call option using just a Single Period BOPM. Here are two ways of doing this: First of all let's summarize your information: Current Share Price (Vs) = $70 Strike or exercise price (X) = $60 Risk-free rate (r) = 5.5% or 0.055 Time to maturity (t) = 12 months Downward movement in share price for the period (d) = $65 / $70 = 0.928571429 Upward movement in share price for the period (u) = 1/d = 1/0.928571429 = 1.076923077 \"\"u\"\" can be translated to $ multiplying by Vs => 1.076923077 * $70 = $75.38 which is the maximum probable share price in 12 months time. If you need more clarification here - the minimum and maximum future share prices are calculated from stocks past volatility which is a measure of risk. But because your textbook question does not seem to be asking this - you probably don't have to bother too much about it yet. Intrinsic Value: Just in case someone reading this is unclear - the Value of an option on maturity is the difference between the exercise (strike) price and the value of a share at the time of the option maturity. This is also called an intrinsic value. Note that American Option can be exercised prior to it's maturity in this case the intrinsic value it simply the diference between strike price and the underlying share price at the time of an exercise. But the Value of an option at period 0 (also called option price) is a price you would normally pay in order to buy it. So, say, with a strike of $60 and Share Price of $70 the intrinsic value is $10, whereas if Share Price was $50 the intrinsic value would be $0. The option price or the value of a call option in both cases would be fixed. So we also need to find intrinsic option values when price falls to the lowest probable and rises to the maximum probable (Vcd and Vcu respectively) (Vcd) = $65-$60 = $5 (remember if Strike was $70 then Vcd would be $0 because nobody would exercise an option that is out of the money) (Vcu) = $75.38-$60 = $15.38 1. Setting up a hedge ratio: h = Vs*(u-d)/(Vcu-Vcd) h = 70*(1.076923077-0.928571429)/(15.38-5) = 1 That means we have to write (sell) 1 option for each share purchased in order to hedge the risks. You can make a simple calculation to check this, but I'm not going to go into too much detail here as the equestion is not about hedging. Because this position is risk-free in equilibrium it should pay a risk-free rate (5.5%). Then, the formula to price an option (Vc) using the hedging approach is: (Vs-hVc)(e^(rt))=(Vsu-hVcu) Where (Vc) is the value of the call option, (h) is the hedge ratio, (Vs) - Current Share Price, (Vsu) - highest probable share price, (r) - risk-free rate, (t) - time in years, (Vcu) - value of a call option on maturity at the highest probable share price. Therefore solving for (Vc): (70-1*Vc)(e^(0.055*(12/12))) = (75.38-1*15.38) => (70-Vc)*1.056540615 = 60 => 70-Vc = 60/1.056540615 => Vc = 70 - (60/1.056540615) Which is similar to the formula given in your textbook, so I must assume that using 1+r would be simply a very close approximation of the formula above. Then it is easy to find that Vc = 13.2108911402 ~ $13.21 2. Risk-neutral valuation: Another way to calculate (Vc) is using a risk-neutral approach. We first introduce a variable (p) which is a risk-neutral probability of an increase in share price. p = (e^(r*t)-d)/(u-d) so in your case: p = (1.056540615-0.928571429)/(1.076923077-0.928571429) = 0.862607107 Therefore using (p) the (Vc) would be equal: Vc = [pVcu+(1-p)Vcd]/(e^(rt)) => Vc = [(0.862607107*15.38)+(0.137392893*5)]/1.056540615 => Vc = 13.2071229185 ~ $13.21 As you can see it is very close to the hedging approach. I hope this answers your questions. Also bear in mind that there is much more to the option pricing than this. The most important topics to cover are: Multi-period BOPM Accounting for Dividends Black-Scholes-Merton Option Pricing Model\"",
"title": ""
},
{
"docid": "4f214c7896e53e4033f83168ea3ed4c4",
"text": "The value of a share depends on the value of the company, which involves a lot more than the value of its assets -- it requires making decisions about what you think will happen to the company in the future. That's inherently not something that can be reduced to a single formula, at least not unless you can figure out how to represent your guesses and your confidence in them in the formula ... and even if you could do all that it would only say what you think the stock is worth; others will be using different numbers and legitimately get different results. Disagreement over value is what the stock market is all about, I'm afraid.",
"title": ""
},
{
"docid": "d938cfa19603cd76c60ccc1bc2fa74d2",
"text": "I was looking for ideas on what the usual figures are in such positions. Something like market value, or other terms such as changing slab percentages in compensation. Not sure what the best practices are in this situation. Not sure what you are referring to.",
"title": ""
},
{
"docid": "f6f1061862d29930fecfddd11df34c74",
"text": "I've had stock options at two different jobs. If you are not getting a significant ownership stake, but rather just a portion of options as incentive to come work there, I would value them at $0. If you get the same salary and benefits, but no stock options at another company and you like the other company better, I'd go to the other company. I say this because there are so many legal changes that seem to take value from you that you might as well not consider the options in your debate. That being said, the most important question I'd want to know is what incentive does the company have to going public or getting bought? If the company is majority owned by investors, the stock options are likely to be worth something if you wait long enough. You are essentially following someone else's bet. If the company is owned by 2 or 3 individuals who want to make lots of money, they may or may not decide to sell or go public.",
"title": ""
},
{
"docid": "e0d17415eded90e62972b593b0bcd960",
"text": "\"Your employer should send you a statement with this information. If they didn't, you should still be able to find it through E*Trade. Navigate to: Trading & Portfolios>Portfolios. Select the stock plan account. Under \"\"Restricted Stock\"\", you should see a list of your grants. If you click on the grant in question, you should see a breakdown of how many shares were vested and released by date. It will also tell you the cost basis per share and the amount of taxes withheld. You calculate your cost basis by multiplying the number of released shares by the cost basis per share. You can ignore the ordinary income tax and taxes withheld since they will already have been included on your W2 earnings and withholdings. Really all you need to do is report the capital gain or loss from the cost basis (which if you sold right away will be rather small).\"",
"title": ""
},
{
"docid": "961b808e8f5aff1ccc271dcee4ea0080",
"text": "This is basically a math problem. It depends on the pension benefits, the lump sum, and the chance that the company doesn't honor its pension plan. If you're willing to share the first 2 and the company name, it's possible to roughly figure out the odds of the third if your company has bonds or CDS. Maybe some bored analyst would do it for you here, or you could probably hire a financial advisor for an hour or 2 to figure it out.",
"title": ""
}
] |
fiqa
|
345dc4200dd11a05f00a6a5d13f60218
|
Filing 1040-NR when I have been outside the US the entire year?
|
[
{
"docid": "b4631de9bda8f2ebb39cce887c51539a",
"text": "Yes, you can still file a 1040nr. You are a nonresident alien and were: engaged in a trade or business in the United States Normally, assuming your withholding was correct, you would get a minimal amount back. Income earned in the US is definitely Effectively Connected Income and is taxed at the graduated rates that apply to U.S. citizens and resident aliens. However, there is a tax treaty between US and India, and it suggests that you would be taxed on the entirety of the income by India. This suggests to me that you would get everything that was withheld back.",
"title": ""
}
] |
[
{
"docid": "1e9be9267b7d796c28f93fb7647721d8",
"text": "\"1040 or 1040NR depends on whether you are a resident alien or nonresident alien -- 1040/1040A/1040EZ for resident aliens, and 1040NR/1040NR-EZ for nonresident aliens. Determining whether you are a resident is somewhat complex, and there is not enough information in your question to determine it. Publication 519 is the guide for taxes for aliens. (It hasn't been updated for 2014 yet, so mentally shift all the years in the publication up by one year when you read it.) Since you don't have a green card, whether you are a resident is determined by the Substantial Presence Test. The test says that if (the number of days you were in the U.S. in 2014) + 1/3 of (the number of days you were in the U.S. in 2013) + 1/6 of (the number of days you were in the U.S. in 2012) >= 183 days (half a year), then you are a resident alien for 2014. However, there are exceptions to the test. Days that you are an \"\"exempt individual\"\" are not counted toward the Substantial Presence Test. And \"\"exempt individuals\"\" include international students, trainees, teachers, etc. However, there are exceptions to the exceptions. Students are not \"\"exempt individuals\"\" for a year if they have been exempt individuals for any part of 5 previous calendar years. (Different exceptions apply for teachers and trainees.) So whether you are an \"\"exempt individual\"\" for one year inductively depends on whether you have been an \"\"exempt individual\"\" in previous years. Long story short, if before you came to the U.S. as an F-1 student, you haven't been in the U.S. on F-1 or J-1 status, then you will be a nonresident alien for the first 5 calendar years (calendar year = year with a number, not 365 days) that you've been on F-1. We will assume this is the case below. So if you started your F-1 in 2009 (any time during that year) or before, then you would have already been an exempt individual for 5 calendar years (e.g. if you came in 2009, then 2009, 2010, 2011, 2012, 2013 are your 5 years), so you would not be an exempt individual for any part of 2014. Since you were present in the U.S. for most of 2014, you meet the Substantial Presence Test for 2014, and you are a resident alien for all of 2014. If, on the other hand, you started your F-1 in 2010 (any time during that year) or after, then you would still be an exempt individual for the part of 2014 that you were on F-1 status (i.e. prior to October 2014. OPT is F-1.). Days in 2014 in H1b status (3 months) are not enough for you to satisfy the Substantial Presence Test for 2014, so you would be a nonresident alien for all of 2014. If you fall into the latter case (nonresident alien), there are some alternative choices you have. If you were in the U.S. for most of those last 3 months, then you are eligible to choose to use the \"\"First-Year Choice\"\". I will not go into the steps to use this choice, but the result is that it makes you dual-status for 2014 -- nonresident until October, and resident since October. If you are single, then making this choice pretty much gives you no benefit. However, if you are married, then making this choice allows you to subsequently make another choice to become a resident for all of 2014. Being resident gives you some benefits, like being able to file as Married Filing Jointly (nonresidents can only file separately), being able to use the Standard Deduction, being able to use many other deductions and credits, etc. Though, depending on what country you're from, it may affect your treaty benefits, so check that before you consider it.\"",
"title": ""
},
{
"docid": "fd20e7a676ce12fcf7289300c994bbbc",
"text": "I don't have any specific situation on the situation in Austria, but in general there are a few things that you should keep in mind. First of all, the official website of the Austrian tax authorities appears to be this one: https://www.bmf.gv.at/steuern/startseite-steuern.html. There is an English page there, but it is mainly aimed at international businesses. The part about tax treaties may be relevant, though. The general procedure is outlined here: https://www.bmf.gv.at/steuern/startseite-steuern.html. Like I said in my comment, most information is likely only available in German. I would strongly advise to ask help from someone who speaks German and is familiar with the tax system in Austria. The main thing that you would have to do first is to check of which country you are a resident for tax purposes. This is usually the country in which you lived for more than 183 days in the past year. If you moved during the year, and had income from more than one country, you may have to file tax returns in both countries. There are tax treaties between Austria and the UK (and most other countries), so you would have to check those treaties to find out what gets taxed where. In principle you get taxed only once, but usually you would have to declare all income. The last important thing is of course to make sure you submit before the relevant deadlines.",
"title": ""
},
{
"docid": "e39a1801cbfa777e2fda516c1822da31",
"text": "\"It's not quite as bad as the comments indicate. Form 1040ES has been available since January (and IME has been similarly for all past years). It mostly uses the prior year (currently 2016) as the basis, but it does have the updated (2017) figures for items that are automatically adjusted for inflation: bracket points (and thus filing threshhold), standard deductions, Social Security cap, and maybe another one or two I missed. The forms making up the actual return cannot be prepared very far in advance because, as commented, Congress frequently makes changes to tax law well after the year begins, and in some cases right up to Dec. 31. The IRS must start preparing forms and pubs -- and equally important, setting the specifications for software providers like Intuit (TurboTax) and H&RBlock -- several months ahead in order to not seriously delay filing season, and with it refunds, which nearly everyone in the country considers (at least publicly) to be worse than World War Three and the destruction of the Earth by rogue asteroids. I have 1040 series from the last 4 years still on my computer, and the download dates mostly range from late September to mid January. Although one outlier shows the range of possibility: 2013 form 1040 and Schedule A were tweaked in April 2014 because Congress passed a law allowing charitable contributions for Typhoon Haiyan to be deducted in the prior year. Substantive, but relatively minor, changes happen every year, including many that keep recurring like the special (pre-AGI) teacher supplies deduction (\"\"will they or won't they?\"\"), section 179 expensing (changes slightly almost every year), and formerly the IRA-direct-to-charity option (finally made permanent last year). As commented, the current Congress and President were elected on a platform with tax reform as an important element, and they are talking even more intensely than before about doing it, although whether they will actually do anything this year is still uncertain. However, if major reform is done it will almost certainly apply to future years only, and likely only start after a lag of some months to a year. They know it causes chaos for businesses and households alike to upend without advance warning the assumptions built in to current budgets and plans -- and IME as a political matter something that is enacted now and effective fairly soon but not now is just as good (but I think that part is offtopic).\"",
"title": ""
},
{
"docid": "7ff48ab59c694db453df646f2d03e011",
"text": "\"If you're \"\"living off the land\"\" and make no money, then you don't have to file. Though you might be able to actually make money through credits and the like if you do file. If you've lost more than you've made, then you'll probably need to file since someone will have needed to report that they paid you (W-2 or 1099-MISC). If the IRS receives a form saying that you made X and you don't file, they aren't going to just take your word for it that you lost more than you made, right? That, and if you want a refund, you'll almost certainly need to file to get it.\"",
"title": ""
},
{
"docid": "f9589a3228d51c680546c138e8a52d9b",
"text": "Do I pay tax to the US and then also pay it in India for my income, or does my American partner, who holds 15% of the monthly income, pay tax in the US for his income? Of course you do, what kind of question is this? You have income earned in the US by a US entity, and the entity is taxed. Since LLC is a disregarded entity - the tax shifts to you personally. You should file form 1040NR. You should also talk to a tax professional who's proficient in the Indo-US tax treaty, since it may affect your situation.",
"title": ""
},
{
"docid": "d402dc885d5d6ef6afda8b49de969880",
"text": "You're doing business in the US and derive income from the US, so I'd say that yes, you should file a non-resident tax return in the US. And in Connecticut, as well, since that's where you're conducting business (via your domestic LLC registered there). Since you paid more than $600 to your contractor, you're probably also supposed to send a 1099 to him on that account on behalf of your LLC (which is you, essentially, if you're the only member).",
"title": ""
},
{
"docid": "ffe42a6e748797d0223dd014d46a1239",
"text": "As you have indicated, the 1042-S reflects no income or withholding. As such, you are not required to file a US tax return unless you have other income from the US. Gains on stocks are not reported until realized upon sale. FYI, your activity does not fit the requirements of being engaged in a trade or business activity. While the definition is documented in several places of the Code, I have attached Publication 519 which most accurately represents the application to your situation as you have described it. https://www.irs.gov/publications/p519/ch04.html#en_US_2016_publink1000222308",
"title": ""
},
{
"docid": "0ea257e050030729ba1e9a22e16e3923",
"text": "\"I've been highly compensated for a while now, and I have never used a tax professional. My past complications include the year that my company was bought by a VC firm and my stock options and stock held were bought out to the tune of 5x my salary. And now I have two kids in college, with scholarships, and paying the remainder out of 529 accounts. Usually, I don't even use tax software. My typical method is to use the online software -- like turbotax online -- and let it figure out where I am. Then I use the \"\"Free File Fillable forms\"\" online to actually complete the process. Search for \"\"Free File Fillable Forms\"\" -- it's not the same as using turbotax or TaxAct for free. My suggestion to you: download the PDF form of 1040EZ and 1040A from the IRS. Print the EZ, and fill it out. This will give you a better feel for what exactly is going on. With your income, I don't think you can file the EZ, but it's a good way to get your feet wet. The way income taxes work here in the US: According to the IRS, the Personal Exemption this year is worth $4,050, and the Standard Deduction $6,300, assuming you're single. Lets assume that your salary will be in fact 75,000, and you don't pay for any benefits, but you do make a 401k contribution of 15% of your salary. Then your W-2 at the end of the year should tell you to put 63,750 in a particular box on your 1040 form. (63,750 is 85% of 75,000). Lets then assume 63,750 is your AGI after other additions and subtractions. 63,750 - 4,050 - 6,300 == 53,400. The federal Tax system is graduated, meaning there are different ranges (brackets) with different percentages. The term tax people use for taxable income of 53,400 is \"\"marginal tax rate\"\"...so the last dollar they tax at 25%. Other dollars less. According to the IRS, if you're single, then on 53,400, you pay \"\"$6,897.50 plus 25% of the amount over $50,400\"\" Or 6897.50 + 750, or 7647.50. Note this is only Federal Income Tax. You will also be paying Social Security and Medicare payroll Tax. And I'm guessing you'll also be paying colorado state income tax. Each state has its own forms and methods for figuring out the taxes and stuff. By the way, when you start, you'll fill out a \"\"W-4\"\" form to \"\"help\"\" you figure out how much to withhold from every paycheck. (I find the W-4 is not helpful at all). Your company will withhold from your paycheck some mysterious amount, and the process of filling out your 1040A or 1040EZ or whatever will be, likely, to get the over-withheld amount back.\"",
"title": ""
},
{
"docid": "84d4f83c99c529b4aed1b5664848b939",
"text": "\"When I was in this situation, I always did Married Filing Separately. In the space for spouse you just write \"\"non resident alien\"\". I'm assuming you don't make more than the Foreign Earned Income exclusion (about $100k), so the fact that you don't qualify for certain exemptions is probably irrelevant for you. As a side note, now that you are married you have \"\"a financial interest in\"\" all her bank accounts so if her and your foreign bank accounts had an aggregate value of over $10k at any point in 2015 you have until June 30th to file an FBAR, listing both her and your accounts. If you have a decent amount of assets you might need to fill out form 8938 with your tax return too. Here is a link with the reporting thresholds. https://www.irs.gov/Businesses/Corporations/Summary-of-FATCA-Reporting-for-U.S.-Taxpayers\"",
"title": ""
},
{
"docid": "b99725932ea29bc40671448a4319ab71",
"text": "IANAL, I am married to someone in your situation. As a US citizen age 26 who has not had any contact with the IRS, you should most definitely be worried... As a US citizen, you are (and always have been) required to file a US tax return and pay any tax on all income, no matter where earned, and no matter where you reside. There are often (but not always) agreements between governments to reduce double taxation. The US rule as to whether a particular type of income is taxable will prevail. As a US citizen with financial accounts (chequing, saving, investment, etc.) above a minimum balance, abroad, you are required to report information, including the amounts in the account, to the US government annually (Look up FBAR). Failure to file these forms carries harsh penalties. A recent law (FATCA) requires foreign financial institutions to report information on their US citizen clients to the US, irrespective of any local banking privacy laws. It's possible that your application triggered these reporting requirements. You will not be allowed to renounce your US citizenship until you have paid all past US taxes and penalties. Good new: you are eligible in ten years or so to run for President. Don't believe any of this, or that nothing has been missed; you must consult with a local tax expert specializing in US/UK tax laws.",
"title": ""
},
{
"docid": "819197acdc0e88afc44350dcccd999eb",
"text": "\"I believe you have to file a tax return, because state tax refund is considered income effectively connected with US trade or business, and the 1040NR instructions section \"\"Who Must File\"\" includes people who were engaged in trade or business in the US and had a gross income. You won't end up having to pay any taxes as the income is less than your personal exemption of $4050.\"",
"title": ""
},
{
"docid": "9532e3944d518f5fadec4985faa3d889",
"text": "You're most likely required to file in both for 2013 - since you've lived in both. From 2014 and on you're definitely a NY resident (since you're renting a place there and live there), and you may very well continue being NJ resident (since you're essentially continue being domiciled there). I suggest talking to a EA/CPA licensed in NY and NJ to try and see what you can do to avoid being resident in both the states, or see if it is at all an issue other than filing everything double.",
"title": ""
},
{
"docid": "e11cdeaad788b7bd62e45704991b7ad2",
"text": "Plenty of retired people do stay in the US for longer than 60 days and don't pay taxes. In this IRS document 60 days stay appears to be the test for having a 'substantial presence' in the US, which is part of the test for determining residency. However the following is also written: Even if you meet the substantial presence test, you can be treated as a nonresident alien if you are present in the United States for fewer than 183 days during the current calendar year, you maintain a tax home in a foreign country during the year, and you have a closer connection to that country than to the United States. In other words, if your property in the US is not your main one, you pay tax in another country, and you stay there less than half the year, you should be treated as a non-resident (I am not a lawyer and this is not advice). This IRS webpage describes the tax situation of nonresident aliens. As I understand it, if you are not engaged in any kind of business in the US and have no income from US sources then you do not have to file a tax return. You should also look into the subject of double tax agreements. If your home country has one, and you pay taxes there, you probably won't need to pay extra tax to the US. But again, don't take my word for it.",
"title": ""
},
{
"docid": "79702816dfe3554f3eae54d04ca87ae3",
"text": "I suggest you talk to a New York-licensed tax adviser (EA or NY-licensed CPA). New York is very aggressive when it comes to residency determination, and given your facts and circumstances you may end up being considered NY resident despite relocating to Florida. If you maintain a studio in NY, I'd say 99% chance is that you remain NY resident for the whole year (but verify with a professional).",
"title": ""
},
{
"docid": "f431551f93c52c2a7b9bb42ffb59e679",
"text": "Tax liability in US: You would need to determine if you are a resident alien or non resident alien. Resident alien are taxed normally as per US citizens. For the annual remuneration you have quoted it would be in the range of 25%. Refer http://www.moneychimp.com/features/tax_brackets.htm To determine if you are resident alien or non resident alien, you need to be present for certain period in US. There is also an exemption even if you meet this you can still be treated as non resident alien if your tax home is outside US [India in this case] Refer to the link for details to determine your category, the durations are for number of days in financial year, hence it matters when you are in US and the exact durations. http://www.irs.gov/taxtopics/tc851.html Also note that if you are assessed as resident alien, even the income from India will be taxed in US unless you declare there is no income in India. Tax liability in India: The tax liability in India would be depending on your NRI status. This again is tied to the financial year and the number of days you are in country. While the year you are going out of India you need to be away for atleast 183 days for you be considred are NRI. So if you are treated as Indian resident, you would have to pay tax in India on entire income. In the worst case, depending on the period you travel and the dates you travel, you could get classified as citizen in US as well as India and have to pay tax at both places. India and US do not have a dual tax avoidance treaty for individuals. Its there for certain category like small business and certain professions like teacher, research etc.",
"title": ""
}
] |
fiqa
|
1020716aaaec32888344facc7b371987
|
Is buying a lottery ticket considered an investment?
|
[
{
"docid": "a74ccfd8ffa26a2638753a76c7d37c52",
"text": "There is a clear difference between investing and gambling. When you invest, you are purchasing an asset that has value. It is purchased in the hopes that the asset will either increase in value or generate income. This definition holds true whether you are investing in shares of stock, in real estate, or in a comic book collection. You can also purchase debt: if you loan money, you own debt that will (hopefully) be repaid and generate income. Gambling is playing a game for chance. When you gamble, you have not purchased an asset; you have only paid to participate in a game. Some games have a degree of skill (blackjack, poker), others are pure chance (slot machine). In most gambling games, the odds are against the player and in favor of the one running the game. Lottery tickets, without a doubt, are gambling. There is a good article on Investopedia that discusses the difference between investing and gambling in more detail. One thing that this article discusses is the house edge, or the advantage that the people running a gambling game have over the players. With most casino games, the house has an advantage of between 1 and 15% over the players. With a typical lottery, the house edge is 50%. To address some of the points made by the OP's recent edit and in the comments: I do not think the definitions of investment and gambling need to be dependent on expected value. There can be bad investments, where the odds of a good result are low. Similarly, there could be gambling games where the odds are in the player's favor, either due to the skill of the player or through some quirk of the game; it's still gambling. Investing is purchasing an asset; gambling is a game of chance. I do not consider a lottery ticket an asset. When you buy a lottery ticket, you are just paying a fee to participate in a game. It is the same as putting a coin in a slot machine. The fact that you are given a piece of paper and made to wait a few days for the result do not change this. Assets have inherent value. They might be valuable because of their ability to generate income (stocks, bonds, debt), their utility (precious metals, commodities, real estate), or their desirability as a thing of beauty (collectibles), for example. A lottery ticket, however, is only an element of a game. It has no value other than in the game.",
"title": ""
},
{
"docid": "81274e1b77476085f38c34e0060682d1",
"text": "\"This question feels like an EL&U question to me, and so I will treat it as one. Investment, noun form of to invest, originally from the Latin investire, meaning to clothe, means: [T]o commit (money) in order to earn a financial return Merriam-Webster Online Dictionary, Invest, vb. tr., definition 1 As such, when a person commits money with the purpose of earning a financial return, they are investing. Playing the lottery, when done so for the purpose of financial return, would fall under this definition - even if it's a poor choice. Gambling, verb tense of to gamble, likely originally from the word gamen, meaning to play, means: a : to play a game for money or property b : to bet on an uncertain outcome Merriam-Webster Online Dictionary, Gamble, vb. itr., definition 1 Playing the lottery is clearly gambling (as a lottery is a game, by definition). The second definition could well include investing in the stock market, particularly certain kinds of investments (derivatives, currency speculation, for example). Aside from the definitions, however, normal usage clearly favors investment to be something with an expectation of positive return, while gambling is taking a risk without that expectation (rather with the hope of positive return). Legally, as well, playing the lottery is not something that is considered investment (so it is taxed differently). However, the question was \"\"Can\"\", and by definition, clearly it can be (assuming you are not asking legally).\"",
"title": ""
},
{
"docid": "aeb64b07561075ceb2b069672dc49c04",
"text": "From a mathematical expected-value standpoint, there is no difference between gambling (e.g. buying a lottery ticket) and investing (e.g. buying a share of stock). The former probably has negative expected value while the latter probably has positive expected value, but that is not a distinction to include in a definition (else every company that gives a bad quarterly earnings report suddenly changes categories). However, investment professionals have a vested interest in claiming there is a difference; that justifies them charging fees to steer you into the right investment. Consequently, hair-splitting ideas like the motive behind a purchase are introduced. The classification of an item to be purchased should not depend on the mental state of its purchaser. Depending on the situation, it may be right to engage in negative EV behavior. For example, if you have $1000 and need $2000 by next week or else you can't have an operation and you will die (and you can't find anyone to give you a loan). Your optimal strategy is to gamble your $1000, at the best odds you can get, with a possible outcome of $2000. So even if you only have a 1/3 chance of winning and getting that operation, it's still the right bet if you can't find a better one.",
"title": ""
},
{
"docid": "7e1a614a6c1eba9e5fe5b6d85ad36831",
"text": "\"Why must terms must be mutually exclusive? This (false) dichotomy is what seems to cause the most debate. It is the SINGLE EVENT OUTCOME that defines gambling. Gambling will involve an aleatory contract. That is, the outcome is specifically tied to a single event that determines profit/loss. This could be the outcome of a race or the roll of a dice, but should involve chance. This is why gambling is often in the context of a game, but I would make the argument that some investment tools fall into this category - The price of a stock at a certain date, for example. This may also be called \"\"betting\"\", which opens up a whole other discussion. Investing has no such implication, and as such it is the broader term. Investing is to put something (money) to work to return a profit. Some forms of gambling could fall under this umbrella. Some would say that is a \"\"bad investment\"\" and even if they are right, it may still be the desire and intent of the investor to make a profit. Not all gambling falls under investing. You can gamble for pleasure. The profit/loss of most investments are not contractually tied to a specific event or outcome (e.g. the price of a stock over 10 years is the result of many events affecting its market value). Such an investment would not be considered gambling.\"",
"title": ""
},
{
"docid": "943130ce93b4e51ffd1dd1b79a500bb6",
"text": "\"logically, yes. legally, no. any reasonable definition of an \"\"investment\"\" must include some types of gambling and insurance. lottery tickets specifically are really crappy high risk/high return investment. obviously most people try to avoid investments with a negative average expected future value, but from a purely semantic perspective anything with a potential future value is an investment. conversely, anyone with a gambling problem should not pretend they are not gambling when making focused investments in high volatility stock options. that said, the irs taxes gains and losses differently depending on whether they are classified as \"\"gambling\"\", or just \"\"crappy investing\"\". so you will not be able to deduct your gambling losses from your earned income (unlike investment losses which can be deducted up to 3k$ per year).\"",
"title": ""
},
{
"docid": "1f175d50b874cfd98fd91db1fb224437",
"text": "\"I am reminded of a dozen year old dialog. I asked my 6 year old, \"\"If we call a tail a leg, how many legs does a dog have?\"\" She replied, \"\"Four, you can call it anything you want, but the dog still has four legs.\"\" Early on in my marriage, my wife was heading out to the mall, and remarked that she was \"\"going to invest in a new pair of shoes.\"\" I explained to her that while I was happy she would have new shoes to wear, words have meaning, and unless she was going to buy the ruby red slippers Dorothy wore in the Wizard of Oz, or Elvis' Blue Suede Shoes, her's were not expected to rise in value and weren't an investment. Some discussion followed, and we agreed even the treadmill, which is now 20 years old, was not an 'investment' despite the fact that it saved us more than its cost in a combined 40 years of gym memberships we did not buy. In the end, no one who is financially savvy calls a lottery ticket an investment, and few who buy them acknowledge that it's simply throwing money away.\"",
"title": ""
},
{
"docid": "cf558c2e2343e30252737004eaaee0fe",
"text": "\"Although this has been touched upon in comments, I think the following line from the currently accepted answer shows the biggest issue: There is a clear difference between investing and gambling. The reality is that the difference isn't that clear at all. Tens of comments have been written arguing in both directions and looking around the internet entire essays have been written arguing both positions. The underlying emotion that seems to shape this discussion primarily is whether investing (especially in the stock market) is a form of gambling. People who do invest in this way tend to get relatively emotional whenever someone argues that this is a form of gambling, as gambling is considered a negative thing. The simple reality of human communication is that words can be ambiguous, and the way investors will use the words 'investments' and 'gambles' will differ from the way it is used by gamblers, and once again different from the way it's commonly used. What I definitely think is made clear by all the different discussions however is that there is no single distinctive trait that allows us to differentiate investing and gambling. The result of this is that when you take dictionary definitions for both terms you will likely end up including lottery tickets as a valid form of investment. That still however leaves us with a situation where we have two terms - with a strong overlap - which have a distinctive meaning in communication and the original question whether buying lottery tickets is an investment. Over on investorguide.com there is an absolutely amazing strongly recommended essay which explores countless of different traits in search of a difference between investing and gambling, and they came up with the following two definitions: Investing: \"\"Any activity in which money is put at risk for the purpose of making a profit, and which is characterized by some or most of the following (in approximately descending order of importance): sufficient research has been conducted; the odds are favorable; the behavior is risk-averse; a systematic approach is being taken; emotions such as greed and fear play no role; the activity is ongoing and done as part of a long-term plan; the activity is not motivated solely by entertainment or compulsion; ownership of something tangible is involved; a net positive economic effect results.\"\" Gambling: \"\"Any activity in which money is put at risk for the purpose of making a profit, and which is characterized by some or most of the following (in approximately descending order of importance): little or no research has been conducted; the odds are unfavorable; the behavior is risk-seeking; an unsystematic approach is being taken; emotions such as greed and fear play a role; the activity is a discrete event or series of discrete events not done as part of a long-term plan; the activity is significantly motivated by entertainment or compulsion; ownership of something tangible is not involved; no net economic effect results.\"\" The very interesting thing about those definitions is that they capture very well the way those terms are used by most people, and they even acknowledge that a lot of 'investors' are gambling, and that a few gamblers are 'investing' (read the essay for more on that). And this fits well with the way those two concepts are understood by the public. So in those definitions normally buying a lottery ticket would indeed not be an investment, but if we take for example Vadim's operation example If you have $1000 and need $2000 by next week or else you can't have an operation and you will die (and you can't find anyone to give you a loan). Your optimal strategy is to gamble your $1000, at the best odds you can get, with a possible outcome of $2000. So even if you only have a 1/3 chance of winning and getting that operation, it's still the right bet if you can't find a better one. this can suddenly change the perception and turn 'gambling' into 'high-risk investing'.\"",
"title": ""
},
{
"docid": "b361912b65ba982ea0d1c4dfda2b2f4b",
"text": "\"Buying lotteries tickets makes you the fish not the fisher. Just like casinos or drugs. If you like, you can call buying tickets an \"\"investment\"\" or better yet, a donation in the lottery's owner wealth. No real investor is dumb enough to get into a business where 99.9999999% of the \"\"investors\"\" lose EVERYTHING they invested. Besides, a real investments means BIG money. You can call it so if you are ready to sell your house and buy tickets of all those money, but still, the risk is so high that it's not worth it.\"",
"title": ""
},
{
"docid": "0f7e3a33499478e63a156d3575cb9e11",
"text": "Something that is missing from the discussion is the actual market for the lottery ticket -- if a market existed for the tickets themselves, that would make this far more obvious, but since there isn't one; buying a single ticket gives different Expected Values, but since the ticket has a defined 'game' instance, a single ticket is a gamble. Playing the lottery in the long run could be part of a high risk investment portfolio. [edited for clarity]",
"title": ""
}
] |
[
{
"docid": "2091cd62b5cbca7826df3753f9b1e77a",
"text": "\"Situation #1: I keep playing, and eventually earn 1000 PED. I withdraw this. Will I get taxed? If so, by how much? This is probably considered an \"\"award\"\", so whatever your country taxes for lottery/gambling winnings would be applicable. If there's no specific taxation on this kinds of income - then it is ordinary income. Situation #2: I deposit $5000, play the game, lose some money and withdraw PED equal to $4000. Will I get taxed? If so, by how much? Since it is a game, it is unlikely that deducting losses from your income would be allowed. However, the $4000 would probably not be taxed as income (since you are getting your own money back). Situation #3: I deposit $5000 and use this to buy in-game items. I later sell these items for massive profits (200%+, this can happen over the course of 2 years for sure). I withdraw $10000. Will I get taxed? If so, by how much? Either the same as #1 (i.e.: ordinary income) or as capital gains (although tax authority may argue that this was not a for-profit investment, and capital gains treatment shouldn't be applicable). Will I get taxed on withdrawals from Real Cash Economy games? And do the taxes apply to the full withdrawal, or only on the profits? Or only on the profits above a certain amount? Generally income taxes only apply on income. So if you paid $10000 and got back $12000 - only the $2000 is considered income. However some countries may tax full amounts under certain conditions. Such taxes are called \"\"franchise taxes\"\". For a proper tax advice consult with the locally licensed tax adviser.\"",
"title": ""
},
{
"docid": "c2fe5acd9728103715dfdf53c097f4c8",
"text": "A large number of the general population spends the huge of their cash to purchase lotto tickets and further on some mystery frameworks that offer ensured to win lottery money. The Global Lottery deals ascend to $300 billion for each annum. Take this game as stimulation, not as a source of income since it doesn't ensure that you win. Our lotto e-book motto is to show people how to win small prizes on a regular basis.",
"title": ""
},
{
"docid": "edc0718cfe98e4cb618686f18277840e",
"text": "Easy. Start with 2 millions and lose only one. Jokes aside, if you want a million USD, you should be asking yourself how you can produce products or services worth $5 millions. (expect the extra to be eaten up by taxes, marketing, sales, workforce...) If by investment you mean making risky bets on the stock market, you might have a better time going to Las Vegas. On the other hand, if by investment you mean finding something that will produce $$$ and getting involved, it's a different matter.",
"title": ""
},
{
"docid": "7b6771db8851ff839a6450e6120b8f5d",
"text": "If you hold a future plus enough cash collateral it is economically equivalent to owning the underlying asset or shorting the underlying asset. In general financial assets such as stock indices have a positive expected return - that's the main difference between investing and gambling. There's nothing that special about futures, they are just another contractual form of asset ownership. Well, one difference is that regulations or brokerages allow individual investors more leverage with options and futures than with straight borrowing. But this is more a regulatory issue than a conceptual issue with the securities themselves. In theory regulators or brokers could require you to hold enough collateral to make a future equivalent to buying the underlying.",
"title": ""
},
{
"docid": "15e9d51f5d01bddba46fc1ea96a54e20",
"text": "\"When you invest in a property, you pay money to purchase the property. You didn't have to spend the money on the property though - you could have invested it in the stock market instead, and expected to make a 4% annualized real rate of return or thereabouts. So if you want to know whether something's a \"\"good investment\"\", ask whether your annual net income will be more or less than 4% of the money you put into it, and whether it is more or less risky than the stock market, and try to judge accordingly. Predicting the net income, though, is a can of worms, doubly so when some of your expenses aren't dollar-denominated (e.g. the time you spend dealing with the property personally) and others need to be amortized over an unpredictable period of time (how long will that furnace repair really last?). Moreover your annualized capital gain and rental income is also unpredictable; rent increases in a given area cannot be expected to conform to a predetermined mathematical formula. Ultimately it is impossible to predict in the general case - if it were possible we probably would have skipped that last housing bubble, so no single simple formula exists.\"",
"title": ""
},
{
"docid": "a02957a9a32e31d2f640034772b0d3af",
"text": "You're confused because the source you cite leaves out one number that isn't relevant to the argument they're making: total costs. The number you're expecting, $9 x 365 or $3285 is the total cost of buying the jewelry which, when subtracted from the $3650 sales volume gives us the net profit of $365. The investment is the amount of money original put into a system our company. In this case the merchant bought his first piece of jewelry for $9, sold it for $10, took one dollar in profit and used the other 9 to reinvest by buying a new piece of jewelry. We can extend the analogy further. After 9 days of selling, the merchant will posses $18, allowing him to now buy 2 pieces of jewelry each morning and sell them for $20. Every day his costs will be $18 and he'll turn a $2 profit, all with the original investment of $9.",
"title": ""
},
{
"docid": "a18ba9d2615f5c10a7d2b53e773cae58",
"text": "Although I am not a tax professional, and in this case you would be better off with a professional advice, my understanding (at least of Arizona, New York and California individual tax regulations that I've been dealing with) is that you only pay taxes in the state in which you're domiciled. Lottery winnings are payed by States/State-run corporations and as such sourced to the State that pays it. Buying a ticket in SC links you to the lottery run in that State, even if you live in another. You'll be claiming your winnings in SC, not in NC, and the winnings will be sourced to SC, not NC. As such SC will be taxing them. NC will be taxing them as well, since you're NC resident.",
"title": ""
},
{
"docid": "f387828f56595e9bb2de18d7b44aa736",
"text": "A lot of these answers are really weak. The expected value is pretty much the answer. You have to also though, especially as many many millions of tickets are purchased--make part of the valuation the odds of the jackpot being split x ways. So about 1 in 290--> the jackpot needs to be a take-home pot of $580 million for the $2 ticket. Assume the average # of winners is about 1.5 so half the time you're going to split the pot, bringing the valuation needed for the same jackpot to be $870 million. It's actually somewhat not common to have split jackpots because the odds are very bad + many people pick 'favourite numbers'.",
"title": ""
},
{
"docid": "98d9f2c9a4ae10eb6c2234f4874cd846",
"text": "Speculation means putting your money on a hunch that some event may occur, depending on current circumstances and some future circumstances. So either you win huge or lose a lot. Investment is a conscious decision made on well defined research and grounded on good reasons i.e. economy, industry, company reports etc. Here is a link on wikipedia with more details on Speculation.",
"title": ""
},
{
"docid": "8c4e169b6c52731461477d99dd8a91b8",
"text": "I think playing certain kinds of lottery is as economically sound as buying certain kinds of insurance. A lottery is an inverted insurance. Let me elaborate. We buy insurance for at least two reasons. The first one is clear: We pay a fee to protect ourselves from a risk which we don't want to (or cannot) bear. Although on average buying insurance is a loss, because we pay all the insurance's office buildings and employee's salaries, it still is a reasonable thing to do. (But it should also be clear that it is unreasonable to buy insurance for risks one could easily bear oneself.) The second reason to buy insurance is that it puts us at ease. We don't have to be afraid of theft or of a mistake we make which would make us liable or of water damage to our house. In that sense we buy freedom of sorrow for a fee, even if the damage wouldn't in fact ruin us. That's totally legitimate. Now I want to make the argument that buying a lottery ticket follows the same logic and is therefore not economically unreasonable at all. While buying a lottery ticket is on average a loss, it provides us with a chance to obtain an amount of money we would normally never get. (Eric Lippert made this argument already.) The lottery fee buys us a small chance of something very valuable, much as the insurance frees us from a small risk of something very bad. If we don't buy the ticket, we may have 0% chance of becoming (extremely) rich. If we buy one, we clearly have a chance > 0%, which can be considered an improvement. (Imagine you'd have a 0.0000001% chance to save the life of a loved one with a ticket who'd be 100% doomed otherwise. You'd bite.) Even the second argument, that an insurance puts us at ease, can be mirrored for lotteries. The chance to win something may provide entertainment in our otherwise dull everyday life. Considering that playing the lottery only makes sense for the chance to obtain more money than otherwise possible, one should avoid lotteries which have lots of smaller prizes because we are not really interested in those. (It would be more economical to save the money for smaller amounts.) We ideally only want lotteries which lean on the big money prizes.",
"title": ""
},
{
"docid": "8b31c1ca4e910dfd4bbe5570f884252d",
"text": "No. You owe taxes in the state you made the money. So unless you can convince the lottery company to retroactively move to Puerto Rico or such, you can't. As others said, if you win, that should not be your worries..",
"title": ""
},
{
"docid": "0b0c1e7fed13cf2a37b7ee9f879cd5af",
"text": "Firstly, playing the lottery is not investing it is gambling. The odds in gambling are always against you and with the house. Secondly, no one would ever give you a payout of 3 to 1 when the odds are 50:50, unless they were looking to give away money. Even when you place your chips on either red or black on a roulette table your payout if you are correct is 100% (double your money), however the odds of winning are less than 50%, there are 18 reds, 18 blacks and 2 greens (0 and 00). Even if you place your chips on one single number, your payout will be 35:1 but your odds of winning are 1:38. The odds are always with the house. If you want to play the lotto, use some money you don't need and expect to lose, have some fun and enjoy yourself if you get any small winnings. Gambling should be looked at as a source of entertainment not a source of investing. If you take gambling more serious than this then you might have a problem.",
"title": ""
},
{
"docid": "180d2a7f0af42c2226913663d438e41b",
"text": "\"I think that the answer by @jkuz is good. I'd add that the there's a mathematically precise difference: Gambling games are typically \"\"zero-sum\"\" games, which means that every dollar won by one person is lost by another. (If there's a \"\"house\"\" taking a cut then it's worse than zero-sum, but let's ignore that for the moment.) None of the markets that you mentioned are zero-sum because it's possible for both parties in the transaction to \"\"win\"\" since they typically have different objectives. If I buy stock, I typically desire for it to go up to make money, but, if I sell stock, I typically sell it because I want the money to do something else completely. The \"\"something else\"\" might be invest in another instrument if I think it's better or I'm rebalancing risk. It might also be to buy a house, pay for college, or (if I'm in retirement living on my investments) to buy food. If the stock goes up, the buyer won (increased investment) but the seller also won (got the \"\"other thing\"\" that they wanted/needed), which they would not have been able to get had there not been a buyer willing to pay cash for the stock. Of course it's possible that in some cases not everyone wins because there is risk, but risk should not be considered synonymous with gambling because there's varying degrees of risk in everything you do.\"",
"title": ""
},
{
"docid": "8357a729b20014c82aa2ce046b89fe1c",
"text": "\"Gambling is perhaps not well defined, but it certainly doesn't include things like reality show winnings. However, it is possible he could deduct something for this. If the reality show qualifies as a \"\"hobby\"\", and his expenses exceed the 2% of AGI requirement, it's possible he could deduct those airplane tickets and such. That deduction is explained in Publication 529.\"",
"title": ""
},
{
"docid": "7acc0cc7b924cbf49ca9a80edd4ec788",
"text": "The satisfaction from gains packs less of an emotional impact than the fear of loss. It's very difficult for many people to overcome this fear, so when prices begin to fall, many investors sell to minimize their potential loss. This causes a further drop, which can lead to more selling as other investors reach their emotional threshold for loss. This emotion-based selling keeps the market inefficient in the short term. If there aren't enough value investors waiting to scoop up the stock at the new discount, it can stay undervalued for a long time.",
"title": ""
}
] |
fiqa
|
c7fdc3a9d054fa46baf4ea4f9da75bf7
|
How to incentivize a real-estate broker to find me a cheap house
|
[
{
"docid": "8aa8ade8e003f1c7d6a73ac46eeab5f7",
"text": "\"Here in the U.S., a realtor can act as a \"\"seller's agent\"\" or a \"\"buyer's agent\"\". I think what you are calling a \"\"broker\"\" in the U.S. we call a \"\"buyer's agent\"\", and this may just be a difference in terminology, from your post it sounds like the concept is the same. I am answering from a U.S. perspective, please let me know if something doesn't make sense in the Israeli context. Here, each typically gets 3% to 3.5% of the sale price (at least in my part of the country). So yes, the buyer's agent has an incentive to get a higher price, even though this is contrary to the interests of the person he is supposed to represent. On the other hand, the buyer's agent has a strong incentive to find a house at a price that you consider acceptable. If the absolute most you are willing to pay is, say, ₪1,000,000, and he keeps showing you houses that cost ₪1,500,000, he's just wasting his time. (He's wasting your time too, of course, but let's assume he doesn't care about that.) (I don't know what housing prices are in Israel today, just making up numbers.) Suppose he has two houses that he can show you, one in your price range and one not. If he shows you the first you may buy it and we will very quickly get his commission. If he shows you the second, you probably won't buy it and he'll get zero. If he keeps showing you houses above your price range, he's doing a bunch of work for which he will never be paid. The worst case from your point of view is if you're thinking that you're expecting and prepared to pay, say, ₪1,000,000 to ₪1,300,000, and you tell the broker that, his incentive is to concentrate on the upper end, maybe even push it a little. But still, if he shows a house that's well within your range so you'll quickly buy, he can get ₪30,000 today, versus trying to push you to go higher so he can maybe get ₪39,000 in a few months. Is the extra ₪9,000 worth several months of extra work? Probably not. Personally, I've never had a problem with a realtor trying to push me to buy a house more expensive than I said I was prepared to pay. At least not that I noticed. Maybe they were very skillful at it and I didn't realize they were doing it, like showing me houses that were totally run-down dumps until I decided I was willing to pay more. As to your specific suggestion: I don't know if a realtor would be willing to negotiate an alternative deal from their standard contract. I've never tried to do such a thing. Yes, this would give him an incentive to find the lowest possible price. Arguably this would create a perverse incentive to show you houses of very low quality just because they're cheap. And there would be the problem that he'd have no incentive to show you houses at or just over your stated maximum, as his commission would be zero. (Negative if it goes over slightly?) What I did on my last house was tell the realtor, I want to start by looking at houses costing under \\$X. If I can't find anything I like, I'll go a little higher. By not telling the realtor my maximum, I discouraged her from immediately going for the maximum. At least that was my theory.\"",
"title": ""
},
{
"docid": "795d24a614da96627f16836ace377f4d",
"text": "From your profile, I see you are in Israel. The process is probably different from in the US. In the US, an agent is usually happy to work with a buyer. After all, When I list a house, there are potential buyers all over my state and elsewhere. The best thing you can do is first, have your financing in order. A bank will be able to tell you how much you can afford and how much they'll lend you. If you approach an agent and tell them the exact range of price, area you're interested in, and other specifics such as number of bedrooms, etc, that agent should be happy to find houses to fit your request. Obviously, an agent listing million dollar homes, busy with those all day, is not going to want to handle a buyer looking for a $200K home. But in the end, the real estate agents aren't all listing high end, and someone is moving the smaller houses as well. Often, an office will have a call center where agents who are less busy will answer the phone hoping to get a client that will bring a sale. That's one way to go. The other is word of mouth. Just ask others who you work with or socialize with if they know a good agent. In my case, I'd be happy to get such a referral.",
"title": ""
},
{
"docid": "ba6d340046b74790785d6b8160200dba",
"text": "Having just gone through this process as a buyer via broker in Israel, here are my thoughts: Tl;dr: An incentive such as you are suggesting would not be particularly helpful. In this case, your best option is to spend your efforts shopping for a broker that you can trust. The rest: Your main concern is that the broker will find you a place at the top of your budget and will not negotiate aggressively. The main person responsible for negotiation is YOU. You are paying for the property, and you are putting in bids: not your agent. The agent should advise you, but in the end should pass along your bids directly. The real problem is that you, as the buyer, generally do not have as close a feel for the pulse of the market as the broker, who should be quite aware of recent closings in the neighborhood. Therefore, there are a few things that you can do to help arm yourself: At the end of the day, if you have decided to use a broker, you are making a large financial commitment to hire someone to find you the best place, and therefore it may be more important at this point to spend your efforts shopping around for the best broker, rather than trying to figure out how to outsmart her. You are correct: buyers' agents DO have incentives to sell you on places that may not be right or good for you. For example: Although your scheme may help a bit with the first concern, it will not help at all with the other two, which I assume to be much more likely problems in any event. Instead, find recommendations for brokers from others. Have the broker show you a few properties and put in some low bids to get a feel for how she handles them. Discuss the properties together and try to assess if they really have your interests in mind. You are paying a lot for their service, and you should make sure, as much as possible, that they really are working honestly and in your best interest. A good broker who knows his market and is trying to help you can be a great asset in the opaque, cutthroat real estate market. הבל הבלים, הכל הבל. סוף דבר הכל נשמע, את האלוהים יירא ואת מצוותיו שמור כי זה כל האדם. Good luck!",
"title": ""
},
{
"docid": "59962070028d867ee4b2d9d919702dd7",
"text": "Shop lots of houses. Find at least three you want and start by offering a low price and working your way up. Your risk is that houses you would have liked get bought by someone else while you are negotiating, that is how you discover how much you actually have to pay to get a house. Brokers only get paid if a deal closes. That is their incentive to get you a better price. If they know you will buy a different house unless the one they are selling gets your business, then they will work to make that happen.",
"title": ""
}
] |
[
{
"docid": "9d49fecd9c88546d2b3fd701e7d5f498",
"text": "\"Short answer: It depends :) It should generally be cheaper to get a loan directly from a bank, but often a mortgage broker can find you deals that you might not be able to get with a local bank. If you are refinancing, the cheapest option of all is usually to go through the bank that holds your existing mortgage. As for how mortgage brokers make their money, there are two ways. The first is on the \"\"front end\"\" through fees (origination fees especially) that go directly to them. The second and less obvious is on the \"\"back end\"\". This is where they make money by giving you a loan at a slightly higher rate than the lender was willing to give you. So, let's say they find a lender that will give you a loan at 5.25%. They offer that loan to you at 5.5% and pocket the extra .25% when the bank takes it over.\"",
"title": ""
},
{
"docid": "59737251d36622741b945a786416c7ac",
"text": "\"In a hot market, aka a \"\"sellers market\"\", rates are low, money readily available, housing inventory low, and demand high. It's not rocket science, and in fact, the only thing the buyer is likely to need from his agent is advice on price. Is it possible the fair price attracts a buyer on day one? Sure. But it's far more likely the house should have been listed higher. Perhaps a lot higher. (Disclosure - I am an agent) I'd rather set a price too high, and agree with the seller that we have room to go down, than to sell on day one at a low price, wondering how much money I just lost my client. Even if an offer came at asking price on the first day, in a hot market, the right answer is \"\"we are entertaining a number of offers, please confirm your best and final by next Friday.\"\"\"",
"title": ""
},
{
"docid": "074c8aaf0bf362575925d5dffb0edf9c",
"text": "You would have to find someone in the other state who wanted to swap. This is conceivable but difficult if you want the houses to be the same value. How do you find the one person who lives in the right place now and wants to move to the right area? The normal way this situation is handled is to simply put your house on the market. At the same time, you find a new house in the new location. You arrange for a new mortgage for the new house and make purchase contingent on selling the old house. Your buyer pays off your mortgage and gives you a bit left over that you use as a downpayment on the new house. Note that you take a loss on closing costs when you do this. This is why if you are in the position where you move frequently, you may be better off renting. Sometimes an employer will help with this, paying for a long term hotel or short term rental. This can give you more room to sell and buy the houses. If you have to move right now, immediately, not in a few months when your housing situation is fixed, consider double renting. You rent out your mortgaged house to someone and pay rent on a new place. You may put some of your stuff in storage until you get into your permanent place. The downside is that it can be harder to sell a house with a tenant until you are close to the end of the lease. And of course, you are probably not in the best position to get or pay good rent. Your situation restricts your options. You might get stuck in this situation for a year so as to get the time that you need to line up a buyer. Of course, you may get lucky and find someone who wants your old house as an investment property. Such a person won't be bothered by a tenant. But they usually want a good price. After all, they want to make money off it. There are those operations that advertise that they buy ugly houses. They want a good deal. You'll probably take a bath. But they can buy quickly, so you can move on quickly. No waiting until they find a buyer. And I'm not saying that you can't do a swap like you want. I'm just saying that you may find it difficult to find a swapping partner. Perhaps an investment person would be up for it. They take your house in trade for their house, letting you stay in their house until they can fix up your old house and either rent it or sell it. The problem is that it may be hard to find such an investor who can handle a house where you are and has a house where you need to be. I don't have a good suggestion for finding a swapping partner other than calling a lot of realtors and asking for suggestions. Maybe a bit of online checking for properties where the owner's business is managing the sale.",
"title": ""
},
{
"docid": "a5d1d152614dde74cea6e8431471e43b",
"text": "\"You can make a contingent offer: \"\"I will buy this house if I sell my own.\"\" In a highly competitive environment, contingent offers tend to be ignored. (Another commentator described such a contingency clause as synonymous with \"\"Please Reject Me\"\".) You can get a bridge loan: you borrow money for a short term, at punishingly high interest. If your house doesn't sell, you're fscked. You pay for two mortgages (or even buy the other house for cash). If you can afford this, congratulations on, you know, being super-rich. Or you can do what I am doing: selling one house and then living at my mom's until I buy another one. (You will have to stay at your own mom's house; my mom's house will be full, of course.) Edit: A commentator with the disturbingly Kafkaesque name of \"\"R.\"\" made the not-unreasonable suggestion that you buy both and rent out one or the other. Consider this possibility, but remember: On the other hand, if the stars align, you might not want to extricate yourself. If the tenant is paying the mortgage and a little more, you have an appreciating asset, and one you can borrow against. With a little work and a little judicious use of leverage, doing this over and over, you can accumulate a string of income-producing rental properties.\"",
"title": ""
},
{
"docid": "001ad7f8030aa55b992aab75c2bd3b7d",
"text": "This is one way in which the scheme could work: You put your own property (home, car, piece of land) as a collateral and get a loan from a bank. You can also try to use the purchased property as security, but it may be difficult to get 100% loan-to-value. You use the money to buy a property that you expect will rise in value and/or provide rent income that is larger than the mortgage payment. Doing some renovations can help the value rise. You sell the property, pay back the loan and get the profits. If you are fast, you might be able to do this even before the first mortgage payment is due. So yeah, $0 of your own cash invested. But if the property doesn't rise in value, you may end up losing the collateral.",
"title": ""
},
{
"docid": "da704574752205e27128f2f8b909fbb8",
"text": "First, this was never an arrangement for you to build equity, this was an arrangement for them to speculate on another house under the guise of teaching you a life lesson like responsibility or something contrived. The only way you profit from this is if the value of the house goes up and you sell it. You get 25% of the proceeds, maybe. If this was an equitable arrangement then they would be paying 75% of the property taxes and a little more for your maintenance efforts.",
"title": ""
},
{
"docid": "f8d5c327ce6e719e6a82fda9724475de",
"text": "While I agree with the existing bulk of comments and answers that you can't tell the lender the $7k is a gift, I do think you might have luck finding a mortgage broker who can help you get a loan as a group. (You might consider as an LLC or other form of corporation if no one will take you otherwise.) That is, each of you will be an owner of the house and appear on the mortgage. IIRC, as long as the downpayment only comes from the collective group, and the income-to-debt ratio of the group as a whole is acceptable, and the strongest credit rating of the group is good, you should be able to find a loan. (You may need a formal ownership agreement to get this accepted by the lender.) That said, I don't know if your income will trump your brother's situation (presumably high debt ratio or lower than 100% multiplier on his income dues to its source), but it will certainly help. As to how to structure the deal for fairness, I think whatever the two of you agree to and put down in writing is fine. If you each think you're helping the other, than a 50/50 split on profits at the sale of the property seems reasonable to me. I'd recommend that you actually include in your write up a defined maximum period for ownership (e.g. 5yr, or 10yr, etc,) and explain how things will be resolved if one side doesn't want to sell at that point but the other side does. Just remember that whatever percentages you agree to as ownership won't effect the lender's view of payment requirements. The lender will consider each member of the group fully and independently responsible for the loan. That is, if something happens to your brother, or he just flakes out on you, you will be on the hook for 100% of the loan. And vice-versa. Your write up ought to document what happens if one of you flakes out on paying agreed upon amounts, but still expects there ownership share at the time of sale. That said, if you're trying to be mathematically fair about apportioning ownership, you could do something like the below to try and factor in the various issues into the money flow: The above has the benefit that you can start with a different ownership split (34/66, 25/75, etc.) if one of you wants to own more of the property.",
"title": ""
},
{
"docid": "0a4c5b8578830ea9dfae6c50ebb28187",
"text": "If you can find a tenant by networking -- co-worker, friend of a friend, etc. -- rather than openly advertising, that often gives you a better pool. Side advice: Check what local housing laws apply to renting a room rather than having a housemate. Once you start advertising this you may be subject to fair housing laws, additional code requirements, and so on.",
"title": ""
},
{
"docid": "f6bdba3040528635a47946d6d4f18927",
"text": "Sounds like the seminar is about using OPM (other people's money), which means you're going to have to find not just real estate, but investors. Those investors are going to need a business plan, contracts, and a lot of work from you to provide as much equity as possible before the property is sold. If you're serious about Real Estate, I suggest finding the most successful broker/agent you can, buying them a beer, glass of wine, or cup of coffee, and picking their brain about it. It'll be cheaper then a scam seminar.",
"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": "6c3d65dc1a9121edc29f7efe1ea815be",
"text": "\"Advice from a long-time flipper You negotiate price based on four factors and none of these are set in stone: How much you love the house. Is this house a 100 out of 100 for you or a 85 or a 75. How much have you compromised. What is the likelihood that you will find a house that will make you just as happy or at least close. You might have a house that is a 95 out of 100 but there are five other houses that you rated between 93-95. What is your timeframe. Know that playing hardball takes longer and can knock you out of the game sometimes and takes a little while to find a new game. What is the relative housing market. Zillow and other such sites are crap. Yes the give you a generalized feel for a community but their estimates are off sometimes by 30-40%. Other factors like street/noise/updates to house/ and so on are huge factors. You will have to really navigate the area and look for very comparable houses that have recently sold. Then use average housing movements to extrapolate your future houses cost. As a buyer you have two jobs. Buy the house you want and manage your agent. Your agent wants you to buy a house as soon as possible and to increase their reputation. Those are their only two factors of working. By you offering closer to the asking price they are able to get their sales as quick as possible. Also other agents will love working with them. In fact your agent is selling you on the home and the price. Agents hardly worry about you paying too much - as most buyers oversell the deal they get on their home. Admitting that you paid too much for your house is more of an admission of ignorance of yourself, compared to agent incompetency. If you decide to low-ball the owner, your agent spends more time with you and possibly reduces their reputation with the selling agent. So it is common for agents to tell you that you should not offer a low price as you will insult the owner. My advice. Unless the home is truly one of a kind for the market offering anything within 20% of the asking price is DEFINITELY within range. I have offered 40% less. If a house is asking too much and has been on the market for 8 months there is no way I am going in with an offer of even 15% lower. That leaves you no room. What you do? First think about how much you think this house could sell for in the next 3 months. In your example let's say 80K based on conservative comps. Then take the most you would actually pay for it. Let's say 75K. 70K is about as high of an opening offer I would go. Do NOT tell your agent your true breaking points. If you tell your agent that you would go to 75K on the house. Then that is what their negotiations will start at. Remember they want the sale to happen as soon as possible. Very likely the other agent - especially if they know each other - will ask if how flexible you are going to be. Then next thing you know your agent calls you back and says would you be willing to go 77K or the owner is firm at 80K. Do not give up your position. You should never forecast to your agent what your next bid or offer would be for the house. Never get into scenarios or future counters. So you offer 70K. If your agent asks you how firm that is? \"\"Very firm\"\". If your agent doesn't want to take the offer to them, \"\"Thank you for being my agent, but I am going to be working with someone that represents what I want.\"\" If the owner says \"\"You are done too me cheapskate.\"\" Well that's how it goes. If the owner stays firm at asking or lowers - then you can come up if you feel comfortable doing so. But understand what your goal is. Is it to get a house or to get a good deal on a house? Mine was always to get a good deal on a house. So I might offer 72K next. If they didn't budge, I am out. If they moved down I went from there. Easy Summary The fact is if they aren't willing to negotiate with you enough it always ends the same. You give them your take-it-or-leave-it offer. You tell your agent that if he/she comes back with one penny over it comes from their commission (god I have said this 100 times in my life and it is the best negotiation tactic you have with your agent). The owner says yes or no and it is over.\"",
"title": ""
},
{
"docid": "9d332653860a7508927301669b5da3c8",
"text": "You don't have to use an agent (broker, as you call it), but it is strongly advised. In some counties lawyers are required, in some not. Check your local requirements. Similarly the escrow companies that usually deal with recording and disbursing of money. You will probably not be able to get a title insurance without using an escrow service (I'm guessing here, but it makes sense to me). You will not be able to secure financing through a bank or a mortgage broker without an escrow company, and it might be hard without an agent. Agents required by law to know all the details of the process, and they can guide you through what to do and what to look into. They have experience reading and understanding the inspection reports, they know what to demand from the seller (disclosures, information, etc), they know how and from where to get the HOA docs and disclosures, and can help you negotiate the price knowing the market information (comparable sales, comparable listings, list vs sales statistics, etc). It is hard to do all that alone, but if you do - you should definitely get a discount over the market price of the property of about 5% (the agents' fees are up to 5% mostly). I bought several properties in California and in other states, and I wouldn't do it without an agent on my side. But if you trust the other side entirely and willing to take the risk of missing a step and having problems later with title, mortgage, insurance or resale, then you can definitely save some money and do it without an agent, and there are people doing that.",
"title": ""
},
{
"docid": "6fb93fa97b82f105f50a9d78e413e00c",
"text": "So obviously, realtors are not economists and have a strong bias here. A lot of actual [economists](https://fivethirtyeight.com/features/the-tax-deductions-economists-hate/) think the mortgage deduction is nonsense and doesn't actually promote home ownership. Countries without the deduction have about the same ownership rates as the U.S. Worth noting that this proposal doesn't actually scrap the mortgage deduction, it just makes the standard deduction bigger. Some people will end up better off with the new standard deduction, and those with more expensive homes can keep using the mortgage deduction. This is one of the few proposals coming out of the Republican congress that actually helps poor people more than rich people.",
"title": ""
},
{
"docid": "a92073afad23a27fb936bf7bdc9d0f55",
"text": "Whenever you put less than 20% down, you are usually required to pay private mortgage insurance (PMI) to protect the lender in case you default on your loan. You pay this until you reach 20% equity in your home. Check out an amortization calculator to see how long that would take you. Most schedules have you paying more interest at the start of your loan and less principal. PMI gets you nothing - no interest or principal paid - it's throwing money away in a very real sense (more in this answer). Still, if you want to do it, make sure to add PMI to the cost per month. It is also possible to get two mortgages, one for your 20% down payment and one for the 80%, and avoid PMI. Lenders are fairly cautious about doing that right now given the housing crash, but you may be able to find one who will let you do the two mortgages. This will raise your monthly payment in its own way, of course. Also remember to factor in the costs of home ownership into your calculations. Check the county or city website to figure out the property tax on that home, divide by twelve, and add that number to your payment. Estimate your homeowners insurance (of course you get to drop renters insurance, so make sure to calculate that on the renting side of the costs) and divide the yearly cost by 12 and add that in. Most importantly, add 1-2% of the value of the house yearly for maintenance and repair costs to your budget. All those costs are going to eat away at your 3-400 a little bit. So you've got to save about $70 a month towards repairs, etc. for the case of every 10-50 years when you need a new roof and so on. Many experts suggest having the maintenance money in savings on top of your emergency fund from day one of ownership in case your water heater suddenly dies or your roof starts leaking. Make sure you've also estimated closing costs on this house, or that the seller will pay your costs. Otherwise you loose part of that from your down payment or other savings. Once you add up all those numbers you can figure out if buying is a good proposition. With the plan to stay put for five years, it sounds like it truly might be. I'm not arguing against it, just laying out all the factors for you. The NYT Rent Versus Buy calculator lays out most of these items in terms of renting or buying, and might help you make that decision. EDIT: As Tim noted in the comments below, real monthly cost should take into account deductions from mortgage interest and property tax paid. This calculator can help you figure that out. This question will be one to watch for answers on how to calculate cost and return on home buying, with the answer by mbhunter being an important qualification",
"title": ""
},
{
"docid": "d155ae5534d0d32f1e77521fe072f09c",
"text": "\"That sounds like a particularly egregious version of exclusivity. However, the way that you could handle that is to include a \"\"contingency\"\" in your purchase agreement stating that your offer is contingent upon the seller paying the brokerage fee. The argument against this, and something your broker might use to encourage you not to do so, is that it makes your offer less attractive to the buyer. If they have two offers in hand for the same price, one with contingencies and one without, they will likely take the no-contingency offer. In my area, right now, house offers are being made without very common contingencies like a financing contingency (meaning you can back out if you can't finance the property) or an inspection contingency. So, if your market is really competitive, this may not work. One last thought is that you could also use this to negotiate with your broker. Simply say you're only sign this expecting that any offer would have such a contingency. If it's untenable in your current market, it will likely cause your broker to move on. Either way, I'd say you should push back and potentially talk to some other brokers. A good broker is worth their weight in gold, and a bad one will cost you a boat load. And if you're in Seattle, I'll introduce you to literally the best one in the world. :-)\"",
"title": ""
}
] |
fiqa
|
f44f9ca50e2d4b22da579fa00b72dc1b
|
Why do banks encourage me to use online bill payment?
|
[
{
"docid": "249b2108d031acf2c4a2641ff0360635",
"text": "Another reason for banks to push this is sitckyness. Once you have all of your bills setup, its more trouble to change banks. This reduces the customer turnover rate, which lowers their costs.",
"title": ""
},
{
"docid": "18665dc5fa080e4469ed3808a1f01234",
"text": "Most transactions that the bank performs for you are electronic ACH transactions, so the costs to them are minimal in the long run. Most banks do it now to keep up with the competition. Almost every bank does it now, so they have to do it to attract new business and keep existing customers. Also, the more you rely on the bank and use them to pay bills, the more they learn about you over time and can use that data in overall marketing plans. It's easier for them to record it into their system if it is all electronic to begin with.",
"title": ""
},
{
"docid": "c3849e3003518435903391eaf972f235",
"text": "The paper check method also allows the bank to use your money while the check is in the mail. My bank debits my account immediately, so while my $100 utility bill is traveling the U.S. Postal System for two days, they can make use of my $100 in whatever slush fund they like.",
"title": ""
},
{
"docid": "fc5e574b884a22dd65f5ba40b6e14f6d",
"text": "\"One other aspect of this is that the bank will plan to eventually approach the merchant that they are sending paper checks to and say \"\"why don't you sign up with us and give us your ACH info, and we won't send you checks?\"\" And a lot of merchants will say \"\"sure\"\", because someone has to open those checks and take them down to the bank, and that isn't free. And that time while the money is in the mail, or sitting on someone's desk to be deposited, that is money that isn't working for you. So everyone wins.\"",
"title": ""
},
{
"docid": "7e8a821e9da68323eb24d1bcdff738d0",
"text": "It’s more convenient for both you and the bank; its much simpler to handle things electronically than it is to go through paperwork. Also, its eco-friendly and by saying that they care about the environment, banks earn brownie points with environmentally-conscious customers.",
"title": ""
}
] |
[
{
"docid": "362f05a523b3b1facc4c35235924f422",
"text": "That's how my power company does it. You authorize them to direct debit recurring monthly. If they screw up and withdraw $1000, you're out until it gets fixed. But it varies from company to company. Not everyone's situation is like your online banking.",
"title": ""
},
{
"docid": "3201a2eb3d02a72161d8c3f6e3e327b2",
"text": "Agreed. I use online banking for everything I can. The only thing that holds me back is when there are insane fees on using online payments. So really it's the companies with these fees that are slowing us all down... And the older generation that refuses to try to understand debit/credit cards and online banking. My grandma will only use cash and checks.",
"title": ""
},
{
"docid": "a603e76dd7cf5e499482b89caca47328",
"text": "First, they don't have an obligation to provide a service for a non-customer. In theory, the could even refuse this service to account holders if that was their business model, although in practice that would almost surely be too large of a turn-off to be commercially feasible. Non-account holders aren't paying fees or providing capital to the bank, so the bank really has no incentive or obligation to tie up tellers serving them. Maybe as importantly, they have a legitimate business reason in this case as stated. The fact that the bill passed whatever test the teller did does not, of course, ensure that the bill is real. They may (or may not) subject it to additional tests later that might be more conclusive. Making you have an account helps ensure that, in the event they do test it and it fails, that (a) they know who you are in case the Secret Service wants to find you, and (b) they can recover their losses by debiting your account by the $100. This isn't foolproof since any number of bad things could still happen (identity theft, closing account before they do additional tests, bill passing later tests, etc.), but it does give them some measure of protection.",
"title": ""
},
{
"docid": "1c93766cffbed678cdc07a21a5894f72",
"text": "Something you may want to consider if you are still choosing a bill-paying service is the contingency policies of the service. I just suffered an extended stay in a hospital and my officially (in writing) designated Power of Attorney was NOT granted access to my PAYTRUST account. Thus they could NOT take care of my finances easily. After my discharge, I contacted PAYTRUST and they had canceled my account and would not reactivate it. This is after over fifteen years of loyalty. Needless to say there was much financial chaos in my life due to their negligence. They were staunch in their policy and said officially that if they need to acknowledge a Power of Attorney, the ONLY thing they will allow the POA to do is close the PAYTRUST account. How's that for customer service?! Caveat Emptor. I am now seeking another service and will be asking about their POA policies.",
"title": ""
},
{
"docid": "8695e8030ee3269d15f22929ed6fbf9f",
"text": "I know of websites that do this, but I don't know of banks that do. Is there any reason you want to do this at a bank rather than use a service? My main concern with using a bank for this would be the risk of overdraft fees",
"title": ""
},
{
"docid": "35521eafb32f55645fbcfd314a99e5f0",
"text": "While it's wise, easier and safer to check your transactions online a few times a month, I opt to receive and file paper statements as a hard copy back up of account history. Any reconciliation I perform is a quick glance to make sure the numbers sound right. It's probably a small waste of time and space, but it settles some of my paranoia (due to my training as a computer engineer) about failure of electronic banking systems. If someone tampers with bank records or a SAN explodes and wipes out a bunch of account data, then I will have years worth of paper statements to back up my numbers. Having years worth of statements printed on the banks stationary will have better credibility in court than a .pdf or printout thereof that could have been doctored, in case I ever needed to take my bank to court. A little piece of mind for the price of a letter opener, a square foot file box and a couple of minutes a month.",
"title": ""
},
{
"docid": "151cb4b3a1d1eebe302685ca1a4fa112",
"text": "Lower risk of having to fight to get their money back, obviously. That's what credit rating is supposed to predict. Paying your bills on time, and paying off the balance in full every month, are different questions. They want to know that you will make the minimum payments at least, and that you will eventually pay back the loan. Compare that with subprime and/or loan sharks, where the assumption is that being late or defaulting is more common, and interest rates are truly obscene in order to make a profit despite that.",
"title": ""
},
{
"docid": "ad95541644e49cb3761095f39c7f52da",
"text": "\"I don't see how this concept takes off. First and foremost, BankSimple is NOT a bank but a tech company masquerading as one. BankSimple leaves industry regulation and treasury management -- the CORE of banking, to outside parties. Call me old fashioned, but I prefer to have as few stops between me and my money as possible. If not for a fear of losing it in a robbery and inability to earn interest, I'd shove it under a mattress. So why would I want to bank with an intermediary, who admittently doesn't understand how the process works? How is that \"\"looking out for my interests\"\"? And how is your security better than other institutions that offer 128-bit encryption and multiple security questions to test a customer's identity? I'd like to add that not charging overdraft fees and providing lines of credit to help customers out in the event they spend more than they have is nice in concept, but what happens when those same customers do not make deposits to cover their shortfalls? When it comes to money, people will take advantage of any opportunities they have to circumvent the system. Especially if funds are tight.\"",
"title": ""
},
{
"docid": "f7a396f4f01017517d2af9035b684198",
"text": "Using the bank's bill pay always seemed like a hassle to me. There are lots of mistakes to be made by me that can result in late payments and not too many benefits other than some convenience, and being able to pay bills online for accounts that require paper payment. (Although the banking systems often screw up those payments) Plus, there is usually a fee associated with bill pay, at least to some extent. I generally use the websites of my credit cards or other entities to pay bills. Then again, maybe I'm a bit of a weirdo here... I don't see mailing a check 3 days ahead of the due date as a particular hassle.",
"title": ""
},
{
"docid": "44309cd550236d0b4bb90aa00c1efe11",
"text": "I use online banking and bill pay for all accounts where I can control when and how much is paid, where I push the funds out. The bills from those companies that want to be allowed to reach into my account and pull money automatically (e.g. my Chase mortgage) I simply will not enroll - they get a paper check in the mail. There is no way I am giving these cocksucker criminals *permission* to take money out of my accounts.",
"title": ""
},
{
"docid": "540ad14306a6ab98c337a396e981a398",
"text": "Even for those of us who aren't at risk of over drafting, direct debit is a less-than-stellar option. Direct debit is a great way to begin ignoring how large your bills are. By explicitly paying them through my bank's online billpay, I notice immediately when a bill is larger than it ought to be. This is often caused by a billing error. In which case I've found it far easier to resolve disputes when the money is still in my hands. It's significantly harder to convince an internet provider, cell phone service, or utility to reverse an incorrect charge after it's been paid than it is before. The other times, it's because I've been using the service more than normal. For example, sending text messages more frequently or using more electricity. Explicitly paying these bills makes me realize upfront that there's been a change in my behavior and I can either reduce my expenses or accept the higher cost for higher service. My own experience leads me to believe that paying your bills automatically every month is a great way to ignore these events, and leak money like a sieve. Online bill pay makes doing this as trivial as I could hope for, and the risk of missing a payment is essentially nil.",
"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": "d9cdcdff137ec7b88535795c9b4a7540",
"text": "\"From the banks point of view the point of a current account like this is to get you as a regular customer. They want to be your \"\"main bank\"\", the bank you interact with the most, the bank you turn to first when you need financial products and services, the bank whose advertising you see every time you log into online banking or walk into a branch. The bank knows that if they just offer the unprofitablly high interest rate or other perks with no strings attatched that people will open the account and dump a bunch of savings in it but won't actually move their financial life over, their old bank will still be their main bank. So they attatch strings like a required minimum deposit, a minimum number of direct debits and similar. These have minimal effect on people actually using the account as their main current account while being a pain for people trying to game the system. Of course as you point out it is still possible to game the system but they don't need to make gaming the system impossible, they just need to make it inconvianiant enough that most people won't bother.\"",
"title": ""
},
{
"docid": "f1b045c543a90f25c4cfb615618dd4e6",
"text": "I don't know, ask the various companies I'm forced to do business with why in the hell they want me to stop by their office so I can drop a check off vs just using some means of digital payment. I would fucking LOVE to ditch paper checks.",
"title": ""
},
{
"docid": "bc62090f22d1078f7f51c9926b2899ac",
"text": "There is a reason - your credit score. If you ever take out a mortgage, you might pay dearly for your behavior. The bank where you have the credit card reports the amount on the bill to the credit rating agencies. If you pay before the bill date, they will always report zero. You should wait at least till the day after the billing cycle ends, and then pay off (you don't need to have the paper bill in your hands - you can see online when the cycle closed). Depending on your other financial behavior, this will have between zero and significant effect, on the percentages you get offered for car loans, mortgages, etc.",
"title": ""
}
] |
fiqa
|
96e36db56c2649809d9229ed7922a5d5
|
Form as LLC or S Corp to reduce tax liability
|
[
{
"docid": "4286585f14be963a8f314ca32f310036",
"text": "\"This is actually quite a complicated issue. I suggest you talk to a properly licensed tax adviser (EA/CPA licensed in your State). Legal advice (from an attorney licensed in your State) is also highly recommended. There are many issues at hand here. Income - both types of entities are pass-through, so \"\"earnings\"\" are taxed the same. However, for S-Corp there's a \"\"reasonable compensation\"\" requirement, so while B and C don't do any \"\"work\"\" they may be required to draw salary as executives/directors (if they act as such). Equity - for S-Corp you cannot have different classes of shares, all are the same. So you cannot have 2 partners contribute money and third to contribute nothing (work is compensated, you'll be getting salary) and all three have the same stake in the company. You can have that with an LLC. Expansion - S-Corp is limited to X shareholders, all of which have to be Americans. Once you get a foreign partner, or more than 100 partners - you automatically become C-Corp whether you want it or not. Investors - it would be very hard for you to find external investors if you're a LLC. There are many more things to consider. Do not make this decision lightly. Fixing things is usually much more expensive than doing them right at the first place.\"",
"title": ""
},
{
"docid": "d4027d20a9a9396d21be3ac1bc4cf610",
"text": "An LLC or an S corp will result in the same tax obligations because both are pass-through tax entities. An LLC is more flexible for the situation you describe because the member and manager responsibilities can be detailed in the operating agreement. You really should get a business attorney to help you get your operating agreement in order. There's also a startups beta site on Stack Exchange that may be able to help you with questions about ways to handle your operating agreement.",
"title": ""
}
] |
[
{
"docid": "fb4538721131cc3f19655a02ffa66286",
"text": "\"If you start an LLC with you as the sole member it will be considered a disregarded entity. This basically means that you have the protection of being a company, but all your revenues will go on your personal tax return and be taxed at whatever rate your personal rate calculates to based on your situation. Now here is the good stuff. If you file Form 2553 you can change your sole member LLC to file as an S Corp. Once you have done this it changes the game on how you can pay out what your company makes. You will need to employ yourself and give a \"\"reasonable\"\" salary. This will be reported to the IRS and you will file your normal tax returns and they will be taxed based on your situation. Now as the sole member you can then pay yourself \"\"distribution to share holders\"\" from your account and this money is not subject to normal fica and social security tax (check with your tax guy) and MAKE SURE to document correctly. The other thing is that on that same form you can elect to have a different fiscal year than the standard calendar IRS tax year. This means that you could then take part of profits in one tax year and part in another so that you don't bump yourself into another tax bracket. Example: You cut a deal and the company makes 100,000 in profit that you want to take as a distribution. If you wrote yourself a check for all of it then it could put you into another tax bracket. If your fiscal year were to end say on sept 30 and you cut the deal before that date then you could write say 50,000 this year and then on jan 1 write the other check.\"",
"title": ""
},
{
"docid": "6e5c72f2f75b888eb1f9b13f75672b55",
"text": "It seems that you're complicating things quite a bit. Why would you not create a business entity, open one or more bank accounts for it, and then have the money wired into those accounts? If you plan on being a company then set up the appropriate structure for it. In the U.S., you can form an S-corporation or an LLC and choose pass-through taxation so that all you pay is income tax on what you receive from the business as personal income. The business itself would not have tax liability in such a case. Co-mingling your personal banking with that of your business could create real tax headaches for you if you aren't careful, so it's not worth the trouble or risk.",
"title": ""
},
{
"docid": "b1d966d38507f2431e2031ce742cfa87",
"text": "Compared with a Sole Proprietorship, the main disadvantages of an S-Corporation or an LLC are that it adds a lot of management overhead (time, and possibly money if you don't do it all yourself), and there are fees you must pay to incorporate, as well as additional yearly maintenance fees which vary by state. You should be able to weigh the tax savings and liability protection against the extra costs and hassle, and see which way the scales tip. As a rule of thumb, the bigger your business gets or the more income you make, the more attractive incorporating becomes. Note there are some additional taxes that certain jurisdictions impose on business income. For example, IL and CA charge 1.5% tax, NY is less, but NYC is 8.85%! In NYC specifically, you could actually end up paying slightly more tax as an S-Corp than you would as a Sole Proprietorship. In most places though, the nominal local taxes will still be less than the FICA taxes you could potentially save.",
"title": ""
},
{
"docid": "8c4eec481cd96016588a5da0051cb9b8",
"text": "Profits and losses in a partnership, LLC or S-corp are always reported proportional to the share of ownership. If you have a 30% share in a partnership, you will report 30% of the profit (or loss) of the respective tax year on your personal return. If you look at Part II, section J of your K-1, it should show your percentage of ownership in the entity. All numbers in Part III should reflect the amount of your share (not the entity's total amounts, which will be on Form 1065 for a partnership):",
"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": "614098cccc7c2833b8fc3c2452d2e12c",
"text": "\"Ditto @GradeEhBacon, but let me add a couple of comments: But more relevantly: GradeEhBacon mentioned transaction costs. Yes. Many tax shelters require setting up accounts, doing paperwork, etc. Often you have to get a lawyer or accountant to do this right. If the tax shelter could save you $1 million a year in taxes, it makes sense to pay a lawyer $10,000 to set it up right. If it could save you $100 a year in taxes, paying $10,000 to set it up would be foolish. In some cases the tax savings would be so small that it wouldn't be worth the investment of spending $20 on a FedEx package to ship the paperwork. Inconvenience. Arguably this is a special case of transaction costs: the cost of your time. Suppose I knew that a certain tax shelter would save me $100 a year in taxes, but it would take me 20 hours a year to do the paperwork or whatever to manage it. I probably wouldn't bother, because my free time is worth more than $5 an hour to me. If the payoff was bigger or if I was poorer, I might be willing. Complexity. Perhaps a special case of 3. If the rules to manage the tax shelter are complicated, it may not be worth the trouble. You have to spend a bunch of time, and if you do it wrong, you may get audited and slapped with fines and penalties. Even if you do it right, a shelter might increase your chance of being audited, and thus create uncertainty and anxiety. I've never intentionally cheated on my taxes, but every year when I do my taxes I worry, What if I make an honest mistake but the government decides that it's attempted fraud and nails me to the wall? Qualification. Again, as others have noted, tax shelters aren't generally, \"\"if you fill out this form and check box (d) you get 50% off on your taxes\"\". The shelters exist because the government decided that it would be unfair to impose taxes in this particular situation, or that giving a tax break encourages investment, or some other worthy goal. (Sometimes that worthy goal is \"\"pay off my campaign contributors\"\", but that's another subject.) The rules may have unintended loopholes, but any truly gaping ones tend to get plugged. So if, say, they say that you get a special tax break for investing in medical research, you can't just declare that your cigarette and whiskey purchases are medical research and claim the tax break. Or you talked about off-shore tax havens. The idea here is that the US government cannot tax income earned in another country and that has never even entered the US. If you make $10 in France and deposit it in a French bank account and spend it in France, the US can't tax that. So American companies sometimes set up bank accounts outside the US to hold income earned outside the US, so they don't have to bring it into the US and pay the high US tax rate. (US corporate taxes are now the highest of any industrialized country.) You could, I suppose, open an account in the Caymans and deposit the income you earned from your US job there. But if the money was earned in the US, working at a factory or office in the US, by a person living in the US, the IRS is not going to accept that this is foreign income.\"",
"title": ""
},
{
"docid": "4bb25289d82cc6137c37ac317104b946",
"text": "\"Agreed on all points. You're still not saving a TON of money, given that you have to have a reasonable balance of salary/distributions, but an S-corp is the way to go if you're making substantial profit in order to save tax money. I'll reiterate (my wife is a CPA and she guides me on my business) - you can't legally save \"\"untaxed earnings\"\" for next year.\"",
"title": ""
},
{
"docid": "e8c6bd900f8d5b7b20accdc0347b2060",
"text": "Is the business an S-Corp, LLC or Sole Prop? I am going to guess based on the question that it is an LLC that you never closed with the state and you live in a state (NY) that charges a fee for having an LLC in the state in which case you owe those fees to the state. I am not aware of any taxes on the mere existence of a business by the IRS. I think you are going to find out that the are no taxes owed to the IRS for this nonexistent activity.",
"title": ""
},
{
"docid": "bf38dce82645ae04c92ffe7f51c40d0a",
"text": "An S-corp doesn't pay income tax -- taxation is pass-through. This being the case, there are no tax deductions it could take for charitable giving. The solution would be for you to make the contribution out of your own pocket and then personally claim the deduction on your own taxes.",
"title": ""
},
{
"docid": "2af033af3f8b981e4e7147ebc864cc28",
"text": "\"You probably don't need S-Corp. There's no difference between what you can deduct on your Schedule C and what you can deduct on 1120S, it will just cost you more money. Since you're gambling yourself, you don't need to worry about liability - but if you do, you should probably go LLC route, much cheaper and simpler. The \"\"reasonable salary\"\" trick to avoid FICA won't work. Don't even try. Schedule C for professional gamblers is a very accepted thing, nothing extraordinary about it.\"",
"title": ""
},
{
"docid": "50d712e4318ff47ff4c92c5ddf4fa22d",
"text": "I'm not certain I understand what you're trying to do, but it sounds like you're trying to create a business expense for paying off your personal debt. If so - you cannot do that. It will constitute a tax fraud, and if you have additional partners in the LLC other than you and your spouse - it may also become an embezzlement issue. Re your edits: Or for example, can you create a tuition assistance program within your company and pay yourself out of that for the purposes of student loan money. Explicitly forbidden. Tuition assistance program cannot pay more than 5% of its benefits to owners. See IRS pub 15-B. You would think that if there was a way to just incorporate and make your debts pre-tax - everyone would be doing it, wouldn't you?",
"title": ""
},
{
"docid": "2d11e107b45fdc610c799bfd97e53ba5",
"text": "\"This seems to depend on what kind of corporation you have set up. If you're set up as a sole proprietor, then the Solo 401k contributions, whether employee or employer, will be deducted from your gross income. Thus they don't reduce it. If you're set up as an S-Corp, then the employer contributions, similar to large employer contributions, will be deducted from wages, and won't show up in Box 1 on your W-2, so they would reduce your gross income. (Note, employee contributions also would go away from Box 1, but would still be in Box 3 and 5 for FICA/payroll tax purposes). This is nicely discussed in detail here. The IRS page that discusses this in more (harder to understand) detail is here. Separately, I think a discussion of \"\"Gross Income\"\" is merited, as it has a special definition for sole proprietorships. The IRS defines it in publication 501 as: Gross income. Gross income is all income you receive in the form of money, goods, property, and services that is not exempt from tax. If you are married and live with your spouse in a community property state, half of any income defined by state law as community income may be considered yours. For a list of community property states, see Community property states under Married Filing Separately, later. Self-employed persons. If you are self-employed in a business that provides services (where products are not a factor), your gross income from that business is the gross receipts. If you are self-employed in a business involving manufacturing, merchandising, or mining, your gross income from that business is the total sales minus the cost of goods sold. In either case, you must add any income from investments and from incidental or outside operations or sources. So I think that regardless of 401(k) contributions, your gross income is your gross receipts (if you're a contractor, it's probably the total listed on your 1099(s)).\"",
"title": ""
},
{
"docid": "3888310130e7db43d4af9b3324cf9def",
"text": "I think I may have figured this out but if someone could double check my reasoning I'd appreciate it. So if my company makes $75000 and I decide to pay myself a $30000 salary, then the quarterly payment break down would be like this: 1040ES: Would pay income tax on non salary dividend ($45000) 941: Would pay income tax, SS, medicare on salary ($30000) (I'm the only person on payroll) So I think this answers my question in that after switching from filing as LLC to S-corp, I won't have to pay as much on 1040ES because some of it will now be covered on payroll.",
"title": ""
},
{
"docid": "e3690f57050d3a70467bddf10e4f5f4c",
"text": "\"It might be best to step back and look at the core information first. You're evaluating an LLC vs a Corporation (both corporate entities). Both have one or more members, and both are seen similarly (emphasis on SIMILAR here, they're not all the same) to the IRS. Specifically, LLC's can opt for a pass-through tax system, basically seen by the IRS the same way an S-Corp is. Put another way, you can be taxed as a corporate entity, or it's P/L statements can \"\"flow through\"\" to your personal taxes. When you opt for a flow-through, the business files and you get a separate schedule to tie into your taxes. You should also look at filing a business expense schedule (Schedule C) on your taxes to claim legitimate business expenses (good reference point here). While there are several differences (see this, and this, and this) between these entities, the best determination on which structure is best for you is usually if you have full time employ while you're running the business. S corps limit shares, shareholders and some deductions, but taxes are only paid by the shareholders. C corps have employees, no restrictions on types or number of stock, and no restrictions on the number of shareholders. However, this means you would become an employee of your business (you have to draw monies from somewhere) and would be subject to paying taxes on your income, both as an individual, and as a business (employment taxes such as Social Security, Medicare, etc). From the broad view of the IRS, in most cases an LLC and a Corp are the same type of entity (tax wise). In fact, most of the differences between LLCs and Corps occur in how Profits/losses are distributed between members (LLCs are arbitrary to a point, and Corps base this on shares). Back to your question IMHO, you should opt for an LLC. This allows you to work out a partnership with your co-worker, and allows you to disburse funds in a more flexible manner. From Wikipedia : A limited liability company with multiple members that elects to be taxed as partnership may specially allocate the members' distributive share of income, gain, loss, deduction, or credit via the company operating agreement on a basis other than the ownership percentage of each member so long as the rules contained in Treasury Regulation (26 CFR) 1.704-1 are met. S corporations may not specially allocate profits, losses and other tax items under US tax law. Hope this helps, please do let me know if you have further questions. As always, this is not legal or tax advice, just what I've learned in setting several LLCs and Corporate structures up over the years. EDIT: As far as your formulas go, the tax rate will be based upon your personal income, for any pass through entity. This means that the same monies earned from and LLC or an S-corp, with the same expenses and the same pass-through options will be taxed the same. More reading: LLC and the law (Google Group)\"",
"title": ""
},
{
"docid": "49af7aa1976b53feba7306586aa787c1",
"text": "You may be able to, depending on what state you're in, but it is going to be 10x more complicated than just forming a new LLC. I don't see an advantage to this approach - if you're imagining it will be cheaper, you are imagining wrong.",
"title": ""
}
] |
fiqa
|
95e910144f1c4501842fab0b09ad0004
|
Good at investing - how to turn this into a job?
|
[
{
"docid": "aa706c78eb65dc0e73d27be0980001c0",
"text": "Staying in Idaho, you could pursue some additional degree and try to get a job with a bank in the area as an investment advisor of some sort. However, I have doubts as to whether or not you'd be able to employ your creativity and test your own instincts in that sort of a position. If you really want to get into the big-money investment sector, I'd suggest a move to a financial hub (Chicago, New York, San Francisco) and getting a job programming for a big firm. After obtaining some experience there, you may be able to transfer to a more investment-oriented position (at the same firm or another) and from there to a position where you can unleash your talent (assuming you have some). Putting a degree in finance somewhere in the mix would help too. Consider the following. You want to make $50,000/yr (low) by running a fund with a 1% expense ratio (high) investing other peoples' money... you're dealing with at least $5 million. That's a good chunk of change. To be entrusted with that kind of money is kind of a big deal, and you'll need to get some people to believe in your capabilities. You're not likely to get that kind of trust working out of Boise. Even if you're just doing research for some fund manager, you're not likely to find too many of those in Boise either.",
"title": ""
},
{
"docid": "3e29cffd92873ce7bd0d57d81102cb04",
"text": "You need to do a few things to analyze your results. First, look at the timing of the deposits, and try to confirm the return you state. If it's still as high as you think, can you attribute it to one lucky stock purchase? I have an account that's up 863% from 1998 till 2013. Am I a genius? Hardly. That account, one of many, happened to have stocks that really outperformed, Apple among them. If you are that good, a career change may be in order. Few are that good. Joe",
"title": ""
},
{
"docid": "003e10251585cd7b5cdf6042ae837ae0",
"text": "Step 1: Get a part-time job in sales. Perhaps selling appliances at Sears. Step 2: If you are great at that, then look into becoming a stock broker/investment adviser in Boise ... which is a sales job. Step 3: If you are great at that, then you might be able to become a portfolio manager, perhaps a hedge fund manager for the clients you collected as a stock broker/ investment consultant. That seems to be the steps I have seen from reading the bios of a number of professional investors. The other method seems to be an MBA from a top 10 business school.",
"title": ""
}
] |
[
{
"docid": "c4d74a187ce9d827a308f17fa8561d36",
"text": "okay, I was thinking of an investment advisor. I believe in not doing it alone too. But i don't believe in just one more person. Investing advisors, tax advisors, business and law. I don't go to an advisor bc I can't balance my monthly budget and also want to save, you know. Questions more like, highest growth sectors, diversified strategies, etc. And right, they wouldn't get fired bc their client is still happy, (even though their losing money during a record bull market). Guy must be a good sales man. I'd just want to know that my advisors performance is decent relative to the market. But again, I'm not handing over checks to people, only speaking with them. edit: Yes, the average person should worry about making their kids soccer games and shit, not necessarily the markets and what their investment is worth in 30yrs",
"title": ""
},
{
"docid": "f5c7f7d203e7382c51786e86d48f3934",
"text": "Before you even enroll in a good financial school, register for an account with a bank that allows you to manage a stock portfolio. I prefer TD Ameritrade. You do have to be 18 (Just register it under your parents, it doesn't matter. Just make sure they fill out the information portion. Get the SSN and tax info right. Basically it's their account, you're just managing it. ) That way you'll have some good, practical experience going into it. Understand that working with money can be a very cut-throat industry, be ready to be competing with people constantly. Also, surround yourself with books from successful stock brokers, investment bankers, things like that. When you're working you'll want information like that. Good luck, and I hope this helps.",
"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": "6733503969aa5c9d4a28db6682da7ab3",
"text": "Unless and until you are ready to do the ground work and get your hands dirty in the market, it is better to let the money where it is. But how to distribute money in which asset classes, industry etc is your choice to make. But remember that a big investment company doesn't guarantee that you will always earn a return higher than the market or it is safe with them. They are also bound to make mistakes and go bust, but it would be quite rare for companies, with billions of assets because they have strict checks in place and invest with extreme caution and proper research. One option is to try dabbling in the markets yourself, slowly, not everything at once. You will learn a lot and there are loads of information on the net and books in stores which could get you started. You will need to do a lot of groundwork to beat the market. That is difficult but not impossible. People have done it time and time again and they have put in hard work to do so. And I don't see with a little bit of work and time, why you shouldn't be able to do that, unless and until you are lazy and don't intend to do it.",
"title": ""
},
{
"docid": "c255f9fe7a02eec2d330e649199f09dc",
"text": "Unfortunately, in this market environment your goal is not very realistic. At the moment real interest rates are negative (and have been for some time). This means if you invest in something that will pay out for sure, you can expect to earn less than you lose through inflation. In other words, if you save your $50K, when you withdraw it in a few years you will be able to buy less with it then than you can now. You can invest in risky securities like stocks or mutual funds. These assets can easily generate 10% per year, but they can (and do) also generate negative returns. This means you can and likely will lose money after investing in them. There's an even better chance that you will make money, but that varies year by year. If you invest in something that expects to make 10% per year (meaning it makes that much on average), it will be extremely risky and many years it will lose money, perhaps a lot of it. That's the way risk is. Are you comfortable taking on large amounts of risk (good chances of losing a lot of your money)? You could make some kind of real investment. $50K is a little small to buy real estate, but you may be able to find something like real estate that can generate income, especially if you use it as a down payment to borrow from the bank. There is risk in being a landlord as well, of course, and a lot of work. But real investments like that are a reasonable alternative to financial markets for some people. Another possibility is to just keep it in your bank account or something else with no risk and take $5000 out per year. It will only last you 10 years that way, but if you are not too young, that will be a significant portion of your life. If you are young, you can work and add to it. Unfortunately, financial markets don't magically make people rich. If you make a lot of money in the market, it's because you took a risk and got lucky. If you make a comfortable amount with no risk, it means you invested in a market environment very different from what we see today. --------- EDIT ------------ To get an idea of what risk free investments (after inflation) earn per year at various horizons see this table at the treasury. At the time of this writing you would have to invest in a security with maturity almost 10 years in order to break even with inflation. Beating it by 10% or even 3% per year with minimal risk is a pipe dream.",
"title": ""
},
{
"docid": "252851bb2da3621d7ad059dcc0ae87fb",
"text": "\"Say you have $15,000 of capital to invest. You want to put the majority of your capital into low risk investments that will yield positive gains over the course of your working career. $5,000: Government bonds and mutual funds, split how you want. $9,500: Low risk, trusted companies with positive historical growth. If the stock market is very unfamiliar for you, I recommend Google Finance, Yahoo Finance, and Zack's to learn about smart investments you can make. You can also research the investments that hedge fund managers and top investors are making. Google \"\"Warren Buffett or Carl Icahn portfolio\"\", and this will give you an idea of stocks you can put your money into. Do not leave your money into a certain company for more than 25 years. Rebalance your portfolio and take the gains when you feel you need them. You have no idea when to take your profits now, but 5 years from now, you will be a smart and experienced investor. A safe investment strategy to start is to put your money into an ETF that mimics the S&P 500. Over the past 20 years, the S&P 500 has yielded gains of about 270%. During the financial crisis a few years back, the S&P 500 had lost over 50% of its value when it reached its low point. However, from when it hit rock bottom in 2009, it has had as high percentage gains in six years as it did in 12 years from 1995 to 2007, which about 200%. The market is very strong and will treat your money well if you invest wisely. $500: Medium - High risk Speculative Stocks There is a reason this category accounts for only approximately 3% of your portfolio. This may take some research on the weekend, but the returns that may result can be extraordinary. Speculative companies are often innovative, low priced stocks that see high volatility, gains or losses of more than 10% over a single month. The likelihood of your $500 investment being completely evaporated is very slim, but if you lose $300 here, the thousands invested in the S&P 500, low risk stocks, government bonds, and mutual funds will more than recuperate the losses. If your pick is a winner, however, expect that the $500 investment could easily double, triple, or gain even more in a single year or over the course of just a few, perhaps, 2-4 years will see a very large return. I hope this advice helps and happy investing! Sending your money to smart investments is the key to financial security, freedom, and later, a comfortable retirement. Good luck, Matt McLaughlin\"",
"title": ""
},
{
"docid": "1de9922aee25c5dcff6072c4d5429de7",
"text": "Yeah true that. Counseling people to avoid the negatives has been more beneficial in my life than great recommendations. Even one mistake and you're up shit's creek. And I will say I have the knowledge to help people to avoid mistakes, but sometimes it devolves into mud slinging (unfortunately). If this wasn't a new account then it might give you an indication of how I've done this in the past. Most of the time it takes too much explaining to get people up to speed though. A word to the wise: I'd recommend being open to switching industries. Everyone in finance is pretty toxic and all ended up there because of money. End up chasing the CFA (cancer distilled into three exams), grad school, nonsense corporate jobs, or the dream in high finance/small shops where the founders don't think they need another smart hard-working person. Even if if it's obvious they do. I remember reaching out and counseling a firm on selling a position that I felt was really stupid. It was not at all in line with their investing objectives and also was one I would never touch. The guy actually agreed with me, didn't hire me (I was after a job), didn't sell the position, and lost them approx. $12 million within 12 months with my math on their 13-F's. I only reach out to firms I respect, which works out to about 1 firm per 100k people in population from what I've seen (in a city like Pittsburgh this was only 4 shops). That means there are maybe 200 people in the US who would make a hiring decision on me for what I like to do. But I've stopped playing that game. I now run a healthcare business I started. It was hard as hell to open but I now run circles around people because nobody actually is in the business of the industry. The doctors, nurses, etc. are all extremely bright - just not in my area. Makes for a much more fun workday.",
"title": ""
},
{
"docid": "463fa73a0da279bb43beb2b3d9493116",
"text": "\"So you are off to a really good start. Congratulations on being debt free and having a nice income. Being an IT contractor can be financially rewarding, but also have some risks to it much like investing. With your disposable income I would not shy away from investing in further training through sites like PluralSite or CodeSchool to improve weak skills. They are not terribly expensive for a person in your situation. If you were loaded down with debt and payments, the story would be different. Having an emergency fund will help you be a good IT contractor as it adds stability to your life. I would keep £10K or so in a boring savings account. Think of it not as an investment, but as insurance against life's woes. Having such a fund allows you to go after a high paying job you might fail at, or invest with impunity. I would encourage you to take an intermediary step: Moving out on your own. I would encourage renting before buying even if it is just a room in someone else's home. I would try to be out of the house in less than 3 months. Being on your own helps you mature in ways that can only be accomplished by being on your own. It will also reduce the culture shock of buying your own home or entering into an adult relationship. I would put a minimum of £300/month in growth stock mutual funds. Keeping this around 15% of your income is a good metric. If available you may want to put this in tax favored retirement accounts. (Sorry but I am woefully ignorant of UK retirement savings). This becomes your retire at 60 fund. (Starting now, you can retire well before 68.) For now stick to an index fund, and once it gets to 25K, you may want to look to diversify. For the rest of your disposable income I'd invest in something safe and secure. The amount of your disposable income will change, presumably, as you will have additional expenses for rent and food. This will become your buy a house fund. This is something that should be safe and secure. Something like a bond fund, money market, dividend producing stocks, or preferred stocks. I am currently doing something like this and have 50% in a savings account, 25% in a \"\"Blue chip index fund\"\", and 25% in a preferred stock fund. This way you have some decent stability of principle while also having some ability to grow. Once you have that built up to about 12K and you feel comfortable you can start shopping for a house. You may want to be at the high end of your area, so you should try and save at least 10%; or, you may want to be really weird and save the whole thing and buy your house for cash. If you are still single you may want to rent a room or two so your home can generate income. Here in the US there can be other ways to generate income from your property. One example is a home that has a separate area (and room) to park a boat. A boat owner will pay some decent money to have a place to park their boat and there is very little impact to the owner. Be creative and perhaps find a way where a potential property could also produce income. Good luck, check back in with progress and further questions! Edit: After some reading, ISA seem like a really good deal.\"",
"title": ""
},
{
"docid": "126517c7db1abd5867ef8b628dc95969",
"text": "How does one get into a position in their career where their work involves a lot of personal judgement to value investments? I'm going into my junior year of undergrad...does it take years of certain experience in the finservices industry to actually get a job/position type like yours? Sounds like an ideal job!",
"title": ""
},
{
"docid": "d3da0cd1c67d1c4cc43b2d6c2096f217",
"text": "Not sure why you're posting in r/finance; did you meant to post in /r/PersonalFinances ? Or /r/financialindependence ? Anyway, I'll play. There are 3 ways you can go about it, make it 4: 1. Commercial: find yourself a job/career that you'd do it for free. I once met a guy who was in your similar situation and he had a hot dog stand in the hearth of the financial district of a large US city; he did it for the fun and to be social. He'd be there only when the Stock Market was open and if the weather was good. You could also develop a more challenging career for the satisfaction of it: writer, artists, craftsman.... You could go back to school, or take an online class, or do an online degree for the pure satisfaction of it all 2. Start a company. Similar to #1 above, but this this 100% entrepreneurial. It could be just yourself, or enlist the help of the wife; full time or part time. This again, follow your passion; since you're set financially it should not that difficult to break even. With time you could grow and hire people, but that increase the complexity and you might find yourself managing the business and not actually getting the satisfaction of doing what you had set to do. 3. Volunteer: find a non profit whose mission aligns with your values, and volunteer there; 1 or a couple of organizations; if you're up to it with time you could climb up the ranks ... 4. Mentoring: there are a lot of people who dream about being in your situation. I am sure it was not luck but hard work as well. You could become a blogger, write a book (in your name or anonymously); or mentor directly someone, reddit and a web site is a good marketing start. If you have enough money (accredited investor) you could become an angel investor, or join an angel consortium to help people with your background to make something out of themselves. 5. A combination of 2 or more from the above.",
"title": ""
},
{
"docid": "4af05e63f5307611cd4398055972c67c",
"text": "After losing my job (age 59) I started trading currencies. Many people have talents that they can use online and turn them into a business. Once I figured out how to trade I started writing eBooks on how to trade. What is your area of expertise, I bet you have one or can develop one.",
"title": ""
},
{
"docid": "0602eb2408df6d73c04c5a0a08efd72a",
"text": "\"If that's your goal. Watch the entire webinar on warren buffet books by Preston Pysh first for a good intro into stocks bonds etc: https://m.youtube.com/watch?list=PLECECA66C0CE68B1E&v=KfDB9e_cO4k Read Dale Carnegies book \"\"How to Win Friends and Influence People\"\" in order to learn how to communicate to people effectively and create networks. The most important skill in any field you choose to go into. Read \"\"The Everything Store\"\" for essentially an MBA in business. Read \"\"The Intelligent Investor\"\" by Benjamin graham for a bachelors in finance. Then take classes that get you the very best professors in the field of finance, economics, and business at your school and make sure you never stop asking questions. Continue to develop your skills and create good saving & communication habits. And if you want great jobs, get internships. To get internships be involved in as much as you can in campus and take leadership roles (especially when you think you can't handle it) you will grow quickly as a leader and businessman if you do it right. If reading is a bit much for you, try audiobooks. And make sure you enjoy college and surround yourself with ambitious youngsters like yourself. It will help you grow. Enjoy school and be social, make mistakes and do whatever it takes to get a minimum 3.5 GPA (get old tests study groups easy teachers or GPA boosting classes if you need to) Aight that's all I got haha\"",
"title": ""
},
{
"docid": "0f873732b1561ed479b43d1d2d0c5ae3",
"text": "\"I switched to the buy side, here is some things you should do. First of all, you already had 6 interviews. I would say the HR people are going to be less helpful because its harder to differentiate yourself. If you are talking to an investment portfolio, and they ask you any of type of... What are you interested in? How did you get into this space? You better have multiple stock pitches lined up. For example, on the the first question I'm interested in IM because I was exposed at an early age by my parents. Although I didn't know what I was doing, I kept following (STOCK 1, you're first crack in the doorway). *more about your background stuff* In fact, STOCK 1 turned out to be one of my best/worst trades. I thought it was going here and it went there due to this and that and etc...*more info about stock 1* Now, I like to look at names such as STOCK 2-5 because they are show (this multiple or that yield or these moats, depending on who you are talking to). That is how you get a job through an informational interview. As for how you get an informational interview? Go run through linkedin. Sort for investment management. Any person you have a 2nd degree network or Group network is fair game. Just shoot your common friend an email (hey whats up, i saw you were friends with X, i'm really interested in his company can you put me in touch). Although the end person may never respond, the connection is like almost guaranteed to help (assuming you're a nice friendly person). Recruiting for IM is a full time job. Even other industries as well. My roommate graduated Haas Business Undergrad program (top 3 in the country) in TWO years (not 2 letters and science + 2 business, but 2 total years) at 19 years old, took him a full year of recruiting and paying his own way out to NY to meet people to land an banking job (due to similar circumstances, as he was fully out of school and wasn't in the normal rotation). What really concerns me is you keep saying \"\"analysis.\"\" It makes me think that you have no clue what you want to do. Tell me what analysis means. If you want to recruit for IM, you better be watching the markets everyday (esp if you are unemployed), have opinions on lots of companies, etc.\"",
"title": ""
},
{
"docid": "6cc39d91d4ee180fe587330a6019f814",
"text": "You can try paper trading to sharpen your investing skills(identifying stocks to invest, how much money to allocate and stuff) but nothing compares to getting beaten black and blue in the real world. When virtual money is involved you mayn't care, because you don't loose anything, but when your hard earned money disappears or grows, no paper trading can incite those feelings in you. So there is no guarantee that doing paper trading will make you a better investor, but can help you a lot in terms of learning. Secondly educate yourself on the ways of investing. It is hard work and realize that there is no substitute for hard work. India is a growing economy and your friends maybe safe in the short term but take it from any INVESTOR, not in the long run. And moreover as all economies are recovering from the recession there are ample opportunities to invest money in India both good and bad. Calculate your returns and compare it with your friends maybe a year or two down the lane to compare the returns generated from both sides. Maybe they would come trumps but remember selecting a good investment from a bad investment will surely pay out in the long run. Not sure what you do not understand what Buffet says. It cannot get more simpler than that. If you can drill those rules into your blood, you mayn't become a billionaire but surely you will make a killing, but in the long run. Read and read as much as you can. Buy books, browse the net. This might help. One more guy like you.",
"title": ""
},
{
"docid": "4b8f5ad2035755610aa45bc32b482f3c",
"text": "I'd say only look for business opportunities in areas where you have quite a lot of specific knowledge, or the ability to learn from someone who already has it. Further, particularly in a saturated market like the one you describe, you need to have a clear idea of how you're going to be better than other players. It's not enough to just want to do something to make money. You need a solid plan and a solid angle on how you're going to be better than others. If you don't have those things yet for what you're looking at, do more research until you do. If you never get there, don't bother. You're essentially saying you want to exploit arbitrage opportunities, which is a legitimate way to make a living, but it requires a LOT of market knowledge, because there are probably millions of people doing the exact same thing.",
"title": ""
}
] |
fiqa
|
db4cfc1ca7e21f89dd0e8db4ed121bd6
|
Can my brother fix his credit?
|
[
{
"docid": "458c382b3a753db9fa9ea21e13b762b0",
"text": "Well, he could negotiate with the bank to pay off the loan before the foreclosure takes effect. That would obviously cost him a large pile of cash but might remove the foreclosure, and possibly the late payments, from his record. But the real answer is that, having signed the note, he should have been making sure payments occurred so it never got close to foreclosure. That's what he promised the bank he would do. Having failed to do so, he really isn't in a position to complain when they tell other businesses that he didn't meet that promise.",
"title": ""
},
{
"docid": "28b410ed0d92fb6024497c5728194ff0",
"text": "In a nutshell, not really. That's the risk you take when you co-sign for someone. The lender only made the loan because of the strength of your brother's credit, not your mother's, so his reputation (in the form of his credit rating) is going to take the hit because of his mother's behaviors. The one thing he can do is this: The credit bureaus allow you to add a comment or explanation to your credit file which may be helpful, provided potential creditors read it, which is never a guarantee. It's worth trying though, so suggest to him to look into it. Here's a link for him/you/anyone to look at that can help explain how this works and what effects it can have: Adding a comment to your credit file for negative items I hope this helps. Good luck!",
"title": ""
}
] |
[
{
"docid": "4fb2718cd68a11f34f1bfa8fecc81f99",
"text": "\"Give him a second chance to fix it. Some computer problems are hard to nail down. THIS: So you're a tech. It's common to work a problem, do procedure A and B that should've fixed it, test repeatedly to make sure it's fixed, and hand it back to the customer... and then the customer, under his operating conditions, has it fail again. If it comes back to you, you have the foreknowledge that A and B didn't work. And you immediately try C and get it fixed. This knowledge does not magically transfer to other shops. So the user goes into Yelp Mode and storms off angry to another shop... they blindly try A and B again, burn in, send him home, it fails again, user's even madder. This is how computers DON'T get fixed. 5% discount for cash is reasonable. If you want to know why that's normal, sign up for Square. Credit cards and checks have a significant overhead, including the risk of bounces and chargebacks, and that adds up to about 5%. Only a few businesses actively solicit it, but many family-owned businesses would accept it if you offered. So firstoff, does the shop give you a creep factor other than your feelings about him not fixing it the first time? If so, cut your losses and bolt. You will definitely need to pay cash to have this fixed properly. Otherwise take it back to him and give him a chance to fix it properly. Having dealt with a lot of customers, what you say sounds an awful lot like \"\"problem so minor I was able to use it for 9 months before bothering to get it fixed which I'm only doing because the warranty is ending\"\", and therefore, \"\"I am resentful about having to give it up for an extended period of time to have it fixed because the problem Just Isn't That Important\"\". If that's true, you're in a values conflict and you might just be better off recognizing that. Cheap PCs are cheap. But the vast majority of niggling PC problems are not in fact hardware problems, they are just MS-Windows being MS-Windows.\"",
"title": ""
},
{
"docid": "a1fb8aedb73144090ad3c2c369cc4336",
"text": "You can sue them for damages. It would be hard to convince the court that the drop in the credit score was because of that loan, but not unthinkable. Especially if you sue through the small-claims court, where the burden of proof is slightly less formal, you have a chance to win and have them pay the difference in rates that it cost you.",
"title": ""
},
{
"docid": "0c9e775e3cbdb0666196bc0c97ef20bf",
"text": "My son who is now 21 has never needed me to cosign on a loan for him and I did not need to establish any sort of credit rating for him to establish his own credit. One thing I would suggest is ditch the bank and use a credit union. I have used one for many years and opened an account there for my son as soon as he got his first job. He was able to get a debit card to start which doesn't build credit score but establishes his account work the credit union. He was able to get his first credit card through the same credit union without falling work the bureaucratic BS that comes with dealing with a large bank. His interest rate may be a bit higher due to his lack of credit score initially but because we taught him about finance it isn't really relevant because he doesn't carry a balance. He has also been able to get a student loan without needing a cosigner so he can attend college. The idea that one needs to have a credit score established before being an adult is a fallacy. Like my son, I started my credit on my own and have never needed a cosigner whether it was my first credit card at 17 (the credit union probably shouldn't have done that since i wasn't old enough to be legally bound), my first car at 18 or my first home at 22. For both my son and I, knowing how to use credit responsibly was far more valuable than having a credit score early. Before your children are 18 opening credit accounts with them as the primary account holder can be problematic because they aren't old enough to be legally liable for the debt. Using them as a cosigner is even more problematic for the same reason. Each financial institution will have their own rules and I certainly don't know them all. For what you are proposing I would suggest a small line of credit with a credit union. Being small and locally controlled you will probably find that you have the best luck there.",
"title": ""
},
{
"docid": "762f38a3a0d17031245925ce5ae08704",
"text": "\"It's not just that credit history is local; it's that it's a private business run for profit. The \"\"big three\"\" credit bureaus in the US are Experian, Equifax and Transunion. They collect information on debt usage and abuse from various companies in the US, and charge a fee to provide that information (and their judgement of you) to companies interested in offering you further credit. But there's nothing stopping a company from collecting international credit histories, or specialized credit histories either (for instance, there's a company called ChexSystems which focuses on retail purchase financing (mostly auto) and checking account abuse, while ignoring other types of lending). That being said, I don't know of any companies which currently collect international credit histories. Perhaps in Europe, with more nations in close geographic proximity, there would be, but not in North America.\"",
"title": ""
},
{
"docid": "9a1b62882df6f726e099da5dcb959da0",
"text": "\"Despite the unmarried status, you need to see a lawyer. Essentially you have a business with this person owning a home as the asset, and a mortgage for which you are responsible for. A lawyer needs to examine any paperwork you have and with knowledge of your particular jurisdiction's laws can advise you on the proper course of action. You paint a really ugly picture of this guy. I bet you are correct that he is kind of a horrible person. \"\"Tough love\"\" time: You willingly entered into a long term contract with this person. Why would you do such a thing? Perhaps some self reflection and counseling is in order. This is probably more important than worrying about your credit. All that being said, it is good of you to want to break ties with this person. You can rebuild. All will be good if you concentrate on the right things.\"",
"title": ""
},
{
"docid": "71b21fd13403926ec1a6b658feec315f",
"text": "Talk about opportunity cost. Show a rope, and put a tag with him on the end of it. Explain that since he has max out his credit, he can no longer get more. Without more credit here are the things he can't have The key to illustrate is that all the money he makes, for the next several years is obligated to the people he has already borrowed it from. Try to have him imagine giving his entire paycheck to a bank, and then doing that for the next five years. To drive it home, point out that there are 5 super bowls, 5 college championship games, 5 final fours, 5 annual concerts he likes, 5 model years of cars, 5 or more iPhone versions in those five years. Or whatever he is into. 5 years of laptops, 5 years of fishing trips. These things are not affordable to him right now. He has already spent his money for the next 5 years, and those are the things he cannot have because he is, in fact, out of cash. Furthermore, if he continues, the credit will dry up completely and his 5 year horizon could easily become ten. To illustrate how long 5 or 10 years is, have him remember that 10 years ago he might have been in college or the military. That 5 years ago Facebook was no big thing. That 5 years ago the Razr was an awesome phone. That 5 years ago we had a different president.",
"title": ""
},
{
"docid": "d200290fcf0a4b60e1a726fae36993a0",
"text": "Lifestyle Credit Solutions, LLC is a credit repair business that provide the consulting and legal signing services in the USA. We provide educational tools to assist our clients on how to improve, how to monitor and maintain credit score in the future. Call us at 757-350-3467 for free consultation!",
"title": ""
},
{
"docid": "737a84c075b317740b52a0f932e0261a",
"text": "\"It is possible to achieve a substitute for refinancing, but because of the \"\"short\"\" life of cars at least relative to housing, there are no true refinancings. First, the entire loan will not be able to be refinanced. The balance less approximately 80% of the value of the car will have to be repaid. Cars depreciate by something like 20% per year, so $2,000 will have to be repaid. Now, you should be able to get a loan if your boyfriend has good credit, but the interest rate will not drop too much further from the current loan's rate because of your presumably bad credit rating, assumed because of your current interest rate. While this is doable, this is not a good strategy if you intend to have a long term relationship. One of the worst corruptors of a relationship is money. It will put a strain on your relationship and lower the odds of success. The optimal strategy, if the monthly payments are too high, is to try to sell the car so to buy a cheaper car. The difficulty here is that the bank will not allow this if balance of the loan exceeds the proceeds from the sale, so putting as much money towards paying the balance to allow a sale is best. As a side note, please insure your car against occurrences such as theft and damage with a deductible low enough to justify the monthly payment. It is a terrible position to have a loan, no car, and no collateral against the car.\"",
"title": ""
},
{
"docid": "4414e027b470e0bbfd52df49d5900c61",
"text": "I would advise against this, answering only the first part of question #1. Borrowing and lending money among friends and family members can often ruin relationships. While it can sometimes be done successfully, this is most likely not the case. All parties involved have to approach this uniquely in order for it to work. This would include your son's future significant other. Obviously you have done very well financially, congratulations. Your view for your son might be for him to pay you off ASAP: Even after becoming a doctor, continue to live like a student until the loan is paid off. His view might be more conventional; get the car and house and pay off my loans before I am 50. He may start with your view, but two years in he marries a woman that pressures him to be more conventional. My advice would be to give if you can afford to, but if not, do not lend. If you decide to lend then come up with a very clear agreement on the repayment schedule and consequences of non-payment. You may want to see a lawyer. For the rest of it, interest payments received are taxable.",
"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": "df1c8f92bb939890f53041871f05d7eb",
"text": "\"Just a word of warning: Most of the companies that promise to repair your credit are scams or close to them. You could just as easily do yourself what they are going to charge you for. Essentially they write a letter to the credit agencies disputing most or all of the bad stuff on your credit report. When you do that, the credit agency sends an inquiry to the company that reported the negative information requiring them to justify it. If that company doesn't respond within x days, they remove the item from your credit report. These companies depend on the fact that some companies aren't going to hit that deadline or even respond. Perhaps they are just too busy to hassle with providing backup documentation for a $20 late payment. They are banking on getting a few of these cheap \"\"outs\"\" to your benefit and charging you for what amounts to sending out a bunch of form letters. If you don't mind writing a bunch of letters, then you can save a lot of money and get the exact same results. These companies want to pretend they have some insider knowledge or fancy lawyers that know special credit-magic, but they generally don't. The only option I'd consider legitimate and not a waste of your time is a referral from the non-profit National Federation for Credit Counseling. They aren't going to \"\"fix your credit\"\", but will give you advice on budgeting and repairing your credit on your own.\"",
"title": ""
},
{
"docid": "0df687f9e6ccd72053a10020ee9f6e67",
"text": "\"ASSUMING you're talking about a property in the United States, the answer generally would be \"\"no\"\". You aren't actually paying any of the expenses for the property and yet you want to take the deductions for doing so? That's a rather cheeky move, I'd say! (grin) It probably would lead to some real strife with your brother, since he would have proper claim to those credit on the basis he's the one footing the bills for the property. Before you do anything like what you're talking about, it might be best to speak with him, because both of you are running the very real risk of an audit, and if that happens then I can guarantee the IRS will slap the daylights out of you for it. Your brother, I'm sure, is already claiming all of the deductions he can for what he's putting into the property, and on top of that you want to file for your half. What half are you referring to, when your out-of-pocket is zero? So what you're saying is, you think that between you and your brother you should be able to take a credit of 150% of the actual deductions...Sounds like a recipe for disaster to me. I strongly encourage you to talk to a tax professional, but if you get a different answer to this than what I've already given then I'd be stunned. I hope this helps. Good luck!\"",
"title": ""
},
{
"docid": "e0d87eaa0bb1c532220ac894df266ab6",
"text": "I'm not good at persuasion, and I'm not an expert at any of this, but here's what I've been thinking. Rather than telling him that he shouldn't rack up more debt, I'd ask him whether he's planning for his debt levels to increase, remain static, or decrease over the next five years. Try to make it feel like he's the one reaching the conclusion that he should be decreasing his debt load. If he says that he's fine with his debt levels remaining static or increasing, then I don't have any further advice. If he says he's trying to decrease his debt level, but it's actually increasing, then maybe he's in denial.",
"title": ""
},
{
"docid": "9c77bfc2b46e4d18c7bd369f7fc60d4b",
"text": "The only thing that comes to mind is a recent HBO Real Sports segment (http://www.youtube.com/watch?v=WDjkbgrgcmo) on a couple of NFL players who blew all of their money. Seeing how they've ended up might make the right impression, but given that your brother ran up $148K in debt, I'm not optimistic.",
"title": ""
},
{
"docid": "3ad3d880e9d7646869f8714ddd5dd6f0",
"text": "The problem here is that the metrics that are used to track the economy are looking for things like growth and change. In a perfect world, everyone would have exactly what they need and there would no need for economists because the economy would be static.",
"title": ""
}
] |
fiqa
|
820596a78a7fe0d6b46d722297e21031
|
Money put down on home
|
[
{
"docid": "1e1a0d7d396eb26d24b09d1bad7690a2",
"text": "I cannot emphasize enough how important it is, when you buy a house with someone you are not married to, to make a legal agreement on how the money should be divided when you sell. I know it's too late for you, but I write this for anyone else reading this answer. From a legal point of view, if you made no agreement otherwise, you each own 50% of the house. If you want to divide it any other way, you will have to agree what an appropriate division is. Dividing according to the amount each of you paid towards it is a good way. Decide for yourselves if that means just mortgage payments, or also taxes, repairs, utilities etc. You should also be aware that if you have been living together a long time, like more than a year, some jurisdictions will allow one party to sue the other as if they were getting divorced. Then the courts would be involved in the division of property.",
"title": ""
},
{
"docid": "587070af410b39e29a6ef113da901b37",
"text": "You should have drafted a contract of purchase that stipulated out equity stake in the home based of his down payment and yours, along with future monthly payments. But morally, if the house sells, yielding 100,000 profit (after fees/taxes/etc), you should get ( To Calculate Your Cut: (20,000 + Your Total Mortgage Payments Applied to Principle) / (1,900 + His Total Mortgage Payments Applied to Principle Only) * Profit on Sale of House After All Fees = Your Cut His would be: (1,900 + His Total Mortgage Payments Applied to Principle Only) / (20,000 + Your Total Mortgage Payments Applied to Principle) * Profit on Sale of House After All Fees = His Cut You'd then take mortgage payment totals for each; and calculate the payments made towards interest; and claim the correct amount each of you paid on payments for the mortgage interest deduction when you file your taxes. Although, depending on how the loan is written, the banks may issue 1099s which dont reflect actual payments made... Talk to an accountant.",
"title": ""
},
{
"docid": "669f6bb07efee1a77100075f82dd5da0",
"text": "\"To quote Judge Judy: \"\"Our courts are not in the business of settling assets of couples who decide to play house\"\". This is one of the reasons we put off buying houses with a partner until we are married. The courts have rules for couples who marry, then split, but none for those who don't. In the scenerio you spelled out, you are at the mercy of your ex-boyfriend as far as getting your downpayment back. Legally, you are entitled to 50% of the funds remaining after the sale and expenses.\"",
"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": "9603a0a9d4512d6fff36ef5f330d02a4",
"text": "It seems very risky have all of your net worth in this one home. If I were to buy the house, I'm not sure I would put that much down, consider 20% and keep cash on hand, in retirement assets, etc. I would look at how much a mortgage, plus interest, taxes, insurance, etc. would cost with 50% down and with 20% down and see how that impacts your cash flow. Renting may make more sense, it's hard to tell without more specifics (NYTimes Rent/Buy calculator is a nice tool), but regardless, I would not want to have so much net worth tied into one asset and so would opt for less money down if I were to buy. Focus on rebuilding some retirement assets.",
"title": ""
},
{
"docid": "c4142872216d91d5acbe45068cf97c5c",
"text": "\"We’re buying the home right over $200,000 so that means he will only need to put down (as a ‘gift’) roughly $7000. I'm with the others, don't call this a gift unless it is a gift. I'd have him check with the bank that previously refused him a mortgage if putting both of you on a mortgage would allay their concerns. Your cash flow would be paying the mortgage payment and if you failed to do so, then they could fall back on his. That may make more sense to them, even if they would deny each of you a loan on your own. This works for them because either of you is responsible for the whole loan. It works for him because he was already willing to be responsible for the whole loan. And your alternative plan makes you responsible for the whole loan, so this is just as good for you. At what percentage would you suggest splitting ownership and future expenses? Typically a cash/financing partnership would be 50/50, but since it’s only a 3.5% down-payment instead of 20% is that still fair? Surprisingly enough, a 3.5% down-payment that accumulates is about half the equity of a 20% down-payment. So your suggestion of a 25%-75% split makes sense if 20% would give a 50%-50% split. I expected it to be considerably lower. The way that I calculated it was to have his share increase by his equity share of the \"\"rent\"\" which I set to the principal plus interest payment for a thirty year loan. With a 20% down-payment, this would give him 84% equity. With 3.5%, about 40% equity. I'm not sure why 84% equity should be the equivalent of a 50% share, but it may be a side effect of other expenses. Perhaps taking property taxes out would reduce the equity share. Note that if you increase the down-payment to 20%, your mortgage payment will drop substantially. The difference in interest between 3.5% and 20% equity is a couple hundred dollars. Also, you'll be able to eliminate any PMI payment at 20%. It could be argued that if he pays a third of the monthly mortgage payment, that that would give him the same 50% equity stake on a 3.5% down-payment as he would get with a 20% down-payment. The problem there is that then he is effectively subsidizing your monthly payment. If he were to stop doing that for some reason, you'd have what is effectively a 50% increase in your rent. It would be safer for you to handle the monthly payment while he handles the down-payment. If you couldn't pay the mortgage, it sounds like he is in a position to buy out your equity, rent the property, and take over the mortgage payment. If he stopped being able to pay his third of the mortgage, it's not evident that you'd be able to pick up the slack from him much less buy him out. And it's unlikely that you'd find someone else willing to replace him under those terms. But your brother could construct things such that in the face of tragedy, you'd inherit his equity in the house. If you're making the entire mortgage payment, that's a stable situation. He's not at risk because he could take over the mortgage if necessary. You're not at risk because you inherit his equity share and can afford the monthly payment. So even in the face of tragedy, things can go on. And that's important, as otherwise you could lose your equity in the house.\"",
"title": ""
},
{
"docid": "18749a80f9c64913855cdf4a33c8e616",
"text": "Some part of the payment is probably also going for tax escrow, insurance payments, probably PMI if you aren't putting at least 20% down. Get a complete breakdown of the costs. Remember to budget for upkeep. And please see past discussion of why buying a home at this point in your career/life may be very, very premature.",
"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": "2b8397488b963b5b724d80738998b573",
"text": "The more you put down now, the less money you are borrowing. 30yrs of interest adds up. Even paying a small amount at the beginning of the mortgage can turn into a huge savings over the life of the loan. That's why you'll find advice to make extra mortgage payments in the beginning. The question is: Do you have a better use for that money? In particular, do you have any higher-interest debt (higher APR than your mortgage) that needs to be paid off? You generally want to take care of those first. Beyond that can you invest the extra down payment money elsewhere (eg stock market) and get a better return than your mortgage rate? (don't forget about taxes on investment profits). If so, that money will do more good there.",
"title": ""
},
{
"docid": "131dd4b5ab278fb180995c846a2cc23e",
"text": "Good answer, I'm painfully aware of how much money that is for how long, but I think we're getting the runaround here. We're going to find a way to reduce that rate and increase our down payment. It's the only way I see of getting myself into a house",
"title": ""
},
{
"docid": "8b839d729f83a276ef9f64f6ca8539a4",
"text": "A $250K earner might have $4M in retirement savings and $500K in available funds, but doesn't wish to spend all his liquidity on the house. In general, a house might cost 2-3 times one's annual income. It would take many years to get that saved up. They might want to have the house sooner. It all goes back to choice, priorities, personal preference.",
"title": ""
},
{
"docid": "8154fd100f804520d75c6fcbf83c9936",
"text": "I'm surprised to even hear this question with the current state of devaluation of real estate. One thing I'll add to the other answers is to make sure you are doing a true apples/apples comparison to other investments when considering real estate. You can't just take subtract the purchase price from the sales price to get your ROI. Real estate has very heavy carry costs that you need to factor into any ROI calculation including: One more point: A house that you live in shouldn't be considered an investment, but rather an expense. You have to be able to liquidate an investment and collect your return. Unless you plan to move back in with your parents, you are always going to need a place to live so you can never really cash out on that investment, except perhaps by downgrading your lifestyle or a reverse mortgage.",
"title": ""
},
{
"docid": "64d3ed9bdd8bc785d306c43ab39bcb18",
"text": "\"No one has addressed the fact that your loan interest and property taxes are \"\"deductible\"\" on your taxes? So, for the first 2/3 years of your loan, you will should be able to deduct each year's mortgage payment off your gross income. This in turn reduces the income bracket for your tax calculation.... I have saved 1000's a year this way, while seeing my home value climb, and have never lost a down payment. I would consider trying to use 1/2 your savings to buy a property that is desirable to live in and being able to take the yearly deduction off your taxes. As far as home insurance, most people I know have renter's insurance, and homeowner's insurance is not that steep. Chances are a year from now if you change your mind and wish to sell, unless you're in a severely deflated area, you will reclaim at minimum your down payment.\"",
"title": ""
},
{
"docid": "699785d1cb3f24db24145681487e024e",
"text": "\"From what I've read, paying down your mortgage -- above and beyond what you'd normally pay -- is indeed an investment but a very poor form of investment. In other words, you could take that extra money you'd apply towards your mortgage and put it in something that has a much higher rate of return than a house. As an extreme example, consider: if I took $6k extra I would have paid toward my mortgage in a single year, and bought a nice performing stock, I could see returns of 2x or 3x. Now, that implies I know which stock to pick, etcetera.. I found a \"\"mortgage or investment\"\" calculator which could be of use as well: http://www.planningtips.com/cgi-bin/prepay_v_invest.pl (scroll to bottom to see the summary and whether or not prepay or invest wins for the numbers you plugged in)\"",
"title": ""
},
{
"docid": "fe42f4891bb8abe1c35dea12d56d0e78",
"text": "Save up a bigger downpayment. The lender's requirement is going to be based on how much you finance, not the price of the house.",
"title": ""
},
{
"docid": "7a16e7a60d19912d82df48675bb490c6",
"text": "\"I second DJClayworth's suggestion to wait and save a larger down-payment. I'll also add: It looks like you neglected to consider CMHC insurance in your calculation. When you buy your first home with less than 20% down, the bank will require you to insure the mortgage. CMHC insurance protects the bank if you default – it does not protect you. But such insurance does make a bank feel better about lending money to people it otherwise wouldn't take a chance on. The kicker is you would be responsible for paying the CMHC insurance that's protecting the bank. The premium is usually added on to the amount borrowed, since a buyer requiring CMHC insurance doesn't, by definition, have enough money up front. The standard CMHC premium for a mortgage with 5% down, or as they would say a \"\"95% Loan-to-Value ratio\"\" is 2.75%. Refer to CMHC's table of premiums here. So, if you had a down-payment of $17,000 to borrow a remaining $323,000 from the bank to buy a $340,000 property, the money you owe the bank would be $331,883 due to the added 2.75% CMHC insurance premium. This added $8883, plus interest, obviously makes the case for buying less compelling. Then, are there other closing costs that haven't been fully considered? One more thing I ought to mention: Have you considered saving a larger down-payment by using an RRSP? There's a significant advantage doing it that way: You can save pre-tax dollars for your down-payment. When it comes time to buy, you'd take advantage of the Home Buyer's Plan (HBP) and get a tax-free loan of your own money from your RRSP. You'd have 15 years to put the money back into your RRSP. Last, after saving a larger downpayment, if you're lucky you may find houses not as expensive when you're ready to buy. I acknowledge this is a speculative statement, and there's a chance houses may actually be more expensive, but there is mounting evidence and opinion that real estate is currently over-valued in Canada. Read here, here, and here.\"",
"title": ""
},
{
"docid": "f86aff035b0ccc3e9a474f3878d5a5d1",
"text": "\"If you are investing in a mortgage strictly to avoid taxes, the answer is \"\"pay cash now.\"\" A mortgage buys you flexibility, but at the cost of long term security, and in most cases, an overall decrease in wealth too. At a very basic level, I have to ask anyone why they would pay a bank a dollar in order to avoid paying the government 28 - 36 cents depending on your tax rate. After all, one can only deduct interest- not principal. Interest is like rent, it accrues strictly to the lender, not equity. In theory the recipient should be irrelevant. If you have a need to stiff the government, go ahead. Just realize you making a banker three times as happy. Additionally the peace of mind that comes from having a house that no banker can take away from you is, at least for me, compelling. If I have a $300,000 house with no mortgage, no payments, etc. I feel quite safe. Even if my money is tied up in equity, if a serious situation came along (say a huge doctors bill) I always have the option of a reverse mortgage later on. So, to directly counter other claims, yes, I'd rather have $300k in equity then $50k in equity and $225k in liquid assets. (Did you notice that the total net worth is $25k less? And that's even before one considers the cash flow implication of a continuing mortgage. I have no mortgage, and I'm 41. I have a lot of net worth, but the thing that I really like is that I have a roof over my head that no on e can take away from me, and sufficient savings to weather most crises). That said, a mortgage is not about total cost. It is about cash flow. To the extent that a mortgage makes your cash flow situation better, it provides a benefit- just not one that is quantifiable in dollars and cents. Rather, it is a risk/reward situation. By taking a mortgage even when you have the cash, you pay a premium (the interest rate) in order to have your funds available when you need it. A very simple strategy to calculate and/or minimize this risk would be to invest the funds in another investment. If your rate of return exceeds the interest rate minus any tax preference (e.g. 4% minus say a 25% deduction = 3%), your money is better off there, obviously. And, indeed, when interest rates are only 4%, it may may be possible to find that. That said, in most instances, a CD or an inflation protected bond or so won't give you that rate of return. There, you'd need to look at stocks- slightly more risky. When interest rates are back to normal- say 5 or 6%, it gets even harder. If you could, however, find a better return than the effective interest rate, it makes the most sense to do that investment, hold it as a hedge to pay off the mortgage (see, you get your security back if you decide not to work!), and pocket the difference. If you can't do that, your only real reason to hold the cash should be the cash flow situation.\"",
"title": ""
},
{
"docid": "7eef0d2655e34152349d76720329f339",
"text": "\"Well, I suppose it depends on your idea of a \"\"lost cause\"\". Are you planning to lose the house to foreclosure? If so, then yes, it's a lost cause. Don't waste your money paying down the principal. In any other scenario* you should absolutely pay down the principal to the extent that you'd pay down any loan with nearly 9% interest (in other words, moderately aggressively). The fact is, you owe someone $265,000 unless you plan on losing the home to foreclosure. You can manage the amount of interest you pay while you hold that debt by paying it down. * Short sale and bankruptcy would be special conditions as well, but not exactly the same effect as foreclosure.\"",
"title": ""
}
] |
fiqa
|
96ab81f586446afed26493b67fc5acfe
|
Saving for retirement without employer sponsored plan
|
[
{
"docid": "dbd67df0ff9ed5862653c42553791904",
"text": "I'm looking for ways to geared to save for retirement, not general investment. Many mutual fund companies offer a range of target retirement funds for different retirement dates (usually in increments of 5 years). These are funds of funds, that is, a Target 2040 Fund, say, will be invested in five or six different stock and bond mutual funds offered by the same company. Over the years and as the target date approaches closer, the investment mix will change from extra weight given to stock mutual funds towards extra weight being given to bond mutual funds. The disadvantage to these funds is that the Target Fund charges its own expense ratio over and above the expense ratios charged by the mutual funds it invests in: you could do the same investments yourself (or pick your own mix and weighting of various funds) and save the extra expense ratio. However, over the years, as the Target Fund changes its mix, withdrawing money from the stock mutual funds and investing the proceeds into bond mutual funds, you do not have to pay taxes on the profits generated by these transactions except insofar as some part of the profits become distributions from the Target Fund itself. If you were doing the same transactions outside the Target Fund, you would be liable for taxes on the profits when you withdrew money from a stock fund and invested the proceeds into the bond fund.",
"title": ""
},
{
"docid": "473bea867c1ec882bb7dd4adaa25a42a",
"text": "Variable Annuities would be one option though there are SEC warnings about them, for an option that is tax-deferred and intended to be used for long-term investing such as retirement. There is a bit of a cost to gain the tax-deferral which may not always make them worthwhile.",
"title": ""
},
{
"docid": "a67a6ab7b645e0b531b9bf3203845161",
"text": "\"You might consider working on getting your new employer to sponsor a 401k, there may be options where you can invest and they aren't required to add anything as a match (which gives you higher limits). If they don't match, they may just be liable for some administration fees. If you have any side business that you do, you might also be eligible for other \"\"self-employed\"\" options that have higher limits (SEP, Simple - I think they may go up to $15k) although, I'm not sure the nitty gritties of them.\"",
"title": ""
}
] |
[
{
"docid": "f6f282218f40e8d1f7fdc94c153f7f47",
"text": "While you have found a way to possibly gain $1275 in tax free income, you are also risking $1275 if you end up not using the money you contributed. You will have to find a way to have that much in medical expenses by your retirement date or you will leave some money in the Flexible Spending Account. There are risks you take with these accounts (use it or lose it) and risks the company takes (leave with a deficit in the account). Many times we get questions about how to spend all that the employee contributed before the last day of work, or the end of the plan year. You can play it more fair by selecting the maximum amount per check to be taken from your pay check, then waiting until the retirement date to decide how much you will withdraw from the FSA. Your last day of work is your last day to incur a medical expense but you are given a window to submit your claims that extends beyond your last day of work. I have not personally heard of an employer requiring a former employee to pay back the money when there is a deficit in their FSA. Remember people are fired, or laid off with little or no warning trapping their money in a FSA. The fact that you have the ability to plan for this event and considered your options, is a great position to be in.",
"title": ""
},
{
"docid": "d207ee331864241d260bee9c73f4be88",
"text": "If you can afford it, there are very few reasons not to save for retirement. The biggest reason I can think of is that, simply, you are saving in general. The tax advantages of 401k and IRA accounts help increase your wealth, but the most important thing is to start saving at an early age in your career (as you are doing) and making sure to continue contributing throughout your life. Compound interest serves you well. If you are really concerned that saving for retirement in your situation would equate to putting money away for no good reason, you can do a couple of things: Save in a Roth IRA account which does not require minimum distributions when you get past a certain age. Additionally, your contributions only (that is, not your interest earnings) to a Roth can be withdrawn tax and penalty free at any time while you are under the age of 59.5. And once you are older than that you can take distributions as however you need. Save by investing in a balanced portfolio of stocks and bonds. You won't get the tax advantages of a retirement account, but you will still benefit from the time value of money. The bonus here is that you can withdraw your money whenever you want without penalty. Both IRA accounts and mutual fund/brokerage accounts will give you a choice of many securities that you can invest in. In comparison, 401k plans (below) often have limited choices for you. Most people choose to use their company's 401k plan for retirement savings. In general you do not want to be in a position where you have to borrow from your 401k. As such it's not a great option for savings that you think you'd need before you retire. Additionally 401k plans have minimum distributions, so you will have to periodically take some money from the account when you are in retirement. The biggest advantage of 401k plans is that often employers will match contributions to a certain extent, which is basically free money for you. In the end, these are just some suggestions. Probably best to consult with a financial planner to hammer out all the details.",
"title": ""
},
{
"docid": "980789da5abf6464c0e7ff07ef72bc5e",
"text": "\"You have several questions in your post so I'll deal with them individually: Is taking small sums from your IRA really that detrimental? I mean as far as tax is concerned? Percentage wise, you pay the tax on the amount plus a 10% penalty, plus the opportunity cost of the gains that the money would have gotten. At 6% growth annually, in 5 years that's more than a 34% loss. There are much cheaper ways to get funds than tapping your IRA. Isn't the 10% \"\"penalty\"\" really to cover SS and the medicare tax that you did not pay before putting money into your retirement? No - you still pay SS and medicare on your gross income - 401(k) contributions just reduce how much you pay in income tax. The 10% penalty is to dissuade you from using retirement money before you retire. If I ... contributed that to my IRA before taxes (including SS and medicare tax) that money would gain 6% interest. Again, you would still pay SS and Medicare, and like you say there's no guarantee that you'll earn 6% on your money. I don't think you can pay taxes up front when making an early withdrawal from an IRA can you? This one you got right. When you file your taxes, your IRA contributions for the year are totaled up and are deducted from your gross income for tax purposes. There's no tax effect when you make the contribution. Would it not be better to contribute that $5500 to my IRA and if I didn't need it, great, let it grow but if I did need it toward the end of the year, do an early withdrawal? So what do you plan your tax withholdings against? Do you plan on keeping it there (reducing your withholdings) and pay a big tax bill (plus possibly penalties) if you \"\"need it\"\"? Or do you plan to take it out and have a big refund when you file your taxes? You might be better off saving that up in a savings account during the year, and if at the end of the year you didn't use it, then make an IRA contribution, which will lower the taxes you pay. Don't use your IRA as a \"\"hopeful\"\" savings account. So if I needed to withdrawal $5500 and I am in the 25% tax bracket, I would owe the government $1925 in taxes+ 10% penalty. So if I withdrew $7425 to cover the tax and penalty, I would then be taxed $2600 (an additional $675). Sounds like a cat chasing it's tail trying to cover the tax. Yes if you take a withdrawal to pay the taxes. If you pay the tax with non-retirement money then the cycle stops. how can I make a withdrawal from an IRA without having to pay tax on tax. Pay cash for the tax and penalty rather then taking another withdrawal to pay the tax. If you can't afford the tax and penalty in cash, then don't withdraw at all. based on this year's W-2 form, I had an accountant do my taxes and the $27K loan was added as earned income then in another block there was the $2700 amount for the penalty. So you paid 25% in income tax for the earned income and an additional 10% penalty. So in your case it was a 35% overall \"\"tax\"\" instead of the 40% rule of thumb (since many people are in 28% and 35% tax brackets) The bottom line is it sounds like you are completely unorganized and have absolutely no margin to cover any unexpected expenses. I would stop contributing to retirement today until you can get control of your spending, get on a budget, and stop trying to use your IRA as a piggy bank. If you don't plan on using the money for retirement then don't put it in an IRA. Stop borrowing from it and getting into further binds that force you to make bad financial decisions. You don't go into detail about any other aspects (mortgage? car loans? consumer debt?) to even begin to know where the real problem is. So you need to write everything down that you own and you owe, write out your monthly expenses and income, and figure out what you can cut if needed in order to build up some cash savings. Until then, you're driving across country in a car with no tires, worrying about which highway will give you the best gas mileage.\"",
"title": ""
},
{
"docid": "8f84614007906bfba1c9fddd39f429e2",
"text": "This is what I'm planning on. Retirement would be difficult, if not impossible, without the expected SS payments. In terms of current retirement planning, it's the difference between putting 20% of my income aside for retirement, and 35% of my income aside. It's one thing to keep the wealthy happy and tax free, it's another to deny 80% of the population something that they will have to have at some point.",
"title": ""
},
{
"docid": "b889451312f36ac447ef241b9b309b29",
"text": "\"There are so many people who did not save throughout their work careers largely because they had a safe and secure pension to count on. Many of these people turned down other more lucrative opportunities and gave generously from whatever saving they had. They did this because they had a state pension that they could count on. Apart from a tiny SS amount, the \"\"untouchable\"\" and thought-to-be, guaranteed pension was the only retirement plan. Suddenly and with no time to save money to replace pension shortfalls, their earnings could be greatly reduced, or completely wiped out. Tragic.\"",
"title": ""
},
{
"docid": "7b6a14735718b5db9645179bf66da501",
"text": "\"There is a basic difference between saving for voluntary retirement (i.e. choosing to do things other than work even though you could still work) and the need to save for later in life in general. Regardless of how much you like your job, a time will eventually come when you are no longer able to work, and you will need an alternate source of income to live from at that point. Unfortuately, this is also the time when most people generally have the highest medical bills as well, and may need other services such as long-term nursing home care. So even if you plan to work as long as possible, a retirement fund is an excellent way to plan for these needs as it is tax-advantaged and many companies offer matching contributions. I would simply recommend that you see \"\"retirement accounts\"\" as a good way to accomplish your goals - you don't have to use them to create a \"\"typical\"\" retirement. Once you've taken advantages of the match and tax subsidies, you may also wish to consider saving for an annuity. Fees can be high, so you will need to do your homework (generally, you want to wait and buy an immediate annuity), but this is another way to turn savings into guaranteed income once you need to stop working. Best of luck!\"",
"title": ""
},
{
"docid": "0a7256c869390ae3442a3831d5568b59",
"text": "If you have kids, there are also 529 funds to consider. They aren't pre-tax, but do have tax advantages. If your employer doesn't have a 401k, chances are they don't offer Health Savings Accounts, but that is another thing to look at.",
"title": ""
},
{
"docid": "17d8e4f29e00cd50db0ad51da51ed795",
"text": "\"Your retirement PLAN is a lifelong plan and shouldn't be tied to your employer status. Max out your 401(k) contribution to the maximum that your employer matches (that's a 100% ROI!) and as much as you can afford. When you leave the work force rollover your 401(k) to an IRA account (e.g.: you can create an IRA account with any of the online brokerage firms Schwab, E-Trade, Sharebuilder, or go with a brick-and-mortar firm like JP Morgan, Stifel Nicolaus, etc.). You should have a plan: How much money do you need/month for your expenses? Accounting for inflation, how much is that going to be at retirement (whatever age you plan to retire)? How much money do you need to have so that 4.5% of that money will provide for your annual living expenses? That's your target retirement amount of savings. Now figure out how to get to that target. Rule #1 Invest early and invest often! The more money you can sock away early in your career the more time that money has to grow. If you aren't comfortable allocating your investments yourself then you could go with a Targeted Retirement Fund. These funds have a general \"\"date\"\" for retirement and the assets are allocated as appropriate for the amount of risk appropriate for the time to retirement.\"",
"title": ""
},
{
"docid": "438545110087a3379434531a7350b942",
"text": "\"To be honest, I think a lot of people on this site are doing you a disservice by taking your idea as seriously as they are. Not only is this a horrible idea, but I think you have some alarming misunderstandings about what it means to save for retirement. First off, precious metals are not an \"\"investment\"\"; they are store of value. The old saying that a gold coin would buy a suit 300 years ago and will still buy a suit today is pretty accurate. Buying precious metals and expecting them to \"\"appreciate\"\" in the future because they are \"\"undervalued\"\" is just flat-out speculation and really doesn't belong in a well-planned retirement account, unless it's a very small part for the purposes of diversification. So the upshot to all of this is the most likely outcome is you get zero return after inflation (maybe you'll get lucky or maybe you'll be very unlucky). Next you would say that sure, you're giving up some expected return for a reduction in risk. But, you've done away with diversification which is the most effective way to minimize risk... And I'm not sure what scenario you're imagining that the stock market or any other reasonable investment doesn't make any returns. If you invest in a market wide index fund, then the expected return is going to be roughly in proportion with productivity gains. To say that there will be no appreciation of the stock market over the next 40 years is to say that technological progress will stop and/or we will have large-scale economic disruptions that will wipe out 40 years of progress. If that happens, I would say it's highly questionable whether silver will actually be worth anything at all. I'd rather have food, property, and firearms. So, to answer your question, practically any other retirement savings plan would be better than the one that you currently outlined, but the best plan is just to put your money in a very low-cost index fund at Vanguard and let it sit until you retire. The expense ratios are so stupidly small, that it's not going to meaningfully affect your return.\"",
"title": ""
},
{
"docid": "f35317548c0342e1ecd3c69b1d7c2e3e",
"text": "\"A trick that works for some folks: \"\"Pay yourself first.\"\" Have part of your paycheck put directly into an account that you promise yourself you won't touch except for some specific purpose (eg retirement). If that money is gone before it gets to your pocket, it's much less likely to be spent. US-specific: Note that if your employer offers a 401k program with matching funds, and you aren't taking advantage of that, you are leaving free money on the table. That does put an additional barrier between you and the money until you retire, too. (In other countries, look for other possible matching fundsand/or tax-advantaged savings programs; for that matter there are some other possibilities in the US, from education savings plans to discounted stock purchase that you could sell immediately for a profit. I probably should be signed up for that last...)\"",
"title": ""
},
{
"docid": "202c53d0be008d1d7d0ed008a4c644c8",
"text": "\"Are you not allowed the y5 option? I'm no guru, but one thing that sticks out to me in that plan is the vesting period of 5yrs as opposed to 10, so the money is \"\"yours\"\" in half the time....so if after 5yrs, you find a better gig, you can roll those benefits into another account and manage them on your own (or just leave and draw on them when you are eligible) Then again, knowing that many municipalities are in shit shape due to their pension benefit liabilities, they may be pushing to the longer vesting period to a) encourage you to stay employed there and/or b) allow them to keep the money should you leave before that 10yr period Like I said, though- I'm def no guru, and that is only one aspect of these plans. I'd personally reach out to a financial planner so they can game it all out for you and equip you with the info to make the best choice\"",
"title": ""
},
{
"docid": "f8b413ac5350b149280bf7267b6012d0",
"text": "I agree that to take the money from the defined benefit plan you are saying that you can get a better return than the plan. You are taking all the risk if you take the lump sum. But there are two more risks that you are taking by keeping the money in the plan even though you are decades from retirement. Funding risk: companies and state/city/county governments have underfunded their pension programs due to budget pressure. In some cases they have skipped payments when the market was good, because they felt they were ahead of their obligations. They also delayed or skipped contributions when they had a budget shortfall, and wanted to not end the government/company fiscal year in the red. The risk is that they can get so far behind that they change their promises to current and former employees. This was one of the issues with the city of Detroit this year. Bankruptcy: even though their are guarantees regarding pension benefits, the Pension Benefit Guaranty Corporation does set a maximum benefit. If the company goes bankrupt or the plan is terminated you might not get all the money you were expecting. While the chances of taking a haircut generally impacts people who have a long career, because they are entitled to a large benefit, it can impact people who don't expect it.",
"title": ""
},
{
"docid": "a1d69eb985a4d50a9c80952015d3bf59",
"text": "\"Why? Simply: because it has been mandated as law, and so you may have no choice in the matter whether to contribute or not. Quoting from GOV.UK – Workplace pensions: ‘Automatic enrolment’ A new law means that every employer must automatically enrol workers into a workplace pension scheme if they: Next: even if you think you will work \"\"until you die\"\", you can still access the money saved in the pension scheme when you attain the required minimum age for withdrawals under your scheme. For instance, that may be age 55, but it may also vary by scheme. Becoming fully retired — as in stopping all work — is not a requirement to access retirement income from your pension scheme. In the eyes of a pension scheme, retirement is typically when you elect to take your income benefits according to the established rules of the scheme. Quoting from nidirect – Working past State Pension age: Continuing in work and your workplace pension If you reached the age at which you can start claiming your workplace pension scheme, you don't need to stop work in order to claim. You have a number of options, including taking some of the pension you've built up while continuing to work for the same employer. As to why things are set up this way: While some younger folk may, today, expect to continue working until death, for a variety of reasons that isn't always possible. Two typical such reasons are: disability, and involuntary unemployment (i.e. willing and able but still can't land the next job). Moreover, plans change. Young workers with health and vitality may expect they'll always feel invincible, but end up learning otherwise over time, and may come to appreciate the savings that were forced upon them. The \"\"forced savings\"\" aspect of state and state-sponsored pension schemes are meant to provide some safety net for those later years when it is a strong possibility that one can't continue to work. The alternative is to be a 100% burden on family and/or society.\"",
"title": ""
},
{
"docid": "c4ec080f48901e5d1591782ca087bcba",
"text": "The Trinity study looked at 'safe' withdrawal rates from retirement portfolios. They found it was safe to withdraw 4% of a portfolio consisting of stocks and bonds. I cannot immediately find exactly what specific investment allocations they used, but note that they found a portfolio consisting largely of stocks would allow for the withdrawal of 3% - 4% and still keep up with inflation. In this case, if you are able to fund $30,000, the study claims it would be safe to withdraw $900 - $1200 a year (that is, pay out as scholarships) while allowing the scholarship to grow sufficiently to cover inflation, and that this should work in perpetuity. My guess is that they invest such scholarship funds in a fairly aggressive portfolio. Most likely, they choose something along these lines: 70 - 80% stocks and 20 - 30% bonds. This is probably more risky than you'd want to take, but should give higher returns than a more conservative portfolio of perhaps 50 - 60% stocks, 40 - 50% bonds, over the long term. Just a regular, interest-bearing savings account isn't going to be enough. They almost never even keep up with inflation. Yes, if the stock market or the bond market takes a hit, the investment will suffer. But over the long term, it should more than recover the lost capital. Such scholarships care far more about the very long term and can weather a few years of bad returns. This is roughly similar to retirement planning. If you expect to be retired for, say, 10 years, you won't worry too much about pulling out your retirement funds. But it's quite possible to retire early (say, at 40) and plan for an infinite retirement. You just need a lot more money to do so. $3 million, invested appropriately, should allow you to pull out approximately $90,000 a year (adjusted upward for inflation) forever. I leave the specifics of how to come up with $3 million as an exercise for the reader. :) As an aside, there's a Memorial and Traffic Safety Fund which (kindly and gently) solicited a $10,000 donation after my wife was killed in a motor vehicle accident. That would have provided annual donations in her name, in perpetuity. This shows you don't need $30,000 to set up a scholarship or a fund. I chose to go another way, but it was an option I seriously considered. Edit: The Trinity study actually only looked at a 30 year withdrawal period. So long as the investment wasn't exhausted within 30 years, it was considered a success. The Trinity study has also been criticised when it comes to retirement. Nevertheless, there's some withdrawal rate at which point your investment is expected to last forever. It just may be slightly smaller than 3-4% per year.",
"title": ""
},
{
"docid": "8e33d3966285f67dd5f2d0f6ae221bcf",
"text": "401(k) plans, 403(b) plans, IRAs etc all require more paperwork than a non-tax-advantaged investment. As a result, most such plans (with Vanguard as well as with other management companies) offer only a small set of investment options, and so it costs the plan sponsor (you wearing your Employer hat) money if you want to add more investment options for your Solo 401(k) plan). Note that with employer-sponsored retirement plans, investments in each mutual fund might be coming in small amounts from various employees, much less than the usual minimum investment in each fund, and possibly less than the minimum per-investment transaction requirement (often $50) of the fund group. Taking care of all that is expensive, and it is reasonable that Vanguard wants to charge you (the Employer) a fee for the extra work it is doing for you. When I was young and IRAs had just been invented (and the annual contribution limit was $2000 for IRAs), I remember being charged a $20 annual fee per Vanguard fund that I wanted to invest in within my IRA but this fee was waived once my total IRA assets with Vanguard had increased above $10K.",
"title": ""
}
] |
fiqa
|
d97dff19586dfd0270e664faf56757a1
|
Lend money at a rate linked to the prime rate
|
[
{
"docid": "03eefa72a1390fb78982f750e40bfd7f",
"text": "Yes. In the US these are called certificates of deposit or savings accounts. Every run-of-the-mill bank offers them. You give the bank money and in return they pay you an interest rate that is some fraction of or (negative) offset from the returns they expect to make from your money. Since most investments that a bank makes (say, loaning money to a local business) are themselves based on some multiple of or (positive) offset from the prime rate, in return the interest rate that they offer you is also mathematically based on the prime rate. You can find lists of banks offering the best returns on CDs or savings accounts at sites like BankRate.",
"title": ""
}
] |
[
{
"docid": "4cbc08ca586bb6481b02839029c3f7d0",
"text": "What you are looking here is the cost of capital, because that is what you are effectively giving up in order to invest in those loans. In a discounted cash-flow, it would be the *i* in the denominator (1+*i*). For instance, instead of purchasing those loans you could have lent your money at the risk-free rate (not 100% true, but typical assumption), and therefore you are taking a slight risk in those loans for a higher return. There are several ways to compute that number, the one most often used would be the rate if the bank were to lend that money. In this way, it would be the Fed Funds rate plus some additional risk premium.",
"title": ""
},
{
"docid": "51ace463ec495857250cc8631b9ee890",
"text": "I got that notion from Max Kaiser, his ideas about that are mostly about interest rate apartheid - banks and rich people get money at zero interest, we pay 9, 10, 30%. I think it involves everything from how we are seen in the eyes of the law to assuming risk, etc. We are expected to play by the rules and they are not.",
"title": ""
},
{
"docid": "2c0081f11b746bf57c7e9a1076671560",
"text": "Basically, what you describe exists in many countries - not in the USA though. In Europe, people have checking accounts with allowed overdraft, typically three month net salaries. You can just this money any day as you like, and pay it back - completely or partially - any day as you like. Interest is calculated for each day on the amount used that day; and the collateral is 'future income', predicted / expected from previous income. In the USA, credit cards have taken its place, with stricter different rules and limitations. In addition, many of the extra rules in loans were invented to take advantage of the ignorance or situation of the borrower to make even more money. For example, applying extra payments to future due payments instead of to the principal makes that principal produce more interest while the extra payments just sit around.",
"title": ""
},
{
"docid": "7bd327e9066516fa1c01300257f23a07",
"text": "It's easiest to get your payment from the PMT function in Excel or Google Sheets. So a $100,000 30 year mortgage at 3% looks like this: The basic calculation is pretty simple. You take the annual interest rate, say 3%, divided by 12, times the existing principal balance: The idea is that borrowers would like to have a predictable payment. The earlier payments are proportionally more interest than principal than later payments are but that's because there is much more principal outstanding on month 1 than on month 200.",
"title": ""
},
{
"docid": "08ae45c25bb27e5167d571d0f6f23ba3",
"text": "\"This is the best tl;dr I could make, [original](https://www.nytimes.com/2017/07/27/business/dealbook/libor-fca-banks-andrew-bailey.html) reduced by 82%. (I'm a bot) ***** > The one-year Libor, which represents the rate of interest on a loan between banks to be paid back within a year, is the most commonly used index for mortgages in the United States, according to the Consumer Financial Protection Bureau. > &quot;And while we have given our full support to encouraging panel banks to continue to contribute and maintaining Libor over recent years, we do not think markets can rely on Libor continuing to be available indefinitely.\"\" > Mr. Bailey said that the regulator had agreed with the panel banks to sustain Libor through 2021 to smooth a transition to new rates. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6r14fz/libor_brought_scandal_greatest_financial_scandal/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~180937 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*: **Libor**^#1 **rate**^#2 **bank**^#3 **over**^#4 **Financial**^#5\"",
"title": ""
},
{
"docid": "33580f0327e95b794853dd6c811a609b",
"text": "Generally, if you watch for the detail in the fine print, and stay away from non-FDIC insured investments, there is little difference, so yes, pick the highest you can get. The offered interest rate is influenced by what the banks are trying to accomplish, and how their current and desired customer base thinks. Some banks have customer bases with very conservative behavior, which will stick with them because they trust them no matter what, so a low interest rate is good enough. The disadvantage for the bank is that such customers prefer brick-and-mortar contact, which is expensive for the bank. Or maybe the bank has already more cash than they need, and has no good way to invest it. Other banks might need more cash flow to be able to get stronger in the mortgage market, and their way of getting that is to offer higher interest rates, so new customers come and invest new money (which the bank in turn can then mortgage out). They also may offer higher rates for online handling only. Overall, there are many different ways to make money as a bank, and they diversify into different niches with other focuses, and that comes with offering quite different interest rates.",
"title": ""
},
{
"docid": "0728c771610b8d73857743160db5d244",
"text": "This is of course using 'new math'. Namely, if I lend you $100 and you keep it for a month, I've lent you $100. In fact, if I loan you $100 for a year I've loaned you $100. But if I lend you $100 overnight, you pay me back in the morning, I lend you $100 overnight, you pay me back in the morning and we repeat that for a month, I've supposedly lent you $3,000. That's some interesting math for sure.",
"title": ""
},
{
"docid": "5fc1b6f50dab7b6be9ad8ae72e29381d",
"text": "\"My answer is specific to the US because you mentioned the Federal Reserve, but a similar system is in place in most countries. Do interest rates increase based on what the market is doing, or do they solely increase based on what the Federal Reserve sets them at? There are actually two rates in question here; the Wikipedia article on the federal funds rate has a nice description that I'll summarize here. The interest rate that's usually referred to is the federal funds rate, and it's the rate at which banks can lend money to each other through the Federal Reserve. The nominal federal funds rate - this is a target set by the Board of Governors of the Federal Reserve at each meeting of the Federal Open Market Committee (FOMC). When you hear in the media that the Fed is changing interest rates, this is almost always what they're referring to. The actual federal funds rate - through the trading desk of the New York Federal Reserve, the FOMC conducts open market operations to enforce the federal funds rate, thus leading to the actual rate, which is the rate determined by market forces as a result of the Fed's operations. Open market operations involve buying and selling short-term securities in order to influence the rate. As an example, the current nominal federal funds rate is 0% (in economic parlance, this is known as the Zero Lower Bound (ZLB)), while the actual rate is approximately 25 basis points, or 0.25%. Why is it assumed that interest rates are going to increase when the Federal Reserve ends QE3? I don't understand why interest rates are going to increase. In the United States, quantitative easing is actually a little different from the usual open market operations the Fed conducts. Open market operations usually involve the buying and selling of short-term Treasury securities; in QE, however (especially the latest and ongoing round, QE3), the Fed has been purchasing longer-term Treasury securities and mortgage-backed securities (MBS). By purchasing MBS, the Fed is trying to reduce the overall risk of the commercial housing debt market. Furthermore, the demand created by these purchases drives up prices on the debt, which drives down interest rates in the commercial housing market. To clarify: the debt market I'm referring to is the market for mortgage-backed securities and other debt derivatives (CDO's, for instance). I'll use MBS as an example. The actual mortgages are sold to companies that securitize them by pooling them and issuing securities based on the value of the pool. This process may happen numerous times, since derivatives can be created based on the value of the MBS themselves, which in turn are based on housing debt. In other words, MBS aren't exactly the same thing as housing debt, but they're based on housing debt. It's these packaged securities the Fed is purchasing, not the mortgages themselves. Once the Fed draws down QE3, however, this demand will probably decrease. As the Fed unloads its balance sheet over several years, and demand decreases throughout the market, prices will fall and interest rates in the commercial housing market will fall. Ideally, the Fed will wait until the economy is healthy enough to absorb the unloading of these securities. Just to be clear, the interest rates that QE3 are targeting are different from the interest rates you usually hear about. It's possible for the Fed to unwind QE3, while still keeping the \"\"interest rate\"\", i.e. the federal funds rate, near zero. although this is considered unlikely. Also, the Fed can target long-term vs. short-term interest rates as well, which is once again slightly different from what I talked about above. This was the goal of the Operation Twist program in 2011 (and in the 1960's). Kirill Fuchs gave a great description of the program in this answer, but basically, the Fed purchased long-term securities and sold short-term securities, with the goal of twisting the yield curve to lower long-term interest rates relative to short-term rates. The goal is to encourage people and businesses to take on long-term debt, e.g. mortgages, capital investments, etc. My main question that I'm trying to understand is why interest rates are what they are. Is it more of an arbitrary number set by central banks or is it due to market activity? Hopefully I addressed much of this above, but I'll give a quick summary. There are many \"\"interest rates\"\" in numerous different financial markets. The rate most commonly talked about is the nominal federal funds rate that I mentioned above; although it's a target set by the Board of Governors, it's not arbitrary. There's a reason the Federal Reserve hires hundreds of research economists. No central bank arbitrarily sets the interest rate; it's determined as part of an effort to reach certain economic benchmarks for the foreseeable future, whatever those may be. In the US, current Fed policy maintains that the federal funds rate should be approximately zero until the economy surpasses the unemployment and inflation benchmarks set forth by the Evans Rule (named after Charles Evans, the president of the Federal Reserve Bank of Chicago, who pushed for the rule). The effective federal funds rate, as well as other rates the Fed has targeted like interest rates on commercial housing debt, long-term rates on Treasury securities, etc. are market driven. The Fed may enter the market, but the same forces of supply and demand are still at work. Although the Fed's actions are controversial, the effects of their actions are still bound by market forces, so the policies and their effects are anything but arbitrary.\"",
"title": ""
},
{
"docid": "f7f27dfffa398fe03986c118eb595efc",
"text": "The Fed controls the base interest rate for lending to banks. It raises this rate when the economy is doing well to limit inflation, and lowers this rate when the economy is doing poorly to encourage lending. Raising the interest rate signals that the Fed believes the economy is strong/strengthening. Obviously it's more complicated than that but that's the basic idea.",
"title": ""
},
{
"docid": "b67743cb4e5d07b3227567e526be37de",
"text": "\"The interest rate offered by a bond is called the nominal interest rate. The so-called real interest rate is the nominal interest rate minus the rate of inflation. If inflation is equal to or greater than the nominal rate at any given time, the REAL interest rate is zero or negative. We're talking about a ten year bond. It's possible for the real interest rate to be negative for one or two years of the bond's life, and positive for eight or nine. On the other hand, if we have a period of rising inflation, as in the 1970s, the inflation rate will exceed the (original) interest rate in most years, meaning that the real interest rate on the ten year bond will be negative over its whole life. People lost \"\"serious\"\" money on bonds (and loans) in the 1970s. In such situations, the BORROWERS make out. That is, they borrow money at low rates, earn inflation (plus a little more) pay back inflated dollars, and pocket the difference. For them, the money is \"\"free.\"\"\"",
"title": ""
},
{
"docid": "09341e6010c64a265197ec01f49e1ee6",
"text": "As no one has mentioned them I will... The US Treasury issues at least two forms of bonds that tend to always pay some interest even when prevailing rates are zero or negative. The two that I know of are TIPS and I series bonds. Below are links to the descriptions of these bonds: http://www.treasurydirect.gov/indiv/research/indepth/tips/res_tips.htm http://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm",
"title": ""
},
{
"docid": "b681511148f7950613ac99ca0cd0f0fd",
"text": "\"The \"\"pure play\"\" would be using interest rate options. http://www.cboe.com/Products/InterestRateOptionsSpecs.aspx\"",
"title": ""
},
{
"docid": "55a4f389f97a24cc60821597a105d24a",
"text": "In the EU, you might be looking for Directive 2000/35/EC (Late Payment Directive). There was a statutory rate, 7% above the European Central Bank main rate. However, this Directive was recently repealed by Directive 2011/7/EU, which sets the statutory rate at ECB + 8%. (Under EU regulations, Directives must be turned into laws by national governments, which often takes several months. So in some EU countries the local laws may still reflect the old Directive. Also, the UK doesn't participate in the Euro, and doesn't follow the ECB rate)",
"title": ""
},
{
"docid": "e16b834629cbf3ea7dbfc65ce2a43ca4",
"text": "\"In the United States, if someone refers to the \"\"interest rate\"\", especially if heard on news or talk radio in particular, they are almost always referring to the federal funds rate, a rate set forth and maintained by the United States Federal Reserve (the \"\"fed\"\" for short). If the fed opts to raise or lower this rate, it subsequently effects all interest rates, whether by being directly connected in a chain of loans or by market demand through the efficiency of financial markets in the case of bond auctions. The FOMC meets eight times each year to determine the target for the federal funds rate. The federal funds rate effects all interest rates because it is the originating rate of interest on all loans in the chain of loans. Because of this significance as a benchmark for all interest rates, it is the rate most commonly referred to as \"\"interest rate\"\" when used alone. That is why other rates are specified by what they actually are; e.g., mortgage rates; 10 year & 30 year (for 10 year treasury and 30 year treasury bond yields respectively); savings rate, auto rate, credit card rate, CD rate—all rates of interest effected by the originating loan that is the federal funds rate. This is true in the United States but will vary for other countries. In general though, it will almost always refer to the originating rate for all loans in a given country, institution, etc. Note that bonds have yields that are based on market demand that is, in turn, based on the federal funds rate. It is because of the efficiency of financial markets that the demand, and thus the yields, are correlated to the federal funds rate.\"",
"title": ""
},
{
"docid": "735cdacb94f03923d7db3c732b06db0f",
"text": "\"These rates are so low because the cost of money is so low. Specifically, two rates are near zero. The Federal Reserve discount rate, which is \"\"the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility--the discount window.\"\" The effective federal funds rate, which is the rate banks pay when they trade balances with each other through the Federal Reserve. Banks want to profit on the loans they make, like mortgage loans. To do so, they try to maximize the difference between the rates they charge on mortgages and other loans (revenue), and the rates they pay savings account holders, the Federal Reserve or other banks to obtain funds (expenses). This means that the rates they offer to pay are as close to these rates as possible. As the charts shows, both rates have been cut significantly since the start of the recession, either through open market operations (the federal funds rate) or directly (the discount rate). The discount rate is set directly by the regional Federal Reserve banks every 14 days. In most cases, the federal funds rate is lower than the discount rate, in order to encourage banks to lend money to each other instead of borrowing it from the Fed. In the past, however, there have been rare instances where the federal funds rate has exceeded the discount rate, and it's been cheaper for banks to borrow money directly from the Fed than from each other.\"",
"title": ""
}
] |
fiqa
|
521adda36c0b95cb3a8d7b89443bb084
|
Is Bogleheadism (index fund investing) dead?
|
[
{
"docid": "bfb844efdcbda51b6ec1bb6a74c2bfb2",
"text": "The reports of my death have been greatly exaggerated. - Twain I use index funds in my retirement planning, but don't stick to just S&P 500 index funds. Suppose I balance my money 50/50 between Small Cap and Large Cap and say I have $10,000. I'd buy $5,000 of an S&P Index fund and $5,000 of a Russell 2000 index fund. Now, fast forward a year. Suppose the S&P Index fund has $4900 and the Russell Index fund has $5200. Sell $150 of Russell Index Fund and buy $150 of S&P 500 Index funds to balance. Repeat that activity every 12-18 months. This lets you be hands off (index fund-style) on your investment choices but still take advantage of great markets. This way, I can still rebalance to sell high and buy low, but I'm not stressing about an individual stock or mutual fund choice. You can repeat this model with more categories, I chose two for the simplicity of explaining.",
"title": ""
},
{
"docid": "cbcdc3ea9bf228d4bf12f852eef8e693",
"text": "If the ship is sinking, switching cabins with your neighbor isn't necessarily a good survival strategy. Index funds have sucked, because frankly just about everything has sucked lately. I still think it is a viable long term strategy as long as you are doing some dollar cost averaging. You can't think about long term investing as a steady climb up a hill, markets are erratic, but over long periods of time trend upwards. Now is your chance to get in near the ground floor. I can completely empathize that it is painful right now, but I am a believer in market efficiency and that over the long haul smart money is just more expensive (in terms of fees) than set-it-and-forget it diversified investments or target funds.",
"title": ""
},
{
"docid": "aac84e8f8334ccd8fda74433b189625a",
"text": "It's incredibly difficult to beat the market, especially after you're paying out significant fees for managed funds. The Bogleheads have some good things going for them on their low cost Vanguard style funds. The biggest winners in the financial markets are the people collecting fees from churn or setting up the deals which take advantage of less sophisticated/connected players. Buy, Hold and Forget has been shown as a loser as well in this recession. Diversifying and re-balancing however takes advantage of market swings by cashing out winners and buying beaten down stocks. If you take advantages of general market highs and lows (without worrying about strict timing) every few months to re-balance, you buy some protection from crashes in any given sector. One common guideline is to use your age as the percentage of your holdings that are in cash equivalents, rather than stocks. At age 28, at least 28% of my account should be in bonds, real estate, commodities, etc. This should help guide your allocation and re-balancing strategy. Finally, focusing on Growth and Income funds may give you a better shot at above S&P returns, but it's wise to hold a small percentage in the S&P 500 as well.",
"title": ""
},
{
"docid": "8cb7eb913f9f29b9425752068c1fd065",
"text": "\"From http://blog.ometer.com/2008/03/27/index-funds/ , Lots of sensible advisers will tell you to buy index funds, but importantly, the advice is not simply \"\"buy index funds.\"\" There are at least two other critical details: 1) asset allocation across multiple well-chosen indexes, maintained through regular rebalancing, and 2) dollar cost averaging (or, much-more-complex-but-probably-slightly-better, value averaging). The advice is not to take your single lump sum and buy and hold a cap-weighted index forever. The advice is an investment discipline which involves action over time, and an initial choice among indexes. An index-fund-based strategy is not completely passive, it involves some active risk control through rebalancing and averaging. If you'd held a balanced portfolio over the last ten years and rebalanced, and even better if you'd dollar cost averaged, you'd have done fine. Your reaction to the last 10 years incidentally is why I don't believe an almost-all-stocks allocation makes sense for most people even if they're pretty young. More detail in this answer: How would bonds fare if interest rates rose? I think some index fund advocacy and books do people a disservice by focusing too much on the extra cost of active management and why index funds are a good deal. That point is true, but for most investors, asset allocation, rebalancing, and \"\"autopilotness\"\" of their setup are more important to outcome than the expense ratio.\"",
"title": ""
},
{
"docid": "897210fbc785440af682a59544834ec4",
"text": "Dogma always disappoints. The notion that an index fund is the end-all, be-all for investing because the expense ratios are low is a flawed one. I don't concern myself with cost as an independent factor -- I look for the best value. Bogle's dogma lines up with his business, so you need to factor that in as well. Vendors of any product spend alot of time and money convincing you that unique attributes of their product are the most important thing in the world. Pre-crash, the dogmatics among us were bleating about how Fixed-date Retirement Funds were the new paradigm. Where did they go?",
"title": ""
},
{
"docid": "7a2f3874313270fac9674ad2cccbc5c1",
"text": "Excellent Question! I agree with other repliers but there are some uneasy things with index funds. Since your view is death, I will take extremely pessimist view things that may cause it (very big may): I know warnings about stock-picking but, in imperfect world, the above things tend to happen. But to be honest, they feel too much paranoia. Better to keep things simple with good diversification and rebalancing when people live in euphoria/death. You may like Bogleheads.org.",
"title": ""
},
{
"docid": "84af74fe96101aba83d1b6e7c3bc8013",
"text": "I think you can do better than the straight indexes. For instance Vanguard's High Yield Tax Exempt Fund has made 4.19% over the past 5 years. The S&P 500 Index has lost -2.25% in the same period. I think good mutual funds will continue to outperform the markets because you have skilled managers taking care of your money. The index is just a bet on the whole market. That said, whatever you do, you should diversify. List of Vanguard Funds",
"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": "5e94e5d41bae9c399526f9811866f985",
"text": "It's quite alright, it's been over a decade since he passed so I'm not particularly sensitive about it any more. I'll have a look at investopedia, but what I'm mainly interested in is private equity. I wanted to ask directly about that, but I feel that I need a frame of reference to understand what's going on. As in, I doubt I'd be able to really get private equity without first having an understanding of public trading. Is this subreddit really that reputable? I've learned to not really trust reddit, for the most part. Is there some kind of curation here?",
"title": ""
},
{
"docid": "842ba6cab5bdbcd099f09cd5f35e37ca",
"text": "Fair, but to the first point, taking action on the climate change/stranded asset risk would disqualify the fund as a passive investment. Half the point of passive funds is to take that part of risk out of the equation - poor investment decisions - and rely on the average S&P500 performance instead. I get the second point, though I question whether that point has validity until activist investors are in significant, which is a long way off.",
"title": ""
},
{
"docid": "8cbbc2352d0e322816d8a9623eee9235",
"text": "\">those fossil free funds have been outperforming their fossilized index counterparts Why am I not surprised that over a 3 year or less time period, during the worst oil crash in at least 20 years, a fund the excludes that sector is performing better? What a misleading statement. Like saying in early 2000, \"\"oh my tech-free fund is outperforming the funds with tech stocks\"\" while ignoring the dot com bubble bursting having any effect, and implying that tech stocks will never recover.\"",
"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": "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": "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": ""
},
{
"docid": "08d5925d71bac21221c3b6a39b518ede",
"text": "There is a difference between trading which is short term focussed and investing which is longterm focussed. On the long term what drives stock prices is still the overall economy and the performance of the underlying business aspects. I do not think that any trading algorithms will change this. These are more concerned with short term profits regardless of the underlying business economics. Therefore I think that longterm investing using index funds is still a viable strategy for most private investors.",
"title": ""
},
{
"docid": "91ac0fed77d4e280fa2c49c0ad065fa6",
"text": "\"'Buy and Hold' Is Still a Winner: An investor who used index funds and stayed the course could have earned satisfactory returns even during the first decade of the 21st century. by By Burton G. Malkiel in The Wall Street Journal on November 18, 2010: \"\"The other useful technique is \"\"rebalancing,\"\" keeping the portfolio asset allocation consistent with the investor's risk tolerance. For example, suppose an investor was most comfortable choosing an initial allocation of 60% equities, 40% bonds. As stock and bond prices change, these proportions will change as well. Rebalancing involves selling some of the asset class whose share is above the desired allocation and putting the money into the other asset class. From 1996 through 1999, annually rebalancing such a portfolio improved its return by 1 and 1/3 percentage points per year versus a strategy of making no changes.\"\" Mr. Malkiel is a professor of economics at Princeton University. This op-ed was adapted from the upcoming 10th edition of his book \"\"A Random Walk Down Wall Street,\"\" out in December by W.W. Norton. http://online.wsj.com/article/SB10001424052748703848204575608623469465624.html\"",
"title": ""
},
{
"docid": "071c2132ddf7a9b2e7d73def17bc4916",
"text": "Wheee . . .what fun . .these fucking bankers never learn and on the other side of the shit spectrum we have the Jolly octopus (AKA Goldman) with investors pulling out of their Rainbow unicorn fund. I am watching you octopus and if you need [help vs the Octopus](http://www.investorclaims.com/Brokerage-Firms/Goldman-Sachs.aspx)",
"title": ""
},
{
"docid": "545e9e42cce983a37760a9ff4bb41ede",
"text": "I tried direct indexing the S&P500 myself and it was a lot of work. Lots of buys and sells to rebalance, tons of time in spreadsheets running calculations/monitoring etc, dealing with stocks being added or removed from the index, adding money (inflows). Etc. All of the work is the main reason I stopped. I came to realize the 0.05% I pay Vanguard is a great deal.",
"title": ""
},
{
"docid": "db5cee669f27b0a3197bf6309cf96007",
"text": "Statistically speaking active strategies **are** strictly on par with, or worse when you subtract fees, than passive strategies (regardless of how much time or money you spend investigating companies). Actively managed mutual funds are by and large just a racket where one class of rich people soaks another class of rich people plus some of the middle class. So yeah they should go ahead and call it a day. About time IMO.",
"title": ""
},
{
"docid": "be6485d1e027582bd54cfed4272ca86a",
"text": "\"Hope springs eternal in the human breast. No actively managed fund has beaten the indices over a long period of time, but over shorter periods, actively managed funds have beaten the indices quite often, sometimes quite spectacularly, and sometimes even for many years in a row. Examples from the past include Fidelity Magellan and Legg Mason Value Trust. So people buy actively managed funds hoping to cash in on such good performance. The difficulty is, of course, that many people don't even think about investing in a fund until it is listed in some \"\"Top Forty Funds of last year\"\" compilation, and for many funds, they have already peaked, and new buyers are often disappointed. Some people who invested earlier plan on getting out of the fund before the fund falls flat on its face, and fewer even succeed in doing so. As to why 401k plans often have high-cost actively managed funds, there are several reasons. A most important one is that there are numerous companies that act as administrators of 401k programs and these companies put together package deals of 401k programs (funds, administrative costs etc), and small employers perforce have to choose from one of these packages. Second, there are various rules that have come into existence since the first days of 401k (and 403b) programs such as the investment choices must include funds of different types, and actively managed funds (large cap, small cap etc) are one of the choices that must be offered. Gone are the days when the only choice was a variable annuity offered by the insurance company administering the 401k program. Finally, program participants also have hopes (cf. opening sentence) and used to demand that the 401k program offer a few actively managed funds, not just index funds.\"",
"title": ""
},
{
"docid": "6c107b901b430498b1ecacaf3deb6978",
"text": "\"I have seen Dave Ramsey give extremely bad retirement advice in the past. For example, he turned fund fees into a political issue and said people who worry about mutual fund fees are [\"\"from a liberal political perspective...\"\"](https://youtu.be/zR64-Ea_r5U?t=214) They are *actually* concerned about the [compounding returns of investors ](https://www.youtube.com/watch?v=KuZvu_h3x1A) and how higher fees will eat at them, rather than the amount of money that investment companies will get in fees. There's no politics involved at all, he's just a blabbering idiot. I don't see any reason to follow his advice.\"",
"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": "f824112e5846e465882fb442b9ec6dd2",
"text": "\"As an exercise, I want to give this a shot. I'm not involved in a firm that cares about liquidity so all this stuff is outside my purview. As I understand it, it goes something like this: buy side fund puts an order to the market as a whole (all or most possibly exchanges). HFTs see that order hit the first exchange but have connectivity to exchanges further down the pipe that is faster than the buy side fund. They immediately send their own order in, which reaches exchanges and executes before the buy side fund's order can. They immediately put up an ask, and buy side fund's order hits that ask and is filled (I guess I'm assuming the order was a market order from the beginning). This is in effect the HFT front running the buy side fund. Is this accurate? Even if true, whether I have a genuine issue with this... I'm not sure. Has anyone on the \"\"pro-HFT\"\" side written a solid rebuttal to Lewis and Katsuyama that has solid research behind it?\"",
"title": ""
}
] |
fiqa
|
6ea17f867f77cb207ffc8e081e535a34
|
Is it legal to receive/send “gifts” of Non-Trivial Amounts to a “friend”?
|
[
{
"docid": "5b716f07f38802c613035f3a7fad6a1a",
"text": "\"Am I right to say that no tax needs to be given for the annual ~$130k USD, since they are considered as annual gift tax exclusion? Not only that you're wrong, but it also looks like a tax fraud, not just mere avoidance. You'll have hard time proving to any judge or jury that the gifts are \"\"in good faith\"\". By the way, $5 a month is below minimum wage.\"",
"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": ""
},
{
"docid": "0057efd3bc83870cb6b88d7d8c6884fe",
"text": "\"In almost all cases, gifts from employers are considered taxable compensation, based on the employer-employee nature of the relationship. Furthermore, cash gifts are always considered to be intended as wages, regardless of how you receive the money. Furthermore, regardless of whether you expect to receive anything in return (such as contractual consideration) or whether the amounts are large enough to be declared as taxable personal gifts, it is likely that the IRS would consider these payments to be \"\"disguised wages\"\", as these payments would fail several tests that the IRS uses to determine whether benefits provided by the employer are non-taxable, including: I'd recommend reviewing IRS publication 535 here, as well as publication 15-B here for more on what constitutes taxable wages & benefits. It seems very unlikely to me that you could make a persuasive legal defense in which you claimed to be working full-time for $60.00 per year and just happened to be receiving large personal gifts of $130,000.00. In my opinion it seems much more likely that these payments would be found to be taxable wages for services rendered.\"",
"title": ""
}
] |
[
{
"docid": "5def525b2a57b46bcad7d51eab491630",
"text": "\"Can I teach children an invaluable skill for free and provide a website or PayPal link for anyone who appreciates the result of my gift to their child and wishes to gift me money (or maybe they don’t have a child but believe in my revolutionary contribution to the future) as they see fit, up to $10K? Two immediately obvious problems with this strategy: What about when you receive gifts from people who aren't in the US? You have to declare, and pay taxes on, foreign gifts. It seems to me that these may not be gifts because they are given in connection with the service you provided rather than from \"\"detached and disinterested generosity\"\" as required to make the gift tax exempt. (See Commisioner v. Duberstein -- gift given to thank associate for a sales lead did not arise from detached generosity. See Stanton v. United States -- gift given in appreciation of services rendered may or may not be a gift for tax purposes. See also Bogardus v. Commissioner -- gifts inspired by past service can be tax exempt.)\"",
"title": ""
},
{
"docid": "ff1680202ea7ecb2eaf5bf1e9ad9f44d",
"text": "It's the gifter who is liable for gift tax, not the recipient. The recipient just needs to file a certain form for reporting purposes if the gift exceeds a certain amount.",
"title": ""
},
{
"docid": "a8a360a48db46630fb2e66038158a69f",
"text": "The counsel of a friend doesn't come with a legal or professional liability. The key to doing this sort of thing successfully is to respect boundaries. You are providing advice and discussion, not taking over your friend's life.",
"title": ""
},
{
"docid": "16d390cfb5153bdf18a35dc9bb7bd127",
"text": "I want to know it is taxable any guidelines As per the income tax rules, this is taxable to you. The amount will be treated as gift to you. The limit of this in a year [across all friends] is Rs 50,000. If the limit exceeds, the entire amount is taxable. You would need to declare this as other income and pay taxes as per your tax brackets.",
"title": ""
},
{
"docid": "da157099bd7822e78f0992c122a1b165",
"text": "\"Usually services like Western Union or MoneyGram only give the recipient the money, not the information about who and when sent it. But you can verify with them directly. However, for legal/tax reasons, your friend might have to declare that it was a gift, and where it came from. So depending on the country of the destination you might not be able to completely \"\"hide\"\" from the recipient, even if the transfer service technically allows that. In any case, when you transfer the money out from the US you'll have to provide your personal identification and information. Since the USA PATRIOT Act, it is impossible to transact \"\"anonymously\"\" (not sure if it ever was possible in the US, actually).\"",
"title": ""
},
{
"docid": "35541f20e6e0513e4ae7160d281c2cf4",
"text": "\"To echo part of stannius' response. If it's taxable, there would be tax on $19,999, just a bit less than on $20,000. Your uncle may have a credential, and members here may not, but still he may be mistaken. Or he could be giving you advice on how to skirt the law. The taxability and the $20,000 threshold are unrelated! Trying to 'avoid' the $20,000 is a completely misplaced effort. Gifts from anyone are not taxable to the recipient. So long as nothing is received in return, it's not taxable income to her. In contrast a blogger with a \"\"tip jar\"\" is soliciting money in exchange for advice, entertainment, etc. that's taxable. Donations to individuals, in the circumstance you describe are not income to her, nor are they deductible to the donor. Edit - a fellow blogger (more than that, she's my tax crush) had an article Cancer survivor gets $19,000 tax bill for GoFundMe donations which may render my answer incorrect. Other article on this story suggest that the IRS is notified, but the nature of the transfer needs to be addressed. In my opinion, you should find a new uncle CPA.\"",
"title": ""
},
{
"docid": "2bcc8b74c04144dc676027c589f65a93",
"text": "It is certainly legal to transfer money between people, no matter how often, as long as the money is not originally from illegal sources. If you are gaining in the process, you need to pay taxes on your (net) gain, as on any income; but as always, taxed income is still income. Consider the accumulating transaction cost, the inherent risk (of your friend keeping the money), and the risk of the exchange rate going the other way; but otherwise it is a simple arbitrage business. There are thousands of people who do that all year long at stock exchanges and money markets; you might be able to do it more efficient there, and you don't need a 'friend' on the other side for that.",
"title": ""
},
{
"docid": "09f8267e7da430fa6e197b1a3cb493f3",
"text": "\"I am neither a lawyer nor a tax accountant, and if you're dealing with serious money I suggest you consult a professional. But my understanding is: If you make a loan at zero interest or at below-market rates, the IRS will consider the difference between the interest that you do charge and the market rate to be a gift. That is, if someone could get a loan from a bank and he'd pay $1000 in interest for the year, but instead you loan him the money as a friend interest free, than as far as the IRS is concerned you have given him a $1000 gift, and you could potentially have to pay gift tax. Or they might \"\"impute\"\" the interest to you and tax you on $1000 of additional income. If you have no agreement on repayment terms, if it's all, \"\"Hey Joe, just pay me back when you can\"\", then the IRS is likely to consider the entire \"\"loan\"\" to be a gift. There's an annual exclusion on gifts -- I think it's now $13,000 -- so if you loan your buddy fifty bucks to tide him over until next pay day, the IRS isn't going to get involved in that. They're worried about more serious money. And yes, the IRS does \"\"police loan rates\"\". The IRS examines exact numbers for all sorts of things. If, say, you go on a 100-mile overnight business trip, and the company gives you $10,000 for travel expenses, the IRS is likely to say that this is not a tax-deductible travel expense at all but a sham to hide part of your salary from taxes. Or if you donate a pair of old socks to charity and declare a $500 charitable contribution deduction, the IRS will say that that is not a realistic value for a pair of old socks and disallow the deduction. Etc. A small discrepancy from market rates can be justified for any number of reasons. If the book value of a used car is $5000 and you sell it to your neighbor for $4900, the IRS is unlikely to question it, there are any number of legitimate business reasons why you had to give a discount to make the sale. But if you sell it to him for $50, they may declare that this is not a sale but a gift. Etc.\"",
"title": ""
},
{
"docid": "7c0a0278315e3d323293789b6ad3c383",
"text": "Some aspect is legal some in grey area. Please maintain proper documentation. Generally for amounts in question, there is less scrutiny from Income tax. Buying on behalf of your friends... First there is a limit of 250,000 USD, so fine on this point. Second is only licensed dealers can participate in FX. In your case, it can appear that you are acting as dealer. On getting money back, this looks like gift and if it's more than 50,000 in a year it is taxable. Of course if you establish that it was convenience then no issues. So you need good amount of documentation, plus if you are getting paid after few months, tax can treat this as personal loan and arrive at deemed interest. Edits: There is no guideline as to what the income tax will ask you, if there is a scrutiny. One would need to have paper work, a letter from friend requesting you to purchase things. You would have to keep a record of items ordered and match it with credit card statement. Proof that the goods were delivered to his address. Proof of equivalent credit entry from your friend into your bank statement. Reason why your friend could not do this himself. i.e. what is stopping him from getting a international debit/credit card? So if you think you can convince that its convenience, yes, else taxes.",
"title": ""
},
{
"docid": "c6c91d59a4fc2f74edce1e2045913676",
"text": "Yes, depending on what you're trying to achieve. If its just a symbolic gift - you can use a service like this. There are several companies providing this service, look them up, but the prices are fairly the same. You'll end up getting a real stock certificate, but it will cost a lot of overhead (around $40 to get the certificate, and then another $40 to deposit it into a brokerage account if you want to sell it on a stock exchange). So although the certificate is real and the person whose name on it is a full-blown shareholder, it doesn't actually have much value (unless you buy a Google or Apple stock, where the price is much much higher than the fees). Take into account that it takes around 2 months for the certificate to be issued and mailed to you, so time accordingly. Otherwise, you can open a custodial brokerage account, and use it to buy stocks for the minor. Both ways are secure and legal, each for its own purpose and with its own fees.",
"title": ""
},
{
"docid": "bcfbda6f6efd84f91788beed892a5c23",
"text": "\"Donations, particularly those in the context of you providing a free service (software, libraries, etc.) are a notable grey area in tax code. Simply naming a button \"\"Donate\"\" doesn't necessarily classify the money transfer as a \"\"gift\"\". The IRS can decide that it's money you're being paid to continue your excellent work/service, making it taxable income (unless you're a registered non-profit organization). In the instance of Patreon, and many other crowd-funding services, you're providing a certain level of \"\"service\"\" for each tier of donations (such as early access or something, I'm not sure what you're offering), which means they're receiving consideration for their donations, which most likely makes it fall into taxable income (again, unless you're a registered non-profit organization). State tax law is even more convoluted, and you should consult your tax professional for clarification on your specific situation.\"",
"title": ""
},
{
"docid": "7580d0f09609a37a313d9980cfe14a7c",
"text": "\"Daniel covered the correct way to file on the returns, I'm chiming in specifically to discuss the question of whether it could be a gift. The IRS will classify it as a tip even if the person giving it says it's a gift if a service was rendered before the gift was given. The only way that you could make a case to the IRS that it was a gift is if you have a personal relationship outside of the working environment, and the person giving the gift provides an explanation for the motivation behind the gift. Such explanations as \"\"Happy Birthday\"\" or \"\"Congratulations on graduating\"\" or other special occasions could be gifts. But \"\"you did a good job, and I just want to reward you for your effort\"\" is not a reason someone gives a gift, and the IRS will penalize you if you do not have evidence that it was a gift rather than a tip.\"",
"title": ""
},
{
"docid": "231c8283c9656c1c1a24480712f7b79b",
"text": "The standard approach is to reach an agreement and put it in writing. What you agree upon is up to you, but in the US if you want to avoid gift taxes larger loans need to be properly documented and must charge at least a certain minimal interest rate. (Or at least you must declare and be taxed upon that minimal income even if you don't actually charge it. Last I looked, the federal requirement was somewhere under 0.3%, so this isn't usually an issue. There may also be state rules.) When doing business with friends, treat it as business first, friendship second. Otherwise you risk losing both money and friendship. Regarding what rate to charge: That is something you two have to negotiate, based on how much the borrower needs the money, how much lending the money puts the lender at risk, how generous each is feeling, etc. Sorry, but there is no one-size-fits-all answer here. What I charge (or insist on paying to) my brother might be different from what I charge my cousin, or a co-worker, or best friend, or... If both parties think it's fair, it's fair. If you can't reach an agreement, of course, the loan doesn't happen.",
"title": ""
},
{
"docid": "fa50b3447866754944dd49e44d0b667d",
"text": "You friend would only be able to deposit this in NRO account. You may have to explain the source of money. If you declare it as gift, then you would need to pay gift tax. What you are doing is converting USD to INR outside the normal banking network and this maybe in volition of FEMA [Foreign Exchange Management Act].",
"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": ""
}
] |
fiqa
|
65bc5b3f0814807f687ca34e035b6744
|
What mix of credit lines and loans is optimal for my credit score?
|
[
{
"docid": "eac9e52597b4b09f967bb1dd55f9d6af",
"text": "Over time, you'll have more loans, maybe a few store cards, mortgage, car loan, etc. I'm a fan of maximizing one's wealth, and the small rebate/reward adds up over time, so I'm not against the store cards, so long as you always pay the bill in full. As far as FICO is concerned, what they 'like' to see may not necessarily be optimum for you. I'd suggest you go about your business, and over time use the few cards that combine to give to the best benefit combination that works for you.",
"title": ""
},
{
"docid": "5125c60090eb9d00dda6f03f165512d5",
"text": "Please do not conflate number of credit cards with amount of debt. Consider two scenarios, The latter scenario yields much better credit scoring. Many recommendation sources suggest the following, Although your credit score seems very important, it is only important when you have financial interactions (such as applying for credit or services) where the other party makes decisions based upon the score. You should only obtain loans and credit when you want and it makes sense based upon your needs; choosing to live your life to serve credit scoring agencies may not be your happy place.",
"title": ""
},
{
"docid": "ca4efa920bc59cb71bee8163139124a8",
"text": "I think you are interpreting their recommended numbers incorrectly. They are not suggesting that you get 13-21 credit cards, they are saying that your score could get 13-21 points higher based on having a large number of credit cards and loans. Unfortunately, the exact formula for calculating your credit score is not known, so its hard to directly answer the question. But I wouldn't go opening 22+ credit cards just to get this part of the number higher!",
"title": ""
}
] |
[
{
"docid": "c80690c383f8d27b8c6dca8f9e944273",
"text": "Generally speaking personal loans have higher rates than car loans. During fairly recent times, the market for car loans has become very competitive. A local credit union offers loans as low as 1.99% which is about half the prevailing mortgage rate. In comparison personal loans are typically in the 10-14% range. Even if it made mathematical sense to do so, I doubt any bank would give you a personal loan secured by a car rather than car loan. Either the brain would not work that way; or, it would simply be against company policy. These questions always interest me, why the desire to maximize credit score? There is no correlation between credit score and wealth. There is no reward for anything beyond a sufficiently high score to obtain the lowest rates which is attained by simply paying one's bills on time. One will always be limited by income when the amount able to borrow is calculated regardless of score. I can understand wanting to maximize different aspects of personal finance such as income or investment return percentage, etc.. By why credit score? This is further complicated by a evolving algorithm. Attempts to game the score today, may not work in the future.",
"title": ""
},
{
"docid": "a137feafa12e8c55808779a1912728fd",
"text": "\"It's probably important to understand what a credit score is. A credit score is your history of accruing debt and paying it back. It is supplemented by your age, time at current residence, time at previous residences, time at your job, etc. A person with zero debt history can still have a decent score - provided they are well established, a little older and have a good job. The top scores are reserved for those that manage what creditors consider an \"\"appropriate\"\" amount of debt and are well established. In other words, you're good with money and likely have long term roots in the community. After all, creditors don't normally like being the first one you try out... Being young and having recently moved you are basically a \"\"flight risk\"\". Meaning someone who is more likely to just pick up and move when the debt becomes too much. So, you have a couple options. The first is to simply wait. Keep going to work, keep living where you are, etc. As you establish yourself you become less of a risk. The second is to start incurring debt. Personally, I am not a fan of this one. Some people do well by getting a small credit card, using some portion of it each month and paying it off immediately. Others don't know how to control that very well and end up having a few months where they roll balances over etc which becomes a trap that costs them far more than before. If I were in your position, I'd likely do one of two things. Either buy the phone outright and sign up for a regular mobile plan OR take the cheaper phone for a couple years.\"",
"title": ""
},
{
"docid": "d9758baa2e8282051e22e60e24a3559e",
"text": "\"It makes no sense to spend money unnecessarily, just for the purpose of improving your credit score. You have to stop and ask yourself the question \"\"Why do I need a good credit score?\"\" Most of the time, the answer will be \"\"so I can get a lower interest rate on (ABC loan) in the future.\"\" However, if you spend hundreds or even thousands of dollars in the present, just so that you can save a few points on a loan, you're not going to come out ahead. The car question should be considered strictly in the context of transportation expenses: \"\"It cost me $X to get around last year using Lyft. If instead I owned a car, it would have cost me $Y for gas, insurance, depreciation, parking, etc.\"\" If you come out ahead and Y < X, then buy the car. Don't jump into an expensive vehicle (which is never a good investment) or get trapped into an expensive lease which will costs you many times more than the depreciation value of a decent used car, just so that you can save a few points on a mortgage. Your best option moving forward would be to pay off your student loans first, getting rid of that interest expense. Place the remainder in savings, then start to look at a budget. Setting aside a 20% down payment on a home is considered the minimum to many people, and if that is out of reach you might need to consider other neighborhoods (less than 400K!). If you're still concerned about your credit score, a good way to build that up (once you have a budget and spending under control) is to get a credit card with no annual fees. Start putting all of your expenses on the credit card (groceries, etc), and paying off the balance IN FULL every month. By spending only what you need to within a reasonable budget, and making payments on time and in full, your credit rating will begin to gradually improve. If you have a difficult time tracking your expenses or sticking to a budget, then there is potential for danger here, as credit cards are notorious for high interest and penalties. But by keeping it under control and putting the rest toward savings, you can begin to build wealth and put yourself in a much better financial position moving into the future.\"",
"title": ""
},
{
"docid": "be3ebb9a653b7bd6e4acc2702bbd01c0",
"text": "Nobody outside of the credit scoring agencies know exactly what goes into the scoring formula. That said, I don't think there is any evidence that keeping a fixed loan (car or mortgage) open is necessary to keep its effect on your score. It doesn't improve your utilization ratio like an open revolving credit line would. And depending on the exact details of how your specific lender reports the loan, it might appear detrimental to your debt-to-income ratio. I would simply pay it off.",
"title": ""
},
{
"docid": "c23a1e24ab98e5bdc93c4eaa97a24cd2",
"text": "It may or may not be a good idea to borrow money from your family; there are many factors to consider here, not the least of which is what you would do if you got in serious financial trouble and couldn't make your scheduled payments on the loan. Would you arrange with them to sell the property ASAP? Or could they easily manage for a few months without your scheduled payments if it were necessary? A good rule of thumb that some people follow when lending to family is this: don't do it unless you're 100% OK with the possibility that they might not pay you back at all. That said, your question was about credit scores specifically. Having a mortgage and making on-time payments would factor into your score, but not significantly more heavily than having revolving credit (eg a credit card) and making on time payments, or having a car loan or installment loan and making on time payments. I bought my house in 2011, and after years of paying the mortgage on time my credit score hasn't changed at all. MyFico has a breakdown of factors affecting your credit score here: http://www.myfico.com/crediteducation/whatsinyourscore.aspx. The most significant are a history of on-time payments, low revolving credit utilization (carrying a $4900 balance on a card with a $5000 limit is bad, carrying a $10 balance on the same card is good), and overall length of your credit history. As to credit mix, they have this to say: Types of credit in use Credit mix determines 10% of my FICO Score The FICO® Score will consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. It's not necessary to have one of each, and it's not a good idea to open credit accounts you don’t intend to use. The credit mix usually won’t be a key factor in determining your FICO Score—but it will be more important if your credit report does not have a lot of other information on which to base a score. Have credit cards – but manage them responsibly Having credit cards and installment loans with a good payment history will raise your FICO Score. People with no credit cards tend to be viewed as a higher risk than people who have managed credit cards responsibly.",
"title": ""
},
{
"docid": "4d7dbfeee6ded15327e2a8a4f21ff978",
"text": "That seems a little high in my experience. I've used a home equity line of credit instead, as the rates are much lower (~3.5%).",
"title": ""
},
{
"docid": "fc6ff22d4a46d1b5085eed248eb0c7e0",
"text": "That sounds like bunk too me. Even if it does, the total number of loans isn't going to be a major factor in your credit score. I wouldn't worry about it unless you have other reasons to consolidate the loans. For example, Government student loans can introduce risk into your finances in that they are difficult to dismiss as part of a bankruptcy if that ever becomes necessary.",
"title": ""
},
{
"docid": "baa1e82b41268f3df7d3fc799c8edb6d",
"text": "Would opening a second credit card contribute in any meaningful way to my credit mix or no, since it's the same type of credit? Yes, multiple lines of credit help your credit score, even if they are all credit cards. There are experts on both sides of this argument though. For example, Fico says that you shouldn't open a new credit card just for the credit boost, while NerdWallet cautiously recommends it. My recommendation is that if you're disciplined with your credit spending, it will help a little. If yes, is it worth it to take the hit to my average account age sooner rather than later by opening a new credit card? If you want to build up your number of credit lines, do so well before you need to use your credit to take out a loan. Not only will your credit score take a hit from the average age dropping, but you'll also have a hard pull on your credit report. As Fixed Point points out, though, you will see a larger improvement to your credit score by adding another type of credit, such as a home loan, to your credit mix. If you are already limited your credit utilization to 10%-30% then you probably won't be able to reach your goal by just adding a credit card.",
"title": ""
},
{
"docid": "caf5a078744cc54a81030ae60317e94b",
"text": "\"Would it make sense to take a loan from a relative... Other people have pointed this out, but honestly, I'd be very reluctant to answer \"\"yes\"\" to this no matter how you completed that sentence. There's always an intangible risk to mixing money and relationships. There's a lot that can go wrong during the duration of the loan, and if it does, the consequences could be a lot greater than just a bad credit score.\"",
"title": ""
},
{
"docid": "6de2264a0a9d82015be6c5d897c27ebd",
"text": "I have a car loan paid in full and even paid off early, and 2 personal loans paid in full from my credit union that don't seem to reflect in a positive way and all 3 were in good standing. But you also My credit card utilization is 95%. I have a total of 4 store credit cards, a car loan, 2 personal loans. So assuming no overlap, you've paid off three of your ten loans (30%). And you still have 95% utilization. What would you do if you were laid off for six months? Regardless of payment history, you would most likely stop making payments on your loans. This is why your credit score is bad. You are in fact a credit risk. Not due to payment history. If your payment history was bad, you'd likely rank worse. But simple fiscal reality is that you are an adverse event away from serious fiscal problems. For that matter, the very point that you are considering bankruptcy says that they are right to give you a poor score. Bankruptcy has adverse effects on you, but for your creditors it means that many of them will never get paid or get paid less than what they loaned. The hard advice that we can give is to reduce your expenses. Stop going to restaurants. Prepare breakfast and supper from scratch and bag your lunch. Don't put new expenses on your credit cards unless you can pay them this month. Cut up your store cards and don't shop for anything but necessities. Whatever durables (furniture, appliances, clothes, shoes, etc.) you have now should be enough for the next year or so. Cut your expenses. Have premium channels on your cable or the extra fast internet? Drop back to the minimum instead. Turn the heat down and the A/C temperature up (so it cools less). Turn off the lights if you aren't using them. If you move, move to a cheaper apartment. Nothing to do? Get a second job. That will not only keep you from being bored, it will help with your financial issues. Bankruptcy will not itself fix the problems you describe. You are living beyond your means. Bankruptcy might make you stop living beyond your means. But it won't fix the problem that you make less money than you want to spend. Only you can do that. Better to stop the spending now rather than waiting until bankruptcy makes your credit even worse and forces you to cut spending. If you have extra money at the end of the month, pick the worst loan and pay as much of it as you can. By worst, I mean the one with the worst terms going forward. Highest interest rate, etc. If two loans have the same rate, pay the smaller one first. Once you pay off that loan, it will increase the amount of money you have left to pay off your other loans. This is called the debt snowball (snowball effect). After you finish paying off your debt, save up six months worth of expenses or income. These will be your emergency savings. Once you have your emergency fund, write out a budget and stick to it. You can buy anything you want, so long as it fits in your budget. Avoid borrowing unless absolutely necessary. Instead, save your money for bigger purchases. With savings, you not only avoid paying interest, you may actually get paid interest. Even if it's a low rate, paid to you is better than paying someone else. One of the largest effects of bankruptcy is that it forces you to act like this. They offer you even less credit at worse terms. You won't be able to shop on credit anymore. No new car loan. No mortgage. No nice clothes on credit. So why declare bankruptcy? Take charge of your spending now rather than waiting until you can't do anything else.",
"title": ""
},
{
"docid": "3b46cd1cd828458b9853b605028dc8a9",
"text": "\"Your headline question \"\"How do you find best mortgage without damaging credit score?\"\" has a simple answer. If you have all your ducks in a row, and know what you are doing, you will get qualified. If you are like a recent client of mine, low FICO, low downpayment, random income, you might have issues. If your self-prequalification is good, you are in control, go find the best rate/ total cost, no need to put in multiple applications. If, for some reason you do, FICO sees that you are shopping for a single loan, and you are not dinged.\"",
"title": ""
},
{
"docid": "79e105694a0a1cf5b65b66b9141c856d",
"text": "In my opinion, it generally makes sense to focus all of your debt-reduction energy and funds on one loan at a time. There are two reasons for this: It will allow you to more quickly move from 4 loans to 3 loans, and then 2, and then 1, providing you with a sense of progress and motivation. As you reduce the number of loans that you have, your monthly minimum payment obligations will be reduced. Then, if you have a month with an emergency expense, you will have more income available to you for your emergency without getting behind on your loans. There is debate about whether to pay loans in order of the loan balance or in order of interest rate (you can read about this here and here), but in your case, your highest interest loans also have the lowest balance, so either method would have you picking the same loans first. You have already chosen, wisely, to start with the $1500, 6.8% loans. Send all of your $1000 to one of these loans, and continue to work aggressively to knock out all four as quickly as possible.",
"title": ""
},
{
"docid": "22f8bcf663f42ed5f126b1e447b84980",
"text": "\"There are a lot of things that go into your credit score, but the following steps are core to building it: Now, in your case, you obviously have some flexibility in your monthly budget since you're considering paying down your college loan faster. You have to weigh whether it would be better to pay off the loan that much faster, or just save the money towards buying the car. If you can pile up enough cash to buy the car (and still leave yourself an emergency fund) it would be better to buy the car than add another interest payment. As other answers have noted, you don't want to get in a situation where you have no cash for \"\"unexpected events\"\". Some links of interest:\"",
"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": "e1245b875d4c560a9d50a0e41dd70425",
"text": "Are you sure the payment has actually posted and isn't sitting in a pre-auth status? If it is, it'll fall off in a few days and they're probably telling the truth. If not, and it has fully posted to your account, I agree with the others. It's very appropriate to initiate a chargeback. You can provide documentation showing they confirmed a cancellation, further, you can show proof that they had no intent of charging you. Good luck!",
"title": ""
}
] |
fiqa
|
8b2110ab0e49ecdd936fd11ec0aed9b6
|
Taxation from variations in currency
|
[
{
"docid": "3200217e7939b7c9eb0a82e4a1124feb",
"text": "Here is the technical guidance from the accounting standard FRS 23 (IAS 21) 'The Effects of Changes in Foreign Exchange Rates' which states: Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements shall be recognised in profit or loss in the period in which they arise. An example: You agree to sell a product for $100 to a customer at a certain date. You would record the sale of this product on that date at $100, converted at the current FX rate (lets say £1:$1 for ease) in your profit loss account as £100. The customer then pays you several $100 days later, at which point the FX rate has fallen to £0.5:$1 and you only receive £50. You would then have a realised loss of £50 due to exchange differences, and this is charged to your profit and loss account as a cost. Due to double entry bookkeeping the profit/loss on the FX difference is needed to balance the journals of the transaction. I think there is a little confusion as to what constitutes a (realised) profit/loss on exchange difference. In the example in your question, you are not making any loss when you convert the bitcoins to dollars, as there is no difference in the exchange rate between the point you convert them. Therefore you have not made either a profit or a loss. In terms of how this effects your tax position; you only pay tax on your profit and loss account. The example I give above is an instance where an exchange difference is recorded to the P&L. In your example, the value of your cash held is reflected in your balance sheet, as an asset, whatever its value is at the balance sheet date. Unfortunately, the value of the asset can rise/fall, but the only time where you will record a profit/loss on this (and therefore have an impact on tax) is if you sell the asset.",
"title": ""
},
{
"docid": "7bbe8dd439c3cc40c4de8b119a3b33d4",
"text": "According to the answers to this question, you generally aren't taxed on gains until you sell the asset in question. None of those answered specifically for the U.K., so perhaps someone else will be able to weigh in on that. To apply those ideas to your question, yes your gains and losses are taxable. If you originally traded something worth $100 for the bitcoins, then when you converted back to dollars you received $200, you would have a $100 gain, simply on the foreign exchange trade. That is, this $100 of income is in addition to any income you made from your business (selling goods).",
"title": ""
}
] |
[
{
"docid": "d1138e355b81a7a8ac2647aa46a98c76",
"text": "It is interesting to consider the Netherlands which is part of the Euro zone. Germany uses 1 and 2 cent coins. Adjacent is the Netherlands where items remain priced to the cent but cash totals are rounded to the nearest 5c so 1 and 2c coins are out of circulation.",
"title": ""
},
{
"docid": "5712bdc7208402f56051e2fd71d54a61",
"text": "Let me restate question for clarity. Facts: Question: Are there any taxes for this transaction? Answer: (Added improvements provided by Eric) Generally No. Generally, it is not considered income until you sell and the sale price is greater than the purchase price. But with currency differences, there is an additional complication, section 988 rules apply. It could result in ordinary income or loss.",
"title": ""
},
{
"docid": "8568a818f3a0c4a7473017be99a53d48",
"text": "\"I found an answer by Peter Selinger, in two articles, Tutorial on multiple currency accounting (June 2005, Jan 2011) and the accompanying Multiple currency accounting in GnuCash (June 2005, Feb 2007). Selinger embraces the currency neutrality I'm after. His method uses \"\"[a]n account that is denominated as a difference of multiple currencies... known as a currency trading account.\"\" Currency trading accounts show the gain or loss based on exchange rates at any moment. Apparently GnuCash 2.3.9 added support for multi-currency accounting. I haven't tried this myself. This feature is not enabled by default, and must be turned on explicity. To do so, check \"\"Use Trading Accounts\"\" under File -> Properties -> Accounts. This must be done on a per-file basis. Thanks to Mike Alexander, who implemented this feature in 2007, and worked for over 3 years to convince the GnuCash developers to include it. Older versions of GnuCash, such as 1.8.11, apparently had a feature called \"\"Currency Trading Accounts\"\", but they behaved differently than Selinger's method.\"",
"title": ""
},
{
"docid": "67363603df95dbf02c5c4c322d2c4a61",
"text": "It should be very obvious that getting X Euro cash in your hand is better than deducting them from taxable income. You would need to have a tax rate of over 100% to do better otherwise.",
"title": ""
},
{
"docid": "ca7c97032d41c46ad8353113e3ff60a4",
"text": "Having taxes in USD gives the USD intrinsic value. The US government already fights any attempt to have the petrodollar undermined (foreign exchanges that trade oil in currency other than USD). It will have to exactly 0 interest in undermining itself by accepting anything but USD in taxes.",
"title": ""
},
{
"docid": "6057489b63d4a6078034e2f58b3fe5f7",
"text": "I'm not sure, but I think the monetary system of Second Life or World of Warcraft would correspond to what you are looking for. I don't think they are independent of the dollar though, since acquiring liquidity in those games can be done through exchange for real dollars. But there can be more closed systems, maybe Sim type games where this is not the case. I hope this helps.",
"title": ""
},
{
"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": "410f540b4ab654bf8bda42f5bd8443f1",
"text": "If you make money in currency speculation (as in your example), that is a capital gain. A more complicated example is if you were to buy and then sell stocks on the mexican stock exchange. Your capital gain (or loss) would be the difference in value in US dollars of your stocks accounting for varying exchange rates. It's possible for the stocks to go down and for you to still have a capital gain, and vice versa.",
"title": ""
},
{
"docid": "a84f16ada81922d72884f228646ce307",
"text": "I spoke to HMRC and they said #1 is not allowable but #2 is. They suggested using either their published exchange rates or I could use another source. I suggested the Bank of England spot rates and that was deemed reasonable and allowable.",
"title": ""
},
{
"docid": "d0924928f7f5f7194bd15333e140dbae",
"text": "\"In 2014 the IRS announced that it published guidance in Notice 2014-21. In that notice, the answer to the first question describes the general tax treatment of virtual currency: For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency. As it's property like any other, capital gains if and when you sell are taxed. As with any capital gains, you're taxed on the \"\"profit\"\" you made, that is the \"\"proceeds\"\" (how much you got when you sold) minus your \"\"basis\"\" (how much you paid to get the property that you sold). Until you sell, it's just an asset (like a house, or a share of stock, or a rare collectible card) that doesn't require any reporting. If your initial cryptocurrency acquisition was through mining, then this section of that Notice applies: 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. That is to say, when it was mined the market value of the amount generated should have been included in income (probably on either Line 21 Other Income, or on Schedule C if it's from your own business). At that point, the market value would also qualify as your basis. Though I doubt there'd be a whole lot of enforcement action for not amending your 2011 return to include $0.75. (Technically if you find a dollar bill on the street it should be included in income, but usually the government cares about bigger fish than that.) It sounds like your basis is close enough to zero that it's not worth trying to calculate a more accurate value. Since your basis couldn't be less than zero, there's no way that using zero as your basis would cause you to pay less tax than you ought, so the government won't have any objections to it. One thing to be careful of is to document that your holdings qualify for long-term capital gains treatment (held longer than a year) if applicable. Also, as you're trading in multiple cryptocurrencies, each transaction may count as a \"\"sale\"\" of one kind followed by a \"\"purchase\"\" of the other kind, much like if you traded your Apple stock for Google stock. It's possible that \"\"1031 like kind exchange\"\" rules apply, and in June 2016 the American Institute of CPAs sent a letter asking about it (among other things), but as far as I know there's been no official IRS guidance on the matter. There are also some related questions here; see \"\"Do altcoin trades count as like-kind exchanges?\"\" and \"\"Assuming 1031 Doesn't Apply To Cryptocurrency Trading\"\". But if in fact those exchange rules do not apply and it is just considered a sale followed by a purchase, then you would need to report each exchange as a sale with that asset's basis (probably $0 for the initial one), and proceeds of the fair market value at the time, and then that same value would be the basis of the new asset you're purchasing. Using a $0 basis is how I treat my bitcoin sales, though I haven't dealt with other cryptocurrencies. As long as all the USD income is being reported when you get USD, I find it unlikely you'll run into a lot of trouble, even if you technically were supposed to report the individual transactions when they happened. Though, I'm not in charge of IRS enforcement, and I'm not aware of any high-profile cases, so it's hard to know anything for sure. Obviously, if there's a lot of money involved, you may want to involve a professional rather than random strangers on the Internet. You could also try contacting the IRS directly, as believe-it-or-not, their job is in fact helping you to comply with the tax laws correctly. Also, there are phone numbers at the end of Notice 2014-21 of people which might be able to provide further guidance, including this statement: The principal author of this notice is Keith A. Aqui of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information about income tax issues addressed in this notice, please contact Mr. Aqui at (202) 317-4718\"",
"title": ""
},
{
"docid": "e83d0a17d6016f0a1252a86909c2d29e",
"text": "\"Well there are a couple reasons that people from various countries use specific currencies: 1. Government courts will recognize the settlement of contracts if they are paid with their local currency. So even if you wanted to be paid in Swiss Francs, your contracting partner can choose to pay you in USD instead. This artificially inflates the value of the local currency by increasing demand for it. 2. You're only allowed to pay your taxes in the local currency. This also artificially increases the demand for it, and it's the \"\"root value\"\" of the currency - people clamor for bits of green paper because if they don't have enough of it to pay off the tax man, they'll go to jail.\"",
"title": ""
},
{
"docid": "b33cbf727f004a084bf7f74b3a932a74",
"text": "\"Bingo, great question. I'm not the original poster, \"\"otherwiseyep\"\", but I am in the economics field (I'm a currency analyst for a Forex broker). I also happen to strongly disagree with his posts on the origin of money. To answer your question: the villagers are forced to use the new notes by their government, which demands that their income taxes be paid with the new currency. This is glossed over by otherwiseyep, which is unfortunate because it misleads people who are new to economics into believing the system of fiat money we have now is natural/emergent (created from the bottom-up) and not enforced from the top-down. Legal tender laws enforced in each nation's courts mean that all contracts can be settled in the local fiat currency, regardless of whether the receiver of the money wants a different currency. These laws (and the income tax) create an artificial \"\"root demand\"\" for the fiat currency, which is what gives it its value. We don't just *decide* that green paper has value. We are forced to accumulate it by the government. Fiat currencies are not money. We call them money, but in fact they are credit derivatives. Let me explain: A currency's value is inextricably tied to the nation's bond market. When investors buy a nation's bonds, they are loaning that nation money. The investor expects to receive interest payments on the bonds. The interest rate naturally rises as the bonds are perceived to be more-risky, and naturally falls as the bonds are perceived to be less-risky. The risk comes from the fact that governments sometimes get really close to not being able to pay their interest payments. They get into so much debt, and their tax-revenue shrinks as their economy worsens. That drives up the interest rate they must pay when they issue new bonds (ie add debt). So the value of a currency comes from tax revenue (interest payments). If a government misses an interest payment, or doesn't fully pay it, the market considers this a \"\"credit event\"\" and investors sell their bonds and freak out. Selling bonds has the effect of driving interest rates even higher, so it's a vicious cycle. If the government defaults, there's massive deflation because all debt denominated in that currency suddenly skyrockets due to the higher interest rates. This creates a chain of cascading defaults - one person defaults, which leads another person, and another, and so on. Everyone was in debt to everyone else, somewhere along the chain. In order to counteract this deflation (which ultimately leads to the kind of depression you saw in 1930's US), governments will print print print, expanding the credit supply via the banks. So this is what you see happening today - banks are constantly being bailed out all over the Western world, governments are cutting programs to be able to meet their interest payments, and central banks are expanding credit supplies and bailing out their buddies. Real money has ZERO counterparty risk. What is counterparty risk? It's just the risk that the guy who owes you something won't honor his debt. Gold and silver and salt and oil aren't IOU's. So they can be real money.\"",
"title": ""
},
{
"docid": "22c0f2cf46cd1c218084c88abdbc96d4",
"text": "This is bullshit. The US government requires taxes to be paid in USD. There's your intrinsic value. If you want to be compliant with the federal law, your business and you as an individual are required to convert assets or labor into USD to pay them.",
"title": ""
},
{
"docid": "470c40758858a423b7448ad297cbb8b1",
"text": "\"No, Skiffbug is not English. Second, it's very clear that the type of method considered \"\"special\"\" by the tax code is clearly not labor, but capital gains and gains from \"\"carried interest\"\". If you actually take 3 seconds to read my comment, I am saying both should be treated in exactly the same way, and taxed at the same progressive scale.\"",
"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": ""
}
] |
fiqa
|
ba9de7ba0ae79ccd6fae43795151c192
|
Strategies for saving and investing in multiple foreign currencies
|
[
{
"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": "fb7d5856aacec43324d7bec156957748",
"text": "Evaluating the value of currencies is always difficult because you are usually at the mercy of a central bank that can print new currency on a whim. I am trying to diversify my currency holdings but it is difficult to open foreign bank accounts without actually being in the foreign country. Any ideas here? You don't indicate which currencies you own but I would stick with your diversified portfolio of currencies and add some physical assets as a hedge against the fiat currencies.",
"title": ""
},
{
"docid": "bcb8c55265bab74bad6f31e636a935a8",
"text": "The bad news is that foreign exchange is ultimately somewhat unpredictable, and analyzing the risk of these things is not particularly straightforward. I'm afraid I don't know what tools exist to analyze these, aside from suggesting you look at textbooks for financial analysis classes. The good news is that there are other people who deal with multiple currencies (international businesses, for instance) who worry about the same thing. As such, you can take a look at foreign exchange rate futures and related instruments to estimate what the market as a whole currently expects the values to do. The prices of these futures could be a useful starting point.",
"title": ""
}
] |
[
{
"docid": "a6f3673e71cdfeb5998f0abfae96975d",
"text": "In general, to someone in a similar circumstance I might suggest that the lowest-risk option is to immediately convert your excess currency into the currency you will be spending. Note that 'risk' here refers only to the variance in possible outcomes. By converting to EUR now (assuming you are moving to an EU country using the EUR), you eliminate the chance that the GBP will weaken. But you also eliminate the chance that the GBP will strengthen. Thus, you have reduced the variance in possible outcomes so that you have a 'known' amount of EUR. To put money in a different currency than what you will be using is a form of investing, and it is one that can be considered high risk. Invest in a UK company while you plan on staying in the UK, and you take on the risk of stock ownership only. But invest in a German company while you plan on staying in the UK, you take on the risk of stock ownership + the risk of currency volatility. If you are prepared for this type of risk and understand it, you may want to take on this type of risk - but you really must understand what you're getting into before you do this. For most people, I think it's fair to say that fx investing is more accurately called gambling [See more comments on the risk of fx trading here: https://money.stackexchange.com/a/76482/44232]. However, this risk reduction only truly applies if you are certain that you will be moving to an EUR country. If you invest in EUR but then move to the US, you have not 'solved' your currency volatility problem, you have simply replaced your GBP risk with EUR risk. If you had your plane ticket in hand and nothing could stop you, then you know what your currency needs will be in 2 years. But if you have any doubt, then exchanging currency now may not be reducing your risk at all. What if you exchange for EUR today, and in a year you decide (for all the various reasons that circumstances in life may change) that you will stay in the UK after all. And during that time, what if the GBP strengthened again? You will have taken on risk unnecessarily. So, if you lack full confidence in your move, you may want to avoid fully trading your GBP today. Perhaps you could put away some amount every month into EUR (if you plan on moving to an EUR country), and leave some/most in GBP. This would not fully eliminate your currency risk if you move, but it would also not fully expose yourself to risk if you end up not moving. Just remember that doing this is not a guarantee that the EUR will strengthen and the GBP will weaken.",
"title": ""
},
{
"docid": "eda543db876b5d150a730688db867bef",
"text": "This is called currency speculation, and it's one of the more risky forms of investing. Unless you have a crystal ball that tells you the Euro will move up (or down) relative to the Dollar, it's purely speculation, even if it seems like it's on an upswing. You have to remember that the people who are speculating (professionally) on currency are the reason that the amount changed, and it's because something caused them to believe the correct value is the current one - not another value in one direction or the other. This is not to say people don't make money on currency speculation; but unless you're a professional investor, who has a very good understanding of why currencies move one way or the other, or know someone who is (and gives free advice!), it's not a particularly good idea to engage in it - while stock trading is typically win-win, currency speculation is always zero-sum. That said, you could hedge your funds at this point (or any other) by keeping some money in both accounts - that is often safer than having all in one or the other, as you will tend to break even when one falls against the other, and not suffer significant losses if one or the other has a major downturn.",
"title": ""
},
{
"docid": "6207d6f6b6c4c84fc02c0153c0fc89f6",
"text": "I would strongly recommend investing in assets and commodities. I personally believe fiat money is losing its value because of a rising inflation and the price of oil. The collapse of the euro should considerably affect the US currency and shake up other regions of the world in forex markets. In my opinion, safest investment these days are hard assets and commodities. Real estate, land, gold, silver(my favorite) and food could provide some lucrative benefits. GL mate!",
"title": ""
},
{
"docid": "51876fb7fa8f2f1b1c5fc654650a5ef4",
"text": "The other obvious suggestion I guess is to buy cheap stocks and bonds (maybe in a dollar denominated fund). If the US dollar rises you'd then get both the fund's US gains plus currency gains. However, no guarantee the US dollar will rise or when. Perhaps a more prudent approach is to simply diversify. Buy both domestic and foreign stocks and bonds. Rebalance regularly.",
"title": ""
},
{
"docid": "ca5d202b93c164af5f61d58a5cd0aa01",
"text": "Here's what the GnuCash documentation, 10.5 Tracking Currency Investments (How-To) has to say about bookkeeping for currency exchanges. Essentially, treat all currency conversions in a similar way to investment transactions. In addition to asset accounts to represent holdings in Currency A and Currency B, have an foreign exchange expenses account and a capital gains/losses account (for each currency, I would imagine). Represent each foreign exchange purchase as a three-way split: source currency debit, foreign exchange fee debit, and destination currency credit. Represent each foreign exchange sale as a five-way split: in addition to the receiving currency asset and the exchange fee expense, list the transaction profit in a capital gains account and have two splits against the asset account of the transaction being sold. My problems with this are: I don't know how the profit on a currency sale is calculated (since the amount need not be related to any counterpart currency purchase), and it seems asymmetrical. I'd welcome an answer that clarifies what the GnuCash documentation is trying to say in section 10.5.",
"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": "eed081ec371f4f89970eecf6adddb3f4",
"text": "My original statement was answering onefingerattack's query, not strategizing for institutional investors. It's very easy for instituationals to move money across borders into and out of treasuries, and to purchase gold near spot and vault it. For a retailer like onefingerattack, getting money into bitcoin is going to be much easier than opening a foreign bank account, exchanging, and transferring funds. And my point wasn't to say that this was necessarily the best strategy because it is impossible to know. I just linked to an article about the fact that this strategy is being used by other Europeans (although, I think it's more by Greeks who worry about their Euros being nationalized and replaced with a drachma).",
"title": ""
},
{
"docid": "93ed9100864a8c4146441b8c7bc0dab5",
"text": "Now, is there any clever way to combine FOREX transactions so that you receive the US interest on $100K instead of the $2K you deposited as margin? Yes, absolutely. But think about it -- why would the interest rates be different? Imagine you're making two loans, one for 10,000 USD and one for 10,000 CHF, and you're going to charge a different interest rate on the two loans. Why would you do that? There is really only one reason -- you would charge more interest for the currency that you think is less likely to hold its value such that the expected value of the money you are repaid is the same. In other words, currencies pay a higher interest when their value is expected to go down and currencies pay a lower interest when their value is expected to go up. So yes, you could do this. But the profits you make in interest would have to equal the expected loss you would take in the devaluation of the currency. People will only offer you these interest rates if they think the loss will exceed the profit. Unless you know better than them, you will take a loss.",
"title": ""
},
{
"docid": "7034b1830c9bba00e0fa8ff154ab84d5",
"text": "\"Here's a dump from what I use. Some are a bit more expensive than those that you posted. The second column is the expense ratio. The third column is the category I've assigned in my spreadsheet -- it's how I manage my rebalancing among different classes. \"\"US-LC\"\" is large cap, MC is mid cap, SC is small cap. \"\"Intl-Dev\"\" is international stocks from developed economies, \"\"Emer\"\" is emerging economies. These have some overlap. I don't have a specific way to handle this, I just keep an eye on the overall picture. (E.g. I don't overdo it on, say, BRIC + Brazil or SPY + S&P500 Growth.) The main reason for each selection is that they provide exposure to a certain batch of securities that I was looking for. In each type, I was also aiming for cheap and/or liquid like you. If there are substitutes I should be looking at for any of these that are cheaper and/or more liquid, a comment would be great. High Volume: Mid Volume (<1mil shares/day): Low Volume (<50k shares/day): These provide enough variety to cover the target allocation below. That allocation is just for retirement accounts; I don't consider any other savings when I rebalance against this allocation. When it's time to rebalance (i.e. a couple of times a year when I realize that I haven't done it in several months), I update quotes, look at the percentages assigned to each category, and if anything is off the target by more than 1% point I will buy/sell to adjust. (I.e. if US-LC is 23%, I sell enough to get back to 20%, then use the cash to buy more of something else that is under the target. But if US-MC is 7.2% I don't worry about it.) The 1% threshold prevents unnecessary trading costs; sometimes if everything is just over 1% off I'll let it slide. I generally try to stay away from timing, but I do use some of that extra cash when there's a panic (after Jan-Feb '09 I had very little cash in the retirement accounts). I don't have the source for this allocation any more, but it is the result of combining a half dozen or so sample allocations that I saw and tailoring it for my goals.\"",
"title": ""
},
{
"docid": "a3041f3b2f3e082b53a5789066773d5b",
"text": "Currency speculation is a very risky investment strategy. But when you are looking for which currency to denote your savings in, looking at the unit value is quite pointless. What is important is how stable the currency is in the long term. You certainly don't want a currency which is prone to inflation, because it means any savings denoted in that currency constantly lose purchasing power. Rather look for a currency which has a very low inflation rate or is even deflating. Another important consideration is how easy it is to exchange between your local currency and the currency you want to own. A fortune in some exotic currency is worth nothing when no local bank will exchange it into your local currency. The big reserve currencies like US Dollar, Euro, Pound Sterling and Japanes yen are usually safe bets, but there are regional differences which can be easily converted and which can't. When the political relations between your country and the countries which manage these currencies is unstable, this might change over night. To avoid these problems, rather invest into a diverse portfolio of commodities and/or stocks. The value of these kinds of investments will automatically adjust to inflation rate, so you won't need to worry about currency fluctuation.",
"title": ""
},
{
"docid": "61d4dc5d0d5d24072fd42eeb5e6639bc",
"text": "I've thought of the following ways to hedge against a collapsing dollar:",
"title": ""
},
{
"docid": "901f365eaa8747e77a314cba2f232ef2",
"text": "Like most other investment decisions - it depends. Specifically in this case it depends upon your view of the FX (Foreign Exchange) market over the next few years, and how sensitive you are to losses. As you correctly note, a hedge has a cost, so it detracts from your overall return. But given that you need to repatriate the investment eventually to US Dollars, you need to be aware of the fluctuations of the dollar versus other currencies. If you believe that over your time horizon, the US dollar will be worth the same as now or less, then you should not buy the hedge. If the dollar is the same - the choice is/was obvious. If you believe the US dollar will be weaker in the future, that means that when you repatriate back to US dollars, you will purchase more dollars with your foreign currency. If on the other hand, you believe the US Dollar will get stronger, then you should certainly lock in some kind of hedge. That way, when your foreign currency would have effectively bought fewer US, you will have made money on the hedge to make up the difference. If you choose not to hedge now, you can likely hedge that exposure at any time in the future, separate from the initial investment purchase buy buying/selling the appropriate FX instrument. Good Luck",
"title": ""
},
{
"docid": "4bb3abcd14a58afbb8f891284510f413",
"text": "We face the same issue here in Switzerland. My background: Institutional investment management, currency risk management. My thoughs are: Home Bias is the core concept of your quesiton. You will find many research papers on this topic. The main problems with a high home bias is that the investment universe in your small local investment market is usually geared toward your coutries large corporations. Lack of diversification: In your case: the ASX top 4 are all financials, actually banks, making up almost 25% of the index. I would expect the bond market to be similarly concentrated but I dont know. In a portfolio context, this is certainly a negative. Liquidity: A smaller economy obviously has less large corporations when compared globally (check wikipedia / List_of_public_corporations_by_market_capitalization) thereby offering lower liquidity and a smaller investment universe. Currency Risk: I like your point on not taking a stance on FX. This simplifies the task to find a hedge ratio that minimises portfolio volatility when investing internationally and dealing with currencies. For equities, you would usually find that a hedge ratio anywhere from 0-30% is effective and for bonds one that ranges from 80-100%. The reason is that in an equity portfolio, currency risk contributes less to overall volatility than in a bond portfolio. Therefore you will need to hedge less to achieve the lowest possible risk. Interestingly, from a global perspective, we find, that the AUD is a special case whereby, if you hedge the AUD you actually increase total portfolio risk. Maybe it has to do with the AUD being used in carry trades a lot, but that is a wild guess. Hedged share classes: You could buy the currency hedged shared classes of investment funds to invest globally without taking currency risks. Be careful to read exactly what and how the share class implements its currency hedging though.",
"title": ""
},
{
"docid": "39928f12a6d24edaa1134d615395beaa",
"text": "\"You sound like a savvy consumer of currencies! ;) You should put your insights and skepticism to use, and publish a \"\"currency review\"\" to help people decide which currencies are safest to save in. You could also create your own currency, and assure investors that they are entitled to exchange it for a fixed amount of a commodity at any time, for instance gasoline or wheat. >I see no reason to expect bodies with shorter term interests would do a better job. Competition.\"",
"title": ""
},
{
"docid": "e034c4331d15e3aef5d73451913e17b2",
"text": "If you have significant assets, such as a large deposit, then diversification of risks such as currency risk is good practice - there are many good options, but keeping 100% of it in roubles is definitely not a good idea, nor is keeping 100% of it in a single foreign currency. Of course, it would be much more beneficial to have done it yesterday, and moments of extreme volatility generally are a bad time to make large uninformed trades, but if the deposit is sufficiently large (say, equal to annual expenses) then it would make sense to split it among different currencies and also different types of assets as well (deposit/stocks/precious metals/bonds). The rate of rouble may go up and down, but you also have to keep in mind that future events such as fluctuating oil price may risk a much deeper crisis than now, and you can look to experiences of the 1998 crisis as an example of what may happen if the situation continues to deteriorate.",
"title": ""
}
] |
fiqa
|
3d3216cdf77ae7dc5a2a327d29acd984
|
Would there be tax implications if I used AirBnB as opposed to just renting out a unit normally?
|
[
{
"docid": "922eb07ad76873af336dc4b44acb1089",
"text": "There's no tax difference between using AirBnB or Craigslist or any other method to find tenants. The rules relating to occupancy and frequency may be different for some purposes if you go from yearly or monthly tenants to daily-rate tenants. Your state and local authorities may in the future try to consider you a motel or Bed n Breakfast equivalent, and subject you to various regulations and business taxes. But the method of finding customers itself is probably not meaningful for tax purposes.",
"title": ""
},
{
"docid": "cc944b121bd06b9a75a12eae2177827d",
"text": "It actually depends on the services provided. If you're renting through AirBnB, you're likely to provide much more services to the tenants than a traditional rental. It may raise it to a level when it is no longer a passive activity. See here, for starters: Providing substantial services. If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, you report your rental income and expenses on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. Use Form 1065, U.S. Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. For information, see Publication 334, Tax Guide for Small Business. Also, you may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. For a discussion of “substantial services,” see Real Estate Rents in Publication 334, chapter 5",
"title": ""
},
{
"docid": "81f2328846131e46151d7aa05225efae",
"text": "\"Given your clarifying comment that you're asking about the length of stay rather than AirBnB in particular, I'd say there is a decent chance there will be tax differences. The difference is unlikely to be in income tax, but many cities have local ordinances that impose transaction taxes on short stays. For instance, the town where I live has a \"\"transient occupancy tax\"\" for any paid stay of less than 31 days. Unfortunately, because these taxes are often levied by individual cities, it's hard to know whether one applies in your case. One town may impose no tax while the town right next to it does impose a tax. You'll have to look at what your local laws are. This could be easy if your town has a nice comprehensive website about local laws; if not you may have to do some deeper research. In any case, you should definitely look into it, since there could be penalities if there is a tax and the city finds out you're not paying it. As AirBnB has grown in popularity, many municipalities have begun to crack down on AirBnB renters who try to make money without paying taxes like a regular motel (as well as conforming to other laws, e.g., running a business in a neighborhood zoned residential).\"",
"title": ""
}
] |
[
{
"docid": "a873928ae3e926d6bf8cd38ab90ef9d7",
"text": "You have some of the math right, but are missing a few things. Here's what I can offer - if I leave anything out, someone please expand or clarify. Rental income can be reduced by mortgage interest and maintenance costs (as you mentioned), but also by property tax payments, association fees, insurance costs, landlord expenses, and depreciation. Note that if you don't live in the property for 3 years, you'll have to pay capital gains tax if/when you sell the house. You can live in it again for 2 of the last 5 years to avoid this. Many people recommend only assuming you will get 10 months of rental income a year, to account for transitions between tenants, difficult in finding new tenants, and the occasional deadbeat tenant. This also adds a buffer for unexpected problems you need to fix in the house. If you can't at least break even on 10 months of income a year, consider the risk. I think there are also some cases where you need to repay depreciation amounts that you have deducted, but I don't know the details. Renting out a house can be fun and profitable, but it's very far from a sure thing. I'd always recommend preparation and caution, and of course talking to professionals about the finances, accounting, and lease-writing. Good luck!",
"title": ""
},
{
"docid": "892754309c682c15efdc764e3fc442c5",
"text": "Previously, AirBnBs counted as hotels, which meant that you had to get a hotel license and other stuff that was too onerous for one guy with an apartment to bother with. So it's not that they specifically banned AirBnB, it's just that the previous law regulated big hotels and small hotels the same way. IIRC, AirBnB has run into similar legal issues in the states.",
"title": ""
},
{
"docid": "f6bbadb8199fa90aa011568f6a6db40c",
"text": "I have loved using AirBnB. I have found it easier to hire a maid to clean and it has been extremely financially advantageous for me. Be sure to check out out regulations in your area regarding AirBnB. I spoke with a personal advisor before I used AirBnB just to be sure that it would not affect my insurance, property taxes, as well income tax. It was very helpful to take this step before becoming a host!",
"title": ""
},
{
"docid": "ab9f929ea3fa816e309577a582a4c26e",
"text": "The only downside is for the agents, not you. Agents, especially selling agents, prefer the concession over the price reduction for their own interests. They get a commission on a higher purchase price. That, and the recorded sales price for the house is a tad higher, which incrementally increases the comps for the next sales. When we moved, the agent conditioned me to get ready to offer a concession should we decide to sell our previous home. We decided to rent that property, and have someone else manage it. But with regard to your questions, the concessions are applied against your closing costs. When we bought our last house they specified caps on the closing costs, so money will be typically be withheld (or not) contractually. The concessions aren't a taxable gain. Your basis in the property will be higher than if you get a price reduction, but the lower basis (hopefully) means a higher capital gain when you sell.",
"title": ""
},
{
"docid": "ee21749916f89670ecfa90cfb2e9c360",
"text": "\"While the question is very localized, I'll answer about the general principle. My main question is with how far away it is (over 1000 miles), how do I quantify the travel expenses? Generally, \"\"necessary and ordinary\"\" expenses are deductible. This is true for business and also true for rentals. But what is necessary and what is ordinary? Is it ordinary that a landlord will manage the property 1000 miles away by himself on a daily basis? Is it ordinary for people to drive 1000 miles every week? I'd say \"\"no\"\" to both. I'd say it would be cheaper for you to hire a local property manager, thus the travel expense would not be necessary. I would say it would be cheaper to fly (although I don't know if its true to the specific situation of the OP, but as I said - its too localized to deal with) rather than drive from Texas to Colorado. If the OP thinks that driving a thousand miles is indeed ordinary and necessary he'll have to justify it to the IRS examiner, as I'm sure it will be examined. 2 trips to the property a year will be a nearly 100% write-off (2000 miles, hotels, etc). From what I understood (and that is what I've been told by my CPA), IRS generally allows 1 (one) trip per year per property. If there's an exceptional situation - be prepared to justify it. Also, keep all the receipts (like gas, hotel, etc.... If you claim mileage but in reality you took a flight - you'll get hit hard by the IRS when audited). Also while I'm up there am I allowed to mix business with pleasure? You cannot deduct personal (\"\"pleasure\"\") expenses, at all. If the trip is mainly business, but you go out at the evening instead of staying at the hotel - that's fine. But if the trip is \"\"business\"\" trip where you spend a couple of hours at your property and then go around having fun for two days - the whole trip may be disallowed. If there's a reasonable portion dedicated to your business/rental, and the rest is pleasure - you'll have to split some of the costs and only deduct the portion attributed to the business activities. You'll have to analyze your specific situation, and see where it falls. Don't stretch the limits too much, it will cost you more on the long run after all the audits and penalties. Can I also write off all travel involved in the purchase of the property? Although, again, the \"\"necessary and ordinary\"\" justification of such a trip is arguable, lets assume it is necessary and ordinary and generally justified. It is reasonable to expect you to go and see the property with your own eyes before the closing (IMHO, of course, I'm not an authority). Such an expense can be either business or investment expense. If its a business expense - its deductible on schedule C. If its an investment expense (if you do buy the property), its added to the cost of the property (capitalized). I'm not a tax adviser or a tax professional, and this is not a tax advice. This answer was not written or intended to be used, and cannot be used, for the purpose of avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code. You should seek a professional consultation with a CPA/Attorney(tax) licensed in your State(s) or a Federally licensed Enrolled Agent (EA).\"",
"title": ""
},
{
"docid": "dbfa5b84cb673235e5bac207e7538d3e",
"text": "As I understand it... Generally housing can't be considered a business expense unless taken at your employer's explicit direction, for the good of the business rather than the employee. Temporary assignment far enough from you home office that commuting or occasional hotel nights are impractical, maybe. In other words, if they wouldn't be (at least theoretically) willing to let you put it on an expense account, you probably can't claim it here.",
"title": ""
},
{
"docid": "f5d03797d7499736c830449098a393c1",
"text": "\"Is all interest on a first time home deductible on taxes? What does that even mean? If I pay $14,000 in taxes will My taxes be $14,000 less. Will my taxable income by that much less? If you use the standard deduction in the US (assuming United States), you will have 0 benefit from a mortgage. If you itemize deductions, then your interest paid (not principal) and your property tax paid is deductible and reduces your income for tax purposes. If your marginal tax rate is 25% and you pay $10000 in interest and property tax, then when you file your taxes, you'll owe (or get a refund) of $2500 (marginal tax rate * (amount of interest + property tax)). I have heard the term \"\"The equity on your home is like a bank\"\". What does that mean? I suppose I could borrow using the equity in my home as collateral? If you pay an extra $500 to your mortgage, then your equity in your house goes up by $500 as well. When you pay down the principal by $500 on a car loan (depreciating asset) you end up with less than $500 in value in the car because the car's value is going down. When you do the same in an appreciating asset, you still have that money available to you though you either need to sell or get a loan to use that money. Are there any other general benefits that would drive me from paying $800 in rent, to owning a house? There are several other benefits. These are a few of the positives, but know that there are many negatives to home ownership and the cost of real estate transactions usually dictate that buying doesn't make sense until you want to stay put for 5-7 years. A shorter duration than that usually are better served by renting. The amount of maintenance on a house you own is almost always under estimated by new home owners.\"",
"title": ""
},
{
"docid": "951e1802fc1a35e5036586875032cec8",
"text": "I am also neither an attorney nor a tax advisor. Yes, the rent money you pay to your friend is taxable income, but suddenly all kinds of expenses around the house - including a fraction of the interest paid on the mortgage - become tax deductible. For example, let's say that the mortgage is $1000 / month and you pay your friend $500 / month. If you live in 50% of the house, then he can deduct 50% (plus or minus) of the expenses associated with owning the house, including: All of these things (50% of them, anyway) become tax deductible. It'd be quite possible for him to take a loss on the endeavor and actually reduce his taxes every year. Until it comes time to sell; selling a property that has been used as a rental is more taxable than selling a property that has been a personal residence.",
"title": ""
},
{
"docid": "3a8f1abce7f1bb4e2585da25dee8fb6b",
"text": "You should absolutely go for it, and I encourage you to look for multi-unit (up to 4) properties if there are any in your area. With nulti-unit properties it is far more common than not that the other units pay the mortgage. To comment on your point about slowly building an asset if the renter covers the payment; that's true, but you're also missing the fact that you get to write off the interest on your income taxes, that's another great benefit. If you intend to make a habit out of being a landlord, I highly encourage you to use a property management company. Most charge less than 10% and will handle all of the tough stuff for you, like: fielding sob stories from tenants, evicting tenants, finding new tenants, checking to make sure the property is maintained... It's worth it. There fees are also tax-deductible... It makes a boat load of sense. Just look at the world around you. How many wealthy people rent??? I've met one, but they own investment properties though...",
"title": ""
},
{
"docid": "9c6049b7f0f02c8b3d88fd94a38a84ea",
"text": "I kind of hate piling on with another opinion, but this is too long for a comment. I did what you are thinking of doing, I would at least try renting it for a couple years so long as: The primary risks of renting are mostly related to unexpected costs and bad tenants, you've got a very healthy income, so as long as you maintain a nice emergency fund it doesn't sound like keeping this property as a rental will be too much risk. If the rental market is strong where your house is, then you have a better chance of avoiding bad tenants. I like to keep my rent a little lower than the max I think it could go for, to attract more applications and hopefully find someone who will be a good longer term tenant. Tax-free gains So long as you lived in your house 2 of the last 5 years, you can sell without paying capital gains tax on your profit, so you could try renting it for 2 years and then sell. That was a key for me when I converted my first house to a rental. I liked that flexibility, there's still the typical renting risks associated, but it's not a lifelong commitment. You can get 2 years of increased equity/appreciation tax-free, or you could find you enjoy it and keep it for the long haul.",
"title": ""
},
{
"docid": "d06525efe0150a80ee674745dfe0cf60",
"text": "It’s really hard to interpret the scale of this effect. How many listings does an area need to have for this to hold true? If a town goes from 5 listings to 25 (400% increase!) would that translate to a 15% increase in average rent? Probably not. Percent of total housing stock being listed on Airbnb would probably be a better measurement. At least in NYC, the city of perpetually too high rent, the rate of rent increases has been relatively low, despite the rise of Airbnb over the last few years. Without reading the (not yet published ) study that this article is reporting on, it’s not possible to say whether the .39% increase in rent is a meaningful contribution, or a barely measurable statistic.",
"title": ""
},
{
"docid": "d8f0a7821b298099eff5e8c6d8591334",
"text": "If your landlord is OK with you subletting your apartment - then that's all that the landlord has to do with that. It doesn't really matter if the landlord is a private person or a publicly trade corporation/fund. No relevance at all. As to your own reporting - you're receiving rent. That is income to you. You can deduct the portion of your expenses (including rent) attributable to the area you rent out. All this goes to your Schedule E. Any positive remainder becomes your taxable income. Any deduction must be substantiated (i.e.: you'll have to keep all the receipts for all the expenses you used for the deduction for as long as the tax year is open, which is at least the next 3 years after filing).",
"title": ""
},
{
"docid": "84802594cb5304ceebedadaed52cb223",
"text": "Ethically, you and your landlord should always report both income and expense as there technically exists a service and a rent. So it is subject to taxation. On the other hand, it can be considered an exchange of a simple favour and if it doesn't involve a money exchange or any profits (I am assuming that you are not selling what you or your landlord produce on the market) no value can be calculated thus no taxation can be applied. This changes though if a contract is involved, as a legal value can be estimated. Caution: These subjects can vary on an extreme level of specificity, of what can and cannot be claimed as income and expense, which can vary per country, state, province and even per judge, as well as the nature and sector of the work. Also, if you intend to formalize this relationship, the type of contract and reporting forms do vary per state as well. So it might be best to confirm it with a local legal advisor to avoid unfortunate surprises.",
"title": ""
},
{
"docid": "efa51fe7c17d14246a73d36a35151dd5",
"text": "\"I would say similar rules apply in the US. If you have a net loss from rental property, you certainly can claim that loss against your personal income. There are various rules around this though that make it a bit less clear cut. If you are a \"\"real estate professional\"\", which basicly means you spend at least 750 hours per year working on your rental properties (or related activities), then all losses are deductible against any other ordinary income you have. If you aren't a \"\"real estate professional\"\", then your rental income is considered a \"\"passive activity\"\" and losses you can count against regular income are limited to $25,000 per year (with a carry-forward provision) and begin to phase out entirely if your income is between $100,000 and $150,000. So, the law here is structured to allow most small-time investors to take rental real estate losses against their ordinary income, but the income phase-out provision is designed to prevent the wealthy from using rental property losses to avoid taxation.\"",
"title": ""
},
{
"docid": "bc325b7dfcb54008801d23fc67003673",
"text": "Its best you start this venture as a Business entity. Whatever the customer pays you is your income. Whatever you pay to the hotel will be your expenses. Apart from this there will be other expenses. So essentially difference between your income and expense will be the profit of the entity and tax will be on the profit. If you do not want to start an Business entity and pay as an individual then please add the country tag, depending on the country there may different ways to account for the funds.",
"title": ""
}
] |
fiqa
|
ccc68931207360295baaa972ac416980
|
What to do if a state and federal refund is denied direct deposit?
|
[
{
"docid": "1619a2901c8114a352d54227320b8370",
"text": "\"It is not allowed to pay refunds to anyone other than the taxpayer. This is due to various tax return fraud schemes that were running around. Banks are required to enforce this. If the direct deposit is denied, a check will be issued. In her name, obviously. What she does with it when she gets it is her business - but I believe that tax refund checks may not be just \"\"endorsed\"\", the bank will likely want to see her when you deposit it to your account, even if it is endorsed. For the same reason.\"",
"title": ""
},
{
"docid": "364b20bda72056b70460263d8e3e0193",
"text": "Publication 17 Your Income Tax top of page 14 If the direct deposit cannot be done, the IRS will send a check instead. When your girlfriend gets the check, she can endorse it over to you for deposit into your account.",
"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": "b240c8733992c78e273ab69c01482f22",
"text": "\"If she reported the income on the business return, I'd treat this as a \"\"mail audit\"\". Try to get a clear statement from Square confirming what they reported, under which SSN/EIN, for what transactions. Make a copy of that. If at all possible, get them to send a letter to the IRS (copy to you) acknowledging that they reported it under the wrong number. Copy the IRS's letter. Square's letter, and both personal and business 2012 returns. Write a (signed) cover letter explaining what had happened and pointing out the specific line in the business return which corresponded to the disputed amount, so they can see that you did report it properly and did pay taxes on it as business income. End that letter with a request for advice on how to straighten this out. Certified-mail the whole package back to the IRS at whatever address the advisory letter gives. At worst, I'm guessing, they'll tell you to refile both returns for 2012 with that income moved over from the business return to the personal return, which will make everything match their records. But with all of this documentation in one place, they may be able to simply accept that Square misreported it and correct their files. Good luck. The IRS really isn't as unreasonable as people claim; if you can clearly document that you were trying to do the right thing, they try not to penalize folks unnecessarily.\"",
"title": ""
},
{
"docid": "4726389971e8ff52e63f8ca632c0f16a",
"text": "What I'm reading is that they subtracted the $85 you owe them and they're cutting you a cashier's check for the rest. Ethically speaking, you owed them the money, they subtracted it and made you a check for the rest. Once you cash that check, nobody owes anyone anything in this equation. Sounds like they're in the clear. Legally speaking, I have no idea, since I'm not a lawyer, but even if it was not legal, good luck getting the $85 back without spending far more in retaining a lawyer and fighting it in court. Even fighting it in small claims court will take more of your time than $85 is worth. If it's your time that is the problem, 12 days is not horrible in banking terms. Yes, we're spoiled now by ACH transfers and same day deposit availability, but since you're retired, I'm sure if you think back you'll remember when it used to take two business weeks to clear a check... TLDR; cancel future deposits to that bank, find a new bank, then forget this fiasco and get your revenge by enjoying your life.",
"title": ""
},
{
"docid": "bd2b03ed3cd4d1e068eb182200ec4848",
"text": "\"What they are doing is wrong. The IRS and the state might not be happy with what they are doing. One thing you can ask for them to do is to give you a credit card for business and travel expenses. You will still have to submit receipts for expenses, but it will also make it clear to the IRS that these checks are not income. Keep the pay stubs for the year, or the pdf files if they don't give you a physical stub. Pay attention to the YTD numbers on each stub to make sure they aren't sneaking in the expenses as income. If they continue to do this, ask about ownership of the items purchased, since you will be paying the tax shouldn't you own it? You can in the future tell them \"\"I was going to buy X like the customer wanted, but I just bought a new washer at home and their wasn't enough room on the credit card. Maybe next month\"\"\"",
"title": ""
},
{
"docid": "b9dca32b8177f2bddd8208506c0d1b84",
"text": "You proceed with a proper legal advice. You should not ignore IRS letters. You should have taken your chances in trying to reach a compromise with them, but that ship has likely sailed already. You might want to consider bankruptcy. Ask your parents for a couple of hundreds of dollars to pay for a legal consultation with a lawyer and a CPA and proceed from there.",
"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": "7e10f9fb1ebe25140c06de0de01657db",
"text": "He has my bank account info, and I just want to know where I stand legally. Legally you can't keep the money. It would either go back to the originator or to Government unclaimed department. I got a bunch of missed calls from an unknown number and a really unprofessional email from a guy who supposedly worked for UNICEF saying I had 4 hours until I am suppose to be visited by police and that there was nowhere I could run to. These are common tactics employed to ensure you take some action and transfer the real money somewhere. Do not succumb to such tactics. The money is still in my account I have not touched it. Advise your Bank immediately that there is this deposit into your account that is not your's. Let the bank take appropriate action. Do not authorize Bank to debit your account. The max you can do is authorize the bank to reverse this transaction. The best is stick to statement that said transaction is not yours and Bank is free to do what is right. There is a small difference and very important. If you authorize bank to debit, you have initiated a payment. So if the original payment were revered by originator bank, you are left short of money. However if your instructions are very clear, that this specific transaction can be reversed, you cannot be additionally debited if this transaction is reversed. He has my bank account info, Depending on how easy / difficult, my suggestion would be monitor this account closely, best is if you can close it out and open a new one.",
"title": ""
},
{
"docid": "73b127d58b51f1016763b2b24a668843",
"text": "\"They're hiding income. The IRS is a likely candidate for who they are hiding it from but not the only option. Another possibility that comes to mind is someone who had a judgment against them--a check made out to \"\"cash\"\" could be handled by someone else and thus not ever appear in their bank accounts.\"",
"title": ""
},
{
"docid": "d75dff954aeb4f366304acd2900b66ae",
"text": "How would I go about this so that I can start using this money? You would open the LLC. The checks were not written out to you, they were written out to the LLC. Only the LLC can endorse them.",
"title": ""
},
{
"docid": "d1f69580b17dd1e0f0938967cdcd6d0f",
"text": "\"Did I do anything wrong by cashing a check made out to \"\"trustee of <401k plan> FBO \"\", and if so how can I fix it? I thought I was just getting a termination payout of the balance. Yes, you did. It was not made to you, and you were not supposed to even be able to cash it. Both you and your bank made a mistake - you made a mistake by depositing a check that doesn't belong to you, and the bank made a mistake by allowing you to deposit a check that is not made out to you to your personal account. How do I handle the taxes I owe on the payout, given that I had a tax-free 1099 two years ago and no 1099 now? It was not tax free two years ago. It would have been tax free if you would forward it to the entity to which the check was intended - since that would not be you. But you didn't do that. As such, there was no withdrawal two years ago, and I believe the 401k plan is wrong to claim otherwise. You did however take the money out in 2014, and it is fully taxable to you, including penalties. You should probably talk to a licensed tax adviser (EA/CPA licensed in your State). My personal (and unprofessional) opinion is that you didn't withdraw the money in 2012 since the check was not made out to you and the recipient never got it. You did withdraw money in 2014 since that's when you actually got the money (even if by mistake). As such, I'd report this withdrawal on the 2014 tax return. However, as I said, I'm not a professional and not licensed to provide tax advice, so this is my opinion only. I strongly suggest you talk to a licensed tax adviser to get a proper opinion and guidance on the matter. If it is determined that the withdrawal was indeed in 2012, then you'll have to amend the 2012 tax return, report the additional income and pay the additional tax (+interest and probably underpayment penalty).\"",
"title": ""
},
{
"docid": "923c83903e086d58d9dbb0ef7d9916a7",
"text": "Rent deposit returned to you is not an income. Its your money to begin with. The homeowner is taxed on taking it and can expense the refund, but for you - there's no taxable event. ATM rebate is what it is - rebate. A cash discount over the money paid. Basically - the bank refunded you a fee you paid (ATM rebate is a refund of the ATM fee you paid to a third-party ATM operator). Again - your money. The ATM operator and the bank both have taxable income/deduction, but its not your problem. You - just got your money back. No income, no taxable event. Neither should appear on your tax forms, and similarly nor should credit card points, cash rebates, frequent flyer miles, etc. All are in fact either a refund of your money paid or a merchant discount to you, not an income.",
"title": ""
},
{
"docid": "765dc468438264b52683a3b3d7dcbb3e",
"text": "Unfortunately assets placed in a safety deposit box are not covered under the Federal Deposit Insurance Program (FDIC). Unless the bank is found to be negligent in the way it handled or protected your safety deposit box, neither them nor their private insurance company will reimburse you for the loss. Find out if in the duration you had your box with them, they moved, transitioned or merged with another entity. In this specific situation, you may be able to demonstrate negligence on the part of the banks as they have seemingly misplaced your box during their transition phase, and depending upon the value of the items placed in your safety deposit box, you may be entitled to some form of recovery. Some homeowner's insurance policies may also cover the loss, but if you didn't document what you kept in the box, you have difficulty verifying proof of the value. Valuables are often lost but documents can often be reconstructed. You can get stock and bonds by paying a fee for new certificates. For wills and trusts, you can reach out to the lawyer that prepared them for a copy. You should always keep 3 copies of such documents. When you put stuff in the box, always videotape it (photographs can be challenged) but if the video shows it was put in there, although it can still be taken out by you after you turn off the camera, yields more weight in establishing content and potential value. Also know the value of the items and check with your homeowner policy to make sure the default amount covers it, if not then you may need to include a rider to add the difference in value and the video, receipts, appraisals and such will serve you well in the future in such unfortunate circumstances. If the contents of a safety deposit box are lost because you didn't pay the fee, then depending on the state you are in the time frame might vary (3 years on average), but none the less they are sent to the State's unclaimed property/funds department. You can search for these online often times or by contacting the state. It would help for you to find out which scenario you are in, their fault or yours, and proceed accordingly. Good luck.",
"title": ""
},
{
"docid": "66a88f1661186e80991916393fcc3437",
"text": "Something like this sort of thing happened to me but with Chase bank. The county made a mistake on our taxes and forgot to give us the right deductions and we got a whopping high property tax bill. Since we did have an escrow account the bank just paid the taxes and raised our mortgage by a nearly unaffordable 60% or so even though we called the bank and told them not to pay the tax bill as it was being disputed. By the time we got the tax issues sorted out Chase refused to adjust the mortgage. The only way we were able to get out of it was to refinance with another bank and opt out of the escrow account and handle taxes on our own, which fixed the whole problem. It seemed an awful lot like an attempt to force us into a foreclosure. If we didn't have the money to refinance we would have barely been able to afford the mortgage payment. Why they would want to do that I have no idea. It really sucked though.",
"title": ""
},
{
"docid": "28d9aa347dd6586e63001086f0a889da",
"text": "California is very aggressive when it comes to determining residency. While you have a legitimate defense, I suggest talking with a California-licensed CPA or EA practicing in California, which are experienced in dealing with the FTB residency audits.",
"title": ""
},
{
"docid": "49fcb429b4cc17c2db360a6d3770a84a",
"text": "Real world case: IRS: You owe us $x. You didn't report your income from job y. My mother: I didn't work for y. I don't even know who y is. IRS: If the W-2 is wrong, talk to them to get it fixed. My mother: I can't find y. Please give me an address or phone. IRS: We can't. You talk to them and get it fixed. I know this dragged on for more than a year, they never mentioned the final outcome and they're gone now so I can't ask.",
"title": ""
}
] |
fiqa
|
8b4462d25ef5c1f7f74970a9244d8e48
|
Are there any e-commerce taxation rules in India?
|
[
{
"docid": "2ef4e47b64b903efa22be3cfe708549a",
"text": "There are no clear guidelines. If you are selling as individual, then what ever profit you make gets added to your overall income as you pay tax accordingly. This is true for sole proprietor or partnership kind of firms. If you are registered as a Company, the profits are taxed as business income. There may be VAT and other taxes. Please consult a CA who can guide you in specifics as for eCommerce, there is no defined law and one has to interpret various other tax laws.",
"title": ""
}
] |
[
{
"docid": "1a47af56d5b794e7f58cdb39117264bd",
"text": "\"TL;DR - my understanding of the rules is that if you are required to register for GST (earning more than $75k per annum), you would be required to pay GST on these items. To clarify firstly: taxable income, and goods and services tax, are two different things. Any income you receive needs to be considered for income tax purposes - whether or not it ends up being taxable income would be too much to go into here, but generally you would take your expenses, and any deductions, away from your income to arrive at what would generally be the taxable amount. An accountant will help you do this. Income tax is paid by anyone who earns income over the tax free threshold. By contrast, goods and services tax is a tax paid by business (of which you are running one). Of course, this is passed on to the consumer, but it's the business that remits the payment to the tax office. However, GST isn't required to be charged and paid in all cases: The key in your situation is first determining whether you need to register for GST (or whether indeed you already have). If you earn less than $75,000 per year - no need to register. If you do earn more than that through your business, or you have registered anyway, then the next question is whether your items are GST-free. The ATO says that \"\"some education courses [and] course materials\"\" are GST-free. Whether this applies to you or not I'm obviously not going to be able to comment on, so I would advise getting an accountant's advice on this (or at the very least, call the ATO or browse their legal database). Thirdly, are your sales connected with Australia? The ATO says that \"\"A sale of something other than goods or property is connected with Australia if ... the thing is done in Australia [or] the seller makes the sale through a business they carry on in Australia\"\". Both of these appear to be true in your case. So in summary: if you are required to register for GST, you would be required to pay GST on these items. I am not a financial advisor or a tax accountant and this is not financial advice.\"",
"title": ""
},
{
"docid": "bd32fe9ac63a48f7adcb39dea2923ad9",
"text": "I am an Israeli based citizen who represents and Indian company who sells its products in Israel. As an agent I am entitled to commission on sales on behalf the Indian company who advised that. Any commission paid to you will be applicable to TDS at 20.9% of the commission amount, the tax will be paid and a Tax paid certificate will be given to you. According to a Bilateral Double tax avoidance treaty if the tax has been deducted in India you will get credit for this tax in Israel.",
"title": ""
},
{
"docid": "31dd8c969c8a715cae3a09966b339ea4",
"text": "\"Believe it or not, unless you directly contact an accountant with experience in this field or a lawyer, you may have a tough time getting a direct answer from a reputable source. The reason is two fold. First, legally defining in-game assets is exceptionally difficult from a legal/taxation stand point. Who really owns this data? You or the company that has built the MMO and manages the servers containing all of the data? You can buy-and-sell what is effectively \"\"data\"\" on their servers but the truth is, they own the code, the servers, the data, your access rights, etc. and at any point in time could terminate everything within their systems. This would render the value of your accounts worthless! As such, most countries have overwhelmingly avoided the taxation of in-game \"\"inventory\"\" because it's not really definable. Instead, in game goods are only taxed when they are exchanged for local currency. This is considered a general sale. There may be tax codes in your region for the sale of \"\"digital goods\"\". Otherwise, it should be taxed as sale a standard good with no special stipulations. The bottom line is that you shouldn't expect to find much reliable information on this topic, on the internet. Law's haven't been welled defined, regarding in-game content worth and taxing of sales and if you want to know how you should pay your taxes on these transactions, you need to talk to a good accountant, a lawyer or both.\"",
"title": ""
},
{
"docid": "11d9870d5f19e2e39ff3218c3432a08f",
"text": "Yes you need to pay taxes in India. Show this as other income and pay tax according to your tax bracket. Note you need to pay the taxes quarterly if the net tax payable is more than 10,000.",
"title": ""
},
{
"docid": "938244c4d2b7616a503f8be322873695",
"text": "Apparently Amazon's legal team that is battling to prevent online retailers from getting taxed was not consulted as to whether an idea like this would look *really* bad for their case. It's brilliant, but a wee bit diabolical. Brick and mortar retailers really have no recourse against something like this.",
"title": ""
},
{
"docid": "fa74f9772e688a7311fdd7a91a3b9504",
"text": "Are there any IRS regulations I should be aware of when sending money to India? None. As long as you are following the standard banking channels. You are also declaring all the accounts held outside US in your tax returns. FBAR. Is it legal to do so? Yes it is legal. do I have to declare how much I am investing and pay extra taxes? As part of FBAR. Income earned [including interest, capital gains, etc] needs to be paid in India [there are some exemptions for example interest on NRE accounts] as well as in the US [relief can be claimed under DTAA Indian version here and US here]. So if you already have paid taxes on salary and say transfer USD 10K to India; there is no tax on this 10K. If this 10K generates an income of say 2K; this 2K is taxable as per normal classification and rules.",
"title": ""
},
{
"docid": "0660a055e498255f0629f66e7b8303f2",
"text": "\"Tax is often calculated per item. Especially in the days of the internet, some items are taxable and some aren't, depending on the item and your nexus. I would recommend calculating and storing tax with each item, to account for these subtle differences. EDIT: Not sure why this was downvoted, if you don't believe me, you can always check with Amazon: http://www.amazon.com/gp/help/customer/display.html/ref=hp_468512_calculated?nodeId=468512#calculated I think they know what they're talking about. FINAL UPDATE: Now, if someone goes to your site, and buys something from your business (in California) and the shipping address for the product is Nevada, then taxes do not have to be collected. If they have a billing address in California, and a shipping address in Nevada, and the goods are shipping to Nevada, you do not have to declare tax. If you have a mixture of tangible (computer, mouse, keyboard) and intangible assets (warranty) in a cart, and the shipping address is in California, you charge tax on the tangible assets, but NOT on the intangible assets. Yes, you can charge tax on the whole order. Yes for most businesses that's \"\"Good enough\"\", but I'm not trying to provide the \"\"good enough\"\" solution, I'm simply telling you how very large businesses run and operate. As I've mentioned, I've done several tax integrations using software called Sabrix (Google if you've not heard of it), and have done those integrations for companies like the BBC and Corbis (owned and operated by Bill Gates). Take it or leave it, but the correct way to charge taxes, especially given the complex tax laws of the US and internationally, is to charge per item. If you just need the \"\"good enough\"\" approach, feel free to calculate it by total. Some additional reading: http://en.wikipedia.org/wiki/Taxation_of_Digital_Goods Another possible federal limitation on Internet taxation is the United States Supreme Court case, Quill Corp. v. North Dakota, 504 U.S. 298 (1992),[6] which held that under the dormant commerce clause, goods purchased through mail order cannot be subject to a state’s sales tax unless the vendor has a substantial nexus with the state levying the tax. In 1997, the federal government decided to limit taxation of Internet activity for a period of time. The Internet Tax Freedom Act (ITFA) prohibits taxes on Internet access, which is defined as a service that allows users access to content, information, email or other services offered over the Internet and may include access to proprietary content, information, and other services as part of a package offered to customers. The Act has exceptions for taxes levied before the statute was written and for sales taxes on online purchases of physical goods.\"",
"title": ""
},
{
"docid": "f1ee18a46281f5e2f00434b944a1f564",
"text": "So isn't this a success? It was implemented by taxation teams to ensure that non taxable transactions could no longer occur, and now they aren't. On the corruption side, everything is electronic and traceable now. Sounds like it is working as intended.",
"title": ""
},
{
"docid": "cee6066775e02c40e471c8f3f0bef895",
"text": "It looks like businesses selling services (like software downloads) from outside the EU to the UK have to register for VAT if the amount of such sales goes over the UK VAT registration threshold: [If] the value of the taxable supplies you make is over a specified threshold [then] you must register for VAT So it seems plausible that this business does have some requirement to charge VAT on its sales, but clearly it should have done so at the time of sale, not months later. As you say, UK and EU law require that prices are displayed including relevant taxes. Since this business is in the US, they might be able to claim that those rules don't apply to them. But I'm not aware of even US businesses being able to claim sales tax from a US customer months after originally making a sale, and it goes against all reasonable principles of law if they would be able to do it. So the business should really just accept that they screwed up and they'll now have to take the hit and pay the tax themselves. They can work as if the pre-tax price was $12.99/1.2 = $10.825, leaving $2.165 they need to hand over to HMRC. I don't think there's any legal way they can demand money from you now, and certainly for such a low sum of money there's no practical way they could. I can't find anything definitive one way or the other, but I suppose it's possible that HMRC would consider you the importer under these circumstances and so liable for the VAT yourself. But I don't know of any practial way to actually report this to HMRC or pay them the money, and again given the amount there's no realistic chance they'd want to chase you for it. In your shoes I would either ignore the email, or write back and politely tell them that they should have advertised the cost at the time and you're not willing to pay extra now. And you might want to keep an eye on the card you used to pay them to make sure they don't try to just charge it anyway. EDIT: as pointed out in a comment, the company behind this (or at least one with a very similar problem and wording in their emails!) did end up acknowledging that they can't actually do this and that they'll need to pay the tax out of the money they already collected, as I described above. It seems they didn't contact the people they originally emailed to let them know this, though. There's some more discussion here.",
"title": ""
},
{
"docid": "ebe7bab9b048af3bcc0e783606e7074e",
"text": "But why can't two companies exchange goods directly without paying VAT? This would make the famous carousel fraud scam impossible and businesses won't have to deal with complicated refunds. Sales tax in the United States works as you describe. Sales tax is charged only to end customers, not to businesses that themselves charge sales tax. But this means that a criminal business can charge tax and just pocket it unless someone else reports it. They can also evade income tax the same way. Not to mention other issues like cross jurisdiction taxes (e.g. internet sales often evade sales tax). The whole point of a Value Added Tax (VAT) is that they charge at each level. This creates a system where each buyer reports the tax paid to the seller so as to be able to deduct it. So the seller has to pay the VAT that they charged. Or the tax authorities know and can revoke their VAT license. If only the end user is charged tax, then fraud is easier than under a VAT. So easy, I doubt they have a special name for it. The fraudulent business just collects tax from end users and disappears. Or simply fails to record those transactions. You could call it missing transaction record fraud, but why bother? It's just straight up tax fraud. The complexity of the carousel fraud arises from the difficulty of evading a VAT.",
"title": ""
},
{
"docid": "26ff4efdbe492785428bc757d31d8103",
"text": "I don't know how taxes work in Israel, but I imagine it is relatively similar to taxes in the US. In the US you need to pay taxes on investment earnings when you sell them or in this case trade them for something of value. The amount that would typically would be taxed on would be the difference between how much you paid for the currency and the value of the item you traded it for. In theory there shouldn't be any difference in trading bitcoins versus dollars or euros. Reality is that they are rather weird and I don't know what category they would fall into. Are they a currency or a collectors item? I think this is all rather hypothetical because there is no way for any government to track digital currencies and any taxes paid would be based on the honor system. I am not an account and the preceding was not tax advice...",
"title": ""
},
{
"docid": "0a998ba4e2f818772ac51100aeaa986e",
"text": "I am from India. I visited US 6-8 times on business VISA and then started 2 Member LLC. Myself and My wife as LLC Members. We provide Online Training to american students from India. Also Got EIN number. Never employed any one. Do i need to pay taxes? Students from USA pays online by Paypal and i am paying taxes in India. Do i need to pay Taxes in US? DO i need to file the Tax returns? Please guide me. I formed LLC in 2010. I opened an Office-taken Virtual office for 75 USD per month to open LLC in 2010. As there is physical virtual address, am i liable for US taxes? All my earning is Online, free lancing.",
"title": ""
},
{
"docid": "ba9c7a098b91c3adfcde14646cd9d9e2",
"text": "Is the VAT scam still on the go? I was under the impression that amazon have to pay vat according to the country the items are shipped to, not shipped from? It will be a complete fuck up on the part of our politicians if this loophole has not been closed yet.",
"title": ""
},
{
"docid": "4972d02c5cb0088e316851b3f20b2dee",
"text": "Tax is due in India as you offered services from India. So whether the International Client pays via Credit Card, Bank Transfer, Paypal or any other means is not relevant. Even if the International Client pays you in a account outside India; it is still taxable in India.",
"title": ""
},
{
"docid": "ec9c26997f81609a501071663b98f250",
"text": "Can I give the bank the $300,000 to clear the mortgage, or must I pay off the total interest that was agreed upon for the 30 year term? This depends on the loan agreement. I had one loan where I was on the hook regardless. Early payment was just that, early payment. It would have allowed me to skip months without making payments (because I had already made them). Most loans charge interest on the remaining balance. If you pay early, it reduces your balance, decreasing the interest. If you pay it off early, there's no more balance and no more interest. I'm curious why the bank would let you do this, since they will lose out on a lot of profit. But they have their money back and can loan it out again. If they maintained the loan, they aren't guaranteed of getting their money. Interest is rent that you pay for the loan of the money. Once you return the money, why pay more rent? While some apartment leases require paying through the entire term, most allow for early termination with proper notice. You give back the apartment; the landlord rents it out again. Why should they get paid two rents? Another issue is that if someone with a mortgage switches jobs to a new location, that person will likely prefer to sell the current house and buy one in the new location. This is actually the typical way for a mortgage to end. If the bank did not allow that, they would essentially force the family to rent out the mortgaged house and rent a new house. So the bank would go from an owner-occupied house that the inhabitants want to keep maintained to a rental, where the inhabitants only care to the extent of their legal liability. Consider the possibility that the homeowners lose one of their jobs. They can't afford the house. So they sell it and close out the mortgage. Should the bank refuse to allow the sale and attempt to recover the interest from the impoverished homeowners? That situation would almost guarantee an expensive foreclosure. Once there is any early termination clause for any reason, it makes sense for the bank to structure the loan to include the possibility. That way they don't have to investigate whatever excuse is involved. Loan regulators may require this as well, particularly on mortgages.",
"title": ""
}
] |
fiqa
|
0fa3a3cf581cd144d30c9152f713d789
|
Free/open source Unix software that pulls info from all my banks/brokers/credit cards?
|
[
{
"docid": "7f60f3491884525065cfe44ca428df27",
"text": "Gnucash uses aqbanking, so I'd suggest looking at aqbanking to see if it will do what you want. It seems to be actively developed (as of 26.2.2011), but the main page is in German and my German is a bit rusty... You might also try asking on the gnucash-users list.",
"title": ""
},
{
"docid": "9c7310340478610eea3f1d4b154baaf6",
"text": "\"As far as I can tell there are no \"\"out-of-the-box\"\" solutions for this. Nor will Moneydance or GnuCash give you the full solution you are looking for. I imaging people don't write a well-known, open-source, tool that will do this for fear of the negative uses it could have, and the resulting liability. You can roll-you-own using the following obscure tools that approximate a solution: First download the bank's CSV information: http://baruch.ev-en.org/proj/gnucash.html That guy did it with a perl script that you can modify. Then convert the result to OFX for use elsewhere: http://allmybrain.com/2009/02/04/converting-financial-csv-data-to-ofx-or-qif-import-files/\"",
"title": ""
},
{
"docid": "457c5bf12f90218237dd69a0c2508da6",
"text": "\"Moneydance is a commercial application that is cross-platform. Written in Java, they run and are supported on Windows, Mac and Linux. They integrate with many financial institutions and for those that it cannot, you can import a locally downloaded file. I have used it for several years on my Mac, but have no company affiliation. I'm not sure if by saying \"\"Unix\"\" software you meant FOSS of some kind, but good luck in any case.\"",
"title": ""
},
{
"docid": "fd5a1b84940c079a7c2f75cafa6f8904",
"text": "Buxfer is a personal-finance web app which you might like. It's not open-source. But at least none of your complaints about financeworks.intuit.com apply to Buxfer. Buxfer offers a piece of software you can download to your own PC, called Firebux. This macro-recording software provides automation that helps you download statements and upload them to Buxfer. So you never have to give Buxfer any of your bank or brokerage usernames or passwords. Buxfer and Firebux are both free of charge. Wesabe, another personal-finance web app, also used to offer data-uploader software, but Wesabe has now gone out of business.",
"title": ""
}
] |
[
{
"docid": "0fa57073146e6e11461601c5ccd90fba",
"text": "I work in the retail software industry, and can confirm this is a major problem right now. There are several very popular point of sale packages that hackers have written RAM scrapers for. Yes, there is (a lot) of credit card fraud traced back to these hacks.",
"title": ""
},
{
"docid": "830ab9fb4caf0738837905aa1d8a5b57",
"text": "I generally concur with your sentiments. mint.com has 'hack me' written all over it. I know of two major open source tools for accounting: GNUCash and LedgerSMB. I use GNUCash, which comes close to meeting your needs: The 2.4 series introduced SQL DB support; mysql, postgres and sqlite are all supported. I migrated to sqlite to see how the schema looked and ran, the conclusion was that it runs fine but writing direct sql queries is probably beyond me. I may move it to postgres in the future, just so I can write some decent reports. Note that while it uses HTML for reporting, there is no no web frontend. It still requires a client, and is not multi-user safe. But it's probably about the closest to what you what that still falls under the heading of 'personal finance'. A fork of SQL Ledger, this is postgreSQL only but does have a web frontend. All the open source finance webapps I've found are designed for small to medium busineses. I believe it should meet your needs, though I've never used it. It might be overkill and difficult to use for your limited purposes though. I know one or two people in the regional LUG use LedgerSMB, but I really don't need invoicing and paystubs.",
"title": ""
},
{
"docid": "446d9213a8f4ea94a44d0e75bf123e7b",
"text": "\"Mint is one alternative. If you want the raw data in CSV format, you can use \"\"Export\"\" feature under\"",
"title": ""
},
{
"docid": "a3cb261d0561cda92eabd6e103677895",
"text": "I use Banktivity. It's very much not free, but it automatically downloads all my bank and credit card activity and has excellent reporting options.",
"title": ""
},
{
"docid": "e05dcedf1a1bea716785027fabcee543",
"text": "\"Considering the fact that you are so unaware of how to find such data, I find it very very hard to believe that you actually need it. \"\"All trade and finance data for as much tickers and markets as possible.\"\" Wtf does that even mean. You could be referencing thousands of different types of data for any given \"\"ticker\"\" with a statement so vague. What are you looking for?\"",
"title": ""
},
{
"docid": "9b8834fbccc5971800907f56b7c5afdd",
"text": "Sure, Yahoo Finance does this for FREE.",
"title": ""
},
{
"docid": "db80ee9cc1f82f76ee6adc6bc300bb4f",
"text": "\"Yes, Interactive Brokers is a good source for live data feeds and they have an API which is used to programmatically access the feeds, you will have to pay for data feeds from the individual data sources though. The stock exchanges have a very high price for their data and this has stifled innovation in the financial sector for several decades in the united states. But at the same time, it has inflated the value and mystique of \"\"quants\"\" doing simple algorithms \"\"that execute within milliseconds\"\" for banks and funds. Also RIZM has live feeds, it is a younger service than other exchanges but helps people tap into any online broker's feeds and let you trade your custom algorithms that way, that is their goal.\"",
"title": ""
},
{
"docid": "b274dcbeca8aaf4a0d475b7e2101809b",
"text": "Mint has worked fairly well for tracking budgets and expenses, but I use GnuCash to plug in the holes. It offers MSFT$ like registers; the ability to track cash expenses, assets, and liabilities; and the option to track individual investment transactions. I also use GnuCash reports for my taxes since it gives a clearer picture of my finances than Mint does.",
"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": "9102b28680803096847734691b1c9fe0",
"text": "http://www.mint.com attaches to all your accounts and lists all your transactions. I love it.",
"title": ""
},
{
"docid": "7978a163ea6fbead1bd037bcc1a14902",
"text": "I also searched for some time before discovering Market Archive, which AFAIK is the most affordable option that basically gives you a massive multi-GB dump of data. I needed sufficient data to build a model and didn't want to work through an API or have to hand-pick the securities to train from. After trying to do this on my own by scraping Yahoo and using the various known tools, I decided my time was better spent not dealing with rate-limiting issues and parsing quirks and whatnot, so I just subscribed to Market Archive (they update the data daily).",
"title": ""
},
{
"docid": "4767150d12ae946f266ade3beae6a7b0",
"text": "You could keep an eye on BankSimple perhaps? I think it looks interesting at least... too bad I don't live in the US... They are planning to create an API where you can do everything you can do normally. So when that is released you could probably create your own command-line interface :)",
"title": ""
},
{
"docid": "1ce26b7bf8249861b734fb8c1e184fc4",
"text": "Plaid is exactly what you are looking for! It's docs are easy to understand, and you can sign up to their API and use their free tier to get started. An example request to connect a user to Plaid and retrieve their transactions data (in JSON):",
"title": ""
},
{
"docid": "8623e6b3e12ca9478225e18df7e0e06a",
"text": "Some banks would allow you to export your transactions as CSV (they call it Excel export, but in many cases it's actually just CSV). However, I would not expect any bank to bother with creating anything like command-line access - return on such investment would be too low. There are other ways to get information out of the banks, I'm sure - providers like Yodelee must be using something to fetch financial data - but those usually not for general public access. Also, you can use something like mint.com to aggregate you banking data if you bank doesn't do good export and then export it from there. They have CSV export too. If you need to do any actions though, I don't think there's anything like you are looking for.",
"title": ""
},
{
"docid": "5ef9589f70c394dd722cea35986d83a7",
"text": "Many things I buy from Amazon I could get cheaper from Walmart but I pay more from Amazon just so I don't have to go to Walmart. It isn't the company itself that keeps me away, its the people that frequent the establishment and the lines. Funny you should mention the locker. I remember when they first started rolling this out and until just now, I had no idea I actually have 2 in my area.",
"title": ""
}
] |
fiqa
|
eb77916573c376f2586bbc26f2f553a2
|
Creating S-Corp: Should I Name My Wife as a Director/Shareholder?
|
[
{
"docid": "f3153f161517c291ba3f59b50c82f271",
"text": "If you're creating an S-Corp for consulting services that you personally are going to provide, what would it give her to have 50% of the corporation when you're dead? Not to mention that you can just add it to your will that the corporation stock will go to her, and it will be much better (IMHO, talk to a professional) since she'll be getting stepped-up basis. Why aren't you talking to a professional before making decisions? It doesn't sound like a good way to conduct business.",
"title": ""
},
{
"docid": "e7c53800da86c53cc3a8b7a9c9ae3974",
"text": "There are many aspects to consider in deciding what sort of company you want to form. Instead of an S-corporation, you should determine whether it would be better to form a Limited Liability Company (LLC), Limited Partnership (LP) or even a professional company (PC). Littleadv is correct: There is minimal benefit in forming an S-corp with you and your wife as the shareholders, if you will be the only contributor-worker. There are costs associated with an S-corporation, or any corporation, that might outweigh benefits from more favorable tax treatment, or personal protection from liability: Filing fees and disclosure rules vary from state to state. For example, my father was a cardiologist who had no employees, other than my grandmother (she worked for free), in a state with income taxes (NM). He was advised that a PC was best in New Mexico, while an S-Corp was better in Florida (there are no personal income taxes in Florida). The only way to know what to do requires that you consult an accountant, a good one, for guidance.",
"title": ""
}
] |
[
{
"docid": "da9ecf6147e0082b20047381cdb41141",
"text": "\"There are no dividends from S-Corp. There are distributions. Big difference. S-Corps fill form 1120S and schedule K-1 per shareholder. In the schedule all the income of your S-Corp will be assigned to various categories that you will later copy to your personal tax return as your personal income. It is not dividend income. The reason people prefer to take distributions from their S-Corps instead of salary is because you don't pay SE taxes on the distributions. That is also the reason why the IRS forces you to pay yourself a reasonable salary. But the tax rate on the income, all of it, is your regular income tax rate, unless the S-Corp income is categorized in a preferred category. The fact that its an S-Corp income doesn't, by itself, allow any preferential treatment. If you're learning the stuff as you go - you should probably get in touch with a tax professional to advise you. All the S-Corp income must be distributed. Its not a matter of \"\"avoiding paying the tax\"\", its the matter of \"\"you must do it\"\". Not a choice. My 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 (circ 230 disclaimer).\"",
"title": ""
},
{
"docid": "baff06bf28cd635f0ae8ac8f028df2fb",
"text": "It's whatever you decide. Taking money out of an S-Corp via distribution isn't a taxable event. Practically speaking, yes, you should make sure you have enough money to afford the distribution after paying your expenses, lest you have to put money back a few days later in to pay the phone bill. You might not want to distribute every penny of profit the moment you book it, either -- keeping some money in the business checking account is probably a good idea. If you have consistent cash flow you could distribute monthly or quarterly profits 30 or 60 days in arrears, for example, and then still have cash on hand for operations. Your net profit is reflected on the Schedule K for inclusion on your personal tax return. As an S-Corp, the profit is passed through to the shareholders and is taxable whether or not you actually distributed the money. You owe taxes on the profit reported on the Schedule K, not the amounts distributed. You really should get a tax accountant. Long-term, you'll save money by having your books set up correctly from the start rather than have to go back and fix any mistakes. Go to a Chamber of Commerce meeting or ask a colleague, trusted vendor, or customer for a recommendation.",
"title": ""
},
{
"docid": "0798aa4e5d06e0deb5d8c966f0f35db5",
"text": "I see a lot of people making the mistake or being given bad advise in structuring a new business. If you have more than one shareholder, then by all means an S Corporation is a better structure for lower taxes; avoid double taxation. If, however, this is a one shareholder S Corp, then you had better 1099 yourself as a consultant or look into sole proprietorship. The tax benefits are much better either way. Dr. Suraiya Shaik Ali",
"title": ""
},
{
"docid": "c802c5a8765525396bb86c842ec26502",
"text": "I know the general principles of acting as a director in a company, and am familiar with the rights of shareholders. In the last ten years or so, I believe Australia has introduced legislation that strongly punishes those directors who do not act in a professional or prudent manner. While I will of course attempt to fulfill the duties required - I am new to conducting business at this level, and am concerned about mistakenly breaching some unknown rule/law and being subject to repercussions that I just don't know about. As you have already stated, the key to being director in a company is the additional responsibility. Legally you can be held in breach. At the same time you will be able to influence your decision much better if you a director and thus safeguard your interest. If you are only a shareholder, you cannot be held responsible for decision by company, individual malpractice may still be applicable, but this is less of a risk. However over a period of time, the board can take certain decision that may marginalize your holding in the company.",
"title": ""
},
{
"docid": "41e179499d51cab275537bb819a76730",
"text": "Who you name as executor of your estate is to your judgment. If you feel that this friend will execute your wishes, then that's really all that matters. If your friend is your first choice, then name his wife as a back-up (in case something happens to him in the meantime). You can change your executor as long as you're fit to do so, so this isn't a forever decision if you have a falling-out.",
"title": ""
},
{
"docid": "2ff2c8d04f80b637da2b51de86a1c16e",
"text": "First, determine the workload he will expect. Will you have to quit your other work, either for time or for competition? How much of your current business will be subsumed into his business, if any? Make sure to understand what he wants from you. If you make an agreement, set it in writing and set some clear expectations about what will happen to your business (e.g. it continues and is not part of your association with the client). Because he was a client for your current business, it can blur the lines. Second, if you join him, make sure there is a business entity. By working together for profit, you will have already formed a partnership for tax purposes. Best to get an entity, both for the legal protection and also for the clarity of law and accounting. LLCs are simplest for small ventures; C corps are useful if you have lots of early losses and owners that can't use them personally, or if you want to be properly formed for easy consumption by a strategic. Most VCs and super-angels prefer everybody be a straight C. Again, remember to define, as necessary, what you are contributing to be an owner and what you are retaining (your original business, which for simplicity may already be in an entity). As part of this process, make sure he defines the cap table and any outstanding loans. Auntie June and Cousin Steve might think their gifts to him were loans or equity purchases; best to clear this issue up early before there's any more money in it. Third, with regard to price, that is an intensely variable question. It matters what the cap table looks like, how early you are, how much work he's already done, how much work remains to be done, and how much it will pay off. Also, if you do it, expect to be diluted by other employees, angels, VCs, other investors, strategics, and so on. Luckily, more investors usually indicates a growing pie, so the dilution may not be at all painful. But it should still be on your horizon. You also need to consider your faith in your prospective partner's ability to run the business and to be a trustworthy partner (so you don't get Zuckerberg'd), and to market the business and the product to customers and investors. If you don't like the prospects, then opt for cash. If you like the business but want to hedge, ask for compensation plus equity. There are other tricks you could use to get out early, like forced redemption, but they probably wouldn't help either because it'd sour your relationship or the first VC or knowledgeable angel to come along will want you to relinquish that sort of right. It probably comes down to a basic question of your need for cash, his willingness to let you pursue outside work (hopefully high) and your appraisal of the business' prospects.",
"title": ""
},
{
"docid": "3888310130e7db43d4af9b3324cf9def",
"text": "I think I may have figured this out but if someone could double check my reasoning I'd appreciate it. So if my company makes $75000 and I decide to pay myself a $30000 salary, then the quarterly payment break down would be like this: 1040ES: Would pay income tax on non salary dividend ($45000) 941: Would pay income tax, SS, medicare on salary ($30000) (I'm the only person on payroll) So I think this answers my question in that after switching from filing as LLC to S-corp, I won't have to pay as much on 1040ES because some of it will now be covered on payroll.",
"title": ""
},
{
"docid": "ebfdc556e16641b35c2d76abcb6f55c6",
"text": "\"If you elect to have the company treated as an S corp, the profits/losses of the company will pass through to the shareholders (i.e. you) on a Schedule K-1 form every year. These amounts on the Schedule K-1 are taxable whether or not the company actually distributed the money to you. Typically, the company will distribute profits to the shareholders because they will have to pay taxes on this amount. https://turbotax.intuit.com/tax-tools/tax-tips/Small-Business-Taxes/What-is-a-Schedule-K-1-Tax-Form-/INF19204.html So the money held in the company's bank accounts won't appear on your taxes per se, but the profits/losses as reported on the company's tax return will pass through to you on the Schedule K-1. Typically these amounts are taxed as income. Your tax accountant can advise you on how much money you can/should take through regular payroll and how much can be distributed as a shareholder, as well as help you prepare the corporate tax returns and schedule(s) K-1 every year. There are tax advantages to taking money out of the company through distributions instead of payroll, but the amounts can be scrutinized and subject to a criterion of \"\"reasonable compensation\"\", hence my recommendation for a tax accountant.\"",
"title": ""
},
{
"docid": "62d275defac8a06f8d6040c5a24625cd",
"text": "LLC is not a federal tax designation. It's a state-level organization. Your LLC can elect to be treated as a partnership, a disregarded entity (i.e., just report the taxes in your individual income tax), or as an S-Corp for federal tax purposes. If you have elected S-Corp, I expect that all the S-Corp rules will apply, as well as any state-level LLC rules that may apply. Disclaimer: I'm not 100% familiar with S-corp rules, so I can't evaluate whether the statements you made about proportional payouts are correct.",
"title": ""
},
{
"docid": "3ecb3c403e3a3186ddfa2c51db2b0c14",
"text": "Yes. The S-Corp can deduct up to the amount it actually incurred in expenses. If your actual expenses to build the carport were $1000, then the $1000 would be deductible, and your business should be able to show $1000 in receipts or inventory changes. Note you cannot deduct beyond your actual expenses even if you would normally charge more. For example, suppose you invoiced the non-profit $2000 for the carport, and once the bill was paid you turned around and donated the $2000 back to the non-profit. In that case you would be deducting $1000 for your cost + $2000 donation for a total of $3000. But, you also would have $2000 in income so in the end you would end up with a $1000 loss which is exactly what your expenses were to begin with. It would probably be a good idea to be able to explain why you did this for free. If somehow you personally benefit from it then it could possibly be considered income to you, similar to if you bought a TV for your home with company funds. It would probably be cleaner from an accounting perspective if you followed through as described above- invoice the non-profit and then donate the payment back to them. Though not necessary, it could lesson any doubt about your motives.",
"title": ""
},
{
"docid": "2af033af3f8b981e4e7147ebc864cc28",
"text": "\"You probably don't need S-Corp. There's no difference between what you can deduct on your Schedule C and what you can deduct on 1120S, it will just cost you more money. Since you're gambling yourself, you don't need to worry about liability - but if you do, you should probably go LLC route, much cheaper and simpler. The \"\"reasonable salary\"\" trick to avoid FICA won't work. Don't even try. Schedule C for professional gamblers is a very accepted thing, nothing extraordinary about it.\"",
"title": ""
},
{
"docid": "a790ea76bfb4f97a68f559ad99aca210",
"text": "\"With the second example, if you continue to read on you will see that although directors must try and maximise shareholders wealth. That precedence doesn't change however the interpretation of the actions and whether they maximise shareholders wealth does. For example giving money to charity with regards to the Doge v. Ford case would probably have been blocked on the grounds that it decreases shareholder wealth, but later cases such as A. P. Smith Manufacturing Co. v. Barlow say that donations can increase shareholders wealth in the long run. So it gives a broader coverage of the actions deemed to increase shareholder wealth. The second is related to short term vs long term wealth but part of the reason for it was due to the inability of Paramount to prove that the value increase for shareholders in the long run from selling to Viacom rather than QVC would be larger than the difference between the two offers, which was 1.3 billion. Then there is also the issue of shareholders rights and the companys ability to block shareholders from selling to whomever they want. So as I said it's related, but the issue isn't solely and simply about short term vs long term wealth. Both examples are kind of weak as in the first, well the issue doesn't really exist in the present day as previous case law has broadened the definition of actions which increase shareholder wealth, and in the second, short term vs long term value is related, but mostly tagging along with a larger issue. Your original statement was \"\"in matters of cost vs. quality I'd expect publicly traded companies to prioritize short-term shareholder profit (or be sued by said shareholders.)\"\" Are there any examples where shareholders have sued simply because they wanted better short term performance over long term performance?\"",
"title": ""
},
{
"docid": "01146864ca51d161601ebe09cd8359b9",
"text": "First of all, this is a situation when a consultation with a EA working with S-Corporations in California, CA-licensed CPA or tax preparer (California licenses tax preparers as well) is in order. I'm neither of those, and my answer is not a tax advice of any kind. You're looking at schedule CA line 17 (see page 42 in the 540NR booklet). The instructions refer you to form 3885A. You need to read the instructions carefully. California is notorious for not conforming to the Federal tax law. Specifically, to the issue of the interest attributable to investment in S-Corp, I do not know if CA conforms. I couldn't find any sources saying that it doesn't, but then again - I'm not a professional. It may be that there's an obscure provision invalidating this deduction, living in California myself - I wouldn't be surprised. So I suggest hiring a CA-licensed tax preparer to do this tax return for you, at least for the first year.",
"title": ""
},
{
"docid": "f6cafb8253a880df1e4cecfe0f1ae1c1",
"text": "\"If you swap the word \"\"shareholder\"\" for \"\"investor\"\" I think it helps clarify things. If you owned 51% of the company you'd get to say what to do with the cash, would you not? Managers are smart and successful, but ultimately just employees. Companies are beholden to their shareholders. In a more practical sense, I would think the board (representing shareholders) and the upper management would have to come up with a plan. But shareholders have the ultimate say.\"",
"title": ""
},
{
"docid": "0ccce0ac35a3ef68c4594ec1309af4dc",
"text": "I read, however, that if the company's assets are not kept separate from our assets then if we got sued, the corporate veil would be pierced. This whole venture would be to give us additional income so my wife could watch our daughter and have an income.",
"title": ""
}
] |
fiqa
|
d890b05ba7f6411311dad64290aa8509
|
Why do credit cards require a minimum annual household income?
|
[
{
"docid": "a2877406bf0777a29e86442ade57fcb8",
"text": "Here's one reason that's being overlooked in answers so far. (@ChrisInEdmonton, this is for your comment on @Chad's answer.) How do credit card companies make money? Sure, there's interest charges, but those are offset significantly by the cost of borrowing money, and by people defaulting on their debt / entering bankruptcy. The other way they make money is by processing transactions. They get a cut of whatever you buy. If you're a high-income person, and you're going to process a lot of expenditures with this credit card, your business is worth more. They will be willing to bribe you with things like cash-back, frequent flier miles, and insurance on your auto rentals, so that they can be your #1 go-to card. (This works in concert with the way that some credit card vendors with richer clientele overall - American Express - get to charge higher merchant fees for access to these customers' wallets. But that was mentioned in other answers.) If you're not a high-income person, your business is worth less. If you go somewhere asking for credit, they're going to try and give you a card which will earn them the most money - which probably isn't the one where they give you back 50% of their transaction fee in rewards. It's a calculated risk, since they still have to compete against cash, debit cards, and all the other credit card companies, so they don't have you totally over a barrel, but you shouldn't expect as many freebies, either.",
"title": ""
},
{
"docid": "19bde1702c8c2197120ccd74d527b835",
"text": "While you're asking about a particular bank, I'll give my opinion of this in general. I think a $12,000 household income is pretty low to be given credit. The risk to the bank is certainly higher than if the income were at that $35,000 level. They can use this to differentiate what they offer for perks, and if they ever collateralize the debt of these cards, it's a clearly defined demographic.",
"title": ""
},
{
"docid": "8b7deb81ad4a582eb5faa70ec1ea7087",
"text": "\"I don't know, but I can guess. You'll notice the Elite card has higher rewards. A card might want to convince merchants that they represent high end buyers, and use that to negotiate higher merchant discounts. Issuing bank: \"\"Our 10 million card holders are sophisticated and have lots of discretionary income. If you don't agree to this rate, we'll terminate the contract and they will take their business elsewhere.\"\" Merchant: \"\"But it's twice the rate of everyone else! I'm sure these customers have other means of payment, and besides, how many of those card holders are actually using it?\"\" Issuing bank: \"\"Our cardholders signal their interest in the benefits of cardholding by paying us an annual fee. If they didn't want one, they'd stop paying right? They clearly know they have one and our records indicate they use them regularly. We're pretty sure if you don't wise up they'll shop at your biggest competitor, another client of ours. pause Frankly, they already do.\"\"\"",
"title": ""
},
{
"docid": "f032940278daca72683096e577819184",
"text": "It is much simpler than any of that. People who make money have a greater capacity to pay their bills. Credit card companies make money off of people who can afford to pay several hundred dollars a month in interest charges. If you only make 500 a month you can not afford to pay 200 in interest. So their cost of doing business with you is higher. These cards are issued to make money. And they make their money off of people paying 12-29% interest on their 5k+ credit limits they have nearly maxed.",
"title": ""
}
] |
[
{
"docid": "288aee3cde90d68f08dfb90dda778a6b",
"text": "\"You are correct. Credit card companies charge the merchant for every transaction. But the merchant isn't necessarily going to give you discount for paying in cash. The idea is that by providing more payment options, they increase sales, covering the cost of the transaction fee. That said, some merchants require a minimum purchase for using a credit card, though this may be against the policies of some issuers in the U.S. (I have no idea about India.) Also correct. They hope that you'll carry a balance so that they can charge you interest on it. Some credit cards are setup to charge as many fees as they possibly can. These are typically those low limit cards that are marketed as \"\"good\"\" ways to build up your credit. Most are basically scams, in the fact that the fees are outrageous. Update regarding minimum purchases: Apparently, Visa is allowing minimum purchase requirements in the U.S. of $10 or less. However, it seems that MasterCard still does not allow them, for the most part. Moral of the story: research the credit card issuers' policies. A further update regarding minimum purchases: In the US, merchants will be allowed to require a minimum purchase of up to $10 for credit card transactions. (I am guessing that prompted the Visa rule change mentioned above.) More detail can be found here in this answer, along with a link to the text of the bill itself.\"",
"title": ""
},
{
"docid": "fe39f604ea42df974c6c353a8578884f",
"text": "I don't see why it would be any harder to sell stocks or bonds than it is to sell a CD you may have. Not to mention for large one time expenditures you can usually cover these with a credit card. This gives you about a month to move money around to pay your credit card off in a timely manner without incurring a charge. I have had no problem getting a credit limit beyond 4-5 months of expenses for myself on a single card. I can't even think of a household emergency that you can't pay for with a credit card. Job loss situations are not going to require large amounts of money immediately. True catastrophic emergencies (natural disasters, ransoms) however will need fast cash potentially. However in this case the only thing that is good is having cash on hand. As you can't count on ATMs or Bank systems to be functional. Even more serious emergencies such as zombies, the end of world, or anything that involves total economic collapse would require things that are not cash. You would need to invest in things like supplies, shelter, guns and maybe shiny metals that may have value.",
"title": ""
},
{
"docid": "2180f91615b9d9c4599b3ab34e79b69e",
"text": "1) Every credit card company charges vendors a fee. That's sufficient to make an acceptable profit per charge even if some of that money goes into marketing expenses -- and the cash-back offer is a marketing expense. 2) Many if not most consumers pay interest; probably everyone does so occasionally when we get distracted and miss a payment. 3) The offer encourages you to put more payments on the card -- and in particular on their card -- than you might otherwise. See #1; that increases net income.",
"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": "97dd95216f61b7b4ca84a94b66c47844",
"text": "There are a lot of forces at play here, one of which is addressed in your second bullet point. Housing, transportation, food, and healthcare are pretty much the staple expenses of a modern day human. While these expenses all have a range from minimum required to function and luxurious all humans incur these costs. The lower rung wage earners earn an amount closer to their actual costs than higher earners. As income scales up these expenses typically also scale up with different lifestyle choices. There reaches a breaking point though where is so much excess to your income that you begin meaningfully spending on investments; you may also begin to take a meaningful portion of your compensation in securities rather than currency. In times where the economy is booming, folks who hold assets in securities rather than currency really win. In 2008 people in that highest rung really took a wealth hit (and probably an income hit).",
"title": ""
},
{
"docid": "a47cc29f2e01747714734a1f3a1113ca",
"text": "Eventually you are going to need some sort of real credit history. It is possible that you will be able to evade this if you never buy a house, or if you pay cash for any house/condo/car/boat/etc that you buy. Even employers check credit history these days. I wouldn't be surprised if some medical professionals such as surgeons check it also. Obviously if you have a mortgage and car loan this doesn't apply, but I'd be curious how you acquired those unless you have substantial income and/or assets. Combine this with the fact that certain things like renting a car essentially require a credit card (because they need to put a hold on more money than they are actually going to take out of your card, so they can take that money if you don't bring the car back), and I think you should have a credit card unless you and your wife are individuals with zero impulse control, which sounds highly improbable. If your concern is the financial liability of the credit line, just keep the credit line low.",
"title": ""
},
{
"docid": "133d68a977f137193a8d82aa9e373f8b",
"text": "What makes a credit card risky is that it requires discipline. It is very easy to buy things that you cannot afford with a credit card. Credit cards usually require a minimum payment every month if you owe them money, but if you pay only the minimum amount, your debt will grow quickly. And since the interest rates are usually very high, you can easily get into a state where you are overwhelmed by your debt. The correct way to use a credit card is to pay the complete bill every month. If you can't afford to pay the complete bill because you spent too much, cut up your credit card. On the positive side, there are many situations where paying by credit card will give you protection if you don't get the goods that you paid for, because the credit card company is fully responsible for those goods, just like the seller. So if you pay for a $5,000 holiday with a credit card and the company you paid to goes bankrupt, the credit card company will refund your money. Do not ever look at cash back on purchases. You only get cash back if you spend money. Getting $50 cash back is of no use if you had to get $2,500 deeper in debt to get that cash back. (Some people might contradict this. But if you ask for advice on money.stackexchange then this is the correct advice for you that you should follow).",
"title": ""
},
{
"docid": "2786cbf4423fa30dc7a0d1cbed87a1a5",
"text": "If you are in the U.S., without credit cards, you probably don't have a credit history. Without a credit history, you won't be able to get a loan/mortgage, and even if you do, you'll get it on very unfavorable terms. Depending on where you live you might even have great difficulty renting an apartment. So, the most important reason to have credit cards is to have a good credit score. People have already listed other advantages of having credit cards, but another thing that wasn't mentioned is fraud protection. Credit cards are better protected against fraud than debit cards. You probably shouldn't use debit cards online unless you must. Also, without a credit card or credit history, some simple and important liberties like renting a car while you are travelling might be denied to you. So, in conclusion, it's bizarre, but in modern America you need credit cards, and you need them bad.",
"title": ""
},
{
"docid": "9005a342e2f904ef62c7d337719a6f9a",
"text": "\"This is not a full answer and I have no personal finance experience. But I have a personal story as I did this. As Vicky stated Another point: there are various schemes available to help first time buyers. By signing up for this, you would exclude yourself from any of those schemes in the future. I did this for my dad when I was 16 or so. I am in Canada and lost $5,000 first time buyers tax rebate. As long as many other bonuses like using your rsps for your first home. I also am having a fair amount of trouble getting a credit card, because even though I am only a part member of the mortgage they expect you to be able to cover the whole thing. So when the banks look at my income of say $3000 a month they say \"\"3000 - rent(500) - mortgage(3000)\"\" You make $-500 a month. I then explain that I do not actually pay the mortage so it is not coming out of my paycheck. They do not care. I am responsible for full payments and they consider it used.\"",
"title": ""
},
{
"docid": "8269bcb47854a203c450e0d4e7173fab",
"text": "A major reason that I can think of is financial security. Most people have reoccurring costs such as housing, car, medical expenses. If you were to put all you money into dept, and live from check to check, than you could be increasing risk of financial loss. Think about what would happen if one were to default on their mortgage? Risk management plays a huge role in personal finance, and a way of preventing financial loss is to have enough money in an accessible place to pay reoccurring costs in the event that ones situation changes unexpectedly.",
"title": ""
},
{
"docid": "b23d1bc1dc22e8aef985a8bf65abb967",
"text": "\"This is second hand information as I am not a millionaire, but I work with such people everyday and have an understanding of how they handle cash: The wealthy people don't. Simple. Definitely not if they don't have to. Cash is a tool to them that they use only if they get benefit of it being a cash transaction (one of my friends is a re-seller and he gets a 10% discount from suppliers for settling lines using cash). Everything else they place on a line of credit. For people who \"\"dislike\"\" credit cards and pay using ATM or debit cards might actually have a very poor understanding of leverage. I assure you, the wealthy people have a very good understanding of it! Frankly, wealthy people pay less for everything, but they deserve it because of the extreme amount of leverage they have built for themselves. Their APRs are low, their credit limits are insanely high, they have longer billing periods and they get spoiled by credit card vendors all the time. For example, when you buy your groceries at Walmart, you pay at least a 4% markup because that's the standardized cost of processing credit cards. Even if you paid in cash! A wealthy person uses his credit card to pay for the same but earns the same percentage amount in cash back, points and what not. I am sure littleadv placed the car purchase on his credit card for similar reasons! The even more wealthy have their groceries shipped to their houses and if they pay cash I won't be surprised if they actually end up paying much less for fresh (organic) vegetables than what equivalent produce at Walmart would get them! I apologize for not being able to provide citations for these points I make as they are personal observations.\"",
"title": ""
},
{
"docid": "a84d165a29bb7733e13a2f080d5e5d4b",
"text": "FICO is a financial services company, whose customers are financial services companies. Their products are for the benefit of their customers, not consumers. The purpose of the credit score system is two-fold. First, the credit score is intended to make it easy for lending institutions (FICO's customers) to assess the risk of loans that they make. This is probably based on science, although the FICO studies and even the FICO score formula are proprietary secrets. The second purpose of the credit score is to incentivize consumers into borrowing money. And they have done a great job of that. If you think you might need a loan in the future, perhaps a mortgage or a car loan, you need a credit score. And the only way to get a credit score is to start borrowing money now that you don't need. Yes, someone with a good income and a long history of paying utility bills on time would be a great credit risk for a mortgage. However, that person will have no credit score, and therefore be declared by FICO as a bad credit risk. On the other hand, someone with a low income, who struggles, but succeeds, to make the minimum payment on their credit card, would have a better credit score. The advice offered to the first person is start borrowing money now, even though you don't need it. I'm not anti-credit card. I use a credit card responsibly, paying it off in full every month. I use it for the convenience. I don't worry at all about my credit score, but I've been told it is great. However, there are some people that cannot use a credit card responsibly. The temptation is too great. Perhaps they are like problem gamblers, I don't know. But FICO and the financial services industry have created a system that makes a credit card a necessity in many ways. These are the people that get hurt in the current system.",
"title": ""
},
{
"docid": "8cfc4db2662ba69488f741371533407d",
"text": "\"Gross income is used because there are a lot of variables inherent in the calculation of a \"\"net income\"\", including a lot of things under your direct control that you could use to game the system. \"\"Net Income\"\", as others have inferred, is a very flexible term. For the average individual, the definition that would most easily come to mind is likely post-deduction, post-tax earnings; \"\"take-home pay\"\". It sounds reasonable, too, as the amount you take home each month can be easily demonstrated with your two most recent pay stubs (which you need to bring in anyway to verify gross earnings). However, even that simplistic definition is fraught with possibility. You have the ability to modify your pre-tax deductions, such as for retirement or healthcare, and that in turn affects your taxes and thus your net take-home pay. To assume that you won't do that is foolish for the loan officer. Other definitions of \"\"net income\"\", such as, in the case of shopping for a house, \"\"disposable income plus current rent\"\", are the result of even longer lists of deductions from gross pay. Many are also dependent on your current home; your electric bill is a function of the size, location and construction of your current home, all of which will change as soon as you move in. Your other bills, such as telecom (TV/phone/internet) are also more or less location-dependent, as even within a single city or metro area, your choice of services and service providers is dictated by the home's physical location. You may have to pay through the nose right now because your current home isn't serviced by anyone's fiber-optic network, while the home you're moving into could be in a hotly-contested area with access to multiple fiber-optic trunks. So, to simplify all this, mortgage companies simply ask for gross income, then apply a metric that makes relatively conservative assumptions about your spending habits to arrive at a final amount. The upside is simplicity, the downside being that two people both making $60,000/yr may have two completely different financial pictures behind that single number.\"",
"title": ""
},
{
"docid": "ce3daac0469561948d0af7fa2a82d15b",
"text": "I had $70K in credit card at one point. Limited income, starting a business - it's the only credit available. (yes, all paid off now).",
"title": ""
},
{
"docid": "03a11bf8888163c5fdf4c2eb6858340e",
"text": "Here's another way to think about. Let's assume it is 2011 and we have a married couple who are 25 and make a combined salary of $50,000/yr net. A suitable first house in their area is $300,000, six times their annual net salary. Assuming they could scrimp so that 1/2 of take-home went toward saving for their home, they could save enough to buy the house using cash in 12 years, at the age of 37. Onerous, but they could do it. But now let's allow salaries to increase by 3% a year and homes at 10%/yr, as in your question, and let's run things out for 20 years. Now a 25 year old couple at the same sort of jobs would be making $87,675/yr. But the houses in that town would be worth not $300k but $1,834,772. Instead of six times their salary, a house is now nearly 21 times their salary. This means that if they saved 1/2 of take-home to save up for a house, they could afford to buy the house using cash when they were 67 years old. It gets worse quickly. If you run it out for just ten more years, to 30 years, a couple would be able to buy the house -- at $4.8 million or 40x a year's salary -- in cash when they were 105 years old. (Let's hope they ate brown rice). Mortgages can't save them, since even if they could put down ten years' worth of savings on the 2041 house (that'd be 14% down), they'd still carry a $4.1 million mortgage with a $118k annual net salary.",
"title": ""
}
] |
fiqa
|
3f8ae8a1508bf53812c60c63d2441fde
|
Why is the total 401(k) contribution limit (employee + employer) so high?
|
[
{
"docid": "52fa6334a9bac8de7c2dcf1d70f5f971",
"text": "\"Because 401k's are also used by self employed. A person who has a schedule C profitable income can open a 401k and \"\"match\"\" in whatever ratio he wants, up to 25% of the net profits or the limits you stated. This allows self-employed to defer more income taxes to the future. Why only self-employed? Good question. Ask your congressman. My explanation would be that since they're self-employed they're in much more danger of not having income, especially later in life, if their business go south. Thus they need a bigger cushion than an average W2 employee who can just find another job.\"",
"title": ""
},
{
"docid": "7ee2984c54c112d43b0ba985c3b222f1",
"text": "\"Some 401k plans allow you to make \"\"supplemental post-tax contributions\"\". basically, once you hit the pre-tax contribution limit (17.5k$ in 2014), you are then allowed to contribute funds on a post-tax basis. Because of this timing, they are sometimes called \"\"spillover\"\" contributions. Usually, this option is advertised as a way of continuing to get company match even if you accidentally hit the pre-tax limit. But if you actually pay attention to your finances, it is instead a handy way to put away additional tax-advantaged money. That said, you would only want to use this option if you already maxed out your pre-tax and Roth options since you don't get the traditional tax break on contributions or the Roth tax break on the earnings. However, when you leave the company, you can transfer the post-tax money directly into a Roth IRA when you transfer the pre-tax money, match, and earnings into a traditional IRA.\"",
"title": ""
}
] |
[
{
"docid": "351446dcbdc3994c898077f317fdcd20",
"text": "I'm in a similar situation as I have a consulting business in addition to my regular IT job. I called the company who has my IRA to ask about setting up the Individual 401k and also mentioned that I contribute to my employer's 401k plan. The rep was glad I brought this up because he said the IRS has a limit on how much you can contribute to BOTH plans. For me it would be $24K max (myAge >= 50; If you are younger than 50, then the limit might be lower). He said the IRS penalties can be steep if you exceed the limit. I don't know if this is an issue for you, but it's something you need to consider. Be sure to ask your brokerage firm before you start the process.",
"title": ""
},
{
"docid": "a0797aab185d2e515f18e819fd107ed3",
"text": "You're correct about the 401(k). Your employer's contributions don't count toward the $18k limit. You're incorrect about the IRAs though. You can contribute a maximum of $5500 total across IRA and Roth IRA, not $5500 to each. There are also limits once you reach higher levels of income. from IRS.gov: Retirement Topics - IRA Contribution Limits: For 2015, 2016, and 2017, your total contributions to all of your traditional and Roth IRAs cannot be more than:",
"title": ""
},
{
"docid": "6221cc2a58704018bc2bbdadb37651fc",
"text": "Ben Miller's answer is very thorough, and I up voted it. I believe that the ability to rebalance without tax implications is very import, but there are two aspects of the question that were not covered: The 401K in many cases comes with a company match. Putting enough money into the fund each year to maximize the match, give you free money that is not available in the non-retirement accounts. The presence of that match is to encourage employees to contribute: even if they are tying up their funds until retirement age; and they are into a plan with only a handful of investment options; and they may have higher expenses in the 401K. The question also had a concern about the annual limits for the 401K (18,000) and the IRA (5,500). The use of a retirement account doesn't in any way limit your ability to invest in non-retirement accounts. You can choose to invest from 0 to 23,500 in the retirement accounts and from 0 to unlimited into the non-retirement accounts. Double those amounts if you are married.",
"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": "320f8db498d35e7cc9a3f3f26472003e",
"text": "Your employer's matching contribution is calculated based on the dollar amounts you end up putting in. The nature of your 401(k) contribution—whether pre-tax or Roth after-tax—doesn't matter with respect to how their match gets calculated, and their match always goes into a pre-tax account, even if you are contributing after-tax. The onus is on you to choose a contribution amount that maximizes your employer match regardless of the nature of your contribution. Maximizing your employer match using Roth after-tax contributions will eat up more of your annual gross salary, but as long as you are willing to do that then you won't leave free employer match money on the table. Roth after-tax contributions don't get the tax deduction inherent in a pre-tax contribution. The tradeoff is that you end up with less take-home pay per period if you contribute the same number of dollars on a Roth after-tax basis to your 401(k) as opposed to on a pre-tax basis. For instance, to make a maximum $18,000 Roth after-tax contribution to a 401(k), it's going to cost you a lot more than $18,000 of your annual gross salary to net the same $18,000 number. (On the flip side, the Roth money is worth more in retirement than pre-tax money, because it won't be subject to taxes then.) However, 401(k) plan contribution amounts are almost always expressed as a percentage of gross salary, i.e. in pre-tax terms, even when electing to make after-tax contributions! So when electing after-tax, one is implicitly accepting that the contribution will cost more than the percentage of gross salary, because you'll need to pay the tax on a gross amount that would yield the same number of dollars but as an after-tax amount.",
"title": ""
},
{
"docid": "6538420ebb658089269e61fa9012a091",
"text": "Are you obligated to do what they ask? Probably not, with one big caveat discussed below. Your employer sent your money and their money after every paycheck to the 401K management company. Then after a while the 401K management company followed your instructions to roll it over into an IRA. Now the IRA management company has it. Pulling it out of the IRA would be very hard, and the IRA company would be required to report it to the IRS as a withdraw. Here is the caveat. If the extra funds you put in allowed you to exceed the annual contribution amount set by the law, or if it allowed you to put more than 100% of your income into the fund, then this would be an excess contribution, and you and your employer would have to resolve or face the excess contribution penalties. Though if the 401K company and HR allowed you to exceed the annual limit they have a much more complex problem with their payroll system. The bigger concern is why they want you to pull out your $27.50 and their $27.50. Unless you were hitting the maximum limit, your $27.50 could have been invested by adjusting the percentage taken out of each check. You could have picked a percentage to reach a goal. That money is yours because you contributed it and unless you exceed the IRS set limits it is still pre-tax retirement money. The return of matching funds may be harder to calculate. The returns for 2013 were very good. Each $1.06 of matching funds each paycheck purchased a fraction of some investment. That investment went up and down, ok mostly up, if it was invested in the broad market. I guess you should be glad they aren't asking for more due to the increase in value. It would be very hard to calculate what happened if you have moved it around since then. Which of course you did when you moved it into an IRA. If the average employee was also given a $55 gift last year, then the suggestion to the employer is that the tax complexity you and your fellow employees face would exceed the cost of the extra funds. They should chalk it up to an expensive lesson and move on.",
"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": "d38a23c226e9e78cd84d3ff266e896a6",
"text": "\"Early this year I wrote an article Are you 401(k)o’ed? I described the data from a 401(k) expense survey and the punchline was that the average large retirement plan (over 1000 participants) expense was 1.08%, and for smaller plans it rose to 1.24%. As I commented below, if one's goal is to make deposits with income that avoid a tax of 25%, and hope to withdraw it at retirement at 15%, it doesn't take long for a 1% fee to completely negate the benefit of pretax savings. These numbers are averages, in the same article, I mention (ok, I brag) that my company plan has an S&P fund that costs .05%. That's 1% over 20 years. The sound bite of \"\"deposit to the match\"\" needs to be followed by \"\"depending on the choice of investments and their expenses\"\" within the 401(k). Every answer here has added excellent points, fennec's last sentence shouldn't be ignored, there's a phaseout for IRA deductibility, and another for Roth eligibility. For Married filing joint, IRA deduction starts to be lost at $92K, and Roth deposit disallowed at $173K. This adds a bit to the complexity of the decision, but doesn't change the implication of the 1%+ 401(k) fees.\"",
"title": ""
},
{
"docid": "7a54240da4b431d36b9d5df63fdc615d",
"text": "I would definitely recommend contributing to an IRA. You don't know for sure you'll get hired full-time and be eligible for the 401(k) with match, so you should save for retirement on your own. I would recommend Roth over Traditional IRA in your situation, because let's say you do get hired full-time. Since the company offers a retirement plan, your 2015 Traditional IRA contribution would no longer be deductible at your income level (assuming you're single), and non-deductible Traditional IRAs aren't a very good deal (see here and here). If there's a decent chance you would get hired, this factor would override the pre-tax versus post-tax debate for me. At your income level you could go either way on that anyway. A Solo 401(k) would be worth looking into if you wanted to increase your contribution limit beyond what IRAs offer, but given that it sounds like you're just starting out saving for retirement, and you may be eligible for a 401(k) soon, it's probably overkill at this point.",
"title": ""
},
{
"docid": "d5e96c5b75d3d486354cd2566e3ed91b",
"text": "Companies are required BY THE IRS to try to get everybody to contribute minimal amounts to the 401K's. In the past, there were abuses and only the execs could contribute and the low paid workers were starving while the execs contributed huge amounts. On a year-by-year basis, if the low-paid employees don't contribute, the IRS punishes the high paid employees. Therefore, most employers provide a matching program to incentivize low-paid employees to contribute. This 9% limitation could happen in any year and it could have happened even before you got your pay raise, what matters is what the low-paid employees were doing at your company LAST YEAR.",
"title": ""
},
{
"docid": "5e02604ba9a683a904508ddc6fb0142a",
"text": "\"Both are saying essentially the same thing. The Forbes articles says \"\"as much as 20% [...] up to a maximum of $50,000\"\". This means the same as what the IRS page when it says the lesser of a percentage of your income or a total of $53,000. In other words, the $53k is a cap: you can contribute a percentage of your earnings, but you can never contribute more than $53k, even if you make so much money that 20% of your earnings would be more than that. (The difference between 20% and 25% in the two sources appears to reflect a difference in contribution limits depending on whether you are making contributions for employees, or for yourself as a self-employed individual; see Publication 560. The difference between $50k and $53k is due to the two pages being written in different years; the limits increase each year.)\"",
"title": ""
},
{
"docid": "a214f765ad8bf0850db57657119533be",
"text": "\"Your contribution limit to a 401(k) is $18,000. Your employer is allowed to contribute to your 401(k), usually a \"\"matching contribution\"\". That matching contribution comes from your employer, so is not subject to your personal contribution limit. A contribution to a regular 401(k) is typically made with pre-tax money (i.e. you don't pay payroll taxes on the money you contribute) so you pay less taxes for the current tax year. However when you retire and you take money out, you pay taxes on the money you take out. On one hand, your tax rate may be lower when you have retired, but on the other hand, if your investments have appreciated over time, the total amount of tax you pay would be higher. If your company offers a Roth 401(k) plan, you can contribute $18,000 of after tax money. This way you pay the tax on the $18,000 today, as you would if you did not put the money in the 401(k), but when you take the money out at retirement, you would not have to pay tax. In my opinion, that serves as a way to pay effectively more money into your 401(k). Some firms put vesting provisions on the amount that they match in your 401(k), e.g. 4 years at 25% per year. So you have to work 1 full year to be entitled to 25% of their matching contribution, 2 years for 50%, and 4 years to receive all of it. Check your company's Summary Plan Description of the 401(k) to be sure. You are not allowed to invest pre-tax money into a Traditional IRA if you are already contributing to a 401(k) plan and have reached the income limits ($62,000 AGI for single head of household). You are allowed to contribute post-tax money to a Traditional IRA plan if you have already contributed to a 401(k), which you can then Roll-over into a Roth IRA (look up 'backdoor IRA'). The IRA contribution limit applies to all IRA accounts over that calendar year. You could put some money in a traditional IRA, a Roth IRA, another traditional IRA, etc. so long as the total amount is not more than the contribution limit. This gives you an upper limit of 5.5k + 18k = 23.5 investments in retirement accounts. Note however, once you reach age 50, these limits increase to 6.5k (IRA) + 24k (401(k)). They also are adjusted periodically with the rate of inflation. The following approach may be more efficient for building wealth: This ordering is the subject of debate and people have different opinions. There is a separate discussion of these priorities here: Best way to start investing, for a young person just starting their career? Note however, a 401(k) loan becomes payable if you leave your company, and if not repaid, is an unauthorised distribution from your 401k (and therefore subject to an additional 10% tax penalty). You should also be careful putting money into an IRA, as you will be subject to an additional 10% tax penalty if you take out the money (distribution) before retirement, unless one of the exceptions defined by the IRA applies (e.g. $10,000 for first time home purchase), which could wipe out more than any gains you made by putting it in there in the first place. Your specific circumstances may vary, so this approach may not be best for you. A registered financial advisor may be able to help - ensure they are legitimate: https://adviserinfo.sec.gov\"",
"title": ""
},
{
"docid": "6d4aa8a2800bd56b402ed764de9dcc06",
"text": "\"It's going to be quite a challenge to give a definitive answer to any \"\"Why\"\" question about law, and especially so for a question about tax law. One would need to try to dig up statements made by the legislators (and/or their aides) crafting and debating the law. As it is, tax law is already inconsistent in many ways. (Why are there people who can't contribute to a Roth IRA directly but can contribute to a Traditional and then immediately convert it to Roth? Why are maximum limits for 401(k) plans and IRAs separate rather than being one combined \"\"retirement\"\" savings maximum?) In the absence of some specific legislative statements saying that it was set up this way for some specific purpose, one must assume that it was written with the some goals as all tax law: As a compromise between various ideas, trying to accomplish some specific purpose. Feel free to add in some level of inefficiency and it being hard to completely understand the entirely of the tax law, which leads to things perhaps not being as \"\"tidy\"\" as one might hope for. But there's no reason to think that the people crafting the tax advantages for HSA plans had any reason to use 401(k) plans as a template, or wanted them to accomplish the same goals.\"",
"title": ""
},
{
"docid": "d1e4597576431d9c812bc5c5c06202dc",
"text": "One factor to consider is that some employers have a 401k contribution match policy that only allows a certain percentage of any given paycheck to be matched. So if the company is willing to match 4% of each paycheck, you could run into a problem here where you lose out on some of your company match. For example, suppose you get a $20,000 bonus. You can contribute $18,000 per year to your 401k and this bonus could be a nice way to knock most of that out and then take home your full paycheck the rest of the year. Sounds pretty nice, but there's a problem. The company will only match 4% of your $20,000 ($800) when they otherwise would have matched up to 4% of your annual salary ($4,000 if you're making $100,000 in this example). I'd say it's definitely worth it to make a big contribution to your 401k when you get a bonus as it's an easy way to get a lot of money in there without really feeling a loss (since it's extra money on top of your normal paycheck). But I'd definitely be careful about this situation. You don't want to throw away free money. To avoid this problem, make sure that you leave enough of your annual limit so you can contribute enough to get your 4% company match on every paycheck of the year.",
"title": ""
},
{
"docid": "67525a00d56b3e4c7396761c4f96f362",
"text": "Either approach will put a strain on your friendship, unless you are willing to treat it as a gift which may or may not be returned rather than a loan. I agree that paying it direct to the dealer (or giving her a check that is made out to the dealer) avoids the risk of the money getting sidetracked.",
"title": ""
}
] |
fiqa
|
d7308026f0f971a68919c4388fb4bf93
|
Withdraw USD from PayPal without conversion to my home currency of EUR?
|
[
{
"docid": "a41efbee5c826099835787e354a813b0",
"text": "I just tried doing that on my PP which is in the Netherlands, I have added a USD bank account (from my dutch bank) and they sent the verification amount in Euros, I called the bank and wonder why they didn't let me choose account currency they said it's not possible and if I cashout Dollars that I have in my PP (cause we usually do international business so we set it to dollars) it will be changed to Euros, So we decided to keep the dollars in account to pay our bills instead of getting ripped off by PayPal in xchange rates.",
"title": ""
},
{
"docid": "5bb11528f43919b506fbdf9a93c675b3",
"text": "Look for EU banks that have US branches. Open an account there and look for the SWIFT code of your bank in US. Withdraw money using SWIFT US code.",
"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": "311332c16f52022baed996f2c7cdfc26",
"text": "You could use paypal to transfer money. You can pay with paypal and your UK contact could transfer the money to his bank account through paypal. I just received money this way from the US and paid 9 EUR for this. Receiving the funds is as quickly as clicking a button on the paypal site. Transfering it (without costs) took 1-3 days). It is by far the easiest way. If you are uncomfortable using paypal, the other option would be through your own bank account, where you would transfer using IBAN/SWIFT. The SWIFT bank account is usually the IBAN code plus a branch code. Often it is difficult to find the branch code, in that case you can use the IBAN+XXX. In the latter things might be delayed, but I actually haven't noticed the delay yet, since international transfer always seem to take between 1 and 10 days. The international transfering of money costs, except if it is within the EU region. The way to transfer money through Internet banking differs, from bank to bank. They keywords you need to look for are: SEPA, SWIFT, IBAN or international transfer.",
"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": "96be13de93592923809ea5d881ff9459",
"text": "\"The simple answer would be - if you want to take Euros from Germany to Spain as cash and deposit them, you're not breaking any laws, there is nothing to declare to customs (you're still in the EU), it is not \"\"income\"\" so there is nothing to tax, and your bank should be able to receive it without issue (no currency conversion after all). It does however come with the risk of loss/theft en route. So it really depends on how comfortable you are walking around with that much on your person. If you don't want to carry that much around and your banks are imposing unreasonable fees, here's something you could investigate further (I have not tested it myself): Transferwise offers a service that lets people send money to foreign accounts (in different currencies) for a small fee, at mid-market rates. However, they also offer a \"\"request money\"\" feature which allows EUR-EUR transfers (and some other same currency transfers). So perhaps you could use this feature to simply request money from yourself. The requester puts in how much they want to receive. Then they send a generated link to the other party. When clicked, that link sets up a transaction for the requested amount, and sometimes a nominal fee (I created a link for a GBP-GBP transfer and it wanted 1 pound extra, but when I did the same for EUR-EUR it didn't want any extra). I assume you would need two Transferwise accounts, though maybe not? And I'm not sure whether doing this is technically allowed in their terms of service, so you should read those to be sure. The advantage, if this works, is that neither bank sees it as a \"\"transfer\"\". Rather, the originating bank makes a payment to Transferwise, and then Transferwise makes a deposit to the receiving account. So I can't imagine either bank would be able to impose their foreign-bank-transfer fees for the transaction. https://transferwise.com/request-money I have used Transferwise for currency conversions, but not the request money feature, maybe other users could chime in if they have used it.\"",
"title": ""
},
{
"docid": "7402ad5fe06144d975d78da88844f93d",
"text": "If you are a Russian citizen a much easier and common solution would be a USD or EUR withdrawal from your Webmoney account to your Cyprus bank account. You will need to create a Webmoney account (www.webmoney.ru), get a primary certificate in your local Webmoney office in Russia (The list is available at the website), create WMZ (for USD) and WME (for EURO) accounts in Webmoney (done online). Then you can easily top up your Webmoney WMR (Rubles) account (created automatically) with Rubles, convert the sum into USD (According to the Webmoney rate, which is only slightly different from the official central bank rate) and then withdraw the money from your USD Webmoney account to your Cyprus bank account. The money will be transfered to your Cyprus bank account from UK Webmoney dealer. The transaction description would say that this sum is transfered according to the contract of sale of securities. This method prevents any Russian regulatory authorities from seeing your transactions. And the best thig in Webmoney is that they have stable exchange rates and they use classic currencies such as USD, RUR, EUR, etc. Webmoney also has WMG accounts (Gold) and WMX accounts (Bitcoin). Non-Russian residents can also open a Webmoney accounts. You can get one even in Cyprus, by the way:)",
"title": ""
},
{
"docid": "08921e6ff179ad1d23307d2cf828f157",
"text": "\"This is not a problem. SWIFT does not need the Beneficiary Account Currency. The settlement account [or the Instruction amount] is of interest to the Banks. As I understand your agreement with client is they pay you \"\"X\"\" EUR. That is what would be specified on the SWIFT along with your details as beneficiary [Account Number etc]. Once the funds are received by your bank in Turkey, they will get EUR. When they apply these funds to your account in USD, they will convert using the standard rates. Unless you are a large customer and have special instructions [like do not credit if funds are received in NON-USD or give me a special rate or Call me and ask me what I want to do etc]. It typically takes 3-5 days for an international wire depending on the countries and currencies involved. Wait for few more days and then if not received, you have to ask your Client to mention to his Bank that Beneficiary is claiming non-receipt of funds. The Bank that initiated the transfer can track the wire not the your bank which is supposed to receive the funds.\"",
"title": ""
},
{
"docid": "5e378ee1d0052e8237391cc8a26c5555",
"text": "How should we disregard leverage when it's the leverage that creates the 'wipe-out' potential? If you simply convert 100K EUR to USDollars, you dollars might then fluctuate a few thousand, maybe even 10K over a year, but the guy that only put up 1000 EUR to do this has a disproportionally higher risk.",
"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": "eefc2de9693868d1aea53b7a9f8281ef",
"text": "You can calculate your exposure intuitively, by calculating your 'fx sensitivity'. Take your total USD assets, let's assume $50k. Convert to EUR at the current rate, let's assume 1 EUR : 1.1 USD, resulting in 45.5k EUR . If the USD strengthens by 1%, this moves to a rate of ~1.09, resulting in 46k EUR value for the same 50k of USD investments. From this you can see that for every 1% the USD strengthens, you gain 500 EUR. For every 1% the USD weakens, you lose 500 EUR. The simplest way to reduce your exchange rate risk exposure, is to simply eliminate your foreign currency investments. ie: if you do not want to be exposed to fluctuations in the USD, invest in EUR only. This will align your assets with the currency of your future expenses [assuming you intend to continue living in Europe].This is not possible of course, if you would like to maintain investments in US assets. One relatively simple method available to invest in the US, without gaining an exposure to the USD, is to invest in USD assets only with money borrowed in USD. ie: if you borrow $50k USD, and invest $50k in the US stock market, then your new investments will be in the same currency as your debt. Therefore if the USD strengthens, your assets increase in relative EUR value, and your debt becomes more expensive. These two impacts wash out, leaving you with no net exposure to the value of the USD. There is a risk to this option - you are investing with a higher 'financial leverage' ratio. Using borrowed money to invest increases your risk; if your investments fall in value, you still need to make the periodic interest payments. Many people view this increased risk as a reason to never invest with borrowed money. You are compensated for that risk, by increased returns [because you have the ability to earn investment income without contributing any additional money of your own]. Whether the risk is worth it to you will depend on many factors - you should search this site and others on the topic to learn more about what those risks mean.",
"title": ""
},
{
"docid": "4f83fd4e12068a3dd80172e8afb3afef",
"text": "In addition to TransferWise that @miernik answered with and that I successfully used, I found CurrencyFair which looks to be along similar lines and also supports US$.",
"title": ""
},
{
"docid": "72b452624646db70ff1533aa27000710",
"text": "I haven't seen this answer, and I do not know the legality of it, as it could raise red flags as to money laundering, but about the only way to get around the exchange rate spreads and fees is to enter into transactions with a private acquaintance who has Euros and needs Dollars. The problem here is that you are taking on the settlement risk in the sense that you have to trust that they will deposit the euros into your French account when you deposit dollars into their US account. If you work this out with a relative or very close friend, then the risk should be minimal, however a more casual acquaintance may be more apt to walk away from the transaction and disappear with your Euros and your Dollars. Really the only other option would be to be compensated for services rendered in Euros, but that would have tax implications and the fees of an international tax attorney would probably outstrip any savings from Forex spreads and fees not paid.",
"title": ""
},
{
"docid": "11c080592426edb765b2bbb6e1a28c84",
"text": "\"From personal experience of having been abroad for a while for work, I found the simplest method to be to Paypal it to myself from one country to the other. Yes, you incur a transaction fee - but it was always less expensive than \"\"real\"\" bank fees for me. Also - if you use a bank that has offices in both countries, adding an authorized user with a debit card and having them visit the bank every X often and making a withdrawal is a viable route.\"",
"title": ""
},
{
"docid": "a336e432920f71cf5cf7ca918fa8eb41",
"text": "I have a bank account in the US from some time spent there a while back. When I wanted to move most of the money to the UK (in about 2006), I used XEtrade who withdrew the money from my US account and sent me a UK cheque. They might also offer direct deposit to the UK account now. It was a bit of hassle getting the account set up and linked to my US account, but the transaction itself was straightforward. I don't think there was a specific fee, just spread on the FX rate, but I can't remember for certain now - I was transfering a few thousand dollars, so a relatively small fixed fee would probably not have bothered me too much.",
"title": ""
},
{
"docid": "e651432466f0d37eb0787dcba0048ec2",
"text": "There is (at least) one service that allows you to convert USD, GBP and EUR at the interbank spot rate, and make purchases using a prepaid MasterCard in many more currencies (also at the interbank rate). They currently don't charge any fees (as of September 2015). You could use your US prepaid card to fund your account with Revolut and then spend them in your local currency (HRK?) without fees (you can check the current USD/HRK rate with their currency calculator); you can also withdraw to non-EUR SEPA-enabled bank accounts, but then your bank would charge you for the necessary currency conversion (both by fees and their exchange rate). If you have a bank account in EUR, you could alternatively convert your USD balance to EUR and then withdraw that to your EUR bank account. If your US prepaid card has a corresponding bank account which can be used for ACH direct debit or domestic wire transfers (ask the issuer if you are unsure), TransferWise or a similar service might also be an option; they allow you to fund a transaction using one of those methods and then credit an account in",
"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": ""
}
] |
fiqa
|
71b2320882e5871d1a87b54e37676a13
|
How can I determine which stores are regarded as supermarkets for a rewards credit card?
|
[
{
"docid": "898499ec5c013cb2425c03238bfdc185",
"text": "Credit card companies organize types of businesses into different categories. (They charge different types of businesses different fees.) When a business first sets up their credit card processing merchant account, they need to specify the category. Here is a list of categories that Visa uses. Grocery stores and supermarkets are category number 5411. Other types of businesses, such as the examples you provided in your question, have a different category number. American Express simply looks at the merchant category code for each of your transactions and only gives you rewards for the ones in the grocery store category. It's all automated. They likely don't have a list of every grocery store in the US, and even if they did, they would probably not provide it to the public, for proprietary reasons. If you are in doubt about whether or not a particular store is in the grocery category, you'll just have to charge it to your card and see what happens. Often, the category of transaction will be shown for each transaction on your credit card's website.",
"title": ""
},
{
"docid": "c067b0a743d2aaf8960e75893f99eff0",
"text": "Each company that has an account with the credit card network has to classify themselves as a particular type of business. The credit card company uses that classification to catagorize the transaction on your statement. If you buy a T-shirt at a grocery, amusement park, gas station, or resturant; the transaction will be labeled by the vendor type. Look at recent credit card statements, even if they are from different cards, to see how the stores you want to know about are classified.",
"title": ""
},
{
"docid": "41bf3b218fcd4c4af9ab279348d05f96",
"text": "Looks like a user-contributed list is the only good solution to this question, so I'll start one by making this answer community wiki, meaning anyone can edit it. We only aim to add major chain, not every mom&pop store (which probably don't qualify). The rewards details page looks like this: The lists are in alphabetical order.",
"title": ""
},
{
"docid": "169ec979e16f92be80dfb068deb53e2f",
"text": "Contact AmEx. They are the only ones who might have a current list.",
"title": ""
}
] |
[
{
"docid": "6a4936cf131fa97770c1ae307391f7ea",
"text": "If his ATM card is operational and (assuming it is Visa/Mastercard), he can use it at grocery stores and get cashback. Typically, there is no charge for this service.",
"title": ""
},
{
"docid": "8f8fdb88265a450bd73776328c783283",
"text": "Thanks for the info! It seems the consolidation option is the best; switching to the new merchant services provider and getting the discount from our POS on gift card software Can you give me a but more info about the customer loyalty/marketing info?",
"title": ""
},
{
"docid": "13205a84955e1cc9da6c599458da163d",
"text": "Department store cards will appear on your credit report and is often much easier to get approved for. All my friends that have applied for a Macy's card have always been approved. If you are new to the country, department store cards are a great way to build history. Target and Nordstroms are two other department stores to look at. Target is my first suggestion since they carry every day items and will be easy to consistently put charges on the card to build credit history.",
"title": ""
},
{
"docid": "035a423b9e88c47a1530b4882e8a95c7",
"text": "I am not sure but probably it depends upon the cut the credit card company receives from the merchant. For Hotels such as dining etc. the cut could be more. Again, periodically, many merchants join with the card company to launch promotions. It could be part of such promotions. Apart from class of merchants, these points also differ on class of cards e.g a premium card will earn more rewards than a simple classic card.",
"title": ""
},
{
"docid": "1eb37df8d834d9a541269b26ec8971da",
"text": "\"Some features to be aware of are: How you prioritize these features will depend on your specific circumstances. For instance, if your credit score is poor, you may have to choose among cards you can get with that score, and not have much choice on other dimensions. If you frequently travel abroad, a low or zero foreign transaction fee may be important; if you never do, it probably doesn't matter. If you always pay the balance in full, interest rate is less important than it is if you carry a balance. If you frequently travel by air, an airline card may be useful to you; if you don't, you may prefer some other kind of rewards, or cash back. Cards differ along numerous dimensions, especially in the \"\"extra benefits\"\" area, which is often the most difficult area to assess, because in many cases you can't get a full description of these extra benefits until after you get the card. A lot of the choice depends on your personal preferences (e.g., whether you want airline miles, rewards points of some sort, or cash back). Lower fees and interest rates are always better, but it's up to you to decide if a higher fee of some sort outweighs the accompanying benefits (e.g., a better rewards rate). A useful site for finding good offers is NerdWallet.\"",
"title": ""
},
{
"docid": "7f2773fdba1183f8aa41ef9c1cbfd0bf",
"text": "\"##Trader Joe's Trader Joe's is a German privately held chain of grocery stores based in Monrovia, California. As of May 19, 2017, Trader Joe's had 464 stores nationwide in 41 states and in Washington, D.C. By 2015, it was a competitor in \"\"fresh format\"\" grocery stores in the United States. Trader Joe's was founded by Joseph \"\"Joe\"\" Coulombe. From 1979, it was owned by Aldi Nord's German owner Theo Albrecht until his death in 2010, when ownership passed to his heirs. Aldi Nord entirely owns and operates Trader Joe's through an Albrecht family trust. *** ^[ [^PM](https://www.reddit.com/message/compose?to=kittens_from_space) ^| [^Exclude ^me](https://reddit.com/message/compose?to=WikiTextBot&message=Excludeme&subject=Excludeme) ^| [^Exclude ^from ^subreddit](https://np.reddit.com/r/business/about/banned) ^| [^FAQ ^/ ^Information](https://np.reddit.com/r/WikiTextBot/wiki/index) ^] ^Downvote ^to ^remove ^| ^v0.2\"",
"title": ""
},
{
"docid": "07d96288f612a95c2bbec1db71f046b7",
"text": "The store keeps track of what you buy. It is all part of their big data. The knowledge of what you buy helps them project future sales. It allows them to target their marketing. But maybe even more importantly they can sell this knowledge to outside companies. They aren't going to give away that information to another company that would love to have that data, just so they could sell it. Stores use those loyalty cards to be able to link your household to those purchases. Those discounts, or free products, are what they use to entice you to give up your privacy. The fact that in your town young adults love caramel apples, even more than the town next door, makes them confident that your town will love caramel apple scented shampoo. Thus they send you coupons when it become available. They will also sell this knowledge to the shampoo companies. Do some stores make it possible for you to download the data? Yes they do. Apple stores send all receipts via email. Kohls allows me to see detail information about my transactions on line. There must be others. I don't know if any are grocery stores.",
"title": ""
},
{
"docid": "a923077e75dfadab5adefa42b9e60bcb",
"text": "\"I've been a member for over 15 years and do most of my shopping there. But it isn't a myth. While some items are singles/normal such as clothing, many are larger/bulk. The price per unit is a heck of a lot lower as a result, but the price is still higher. For example ketchup is a 1.25kg two pack while my local supermarket sells them as smaller singles. Toilet paper is twice the price of a local Target but you get almost 4 times as much. Bacon comes as a two pack of a pound each (one pack at supermarket). Milk comes as two one gallon containers. Fruit and vegetables come in containers that are typically twice the size of my local supermarket. Bleach comes in a huge box containing 3 large containers. Shrimp comes in a two pound bag - local supermarket is 1lb pound bags at their largest. Halloween candy comes in huge bags - the local supermarket has some that big, but the vast majority are a lot smaller. Bread is in two packs - local supermarket is a one pack. The rotisserie chicken is a single just like my local supermarket and is cheaper. Costco is undoubtedly value for money, but a typical family shopping list will cost more upfront (and then last longer). But not everyone can afford the membership and higher initial \"\"investment\"\".\"",
"title": ""
},
{
"docid": "4149853e53d6d1519fa4d4372b8cada7",
"text": "As a previous employee at Target the cashier's were all doing things wrong...you cannot buy AMEX or Visa prepaid cards with target giftcards or you get in big shit. You are also not supposed to sell giftcards for giftcards. This should all pop up automatically when the cashier rings it up...so i'm confused.",
"title": ""
},
{
"docid": "03d2a0141218f59ccc7954e37ef6ee94",
"text": "We have machines in several grocery store chains that will take your coins, sort them, and give you two ways to get your money back: I've seen these many places, but, of course, I cannot say for sure if there are any near you.",
"title": ""
},
{
"docid": "be8f885297cfc5cb37f3668d73fd059d",
"text": "Additionally, is grocery even a major profit center for Wal-Mart? It wasn't even a major feature of their stores 15+ years ago IIRC. I guess it has decent halo effects today, but I'd be surprised if they wouldn't be fine treating it like a loss leader as well.",
"title": ""
},
{
"docid": "733a24dc9aff8589d4a617d2d8f05503",
"text": "Each of those is a network. Merchants displaying their logos - participate in their network and will accept cards that bear the same logo. Most merchants participate in more than one network. Discover is mostly used in the US, while Visa, Mastercard and American Express are more widely spread in the world (Amex less, Visa and MC are much more widely spread). In addition to being widely spread in the US, Discover is accepted everywhere where UnionPay is accepted (mostly in China) and Diners Club (mostly in EMEA). Advantages/disadvantages? You'll have to compare specific cards, but if you're a traveler in the world - then Discover will probably not be as appealing as Visa or Mastercard.",
"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": "a4145f2a8b7e3f573a413505cf772d3d",
"text": "Yes, an overall $500 loss on the stock can be claimed. Since the day trader sold both lots she acquired, the Wash Sale rule has no net impact on her taxes. The Wash Sale rule would come into play if within thirty days of second sale, she purchased the stock a third time. Then she would have to amend her taxes because claiming the $500 loss would no longer be a valid under the Wash Sale rule. It would have to be added to the cost basis of the most recent purchase.",
"title": ""
},
{
"docid": "5e6f8d2a7fd5e271ad038b24af47df6a",
"text": "\"I can't imagine how a company that has all the proof it needs of its existence and business dealings is able to be challenged in this way. Fact is, they were doing business first. The insurance company has no claim to make. (I'm not a lawyer, my observation there is based on what's right and logical...perhaps the law disagrees and if so, that law is as crooked as the judge who thinks the request for the insurance company's business dealings off \"\"frivolous\"\"). They may have messed up. That's because the evidence looks pretty \"\"open and shut\"\". Too bad for them they're getting pushed around on the basis of \"\"I'm bigger\"\" I guess, huh? I don't see why this means they're on their own. Edit: I didn't see the part about the dillusion suit. Definitely brought it on themselves, still being harassed; and insurance company has no right to shut them or their site down.\"",
"title": ""
}
] |
fiqa
|
f6ae8cc5b4ca8305ca3f42fbf06755af
|
When should I walk away from my mortgage?
|
[
{
"docid": "d8cc99f247ccc6fa76d1139088907572",
"text": "The value of debt is that it allows you to profit from the return of equity beyond the amount of actual net equity you own. Of course, this only works if the cost of borrowing is less than your return on equity. Market timing matters a great deal but isn't accounted for in this view. For my answer I would like to hand-wave away market timing considerations. One plausible justification is that you could default on your current home and then immediately go buy one of equal value. If you buy a new home of a lesser value (due to lack of funds) and then prices appreciate, then you missed some opportunity cost but probably not $100k worth of it. Moving on, here are some helpful assumptions I'll make. I'll ignore performance of your portfolio after retirement and only seek to optimize F, which will be your net worth upon retirement. In either case, your current net worth is earning the R2 rate. We can convert this for both your current net worth and future savings using conversion formulas. Present to future value F = P (1+R2)^x Annual to future value F = S ( (1+R2)^x - 1 ) / R2 Adding these together is sufficient to obtain F in the case that you have no borrowing power. The case where you do not default and maintain your credit score is different due to an initial $100k penalty and the amortized value of borrowing power. In a completely theoretical sense, you get an effective (R2-R1) yield on all borrowed money. The future value will be the following: F = A1 (1+R2-R1)^x One step is missing, however, which is to convert this value (the value of having a good credit score) into present value to compare to value of your defaulting. P of borrowing power = F / (1+R2)^x = A1 { (1+R2-R1)/(1+R2) }^x Now, let's put some specific values in. Say that you can borrow $300k with your good credit history and this applies for the next 25 years, after which you retire. The borrowing rate is 7% and the time-value of money to you is 10%. I would then calculate: P of borrowing power = $58 k < $100 k This indicates that it would be more economical to default. Of course, some people might point out that it will be removed from your record after 7 years. If you plug 7 years instead of 25 years into the equation, almost no assumptions about rates will lead to the option of keeping your house being preferable. So in a nutshell, the value of your credit is probably less than $100k in a purely mathematical sense. But there are other factors too. If you don't have that borrowing ability maybe you wouldn't be able to borrow money to start the business of your dreams. If you are a rock star entrepreneur, then time-value of money to you could be 1,000% yield, sure, then maybe you could make the above numbers work (to favor keeping the house). I've also neglected ethics. As other people point out, it would be like stealing from the bank.",
"title": ""
},
{
"docid": "e19c9cf8d26bc4722076e8306f5b4ae5",
"text": "\"I'm in a similar situation, but I live in a state that doesn't allow mortgagees to \"\"walk away\"\" without recourse. I would consider a short sale or otherwise abandoning the property if: At the end of the day, real estate is an investment, and you don't realize gains or losses until you close the position. The \"\"ra, ra\"\" crowd that thought that real estate was going to boom forever in 2006 was just as wrong as the \"\"bad news bears\"\" crowd that thinks that real estate will never recover either. Investments rise and fall. Many people who bought houses in the 1980's boom (recall the S&L crisis) were underwater for years until prices started rising in the mid-90's. You haven't lost money until you realize that loss.\"",
"title": ""
},
{
"docid": "9636c1a2e0d62c4d86d15b61c98d0eca",
"text": "\"How much is rent in your area? You should compare a rental payment versus your mortgage payment now, bearing in mind the opportunity cost of the difference. Let's say that a rental unit in your area that has the same safety & convenience as your house costs $1600 per month to rent, and your mortgage is $2400. By staying in the house, you are losing that $800 month as well as interest earned on banking that money (however, right now, interest rates are negligible). Factor in total cost of ownership too, meaning extra utilities for one or the other (sometimes houses are cheaper, sometime not), property insurance and taxes for the house (if they aren't already in escrow through your mortgage) and generic house repair stuff. If the savings for a rental are worth more than a couple hundred a month, then I suggest you consider bailing. Start multiplying $500-1000 per month out over a year or two and decide if that extra cash is better for you than crappy credit. Also, this is not the most ethical thing, but I do know of one couple who stopped paying their mortgage for several months, knowing they were going to give the house back at the end. They took what they would have spent in mortgage payments during that time into a savings account, and will have more than enough cash to float for the few years that their credit is lowered by the default. Also something to consider is that we are in a time of ridiculous numbers of people defaulting. As such, a poor credit score might start to be more common among people with decent incomes, to the point where a \"\"poor\"\" score in 5 years is worth about the same as an \"\"average\"\" score today. I wouldn't count on that, but it might soften the blow of your bad credit if you default.\"",
"title": ""
},
{
"docid": "c3b9c2aa52af36e1cad740ee14f64992",
"text": "\"Interestingly enough, \"\"strategic default\"\" seems to be more common than one might think in California and there is actually a lot of information available on it, to include a calculator that breaks down the numbers for you (although affiliated with a law office). Speaking from a purely financial standpoint, walking away only makes sense if it puts you in a better financial position than you were before while you had the mortgage. If you look at the downsides of walking away: The issues with the credit rating are will known but you need to take into account any open lines of credit you currently have as well as any need you might have to open a line of credit in the future. If you currently have credit cards, will the rates go up after the hit? On the housing side of things, you mortgage payment is currently a known quantity that will not change for the duration of the mortgage unless you do something to change it. However, it is fairly rare for rents to not change between years and if you want an apartment or house similar to what you currently have, you might find that the rent will fluctuate quite a bit between years and in the long run the rent might run higher than your current mortgage payment. Likewise, in the shorter term, if the landlord runs a credit check they might adjust what the rent is (or deny you the apartment) on the basis of the black mark on your history for reasons that other have mentioned. Another item to take into account is if you need to get a job in the future. Depending upon what you do for a living this might be a non-issue; however, if you are in a position of trust, walking away from a mortgage payment will reflect negatively upon your character unless you have a very good reason for it. This can lead to a loss of employment opportunities. Next, if you walk away from the mortgage you are walking away from the current value of the home and any future value that the home might have. If you like where you are living and aren't planning on moving to another part of the country, you are gambling that the market will not recover or that you would reach parity with what you owe by the time you need to sell the house. If you do plan on staying where you are and the house is in good repair, then in the long run you might be giving up quite a bit of money by walking away. These are a lot of factors to take into account though so its really hard to say one way or another if a strategic default is a good idea. In the long run you might come out ahead but knowing when that date is can be difficult to calculate. Likewise, in the long run it might adversely affect you and you might come to regret the decision. If the payments themselves are a bit too high, perhaps you can refinance or negotiate with the bank for a lower payment? If you get a better rate but keep your monthly payments the same then you might reach parity with the mortgage much faster which would also be to your advantage.\"",
"title": ""
},
{
"docid": "d0e118ffaf13ca5af91fa2d8b6b964a1",
"text": "\"It's a decision that only you can make. What are the chances that you'll want to take another loan (any loan - car, credit card, installment plan for new fridge, whatever else)? What are the chances that with the bad credit you'll find it hard to rent a place (and in Cali it's hard to rent a place right now, believe me, I bought a place just to save on the rent)? What are the chances that the prices will bounce and your \"\"on-paper\"\" loss will be recovered by the time you actually need/want to sell the house? You have to check all these and make a wise decision considering all the pros and cons in your personal case.\"",
"title": ""
},
{
"docid": "dcaa9bc3f2c813ff10968355fceac9fb",
"text": "Dan - there are other choices. What rate do you have on this mortgage? And what is the value of the home? With a bit of patience and effort, you may be able to lower your rate and save some portion of that $100k you think you can grab. There is no factual answer here. The negative will show for 7 years, and only you can determine whether that's worth it. If in that time the value comes back you may very well be in a worse position, looking to buy a new home that's now well above where it is today. It's possible the current prices are overshooting on the downside, if unemployment drops and consumer confidence returns, you may be back to break-even sooner than you think. As an aside, I find it curious that the Trumps of this world can manipulate the system, creating multiple entities, filing for bankruptcy, yet protecting his own assets, and his wealth is applauded. Yet, asking the question here so many attack you, verbally. The Donald has saved himself billions through his dealings, I don't judge you for asking this question when it comes to $100k. When Trump's net worth was negative, he should have had his property taken away, and been handed a broom.",
"title": ""
},
{
"docid": "fb641b440778b8abb937f3301fba9bca",
"text": "\"To put a different spin on it, suppose you loaned someone $100K, expecting that they would pay it back, and then a little later they decided not too. They are perfectly capable of paying back the money, but just decided they didn't want to, and it seems the laws of your state said you couldn't make them. How would you feel about that? Since this is supposed to be an answer to the question, the answer is: \"\"only if you can't afford to repay it\"\". That's what foreclosure is supposed to be about, not you deciding you would rather not pay your debts. Let's not forget who pays that bill for you - every one of your bank's other customers. EDIT:For the people decrying the moral aspect and saying \"\"it's perfectly alright because the law says that's the punishment and I'm willing to pay it\"\", the law also says \"\"if you kill someone, you go to prison for life\"\". Does that mean that someone who decides they are going to kill someone has a perfect right to do it as long as they are prepared to take the consequences?\"",
"title": ""
},
{
"docid": "cb7b7b210b445ffbc790c136ee3202e0",
"text": "This is a very personal situation of course, but if you can afford the repayments then I recommend keeping the house!. A house is a long term investment and one has to live somewhere. You probably didn't buy the house planning to sell it in 5 years so while in the short term you could suffer a loss on paper chances are things will pick up, they have to eventually. For each boom there is a bust, one for one.",
"title": ""
},
{
"docid": "3baf155d3cdd8c802e2407ab2acb6ceb",
"text": "Very few people's credit is worth $100,000. The average homeowner's credit (family of four with good to very good credit) is worth about $30,000. This is a pure business decision. The bank knew the law when they extended the mortgage to you, and part of the amount they're charging you goes to cover the risk that you might opt to walk away. The mortgage was an agreement between you and the bank and it specified the penalty for you walking away. Taking the agreed upon penalty for an action specifically contemplated in the agreement is also keeping the agreement.",
"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": "d67225c9f61ac0d5fefebca37698c58e",
"text": "Many good answers here, especially that you have to consider that renting may be more expensive than you'd think. Also, keep in mind that rent is money that is completely lost. Even if the property has dropped in value, if you keep paying, you will be able to recuperate part of your mortgage payments when you sell the house. Normally this is about +-30%, but you need to calculate this yourself by dividing the expected sales price of the house by the total mortgage payments you have to make to pack back everything. So I'd say walking away only makes sense if the rents around where you want to live are much lower than (<+-30%) your mortgage payment, and stable. In stead of walking away immediately, perhaps you can refinance your mortgage with a new one? In 2008 the rates were around 5.8%, now they are around 3.6% or so. I don't know how it goes in the USA but in my country, if the rates drop, it is relatively to do this and it can save people who refinance thousands if not more.",
"title": ""
}
] |
[
{
"docid": "bc62090f22d1078f7f51c9926b2899ac",
"text": "There is a reason - your credit score. If you ever take out a mortgage, you might pay dearly for your behavior. The bank where you have the credit card reports the amount on the bill to the credit rating agencies. If you pay before the bill date, they will always report zero. You should wait at least till the day after the billing cycle ends, and then pay off (you don't need to have the paper bill in your hands - you can see online when the cycle closed). Depending on your other financial behavior, this will have between zero and significant effect, on the percentages you get offered for car loans, mortgages, etc.",
"title": ""
},
{
"docid": "0e6906c71943738fc5f8b7d44652ea27",
"text": "Here are the pros and cons and an analytical framework for making a decision. Pros of walking away: Cons: Here's the framework: compare the value of first and second sections for you [1] http://www.nytimes.com/2009/07/30/business/30serviceside.html?_r=0 [2] http://www.mortgagecalculator.org/",
"title": ""
},
{
"docid": "00484e8e9c8d6d544eb2c3b16a4e22a2",
"text": "It isn't always clear cut that you should pay off a debt at all, particularly a mortgage. In simple terms, if you are making a better return than what the bank is charging you, and the investment meets your risk criteria, then you should not pay back the debt. In the UK for example, mortgage rates are currently quite low. Around 2.5 - 3% is typical at the moment. On the other hand, you might reasonably expect a long run average return of around 9 - 11% on property (3 - 5% rental yield, and the rest on capital gains). To make the decision properly you need take into account the following:",
"title": ""
},
{
"docid": "6e0f5a5bd8fcf16434ed72e82e14daf0",
"text": "Consider that the bank of course makes money on the money in your escrow. It is nothing but a free loan you give the bank, and the official reasons why they want it are mostly BS - they want your free loan, nothing else. As a consequence, to let you out of it, they want the money they now cannot make on your money upfront, in form of a 'fee'. That explains the amount; it is right their expected loss by letting you out. Unfortunately, knowing this doesn't change your options. Either way, you will have to pay that money; either as a one-time fee, or as a continuing loss of interest. As others mentioned, you cannot calculate with 29 years, as chances are the mortgage will end earlier - by refinancing or sale. Then you are back to square one with another mandatory escrow; so paying the fee is probably not a good idea. If you are an interesting borrower for other banks, you might be able to refinance with no escrow; you can always try to negotiate this and make it a part of the contract. If they want your business, they might agree to that.",
"title": ""
},
{
"docid": "638bd4fa6dd303bacc352bbf00a7f5bc",
"text": "\"Let's start with income $80K. $6,667/mo. The 28/36 rule suggests you can pay up to $1867 for the mortgage payment, and $2400/mo total debt load. Payment on the full $260K is $1337, well within the numbers. The 401(k) loan for $12,500 will cost about $126/mo (I used 4% for 10 years, the limit for the loan to buy a house) but that will also take the mortgage number down a bit. The condo fee is low, and the numbers leave my only concern with the down payment. Have you talked to the bank? Most loans charge PMI if more than 80% loan to value (LTV). An important point here - the 28/36 rule allows for 8% (or more ) to be \"\"other than house debt\"\" so in this case a $533 student loan payment wouldn't have impacted the ability to borrow. When looking for a mortgage, you really want to be free of most debt, but not to the point where you have no down payment. PMI can be expensive when viewed that it's an expense to carry the top 15% or so of the mortgage. Try to avoid it, the idea of a split mortgage, 80% + 15% makes sense, even if the 15% portion is at a higher rate. Let us know what the bank is offering. I like the idea of the roommate, if $700 is reasonable it makes the numbers even better. Does the roommate have access to a lump sum of money? $700*24 is $16,800. Tell him you'll discount the 2yrs rent to $15000 if he gives you it in advance. This is 10% which is a great return with rates so low. To you it's an extra 5% down. By the way, the ratio of mortgage to income isn't fixed. Of the 28%, let's knock off 4% for tax/insurance, so a $100K earner will have $2167/mo for just the mortgage. At 6%, it will fund $361K, at 5%, $404K, at 4.5%, $427K. So, the range varies but is within your 3-5. Your ratio is below the low end, so again, I'd say the concern should be the payments, but the downpayment being so low. By the way, taxes - If I recall correctly, Utah's state income tax is 5%, right? So about $4000 for you. Since the standard deduction on Federal taxes is $5800 this year, you probably don't itemize (unless you donate over $2K/yr, in which case, you do). This means that your mortgage interest and property tax are nearly all deductible. The combined interest and property tax will be about $17K, which in effect, will come off the top of your income. You'll start as if you made $63K or so. Can you live on that?\"",
"title": ""
},
{
"docid": "95dcf8a389872b6b5395158b82d9b75c",
"text": "I have this exact same issue. Event the dollar amounts are close. Here is how I am looking at the problem. Option 1: Walk away. Goodbye credit for 7+ years. Luckily I can operate in cash with the extra $800 per month, but should I have a non medical emergency I might be SOL. With a family I am not sure I am willing to risk it. What if my car dies the month after I quit paying and the bank chooses to foreclose? What if my wife or I lose our job and we have no credit to live? Option 2: Short sale. Good if I can let it happen. I might or might not be on the hook for the balance depending on the state. If I am on the hook, okay, suck but I could live. If I am not on the hook, it is going to hurt my credit the same as foreclosure. It isn't easy, you need an experienced real estate agent and a willing bank. Option 3: Keep paying. I am going for this. At the moment I can still afford the house even though it is at the expense of some luxuries in my live. (Cable TV, driving to work, a new computer). I am wagering the market fixes itself in the next several years. Should the S hit the fan in most any manner, the mortgage is the first thing I stop paying. I don't know what other options I have. I can't re-fi; too upside down. I can't sell; the house isn't worth the mortgage (and I don't have the cash for the balance). I can't walk away; the credit hit wouldn't be worth the monthly money gain. I have no emotions about the house. I am in a real bad investment and getting out now seems like a good idea, but I am going to guess that having the house 10 years from now is better than not. I don't care about the bank at all, nor do I feel I owe them the money because I took the loan. They assumed risk loaning me the money in the first place. The minute it gets worse for me than for the bank; I will stop paying. Summary Not much to do without a serious consequence. I would suggest holding out for the very long term if you feel you can. The best way to minimize the bad investment is to ride it out and pray it gets better. I am thinking I am a landlord for the next 10 years.",
"title": ""
},
{
"docid": "63d4ae49051ee9037c47e3161cb81f3a",
"text": "I am sorry for your troubles, but impressed with your problem solving skills. Keep going, things will get better. Your best hope is to find a place that does manual underwriting. If they do computer generated stuff, then you will be kicked for sure. If you can show 20% down, and have some savings, and have some history of paying bills, then you might be approved. Here in Florida, RP Funding still does manual underwriting. Another one that is mentioned is Church Hill mortgage. Also you might check with local credit unions. Of course your best bet to be approved is to be open and state upfront the challenges. You have to find someone that has the ability to think, has the ability to see passed the challenges, and has the authority to do so.",
"title": ""
},
{
"docid": "edeaf482e7212cc182e041ee7e700fda",
"text": "\"You owe only $38,860 to pay off your loan now, possibly less. From what you say about your loan, tell me if I got this right: 30 year loan $75,780 original loan amount 9% annual interest rate $609.74 monthly payment You have made 272 payments Payment number 273 is not due until late 2019, possibly early 2020 If I have correctly figured out what you have done, you have been making monthly payments early by pulling out payment coupons before they are due and sending them in with payment. You are about 4 years ahead on your payments. If I have this correct, if you called the bank and asked \"\"what is my payoff amount if I want to pay this loan off tomorrow\"\" they would answer something like $38,860. When you pay a loan off early, you don't just owe the sum of the coupons still remaining. In your case, you owe at least $16,000 less! Indeed, if there is some way to convert your 4 years of pre-payments into an early payment, you would owe even less than $38,860. I don't know banking law well enough to know if that is possible. You should stop pulling coupons out of your book and paying them early. Any payments you make between now and when your next payment is actually due (late 2019 sometime?) you should tell the bank you want applied as an early payment. This will bring your total owed amount down much faster than pulling coupons out of your book and making payments years early. If there is someone in your family who understands banking pretty well, maybe they can help you sort this out. I don't know who to refer you to for more personal help, but I really do think you have more than $16,000 to gain by changing how you are paying your mortgage. Good luck!\"",
"title": ""
},
{
"docid": "37fa30cf5414a80a1e2cc08de201436e",
"text": "From Getting Rid of PMI: Per the federal Homeowners' Protection Act, you can ask that your PMI be canceled when you've paid down your mortgage to 80% of the loan, if you have a good record of payment and compliance with the terms of your mortgage, you make a written request, and you show that the value of the property hasn't gone down. What's more, when you've paid down your mortgage to 78% of the original loan, the law says that the lender must automatically cancel your PMI. (So in this case to prove it hasn't gone down, an appraisal is in order) But all of this doesn't answer the question. The PMI is a separate line item, once it's removed, your total monthly payment drops. You are welcome to keep it in, and indicate it should be a prepayment of principal, if that's your wish, but that's up to you, it's not automatic. In researching this the first time, I ran into an article How to Calculate PMI Costs in which an example is given where a 91% LTV $200K loan has a PMI cost of $1000/yr. So, the impact of not having that extra $20K or so is to pay what amount to an extra 5% on the last $20K of the loan. The PMI doesn't scale over time. When you are $10K away from 80% LTV, you still pay the $1K/yr. For this reason, if you absolutely must go over 80% LTV, I'd suggest shopping for a bank that will permit the excess to be a home equity loan. At least the payoff of that 2nd loan in totally in your control.",
"title": ""
},
{
"docid": "cc18f11bc95d014156bb8f4533a5a25f",
"text": "Start the process by contacting the company that services the mortgage. They can answer all your questions. They should have a form that needs to be submitted. You will want to get from them the most up-to-date payoff amount X days from now. The amount changes each day. They will be sending you a document signifying that the debt has been met. They will also be filing paperwork with the county/city/township releasing the property from the mortgage obligation. Because all my mortgage payoffs have either been or refinancing or I have sold the property, the balance due was significant and the lender required a cashiers check. Contact them to ask. If it only a few thousand left they might take a regular check. Sending the checks via overnight delivery speeds up the process, and cuts down on the uncertainty of the delivery date. Ask for a return receipt so that you have proof of the date it was received. Overpay by a couple of days. They will refund the overage. If you let the mortgage run its course, you will still get a document back from them; they will still file the documents with the local government; and they will refund any overage. If you look at the coupon book, or the paperwork they gave you at settlement the last payment is usually a different amount due to rounding of the monthly payments. Of course if you have been making extra payments or larger than required payments the numbers on the original coupon book are moot so contact the company for the last payment amount.",
"title": ""
},
{
"docid": "c457b06f82020d4b7059d1d9bfe20741",
"text": "I think the OP took responsibility for their mistakes by walking away from their mortgage and living life with in their means. If it screws the bank, so be it, because the bank failed in its responsibility to do due diligence, whether that means figuring out if their mortgagee can pay over the life of the loan and/or if the housing market is a bubble. And the houses were paid for by the banks. The house is the collateral for the loan the bank made. The banks distorted the market with their easy money, and now they have to pay the consequences.",
"title": ""
},
{
"docid": "0aed27e6d78118ca83d0620210613f13",
"text": "If you quit or get fired, you have 60 days to pay back the loan. If you cannot pay back the loan it becomes an early withdrawal subject to taxes and the the 10% penalty. Taking a loan for any significant amount of the down payment is a bad idea for the reasons above. As an alternative, adjust your contributions down to get your maximum match and stash the extra money outside of your 401k in a brokerage account. If you have a Roth IRA already, you can into using up to 10k of it for a first time home purchase.",
"title": ""
},
{
"docid": "c13ba6027ca90f877bc97a68fe5679e3",
"text": "I would put down 12% and pay PMI. Either way, you are taking out a loan, with payments against 88% of the value of the home. I assume the mortgage note would be either 15 or 30 years and the 401k loan would be less (5? 10?). If you take out an 88% mortgage loan and pay it off at the same pace you would have paid the 401k loan, you'll be down to 80% LTV quickly and PMI will stop. If the housing market rebounds and your house appreciates, you'll be at 80% LTV quickly. If you change jobs/lose jobs your mortgage will be unaffected. PMI is an easily quantifiable risk that is worth paying in this case. Contrasted with the 401k loan, the job loss/job change risk is great. It isn't just if you lose your job. Maybe you'll find a great opportunity with a great company that has a 401k plan that doesn't allow loans. Will you forgo taking that job because of your 401k loan?",
"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": "fd5609bb27cf8730ce7d33454f9284f8",
"text": "If you're planning to walk away from the house - don't invest any more money in it. Just be aware of the consequences. It may be worth considering a short sale if both the lenders will agree to erase the debt. If you're going to keep the house, then the fact that you're underwater now is irrelevant, and you should do your best to reduce the burden by paying off the higher rate loan. But, I personally think that accumulating enough cash to make you comfortable in case of a job loss for several months is a higher priority.",
"title": ""
}
] |
fiqa
|
41ee37eacfb9620e0e076a7b84903258
|
Consumer Loans vs Mortgages
|
[
{
"docid": "2df7a1cf3ca314dbb9aa09b8944a2b57",
"text": "I went here: Consumer Loan Law. It seems that a consumer loan is anything other than a business loan or mortgage. However, in California it seems to include a mortgage. It's a bit weird to see that a HEL can be considered a consumer loan even if it is the primary or the only loan on a property. Getting a HEL can be a great low cost way to (re)finance a property as they tend to have low or no closing costs and lower interest rates.",
"title": ""
},
{
"docid": "a176cb795735a8a2d21c2fd59138c4e8",
"text": "Here's a good definition of a consumer loan: What is a Consumer Loan? As@Pete B. pointed out, there are some states (California loves to be the oddball, doesn't it?) that treat some loans in a more unconventional manner, but the gist of it is that a consumer loan is normally unsecured, meaning there's no collateral or lien associated with it. A signature loan would be a good example of a consumer loan. Many times, loans made by non-banks (finance companies that loan for consumer purchases, for instance) would be considered to be consumer loans. I hope this helps. Good luck!",
"title": ""
}
] |
[
{
"docid": "5c4552d9a151aba8324f246f5b6d05e0",
"text": "It depends on the terms. Student loans are often very low interest loans which allow you to spread your costs of education over a long time without incurring too much interest. They are often government subsidized. On the other hand, you often get better mortgage rates if you can bring a down payment for the house. Therefore, it might be more beneficial for you to use money for a down payment than paying off the student load.",
"title": ""
},
{
"docid": "7c3c9107673fd5927e3e38d0ef07c60d",
"text": "It was both. CDOs also contributed. Unfortunately, when the bankers kept packing up their loans they lost track of the risk as did the financial institutions offering instruments to deleverage that risk. So when the subprime borrowers began to fail the institutions started getting hit with risk that they hadn't prepared for. Flippers and home owners who used their homes as ATMs then saw their home values crash and it all fell apart. We are seeing some of this again with owners getting more HELOCs but the real concern is with car loans, credit card and student loan debt.",
"title": ""
},
{
"docid": "fa4237b59e1cb05f8f9db405fdf2cdb9",
"text": "Wait are you saying you have the opportunity to buy bonds at this rate and the company is issuing loans at this rate to consumers? Sounds like a win for the bank, a win for it's shareholders, and a win for the bondholder. (Of course, you'll probably be paying a premium for a 25% coupon bond if that's really what's you're talking about.)",
"title": ""
},
{
"docid": "b016ad4e91e887d07872457741a50b2c",
"text": "Can anyone recommend a good textbook that covers Fannie Mae and Freddie Mac, or more broadly the US home mortgage market? A basic search seems to mostly turn up books that aim to make an ideological point rather than attempt to provide an actual explanation. I have a basic financial knowledge including a basic understanding of derivatives at the level of say the textbook by Hull, but know very little about the US mortgage market specifically. I don't mind technical detail, and am not afraid of math. I don't mind if the book is broader, as long as it includes a reasonably in depth look at these GSEs and their role. This seems to be a pretty basic piece of knowledge for many financial professionals, so I assume there must be at least one standard textbook on this that I just haven't been able to find. EDIT: I'm looking for something post 2008 of course.",
"title": ""
},
{
"docid": "9e09460d1db22e0739c0c89a96007457",
"text": "I'm not sure the reasoning still holds though. If you default on your student loan, your diploma doesn't get repossessed. There's a signifiant moral hazard associated with student loans. A mortgage on the other hand is around a very physical item. Though I can still banks lobbying for better rules, that would be hugely in the consumers disadvantage.",
"title": ""
},
{
"docid": "a1dea617c76c9c16a9eff8182e9a3d2e",
"text": "This is generally wrong. For the vast majority of the time that underqualified alt-a and option-arm mortgages were being written, Fannie and Freddie were not buying, and they were never huge holders of these mortgages. Fannie and Freddie have minimum qualifications standards. However, as time went on, Fannie and Freddie did load up on the securities (not the mortgages), which were of course still problematic. But the liquidity crunch of 08 was not substantially contributed to by Fannie and Freddie.",
"title": ""
},
{
"docid": "0b9b09480180e3d1bd2933988607e7ea",
"text": "I think the discrepancy you are seeing is in the detail of what happens once you pay off your student loan. If you take your monthly payment for your student loan, and apply that to your mortgage once the student loan is payed off, paying the highest interest loan will cone out ahead. If, on the other hand, you take your student loan payment and do something else with it (not pay down your mortgage), you would be better off paying on your mortgage. Say you have $1000 to put towards either loan, and there is 5 years to pay on the student loan, and 25 years to pay on the mortgage. By paying on the student loan you are, roughly, saving 5 years of 5% interest on that $1000. By paying on the mortgage, you are saving 25 years of 3% interest.",
"title": ""
},
{
"docid": "ab823c39820c52a37e205e57d69d4c3d",
"text": "You can explore the scenarios in which it is better to rent or to buy using this application: http://demonstrations.wolfram.com/BuyOrRentInvestmentReturnCalculator/ In the possibly unlikely scenario shown below, at the term of the mortgage (20 years) the tenant and the buyer have practically the same return on investment. At this point the tenant's savings would be sufficient to buy a house equivalent to the buyer's, and this would be the advisable course of action (based on the figures alone).",
"title": ""
},
{
"docid": "c660aa77d34da2bf069924c305d831ea",
"text": "\"I am going to respond to a very thin sliver of what's going on. Skip ahead 4 years. When buying that house, is it better to have $48K in the bank but a $48K student loan, or to have neither? That $48K may very well be what it would take to put you over the 20% down payment threshhold thus avoiding PMI. Banks let you have a certain amount of non-mortgage debt before impacting your ability to borrow. It's the difference between the 28% for the mortgage, insurance and property tax, and the total 38% debt service. What I offer above is a bit counter-intuitive, and I only mention it as you said the house is a priority. I'm answering as if you asked \"\"how do I maximize my purchasing power if I wish to buy a house in the next few years?\"\"\"",
"title": ""
},
{
"docid": "933d4d77ab71aaf0bdb5e1d198ab6f1b",
"text": "When I bought my own place, mortgage lenders worked on 3 x salary basis. Admittedly that was joint salary - eg you and spouse could sum your salaries. Relaxing this ratio is one of the reasons we are in the mess we are now. You are shrewd (my view) to realise that buying is better than renting. But you also should consider the short term likely movement in house prices. I think this could be down. If prices continue to fall, buying gets easier the longer you wait. When house prices do hit rock bottom, and you are sure they have, then you can afford to take a gamble. Lets face it, if prices are moving up, even if you lose your job and cannot pay, you can sell and you have potentially gained the increase in the period when it went up. Also remember that getting the mortgage is the easy bit. Paying in the longer term is the really hard part of the deal.",
"title": ""
},
{
"docid": "662244bb697ba42ca630f74cd02a7791",
"text": "Surely some borrowers and lenders make decisions about making and taking loans based on the actual interest rates on the actual loans? In which case it doesn't matter so much if the rates are calculated based on a fictional assumption about something. At the end of the day every borrower or lender in the market makes their own decision about which lending contracts they take part in.",
"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": "05fd042a679b503668b1e281f14f32f9",
"text": "Cynical answer: Real Estate agents make money on commission from sale of houses, so their compensation is tied to the home price. Banks make money off loans, so it is in their interest to make larger loans (as long as the loan gets paid). So their is a tension at the bank between selling a larger mortgage, and ensuring that their customer can pay the mortgage. Gross income is easier to check, and the taxes at a given income are fairly predictable. And banks realized that people can change their medical and retirement deductions.",
"title": ""
},
{
"docid": "77d9180f70d0802c2ce787ee20f2097e",
"text": "\"In a domestic setting, Letters of Credit are often used to build public works needed to support a development. So if you're bulldozing a few 3 story buildings to build a 50 story tower, the municipality will build appropriate water/sewer/gas/road infrastructure, and draw from the developer's letter of credit to fund it. The 'catch' to the developer is that these things usually aren't revokable -- once the city/town/etc starts work, the developer cannot cut-off the funding, even if the project is cancelled. A letter of credit definitely isn't a consumer financing vehicle. The closest equivalent is a \"\"line of credit\"\" tied to an asset like a home.\"",
"title": ""
},
{
"docid": "fc239a35be77409464db2aaa455acd86",
"text": "You mentioned 15-20 years in your comment on mhoran_psprep's response. This is the most important factor to consider in the points vs. rate question. With a horizon that long it sounds like the points are probably a better option for you. There is a neat comparison tool at The Mortgage Professor's website that may help you build your spreadsheet or simply check the numbers you are getting.",
"title": ""
}
] |
fiqa
|
36a898fc52389242f06a91f2eec42c9b
|
How can I save money on a gym / fitness membership? New Year's Resolution is to get in shape - but on the cheap!
|
[
{
"docid": "3becf428add18f59ba38d20807e3f7d7",
"text": "Shop around for Gym January is a great time to look because that's when most people join and the gyms are competing for your business. Also, look beyond the monthly dues. Many gyms will give free personal training sessions when you sign up - a necessity if you are serious about getting in shape! My gym offered a one time fee for 3 years. It cost around $600 which comes out to under $17 a month. Not bad for a new modern state of the art gym.",
"title": ""
},
{
"docid": "d98599e2bb8795a543c46c226255323c",
"text": "If you're determined to save money, find ways to integrate exercise into your daily routine and don't join a gym at all. This makes it more likely you'll keep it up if it is a natural part of your day. You could set aside half the money you would spend on the gym towards some of the options below. I know it's not always practical, especially in the winter, but here are a few things you could do. One of the other answers makes a good point. Gym membership can be cost effective if you go regularly, but don't kid yourself that you'll suddenly go 5 times a week every week if you've not done much regular exercise. If you are determined to join a gym, here are a few other things to consider.",
"title": ""
},
{
"docid": "a5965eca10891f12b394ad3541cdc32a",
"text": "Try a gym for a month before you sign up on any contracts. This will also give you time to figure out if you are the type who can stick with a schedule to workout on regular basis. Community centres are cost effective and offer pretty good facilities. They have monthly plans as well so no long term committments.",
"title": ""
},
{
"docid": "eb1e4693e06138828d8a9809185fd27e",
"text": "Find a physical activity or programme that interests you. Memberships only have real value if you use them. Consider learning a martial art like karate, aikido, kung fu, tai kwan do, judo, tai chi chuan. :-) Even yoga is a good form of exercise. Many of these are offered at local community centres if you just want to try it out without worrying about the cost initially. Use this to gauge your interest before considering more advanced clubs. One advantage later on if you stay with it long enough - some places will compensate you for being a junior or even associate instructor. Regardless of whether this is your interest or if the gym membership is more to your liking real value is achieved if you have a good routine and interest in your physical fitness activity. It also helps to have a workout buddy or partner. They will help motivate you to try even when you don't feel like working out.",
"title": ""
},
{
"docid": "847a632b12e6877c7889efada52dfa79",
"text": "The gym I used to use was around £35-40 a month, its quite a big whack but if you think about it; its pretty good value for money. That includes gym use, swimming pool use, and most classes Paying for a gym session is around £6 a go, so if you do that 3 times a week, then make use of the other facilities like swimming at the weekends, maybe a few classes on the nights your not at the gym it does work out ok As for deals, my one used to do family membership deals, and I think things like referring a friend gives you money off etc. They will probably also put on some deals in January since lots of people want to give it a go being new year and all",
"title": ""
},
{
"docid": "63309a9b0948785f9f5d96857b4dde78",
"text": "Look for discounts from a health insurance provider, price club, professional memberships or credit cards. That goes for a lot of things besides health memberships. My wife is in a professional woman's association for networking at work. A side benefit is an affiliate network they offer for discounts of lots of things, including gym memberships.",
"title": ""
},
{
"docid": "3e873c2f7acf9a5c8ec012a8b705c129",
"text": "I came across an article posted at Squawkfox last week. It's particularly relevant to answering this question. See 10 Ways to Cut Your Fitness Membership Costs. Here's an excerpt: [...] If you’re in the market for a shiny new gym membership, it may be wise to read the fine print and know your rights before agreeing to a fitness club contract. No one wants to be stuck paying for a membership they can no longer use, for whatever reason. But if you’re revved and ready to burn a few calories, here are ten ways to get fitter while saving some cash on a fitness club or gym membership. Yay, fitness tips! [...] Check it out!",
"title": ""
}
] |
[
{
"docid": "950c17269f8da50f264a91dc43c67c1d",
"text": "Saving for retirement is important. So is living within one's means. Also--wear your sunscreen every day, rain or shine, never stop going to the gym, stay the same weight you were in high school, and eat your vegetables if you want to pass for 30 when you are 50.",
"title": ""
},
{
"docid": "4abd220e2e701da0dd7a47df87939235",
"text": "It depends on you. If you're not an aggressive shopper and travel , you'll recoup your membership fee in hotel savings with one or two stays. Hilton brands, for example, give you a 10% discount. AARP discounts can sometimes be combined with other offers as well. From an insurance point of view, you should always shop around, but sometimes group plans like AARP's have underwriting standards that work to your advantage.",
"title": ""
},
{
"docid": "bac44a8c730685829aae631e9b51a6dc",
"text": "\"Okay. Savings-in-a-nutshell. So, take at least year's worth of rent - $30k or so, maybe more for additional expenses. That's your core emergency fund for when you lose your job or total a few cars or something. Keep it in a good savings account, maybe a CD ladder - but the point is it's liquid, and you can get it when you need it in case of emergency. Replenish it immediately after using it. You may lose a little cash to inflation, but you need liquidity to protect you from risk. It is worth it. The rest is long-term savings, probably for retirement, or possibly for a down payment on a home. A blended set of stocks and bonds is appropriate, with stocks storing most of it. If saving for retirement, you may want to put the stocks in a tax-deferred account (if only for the reduced paperwork! egads, stocks generate so much!). Having some money (especially bonds) in something like a Roth IRA or a non-tax-advantaged account is also useful as a backup emergency fund, because you can withdraw it without penalties. Take the money out of stocks gradually when you are approaching the time when you use the money. If it's closer than five years, don't use stocks; your money should be mostly-bonds when you're about to use it. (And not 30-year bonds or anything like that either. Those are sensitive to interest rates in the short term. You should have bonds that mature approximately the same time you're going to use them. Keep an eye on that if you're using bond funds, which continually roll over.) That's basically how any savings goal should work. Retirement is a little special because it's sort of like 20 years' worth of savings goals (so you don't want all your savings in bonds at the beginning), and because you can get fancy tax-deferred accounts, but otherwise it's about the same thing. College savings? Likewise. There are tools available to help you with this. An asset allocation calculator can be found from a variety of sources, including most investment firms. You can use a target-date fund for something this if you'd like automation. There are also a couple things like, say, \"\"Vanguard LifeStrategy funds\"\" (from Vanguard) which target other savings goals. You may be able to understand the way these sorts of instruments function more easily than you could other investments. You could do a decent job for yourself by just opening up an account at Vanguard, using their online tool, and pouring your money into the stuff they recommend.\"",
"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": "09b119db97e23f1561e931465bf82e81",
"text": "Agree wholeheartedly with the first point - keep track! It's like losing weight, the first step is to be aware of what you are doing. It also helps to have a goal (e.g. pay for a trip to Australia, have X in my savings account), and then with each purchase ask 'what will I do with this when I go to Australia' or 'how does this help towards goal x?' Thrift stores and the like require some time searching but can be good value. If you think you need something, watch for sales too.",
"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": "b5784f5173fee940085b18abefd8ac43",
"text": "The best way to save on clothes is up to you. I have friends who save all year for two yearly shopping trips to update anything that may need updating at the time. By allowing themselves only two trips, they control the money spent. Bring it in cash and stop buying when you run out. On the other hand in my family we shop sales. When we determine that we need something we wait until we find a sale. When we see an exceptionally good sale on something we know we will need (basic work dress shoes, for example), we'll purchase it and save it until the existing item it is replacing has worn out. Our strategy is to know what we need and buy it when the price is right. We tend to wait on anything that isn't on sale until we can find the right item at a price we like, which sometimes means stretching the existing piece of clothing it is replacing until well after its prime. If you've got a list you're shopping from, you know what you need. The question becomes: how will you control your spending best? Carefully shopping sales and using coupons, or budgeting for a spree within limits?",
"title": ""
},
{
"docid": "5f218c61466d5c2c295984a1d83a152b",
"text": "\"The way I approach \"\"afford to lose\"\", is that you need to sit down and figure out the amount of money you need at different stages of your life. I can look at my current expenses and figure out what I will always roughly be paying - bills, groceries, rent/mortgage. I can figure out when I want to retire and how much I want to live on - I generally group 401k and other retirement separately to what I want to invest. With these numbers I can figure out how much I need to save to achieve this goal. Maybe you want to purchase a house in 5 years - figure out the rough down payment and include that in your savings plan. Continue for all capital purchases that you can think you would aim for. Subtract your income from this and you have the amount of money you have greater discretion over. Subtracting current liabilities (4th of July holiday... christmas presents) and you have the amount you could \"\"afford to lose\"\". As to the asset allocation you should look at, as others have mentioned that the younger you the greater your opportunity is to recoup losses. Personally I would disagree - you should have some plan for the investment and use that goal to drive your diversification.\"",
"title": ""
},
{
"docid": "593c2052f536084940c862901c5f2843",
"text": "Interesting, that makes some sense. With Planet Fitness, my understanding is that their cost structure is slanted towards fixed costs. Whether their members come to the gym or not doesn't matter; they still have to pay rent, labor, utilities, buy equipment, etc. Those costs don't change much if people subscribe and don't show up vs. subscribe and do show up. Moviepass seems to be almost entirely variable; their costs are buying movie tickets when people order. They would love it if people signed up and never used it, but unlike PF if people DID use it they'd be completely screwed. It's a risky plan, but it just might work as long as people don't figure out a way to game the system (or, you know, turn out to be movie buffs).",
"title": ""
},
{
"docid": "f35317548c0342e1ecd3c69b1d7c2e3e",
"text": "\"A trick that works for some folks: \"\"Pay yourself first.\"\" Have part of your paycheck put directly into an account that you promise yourself you won't touch except for some specific purpose (eg retirement). If that money is gone before it gets to your pocket, it's much less likely to be spent. US-specific: Note that if your employer offers a 401k program with matching funds, and you aren't taking advantage of that, you are leaving free money on the table. That does put an additional barrier between you and the money until you retire, too. (In other countries, look for other possible matching fundsand/or tax-advantaged savings programs; for that matter there are some other possibilities in the US, from education savings plans to discounted stock purchase that you could sell immediately for a profit. I probably should be signed up for that last...)\"",
"title": ""
},
{
"docid": "8dc02c817c798f53a098e1f8c3943822",
"text": "I've often encountered the practices you describe in the Netherlands too. This is how I deal with it. Avoid gyms with aggressive sales tactics My solution is to only sign up for a gym that does not seem to have one-on-one sales personnel and aggressive sales tactics, and even then to read the terms and conditions thoroughly. I prefer to pay them in monthly terms that I myself initiate, instead of allowing them to charge my account when they please. [1] Avoid gyms that lack respect for their members Maybe you've struggled with the choice for a gym, because one of those 'evil' gyms is very close to home and has really excellent facilities. You may be tempted to ask for a one-off contract without the shady wording, but I advise against this. Think about it this way: Even though regular T&C would not apply, the spirit with which they were drawn up lives on among gym personnel/management. They're simply not inclined to act in your best interest, so it's still possible to run into problems when ending your membership. In my opinion, it's better to completely avoid such places because they are not worthy of your trust. Of course this advice goes beyond gym memberships and is applicable to life in general. Hope this helps. [1] Credit Cards aren't very popular in the Netherlands, but we have a charging mechanism called 'automatic collection' which allows for arbitrary merchant-initiated charges.",
"title": ""
},
{
"docid": "a816d89279fc582023e15c450eb92628",
"text": "\"There's plenty of advice out there about how to set up a budget or track your expenses or \"\"pay yourself first\"\". This is all great advice but sometimes the hardest part is just getting in the right frugal mindset. Here's a couple tricks on how I did it. Put yourself through a \"\"budget fire drill\"\" If you've never set a budget for yourself, you don't necessarily need to do that here... just live as though you had lost your job and savings through some imaginary catastrophe and live on the bare minimum for at least a month. Treat every dollar as though you only had a few left. Clip coupons, stop dining out, eat rice and beans, bike or car pool to work... whatever means possible to cut costs. If you're really into it, you can cancel your cable/Netflix/wine of the month bills and see how much you really miss them. This exercise will get you used to resisting impulse buys and train you to live through an actual financial disaster. There's also a bit of a game element here in that you can shoot for a \"\"high score\"\"... the difference between the monthly expenditures for your fire drill and the previous month. Understand the power of compound interest. Sit down with Excel and run some numbers for how your net worth will change long term if you saved more and paid down debt sooner. It will give you some realistic sense of the power of compound interest in terms that relate to your specific situation. Start simple... pick your top 10 recent non-essential purchases and calculate how much that would be worth if you had invested that money in the stock market earning 8% over the next thirty years. Then visualize your present self sneaking up to your future self and stealing that much money right out of your own wallet. When I did that, it really resonated with me and made me think about how every dollar I spent on something non-essential was a kick to the crotch of poor old future me.\"",
"title": ""
},
{
"docid": "0309d5e6df68d1710cf557e3de38ac2c",
"text": "Congrats on your first real job! Save as much as your can while keeping yourself (relatively) comfortable. As to where to put your hard earned money, first establish why you want to save the money in the first place. Money is a mean to acquire the things we want or need in your life or the lives of others. Once your goals are set, then follow this order:",
"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": "d0e336eb05e4701401e2367555b6ec53",
"text": "Banks make money by charging fees on products and charging interest on loans. If you keep close to a $0 average balance in your account, and they aren't charging you any fees, then yes, your account is not profitable for them. That's ok. It's not costing them much to keep you as a customer, and some day you may start keeping a balance with them or apply for a loan. The bank is taking a chance that you will continue to be a loyal customer and will one day become profitable for them. Just be on the lookout for a change in their fee structure. Sometimes banks drop customers or start charging fees in cases like yours.",
"title": ""
}
] |
fiqa
|
ab4d8ecc78de3d8792c3b47bc2a845f1
|
Emptying a Roth IRA account
|
[
{
"docid": "29079941bcf673433726120d468485ea",
"text": "If you have multiple accounts, you have to empty them all before you can deduct any losses. Your loss is not a capital loss, its a deduction. It is calculated based on the total amount you have withdrawn from all your Roth IRA's, minus the total basis. It will be subject to the 2% AGI treshhold (i.e.: if your AGI is > 100K, none of it is deductible, and you have to itemize to get it). Bottom line - think twice. Summarizing the discussion in comments: If you have a very low AGI, I would guess that your tax liability is pretty low as well. Even if you deduct the whole $2K, and all of it is above the other deductions you have (which in turn is above the standard deduction of almost $6K), you save say $300 if you're in 15% tax bracket. That's the most savings you have. However I'm assuming something here: I'm assuming that you're itemizing your deductions already and they're above the standard deduction. This is very unlikely, with such a low income. You don't have state taxes to deduct, you probably don't spend a lot to deduct sales taxes, and I would argue that with the low AGI you probably don't own property, and if you do - you don't have a mortgage with a significant interest on it. You can be in 15% bracket with AGI between (roughly) $8K and $35K, i.e.: you cannot deduct between $160 and $750 of the $2K, so it's already less than the maximum $300. If your AGI is $8K, the deduction doesn't matter, EIC might cover all of your taxes anyway. If your AGI is $30K, you can deduct only $1400, so if you're in the 15% bracket - you saved $210. That, again, assuming it's above your other deductions, which in turn are already above the standard deduction. Highly unlikely. As I said in the comments - I do not think you can realistically save on taxes because of this loss in such a manner.",
"title": ""
},
{
"docid": "d41d8cd98f00b204e9800998ecf8427e",
"text": "",
"title": ""
}
] |
[
{
"docid": "3b1313c7fe9c8a6cae73baa0bc146c45",
"text": "Indeed, there's no short term/long term issue trading inside the IRA, and in fact, no reporting. If you have a large IRA balance and trade 100 (for example) times per year, there's no reporting at all. As you note, long term gains outside the IRA are treated favorably in the tax code (as of now, 2012) but that's subject to change. Also to consider, The worst thing I did was to buy Apple in my IRA. A huge gain that will be taxed as ordinary income when I withdraw it. Had this been in my regular account, I could sell and pay the long term cap gain rate this year. Last, there's no concept of Wash sale in one's IRA, as there's no taking a loss for shares sold below cost. (To clarify, trading solely within an IRA won't trigger wash sale rules. A realized loss in a taxable account, combined with a purchase inside an IRA can trigger the wash sale rule if the stock is purchased inside the IRA 30 days before or after the sale at a loss. Thank you, Dilip, for the comment.) Aside from the warnings of trading too much or running afoul of frequency restrictions, your observation is correct.",
"title": ""
},
{
"docid": "de8c10a6917e7d079f4d14665fbd746e",
"text": "\"One \"\"con\"\" I have not yet seen mentioned: retirement accounts are generally protected from creditors in a bankruptcy. There are limits and exceptions, Roth has a 1.2 million dollar limit and can be split by a divorce QDRO for instance. Link Since it seems you have no income this year, you may may be raiding your IRA for living expenses. If there is a chance you may declare bankruptcy in the next year or so, consider doing that first and raid the IRA for seed money after.\"",
"title": ""
},
{
"docid": "0e2b7face83c9f057e8fb4d0310c93a3",
"text": "\"To answer your question point by point - I'd focus on the last point. The back of my business card - Let's focus on Single. The standard deduction and exemption add to over $10K. I look at this as \"\"I can have $250K in my IRA, and my $10K (4%) annual withdrawal will be tax free. It takes another $36,900 to fill the 10 and 15% brackets. $922K saved pretax to have that withdrawn each year, or $1.17M total. That said, I think that depositing to Roth in any year that one is in the 15% bracket or lower can make sense. I also like the Roth Roulette concept, if only for the fact that I am Google's first search result for that phrase. Roth Roulette is systematically converting and recharacterizing each year the portion of the converted assets that have fallen or not risen as far in relative terms. A quick example. You own 3 volatile stocks, and convert them to 3 Roth accounts. A year later, they are (a) down 20%, (b) up 10%, (c) up 50%. You recharacterize the first two, but keep the 3rd in the Roth. You have a tax bill on say $10K, but have $15K in that Roth.\"",
"title": ""
},
{
"docid": "18609349ecc3a4afee9ccc0125829fb0",
"text": "Generally, you have 60 days to return funds. If you've been stowing away money in to a Roth IRA and an emergency strikes you pull out contributions sufficient to tackle the emergency while leaving at least the earnings in there. You've never paid taxes on these earnings and the earnings will continue to grow tax free. If you've been stowing away money in a vanilla taxable account and an emergency strikes you pull out whatever amount to tackle the emergency. You've been paying taxes on the earnings all along but there's no paperwork. You can't replace the money in the Roth IRA (outside the 60 day limit except for some specific same year rules that you should iron out with your custodian) but you also haven't lost anything. Either way in the event of an emergency the funds are removed from an account, but in one case you haven't been paying taxes on gains. IF you want to go the route of a Roth IRA wrapper for your emergency fund you shouldn't be touching the funds for small events, tires for your car and the like. If your goal is to juice the tax free nature of the Roth IRA wrapper for as long as you can then repurpose the money for retirement if you never experienced an emergency with the understanding that you may have to gut the account in an emergency, that's fine. If you expect money to routinely come in and out of the account a Roth IRA is a horrible vehicle.",
"title": ""
},
{
"docid": "e13a23ceb7221ef4d45a5947ec9ccb65",
"text": "\"One thing people are missing is that you may not be eligible to contribute to a Roth IRA based on your MAGI. There are income \"\"phaseout\"\" ranges which determine how much, if it all you can contribute.\"",
"title": ""
},
{
"docid": "f225093f010c21c4589471b03c48153c",
"text": "\"In the case of Fidelity, the answer is \"\"no.\"\" Although when you leave your employer and roll over the account to an IRA, leaving it with Fidelity allowed me to keep money in those closed funds. My Roth IRA was not able/allowed to buy those funds.\"",
"title": ""
},
{
"docid": "7300f3bf77b31b2843cb58762e28c42a",
"text": "You are permitted to withdraw the deposits from the Roth with no tax or penalty any time. To Dilip's point, the Roth is a good place to keep the investment, and what you might consider is a 'self-directed' account. This type of IRA or Roth IRA permits a choice of investments that are not typically handled by banks or brokers, including Real Estate and the type of Angel investing you seem to be considering. Note - the rules are tough, you need to be very careful to not be self-dealing, or dealing with certain related parties.",
"title": ""
},
{
"docid": "d2d0ad1b83d45313a4dadac2270bbb42",
"text": "\"no, good questions my friend. when did you do this rollover? if it was this year, your firm should have forms that you can fill out to \"\"undo\"\" the roth conversion - only earnings on your investments will be taxed, and everything gets rolled over to a traditional IRA. not fun for tax filing but... you can also leave them as is and pay the taxes (usually only a good option if it's a low income year for the filer). i would consult your tax advisor regardless in this situation.\"",
"title": ""
},
{
"docid": "52456dcf90b012d6a5124b3306c93288",
"text": "I wrote an article about this a while ago with detailed instructions, so I'll link to it here. Here's a snippet about how to use the Roth IRA loophole and report it properly: You don’t have any Traditional/Rollover IRA at all. You deposit up to the yearly maximum (currently $5500) into a traditional IRA. In your case, you re-characterized, which means you essentially deposited. The fact that it lost money may help you later if you have extra amounts in Traditional IRA. You convert your traditional IRA to become Roth IRA ($5500 change designation from Traditional IRA to Roth IRA). You fill IRS form 8606 and attach it to your yearly tax return, no tax due. You have a fully funded Roth IRA account. If you have amounts in the Traditional IRA in excess to what you contributed last year - it becomes a bit more complicated and you need to prorate. See my article for a detailed example. On the form 8606 you fill the numbers as they are. You deposited to IRA 5500, you converted 5100, your $400 loss is lost (unless you have more money in IRA from elsewhere). If you completely distribute your IRA, you can deduct the $400 on your Schedule A, if you itemize.",
"title": ""
},
{
"docid": "97793b3a30e5346c88a4c290d48d8e81",
"text": "\"That's Imbalance-USD (or whatever your default currency is). This is the default \"\"uncategorized\"\" account. My question is, is it possible to get the \"\"unbalanced\"\" account to zero and eliminate it? Yes, it's possible to get this down to zero, and in fact desirable. Any transactions in there should be reviewed and fixed. You can delete it once you've emptied it, but it will be recreated the next time an unbalanced transaction is entered. Ideally, I figure it should autohide unless there's something in it, but it's a minor annoyance. Presumably you've imported a lot of data into what's known as a transaction account like checking, and it's all going to Imbalance, because it's double entry and it has to go somewhere. Open up the checking account and you'll see they're all going to Imbalance. You'll need to start creating expense, liability and income accounts to direct these into. Once you've got your history all classified, data entry will be easier. Autocomplete will suggest transactions, and online transaction pull will try to guess which account a given transaction should match with based on that data.\"",
"title": ""
},
{
"docid": "aac20c8d1f2573a5249dc783f1d5124e",
"text": "\"I wrote the whimsically titled \"\"The Density of Your IRA\"\" to discuss this exact issue. In the 25% bracket, your pretax 401(k) would have $18,000, with a future tax due. But the Roth effectively took $24,000 in pretax dollars, and put the $18K in post tax money in the account. Since the limits are the same, the Roth is a denser account.\"",
"title": ""
},
{
"docid": "ee473ed573e363dc31cbc27f420ce4a4",
"text": "\"I think what those articles are saying is: \"\"If you want to leave some money to charity and some to relatives, don't bequeath a Roth to charity while bequeathing taxable accounts to relatives.\"\" In other words, it's not \"\"bad\"\" to leave a Roth IRA to charity, it's just not as good as giving it to humans, if there are humans you want to give money to. In your situation, the total amount you want to leave to relatives is less than the value of your Roth. So it sounds like the advice as it applies to you is: \"\"Don't leave your relatives $30K from your taxable funds while leaving the whole Roth to charity. Instead, leave $30K of your Roth to your relatives, while leaving all the taxable funds to charity (along with the leftover $20K of the Roth).\"\" In other words, the Roth is a \"\"last resort\"\" for charitable giving --- only give away Roth money to charity if you already gave humans all the money you want to give them. (I'm unsure of the details of how you would actually designate portions of the Roth for different beneficiaries, but some googling suggests it is possible.)\"",
"title": ""
},
{
"docid": "d1170a7a6127cb2bff5f0784dc298245",
"text": "\"This is the infographic from the Fidelity. It exemplifies what's wrong with the financial industry, and the sad state of innumeracy that we are in. To be clear, Fidelity treats the 401(k) correctly, although the assumption that the withdrawals are all at a marginal 28% is a poor one. The Roth side, they assume the $5000 goes in at a zero tax rate. This is nonsense, as Elaine can't deposit $5000, she has to pay tax first, no? She'd deposit $3600, and would have the identical $27,404 at withdrawal time. And this is pure nonsense - \"\"Let’s look at the numbers another way. Tom takes the $1,400 he saved in taxes from his $5,000 pretax contributions, and invests that money in a taxable brokerage account. That could boost his total at age 75 to $35,445.\"\" The $1400 saved is in his 401(k) already, there's no extra $1400. $5000 went in pretax. Let me go one more step, and explain what I think Joe meant in his comment below - tax table first - At retirement, say a couple has exactly $168,850 of income. With the $20K in standard deduction and exemptions, they are right at the top of the 25% bracket. And have a federal tax bill of $28,925. Overall, an effective rate of 17%. Of course this is a blend from 0%-25%, and I maintain that if some money could have gone in post tax while in the 10%/15% brackets, that would be great, but in the end, if it all skims off at 25%, and comes out at an effective 17%, that's not too bad. The article is incorrect. Misleading. And offends any of us that have any respect for numbers. And the fact that the article claim that \"\"87% found this helpful\"\" just makes me... sad. I've said it elsewhere, and will repeat, there are not just two points in time. The ability to convert Traditional 401(k) to Roth 401(k), and if in IRAs, not just convert, but also recharacterize, opens up other possibilities. It's worth a bit of attention and ongoing paperwork to minimize your lifetime tax bill. Time makes no difference. There is no \"\"crossover point\"\" as with other financial decisions. For this illustration, the results are identical regardless of time. By the way, in today's dollars, it would take $4M pretax to produce an annual withdrawal of $160K. This number is about top 2-3%. The 90%ers need not worry about saving their way to a higher tax bracket.\"",
"title": ""
},
{
"docid": "45760e75a6b20e6f86d656f45746d122",
"text": "\"The IRA contribution limit is a limit on the total amount you can contribute to all of your Roth and traditional IRAs. It's not a per-account limit. (See here and here.) Once you've hit the contribution limit on one account, you've hit it on all of them. Even so, supposing you had a reason with try to take money out of one of the accounts, the answer to your question is \"\"sort of\"\". The limit is a limit on your gross contributions, not your net contributions. It is possible to withdraw Roth contributions if you do so before the tax filing deadline for that year, but you must also withdraw (and pay taxes on) any earnings accured during the time the money was in the Roth (see here). In addition, doing this may not be as simple as just taking the money out of your account; you should probably ask your bank about it and let them know you're \"\"undoing\"\" the contribution, since they may otherwise still record the amount as a real contribution and the withdrawal as unqualified early withdrawal (subject to penalties, etc.).\"",
"title": ""
},
{
"docid": "30c3fa9ee32741f71ad214987a63e3a0",
"text": "If you keep the account in your name only and your girlfriend is depositing money into it, then she is in effect making gifts of money to you. If the total amount of such gifts exceeds $14K in 2014, she will need to file a gift tax return (IRS Form 709, due April 15 of the following year, but not included with her Federal tax return; it has to be sent to a specific IRS office as detailed in the Instructions for Form 709). She would need to pay gift tax (as computed on Form 709) unless she opts to have the excess over $14K count towards her Federal lifetime combined gift and estate tax exclusion of $5M+ and so no gift tax is due. Most estates in the US are far smaller than $5 million and pay no Federal estate tax at all and for most people, the reduction of the lifetime combined... is of no consequence. Another point (for your girlfriend to think about): if you two should break up and go your separate ways at a later time, you are under no obligation to return her money to her, and if you do choose to do so, you will need to file a gift tax return at that time. If you will be returning her contributions together with all the earnings attributable to her contributions, then keep in mind that you will have paid income taxes on those earnings all along since the account is in your name only. Finally, keep in mind that the I in IRA stands for Individual and your girlfriend is not entitled to put her contributions into your IRA account. Summary: don't do this (or open a joint account as tenants in common) no matter how much you love each other. She should open accounts in her name only and make contributions to those accounts.",
"title": ""
}
] |
fiqa
|
36cfd5295eb16bd101e2995b7fbc792b
|
How does stock dilution work in relation to share volume?
|
[
{
"docid": "653107501e59e64058ee6d8681000ae3",
"text": "Here is an example for you. We have a fictional company. It's called MoneyCorp. Its job is to own money, and that's all. Right now it owns $10,000. It doesn't do anything special with that $10,000 - it stores it in a bank account, and whenever it earns interest gives it to the shareholders as a dividend. Also, it doesn't have any expenses at all, and doesn't pay taxes, and is otherwise magic so that it doesn't have to worry about distractions from its mathematical perfection. There are 10,000 shares of MoneyCorp, each worth exactly $1. However, they may trade for more or less than $1 on the stock market, because it's a free market and people trading stock on the stock market can trade at whatever price two people agree on. Scenario 1. MoneyCorp wants to expand. They sell 90,000 shares for $1 each. The money goes in the same bank account at the same interest rate. Do the original shareholders see a change? No. 100,000 shares, $100,000, still $1/share. No problem. This is the ideal situation. Scenario 2: MoneyCorp sells 90,000 shares for less than the current price, $0.50 each. Do the original shareholders lose out? YES. It now has something like $55,000 and 100,000 shares. Each share is now worth $0.55. The company has given away valuable equity to new shareholders. That's bad. Why didn't they get more money from those guys? Scenario 3: MoneyCorp sells 90,000 shares for more than the current price, $2 each, because there's a lot of hype about its business. MoneyCorp now owns $190,000 in 100,000 shares and each share is worth $1.90. Existing shareholders win big! This is why a company would like to make its share offering at the highest price possible (think, Facebook IPO). Of course, the new shareholders may be disappointed. MoneyCorp is actually a lot like a real business! Actually, if you want to get down to it, MoneyCorp works very much like a money-market fund. The main difference between MoneyCorp and a random company on the stock market is that we know exactly how much money MoneyCorp is worth. You don't know that with a real business: sales may grow, sales may drop, input prices may rise and fall, and there's room for disagreement - that's why stock markets are as unpredictable as they are, so there's room for doubt when a company sells their stock at a price existing shareholders think is too cheap (or buys it at a price that is too expensive). Most companies raising capital will end up doing something close to scenario 1, the fair-prices-for-everyone scenario. Legally, if you own part of a company and they do something a Scenario-2 on you... you may be out of luck. Consider also: the other owners are probably hurt as much as you are. Only the new shareholders win. And unless the management approving the deal is somehow giving themselves a sweetheart deal, it'll be hard to demonstrate any malfeasance. As an individual, you probably won't file a lawsuit either, unless you own a very large stake in the company. Lawsuits are expensive. A big institutional investor or activist investor of some sort may file a suit if millions of dollars are at stake, but it'll be ugly at best. If there's nothing evil going on with the management, this is just one way that a company loses money from bad management. It's probably not the most important one to worry about.",
"title": ""
},
{
"docid": "f59f4442413d1763b8006e17302d92bb",
"text": "The reason a company creates more stock is to generate more capital so that this can be utilized and more returns can be generated. It is commonly done as a follow on public offer. Typically the funds are used to retire high cost debts and fund future expansion. What stops the company from doing it? Are Small investors cheated? It's like you have joined a car pool with 4 people and you are beliving that you own 1/4th of the total seats ... so when most of them decide that we would be better of using Minivan with 4 more persons, you cannot complain that you now only own 1/8 of the total seats. Even before you were having just one seat, and even after you just have one seat ... overall it maybe better as the ride would be good ... :)",
"title": ""
},
{
"docid": "3ec032150533346d0abdca0583130571",
"text": "Let me answer with an extreme example - I own the one single share of a company, and it's worth $1M. I issue 9 more shares, and find 9 people willing to pay $1M for each share. I know find my ownership dropped by 90%, and I am now a 10% owner of a business that was valued at $1M but with an additional $9M in the bank for expansion. (Total value now $10M) Obviously, this is a simplistic view, but no simpler than the suggestion that your company would dilute its shares 90% in one transaction.",
"title": ""
}
] |
[
{
"docid": "924ec97e56ea4c56464f722c7914e103",
"text": "Need help with a finance problem I'm currently facing in my business. My company might be going through an acquisition and I need to understand how the dilution works out for shareholders. They currently have large shareholder loans (debt), and will be converting to equity pre-transaction. For this case, if the original company value = $1 MM and the SHL value = $1 MM, I'm assuming that'd dilute equity by 50% for all shareholders if converted to equity at original company value. Correct? However, what if the $1 MM in shareholder loans were converted at the market value of the company, say $4 MM? I might be confusing myself, but just want to confirm.. thanks!",
"title": ""
},
{
"docid": "f4ca061d1169a2f105fa24f5d250c2d5",
"text": "Any time a large order it placed for Buy, the sell side starts increasing as the demand of Buy has gone up. [Vice Versa is also true]. Once this orders gets fulfilled, the demand drops and hence the Sell price should also lower. Depending on how much was the demand / supply without your order, the price fluctuation would vary. For examply if before your order, for this particular share the normal volume is around 100's of shares then you order would spike things up quite a bit. However if for other share the normal volume is around 100000's then your order would not have much impact.",
"title": ""
},
{
"docid": "412af011c70132f78f47a1037f0fc2cd",
"text": "Nominal. What you say is true, but I'm guessing it would be too complicated to modelate. Plus, a shareholder of a very large company would not necessarily experience said loss if he/she sells the stock in small chunks at a time.",
"title": ""
},
{
"docid": "7da0708a8b135ad64f3f50ce0300ce98",
"text": "When you buy shares, you are literally buying a share of the company. You become a part-owner of it. Companies are not required to pay dividends in any given year. It's up to them to decide each year how much to pay out. The value of the shares goes up and down depending on how much the markets consider the company is worth. If the company is successful, the price of the shares goes up. If it's unsuccessful, the price goes down. You have no control over that. If the company fails completely and goes bankrupt, then the shares are worthless. Dilution is where the company decides to sell more shares. If they are being sold at market value, then you haven't really lost anything. But if they are sold below cost (perhaps as an incentive to certain staff), then the value of the company per share is now less. So your shares may be worth a bit less than they were. You would get to vote at the AGM on such schemes. But unless you own a significant proportion of the shares in the company, your vote will probably make no difference. In practice, you can't protect yourself. Buying shares is a gamble. All you can do is decide what to gamble on.",
"title": ""
},
{
"docid": "cc5eee7dc69b5b6abe644a127fc97e84",
"text": "I think the simple answer to your question is: Yes, when you sell, that drives down the price. But it's not like you sell, and THEN the price goes down. The price goes down when you sell. You get the lower price. Others have discussed the mechanics of this, but I think the relevant point for your question is that when you offer shares for sale, buyers now have more choices of where to buy from. If without you, there were 10 people willing to sell for $100 and 10 people willing to buy for $100, then there will be 10 sales at $100. But if you now offer to sell, there are 11 people selling for $100 and 10 people buying for $100. The buyers have a choice, and for a seller to get them to pick him, he has to drop his price a little. In real life, the market is stable when one of those sellers drops his price enough that an 11th buyer decides that he now wants to buy at the lower price, or until one of the other 10 buyers decides that the price has gone too low and he's no longer interested in selling. If the next day you bought the stock back, you are now returning the market to where it was before you sold. Assuming that everything else in the market was unchanged, you would have to pay the same price to buy the stock back that you got when you sold it. Your net profit would be zero. Actually you'd have a loss because you'd have to pay the broker's commission on both transactions. Of course in real life the chances that everything else in the market is unchanged are very small. So if you're a typical small-fry kind of person like me, someone who might be buying and selling a few hundred or a few thousand dollars worth of a company that is worth hundreds of millions, other factors in the market will totally swamp the effect of your little transaction. So when you went to buy back the next day, you might find that the price had gone down, you can buy your shares back for less than you sold them, and pocket the difference. Or the price might have gone up and you take a loss.",
"title": ""
},
{
"docid": "7dc3912bdb7e7a71ae405133330accb6",
"text": "\"Some companies issue multiple classes of shares. Each share may have different ratios applied to ownership rights and voting rights. Some shares classes are not traded on any exchange at all. Some share classes have limited or no voting rights. Voting rights ratios are not used when calculating market cap but the market typically puts a premium on shares with voting rights. Total market cap must include ALL classes of shares, listed or not, weighted according to thee ratios involved in the company's ownership structure. Some are 1:1, but in the case of Berkshire Hathaway, Class B shares are set at an ownership level of 1/1500 of the Class A shares. In terms of Alphabet Inc, the following classes of shares exist as at 4 Dec 2015: When determining market cap, you should also be mindful of other classes of securities issued by the company, such as convertible debt instruments and stock options. This is usually referred to as \"\"Fully Diluted\"\" assuming all such instruments are converted.\"",
"title": ""
},
{
"docid": "60e6bdbead28c05fcc3b0f90ae5bcc63",
"text": "Of course, this calculation does not take into consideration the fact that once the rights are issues, the price of the shares will drop. Usually this drop corresponds to the discount. Therefore, if a rights issue is done correctly share price before issuance-discount=share price after issuance. In this result, noone's wealth changes because shareholders can then sell their stock and get back anything they had to put in.",
"title": ""
},
{
"docid": "1c21c7c12dfb0853ecc3003ed4544234",
"text": "Alot of these answers have focused on the dilution aspect, but from a purely legal aspect, there are usually corporate bylaws that spell out what kind of vote and percentage of votes is needed to take this type of action. If all other holders of stock voted to do this, so 90% for, and you didn't, so 10% against, it's still legal if that vote meets the threshold for taking the action. As an example of this, I known of a startup where employees got $0/share for their vested shares when the company was sold because the voting stock holders agreed to it. Effectively the purchase amount was just enough to cover debts and preferred stock.",
"title": ""
},
{
"docid": "6812554ac6a6fe2c714ab6e6f19a657c",
"text": "\"Note that these used to be a single \"\"common\"\" share that has \"\"split\"\" (actually a \"\"special dividend\"\" but effectively a split). If you owned one share of Google before the split, you had one share giving you X worth of equity in the company and 1 vote. After the split you have two shares giving you the same X worth of equity and 1 vote. In other words, zero change. Buy or sell either depending on how much you value the vote and how much you think others will pay (or not) for that vote in the future. As Google issues new shares, it'll likely issue more of the new non-voting shares meaning dilution of equity but not dilution of voting power. For most of us, our few votes count for nothing so evaluate this as you will. Google's founders believe they can do a better job running the company long-term when there are fewer pressures from outside holders who may have only short-term interests in mind. If you disagree, or if you are only interested in the short-term, you probably shouldn't be an owner of Google. As always, evaluate the facts for yourself, your situation, and your beliefs.\"",
"title": ""
},
{
"docid": "6a54e644b5544df0d9b26eb811dd81af",
"text": "You can't tell for sure. If there was such a technique then everyone would use it and the price would instantly change to reflect the future price value. However, trade volume does say something. If you have a lemonade stand and offer a large glass of ice cold lemonade for 1c on a hot summer day I'm pretty sure you'll have high trading volume. If you offer it for $5000 the trading volume is going to be around zero. Since the supply of lemonade is presumably limited at some point dropping the price further isn't going to increase the number of transactions. Trade volumes reflect to some degree the difference of valuations between buyers and sellers and the supply and demand. It's another piece of information that you can try looking at and interpreting. If you can be more successful at this than the majority of others on the market (not very likely) you may get a small edge. I'm willing to bet that high frequency trading algorithms factor volume into their trading decisions among multiple other factors.",
"title": ""
},
{
"docid": "408b55cf5d99100c61738355162a6405",
"text": "You have just answered your question in the last sentence of your question: More volume just means more people are interested in the stock...i.e supply and demand are matched well. If the stock is illiquid there is more chance of the spread and slippage being larger. Even if the spread is small to start with, once a trade has been transacted, if no new buyers and sellers enter the market near the last transacted price, then you could get a large spread occurring between the bid and ask prices. Here is an example, MDG has a 50 day moving average volume of only 1200 share traded per day (obviously it does not trade every day). As you can see there is already an 86% spread from the bid price. If a new bid price is entered to match and take out the offer price at $0.039, then this spread would instantly increase to 614% from the bid price.",
"title": ""
},
{
"docid": "f3be9d78a26a139925ceadf3aa625988",
"text": "The bonus share also improves the liquidity however there is some difference in treatment. Lets say a company has 100 shares, of $10 ea. The total capital of the compnay is 100*10 = 1000. Assuming the company is doing well, its share is now available in the market for $100 ea. Now lets say the company has made a profit of $1000 and this also gets factored into the price of $100. Lets say the company decides to keep this $1000 kept as Cash Reserve and is not distributed as dividends. In a share split say (1:1), the book value of each share is now reduced to $5, the number of shares increase to 200. The share capital stays at 200*5 = 1000. The market value of shares come down to $50 ea. In a Bonus share issue say (1:1), the funds $1000 are moved from Cash Reserve and transferred to share capital. The book value of each share will remain same as $10, the number of shares increase to 200. The share capital increases to 200*10 = 2000. The market value of shares come down to $50 ea. So essentially from a liquidity point of view both give the same benefit. As to why some companies issue bonus and not a split, this is because of multiple reasons. A split beyond a point cannot be done, ie $10 can be split to $1 ea but it doesn't look good to make it $0.50. The other reason is there is adequate cash reserve and you want to convert this into share holders capital. Having a larger share holders capital improves some of the health ratios for the compnay. At times bouns is used to play upon that one is getting something free.",
"title": ""
},
{
"docid": "0c827880aa2aea2a90fadbf4dd07ad8b",
"text": "You can calculate the fully diluted shares by comparing EPS vs diluted (adjusted) EPS as reported in 10K. I don't believe they report the number directly, but it is a trivial math exercise to reach it. The do report outstanding common stock (basis for EPS).",
"title": ""
},
{
"docid": "20a7eb90fb4fb80f4664b2eeed2ac630",
"text": "First, I want to point out that your question contains an assumption. Does anyone make significant money trading low volume stocks? I'm not sure this is the case - I've never heard of a hedge fund trading in the pink sheets, for example. Second, if your assumption is valid, here are a few ideas how it might work: Accumulate slowly, exit slowly. This won't work for short-term swings, but if you feel like a low-volume stock will be a longer-term winner, you can accumulate a sizable portion in small enough chunks not to swing the price (and then slowly unwind your position when the price has increased sufficiently). Create additional buyers/sellers. Your frustration may be one of the reasons low-volume stock is so full of scammers pumping and dumping (read any investing message board to see examples of this). If you can scare holders of the stock into selling, you can buy significant portions without driving the stock price up. Similarly, if you can convince people to buy the stock, you can unload without destroying the price. This is (of course) morally and legally dubious, so I would not recommend this practice.",
"title": ""
},
{
"docid": "c7bdf878050a0ce633c13691f39664af",
"text": "Volume and prices are affected together by how folks feel about the stock; there is no direct relationship between them. There are no simple analysis techniques that work. Some would argue strongly that there are few complex analysis techniques that work either, and that for anyone but full-time professionals. And there isn't clear evidence that the full-time professionals do sufficiently better than index funds to justify their fees. For most folks, the best bet is to diversify, using low-overhead index funds, and simply ride with the market rather than trying to beat it.",
"title": ""
}
] |
fiqa
|
85570d00f31ff6bf62635643d83c26d9
|
US citizen sometimes residing in spain, wanting to offer consulting services in Europe, TAXES?
|
[
{
"docid": "8047ca318e5d8637aa90fa19584d5cce",
"text": "With something this complicated you are going to want to consult professionals. Either a professional with international experience, who will tell you the best tax arrangement overall but might come expensive, or one professional in each country who will optimize for that country. You will have to pay US taxes, and depending on your residency probably some in Spain. Double tax agreements should kick in to prevent you paying tax on the same money twice. You do not have to pay separate 'European' taxes. If you do substantial business in another country you might have to pay there, but one of your professionals should sort it out.",
"title": ""
}
] |
[
{
"docid": "7eac2e73f8d413f7e41d518f1fd205ce",
"text": "\"You may be considered a resident for tax purposes. To meet the substantial presence test, you must have been physically present in the United States on at least: 31 days during the current year, and 183 days during the 3 year period that includes the current year and the 2 years immediately before. To satisfy the 183 days requirement, count: All of the days you were present in the current year, and One-third of the days you were present in the first year before the current year, and One-sixth of the days you were present in the second year before the current year. If you are exempt, I'd check that ending your residence in Germany doesn't violate terms of the visa, in which case you'd lose your exempt status. If you are certain that you can maintain your exempt status, then the income would definitively not be taxed by the US as it is not effectively connected income: You are considered to be engaged in a trade or business in the United States if you are temporarily present in the United States as a nonimmigrant on an \"\"F,\"\" \"\"J,\"\" \"\"M,\"\" or \"\"Q\"\" visa. The taxable part of any U.S. source scholarship or fellowship grant received by a nonimmigrant in \"\"F,\"\" \"\"J,\"\" \"\"M,\"\" or \"\"Q\"\" status is treated as effectively connected with a trade or business in the United States. and your scholarship is sourced from outside the US: Generally, the source of scholarships, fellowship grants, grants, prizes, and awards is the residence of the payer regardless of who actually disburses the funds. I would look into this from a German perspective. If they have a rule similiar to the US for scholarships, then you will still be counted as a resident there.\"",
"title": ""
},
{
"docid": "397db742bda6c868bf076dce710d52be",
"text": "My experience (from European countries, but not Portugal specifically) is that it's better to change in the European country, as many banks will give you US $ as a matter of course, while in the US (insular place that it is), it can be rather difficult to find a place to exchange money outside an international airport. In fact, I have a few hundred Euros left from my last trip, several years ago. Expected to make another trip which didn't come off, and haven't found a place to exchange them. PS: Just for information's sake, at the time I was working in Europe, and found that by far the easiest way to transfer part of my salary back home was to get $100 bills from my European bank. Another way was to withdraw money from an ATM, as the US & European banks were on the same network. Unfortunately the IRS put a stop to that, though I don't know if it was all banks, or just the particular one I was using. Might be worth checking, though.",
"title": ""
},
{
"docid": "c481d80bad34629d9f8441ecea5d327d",
"text": "Grass is always greener at the other side of the hill. Tax is only a small proportion of your costs. you could easily set up a small company in a so called tax haven. But are you willing to emigrate? If not, will the gain in less taxes cover the frequent travel costs? Even if you would like to emigrate less tax might be deceiving. I recently had a discussion with a US based friend. In the US petrol is way cheaper then in Europe. THere were many examples in differences, but when you actually sum up everything, cost of living was kind of the same. So you might gain on tax, but loose on petrol, or child care to just name some examples For big companies who think globally it makes sense to seek the cheapest tax formula. For them it does not matter where they are located. For us mortals it does.",
"title": ""
},
{
"docid": "72b452624646db70ff1533aa27000710",
"text": "I haven't seen this answer, and I do not know the legality of it, as it could raise red flags as to money laundering, but about the only way to get around the exchange rate spreads and fees is to enter into transactions with a private acquaintance who has Euros and needs Dollars. The problem here is that you are taking on the settlement risk in the sense that you have to trust that they will deposit the euros into your French account when you deposit dollars into their US account. If you work this out with a relative or very close friend, then the risk should be minimal, however a more casual acquaintance may be more apt to walk away from the transaction and disappear with your Euros and your Dollars. Really the only other option would be to be compensated for services rendered in Euros, but that would have tax implications and the fees of an international tax attorney would probably outstrip any savings from Forex spreads and fees not paid.",
"title": ""
},
{
"docid": "c1208ebc915c575fdffa0a2486c77dab",
"text": "Well according to US logic, an individual can be born outside the US to an American parent, never have even stepped foot in the US or even be aware of their American citizenship, but still owe taxes and reporting to the IRS. There are no true international corporations as each country has to have its own subsidiary in order to follow local laws. (well EU being common market can just have one EU) Those subsidiaries are owned by whatever percentage by the headquarters, but are distinct companies.",
"title": ""
},
{
"docid": "78999aaed78a1aaf92b2aec0e2e2d863",
"text": "\"Well, perhaps \"\"have a dedicated tax advisor\"\" is an answer then. I wouldn't have thought of this, as it's not specifically about taxation, is it? Or more broadly \"\"consult with a dedicated professional for the situation in detail\"\"... Yes, that is the only real answer you can get. Anything else will vary between highly localized to entirely incorrect. Pensions are rarely defined benefit anymore, and not many countries still keep state-sponsored defined benefit pension plans. For most, what's left is Social Security system, which is in no way a pension. This is an insurance, and is paid as tax which is rarely refundable (but you won't always have to pay it if you're a foreigner in the country). Usually, Social Security benefits are only available to citizens and (/or, in some rare cases) residents of that country. So it is unlikely (although possible) that you'll benefit from social security payments of more than one country. Some countries have totalization treaties that make your social security payments in one count in the other. If you're in a country that has such an agreement with the Netherlands - you're lucky. Your personal pension savings are basically tax-deferred investment accounts. But tax deferral in one country doesn't necessarily work in another. In the US you have 401k or IRA accounts, but in your own country they may very well be taxable. So you gain the tax deferral in the US, but if your own country taxes them - you lost the benefit, and you will still have to abide by the US tax rules when taking the money out. If you don't plan properly you can easily be hit by double taxation in such cases. Bottom line, you need to plan your pension savings on your own, privately, with a good and solid tax advice (and pension planning advice) that would be relevant to all the countries that you are tax resident at at any given time (you can easily be resident for tax purposes in more than one country). These advisers have to take into account the laws of the countries involved, the tax treaties between themselves and between them and the country of your citizenship, and the future countries you're planning on visiting or getting old at. Its complicated, and most likely you won't be able to predict everything, especially because the laws and treaties tend to change over time.\"",
"title": ""
},
{
"docid": "b7c69995a03600169bdd569cdbd3f7af",
"text": "I can't find anything specifically about holding international real estate as a US taxpayer, but the act of transferring the money to (I presume) an account of yours in Italy, and any other associated accounts, will trigger requirements for reporting under FBAR and FACTA. Even with this, it is primarily a reporting requirement. I do not believe you will incur any additional taxes unless you do rent out the property (or allow someone not a reported dependent to make use of the property). Note that if you do not report and should, the penalties are quite steep, so please do comply. NOTE: I am not a tax expert, nor a lawyer, nor an accountant, nor an agent of the IRS. Please consult one or all of these before making any decisions.",
"title": ""
},
{
"docid": "0ba010ada2df41d157f7e3e023c90428",
"text": "Your first step should be meeting with a CPA or tax attorney who specializes in the taxation of dual citizens. Your local accountant can probably refer you to someone. There are many people in that situation, and while I'm not familiar with the details, I know there are tax treaties between the U.S. and Canada designed to address your situation.",
"title": ""
},
{
"docid": "7180779523eb3b048dca95ac8facad3f",
"text": "\"Others have given a lot of advice about how to invest, but as a former expat I wanted to throw this in: US citizens living and investing overseas can VERY easily run afoul of the IRS. Laws and regulations designed to prevent offshore tax havens can also make it very difficult for expats to do effective investing and estate planning. Among other things, watch out for: US citizens owe US income tax on world income regardless of where they live or earn money FBAR reporting requirements affect foreign accounts valued over $10k The IRS penalizes (often heavily) certain types of financial accounts. Tax-sheltered accounts (for education, retirement, etc.) are in the crosshairs, and anything the IRS deems a \"\"foreign-controlled trust\"\" is especially bad. Heavy taxes on investment not purchased from a US stock exchange Some US states will demand income taxes from former residents (including expats) who cannot prove residency in a different US state. I believe California is neutral in that regard, at least. I am neither a lawyer nor an accountant nor a financial advisor, so please take the above only as a starting point so you know what sorts of questions to ask the relevant experts.\"",
"title": ""
},
{
"docid": "883ffb4ef149f2c7e1288918f3777a27",
"text": "\"On the IRS site you can find a list of \"\"acceptance agents\"\" in your country. Talk to one of them, they'll deal with the IRS on your behalf. If you don't have any in your country, you can contact the big-4 accounting firms or any other agent elsewhere to provide you service. I'd suggest doing this through an agent.\"",
"title": ""
},
{
"docid": "a50bdd1c690e8f51635351fed8dee322",
"text": "\"Your employment status is not 100% clear from the question. Normally, consultants are sole-proprietors or LLC's and are paid with 1099's. They take care of their own taxes, often with schedule C, and they sometimes can but generally do not use \"\"employer\"\" company 401(k). If this is your situation, you can contact any provider you want and set up your own solo 401(k), which will have great investment options and no fees. I do this, through Fidelity. If you are paid with a W2, you are not a consultant. You are an employee and must use your employer's 401(k). Figure out what you are. If you are a consultant, open a solo 401(k) at the provider of your choice. Make sure beforehand that they allow incoming rollovers. Roll all of your previous 401(k)s and IRA's into it. When you have moved your 401(k) to a better provider, you won't be paying any extra fees, but you will not recoup any fees your original provider charged. I'm not sure why you mention a Roth IRA. If you try to roll your 401(k) into a Roth instead of a traditional IRA or 401(k), be aware that you will be taxed on everything you roll. ---- Edit: a little info about IRA's in response to your comment ---- Tax advantaged retirement accounts come in two flavors: one is managed by your company and the money is taken out of your paycheck. This is usually a 401(k) or 403(b). You can contribute up to $18K per year and your company can also contribute to it. The other flavor is an IRA. You can contribute $5,500 per year to this for you and $5,500 for your spouse. These are outside of your company and you make the deposits yourself. You choose your own provider, so competition has driven prices way down. You can have both a 401(k) and an IRA and contribute the max to both (though at high incomes you lose the ability to deduct IRA contributions). These accounts are tax advantaged because you only pay taxes once. With a regular brokerage account, you pay income tax in the year in which you earn money, then you pay tax every year on dividends and any capital gains that have been realized by selling. There are two types of tax-advantaged accounts: Traditional IRA or Traditional 401(k). You do not pay income tax on this money in the year you earn it, nor do you pay capital gains tax. Instead you pay tax only in the year in which you take the money out (in retirement). Roth IRA or Roth 401(k). You do pay income tax on money on this money in the year in which you earn it. But then you don't pay tax on any gains or withdrawals ever again. When you leave your job (and sometimes at other times) you can move your money out of a 401(k) into your IRA, where you can do a better job managing it. You can also move money from your IRA into a 401(k) if your 401(k) provider will allow you to. Whether traditional or Roth is better depends on your tax rate now and your tax rate at retirement. However, if you choose to move money from a traditional account into a Roth account, you must pay tax on it in that year as if it was income because traditional and Roth accounts are taxed at different times. For that reason, if you are just trying to move money out of your 401(k) to save on fees, the logical place to put it is in a traditional IRA. Moving money from a traditional to a Roth may make sense, for example, if your tax rate is temporarily low this year, but that would be a separate decision from the one you are looking at. You can always roll your traditional IRA into a Roth later if that does become the case. Otherwise, there's no reason to think your traditional 401(k) should be rolled into a Roth IRA according to what you have described.\"",
"title": ""
},
{
"docid": "0eee29beb739a8a8abb87eff51649618",
"text": "Since you say 1099, I'll assume it's in the US. :) Think of your consulting operation as a small business. Businesses are only taxed on their profits, not their revenues. So you should only be paying tax on the $700 in the example you gave. Note, though, that you need to be sure the IRS thinks you're a small business. Having a separate bank account for the business, filing for a business license with your local city/state, etc are all things that help make the case that you're running a business. Of course, the costs of doing all those things are business expenses, and thus things you can deduct from that $1000 in revenue at tax time.",
"title": ""
},
{
"docid": "7195053464f2555973061c1a472f0ed3",
"text": "You should probably get a professional tax advice, as it is very specific to the Philipines tax laws and the US-Philippine tax treaty. What I know, however, is that if it was the other way around - you paying a foreigner coming to the US to consult you - you would be withholding 30% of their pay for the IRS which they would be claiming for refund on their own later. So if the US does it to others - I'm not surprised to hear that others do it to the US. Get a professional advice on what and how you should be doing. In any case, foreign taxes paid can be used to offset your US taxes using form 1116 up to some extent.",
"title": ""
},
{
"docid": "6931b28ed497d53fd8dcf1995532c920",
"text": "\"Also within Germany the tax offices usually determine which tax office is responsible for you by asking where you were more than 180 days of the year (if e.g. you have a second flat where you work). That's a default value, though: in my experience you can ask to be handled by another tax office. E.g. I hand my tax declaration to my \"\"home\"\" tax office (where also my freelancing adress is), even though my day-job is 300 km away. So if you work mostly from Poland and just visit the German customer a few times, you are fine anyways. Difficulties start if you move to Germany to do the work at your customer's place. I'm going to assume that this is the situation as otherwise I don't think the question would have come up. Close by the link you provided is a kind of FAQ on this EU regulation About the question of permanent vs. temporary they say: The temporary nature of the service is assessed on a case-by-case basis. Here's my German-Italian experience with this. Background: I had a work contract plus contracts for services and I moved for a while to Italy. Taxes and social insurance on the Italian contracts had to be paid to Italy. Including tax on the contract for services. Due to the German-Italian tax treaty, there is no double taxation. Same for Poland: this is part of EU contracts. By the way: The temporary time frame for Italy seemed to be 3 months, then I had to provide an Italian residence etc. and was registered in the Italian health care etc. system. Due to the German-Italian tax treaty, there is no double taxation. Same for Poland: this is part of EU contracts. Besides that, the German tax office nevertheless decided that my \"\"primary center of life\"\" stayed in Germany. So everything but the stuff related to the Italian contracts (which would probably have counted as normal work contracts in Germany, though they is no exact equivalent to those contract types) was handled by the German tax office. I think this is the relevant part for your question (or: argumentation with the German tax office) of temporary vs. permanent residence. Here are some points they asked: There is one point you absolutely need to know about the German social insurance law: Scheinselbständigkeit (pretended self-employment). Scheinselbständigkeit means contracts that claim to be service contracts with a self-employed provider who is doing the work in a way that is typical for employees. This law closes a loophole so employer + employee cannot avoid paying income tax and social insurance fees (pension contributions and unemployment insurance on both sides - health insurance would have to be paid in full by the self-employed instead of partially by the employer. Employer also avoids accident insurance, and several regulations from labour law are avoided as well). Legally, this is a form of black labour which means that the employer commits a criminal offense and is liable basically for all those fees. There is a list of criteria that count towards Scheinselbständigkeit. Particularly relevant for you could be\"",
"title": ""
},
{
"docid": "106ebc74dbde7657d49f9512ee46cacc",
"text": "THIS. That's why I'm fortunate enough to work a remote job where I live 3 hours north of NYC and have traveled 30 years back in time when it comes to prices of homes. I feel like even with shit credit, the hope of a dream home is much more attainable now that the cost/income ratio is where it should be.",
"title": ""
}
] |
fiqa
|
01fdf9fbdb210fa4af831df9f0c5aa22
|
Buying a home with down payment from family as a “loan”
|
[
{
"docid": "76b0bc30e0178a8627847743ff0ae369",
"text": "\"Say you're buying a 400K house. Your relative finances 120K (30%). Say I'm optimistic, but the real-estate market recovers, and your house is worth 600K in 5-6 years (can happen, with the inflation and all). The gain is 200K. Your relative gets 100K. You repay him 220K on 120K loan for 5 years. Roughly, 16% APR. Quite an expensive loan. I'm of course optimistic, it seems to me that so is your relative. The question is: if the house loses value in that term, does your relative take 50% of the losses? Make calculations based on several expected returns (optimistic, \"\"realistic\"\", loss case, etc), and for each calculate how much in fact will that loan cost. It will help you to decide if you want it. Otherwise your relationships with your relative might go very bad in a few years. BTW: Suggestion: it's a bad idea to mix business and friend/family you don't want to lose.\"",
"title": ""
},
{
"docid": "839709aa6287a3c0bdadf5e399de228d",
"text": "I would recommend against loans from family members. But if you decide to go down that path take care of the basics: This is a business decision so treat it like one. I would add that the situation you describe sounds extremely generous to your family member. I'd look at standard loan agreements (ie. in the marketplace) and model your situation more on them - if you do this, even with you paying a premium, you'd never come up with something as generous as what you have described.",
"title": ""
},
{
"docid": "97346439b9bda6cb87eaf6f87a228137",
"text": "Keep in mind that lenders will consider the terms of any loans you have when determining your ability to pay back the mortgage. They'll want to see paperwork, or if you claim it is a gift they will require a letter to that effect from your relative. Obviously, this could effect your ability to qualify for a loan.",
"title": ""
},
{
"docid": "0d2d02163258915703d7cc13ec404b8d",
"text": "In effect, you are paying for 70% of the house but he gets half the gain. On the flip side, you're living there, so that probably makes up this difference. It will be toughest if the house jumps in value, to the point you might be forced to sell. You might want to think about that a bit.",
"title": ""
},
{
"docid": "dd865e96fd492e3189f843200cf4f59a",
"text": "Lenders pay attention to where your down payment money comes from. If they see a large transfer of money into your bank account within about a year before your purchase, this WILL cause an issue for you. Down payments are not just there to make the principal smaller; they are primarily used as an underwriting data-point to assess your quality as a borrower. If you take the money as loan, it will count against your credit worthiness. If you take the money as a gift, it will raise some other red flags. All of this is done for a reason: if you can't get a down payment, you are a higher credit risk (poor discipline, lack of consistent income), even if you can (currently) pay the monthly cost of a mortgage. (PS - The cost of home ownership is much higher than the monthly mortgage payment.) Will all this mean you WON'T get a loan? Of course not. You can almost always get SOME loan. But it will likely be at a higher rate than you otherwise would qualify for if you just waited a little bit and saved money for a down payment. (Another option: cheaper house.) EDIT: The below comments provide examples where gifts were/are NOT a problem. My experience from buying a house just a few years ago (and my several friends who bought house in the same period, some with family gifts and some without) is that it IS an issue. Your best bet is to TALK, IN PERSON with an actual mortgage broker in your area who can go through the options with you, and the downsides to various approaches.",
"title": ""
},
{
"docid": "17b2928bee6da11bfcbf89b118b27938",
"text": "I'll compare it to a situation that is different, but will involve the same cash flow. Imagine the buyer agrees that you buy only 70% of the house right now, and the remaining 30% in 7 years time. It would be obviously fair to pay 70% of today's value today, pay 30% of a reasonable rent for 7 years (because 30% of the house isn't owned by you), then pay 30% of the value that the house has in 7 years time. 30% of the value in 7 years is the same as 30% of the value today, plus 30% of whatever the house gained in value. Instead you pay 70% of today's value, you pay no rent for the 30% that you don't own, then in 7 years time you pay 30% of today's value, plus 50% of whatever the house gained in value. So you are basically exchanging 30% of seven years rent, plus interest, for 20% of the gain in value over 7 years. Which might be zero. Or might be very little. Or a lot, in which case you are still better off. Obviously you need to set up a bullet proof contract. A lawyer will also tell you what to put into the contract in case the house burns down and can't be rebuilt, or you add an extension to the home which increases the value. And keep in mind that this is a good deal if the house doesn't increase in value, but if the house increases in value a lot, you benefit anyway. A paradoxical situation, where the worse the deal turns out to be after 7 years, the better the result for you. In addition, the relative carries the risk of non-payment, which the bank obviously is not willing to do.",
"title": ""
}
] |
[
{
"docid": "8226861e999d5309617e09affbc81fb2",
"text": "\"It's a little unusual, but I don't think the financial terms are completely unreasonable on their face. What you describe is similar to an interest-only loan, where you make payments that only cover the interest due each month, and the entire principal is due as a single \"\"balloon payment\"\" on a specified date (in this case, the date on which the condo is sold). Your monthly payment of $500 on a principal of $115K is equivalent to an annual interest rate of 5.22%, which at least is not completely usurious. With a traditional mortgage you might pay a rate as low as 3%, if you had sufficient income and excellent credit - but I don't know, from what you've said, whether that's the case. Did you make the current arrangement because you were unable to get a loan from a bank? The main difference here is that instead of the balloon payment being a fixed $115K, it's \"\"75% of the gross proceeds of the sale\"\". If the condo eventually sells for $155K, that would be $116,250, so that's slightly advantageous to them (assuming that \"\"gross proceeds\"\" means \"\"before deducting commissions for either the buyers' or sellers' realtors or any other costs of the sale\"\"), and thus slightly disadvantageous to you. If the condo appreciates in value, that's more of a win for them and more of a relative loss for you. But it's also possible that the value of the condo goes down, in which case this arrangement is better for you than a fixed balloon payment. So this deal does prevent you from getting a larger share of any gains in the value of the property, but it also helps insulate you from any losses. That's important to keep in mind. There's also the issue of needing their consent to sell. That's potentially problematic - usually in a joint ownership scheme, either owner has the right to demand to be bought out or to force a sale. I guess it depends on whether you think your parents would be likely to consent under reasonable circumstances, or to insist on holding the property against your best interests. It's true that you aren't building equity with this arrangement, and if you thought you were, you are mistaken or misled. But let's compare it with other options. If you would qualify for a traditional 30-year fixed mortgage at 3%, your monthly payment would be slightly lower ($484), and you would be building some equity because your payments would reduce the principal as well as paying the interest. But a 30-year loan builds equity very slowly at first - after 7 years you'd have only about $20,000 in principal paid down. If we assume that 5.2% represents the interest rate you'd otherwise pay based on your creditworthiness, then your monthly payment would be $631. So compared to that, you have an extra $130 per month that you can save or invest in whatever you want - you're not forced to invest it in your house. Note that in either case you'd still be paying the condo fees, property taxes, insurance, and maintenance yourself. So we might as well eliminate those from consideration. It might be a good idea to find out what other options you would have - perhaps try to get an interest rate quote on a traditional mortgage from a bank, based on your income and credit history. Then you can decide what to do, taking into account: your financial situation; how much of a monthly payment could you afford? your relationship with your parents; are they likely to be reasonable about renegotiating? Do they in general tend to respect your wishes? Would it harm your relationship if you tried to get out of the deal, and how important is that to you? To what extent do you actually want to pay for equity in this property? Do you really believe it's a good investment, and have evidence to support that? Your options include: Try to renegotiate the terms of the loan from your parents Try to \"\"refinance\"\" the loan, by getting a loan from a bank and paying off some agreed-upon amount of principal to your parents Try to force the sale of the condo and move to another house, financing it some other way Consult a lawyer as to whether your agreement with your parents is legally enforceable. For instance, do they have a lien on the property?\"",
"title": ""
},
{
"docid": "c8ced5ef0976741c68a65d54e9169b35",
"text": "Second mortgages were also a popular way for home buyers without a down payment to borrow 100% of the money, but avoid certain extra fees if they borrowed all the money from a single lender. For example, to borrow $100,000 on a house would incur something called PMI (private mortgage insurance). So to borrow $100,000 to buy my house, my payment might be $800/month, but I would have an additional $100/month of PMI to pay. (These numbers are totally made up and not based in math in any way) So instead of that, borrows might get a first mortgage for $80,000 so they don't have to pay the PMI and get a second mortgage for the difference. This can be beneficial if the second mortgage payment is less than the PMI for borrowing 100%. As far as I know they aren't as easy to get these days, like any loan you need to be qualified and I think 100% financing is probably harder to come by. The negative connotation is no worse than any other loan. I am personally against borrowing money, but if you had big medical expenses, major home repairs or some other emergency I could see it justified. Probably not for a big vacation or for new car though.",
"title": ""
},
{
"docid": "0a8334685586359d464d1eee78129ba8",
"text": "\"Assuming United States; rules may be wildly different elsewhere... The \"\"family loan\"\" trick essentially lets you amortize a gift over multiple years of gift allowance and hopefully dodge gift tax, at the cost of having to pay income tax on the interest you must charge on the loan. The main advantage is that it lets you transfer all the money up front, rather than in $17,000-a-year-per-person-per-person chunks. Let's take the normal case first. Any one person can give any one person up to a specified amount (currently $17k, I believe,) without incurring gift tax. Note that this is counted per person, not per household; you and your spouse could each give $17k per year to each of your son and his spouse under this rule, adding up to $68k per year total. The family loan dodge consists of making them a loan of the money at the mandated minimum interest rate to make it a legal loan (something like 0.3% APR last time I looked), setting the repayment schedule so their payments each year including interest come out to less than you can gift them with tax-free, and then making that gift by paying (yourself) those payments on their behalf. You do need to pay income tax on the portion of those payments that represents interest income, but at that low rate this is a minor cost for the convenience. You'd also want to set up your will to cover what happens if you die with them still owing money on the loan. And this, I believe, is where you will really need expert advice if you go this route, to minimize the government's cut at that time. There may be better answers. If you are talking about this much money, you owe it to yourself to purchase expert advice from someone who has training and experience n this area, rather than taking free advice from the Internet that is likely to cost you much more in the long run. This is a situation where you can't afford not to hire a pro. (For example, I have no idea how trusts might or might not fit your needs.)\"",
"title": ""
},
{
"docid": "37ed914eade031022145bd219bbcf1e4",
"text": "I think you need to go to a local bank and ask. The key thing is paper trail. For any mortgage I've gotten on a new purchase, the bank needs to see where the down payment came from and how it got to the seller. In this case, it can go either way. If the value is truly 100% to the 80% you are looking to finance, and the paper trail is legit, this may work just fine. The issue others seem to have is that simply buying at a 20% discount is not a legit way to finance the 80%. Here, it appears to me that the 20% came from you in installments, via the rent.",
"title": ""
},
{
"docid": "f8d5c327ce6e719e6a82fda9724475de",
"text": "While I agree with the existing bulk of comments and answers that you can't tell the lender the $7k is a gift, I do think you might have luck finding a mortgage broker who can help you get a loan as a group. (You might consider as an LLC or other form of corporation if no one will take you otherwise.) That is, each of you will be an owner of the house and appear on the mortgage. IIRC, as long as the downpayment only comes from the collective group, and the income-to-debt ratio of the group as a whole is acceptable, and the strongest credit rating of the group is good, you should be able to find a loan. (You may need a formal ownership agreement to get this accepted by the lender.) That said, I don't know if your income will trump your brother's situation (presumably high debt ratio or lower than 100% multiplier on his income dues to its source), but it will certainly help. As to how to structure the deal for fairness, I think whatever the two of you agree to and put down in writing is fine. If you each think you're helping the other, than a 50/50 split on profits at the sale of the property seems reasonable to me. I'd recommend that you actually include in your write up a defined maximum period for ownership (e.g. 5yr, or 10yr, etc,) and explain how things will be resolved if one side doesn't want to sell at that point but the other side does. Just remember that whatever percentages you agree to as ownership won't effect the lender's view of payment requirements. The lender will consider each member of the group fully and independently responsible for the loan. That is, if something happens to your brother, or he just flakes out on you, you will be on the hook for 100% of the loan. And vice-versa. Your write up ought to document what happens if one of you flakes out on paying agreed upon amounts, but still expects there ownership share at the time of sale. That said, if you're trying to be mathematically fair about apportioning ownership, you could do something like the below to try and factor in the various issues into the money flow: The above has the benefit that you can start with a different ownership split (34/66, 25/75, etc.) if one of you wants to own more of the property.",
"title": ""
},
{
"docid": "049447e698bc3a74b9f5938b8d8f921e",
"text": "No. As long as you live in the house for 3 years, it's yours to keep. Financing has nothing to do with that.",
"title": ""
},
{
"docid": "16e013dd52ed1d3c03a5c5567b83da8c",
"text": "\"I'm guessing since I don't know the term, but it sounds like you're asking about the technique whereby a loan is used to gather multiple years' gift allowance into a single up-front transfer. For the subsequent N years, the giver pays the installments on the loan for the recipient, at a yearly amount small enough to avoid triggering Gift Tax. You still have to pay income tax on the interest received (even though you're giving them the money to pay you), and you must charge a certain minimum interest (or more accurately, if you charge less than that they tax you as if the loan was earning that minimum). Historically this was used by relatively wealthy folks, since the cost of lawyers and filing the paperwork and bookkeeping was high enough that most folks never found out this workaround existed, and few were moving enough money to make those costs worthwhile. But between the \"\"Great Recession\"\" and the internet, this has become much more widely known, and there are services which will draw up standard paperwork, have a lawyer sanity-check it for your local laws, file the official mortgage lien (not actually needed unless you want the recipient to also be able to write off the interest on their taxes), and provide a payments-processing service if you do expect part or all of the loan to be paid by the recipient. Or whatever subset of those services you need. I've done this. In my case it cost me a bit under $1000 to set up the paperwork so I could loan a friend a sizable chunk of cash and have it clearly on record as a loan, not a gift. The amount in question was large enough, and the interpersonal issues tricky enough, that this was a good deal for us. Obviously, run the numbers. Websearching \"\"family loan\"\" will find much more detail about how this works and what it can and can't do, along with services specializing in these transactions. NOTE: If you are actually selling something, such as your share of a house, this dance may or may not make sense. Again, run the numbers, and if in doubt get expert advice rather than trusting strangers on the web. (Go not to the Internet for legal advice, for it shall say both mu and ni.)\"",
"title": ""
},
{
"docid": "8c153ea4b906a889e5d80fc7a3b0859f",
"text": "Two years ago, I wrote an article titled Student Loans and Your First Mortgage in response to this exact question posed by a fellow blogger. The bottom line is that the loan payment doesn't lower your borrowing power as it fits in the slice between 28% (total housing cost) and 38% (total monthly debt burden) when applying for a loan. But, the $20K is 20% down on $100K worth of house. With median home prices in the US in the mid-high $100Ks, you're halfway there. In the end, it's not about finance, it's a question of how badly you want to buy a house. If I got along with the parents, I'd stay as long as I was welcome, and save every dollar I could. Save for retirement, save for as large a downpayment as you can, and after you buy the house, pay the student loan aggressively. I moved out the week after I graduated.",
"title": ""
},
{
"docid": "241f4865e904c4cb490fc953274884e1",
"text": "\"First off; I don't know of the nature of the interpersonal relationship between you and your roommate, and I don't really care, but I will say that your use of that term was a red flag to me, and it will be so to a bank; buying a home is a big deal that you normally do not undertake with just a \"\"friend\"\" or \"\"roommate\"\". \"\"Spouses\"\", \"\"business partners\"\", \"\"domestic partners\"\" etc are the types of people that go in together on a home purchase, not \"\"roommates\"\". Going \"\"halvsies\"\" on a house is not something that's easily contracted; you can't take out two primary mortgages for half the house's value each, because you can't split the house in half, so if one of you defaults that bank takes the house leaving both the other person and their bank in the lurch. Co-signing on one mortgage is possible but then you tie your credit histories together; if one of you can't make their half of the mortgage, both of you can be pursued for the full amount and both of you will see your credit tank. That's not as big a problem for two people joined in some other way (marriage/family ties) but for two \"\"friends\"\" there's just way too much risk involved. Second, I don't know what it's like in your market, but when I was buying my first house I learned very quickly that extended haggling is not really tolerated in the housing market. You're not bidding on some trade good the guy bought wholesale for fifty cents and is charging you $10 for; the seller MIGHT be breaking even on this thing. An offer that comes in low is more likely to be rejected outright as frivolous than to be countered. It's a fine line; if you offer a few hundred less than list the seller will think you're nitpicking and stay firm, while if you offer significantly less, the seller may be unable to accept that price because it means he no longer has the cash to close on his new home. REOs and bank-owned properties are often sold at a concrete asking price; the bank will not even respond to anything less, and usually will not even agree to eat closing costs. Even if it's for sale by owner, the owner may be in trouble on their own mortgage, and if they agree to a short sale and the bank gets wind (it's trivial to match a list of distressed mortgaged properties with the MLS listings), the bank can swoop in, foreclose the mortgage, take the property and kill the deal (they're the primary lienholder; you don't \"\"own\"\" your house until it's paid for), and then everybody loses. Third, housing prices in this economy, depending on market, are pretty depressed and have been for years; if you're selling right now, you are almost certainly losing thousands of dollars in cash and/or equity. Despite that, sellers, in listing their home, must offer an attractive price for the market, and so they are in the unenviable position of pricing based on what they can afford to lose. That again often means that even a seller who isn't a bank and isn't in mortgage trouble may still be losing thousands on the deal and is firm on the asking price to staunch the bleeding. Your agent can see the signs of a seller backed against a wall, and again in order for your offer to be considered in such a situation it has to be damn close to list. As far as your agent trying to talk you into offering the asking price, there's honestly not much in it for him to tell you to bid higher vs lower. A $10,000 change in price (which can easily make or break a deal) is only worth $300 to him either way. There is, on the other hand, a huge incentive for him to close the deal at any price that's in the ballpark: whether it's $365k or $375k, he's taking home around $11k in commission, so he's going to recommend an offer that will be seriously considered (from the previous points, that's going to be the asking price right now). The agent's exact motivations for advising you to offer list depend on the exact circumstances, typically centering around the time the house has been on the market and the offer history, which he has access to via his fellow agents and the MLS. The house may have just had a price drop that brings it below comparables, meaning the asking price is a great deal and will attract other offers, meaning you need to move fast. The house may have been offered on at a lower price which the seller is considering (not accepted not rejected), meaning an offer at list price will get you the house, again if you move fast. Or, the house may have been on the market for a while without a price drop, meaning the seller can go no lower but is desperate, again meaning an offer at list will get you the house. Here's a tip: virtually all offers include a \"\"buyer's option\"\". For a negotiated price (typically very small, like $100), from the moment the offer is accepted until a particular time thereafter (one week, two weeks, etc) you can say no at any time, for any reason. During this time period, you get a home inspection, and have a guy you trust look at the bones of the house, check the basic systems, and look for things that are wrong that will be expensive to fix. Never make an offer without this option written in. If your agent says to forego the option, fire him. If the seller wants you to strike the option clause, refuse, and that should be a HUGE red flag that you should rescind the offer entirely; the seller is likely trying to get rid of a house with serious issues and doesn't want a competent inspector telling you to lace up your running shoes. Another tip: depending on the pricepoint, the seller may be expecting to pay closing costs. Those are traditionally the buyer's responsibility along with the buyer's agent commission, but in the current economy, in the pricepoint for your market that attracts \"\"first-time homebuyers\"\", sellers are virtually expected to pay both of those buyer costs, because they're attracting buyers who can just barely scrape the down payment together. $375k in my home region (DFW) is a bit high to expect such a concession for that reason (usually those types of offers come in for homes at around the $100-$150k range here), but in the overall market conditions, you have a good chance of getting the seller to accept that concession if you pay list. But, that is usually an offer made up front, not a weapon kept in reserve, so I would have expected your agent to recommend that combined offer up front; list price and seller pays closing. If you offer at list you don't expect a counter, so you wouldn't keep closing costs as a card to play in that situation.\"",
"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": "f95199bb23a6a4f41cb7bd60ecc340f8",
"text": "It is possible for him to get a loan against the house as long as the deeding all takes place at the same time as the loan is closing. Basically you and your brother will both have paperwork to sign, and the title company will not send out checks until the loan funds from the mortgage company. For that deeding to take place, the estate will generally have to be fully settled. That can take time, but you might wish to retain a lawyer to be certain your interests are completely protected. Many people feel like getting legal representation will strain family relationships, but I find the opposite to be true. They often grease the wheels and get the process finished quickly and fairly which ultimately reduces such strain. I would view it as a good sign if he is paying off large debts, because that means he will be in a better position to take a mortgage to pay you your share, but that assumes he is acting in good faith.",
"title": ""
},
{
"docid": "252fb12b2398e3e815babe758c4075bf",
"text": "\"It would have to be made as a \"\"gift\"\", and then the return would be a \"\"gift\"\" back to you, because you're not allowed to use a loan for a down payment. This is not to evade taxes. This is to evade a credit check. The problem is that banks don't like people to have too much debt. The bank could void the loan and go after your friends for damages under certain circumstances, as this is a fraud on the bank. Perhaps you might be guilty of conspiracy to commit fraud or similar. I'm willing to assume for the sake of argument that there is zero chance of your friend not paying you back intentionally. But even so, there are still potential problems. What if your friends end up without the money to pay? Worse, what if something happens to them? This is an off-books transaction. You couldn't make a claim against the estate, as there can't be a paper trail. You'd be left out the money in those circumstances. You'd both be safer if your friends saved up for the next opportunity rather than trying to grab this one. An alternative would be to buy a share of their current rental house. That would give them the necessary money and would give you paper showing your money. It's not a gift, it's a purchase. You'd have to pay capital gains tax on the 15% profit that they're promising you. But you'd both be above board and honest.\"",
"title": ""
},
{
"docid": "c4142872216d91d5acbe45068cf97c5c",
"text": "\"We’re buying the home right over $200,000 so that means he will only need to put down (as a ‘gift’) roughly $7000. I'm with the others, don't call this a gift unless it is a gift. I'd have him check with the bank that previously refused him a mortgage if putting both of you on a mortgage would allay their concerns. Your cash flow would be paying the mortgage payment and if you failed to do so, then they could fall back on his. That may make more sense to them, even if they would deny each of you a loan on your own. This works for them because either of you is responsible for the whole loan. It works for him because he was already willing to be responsible for the whole loan. And your alternative plan makes you responsible for the whole loan, so this is just as good for you. At what percentage would you suggest splitting ownership and future expenses? Typically a cash/financing partnership would be 50/50, but since it’s only a 3.5% down-payment instead of 20% is that still fair? Surprisingly enough, a 3.5% down-payment that accumulates is about half the equity of a 20% down-payment. So your suggestion of a 25%-75% split makes sense if 20% would give a 50%-50% split. I expected it to be considerably lower. The way that I calculated it was to have his share increase by his equity share of the \"\"rent\"\" which I set to the principal plus interest payment for a thirty year loan. With a 20% down-payment, this would give him 84% equity. With 3.5%, about 40% equity. I'm not sure why 84% equity should be the equivalent of a 50% share, but it may be a side effect of other expenses. Perhaps taking property taxes out would reduce the equity share. Note that if you increase the down-payment to 20%, your mortgage payment will drop substantially. The difference in interest between 3.5% and 20% equity is a couple hundred dollars. Also, you'll be able to eliminate any PMI payment at 20%. It could be argued that if he pays a third of the monthly mortgage payment, that that would give him the same 50% equity stake on a 3.5% down-payment as he would get with a 20% down-payment. The problem there is that then he is effectively subsidizing your monthly payment. If he were to stop doing that for some reason, you'd have what is effectively a 50% increase in your rent. It would be safer for you to handle the monthly payment while he handles the down-payment. If you couldn't pay the mortgage, it sounds like he is in a position to buy out your equity, rent the property, and take over the mortgage payment. If he stopped being able to pay his third of the mortgage, it's not evident that you'd be able to pick up the slack from him much less buy him out. And it's unlikely that you'd find someone else willing to replace him under those terms. But your brother could construct things such that in the face of tragedy, you'd inherit his equity in the house. If you're making the entire mortgage payment, that's a stable situation. He's not at risk because he could take over the mortgage if necessary. You're not at risk because you inherit his equity share and can afford the monthly payment. So even in the face of tragedy, things can go on. And that's important, as otherwise you could lose your equity in the house.\"",
"title": ""
},
{
"docid": "c17aff7f263c74b9a7f8eb3c8981ca68",
"text": "Owing money to family members can create serious problems. Taking out a purchase-money mortgage to pay your sister for her share is the best way to avoid future friction and, possibly, outright alienation.",
"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": ""
}
] |
fiqa
|
a929f7e30f00cd31156a8a7a3fbc2ee1
|
How does refinancing work?
|
[
{
"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": "e2afadb028d4d5d23a772479a3d008b2",
"text": "\"You owe $20,000 to a loanshark, 1% per week interest. I'm happy to get 1% per month, and trust you to pay it back, so I lend you the $20,000. The first lender got his money, and now you are paying less interest as you pay the loan back. This is how a refi works, only the first bank won't try to break the legs of the second bank for moving into their business. This line \"\"reinvested the money into the mortgage to lower his monthly payments\"\" implies he also paid it down a bit, maybr the new mortgage is less principal than the one before.\"",
"title": ""
},
{
"docid": "8c6d605796936481b77a643b78bc2d2c",
"text": "Since there was no sale, where does the money actually come from? From the refinancing bank. It's a new loan. How does a bank profit from this, i.e. why would they willingly help someone lower their mortgage payments? Because they sell a new loan. Big banks usually sell the mortgage loans to the institutional investors and only service them. So by creating a new loan - they create another product they can sell. The one they previously sold already brought them profits, and they don't care about it. The investors won't get the interest they could have gotten had the loan been held the whole term, but they spread the investments so that each refi doesn't affect them significantly. Credit unions usually don't sell their mortgages, but they actually do have the interest to help you reduce your payments - you're their shareholder. In any case, the bank that doesn't sell the mortgages can continue making profits, because with the money released (the paid-off loan) they can service another borrower.",
"title": ""
}
] |
[
{
"docid": "2b799dd2dc698724265b86b3950714e8",
"text": "The Avant-Garde experts from mortgage refinancing Delaware will contrive one to one conversation between the mortgage planning expert and customer. Furthermore, dedicated educational workshops and conferences are also designed. Not only has that but, proficient do use their expert knowledge to arm the customers about the credit score.",
"title": ""
},
{
"docid": "846537821605424c23c1a405fb5d6476",
"text": "The reason is the same as with cell phones payment plans. As competition grows cell phone companies offer better payment plans for the same price or the same plans for lower price or both so that you stay with that cell operator. Banks also make better offers if the financial situation allows. Suppose several banks offer refinancing with better terms but prohibit refinancing loans from the same bank. Okay, you refinance from another bank and them maybe refinance the new loan again from the original bank - it's a new loan after the first refinance and prohibition no longer works. They just make you jump through more loops and it doesn't make sense neither for them nor for you",
"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": "9360d30fe1116cbfbd238ffdb702853f",
"text": "\"When you refinance, there is cost (guess: around $2000-$3000) to cover lawyers, paperwork, surveys, deed insurance, etc. etc. etc. Someone has to pay that cost, and in the end it will be you. Even if you get a \"\"no points no cost\"\" loan, the cost is going to be hidden in the interest rate. That's the way transactions with knowledgeable companies works: they do business because they benefit (profit) from it. The expectation is that what they need is different from what you need, so that each of you benefits. But, when it's a primarily cash transaction, you can't both end up with more money. So, unless value will be created somewhere else from the process (and don't include the +cash, because that ends up tacked onto the principle), this seems like paying for financial entertainment, and there are better ways to do that.\"",
"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": "580a99928ac197a0f28d77e7f3786d50",
"text": "That's why they're taking the deal. But it's not like they completely stole all that money. I don't have any stats, but I'd assume most of those people who got their loans are still in their homes. (Sorry, I could be way off. Please correct) But they still are bastards for not letting me refinance. Could have just been because they saw this penalty coming.",
"title": ""
},
{
"docid": "f225d65a2aee4618d33e468bb0ff6024",
"text": "The key to understanding a mortgage is to look at an amortization schedule. Put in 100k, 4.5% interest, 30 years, 360 monthly payments and look at the results. You should get roughly 507 monthly P&I payment. Amortization is only the loan portion, escrow for taxes and insurance and additional payments for PMI are extra. You'll get a list of all the payments to match the numbers you enter. These won't exactly match what you really get in a mortgage, but they're close enough to demonstrate the way amortization works, and to plan a budget. For those terms, with equal monthly payments, you'll start paying 74% interest from the first payment. Each payment thereafter, that percentage drops. The way this is all calculated is through the time value of money equations. https://en.wikipedia.org/wiki/Time_value_of_money. Read slowly, understand how the equations work, then look at the formula for Repeating Payment and Present Value. That is used to find the monthly payment. You can validate that the formula works by using their answer and making a spreadsheet that has these columns: Previous balance, payment, interest, new balance. Each line represents a month. Calculate interest as previous balance * APR/12. Calculate new balance as previous balance minus payment plus interest. Work through all this for a 1 year loan and you will understand a lot better.",
"title": ""
},
{
"docid": "6702878eced62b5b1a1c2ff83ce6aba8",
"text": "\"You seem to think that you are mostly paying interest in the first year because of the length of the loan period. This is skipping a step. You are mostly paying interest in the first year because your principle (the amount you owe) is highest in the first year. You do pay down some principle in that first year; this reduces the principle in the second year, which in turn reduces the interest owed. Your payments stay the same; so the amount you pay to principle goes up in that second year. This continues year after year, and eventually you owe almost no interest, but are making the same payments, so almost all of your payment goes to principle. It is a bit like \"\"compounded interest\"\", but it is \"\"compounded principle reduction\"\"; reducing your principle increases the rate you reduce it. As you didn't reduce your principle until the 16th year, this has zero impact on the interest you owed in the first 15 years. Now, for actual explicit numbers. You owe 100,000$ at 3% interest. You are paying your mortgage annually (keeps it simpler) and pay 5000$ per year. The first year you put 3000$ against interest and 2000$ against principle. By year 30, you put 145$ against interest and 4855$ against principle. because your principle was tiny, your interest was tiny.\"",
"title": ""
},
{
"docid": "7f398ad2294afdfaf8c2e0f39a65b251",
"text": "The underlying investment is usually somewhat independent of your mortgage, since it encompasses a bundle of mortgages, and not only yours. It works similarly to a fund. When, you pay off the old mortgage while re-financing, the fund receives the outstanding debt in from of cash, which can be used to buy new mortgages.",
"title": ""
},
{
"docid": "ef7053fffebc96b8ba633d6201f49f4d",
"text": "Before we were married my wife financed a car at a terrible rate. I think it was around 20%. When trying to refinance it the remaining loan was much larger than the value of the car, so no one was interested in refinancing. I was able to do a balance transfer to a credit card around 10%. This did take on a bit of risk, which almost came up when the car was totaled in an accident. Fortunately the remaining balance was now less than the value of the car, otherwise I would have been stuck with a credit card payment and no vehicle.",
"title": ""
},
{
"docid": "e4ad5de991424ab48e01a72ac5cbd3ac",
"text": "\"I'll assume you live in the US for the start of my answer - Do you maximize your retirement savings at work, at least getting your employer's match in full, if they do this. Do you have any other debt that's at a higher rate? Is your emergency account funded to your satisfaction? If you lost your job and tenant on the same day, how long before you were in trouble? The \"\"pay early\"\" question seems to hit an emotional nerve with most people. While I start with the above and then segue to \"\"would you be happy with a long term 5% return?\"\" there's one major point not to miss - money paid to either mortgage isn't liquid. The idea of owing out no money at all is great, but paying anything less than \"\"paid in full\"\" leaves you still owing that monthly payment. You can send $400K against your $500K mortgage, and still owe $3K per month until paid. And if you lose your job, you may not so easily refinance the remaining $100K to a lower payment so easily. If your goal is to continue with real estate, you don't prepay, you save cash for the next deal. Don't know if that was your intent at some point. Disclosure - my situation - Maxing out retirement accounts was my priority, then saving for college. Over the years, I had multiple refinances, each of which was a no-cost deal. The first refi saved with a lower rate. The second, was in early 2000s when back interest was so low I took a chunk of cash, paid principal down and went to a 20yr from the original 30. The kid starts college, and we target retirement in 6 years. I am paying the mortgage (now 2 years into a 10yr) to be done the month before the kid flies out. If I were younger, I'd be at the start of a new 30 yr at the recent 4.5% bottom. I think that a cost of near 3% after tax, and inflation soon to near/exceed 3% makes borrowing free, and I can invest conservatively in stocks that will have a dividend yield above this. Jane and I discussed the plan, and agree to retire mortgage free.\"",
"title": ""
},
{
"docid": "9d49fecd9c88546d2b3fd701e7d5f498",
"text": "\"Short answer: It depends :) It should generally be cheaper to get a loan directly from a bank, but often a mortgage broker can find you deals that you might not be able to get with a local bank. If you are refinancing, the cheapest option of all is usually to go through the bank that holds your existing mortgage. As for how mortgage brokers make their money, there are two ways. The first is on the \"\"front end\"\" through fees (origination fees especially) that go directly to them. The second and less obvious is on the \"\"back end\"\". This is where they make money by giving you a loan at a slightly higher rate than the lender was willing to give you. So, let's say they find a lender that will give you a loan at 5.25%. They offer that loan to you at 5.5% and pocket the extra .25% when the bank takes it over.\"",
"title": ""
},
{
"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": "c5d854e67e9fba192599f0a95bde7d7e",
"text": "It's so that your total mortgage payment stays the same every month. Obviously, the interest due each month decreases over time, as part of the principal is paid off each month, and so if the proportion of interest and principal repayments were to stay the same then your first payment would be very large and your last payment would be almost nothing.",
"title": ""
},
{
"docid": "a0c3d25d1fe8e8f3be0bb9695ace06f9",
"text": "Add a few more cells to your header that list the interest paid in in the next 3 to 4 years on your current mortgage. Use the cumulative interest function from your spreadsheet program. In the main body of your spreadsheet, add columns that summarize the total cost over 3-4 years for each loan. Add columns that list the interest cost, total cost of interest + refi cost, and the difference between that approach and the interest costs from your current loan. Add 6 columns total: a set for 3 years and a set for 4. Something like this: Repeat that 3 year block off to the right and plug in the 4 year numbers. You requested that we factor in a 3.5% penalty against the money that goes to the discount fee. You could do that by adding a column that calculates this, like Joe described in his answer. Add that 3.5% accrual into the total calculation above, which in turn will knock down the amount of savings for each refi loan. PS: How are you going to earn 3.5% over 48 months?",
"title": ""
}
] |
fiqa
|
442f011483b6f1714fe278385200eeb2
|
What ETF best tracks the price of gasoline, or else crude oil?
|
[
{
"docid": "8dac56cfe9dc085fb7bd971b8476dfcb",
"text": "There is no ETF that closely tracks oil or gasoline. This is because all existing oil and gasoline ETFs hold futures contracts or other derivatives. Storing the oil and gasoline would be prohibitively costly. Futures contracts are prone to contango and backwardation, sometimes resulting in large deviations from the price of the physical commodity. Contrast oil ETFs with metal ETFs, which track nicely. EDIT: See this article about contango. The UNG chart is particularly ugly.",
"title": ""
},
{
"docid": "682165f77ed71998649642d3aa00e5ba",
"text": "Do not buy any commodity tracking ETF without reading and understanding the prospectus. Some of these things get exposure to the underlying commodity via swaps or other hocus-pocus derivatives, so you're really buying credit obligations from some bank. Others are futures based, and you need to understand your potential upside AND downside. If you think that oil prices are going to continue to rise, you should look into sector funds, or better yet individual stocks that are in the oil or associated businesses. Alternatively, look at alternative investments like natural gas producers or pipeline operators.",
"title": ""
},
{
"docid": "b66b61ad11cadb30ca1d30f219290326",
"text": "UNG United States Natural Gas Fund Natural Gas USO United States Oil Fund West Texas Intermediate Crude Oil UGA United States Gasoline Fund Gasoline DBO PowerShares DB Oil Fund West Texas Intermediate Crude Oil UHN United States Heating Oil Fund Heating Oil I believe these are as close as you'd get. I'd avoid the double return flavors as they do not track well at all. Update - I understand James' issue. An unmanaged single commodity ETF (for which it's impractical to take delivery and store) is always going to lag the spot price rise over time. And therefore, the claims of the ETF issuer aside, these products will almost certain fail over time. As shown above, When my underlying asset rises 50%, and I see 24% return, I'm not happy. Gold doesn't have this effect as the ETF GLD just buys gold, you can't really do that with oil.",
"title": ""
}
] |
[
{
"docid": "37a1e67549592b0ff3bda0dcc97552a7",
"text": "I don't know answers that would be specific to Canada but one of the main ETF funds that tracks gold prices is GLD (SPDR Gold Trust) another is IAU (iShares Gold Trust). Also, there are several ETF's that combine different precious metals together and can be traded. You can find a fairly decent list here on the Stock Encylopedia site.",
"title": ""
},
{
"docid": "3546d674628d675d54ccf4a127512ef0",
"text": "Here is some good advice, read your UCO prospectus. It seems to hold 20% of it's value ($600MM out of $3B) via 13800 of the Apr 21st 2015 contracts. (expiring in 30 days) Those will be rolled very quickly into the May contracts at a significant loss of NAV. (based on current oil futures chains) Meaning if crude oil stays exactly the same price, you'd still lose 1% (5% spread loss * .20% the percentage of NAV based off futures contracts) on the roll each month. Their other $2.4Billion is held in swaptions or cash, unsure how to rate that exposure. All I know is those 13,800 contracts are in contango danger during roll week for the next few months (IMO). I wonder if there is a website that tracks inflows and outflows to see if they match up with before and after the roll periods. http://www.proshares.com/funds/uco_daily_holdings.html How Oil ETFs Work Many oil ETFs invest in oil futures contracts. An oil futures contract is a commitment to buy a given amount of crude oil at a given price on a particular date in the future. Since the purpose of oil ETFs is only to serve as an investment vehicle to track the price of oil, the creators of the fund have no interest in stockpiling actual oil. Therefore, oil ETFs such as USO periodically “roll over” their futures contracts by selling the contracts that are approaching expiration and buying contracts that expire farther into the future. The Contango Problem While this process of continually rolling over futures contracts may seem like a great way to track the price of crude oil, there’s a practical problem with the method: contango. The rollover method would work perfectly if oil funds could sell their expiring contracts for the exact same price that they pay for the futures contracts they buy each month. However, in reality, it’s often true that oil futures contracts get more expensive the farther their expiration date is in the future. That means that every time the oil ETFs roll over their contracts, they lose the difference in value between the contracts they sell and the contracts they buy. That’s why funds like USO, which invests only in WTI light, sweet crude oil futures contracts, don’t directly track the performance of the WTI crude oil spot price. http://www.etftrends.com/2015/01/positioning-for-an-oil-etf-rebound-watch-for-contango/ Due to these reasons, I'd deem UCO for swing trading, not for 'investing' (buy-and-hold). Maybe later I'll remember why one shouldn't buy and hold leveraged vehicles (leverage slippage/decay). Do you have an exit price in mind ? or are you buy and hold ?",
"title": ""
},
{
"docid": "4c03d7d3c2bfc374ae93d7b90d38fdd3",
"text": "most def. When I have an algorithmic trading strategy I want to spitball, or some question about how to exploit netback pricing inefficiency between West Texas Intermediate and Brent prices based on some sort of shipping rate change, I'd like to post here. When I want a new job, I'll go to r/financialcareers.",
"title": ""
},
{
"docid": "afdd5a936be2a9b0e538321fa88b1cd4",
"text": "There are multiple ETFs which inversely track the common indices, though many of these are leveraged. For example, SDS tracks approximately -200% of the S&P 500. (Note: due to how these are structured, they are only suitable for very short term investments) You can also consider using Put options for the various indices as well. For example, you could buy a Put for the SPY out a year or so to give you some fairly cheap insurance (assuming it's a small part of your portfolio). One other option is to invest against the market volatility. As the market makes sudden swings, the volatility goes up; this tends to be true more when it falls than when it rises. One way of invesing in market volatility is to trade options against the VIX.",
"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": "64ffe186c7354d96182c0cee97da4d0b",
"text": "\"As of right now it looks like you can't issue an ETF at least because the underlying \"\"commodity\"\" isn't regulated. (See Winkelvoss ETF). I suspect you would run into this problem with any 1940 act fund (mutual fund), but it's more a situation of \"\"not approved\"\" rather than illegal, so an MLP hedge fund structure would probably be fine. And some googling finds Iterative Instinct Management's Storj SPV.\"",
"title": ""
},
{
"docid": "61ae5201d687b57dd6c41eb223c5a1d5",
"text": "\"As others have alluded to but haven't said due to the lack of reputation points to spare, you can take advantage of oil prices by leveraging up and using as much credit and margin as the banks and brokerages (respectively) will lend you. People assume that the correct answer on this forum has to masquerade as conservative financial advice, and this is not advice nor conservative. Futures contracts are readily available, but they are expensive to obtain (like a minimum entry of $4,450). But if this expense is no such object to you then you can then obtain this contract which is actually worth 20x that and experience the price appreciation and depreciation of the whole contract. The concept is similar to a downpayment on a mortgage. You assume \"\"rock bottom\"\" oil prices, but fortunately for you, futures contracts will allow you to quickly change your bets from future price appreciation and allow you to speculate on future price depreciation. So although the union workers will be protesting full time after the drilling company lays them off, you will still be getting wealthier. Long Options. These are the best. The difference with options, amongst other speculation products, is that options require the least amount of capital risk for the greatest reward. With futures, or with trading shares of an ETF (especially on margin), you have to put up a lot of capital, and if the market does not go your desired direction, then will lose a lot. And on margin products you can lose more than you put in. Being long options does not come with these dilemmas. A long march 2015 call option on USO ETF can currently be bought for less than $200 of actual cash (ie. the trading quote will be less than $2.00, but this will cost you less than $200), and will be worth $1000 on a very modest rebound in prices. The most you can lose is the $200 for the contract. Compared to $4450 on the futures, or $100,000 (that you don't have) in the futures market if oil really moves against you, or compared to whatever large amount of cash needed to actually buy shares of an ETF needed to make any decent return. These are the most lucrative (and fun and exhilarating and ) ways to take advantage of rock bottom oil prices, as an individual.\"",
"title": ""
},
{
"docid": "66b7ccc105a31477357e8d060940712c",
"text": "This ETFchannel.com page shows which ETFs hold Wells Fargo and you can search other stocks the get the same information on that site. This the same information for Google This even tells you what percentage of an ETF is a particular stock. Be warned that this site is not entirely free. You will be limited to 6 pages in 6 hours unless you pay for a subscription. Additionally ETFdb.com offers a similar tool.",
"title": ""
},
{
"docid": "aa0ef326df4465ff87ce2aea2d17493a",
"text": "What is your time horizon? Over long horizons, you absolutely want to minimise the expense ratio – a seemingly puny 2% fee p.a. can cost you a third of your savings over 35 years. Over short horizons, the cost of trading in and trading out might matter more. A mutual fund might be front-loaded, i.e. charge a fixed initial percentage when you first purchase it. ETFs, traded daily on an exchange just like a stock, don't have that. What you'll pay there is the broker commission, and the bid-ask spread (and possibly any premium/discount the ETF has vis-a-vis the underlying asset value). Another thing to keep in mind is tracking error: how closely does the fond mirror the underlying index it attempts to track? More often than not it works against you. However, not sure there is a systematic difference between ETFs and funds there. Size and age of a fund can matter, indeed - I've had new and smallish ETFs that didn't take off close down, so I had to sell and re-allocate the money. Two more minor aspects: Synthetic ETFs and lending to short sellers. 1) Some ETFs are synthetic, that is, they don't buy all the underlying shares replicating the index, actually owning the shares. Instead, they put the money in the bank and enter a swap with a counter-party, typically an investment bank, that promises to pay them the equivalent return of holding that share portfolio. In this case, you have (implicit) credit exposure to that counter-party - if the index performs well, and they don't pay up, well, tough luck. The ETF was relying on that swap, never really held the shares comprising the index, and won't necessarily cough up the difference. 2) In a similar vein, some (non-synthetic) ETFs hold the shares, but then lend them out to short sellers, earning extra money. This will increase the profit of the ETF provider, and potentially decrease your expense ratio (if they pass some of the profit on, or charge lower fees). So, that's a good thing. In case of an operational screw up, or if the short seller can't fulfil their obligations to return the shares, there is a risk of a loss. These two considerations are not really a factor in normal times (except in improving ETF expense ratios), but during the 2009 meltdown they were floated as things to consider. Mutual funds and ETFs re-invest or pay out dividends. For a given mutual fund, you might be able to choose, while ETFs typically are of one type or the other. Not sure how tax treatment differs there, though, sorry (not something I have to deal with in my jurisdiction). As a rule of thumb though, as alex vieux says, for a popular index, ETFs will be cheaper over the long term. Very low cost mutual funds, such as Vanguard, might be competitive though.",
"title": ""
},
{
"docid": "07c5b21311bbfa1feacf92e1ced1248f",
"text": "While we're not supposed to make direct recommendations, and I am in no way advising anything, USO an ETF that buys light sweet crude oil futures with the intention of mirroring the price movements of oil.",
"title": ""
},
{
"docid": "89cc2b6694f315a40c76c1cee002a052",
"text": "\"The iShares Barclays Aggregate Bond - ticker AGG, is a ETF that may fit the bill for you. It's an intermediate term fund with annual expenses of .20%. It \"\"seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Barclays Capital U.S. Aggregate Bond Index\"\"\"",
"title": ""
},
{
"docid": "f7e2fad44b5aaa612308ce54e0a84d92",
"text": "Well, the largest, in terms of both volume and unfortunately, contact size is the options on the S&P futures index. It's based on one contract which is $250 times the current S&P index, or just over $300K current value. This does not make for too cheap an option cost, but it's definitely the largest as you requested. For the average Joe, or Ray, in this case, the most popular ETFs are SPY and DIA for the S&P and Dow Jones, respectively. These are reasonably sized so their options are within range of your goal. See the SPY options at Yahoo. Then flip over to the DIA options. (SPY reflects 1/10 the S&P so an option contract, on 100 SPY shares is effectively on 10 times the S&P index or 1/25 the futures option pricing.)",
"title": ""
},
{
"docid": "5c56f86c963da218d415cba0fa5b3cab",
"text": "That doesn't change anything. You're still judging an investment off a 5 year period which includes a massive event which destroyed oil stocks. My previous analogy still applies, if you held 2 portfolios, one with tech stocks and one without for the 5 year period that includes the tech crash in the early 2000s, of course the non tech one would outperform the tech one. XLE, an energy etf, dropped 30% at the end of that period. That has an outsized influence on your article there.",
"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": "ff7f871a450e24d96f85664029365357",
"text": "Investopedia has one and so does marketwatch I've always used marketwatch, and I have a few current competitions going on if you want me to send the link They recently remodeled the website so it works on mobile and not as well on desktop Don't know anything about the investopedia one though",
"title": ""
}
] |
fiqa
|
584f6b1f16d34971d8e43e60b1f776c4
|
Any extra fees charged by passive stock and bond ETFs on top of the standard fees?
|
[
{
"docid": "675a70aadcb10c31e3cc28eca8b61c0c",
"text": "Brokers will have transaction fees in addition to the find management fees, but they should be very transparent. Brokering is a very competitive business. Any broker that added hidden fees to their transactions would lose customers very quickly to other brokers than can offer the same services. Hedge funds are a very different animal, with less regulation, less transparency, and less competition. Their fees are tolerated because the leveraged returns are usually much higher. When times are bad, though, those fees might drive investors elsewhere.",
"title": ""
}
] |
[
{
"docid": "b7c8115416ff9f0bb1c0fe23627ab8ab",
"text": "The creation mechanism for ETF's ensures that the value of the underlying stocks do not diverge significantly from the Fund's value. Authorized participants have a strong incentive to arbitrage any pricing differences and create/redeem blocks of stock/etf until the prices are back inline. Contrary to what was stated in a previous answer, this mechanism lowers the cost of management of ETF's when compared to mutual funds that must access the market on a regular basis when any investors enter/exit the fund. The ETF only needs to create/redeem in a wholesale basis, this allows them to operate with management fees that are much lower than those of a mutual fund. Expenses Due to the passive nature of indexed strategies, the internal expenses of most ETFs are considerably lower than those of many mutual funds. Of the more than 900 available ETFs listed on Morningstar in 2010, those with the lowest expense ratios charged about .10%, while those with the highest expenses ran about 1.25%. By comparison, the lowest fund fees range from .01% to more than 10% per year for other funds. (For more on mutual fund feeds, read Stop Paying High Fees.)",
"title": ""
},
{
"docid": "5f4a5b3c153b0ee7c0d8c166d89883c0",
"text": "\"Back in the olden days, if you wanted to buy the S&P, you had to have a lot of money so you can buy the shares. Then somebody had the bright idea of making a fund that just buys the S&P, and then sells small pieces of it to investor without huge mountains of capital. Enter the ETFs. The guy running the ETF, of course, doesn't do it for free. He skims a little bit of money off the top. This is the \"\"fee\"\". The major S&P ETFs all have tiny fees, in the percents of a percent. If you're buying the index, you're probably looking at gains (or losses) to the tune of 5, 10, 20% - unless you're doing something really silly, you wouldn't even notice the fee. As often happens, when one guy starts doing something and making money, there will immediately be copycats. So now we have competing ETFs all providing the same service. You are technically a competitor as well, since you could compete with all these funds by just buying a basket of shares yourself, thereby running your own private fund for yourself. The reason this stuff even started was that people said, \"\"well why bother with mutual funds when they charge such huge fees and still don't beat the index anyway\"\", so the index ETFs are supposed to be a low cost alternative to mutual funds. Thus one thing ETFs compete on is fees: You can see how VOO has lower fees than SPY and IVV, in keeping with Vanguard's philosophy of minimal management (and management fees). Incidentally, if you buy the shares directly, you wouldn't charge yourself fees, but you would have to pay commissions on each stock and it would destroy you - another benefit of the ETFs. Moreover, these ETFs claim they track the index, but of course there is no real way to peg an asset to another. So they ensure tracking by keeping a carefully curated portfolio. Of course nobody is perfect, and there's tracking error. You can in theory compare the ETFs in this respect and buy the one with the least tracking error. However they all basically track very closely, again the error is fractions of the percent, if it is a legitimate concern in your books then you're not doing index investing right. The actual prices of each fund may vary, but the price hardly matters - the key metric is does it go up 20% when the index goes up 20%? And they all do. So what do you compare them on? Well, typically companies offer people perks to attract them to their own product. If you are a Fidelity customer, and you buy IVV, they will waive your commission if you hold it for a month. I believe Vanguard will also sell VOO for free. But for instance Fidelity will take commission from VOO trades and vice versa. So, this would be your main factor. Though, then again, you can just make an account on Robinhood and they're all commission free. A second factor is reliability of the operator. Frankly, I doubt any of these operators are at all untrustworthy, and you'd be buying your own broker's ETF anyway, and presumably you already went with the most trustworthy broker. Besides that, like I said, there's trivial matters like fees and tracking error, but you might as well just flip a coin. It doesn't really matter.\"",
"title": ""
},
{
"docid": "ed0ed68df5683cfbdc67e5ce8577bcd3",
"text": "Any ETF has expenses, including fees, and those are taken out of the assets of the fund as spelled out in the prospectus. Typically a fund has dividend income from its holdings, and it deducts the expenses from the that income, and only the net dividend is passed through to the ETF holder. In the case of QQQ, it certainly will have dividend income as it approximates a large stock index. The prospectus shows that it will adjust daily the reported Net Asset Value (NAV) to reflect accrued expenses, and the cash to pay them will come from the dividend cash. (If the dividend does not cover the expenses, the NAV will decline away from the modeled index.) Note that the NAV is not the ETF price found on the exchange, but is the underlying value. The price tends to track the NAV fairly closely, both because investors don't want to overpay for an ETF or get less than it is worth, and also because large institutions may buy or redeem a large block of shares (to profit) when the price is out of line. This will bring the price closer to that of the underlying asset (e.g. the NASDAQ 100 for QQQ) which is reflected by the NAV.",
"title": ""
},
{
"docid": "fd894d1730795d2534bc64b24977b373",
"text": "Sure, but as a retail client you'd be incurring transaction fees on entry and exit. Do you have the necessary tools to manage all the corporate actions, too? And index rebalances? ETF managers add value by taking away the monstrous web of clerical work associated with managing a portfolio of, at times, hundreds of different names. With this comes the value of institutional brokerage commissions, data licenses, etc. I think if you were to work out the actual brokerage cost, as well as the time you'd have to spend doing it yourself, you'd find that just buying the ETF is far cheaper. Also a bit of a rabbit hole, but how would you (with traditional retail client tools) even coordinate the simultaneous purchase of all 500 components of something like SPY? I would guess that, on average, you're going to have significantly worse slippage to the index than a typical ETF provider. Add that into your calculation too.",
"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": "bd8c0400df705973b49bbd16a1792a82",
"text": "Usually the ADR fee comes out of dividend payments and is modest. The ADR that I am most familiar with (Vodafone - VOD) pays dividends twice a year and deducts either $0.02 or $0.01 per share. IMO, the ADR fee is not really a material factor. ADRs do have some disadvantages though:",
"title": ""
},
{
"docid": "9a06204d0c55ccb723b886366940db61",
"text": "I don't think that you'll notice a difference in the NAV in a fund with fees that are low as the Vanguard Total Stock Market Fund. Their management fees are incorporated into the NAV, but keep in mind that the fund has a total of $144 billion in assets, with $66 billion in the investor class. The actual fees represent a tiny fraction of the NAV, and may only show up at all on the day they assess the fees. With Vanguard total stock market, you notice the fee difference in the distributions. In the example of Vanguard Total Stock Market, there are institutional-class shares (like VITPX with a minimum investment of $200M) with still lower costs -- as low as 0.0250% vs. 0.18% for the investor class. You will notice a different NAV and distributions for that fund, but there may be other reasons for the variation that I'm not familar with, as I'm not an institutional investor.",
"title": ""
},
{
"docid": "071df86f32434f8df1a73e00cec448e1",
"text": "It really depends on the hedge fund, my hedge fund gives back all rebates for routes that are public knowledge back to the client. Also the rebate is based on the route, not the stock, so it may not offset all expenses on each ETFs. Most of the BATS IEX and other routes have public websites where you can get the infos on what are the rebates for each.",
"title": ""
},
{
"docid": "a9dbe7f5f0b136736a208fcb32b3c391",
"text": "\"If you need less than $125k for the downpayment, I recommend you convert your mutual fund shares to their ETF counterparts tax-free: Can I convert conventional Vanguard mutual fund shares to Vanguard ETFs? Shareholders of Vanguard stock index funds that offer Vanguard ETFs may convert their conventional shares to Vanguard ETFs of the same fund. This conversion is generally tax-free, although some brokerage firms may be unable to convert fractional shares, which could result in a modest taxable gain. (Four of our bond ETFs—Total Bond Market, Short-Term Bond, Intermediate-Term Bond, and Long-Term Bond—do not allow the conversion of bond index fund shares to bond ETF shares of the same fund; the other eight Vanguard bond ETFs allow conversions.) There is no fee for Vanguard Brokerage clients to convert conventional shares to Vanguard ETFs of the same fund. Other brokerage providers may charge a fee for this service. For more information, contact your brokerage firm, or call 866-499-8473. Once you convert from conventional shares to Vanguard ETFs, you cannot convert back to conventional shares. Also, conventional shares held through a 401(k) account cannot be converted to Vanguard ETFs. https://personal.vanguard.com/us/content/Funds/FundsVIPERWhatAreVIPERSharesJSP.jsp Withdraw the money you need as a margin loan, buy the house, get a second mortgage of $125k, take the proceeds from the second mortgage and pay back the margin loan. Even if you have short term credit funds, it'd still be wiser to lever up the house completely as long as you're not overpaying or in a bubble area, considering your ample personal investments and the combined rate of return of the house and the funds exceeding the mortgage interest rate. Also, mortgage interest is tax deductible while margin interest isn't, pushing the net return even higher. $125k Generally, I recommend this figure to you because the biggest S&P collapse since the recession took off about 50% from the top. If you borrow $125k on margin, and the total value of the funds drop 50%, you shouldn't suffer margin calls. I assumed that you were more or less invested in the S&P on average (as most modern \"\"asset allocations\"\" basically recommend a back-door S&P as a mix of credit assets, managed futures, and small caps average the S&P). Second mortgage Yes, you will have two loans that you're paying interest on. You've traded having less invested in securities & a capital gains tax bill for more liabilities, interest payments, interest deductions, more invested in securities, a higher combined rate of return. If you have $500k set aside in securities and want $500k in real estate, this is more than safe for you as you will most likely have a combined rate of return of ~5% on $500k with interest on $500k at ~3.5%. If you're in small cap value, you'll probably be grossing ~15% on $500k. You definitely need to secure your labor income with supplementary insurance. Start a new question if you need a model for that. Secure real estate with securities A local bank would be more likely to do this than a major one, but if you secure the house with the investment account with special provisions like giving them copies of your monthly statements, etc, you might even get a lower rate on your mortgage considering how over-secured the loan would be. You might even be able to wrap it up without a down payment in one loan if it's still legal. Mortgage regulations have changed a lot since the housing crash.\"",
"title": ""
},
{
"docid": "43c7802718feab88d1054220636e2c0d",
"text": "Some other suggestions: Index-tracking mutual funds. These have the same exposure as ETFs, but may have different costs; for example, my investment manager (in the UK) charges a transaction fee on ETFs, but not funds, but caps platform fees on ETFs and not funds! Target date funds. If you are saving for a particular date (often retirement, but could also be buying a house, kids going to college, mid-life crisis motorbike purchase, a luxury cruise to see an eclipse, etc), these will automatically rebalance the investment from risk-tolerant (ie equities) to risk-averse (ie fixed income) as the date approaches. You can get reasonably low fees from Vanguard, and i imagine others. Income funds/ETFs, focusing on stocks which are expected to pay a good dividend. The idea is that a consistent dividend helps smooth out volatility in prices, giving you a more consistent return. Historically, that worked pretty well, but given fees and the current low yields, it might not be smart right now. That said Vanguard Equity Income costs 0.17%, and i think yields 2.73%, which isn't bad.",
"title": ""
},
{
"docid": "ca2dd5f266d4df81c365b3c9d5171ced",
"text": "Many brokers offer a selection of ETFs with no transaction costs. TD Ameritrade and Schwab both have good offerings. Going this route will maximize diversification while minimizing friction.",
"title": ""
},
{
"docid": "0614273d91d85965c4ba9eaaef0c1251",
"text": "Adding international bonds to an individual investor's portfolio is a controversial subject. On top of the standard risks of bonds you are adding country specific risk, currency risk and diversifying your individual company risk. In theory many of these risks should be rewarded but the data are noisy at best and adding risk like developed currency risk may not be rewarded at all. Also, most of the risk and diversification mentioned above are already added by international stocks. Depending on your home country adding international or emerging market stock etfs only add a few extra bps of fees while international bond etfs can add 30-100bps of fees over their domestic versions. This is a fairly high bar for adding this type of diversification. US bonds for foreign investors are a possible exception to the high fees though the government's bonds yield little. If your home currency (or currency union) does not have a deep bond market and/or bonds make up most of your portfolio it is probably worth diversifying a chunk of your bond exposure internationally. Otherwise, you can get most of the diversification much more cheaply by just using international stocks.",
"title": ""
},
{
"docid": "a561e2ff079274876b663253e7d2d371",
"text": "\"You're correct that the trading costs would be covered by the expense ratio. Just to be clear here, the expense ratio is static and doesn't change very often. It's set in such a way that the fund manager *expects* it to cover *all* of their operational costs. It's not some sort of slider that they move around with their costs. I'm not familiar with any ETF providers doing agreements which cover rent and equipment (hedge funds do - see \"\"hedge fund hotels\"\"). ETF providers do routinely enter into agreements with larger institutions that cover stuff like marketing. PowerShares, for a while, outsourced all of the management of the Qs to BNY and was responsible solely for marketing it themselves.\"",
"title": ""
},
{
"docid": "88bb43b977aa1af15ce7a4b0fd2dbc66",
"text": "Zero. Zero is reasonable. That's what Schwab offers with a low minimum to open the IRA. The fact is, you'll have expenses for the investments, whether a commission on stock purchase or ongoing expense of a fund or ETF. But, in my opinion, .25% is criminal. An S&P fund or ETF will have a sub-.10% expense. To spend .25% before any other fees are added is just wrong.",
"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
|
9ba201995c06b938f00d2259a636a71a
|
What's the fuss about Credit Score / History?
|
[
{
"docid": "ce31e7752ac62c2cb7cf8c6e0c236329",
"text": "Simply staying out of debt is not a good way of getting a good credit score. My aged aunt has never had a credit card, loan or mortgage, has always paid cash or cheque for everything, never failed to pay her utility bills on time. Her credit score is lousy because she has never had any debts to pay off so there is no credit history data for her. To the credit checking agencies she barely exists. To get a good score (UK) then get a few debts and pay them off on time.",
"title": ""
},
{
"docid": "9d8a11f7aa80ddcfd0cca4cc69810b00",
"text": "Since we seem to be discussing credit score and credit history interchangeably, if I can add credit report as the third part of the puzzle, I have another point. Your credit score and credit report can be effective tools to notice identity theft or fraud in your name. Keeping track of your report will allow you to not only protect your good name (which is apparently in dispute here) but also those businesses who ultimately end up paying for the stolen goods or services.",
"title": ""
},
{
"docid": "ec9e45be1741b1a7422e93d3c91707e0",
"text": "Your credit score, for better or worse, is increasingly about more than just getting loans. For example insurance companies can use it to some extent to determine your rates,.",
"title": ""
},
{
"docid": "c8de64f43f236a024a2c5165f1f2c0c5",
"text": "\"If human beings were Homo Economicus, i.e. textbook rational and self-interested economic-minded beings, as opposed to simply human, then yes, simple advice like \"\"just stay out of debt and your credit score will take care of itself\"\" could work. Your simplification would be very persuasive to such a being. However, people are not perfectly rational. We buy something we shouldn't have, we charge it on a credit card, we can't afford to pay it off at the end of the month. We lose our job. Our furnace breaks down, or our roof leaks, and we didn't anticipate the replacement cost. Some of this is our fault, some of it isn't – basically, shit happens .. and we get into debt... maybe even knowing all the while we shouldn't have. Our credit history and score takes a hit. Only then do we find out there are consequences! Our interest rates go up, our insurance companies raise premiums, our prospective new employers or landlords run credit checks and either deny us the job or the apartment. Telling a person who asks for help about their credit history/score that they shouldn't have taken on debt in the first place is like telling the farmer he should have kept the barn door shut so the horse wouldn't run out. While it is not \"\"bad\"\" advice, it's not the only kind of advice to offer when somebody finds themselves in such a situation. Adding advice about corrective actions is more helpful. The person probably already know that they shouldn't have overspent in the first place and got into debt. Yes, remind them of the value of being sensible about debt in the first place – it's good reinforcement – but add some helpful advice to the mix. e.g. \"\"So you're in debt. You shouldn't have lived beyond your means. But now that you are in this mess, here's what you can do to improve the situation.\"\"\"",
"title": ""
},
{
"docid": "7786fd5249c1fe12f386442f4b5858b3",
"text": "I justed rented a new house, and they ran my credit to see if I am a reliable person.",
"title": ""
},
{
"docid": "4f7d7b47297fe882b41f5d99354d601a",
"text": "\"Credit Unions have long advocated their services based on the fact that they consider your \"\"character.\"\" Unfortunately, they are then at a loss to explain how they determine the value of your character, other than to say that you're buddies & play pool together so they'll give you a loan. Your Credit History / Score is as accurate a representation of your character in business dealings as can be meaningfully quantified. It tracks your ability to effectively use and manage debt, and your propensity to pay it back responsibly or default on obligations. While it isn't perfect, it is certainly one of the best means currently available for determining someone's trustworthiness when it comes to financial matters.\"",
"title": ""
},
{
"docid": "7ae92e0852a50dba2e8e27b7ef038c67",
"text": "Use credit and pay your bills on time. That's really about it. If you do that, you don't need to think about credit score. It's really a big distraction that is dwelled on too much.",
"title": ""
}
] |
[
{
"docid": "e18a6ca79cdbe05daed214257d18350c",
"text": "\"This is somewhat unbelievable. I mean if you had a business of collecting debts, wouldn't you want to collect said debts? Rather than attempting to browbeat people with these delinquent debts into paying, you have someone volunteering to pay. Would you want to service that client? This would not happen in just about any other industry, but such is the lunacy of debt collecting. The big question is why do you need this cleared off your credit? If it is just for a credit score, it probably is not as important as your more recent entries. I would just wait it out, until 7 years has passed, and you can then write the reporting agencies to remove it from your credit. If you are attempting to buy a home or similarly large purpose and the mortgage company is insisting that you deal with this, then I would do the following: Write the company to address the issue. This has to be certified/return receipt requested. If they respond, pay it and insist that it be marked as paid in full on your credit. I would do this with a money order or cashiers check. Done. Dispute the charge with the credit reporting agencies, providing the documentation of no response. This should remove the item from your credit. Provide this documentation to the mortgage broker. This should remove any hangup they might have. Optional: Sue the company in small claims court. This will take a bit of time and money, but it should yield a profit. There was a post on here a few days ago about how to do this. Make part of any settlement to have your name cleared of the debt. It is counterproductive to fall into the trap of the pursuit of a perfect credit score. A person with a 750 often receives the same rate options as a person with 850. Also your relationship with a particular lender could trump your credit score. Currently I am \"\"enjoying\"\" the highest credit score of my life, over 820. Do you know how I did it? I got out of debt (including paying off the mortgage) and I have no intentions of ever going into debt for anything. So why does it matter? It is a bit ridiculous.\"",
"title": ""
},
{
"docid": "5640f5ba637dfb74c203c5419634b3b5",
"text": "A lot of companies now do credit checks before employment. They may decide that you are untrustworthy by having shoddy credit after a foreclosure/bankruptcy. The past 2 jobs I have they did a credit check. I wonder how companies use that information in the hiring process.",
"title": ""
},
{
"docid": "323b38fed41115e09a03ec6940c82db9",
"text": "While one credit provider (or credit reference agency) might score you in one way, others may score you differently including treating different things that contribute to your score differently. Different credit providers may also not see all of your credit score as potentially some data may not be available to all credit suppliers. Further too many searches may trigger systems that recognise behavior that is a sign of possible fraudulent activity (such as applying for many items of credit in a short space of time). Whether this would directly affect a score or trigger manual checks is also likely to vary. In situations like this a person could have applied for (say) a dozen credit cards, with all the credit checks being performed before there is any credit history for any of those dozen cards.",
"title": ""
},
{
"docid": "c0a73935bc6dc247beaced5699dbfe8b",
"text": "The SCHUFA explicitly says on their website that their scoring system is a secret. However, if your goal is to be credit-worthy for example to get financing for a house or a car or whatever, just pay any loans and your credit card back on time and you'll be fine. There is no need to build a credit history. I just got a mortgage on a new house without any real credit history. I have one credit card which I only use on vacations because some countries don't take my debit card, and I always put money on it before I use it, so I've technically never borrowed money from a bank at all. My banker looked at my SCHUFA with me and we saw that there was nothing in there except for the credit card, which has a 500€ limit and if I maxed it out, the monthly interest would be 6,80€ so he added that 6,80€ to my expenses calculation and that was it. If you're having trouble getting a loan and you don't know why, you can ask the SCHUFA for the data they have on you and you can correct any mistakes they might have made. Sometimes, especially when you have the same full name and birth date as somebody else, the SCHUFA does get things mixed up and you have to sort it out.",
"title": ""
},
{
"docid": "b50015184d26417081fa585c7503fdaf",
"text": "'Perfect' credit would be defined by your credit score. You may have a perfect repayment history, but that is only one factor in your credit score. Paying off a loan early doesn't by itself cause your score to go down. A lack of history, however, will result in a lower score. Lenders use the score because the general consensus is that what you have done in the past is the best indicator of what you will do in the future. In essence, your credit score tells a potential creditor what type of risk they are taking by lending you money. If you have very little history, the risk is not necessarily higher, but it is less predictable, so you have a lower score. These pages explain what makes up your credit score: http://www.myfico.com/credit-education/whats-in-your-credit-score/ https://www.cnbc.com/id/36737279 https://www.creditcards.com/credit-card-news/help/5-parts-components-fico-credit-score-6000.php",
"title": ""
},
{
"docid": "d924152e21fea9126d8690a43f98daaa",
"text": "\"I always hesitate to provide an answer to \"\"how does this affect my credit score?\"\" questions, because the credit agencies do not publish their formulas and the formulas do change over time. And many others have done more reverse engineering than I to figure out what factors do affect the scores. To some extent, there is no way to know other than to get your credit score and track it over time. (The credit report will tell you what the largest negative factors are.) However, let me make my prediction. You have credit, you aren't using a large percentage of it, and don't have defaults/late payments. So, yes, I think it would help your credit score and would build a history of credit. Since this is so unusual, this is just an educated guess.\"",
"title": ""
},
{
"docid": "c35c24cbc8809e65c7ff48d0b0d02406",
"text": "But cash talks. If you can save yourself a grand or two a month in mortgage overpayment, and have the cash for 1st and last month's rent plus deposit, a job or two, etc. That crap means more than a credit score. Plus don't rent from people you can't talk to about with what is going on in your life. My personal credit has always been shit (because the morality associated with debt is complete bullshit) since my 20s and I have never had a problem renting, because I let my landlords know I am human and that paying rent on time and in full is my top bill to pay. People are beginning to realize that FICO scores are pretty meaningless in this Lesser Depression. e: prepositional indifference",
"title": ""
},
{
"docid": "061be53a5ccdf30b62fe64def74bd484",
"text": "Typically one wants to see a credit score, just because you may have money in the bank and decent income does not mean your going to pay, there are plenty of people who have the money but simply refuse to cough it up. Credit is simply a relative way of seeing where one fits against another in a larger group, it shows that this person not only can pay, but does pay. While not having a credit history should make no difference, I can and hopefully easily posited above why it can be necessary to have one. Not all landlords will require a credit check, I was not required to give one, I did not have much credit to begin with, given that, I was forced to cough up a higher degree of a security deposit.",
"title": ""
},
{
"docid": "b00e4f18eac0639c755f68cc84ba5a55",
"text": "Paying on time is the most critical factor. Paying ahead on the loan will not help you from a credit score POV, but it will not hurt you either. In general, to maintain a good credit history, don't bother focusing on credit scores. Frankly, there is very little reason for you to even know what your score is. Just do the following: Lenders want to deal with people with long histories of paying debts back on time.",
"title": ""
},
{
"docid": "40bf7a851f7bd21f9d2e7a3d28c953dc",
"text": "\"Great explanation. I want to add 2 thing: 1) Credit rating agencies played there role in messing up the economy, by giving subprime (higher risk) mortgage backed securities AAA rating. 2) \"\"Other banks saw this happening and were forced to lower their requirements for issuing mortgages.\"\" Well not banks, but mortgage brokers lowered there requirement from issuing mortgages. They even started to issue NINA (no income verification, no assets verification) loans!\"",
"title": ""
},
{
"docid": "5170094437efc2bd510f0477e0209077",
"text": "\"Dan's link (he deleted his answer, BTW) is fine, it showed the components of the score FICO offers. Each input has data behind it, a bell curve of the behaviors and risk of the person behind it. For example, we've discussed utilization many time here. The ideal utilization is not 0%, but 1-19%. This does not mean paying interest, or carrying charges from month to month. Say I had just one card with a $10K limit. I'd want to be sure I never ran a bill above $2000. If I did, I'd see a slight drop in my score, and next month, it would go back to normal. In my case, I have enough available credit that going over 20% is rare, and if it happened, I'd pay the bill down before the bill was issued, just make a mid-cycle payment. FICO decided that those who go over 20% have a higher risk of default. And it gets higher as it goes up. Same with every aspect of the score's components. You are comparing US to non US use. In the US, it seems far more common to use our cards. In my family's case, we use very little cash, and run most of our spending through our cards. As far as The David is concerned, one should separate those who carry a balance from those who pay in full. The pay in full users are better off for their habits and responsible card use. In the US, it's not easy to rent a car or book a hotel with no card. Cards offer a cash rebate that adds up fast, and purchase protection from fraudulent vendors. They also offer extended warranty coverage. The David, and others, claim that \"\"studies prove those using cards spend 10-15% more than cash buyers.\"\" This is a proven fact from scientific studies. Only they don't exist. The best I've seen proves that college kids given a $20 bill spend more carefully than those given a $20 credit card. This doesn't extrapolate to a family budget, and never will. But that quote has a way of being repeated as fact. Yes, it's non-sense, thank you for reading and quoting my blog, I recognize the quote. The report also shows accounts that have gone to collection. An electric bill isn't a regularly reported item, it's assumed your lights are on. But if you stop paying the bill and they send your account to a collection agency, you'll see it hit your report. In response to the comment below - Journal of Experimental Psychology: Applied article titled Monopoly Money: The Effect of Payment Coupling and Form on Spending Behavior runs 13 pages but on the first page offers \"\"Do consumers spend differently when using one payment mode relative to another mode? For example, do consumers spend more when they receive $50 in the form of a gift card than in the form of cash? If indeed they do, then why? This research addresses these issues.\"\" $50? A $50 gift card is a nuisance, I try to use it up within hours of getting one. As I stated above, the behavior of a person with such a card doesn't scale to a many-thousand-per-month budget. Such articles, in my opinion, are nonsense, proving nothing. Unfortunately, this is a bit of a tangent to the original question, and if I put up a stand-alone \"\"Is it a fact that people spend more if using a card than cash?\"\" the question would result in being closed as one that's seeking opinions, not facts.\"",
"title": ""
},
{
"docid": "2a7deb3d6c5891fea008a3d261740e7d",
"text": "\"Credit scores are not such a big deal in Canada as they are in the US and even some European countries. One reason for this: the Social Insurance Number (SIN number) isn't used for so many purposes like the Social Security Number (SSN) in the US. The SIN number isn't even required to get credit (but with some exceptions it is needed to open an interest-bearing savings account, so that the interest income can be reported). You can refuse to provide the SIN number to most private companies. Canada also has one of the highest per-capita immigration rates of any large country, so new arrivals are expected, and services are geared up for them. Most of the banks offer special deals for \"\"New Canadians\"\". You should get a credit card (even if just a secured credit card) through them with one of these offers to start a credit file anyway, but there's no need to actually use it much. Auto-paying a utility bill through the card, and paying it off in full each month, is one way to keep it active. No need to ever pay any interest. Most major apartment rental firms will expect a good proportion of their renters to be new to Canada, so should have procedures in place to deal with it (such as a higher deposit). You should not give them your SIN for a credit check, even when you're more established. Same for utilities, they can just charge a higher deposit if they can't credit check you. For private landlords, everything is negotiable (but see the laws link at the end of this answer). You will later need a credit rating for a mortgage on a house (if not paying cash), so it's worth getting that one token credit card. Useful for car rental also. Here's a fairly complete summary of the laws on renting in Canada, which includes the maximum deposits that can be asked for, and notice periods.\"",
"title": ""
},
{
"docid": "f226011def59447bb6d6e392fde76909",
"text": "If your accounts have an overdraft facility, then every open account is classed as available credit which has a negative effect on your credit score. It's not normally a major concern but it is a factor. (nb. this definitely applies to the UK, maybe not where you are)",
"title": ""
},
{
"docid": "2ffbb4a564a62c8a471a983d723cac5d",
"text": "\"Had they made a billion dollars it still wouldn't be arbitrage. The definition of arbitrage is \"\"the simultaneous purchase and sale of similar commodities in different markets to take advantage of price discrepancy\"\". What they did was take advantage of a loophole where they took free money to buy more free money. I believe the American government calls that Quantitative Easing. Bazinga.\"",
"title": ""
},
{
"docid": "f773014a6042d754ea2057697b5efa0f",
"text": "So, couple of things. Firstly, every international ETF includes risk disclosure language in the prospectus covering both market disruption events as well as geopolitical risk, so the sponsor would be pretty well insulated from direct liability for anything. If the Russian market were truly shut down there are true-up mechanisms in place but in the scenario you're describing the market is still open, it's just only a few participants can trade in it. First thing to do is shut down creates- that is, allow no new money to come into the fund. This at least prevents your problem from getting bigger. Second you're going to switch all redemptions to in kind only. MV itself can't trade in the underlying so they're kind of jammed here. An ETF sponsor can't really refuse your redemption request (can delay, but only for a short time), but they can control the form in which they respond to it. What theoretically should happen here is an AP not subject to sanctions will step in and handle redemptions. Issue is, they'll probably charge for this so you should expect the fund to start trading at a discount to NAV (you, as an investor, sell to them cheaply, they submit a redemption request, then sell the stocks locally). Someone else has pointed that market makers will start stat arbing the fund using correlated/substitute instruments, which totally will help keep things in line, but my guess is that you'd still see the name trading away from NAV regardless. Driver of this will be the amount of money desperate to get out - if investors are content to wait the sanctions out who knows.",
"title": ""
}
] |
fiqa
|
4d8af30f381cf7f076c0ff1a16b6990c
|
Can I use FOREX markets to exchange cash?
|
[
{
"docid": "4f03a5a32f7df5a49a93eb16e4e7bd82",
"text": "Because the standard contract is for 125,000 euros. http://www.cmegroup.com/trading/fx/g10/euro-fx_contractSpecs_futures.html You don't want to use Microsoft as an analogy. You want to use non financial commodities. Most are settled in cash, no delivery. But in the early 80's, the Hunt brothers caused a spectacular short squeeze by taking delivery sending the spot price to $50. And some businesses naturally do this, buying metal, grain, etc. no reason you can't actually get the current price of $US/Euro if you need that much.",
"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": "2bd492a29d94dd3739c66c7cf4cf0976",
"text": "\"With Forex trading - physical currency is not involved. You're playing with the live exchange rates, and it is not designed for purchasing/selling physical currency. Most Forex trading is based on leveraging, thus you're not only buying money that you're not going to physically receive - you're also paying with money that you do not physically have. The \"\"investment\"\" is in fact a speculation, and is akin to gambling, which, if I remember correctly, is strictly forbidden under the Islam rules. That said, the positions you have - are yours, and technically you can demand the physical currency to be delivered to you. No broker will allow online trading on these conditions, though, similarly to the stocks - almost no broker allows using physical certificates for stocks trading anymore.\"",
"title": ""
},
{
"docid": "3e3ffaf0a9e4b4df9c8dc75f87d57b1b",
"text": "You can do this via many online FOREX brokers. All you need to do is set up and fund an account with them and then trade via their online platform. Some examples of brokers that do this are:",
"title": ""
},
{
"docid": "8f3e70ed5e0c4430e5d7b145efd7b51c",
"text": "The vast majority of retail Forex brokers are market makers, rather than ECNs. With that said, the one that fits your description mostly closely is Interactive Brokers, is US-based, and well-respected. They have a good amount of exoitcs available. Many ECNs don't carry these because of the mere fact that they make money on transactions, versus market makers who make money on transactions and even more on your losses. So, if the business model is to make money only on transactions, and they are as rarely traded as exotics are, there's no money to be made.",
"title": ""
},
{
"docid": "ddc38e15fc5715dc19993ad0cc132abc",
"text": "This would depend on what transfer methods your Forex broker allows. Most will allow you to have a check or wire transfer sent...best thing would be to call/email your broker and ask how to get the money into your account. Keep in mind, many brokers will force you to withdraw using the same funding method you used to deposit, up to the amount of the deposit. For example, if I fund my Forex account with $500 on a credit card and make $500 profit, I now have $1,000 sitting in my Forex account. The broker will force me to withdraw $500 as a credit to my credit card before allowing me to use another withdrawal method. This is an anti-money laundering precaution.",
"title": ""
},
{
"docid": "212b89c0dfad33c644815e8141a0949d",
"text": "With your experience, I think you'd agree that trading over a standardized, regulated exchange is much more practical with the amount of capital you plan to trade with. That said, I'd highly advise you to consider FX futures at CME, cause spot forex at the bucket shops will give you a ton of avoidable operational risks.",
"title": ""
},
{
"docid": "a2835b6174f6b3e73ae2a2cdda2658eb",
"text": "Quite a few stock broker in India offer to trade in US markets via tie-up brokers in US. As an Indian citizen, there are limits as to how much FX you can buy, generally very large, should be an issue. The profits will be taxed in US as well as India [you can claim relief under DTAA]",
"title": ""
},
{
"docid": "ef274fde8ff9993d7e6a2b343d34d339",
"text": "\"You can find lots of answers to this question by googling. I found at least five pages about this in 30 seconds. Most of these pages seem to say that if you must convert cash, converting it in the destination country is probably better, because you are essentially buying a product (in this case, dollars), and it will cheaper where the supply is greater. There are more dollars in the USA than there are in Portugal, so you may be able to get them cheaper there. (Some of those pages mention caveats if you're trying to exchange some little-known currency, which people might not accept, but this isn't an issue if you're converting euros.) Some of those pages specifically recommend against airport currency exchanges; since they have a \"\"captive audience\"\" of people who want to convert money right away, they face less competition and may offer worse rates. Of course, the downside of doing the exchange in the USA is that you'll be less familiar with where to do it. I did find some people saying that, for this reason, it's better to do it in your own country where you can shop around at leisure to find the best rate. That said, if you take your time shopping around, shifts in the underlying exchange rate in the interim could erase any savings you find. It's worth noting, though, that the main message from all these pages is the same: don't exchange cash at all if you can possibly avoid it. Use a credit card or ATM card to do the exchange. The exchange rate is usually better, and you also avoid the risks associated with carrying cash.\"",
"title": ""
},
{
"docid": "ac121912dc1c747d695b32eb58af4f23",
"text": "\"The way I am trading this is: I am long the USD / EUR in cash. I also hold USD / EUR futures, which are traded on the Globex exchange. I am long US equities which have a low exposure to Europe and China (as I expect China to growth significantly slower if the European weakens). I would not short US equities because Europe-based investors (like me) are buying comparatively \"\"safe\"\" US equities to reduce their EUR exposure.\"",
"title": ""
},
{
"docid": "06e4704418d257227d647692a04fec2e",
"text": "If you are restricting yourself to Scotiabank (Both retail banking and iTrade), your choices are pretty limited. If you are exchanging more than CAD$25,000 to EUR without margin, you can call Scotiabank and ask for a quote with much lower spread than the published snapshots. The closest ETF that you are talking about is RWE.B on TSX, which is First Asset MSCI Europe Low Risk Weighted ETF (Unhedged). You will be exposed to huge equity market risk and you should do it only if you intend to hold it for 3-5 years. Another way of exchanging cash is without opening an account is through a currency exchange broker (search “toronto currency exchange” for relevant companies). First you send an email asking for a quote for the amount you wanted, then you send the CAD to them via cheque, and they would convert to EUR and deposit it to your EUR account at Scotiabank (retail banking). This method costs around 0.7% compared to 2.5% charged by Scotiabank. An example of these brokers is Interchange Currency Exchange in Toronto. If you are hedging more than 125000 EUR, the proper method is to open an account that supports trading Currency Futures on Globex (US CME group). You can long Euro/Canadian Dollar Futures on margin. The last method is to open an account at Interactive Brokers, put CAD in it, then borrow more CAD to buy EUR. This method costs a few dollars upon trading and the spread is negligible. You need to pay 2.25% per year margin interest through.",
"title": ""
},
{
"docid": "38983f5811ca126fbb64a7d8027e265a",
"text": "Stick with stocks, if you are not well versed in forex you will get fleeced or in over your head quickly. The leverage can be too much for the uninitiated. That said, do what you want, you can make money in forex, it's just more common for people to not do so well. In a related story, My friend (let's call him Mike Tyson) can knock people out pretty easy. In fact it's so easy he says all you have to do is punch people in the face and they'll give you millions of dollars. Since we are such good friends and he cares so much about my financial well-being, he's gotten me a boxing match with Evander Holyfield, (who I've been reading about for years). I guess all I have to do is throw the right punches and then I'll have millions to invest in the stock market. Seems pretty easy, right ?",
"title": ""
},
{
"docid": "3c34a78467249df07b75663f47cedef8",
"text": "Crazy idea but... on the offchance your friend is near one of Europe's few bitcoin ATM's ... buy some bitcoin, transfer them to your friend, and they can presumably cash them in at the ATM. I've no idea how much bid-offer spreads will eat into the transfer or whether you can tolerate bitcoin volatility though. Unless there are money laundering regulations that mean anyone wanting to use one of these ATM's has to agree some ID checks that your friend can't satisfy (I don't actually know much about bitcoin at all). If not a bitcoin ATM, maybe there are other ways your friend can convert bitcoin value to something more useful (bitcoin to mobile-phone top-ups seem to be possible, for example).",
"title": ""
},
{
"docid": "94946e8ad98c7dee3b7fafa8b1ee8f00",
"text": "Many people trade the currency markets via brokers who have developed online apps with live forex prices and many currency pairs. You can trade on your phone, iPad or PC / Mac.",
"title": ""
},
{
"docid": "edb1f705ad85940e241269d785bb0f6b",
"text": "Originally dollars were exchangeable for specie at any time, provided you went to a govt exchange. under Bretton Woods this was a generally fixed rate, but regardless there existed a spread on gold. This ceased to be the case in 71 when the Nixon shock broke Bretton woods.",
"title": ""
},
{
"docid": "1cfa763eb7329a1cea601b1c91dda9c7",
"text": "\"In short, yes. By \"\"forward selling\"\", you enter into a futures contract by which you agree to trade Euros for dollars (US or Singapore) at a set rate agreed to by both parties, at some future time. You are basically making a bet; you think that the dollar will gain on the Euro and thus you'd pay a higher rate on the spot than you've locked in with the future. The other party to the contract is betting against you; he thinks the dollar will weaken, and so the dollars he'll sell you will be worth less than the Euros he gets for them at the agreed rate. Now, in a traditional futures contract, you are obligated to execute it, whether it ends up good or bad for you. You can, to avoid this, buy an \"\"option\"\". By buying the option, you pay the other party to the deal for the right to say \"\"no, thanks\"\". That way, if the dollar weakens and you'd rather pay spot price at time of delivery, you simply let the contract expire un-executed. The tradeoff is that options cost money up-front which is now sunk; whether you exercise the option or not, the other party gets the option price. That basically creates a \"\"point spread\"\"; you \"\"win\"\" if the dollar appreciates against the Euro enough that you still save money even after buying the option, or if the dollar depreciates against the Euro enough that again you still save money after subtracting the option price, while you \"\"lose\"\" if the exchange rates are close enough to what was agreed on that it cost you more to buy the option than you gained by being able to choose to use it.\"",
"title": ""
},
{
"docid": "9baaf39656cae04a080059718b623e3a",
"text": "Actually, yes. Two parties can write a contract and specify how money will change hands, it's called a swap. It's not unusual to write a contract that mimics an existing financial instrument. However, there are disadvantages to both sides to trading a swap rather than a more standard, liquid instrument, so usually it won't happen unless there's an excellent reason.",
"title": ""
}
] |
fiqa
|
844b75046af9c4454c9ff702d08af78c
|
Does cash back apply to online payments with credit card
|
[
{
"docid": "39bcb0e40e9aeb3a52b16e3a23dae31e",
"text": "\"Retail purchases are purchases made at retail, i.e.: as a consumer/individual customer. That would include any \"\"standard\"\" individual expenditure, but may exclude wholesale sales or purchases from merchants who identify themselves as service providers to businesses. Specifics of these limitations really depend on your card issuer, and you should inquire with the customer service at what are their specific eligibility requirements. As an example, here in the US many cards give high cash-back for gasoline purchases, but only at \"\"retail\"\" locations. That excludes wholesale/club sellers like Costco, for example.\"",
"title": ""
}
] |
[
{
"docid": "428cfcdf74ac79a43de9168b360ea759",
"text": "If you paid by debit/credit card, there is an expiration period to the authorization the seller is given by the merchant processor, although that timeframe is dictated by the credit card company/bank, merchant processor, and sometimes by state law. That being said, the other posters are correct that technically, once you authorize charge, the seller has the right to expect fulfillment of the agreement, that you would pay them X dollars for Y product.",
"title": ""
},
{
"docid": "d265e885a4eef7fb53d1452c53d655f6",
"text": "No. PayPal payments are credited to a PayPal account. PayPal doesn't let you pay arbitrary banks or credit cards, that defeats the purpose of PayPal and there are other services which can do that cheaper or with less hassle. You need to find another mutually available and satisfactory option with your client.",
"title": ""
},
{
"docid": "37332d0ccd73d33964ee61992a644e94",
"text": "I paid with my Visa credit card. Generally on credit cards, the holds / authorizations are valid for a month on single transactions. So if you haven't been charged on your card, it seems that there was some technical error with the online market place. They were not able to trace this. Is there an expiration date on these kind of online purchases? Should I expect the money to be withdrawn at any time? There are 2 different aspects, one is do you still owe them money and can they ask you; It would be yes, I don't know the timelines. This would depend on establishing a contract etc. They can contact you for unpaid invoice. Can they again charge the credit card automatically ... generally No.",
"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": "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": "123c5d8da7e052d5b03841cd5706169a",
"text": "Cash-back also lets the store turn hard currency into an electronic transfer or check, which reduces the hassle/risk of hauling bagfulls of cash to the bank. (The smaller stores I've spoken to have called this out as a major advantage of plastic over either cash or checks. I'm assuming that the problem scales with number and size of transactions.)",
"title": ""
},
{
"docid": "950898f483d9ce6377d07e9f54f1e44b",
"text": "\"Understand that buying a Starbucks gift card at the grocery store to receive 6% back on your coffee rather than 6% back on your groceries is an exploit of a flaw in the benefits program, not a feature. It's definitely not a blanket yes or no answer, the only way to find out is to try. Separately, I don't know why you would find this \"\"concerning.\"\" This will vary greatly between merchants and cards. There will always be new points churning exploits, they don't last forever and you can't expect every customer service rep to be well versed in methods employed to juice cardmember programs. Hell, a number of years ago one person figured out that he could buy rolls of $1 coins from the US treasury with free shipping and no additional fees. This guy was literally buying thousands of dollars of cash each month to deposit and pay his credit card bill; completely against the terms of the treasury program for distributing the $1 coins. A number of people had their cards and points/cash back revoked for that one.\"",
"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": "ccc83c20986bc4ce66ffc6f1c1bd529f",
"text": "Most merchants (also in Europe) are reasonable, and typically are willing to work with you. credit card companies ask if you tried to work with the merchant first, so although they do not enforce it, it should be the first try. I recommend to give it a try and contact them first. If it doesn't work, you can always go to the credit card company and have the charge reversed. None of this has any effect on your credit score (except if you do nothing and then don't pay your credit card bill). For the future: when a transaction supposedly 'doesn't go through', have them write this on the receipt and give it to you. Only then pay cash. I am travelling 100+ days a year in Europe, using my US credit cards all the time, and there were never any issues - this is not a common problem.",
"title": ""
},
{
"docid": "c8f7a3ce6a223974c1913148af62ded8",
"text": "\"To avoid nitpicks, i state up front that this answer is applicable to the US; Europeans, Asians, Canadians, etc may well have quite different systems and rules. You have nothing to worry about if you pay off your credit-card statement in full on the day it is due in timely fashion. On the other hand, if you routinely carry a balance from month to month or have taken out cash advances, then making whatever payment you want to make that month ASAP will save you more in finance charges than you could ever earn on the money in your savings account. But, if you pay off each month's balance in full, then read the fine print about when the payment is due very carefully: it might say that payments received before 5 pm will be posted the same day, or it might say before 3 pm, or before 7 pm EST, or noon PST, etc etc etc. As JoeTaxpayer says, if you can pay on-line with a guaranteed day for the transaction (and you do it before any deadline imposed by the credit-card company), you are fine. My bank allows me to write \"\"electronic\"\" checks on its website, but a paper check is mailed to the credit-card company. The bank claims that if I specify the due date, they will mail the check enough in advance that the credit-card company will get it by the due date, but do you really trust the USPS to deliver your check by noon, or whatever? Besides the bank will put a hold on that money the day that check is cut. (I haven't bothered to check if the money being held still earns interest or not). In any case, the bank disclaims all responsibility for the after-effects (late payment fees, finance charges on all purchases, etc) if that paper check is not received on time and so your credit-card account goes to \"\"late payment\"\" status. Oh, and my bank also wants a monthly fee for its BillPay service (any number of such \"\"electronic\"\" checks allowed each month). The BillPay service does include payment electronically to local merchants and utilities that have accounts at the bank and have signed up to receive payments electronically. All my credit-card companies allow me to use their website to authorize them to collect the payment that I specify from my bank account(s). I can choose the day, the amount, and which of my bank accounts they will collect the money from, but I must do this every month. Very conveniently, they show a calendar for choosing the date with the due date marked prominently, and as mhoran_psprep's comment points out, the payment can be scheduled well in advance of the date that the payment will actually be made, that is, I don't need to worry about being without Internet access because of travel and thus being unable to login to the credit-card website to make the payment on the date it is due. I can also sign up for AutoPay which takes afixed amount/minimum payment due/payment in full (whatever I choose) on the date due, and this will happen month after month after month with no further action necessary on my part. With either choice, it is up to the card company to collect money from my account on the day specified, and if they mess up, they cannot charge late payment fees or finance charge on new purchases etc. Also, unlike my bank, there are no fees for this service. It is also worth noting that many people do not like the idea of the credit-card company withdrawing money from their bank account, and so this option is not to everyone's taste.\"",
"title": ""
},
{
"docid": "0ee7fd69c667fbb6297c8f12bac30e9e",
"text": "Probably not. I say probably because your credit card's terms of service may treat certain purchases (I'm thinking buying traveler's checks off-hand) as cash advances. See also this question.",
"title": ""
},
{
"docid": "cb8152e2f225941fdaf15f1f09e1f37d",
"text": "I'm not sure if you are including the use of credit cards in the intent of your quesiton. However, I will give you some good reasons I use them even when I can pay cash: 1) I get an interest free loan for almost 30 days as long as I don't carry balances. 2) I get a statement detailing where I am spending my money that is helpful for budgeting. I'd never keep track to this level of detail if I were using cash. 3) Many cards offer reward programs that can be used for cash back. 4) It helps maintain my credit rating for those times I NEED to buy something and pay it off over time (car, house, etc.) 5) Not so much an issue for me personally, but for people that live paycheck to paycheck, it might help to time your cash outflows to match up with your inflows. For a business, I think it is mostly a cash flow issue. That is, in a lot of B2B type businesses customers can pay very slowly (managing their own cash flows). So your revenue can sometimes lag quite a bit behind the expenses that were associated with them (e.g payroll). A business line of credit can smooth out the cash flow, especially for companies that don't have a lot of cash reserves.",
"title": ""
},
{
"docid": "2180f91615b9d9c4599b3ab34e79b69e",
"text": "1) Every credit card company charges vendors a fee. That's sufficient to make an acceptable profit per charge even if some of that money goes into marketing expenses -- and the cash-back offer is a marketing expense. 2) Many if not most consumers pay interest; probably everyone does so occasionally when we get distracted and miss a payment. 3) The offer encourages you to put more payments on the card -- and in particular on their card -- than you might otherwise. See #1; that increases net income.",
"title": ""
},
{
"docid": "16c57c71a6d1dc057d984fddaa84e5e1",
"text": "So, what's the point of a charge-back, if they simply take the word of the merchant? tl;dr: They don't. As both a merchant and a consumer I have been on both ends of credit card chargebacks, and have received what I consider to be mostly fair outcomes in all cases. Here are some examples: Takeaways from this: I strongly urge all consumers who are considering doing a chargeback to try to work with the merchant first, and use the CC dispute as a last resort. In general, you can think of the credit card dispute department like a judge. They hear the arguments presented by both sides, and consider them to the best of their ability. They don't always get it right, but they make their best attempt given the limited information they are provided.",
"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": ""
}
] |
fiqa
|
d8a95203ed73779542e8de1176252d2a
|
Are there any banks in Europe that I can have an account without being in that country?
|
[
{
"docid": "8a9db00ea0772b57065383a8e332b99a",
"text": "Opening account in foreign bank is possible, but you must have strong proofs you use it for legitimate purposes. More chances to get an account if you visit Europe and able to stay, for example, for a week, to visit bank in person and wait for all the checks and approvals. Also keep in mind that there will be deposit/withdraw limits and fees applicable, that are significantly stricter and larger for non-EU citizen. In my opinion, if your amounts are not large, it might not worth it. If amounts are large, you might consider business account rather than personal, as is the example of strong proof I meant.",
"title": ""
},
{
"docid": "d14c708264ea9f9d8eb46a76dd39c6e1",
"text": "It can be done, but I believe it would be impractical for most people - i.e., it would likely be cheaper to fly to Europe from other side of the world to handle it in person if you can. It also depends on where you live. You should take a look if there are any branches or subsidiaries of foreign banks in your country - the large multinational banks most likely can open you an account in their sister-bank in another country for, say, a couple hundred euro in fees.",
"title": ""
}
] |
[
{
"docid": "1bd13694ea76c3b61a2bc7bcd5ddfef6",
"text": "Many European countires allow you to an account for non-residents. You have to appear in the bank personally to open it, some of them even to get your own tax number for non-residents from the local government. I'm not sure if you get a Visa (Electron) chip card immediatelly or you have to wait for like 3 months before being issued one. I've heard that getting a tax number for non-residents and opening a bank account is easily done in one day in Brezice, Republic of Slovenia. They seem to have agile local bureaucracy and banks, since many pople from neighbouring (non-EU) countries (used to) come there to open an EU bank account. Funds can be transfered via Internet banking - US banks have that, do they? SWIFT and IBAN codes are used for international money transfer. But it takes some time (days!) for it to arrive to destination. Tansfers below $20000 per month or per transaction are considered normal, but for amouts above that the destination bank might ask you to explain the purpose, to prove it is not illegal. Some of them accept the explanaiton in writing (they forward it to the regulator that tracks such large transfers), some of them ask you to appear there in person for an interview and to sign a statement. Can't believe US banks are still issuing paing magnet stripe cards like it's still 1980s. I'd expect Europe to be 10 years behind USA in technology, but this seems to be a weird reverse. I've beed using Internet banking with one-time passwd tokens and TAN lists for almost 10 years, and chip cards exclusivley for over 5y. Can't remeber the last time I've seen mag stripe card only. American Express (event the regular green one) got the chip at least 5 years ago. And it is accepted regularly in Europe. Alegedly it's more popular in Europe (although Mastercard is a definite #1, with Visa close to that) that in USA.",
"title": ""
},
{
"docid": "5e7e75cacb7d4a8796673232198e2982",
"text": "\"I don't think there is a law against it. For example comdirect offers multi banking so you can access your accounts from other banks through the comdirect website. My guess would be: Germans are very conservative when it comes to their money (preferring cash above cards, using \"\"safe\"\" low interest saving accounts instead of stocks) so there just might be no market for such a tool. There are desktop apps with bank syncing that offer different levels of personal finance management. Some I know are MoneyMoney, outbank, numbrs, GNUCash and StarMoney.\"",
"title": ""
},
{
"docid": "25865b998a68af259bbb602ce40e0cda",
"text": "I know that many HSBC ATMs at branches in the US and Canada offer this service (they actually scan and shred checks as you deposit them). Perhaps they do same in Germany... but not all ATMs offer this feature.",
"title": ""
},
{
"docid": "452bfceb558022757ab382661c83b5f6",
"text": "No you won't. Germany taxes income, not bank accounts. Note that this changes immediately when your bank account makes interest - you will owe taxes on this interest. However, chances are you won't get a bank account. Without residency or income, typically the banks wouldn't give you an account. Feel free to try, though.",
"title": ""
},
{
"docid": "df5f150b226f8513cdd9a5d35c438b49",
"text": "In Finland, this happens all the time - it's all about having an official ID, they don't even ask your bank account number or the card. However, as no location was specified in the question, I guess it could be anything. The stronger the requirement for official personal id is in your country, the better odds you have with just using that. Where I live it is quite strong.",
"title": ""
},
{
"docid": "da53ab8611ac770aaada2d90f0e05258",
"text": "HSBC will open you an account in the UK while you are still in the US. You can transfer your money before you leave the US. Your credit report and cards can also be transferred with HSBC, I think they have a mastercard. You can keep all your accounts in the US, and use online banking.",
"title": ""
},
{
"docid": "188502c8878306a1a913ada819b89d34",
"text": "Sorry, in the US (Bank of America). The kind of account we have has that high fee, but they also have free account options that have lower or zero balance requirements, you just have to setup direct deposit. The one we have has free checks, free safe deposit box, an English speaking customer service rep guaranteed to answer my call in something like 3 rings, and a bunch of other stuff I'll never use.",
"title": ""
},
{
"docid": "b98dd815ef852c5d1e52b86ec13e8e41",
"text": "Barclays Bank, RBS, and Deutsche Bank have an agreement as part of the Global ATM Alliance that allows you to make withdrawals at Deutsche Bank ATMs at no charge. The usefulness of this arrangement to you depends on how you use your money and would entail opening an account at Barclays or Royal Bank of Scotland. Edit: David, it looks like you will need some kind of residency to open a Barclays account, but you may be able to qualify with the proper supporting documentation. See this website: UK banking services and UK bank accounts, from Barclays Wealth International",
"title": ""
},
{
"docid": "7c27030d6ac878df01bcee186f0476fd",
"text": "Our banking system is pretty archaic compared to Europe's. I never realized it until I started managing bank accounts overseas for work. I manage many in the U.K., with their banking system you can send money to any person or company using a sort code & account (similar to our routing # and account) - and it's free, simple, and reaches the other account within 2 hours. You can include invoice #s, etc. It's the same banks that we have over here (HSBC, Citi, etc), I imagine the only reason why they haven't rolled it out over here is because they make a lot of $$$ off of wires in the US (similar concept but we pay $30-60 per each domestic transfer and it can take days). When my boss moved over here from UK and opened a personal bank account he was horrified to find out that the bill pay function in online banking sent paper checks and that you couldn't just send money to people/companies easily and immediately. The infrastructure and technology is already in place at the big banks, but the banks make big fees off offering us archaic features and too few Americans realize it can be so much easier; until we legislate that banks offer us the better services that already exist elsewhere I doubt we'll get them.",
"title": ""
},
{
"docid": "017b585703b7e141a871ab54e579c57b",
"text": "\"If you are going to keep your US bank account for any period of time, the very best option I know of is to withdraw Euros from an atm using your US card once you are in Germany. I draw on my US account regularly (I'm in Munich) and always get the going \"\"mid market\"\" exchange rate, which is better than what you get from a currency conversion service, transfer agency, or bank transfer, and there are no fees from the atm or my bank for the currency conversion or withdrawal. Of course you should check with your bank to verify their rules and fees for atm use internationally. It would also be wise to put a travel advisory on your account to be sure your transaction is not denied because you are out of country.\"",
"title": ""
},
{
"docid": "658753afb2ce69e32d23b16aa02a4b7e",
"text": "If I understand TransferWise’s Supported Countries page correctly, you could use their service. I believe it should be cheaper than having the bank convert. I've been very happy with the service and use it regularly.",
"title": ""
},
{
"docid": "f36e485e0a7440fb5ee9b39247f2c2c5",
"text": "A lot depends on how much is in the account, and whether you expect to be returning (or having any sort of financial dealings) in Europe in the future. My own experience (about 10 years out of date, and with Switzerland) is that the easiest way to transfer reasonable amounts (a few thousand dollars) was simply to get it in $100 bills from the European bank. I also kept the account open for a number of years while living in the US (doing contracting that was paid into the European bank), and could withdraw money from American ATMs. I eventually had to close the account due to issues between the bank and the IRS. I think it was only that particular bank (UBS) that was the problem, though.",
"title": ""
},
{
"docid": "fe8cec63df9636d261bc60e06280cf6d",
"text": "This only indirectly answer your question, but Schwab investor checking account has no fee, no minimum balance, and will reimburse all ATM fee (inside and outside the US)",
"title": ""
},
{
"docid": "d4df97f35153bdedf4bf9c3089a968a4",
"text": "You're most definitely being scammed. You're being asked all the information required to steal your identity and take over your bank account. And Austria is land-locked, it has no west coast (or any coast, for that matter).",
"title": ""
},
{
"docid": "09b40b4aeb26d398776db60a4235aab8",
"text": "This is an alternative solution and it will depend where you live as to how you will have to make it work. I am in the UK and there are a number of ways that I can use to access my money from anywhere in the world without high transaction fees. Internet banking takes care of everything else.",
"title": ""
}
] |
fiqa
|
c95e3c5dbdb1516910f86ce5eff4a4b0
|
Why is the breakdown of a loan repayment into principal and interest of any importance?
|
[
{
"docid": "72647fff2c5bcd1b85110c5d24dd98f5",
"text": "The breakdown between how much of your payment is going toward principal and interest is very important. The principal balance remaining on your loan is the payoff amount. Once the principal is paid off, your loan is finished. Each month, some of your payment goes to pay off the principal, and some goes to pay interest (profit for the bank). Using your example image, let's say that you've just taken out a $300k mortgage at 5% interest for 30 years. You can click here to see the amortization schedule on that loan. The monthly payment is $1610.46. On your first payment, only $360 went to pay off your principal. The rest ($1250) went to interest. That money is lost. If you were to pay off your $300k mortgage after making one payment, it would cost you $299,640, even though you had just made a payment of $1250. Interest accrues on the principal balance, so as time goes on and more of the principal has been paid, the interest payment is less, meaning that more of your monthly payment can go toward the principal. 15 years into your 30-year mortgage, your monthly payment is paying $762 of your principal, and only $849 is going toward interest. Your principal balance at that time would be about $203k. Even though you are halfway done with your mortgage in terms of time, you've only paid off about a third of your house. Toward the end of your mortgage, when your principal balance is very low, almost all of your payment goes toward principal. In the last year, only $513 of your payments goes toward interest for the whole year. You can think of your monthly loan payment as a minimum payment. If you continue to make the regular monthly payments, your mortgage will be paid off in 30 years. However, if you pay more than that, your mortgage will be paid off much sooner. The extra that you pay above your regular monthly payment all goes toward principal. Even if you have no plans to pay your mortgage ahead of schedule, there are other situations where the principal balance matters. The principal balance of your mortgage affects the amount of equity that you have in your home, which is important if you sell the house. If you decide to refinance your mortgage, the principal balance is the amount that will need to be paid off by the new loan to close the old loan.",
"title": ""
},
{
"docid": "7eff9b05f079615ac6d4d7cee02d6c73",
"text": "It's important because it shows that the amount you owe does not decrease linearly with each payment, and you gain equity as a correspondingly slower rate at the beginning of the loan and faster at the end. This has to be figured in when considering refinancing, or when you sell the place and pay off the mortgage. It also shows why making extra payments toward principal (if your loan permits doing so) is so advantageous -- unlike a normal payment that lowers the whole curve by a notch, reducing the length of time over which interest is due and thus saving you money in the long run. (Modulo possible lost-opportnity costs, of course.)",
"title": ""
},
{
"docid": "501b2ea8d743b90b7da0f82f3bc3c721",
"text": "Yes, the distinction between how your funds are applied to principal vs interest is very important. The interest amount charged each period (probably monthly) is not just one fixed sum calculated at the origination, but rather is a dynamically calculated amount that changes each period relative to how much principal is remaining (amount you owe). The picture you posted showing principal and interest assumes the payer always paid their minimum payment and never made any extra payments of principal. Take a look at the following graph and play around with the extra payment fields. You will see some pretty drastic differences in the Total Interest Paid (green lines) when extra payments are made. http://mortgagevista.com/#m=2&a=240000&b=4.5&c=30y&e=200&f=1/2020&g=10000&h=1/2025&G&H&J&M&N&P&n&o&p&q&x",
"title": ""
},
{
"docid": "c8879e48fff18d0db4a657a7bbac0afe",
"text": "\"The other answers have touched on amortization, early payment, computation of interest, etc, which are all very important, but I think there's another way to understand the importance of knowing the P/I breakdown. The question mentions the loan payment as \"\"cash outflow\"\". That is true, but from an accounting perspective (disclaimer: I am not an accountant, but I know enough of the basics to be dangerous), the outflow needs to be directed to different accounts. The loan principal appears as a liability on your personal balance sheet, which you could use, for example, in determining net worth. The principal amount in your payment should be applied to reduce the liability account. The interest payment goes into the expense account. Another way to look at it is that the principal, while it does reduce your cash account, can be thought of as an internal transfer to the liability account, thus reducing the size of the liability. The interest payment cannot. Aside: From this perspective, the value of the home is an asset, and the difference between the asset account and the loan liability account is the equity in the house (as pointed out in different language by the accepted answer). Of course, precisely determining the value of an illiquid asset like a house at any given moment pretty much requires you to actually sell it, so those accounts are hard to maintain in real-time (the liability of the loan is much easier to track).\"",
"title": ""
},
{
"docid": "f92d195707bc8910972f6def5a6b7f6d",
"text": "It's important because you may be able to reduce the total amount of interest paid (by paying the loan faster); but you can do nothing to reduce the total of your principal repayments. The distinction can also affect the amount of tax you have to pay. Some kinds of interest payments can be counted as business expenses, which means that they reduce the amount of income you have to pay tax on. But this is not generally the case for money used to repay the loan principal.",
"title": ""
},
{
"docid": "6a7d38f2451ab0d1f6ad2b66b641b5c7",
"text": "The reason it's broken out is very specific: this is showing you how much interest accrued during the month. It is the only place that's shown, typically. Each month's (minimum) payment is the sum of [the interest accrued during that month] and [some principal], say M=I+P, and B is your total loan balance. That I is fixed at the amount of interest that accrued that month - you always must pay off the accrued interest. It changes each month as some of the principal is reduced; if you have a 3% daily interest rate, you owe (0.03*B*31) approximately (plus a bit as the interest on the interest accrues) each month (or *30 or *28). Since B is going down constantly as principal is paid off, I is also going down. The P is most commonly calculated based on an amortization table, such that you have a fixed payment amount each month and pay the loan off after a certain period of time. That's why P changes each month - because it's easier for people to have a constant monthly payment M, than to have a fixed P and variable I for a variable M. As such, it's important to show you the I amount, both so you can verify that the loan is being correctly charged/paid, and for your tax purposes.",
"title": ""
}
] |
[
{
"docid": "1b4e0eb0641fc8e6dd1a94c8b3a36a1b",
"text": "\"You should be able to pay back whenever; what's the point of an arbitrary timeline? Cash flow is the life blood of any business. When banks loan money, they are expecting a steady cash flow back. If you just pay back \"\"whenever\"\" - the bank has no idea what they'll be getting back month-to-month. When they can set the terms of the loan (length, rate, payment amount), they know how much cash flow they expect to get. What does [the term of the loan] even mean and what difference in the world does it make? In addition to the predictable cash flow needs above, setting a term for the loan determines how long their money will be tied up in the loan. The longer a bank has money tied up in a loan, the more risk there is that the borrower will default, so the bank will require a greater return (interest rate) for that extra risk. What you have described is effectively a revolving line of credit. The bank let you borrow money arbitrarily, charges you a certain rate of interest, and you can pay them back at your schedule. If you pay all of the interest for that month, everything else goes to principal. If you don't pay all of the interest, that interest is added to the balance and gets interest compounded on top of it. Both are perfectly viable business models, and bank employ them both, but they meed different needs for the bank. Fixed-term loans help stabilize cash flow, and lines of credit provide convenience for customers.\"",
"title": ""
},
{
"docid": "0d6eaeb4ba54c786c2800de434892ca9",
"text": "\"I'm going to give a simpler answer than some of the others, although somewhat more limited: the complicated loan parameters you describe benefit the lender. I'll focus on this part of your question: You should be able to pay back whenever; what's the point of an arbitrary timeline? Here \"\"you\"\" refers to the borrower. Sure, yes, it would be great for the borrower to be able to do whatever they want whenever they want, increasing or decreasing the loan balance by paying or not paying arbitrary amounts at their whim. But it doesn't benefit the lender to let the borrower do this. Adding various kinds of restrictions and extra conditions to the loan reduces the lender's uncertainty about when they'll be receiving money, and also gives them a greater range of legal recourse to get it sooner (since they can pursue the borrower right away if they violate any of the conditions, rather than having the wait until they die without having paid their debt). Then you say: And if you want, you can set a legal deadline. But the mere deadline in the contract doesn't affect how much interest is paid—the interest is only affected by how much money is borrowed and how long has passed. I think in many cases that is in fact how it works, or at least it is more how it works than you seem to think. For instance, you can take out a 30-year loan but pay it off in less than 30 years, and the amount you pay will be less if you pay it off sooner. However, in some cases the lender will charge you a penalty for doing so. The reason is the same as above: if you pay off the loan sooner, you are paying less interest, which is worse for the lender. Again, it would be nice for the borrower if they could just pay it off sooner with no penalty, but the lender has no reason to let them do so. I think there are in fact other explanations for these more complicated loan terms that do benefit the borrower. For instance, an amortization schedule with clearly defined monthly payments and proportions going to interest and principal also reduces the borrower's uncertainty, and makes them less likely to do risky things like skip lots of payments intending to make it up later. It gives them a clear number to budget from. But even aside from all that, I think the clearest answer to your question is what I said above: in general, it benefits the lender to attach conditions and parameters to loans in order to have many opportunities to penalize the borrower for making it hard for the lender to predict their cash flow.\"",
"title": ""
},
{
"docid": "6702878eced62b5b1a1c2ff83ce6aba8",
"text": "\"You seem to think that you are mostly paying interest in the first year because of the length of the loan period. This is skipping a step. You are mostly paying interest in the first year because your principle (the amount you owe) is highest in the first year. You do pay down some principle in that first year; this reduces the principle in the second year, which in turn reduces the interest owed. Your payments stay the same; so the amount you pay to principle goes up in that second year. This continues year after year, and eventually you owe almost no interest, but are making the same payments, so almost all of your payment goes to principle. It is a bit like \"\"compounded interest\"\", but it is \"\"compounded principle reduction\"\"; reducing your principle increases the rate you reduce it. As you didn't reduce your principle until the 16th year, this has zero impact on the interest you owed in the first 15 years. Now, for actual explicit numbers. You owe 100,000$ at 3% interest. You are paying your mortgage annually (keeps it simpler) and pay 5000$ per year. The first year you put 3000$ against interest and 2000$ against principle. By year 30, you put 145$ against interest and 4855$ against principle. because your principle was tiny, your interest was tiny.\"",
"title": ""
},
{
"docid": "99c768a2572426fd23b4feda32756c24",
"text": "It also reduces risk from the bank's eyes. Believe it or not, they do lose out when people don't pay on their mortgages. Take the big 3 (Wells, Chase and BoA). If they have 50 million mortgages between the 3 of them and 20% of people at one point won't be able to pay their mortgage due to loss of income or other factors, this presents a risk factor. Although interest payments are still good, reducing their principal and interest keeps them tied down for additional (or sometimes shorter) time, but now they are more likely to keep getting those payments. That's why credit cards back in 07 and 08 reduced limits for customers. The risk factor is huge now for these financial institutions. Do your research, sometimes a refi isn't the best option. Sometimes it is.",
"title": ""
},
{
"docid": "c4ce60e9a0bfdaf6901a81d352ebcb08",
"text": "\"I think the idea here is that because of the way mortgages are amortized, you can drop additional principal payments in the early years of the mortgage and significantly lower the overall interest expense over the life of the loan. A HELOC accrues interest like a credit card, so if you make a large principal payment using a HELOC, you will be able to retire those \"\"chunks\"\" of debt quicker than if you made normal mortgage payments. I haven't worked out the numbers, but I suspect that you could achieve similar results by simply paying ahead -- making even one extra payment per year will take 7-9 years off of a 30 year loan. I think that the advantage of the HELOC approach is that if you borrow enough, you may be able to recalculate/lower the payment of the mortgage.\"",
"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": "c5b6570980cee300b2970bed11b976d2",
"text": "It's definitely NOT a good idea to pay off one of the smaller loans in your case - a $4k payment split across all the loans would be better than repaying the 5% / $4k loan completely, as it's the most beneficial of your loans and thus is last priority for repayment. A payment that splits across all the loans equally is, in effect, a partial repayment on a loan with an interest rate of 6.82% (weighed average rate of all your loans). It's not as good as repaying a 7% loan, but almost as good. It might be an option to save up until you can repay one of your 7% loans, but it depends - if it takes a lot of time, then you would've paid unneccessary interest during that time.",
"title": ""
},
{
"docid": "4a129fd83fd9f7f640ff960c34b2d2a2",
"text": "is it really so important to have good credit with so much collateral Yes it is important to have good credit, the bank may not lend or may charge higher for bad credit. If you were to default the bank will get all that equity so You are missing the fundamental. Bank cannot take more than what they are owed. When they take possession of house, they auction it. Take what was due from the sale and return any surplus to the owner. This entire process takes time and hence bank wants to avoid giving loan to someone who they feel is risky. Edit: There are different aspects of risk that the bank factors.",
"title": ""
},
{
"docid": "ec9c26997f81609a501071663b98f250",
"text": "Can I give the bank the $300,000 to clear the mortgage, or must I pay off the total interest that was agreed upon for the 30 year term? This depends on the loan agreement. I had one loan where I was on the hook regardless. Early payment was just that, early payment. It would have allowed me to skip months without making payments (because I had already made them). Most loans charge interest on the remaining balance. If you pay early, it reduces your balance, decreasing the interest. If you pay it off early, there's no more balance and no more interest. I'm curious why the bank would let you do this, since they will lose out on a lot of profit. But they have their money back and can loan it out again. If they maintained the loan, they aren't guaranteed of getting their money. Interest is rent that you pay for the loan of the money. Once you return the money, why pay more rent? While some apartment leases require paying through the entire term, most allow for early termination with proper notice. You give back the apartment; the landlord rents it out again. Why should they get paid two rents? Another issue is that if someone with a mortgage switches jobs to a new location, that person will likely prefer to sell the current house and buy one in the new location. This is actually the typical way for a mortgage to end. If the bank did not allow that, they would essentially force the family to rent out the mortgaged house and rent a new house. So the bank would go from an owner-occupied house that the inhabitants want to keep maintained to a rental, where the inhabitants only care to the extent of their legal liability. Consider the possibility that the homeowners lose one of their jobs. They can't afford the house. So they sell it and close out the mortgage. Should the bank refuse to allow the sale and attempt to recover the interest from the impoverished homeowners? That situation would almost guarantee an expensive foreclosure. Once there is any early termination clause for any reason, it makes sense for the bank to structure the loan to include the possibility. That way they don't have to investigate whatever excuse is involved. Loan regulators may require this as well, particularly on mortgages.",
"title": ""
},
{
"docid": "a851b6da4dce317e819435e752e9e6b0",
"text": "\"Will the proportion of my payments towards interest eventually go down? Yes. Today would be a good day to do a web search for \"\"amortization schedule\"\". You will quickly learn how to compute precisely how much of each payment goes to interest and how much goes to principal given different payment choices. Would it be wiser to spend more each month on loan payments? That depends on your goals and resources, which we know nothing about. If you have extra money you could spend it on debt reduction, or you could spend it on an investment that pays more money in growth or dividends than the interest you'd save. Or you could decide that the longer you have that loan, sure, the more interest you'll pay, but inflation will make future money less valuable. Basically, by taking out a loan you have chosen to gamble that the thing you bought with the loaned money will be worth the cost of the interest payments in the future, adjusted for inflation. The bank on the other hand is gambling that you're good for the debt and that they can make a reasonable profit off it. If you have more money to gamble with, which bet is the wisest one is really up to you. would it be smarter to try to pay off one loan before the other? If you want to pay off a loan early then always choose the loan with the higher interest rate. should I start making bi-weekly payments instead of monthly? That's roughly equivalent to paying off the principal by one additional payment a year. There are two reasons to do so. The first is that the total interest will be lower and the loan will be paid off faster. You can work out exactly how much with your new found skill at amortization computation. The second is the simple convenience of knowing that your budget for each pay period is the same. That convenience is worth something; is it worth the amount extra you'll be paying every year? Again, this is for you to decide. Work out how much extra you're paying per year and how much you're saving in the long run, and compare that against the benefit.\"",
"title": ""
},
{
"docid": "64b5152109801f6c7a91e2afffa778a4",
"text": "\"Loans do not carry an \"\"interest balance\"\". You can not pay off \"\"all the interest\"\". The only way to reduce the interest to zero is to pay off the loan. Otherwise, the interest due each month is some percentage of the outstanding principal. Think of it from the bank's perspective: they've invested some amount of money in you, and they expect a return on that investment in the form of interest. If you somehow paid in 16 years all the interest the bank expected to receive in 30 years, you've been scammed.\"",
"title": ""
},
{
"docid": "508ba9807775aa566286ecb749ae099a",
"text": "No offense to any bankers who are reading, but i find it remarkable that they can confuse what I'd expect to be an otherwise simple explanation. If at the end of each day the interest is added, you go to sleep with a new balance. At the moment it's added, you have no interest due, just a higher principal amount than when you went to sleep last night. When I view my loan, I know how much interest added to principal since the last payment. Any amount I pay over that has to go to principal. Forgive me, but the rest sounds like nonsense.",
"title": ""
},
{
"docid": "79d2ca0681ec20663320a4dee527ced1",
"text": "It could be a couple of things besides extra principal: I seem to remember hearing that some (shady?) lenders would just pocket extra payments if you didn't specify where they were headed, but I've also been told that this just isn't true.",
"title": ""
},
{
"docid": "b43238f7a44ef1ebe3914773ab7131b0",
"text": "There are a few reasons, particularly for businesses. The first is opportunity cost. That chunk of money they have could be used to get higher returns somewhere else. If they can borrow from a bank at low interest rates to finance their ongoing operations, they can use their cash to get a higher return somewhere else. The second is credit rating. For public companies, ratings companies give high emphasis to companies with large reserves. This strengthens their ability to pay back the loan should it become necessary. A good credit rating in turn let's the company borrow money at lower rates. When a company can borrow money at low rates, it circles back to the first point where they can now put their reserves to better use. The third is leverage. Companies can use the cash they have built up to leverage into a larger investment. Assuming the investment works out, it will pay for the cost of borrowing over time. For instance let's say I have $1 million to invest. I can pay all cash for a $1 million apartment building or I can leverage that into a $3 million building. Assuming I run it well, the tenants will pay for the cost of borrowing $2 million and at the end of the term I'll be left with my $3 million building.",
"title": ""
},
{
"docid": "2c10de11a5a0c132dd32fd6d66e89194",
"text": "As stated above, the IRA accounts themselves are individual. But if you want to simulate a joint account, the following actions would help: Make sure to setup each account with the other spouse as the beneficiary so that each account goes to any surviving spouse should the unexpected happen. Some brokers (I know TDA does this) allow you to grant access to your account to another login, so that effectively one spouse could make the invest decisions for all your accounts. This is better than simply sharing your username and password, which is against many T&Cs. If you do this in both directions, each spouse has access to all accounts.",
"title": ""
}
] |
fiqa
|
2d9924fa1ca804e07679e745e37877bc
|
What are the reasons to get more than one credit card?
|
[
{
"docid": "d41d8cd98f00b204e9800998ecf8427e",
"text": "",
"title": ""
},
{
"docid": "d8adc7d4160959f688ae4e377b73b715",
"text": "In the case of reward cards, different cards may offer different rewards for different kind of purchases. For example, in the UK, one of the Amex cards offers 1.25% cashback on all purchases, whereas one of the Santander cards offers 3% on fuel, 2% or 1% on certain other transactions, and nothing on others. Of course, you then have to remember to use the right card! Another reason is that a person may use a card for a while, build up a good credit limit, and then move to a different card (perhaps because it has better rewards, or a lower interest rate, etc) without cancelling the first. If it costs nothing to keep the first card, then it can be useful to have it as a spare.",
"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": "4e18a3c6cbff373b8ab0f583250150a6",
"text": "A friend of mine has two credit cards. He has specifically arranged with the card issuers so that the billing cycles are 15 days out of sync. He uses whichever card has more recently ended its billing cycle, which gives him the longest possible time between purchase and the due date to avoid interest.",
"title": ""
},
{
"docid": "39f6c48c7af1810a0a19a134191176db",
"text": "I have a fair number of cards floating around some reasons I have opened multiple accounts. I am not saying that it is for everyone but there are valid scenarios where multiple credit cards can make sense.",
"title": ""
},
{
"docid": "ba1e15889ae2cea42d3c1ef7f74f9ef1",
"text": "Many reasons mentioned already. The reason why I have multiple is missing: I have a personal card for my private use and a company card for company use.",
"title": ""
},
{
"docid": "b9b63ee6b91966273d3a16a44f838842",
"text": "Another good reason: if you have to replace a card due to damage, loss, or identity theft it's nice to have a backup you can use until the new card for your primary account arrives. I know folks who use a secondary card for online purchases specifically so they can kill it if necessary without impacting their other uses, online arguably being at more risk. If there's no yearly fee, and if you're already paying the bill in full every month, a second card/account is mostly harmless. If you have trouble restraining yourself with one card, a second could be dangerous.",
"title": ""
},
{
"docid": "d41d8cd98f00b204e9800998ecf8427e",
"text": "",
"title": ""
},
{
"docid": "1cea1ffc018113668b1aa2a79dde9f86",
"text": "\"3 reasons I can think of: I once worked for a bank and when credit scoring for loans, if you had been approved by different institutions, you were given a better score. So if you held a Visa and Mastercard (as opposed to two Visa cards) your credit score would go higher. More than 6 cards though looked suspicious and your score would take a big hit. Having more than card has helped me when getting special offers multiple times from some websites where it was limited to \"\"one per customer\"\" though most just used your address or email account. If you owed $1000 in total which you can't pay off in one go, it is better to have that split across two cards. You would be paying interest on $500 on each card but when you have one card paid off, the interest you would be paying on the other would be based on the original debt to that one card of $500 (not $1000). I hope that makes sense.\"",
"title": ""
},
{
"docid": "0bfbeea865a7de3a370c39b733d0c35e",
"text": "1- To max out rewards. I have 5 different credit cards, one gives me 5% back on gas, another on groceries, another on Amazon, another at restaurants and another 2% on everything else. If I had only one card, I would be missing out on a lot of rewards. Of course, you have to remember to use the right card for the right purchase. 2- To increase your credit limit. One card can give you a credit limit of $5,000, but if you have 4 of them with the same limits, you have increased your purchasing power to $20,000. This helps improve your credit score. Of course, it's never a good idea to owe $20,000 in credit card debt.",
"title": ""
},
{
"docid": "8cf1cad1101d3b58fb25117237555f98",
"text": "I keep one card just for monthly bills (power company,car loan, etc.). This one is unlikely to get hacked so I won't have to go change the credit card information on my monthly bills. I pay the credit card from my bank account. I just don't want a lot of businesses with direct access to my bank account.",
"title": ""
},
{
"docid": "29fd9a7b163c501ded970e454c7f5aed",
"text": "Someone mentioned sign up bonuses but only mentioned dollar values. You might get points, sweet, sweet airline points :) which some might find compelling enough to churn cards so they always have a few open.",
"title": ""
},
{
"docid": "278dfae26b43adafbd6cf6655c324295",
"text": "I got a Capital One credit card because they don't charge a fee for transactions in foreign currencies. So I only use it when I travel abroad. At home, I use 3 different credit cards, each offering different types of rewards (cash back on gas, movies, restaurants, online shopping etc).",
"title": ""
},
{
"docid": "248a67266daf806c6b4ac027188129d7",
"text": "There is almost no reason to get a second credit card - this is a very good arrangement for your creditor but not for you. Credit cards have high rates of interest which you have to pay unless you pay the credit off every month. Therefore, increasing your total credit capacity should not be your concern. Since internet technology lets you pay off your balance in minutes online, there is no reason to have multiple cards in order to avoid running out of a balance. If, on the other hand, you do not pay your existing card off every month, than getting another card can be even more dangerous, since you're increasing the amount of debt you take on. I'd say at most it would make sense for you to grab a basic VISA, since most places do not accept AMEX. I would also considering cancelling the AMEX if you get the VISA, for reasons above.",
"title": ""
}
] |
[
{
"docid": "ec99e72389a56d364362c3107958891b",
"text": "My recommendation is to not ask for a credit increase, but just increase the utilization of one card if you have multiple cards, and decrease the utilization of the others, and continue paying off all cards in full each month. In a few months, you will likely be offered a credit increase by the card that is getting increased use. The card company that is getting the extra business knows that you are paying off big bills each month and keeping your account in good standing, and they will likely offer you a credit increase all by themselves because they want to keep your business. If no offer is forthcoming, you can call the card company and ask for a credit increase. If they refuse, tell them that you will be charging very little on the card in the future (or even canceling your card, though that will cause a hit on your credit score) because of their refusal, and switch your high volume to a different card.",
"title": ""
},
{
"docid": "5fc083d123368ec99df5ecda0132fdf5",
"text": "If you are planning to get new cards, it is probably best to open the accounts as soon as possible to start establishing a history of good credit use. You might also wish to open multiple accounts so that future lines will have less of an impact on your average age of open credit lines. Since you will probably have higher interest rates it is also advisable never to carry a balance on any of your newly acquired cards. This will prevent a recurrence of the problems you are now trying to recover from.",
"title": ""
},
{
"docid": "87d965cd8c97f1faa8784ca29206e209",
"text": "Because even if you won the lottery, without at least some credit history you will have trouble renting cars and hotel rooms. I learned about the importance, and limitations of credit history when, in the 90's, I switched from using credit cards to doing everything with a debit card and checks purely for convenience. Eventually, my unused credit cards were not renewed. At that point in my life I had saved a lot and had high liquidity. I even bought new autos every 5 years with cash. Then, last decade, I found it increasingly hard to rent cars and sometimes even a hotel rooms with a debit card even though I would say they could precharge whatever they thought necessary to cover any expenses I might run. I started investigating why and found out that hotels and car rentals saw having a credit card as a proxy for low risk that you would damage the car or hotel room and not pay. So then I researched credit cards, credit reports, and how they worked. They have nothing about any savings, investments, or bank accounts you have. I had no idea this was the case. And, since I hadn't had cards or bought anything on credit in over 10 years there were no records in my credit files. Old, closed accounts had fallen off after 10 years. So, I opened a couple of secured credit cards with the highest security deposit allowed. They unsecured after a year or so. Then, I added several rewards cards. I use them instead of a debit card and always pay in full and they provide some cash back so I save money compared to just using a debit card. After 4 years my credit score has gone to 800+ even though I have never carried any debt and use the cards as if they were debit cards. I was very foolish to have stopped using credit cards 20 years ago but just had no idea of the importance of an established credit history. And note that establishing a great credit history does not require that you borrow money or take out loans for anything. just get credit cards and pay them in full each month.",
"title": ""
},
{
"docid": "87f7466bc890563ee9345c8834bfb181",
"text": "Also, unless I missed it and someone already mentioned it, do keep in mind the impact of these credit cards balances on your credit score. Over roughly 75% usage on a given credit account reflects badly on your score and has a pretty large impact on how your worthiness is calculated. It gives the impression that you are a person that lives month to month on cards, etc. If you could get both cards down to reasonable balances to where you could begin paying on them regularly and work them down over time, that will not only look incredible for your credit report but also immediately begin making your credit worthiness begin to raise due to the fact that you will not have accounts that (I'm assuming here) are at very high usage (over 75% of your total limit.) If you have to get one card knocked out just to get breathing room, and you're boxed in here -- or honestly even if the mental stress is causing you incredible hardship day to day, then I suppose blow one card out of the water, reassess and start getting to work on that second card. I hope this helped, I'm no expert, but I have had every kind of luck with credit cards and accounts you could think of, so I can only give my experience from the rubber-meets-the-road perspective. Good luck!",
"title": ""
},
{
"docid": "6d1f5c390d2fc95f58a1fcc9cdf0566a",
"text": "For those who are looking to improve credit for the sake of being able to obtain future credit on better terms, I think a rewards credit card is the best way to do that. I recommend that you only use as many cards as you need to gain the best rewards. I have one card that gives 6% back on grocery purchases, and I have another card that gives 4% back on [petrol] and 2% back on dining out. Both of those cards give only 1% back on all other purchases, so I use a third card that gives 1.5% back across the board for my other purchases. I pay all of the cards in full each month. If there was a card that didn't give me an advantage in making my purchases, I wouldn't own it. I'm generally frugal, so I know that there is no psychological disadvantage to paying with a card. You have to consider your own spending discipline when deciding whether paying with cards is an advantage for you. In the end, you should only use debt when you can pay low interest rates (or as in the case of the cards above, no interest at all). In the case of the low interest debt, it should be allowing you to make an investment that will pay you more by having it sooner than the cost of interest. You might need a car to get to work, but you probably don't need a new car. Borrow as little as you can and repay your loans as quickly as you can. Debt can be a tool for your advantage, but only if used wisely. Don't be lured in by the temptation of something new and shiny now that you can pay for later.",
"title": ""
},
{
"docid": "cb8152e2f225941fdaf15f1f09e1f37d",
"text": "I'm not sure if you are including the use of credit cards in the intent of your quesiton. However, I will give you some good reasons I use them even when I can pay cash: 1) I get an interest free loan for almost 30 days as long as I don't carry balances. 2) I get a statement detailing where I am spending my money that is helpful for budgeting. I'd never keep track to this level of detail if I were using cash. 3) Many cards offer reward programs that can be used for cash back. 4) It helps maintain my credit rating for those times I NEED to buy something and pay it off over time (car, house, etc.) 5) Not so much an issue for me personally, but for people that live paycheck to paycheck, it might help to time your cash outflows to match up with your inflows. For a business, I think it is mostly a cash flow issue. That is, in a lot of B2B type businesses customers can pay very slowly (managing their own cash flows). So your revenue can sometimes lag quite a bit behind the expenses that were associated with them (e.g payroll). A business line of credit can smooth out the cash flow, especially for companies that don't have a lot of cash reserves.",
"title": ""
},
{
"docid": "19db7d1ea4440024576bf59019233a4a",
"text": "Debit cards do not earn the bank any interest from you whereas credit cards do, so they want to give incentive to use credit over debit.",
"title": ""
},
{
"docid": "cfdd43e6bb109477b2927f5a78aa9c38",
"text": "\"The following is based on my Experian credit scoring feedback and experience here in the UK over many years. (And for further information I currently hold a credit score of 999, the highest possible, with 6 credit cards.) Now I'm assuming that while there may be some differences in particulars in your case due to the difference in locality nevertheless the below should hopefully provide some broad guidelines and reasonable conclusion in your situation: Having a large number of active credit accounts may be seen as a negative. However having a large number of settled accounts should on the contrary have a positive effect on your score. As you keep your accounts mostly settled, I think having another card will not be to your detriment and should in time be beneficial. A large total credit balance outstanding may count against you. (But see the next point.) Having your total outstanding debt on all credit accounts be a smaller proportion of your total available credit, counts in your favour. This means having more cards for the same amount of credit in use, is net-net in your favour. It also has the effect of making even larger outstanding credit balances (as in point 2) to be a lower percentage of your total available credit, and consequently will indicate lower risk to lenders. It appears from my experience the higher the highest credit limit on a single card you are issued (and are managing responsibly e.g. either paid off or used responsibly) the better. Needless to say, any late payments count against you. The best thing to do then is to set up a direct debit for the minimum amount to be paid like clockwork every month. Lenders really like consistent payers. :) New credit accounts initially will count against you for a while. But as the accounts age and are managed responsibly or settled they will eventually count in your favour and increase your score. Making many credit applications in a short space of time may count against you as you may be seen to be credit reliant. Conclusion: On balance I would say get the other card. Your credit score might be slightly lower for a couple of months but eventually it will be to your benefit as per the above. Having another card also means more flexibility and more more options if you do end up with a credit balance that you want to finance and pay off over a period as cheaply as possible. In the UK the credit card companies are falling over themselves trying to offer one \"\"interest free\"\" or 0% \"\"balance transfer\"\" offers. Of course they're not truly 0% since you typically have to pay a \"\"transfer fee\"\" of a couple of percent. Still, this can be quite cheap credit, much much cheaper than the headline APR rates actually associated with the cards. The catch is that any additional spending on such cards are paid off first (and attract interest at the normal rate until paid off). Usually also if you miss a payment the interest rate reverts to the normal rate. But these pitfalls are easily avoided (pay by direct debit and don't use card you've got a special deal on for day to day expenses.) So, having more cards available is then very useful because you then have choice. You can roll expensive debts to the cheapest lender at your disposal for as long as they'll offer, and then simply not use that card for any purchases (while paying off the balance as cheaply as possible), meanwhile using another card for day to day expenses.\"",
"title": ""
},
{
"docid": "4ed05f68ca768bf237e64f58839e2da2",
"text": "You have 3 assumptions about the use of credit cards for all your purchases: 1) May be a moot point. At current interest rates that will not make much of a difference. If somebody links their card to a checking account that doesn't pay any interest there will be no additional interest earned. If the rate on their account is <1% they may make a couple of dollars a month. 2) Make sure that the card delivers on the benefits you expect. Don't select a card with an annual fee. Cash is better than miles for most people. Also make sure the best earnings aren't from only shopping at one gas station or one store. You might not make as much as you expect. Especially if the gas station is generally the most expensive in the area. Sometimes the maximum cash back is only for a limited time, or only after you have charged thousands of dollars that year. 3) It can have a positive impact on your credit rating. I have also found that the use of the credit card does minimize the chances of accidentally overdrawing the linked account. There is only one big scheduled withdraw a month, instead of dozens of unscheduled ones. There is some evidence that by disconnecting the drop in balance from the purchase, people spend more. They say I am getting X% back, but then are shocked when they see the monthly bill.",
"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": "e68db5c2c9a5586f8320886ebec6055e",
"text": "Another thing to factor in are deals provided by banks. In general, banks care about new customers more than their existing customers. Hence they explicitly restrict the best deals on credit cards, savings accounts, etc, to new customers only. (Of course, there are occasionally good deals for existing customers, and some banks choose not to discriminate.) If you have many different bank accounts, you are making yourself unavailable for switching bonuses and introductory rates.",
"title": ""
},
{
"docid": "10fb3876dfd56ac3b8ae39c4aaf46346",
"text": "Do you need it? It doesn't sound like it - you seem to be able to manage with just the cards you have. Will it hurt anything? Probably not either, unless it entices you to spend more than you make. Another downside might be that you would spend more than you normally would just to have activity on every card. So all in all, I don't see much upside.",
"title": ""
},
{
"docid": "78ed499616a995e2d3a5153515793822",
"text": "pay off one of the cards completely. there are several reasons why:",
"title": ""
},
{
"docid": "c7f69a4ac2f6301ad1db8d23d13323d7",
"text": "Deposit it in a business savings account. The following below show you some options you can choose from. Next you can invest it in the market i.e. shares, bonds etc. If you have a more risky side, can go for peer to peer lending. If you are feeling really lucky and want to invest in the long term, then buy a property as a buy-to-let landlord. There are loads of options, you only need to explore.",
"title": ""
},
{
"docid": "7b39d160f01e3caff393cd459215bf0a",
"text": "Under what conditions did you move? My favourite method of judging prices objectively comes from concepts written in Your Money or Your Life by Joe Dominguez. Essentially it normalizes money spent by making you figure out how much an item costs with respect to the number of hours you needed to work to afford it. I prefer that method versus comparing with others since it is objective for yourself and looks beyond just the bare prices.",
"title": ""
}
] |
fiqa
|
ec6a767e034b6839db9d7505aea17295
|
Why must identification be provided when purchasing a money order?
|
[
{
"docid": "e8034a4cc4698ab17120162a58ee34d8",
"text": "The Bank Secrecy Act of 1970 requires that banks assist the U.S. Gov't in identifying and preventing money laundering. This means they're required to keep records of cash transactions of Negotiable Instruments, and report any such transactions with a daily aggregate limit of a value greater than (or equal to?) $10,000. Because of this, the business which is issuing the money order is also required to record this transaction to report it to the bank, who then holds the records in case FinCEN wants to review the transactions. EDITED: Added clarification on the $10,000 rule",
"title": ""
}
] |
[
{
"docid": "3643d7beeb720ccb8b716a16c50eaae2",
"text": "\"The best I could come up with would be to simply ask for the amount of \"\"notes\"\" and \"\"coins\"\" you would like, and specify denominations thereof. The different currency labels exist for the reason that not all of them are valued the same, so USD 100 is not the same as EUR 100. To generalize would mean some form of uniformity in the values, that just isn't there.\"",
"title": ""
},
{
"docid": "c1c13aa49e715118d2734bb6c0617b2d",
"text": "PayPal is free for buyers, taking their profit from the sellers -- in much the same way that credit cards take a percentage from the seller (though they will also charge you interest if you don't pay off the entire balance every month). As far as I know, there's nothing that keeps a vendor from having a different price for PayPal customers than cash customers... but that would show up in the number displayed by PayPal before you authorize the purchase, so if you're paying attention it shouldn't be possible to sneak it by you. PayPal has several modes of operation. I'm not aware of one where they hold your balance. Normally you either give them your credit card info, or you give them information about (one of your) bank account(s) and authorize them to do electronic funds transfer from and to that account on your behalf. I've always stuck with the credit card approach; I trust PayPal but I don't trust them that far, on principle. If I was going to link them to an account, it would be a small account I'd create for that purpose, NOT my main savings/checking accounts! (Hm. Actually, I do have one account which normally floats around $500 -- it's the one I dump accumulated pocket change into -- and I could use that. If I ever feel a need to do so.) PayPal does reduce the risk of credit card numbers being abused, by reducing how many people you've given the number to. Depending on what kinds of purchases you make, that may be a security advantage. It certainly doesn't hurt. Personally I have no problem with giving my card number directly to a serious business, but on eBay or sites of that sort where I'm dealing with individuals who are complete strangers I do like the isolation that PayPal provides. In other words, eBay is exactly the environment where I DO use PayPal. After all, that's exactly what PayPal was created for.",
"title": ""
},
{
"docid": "69a4097030d02ad2fe799e6e03e6d176",
"text": "Debit card purchases without PIN are treated as credit card purchases by merchants, and that includes ID verification. In addition to the ways you mentioned, you can get a debit card in any grocery store and load it with cash, and these debit cards don't have a name imprinted on them. But then if you lose them - you may have troubles proving you did in fact lose them when you try to recover your money, as anyone can use them. Technically you can register them online and call in and request refunds for fraud losses just as any other debit/credit card in the US (with $50 deductible), but in practice it may be difficult. These cards have very high fees, and may not be accepted for rentals etc.",
"title": ""
},
{
"docid": "c79f2e2c120b60e4f3b95c05270dbedf",
"text": "See what your current card requires for additional cards. When my daughter turned 16, and I ordered a card for her, I realized the issuer didn't ask for her social security number, only a name and address. That's when I also ordered a card with my pseudonym. Which I believe is what you're looking for. I realize that you prefer no name at all, but any online site where you place an order will require you to fill in that name field .",
"title": ""
},
{
"docid": "571edf1671b49f1cc5c36968933430f8",
"text": "In any country, individuals (and shops) can reject any form of payment that is not Legal Tender - defined by law as a payment form that must be accepted. Shops are typically more generous, because they want to do business with you, but individuals are in a different position. In France, only official coins and bills are declared as Legal Tender (so if they don't want to, individuals don't even need to accept bank transfers). This is for doubts you need to pay. In addition, as you are not forced to do business with them, people and shops can require whatever they feel like to require - if you want to buy their car, they can ask you to stand on your head and spit coins, and if you don't like it, they don't sell to you. (They won't do much business then, probably)",
"title": ""
},
{
"docid": "ab2e33242dd7429fea27ae355e2ed0a4",
"text": "\"For me, it would be hard to leave all forms of money at home (cash, credit card, debit card.) There are times when you simply need to have money on hand. But, here's a simple idea I have that lets you bring your cards with you, yet still puts up a hurdle to curb impulse buying. When you're in a situation where you want to buy something, the card that's in your wallet/purse will be wrapped in your crafted \"\"reminder envelope.\"\" You'll see the reminder, which is hopefully enough. Then, in order to make a purchase you'll need to tear it open. That should get you to think twice. The one problem with the above is online purchases: If you have memorized your card information, add this rule for yourself: No online purchases without the payment card present and visible. (i.e. you also must tear open the envelope for online purchases.)\"",
"title": ""
},
{
"docid": "a6dfcf26a5db31418a373383a13b4b34",
"text": "Nowadays, the field is irrelevant for processing the transfer and completely ignored by the banks. Pretty much the only purpose it has is for documenting whom you intended to send the transfer to. If you mistakenly send a transfer to the wrong person (which is becoming extremely unlikely with the IBAN due to the builtin check digits) then they are mandated by law to give it back to you. If they refuse to do so and you end up going to court, the content of that field could be important to prove them wrong if they claim they are the rightful recipient.",
"title": ""
},
{
"docid": "3425475716ba46e14d125eb4d5332090",
"text": "**Know your customer** Know your customer (KYC) is the process of a business identifying and verifying the identity of its clients. The term is also used to refer to the bank and anti-money laundering regulations which governs these activities. Know your customer processes are also employed by companies of all sizes for the purpose of ensuring their proposed agents, consultants, or distributors are anti-bribery compliant. Banks, insurers and export creditors are increasingly demanding that customers provide detailed anti-corruption due diligence information. *** ^[ [^PM](https://www.reddit.com/message/compose?to=kittens_from_space) ^| [^Exclude ^me](https://reddit.com/message/compose?to=WikiTextBot&message=Excludeme&subject=Excludeme) ^| [^Exclude ^from ^subreddit](https://np.reddit.com/r/business/about/banned) ^| [^FAQ ^/ ^Information](https://np.reddit.com/r/WikiTextBot/wiki/index) ^| [^Source](https://github.com/kittenswolf/WikiTextBot) ^] ^Downvote ^to ^remove ^| ^v0.27",
"title": ""
},
{
"docid": "a25541623ab02af2dc87e91002dd5fb2",
"text": "The IBAN uniquely identifies a Bank and Account number Globally. Technically only IBAN should be sufficient. However in real world, today the way application have got developed [over a last 30 years without IBAN being in place], require Beneficiary Bank Code [identifiers], because based on that they determine how the payment needs to be processed. Although IBAN has been adopted by more countries in Europe [plus Australia, New Zealand and more], there applications have not yet undergone the required change to fully support the real purpose or essence of IBAN. It would still be quite some time for IBAN to be truly functional.",
"title": ""
},
{
"docid": "2ba2c626ca84ace787e7a478a3acbf83",
"text": "There generally isn't much in the way of real identity verification, at least in the US and online. The protection you get is that with most credit cards you can report your card stolen (within some amount of time) and the fraudulent charges dropped. The merchant is the one that usually ends up paying for it if it gets charged back so it's usually in the merchant's best interest to do verification. However the cost of doing so (inconvenience to the customer, or if it's an impulse buy, giving them more time to change their mind, etc) is often greater than the occasional fraudulent charge so they usually don't do too much about it unless they're in a business where it's a frequent problem.",
"title": ""
},
{
"docid": "398bfb864e3bdee31e346f5c9836893b",
"text": "It depends on the seller. If the seller wants, they can collect the information from you and send it to the payment gateway. In that case, they of course have everything that you provide at some point. They are not supposed to keep the security code, and there are rules about keeping the credit card number safe. The first four digits of the credit card number often indicate the bank, although smaller banks may share. But for example a Capital One card would indicate the bank. Other sellers work through a payment gateway that collects the information. Even there, the seller may collect most of the information first and send it to the gateway. In particular, the seller may collect name, email, phone, and address information. And in general the gateway will reveal that kind of information. They will not give the seller credit card info other than the name on the card, expiration date, and possible last four digits. They may report if the address matches the card's billing address (mismatched addresses may mean fraud). Buying through someone like PayPal can provide the least information. For a digital good, PayPal can only expose the buyer's name (which may be a business name) and email (associated with the payment account). However PayPal still has the other information and may expose it under legal action (e.g. if the credit card transaction is reversed or the good sold is illegal). And even PayPal will expose the shipping address for physical goods that require shipping.",
"title": ""
},
{
"docid": "bf31dca0449fe2ee8c4a4b0001b7fcfd",
"text": "It is likely the policy of the credit card company. If you are running a business, you should factor in theft as part of your mark-up/margin. Every major business accounts for theft within their business practices and accounting. That way they are covered for instances like yours. If you have not been accounting for theft, then I'd highly recommend it. This might be an expensive learning lesson for your family business. Either implement new procedures such as checking ID with credit cards to match the names, or factor in theft/loss of product into your margins. Ideally, do both.",
"title": ""
},
{
"docid": "4bcb8768fec274447c5e41195f94b885",
"text": "They could if they wanted. It's of course illegal to do if you didn't authorize it, and to process credit cards, they need to have a relationship with a credit card processing company, which is not so easy to fake - not any Joe could do that using a fake ID. Note that you are protected through your credit card company; if you tell them it's an unauthorized charge, they'll return it to you without discussion. It is then the vendor's duty to prove that it was authorized, and if he cannot, he'll pay extra fees to the processing company. Overall, the risk is very small; it shouldn't be your worry.",
"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": "a65fc91a3ca55f1c0bd429d5487b7e8c",
"text": "The laws of the United States of America require that the federal currency issued is accepted as legal tender for all goods and services anywhere within this country. One really has to wonder what the motivation behind this story is. VISA obviously knows that such a move is illegal. I am skeptical that there's any truth to the article at all.",
"title": ""
}
] |
fiqa
|
f0b46f6be1f5994ac8f963c36b439024
|
Best way to start investing, for a young person just starting their career?
|
[
{
"docid": "35d0603711e7c4e1070df7eb7293ba24",
"text": "\"First off, I highly recommend the book Get a Financial Life. The basics of personal finance and money management are pretty straightforward, and this book does a great job with it. It is very light reading, and it really geared for the young person starting their career. It isn't the most current book (pre real-estate boom), but the recommendations in the book are still sound. (update 8/28/2012: New edition of the book came out.) Now, with that out of the way, there's really two kinds of \"\"investing\"\" to think about: For most individuals, it is best to take care of #1 first. Most people shouldn't even think about #2 until they have fully funded their retirement accounts, established an emergency fund, and gotten their debt under control. There are lots of financial incentives for retirement investing, both from your employer, and the government. All the more reason to take care of #1 before #2! Your employer probably offers some kind of 401k (or equivalent, like a 403b) with a company-provided match. This is a potential 100% return on your investment after the vesting period. No investment you make on your own will ever match that. Additionally, there are tax advantages to contributing to the 401k. (The money you contribute doesn't count as taxable income.) The best way to start investing is to learn about your employer's retirement plan, and contribute enough to fully utilize the employer matching. Beyond this, there are also Individual Retirement Accounts (IRAs) you can open to contribute money to on your own. You should open one of these and start contributing, but only after you have fully utilized the employer matching with the 401k. The IRA won't give you that 100% ROI that the 401k will. Keep in mind that retirement investments are pretty much \"\"walled off\"\" from your day-to-day financial life. Money that goes into a retirement account generally can't be touched until retirement age, unless you want to pay lots of taxes and penalties. You generally don't want to put the money for your house down payment into a retirement account. One other thing to note: Your 401K and your IRA is an account that you put money into. Just because the money is sitting in the account doesn't necessarily mean it is invested. You put the money into this account, and then you use this money for investments. How you invest the retirement money is a topic unto itself. Here is a good starting point. If you want to ask questions about retirement portfolios, it is probably worth posting a new question.\"",
"title": ""
},
{
"docid": "8542f403ccc447be8bc5d2ba558420a2",
"text": "First I'd like to echo msemack's answer. Start by maxing out your 401K and IRA contributions. Not a lot of people just starting their career have the luxury of doing much more outside of that. Here are some additional tips that I learned when I was just getting started:",
"title": ""
},
{
"docid": "8f1640e23ad8d51220d1245790777b31",
"text": "First, congratulations on even thinking about investing while you are still young! Before you start investing, I'd suggest you pay off your cc balance if you have any. The logic is simple: if you invest and make say 8% in the market but keep paying 14% on your cc balance, you aren't really saving. Have a good supply of emergency fund that is liquid (high yielding savings bank like a credit union. I can recommend Alliant). Start small with investing. Educate yourself on the markets before getting in. Ignorance can be expensive. Learn about IRA (opening an IRA and investing in the markets have (good)tax implications. I didn't do this when I was young and I regret that now) Learn what is 'wash sales' and 'tax loss harvesting' before putting money in the market. Don't start out by investing in individual stocks. Learn about indexing. What I've give you are pointers. Google (shameless plug: you can read my blog, where I do touch upon most of these topics) for the terms I've mentioned. That'll steer you in the right direction. Good luck and stay prosperous!",
"title": ""
},
{
"docid": "f71d19e6c9d2beac1ed6871b68dc4618",
"text": "Not 100% related, but the #1 thing you need to avoid is CREDIT CARD DEBT. Trust me on this one. I'm 31, and finally got out of credit card debt about eight months ago. For just about my entire 20s, I racked up credit card debt and saved zero. Invested zero. It pains me to realize that I basically wasted ten years of possible interest, and instead bought a lot of dumb things and paid 25% interest on it. So yes, put money into your 401k and an IRA. Max them out.",
"title": ""
},
{
"docid": "19cf08f2e1f80a9be0d2a44020501f00",
"text": "Warren Buffett answered this question very well at the 2009 Berkshire Hathaway annual meeting. He said that it was important to read everything you can about investing. What you will find is that you will have a number of competing ideas in your head. You will need to think these through and find the best way to solve them that fits you. You will mostly learn how to invest through good examples. There are fewer good examples out there than you might think, given how many books there are and how many people get paid to give advice in this area. If you want to see how professional investors actually think about specific investments, over a thousand investment examples can be found at www.valueinvestorsclub.com, just login as a guest. The site is run by Joel Greenblatt (you would benefit from reading his books also), and it will give you a sense of the work that investors put into their research. Good luck.",
"title": ""
},
{
"docid": "2aa50063f3f9ec9137401eee02976443",
"text": "\"The most important thing is to start. Don't waste months and years trying to figure out the \"\"optimal\"\" strategy or trying to read all the best books before you start. Pick a solid, simple choice, like investing in your company sponsored 401(k), and do it today. This I Will Teach You To Be Rich post on barriers has some good insight on this.\"",
"title": ""
},
{
"docid": "d5f6ab42ec27749661579ad1362da721",
"text": "I would personally suggest owning Mutual Funds or ETF's in a tax sheltered account, such as a 401k or an IRA, especially Roth options if available. This lets you participate in the stock market while ensuring that you have diversified portfolio, and the money is managed by an expert. The tax sheltered accounts (or tax free in the case of Roth accounts) increase your savings, and simplify your life as you don't need to worry about taxes on earnings within those accounts, as long as you leave the money in. For a great beginner's guide see Clark's Investment Guide (Easy).",
"title": ""
},
{
"docid": "49183a72c0b15726b887ab56f8c064b5",
"text": "\"This is a tough question, because it is something very specific to your situation and finances. I personally started at a young age (17), with US$1,000 in Scottrade. I tried the \"\"stock market games\"\" at first, but in retrospect they did nothing for me and turned out to be a waste of time. I really started when I actually opened my brokerage account, so step one would be to choose your discount broker. For example, Scottrade, Ameritrade (my current broker), E-Trade, Charles Schwab, etc. Don't worry about researching them too much as they all offer what you need to start out. You can always switch later (but this can be a little of a hassle). For me, once I opened my brokerage account I became that much more motivated to find a stock to invest in. So the next step and the most important is research! There are many good resources on the Internet (there can also be some pretty bad ones). Here's a few I found useful: Investopedia - They offer many useful, easy-to-understand explanations and definitions. I found myself visiting this site a lot. CNBC - That was my choice for business news. I found them to be the most watchable while being very informative. Fox Business, seems to be more political and just annoying to watch. Bloomberg News was just ZzzzZzzzzz (boring). On CNBC, Jim Cramer was a pretty useful resource. His show Mad Money is entertaining and really does teach you to think like an investor. I want to note though, I don't recommend buying the stocks he recommends, specially the next day after he talks about them. Instead, really pay attention to the reasons he gives for his recommendation. It will teach you to think more like an investor and give you examples of what you should be looking for when you do research. You can also use many online news organizations like MarketWatch, The Motley Fool, Yahoo Finance (has some pretty good resources), and TheStreet. Read editorial (opinions) articles with a grain of salt, but again in each editorial they explain why they think the way they think.\"",
"title": ""
},
{
"docid": "979c95a7d82d2ff23aa9bbc97332178e",
"text": "If your employer offers a 401(k) match, definitely take advantage of it. It's free money, so take advantage of it!",
"title": ""
},
{
"docid": "ad3cf054c9e8adab894e9d6b4ee3ea2f",
"text": "Adding to the very good advises above - Concentrate on costs related to investment activity. Note all expenses and costs that you pay. Keep it low.",
"title": ""
},
{
"docid": "becdcfc45a8504a311011b12d5987a2d",
"text": "When you start to buy stock, don't buy too little of it! Stocks come at a cost (you pay a commission), and you need to maintain a deposit, you have to take these costs into account when buying to calculate your break even point for selling. Don't buy stock for less than 1.500€ Also, diversify. Buy stock from different sectors and from different geographies. Spread your risks. Start buying 'defensive' stocks (food, pharma, energy), then move to more dynamic sectors (telecom, informatics), lastly buy stock from risky sectors that are not mature markets (Internet businesses). Lastly, look for high dividend. That's always nice at the end of the year.",
"title": ""
},
{
"docid": "164f357b28487a92dd220457fa1bda24",
"text": "\"I tell you how I started as an investor: read the writings of probably the best investor of the history and become familiarized with it: Warren Buffett. I highly recommend \"\"The Essays of Warren Buffett\"\", where he provides a wise insight on how a company generates value, and his investment philosophy. You won't regret it! And also, specially in finance, don't follow the advice from people that you don't know, like me.\"",
"title": ""
},
{
"docid": "394e8db16539286dcd7b3a351f08a4af",
"text": "Conventional wisdom says (100-age) percentage of your saving should go to Equity and (age) percentage should go to debt. My advice to you is to invest (100-age) into index fund through SIP and rest in FD. You can re-balance your investment once a year. Stock picking is very risky. And so is market timing. Of cource you can change the 100 into a other number according to your risk tolerance.",
"title": ""
},
{
"docid": "b272698e1679609d91d03ae6740f5359",
"text": "I started my career over 10 years ago and I work in the financial sector. As a young person from a working class family with no rich uncles, I would prioritize my investments like this: It seems to be pretty popular on here to recommend trading individual stocks, granted you've read a book on it. I would thoroughly recommend against this, for a number of reasons. Odds are you will underestimate the risks you're taking, waste time at your job, stress yourself out, and fail to beat a passive index fund. It's seriously not worth it. Some additional out-of-the box ideas for building wealth: Self-serving bias is pervasive in the financial world so be careful about what others tell you about what they know (including me). Good luck.",
"title": ""
}
] |
[
{
"docid": "99ec4e9ad2c34404edec3c8e786cf33b",
"text": "There is no absolute answer to this as it depends on your particular situation, but some tips: As to investing versus saving, you need to do some of both: Be careful about stockpiling too much in bank accounts. Inflation will eat that money up over time to the tune of 3-4%/year. You are young and have a longer investment horizon for retirement, take advantage of that and accept a little more risk while you can.",
"title": ""
},
{
"docid": "3542140ac5e9dea0cfc935e2ec36c743",
"text": "Where is the money coming from? If you already have the money (inheritance, gifts or similar) sitting in your account, you can just buy e.g. index funds from Vanguard, Robinhood or other low-cost brokerages. But first you should estimate how much money you need for your studies - it is a bit of a gamble to invest money that you'll need to withdraw in a few years time. Even though the average return may be quite high (12% sounds like an overestimate, more commonly quoted figure is 7%), over short timespans your stocks will go up and down randomly. Once you actually have a job and have income from it, then the 401k and IRA and similar retirement accounts start to make sense. There is no need to have all your savings in the same account, so you can start saving now already.",
"title": ""
},
{
"docid": "0dbe36e7d333c6d096f12c3665f9261e",
"text": "I think I have a better answer for this since I have been an investor in the stock markets since a decade and most of my money is either made through investing or trading the financial markets. Yes you can start investing with as low as 50 GBP or even less. If you are talking about stocks there is no restriction on the amount of shares you can purchase the price of which can be as low as a penny. I stared investing in stocks when I was 18. With the money saved from my pocket money which was not much. But I made investments on a regular period no matter how less I could but I would make regular investments on a long term. Remember one thing, never trade stock markets always invest in it on a long term. The stock markets will give you the best return on a long term as shown on the graph below and will also save you money on commission the broker charge on every transaction. The brokers to make money for themselves will ask you to trade stocks on short term but stock market were always made to invest on a long term as Warren Buffet rightly says. And if you want to trade try commodities or forex. Forex brokers will offer you accounts with as low as 25 USD with no commissions. The commission here are all inclusive in spreads. Is this true? Can the average Joe become involved? Yes anyone who wants has an interest in the financial markets can get involved. Knowledge is the key not money. Is it worth investing £50 here and there? Or is that a laughable idea? 50 GBP is a lot. I started with a few Indian Rupees. If people laugh let them laugh. Only morons who don't understand the true concept of financial markets laugh. There are fees/rules involved, is it worth the effort if you just want to see? The problem with today's generation of people is that they fear a lot. Unless you crawl you dont walk. Unless you try something you dont learn. The only difference between a successful person and a not successful person is his ability to try, fail/fall, get back on feet, again try untill he succeeds. I know its not instant money, but I'd like to get a few shares here and there, to follow the news and see how companies do. I hear that BRIC (brasil, russia, india and china) is a good share to invest in Brazil India the good thing is share prices are relatively low even the commissions. Mostly ROI (return on investment) on a long term would almost be the same. Can anyone share their experiences? (maybe best for community wiki?) Always up for sharing. Please ask questions no matter how stupid they are. I love people who ask for when I started I asked and people were generous enough to answer and so would I be.",
"title": ""
},
{
"docid": "af1e7f772ced48852837068b40ff5770",
"text": "Investments earn income relative to the principal amounts invested. If you do not have much to invest, then the only way to 'get rich' by investing is to take gambles. And those gambles are more likely to fail than succeed. The simplest way for someone without a high amount of 'capital' [funds available to invest] to build wealth, is to work more, and invest in yourself. Go to school, but only for proven career paths. Take self-study courses. Learn and expand your career opportunities. Only once you are stable financially, have minimal debt [or, understand and respect the debt you plan to pay down slowly, which some people choose to do with school and house debt], and are able to begin contributing regularly to investment plans, can you put your financial focus on investing. Until then, any investment gains would pale in comparison to gains from building your career.",
"title": ""
},
{
"docid": "2234ad152a94b06edf2086f30592fe80",
"text": "I am not interested in watching stock exchange rates all day long. I just want to place it somewhere and let it grow Your intuition is spot on! To buy & hold is the sensible thing to do. There is no need to constantly monitor the stock market. To invest successfully you only need some basic pointers. People make it look like it's more complicated than it actually is for individual investors. You might find useful some wisdom pearls I wish I had learned even earlier. Stocks & Bonds are the best passive investment available. Stocks offer the best return, while bonds are reduce risk. The stock/bond allocation depends of your risk tolerance. Since you're as young as it gets, I would forget about bonds until later and go with a full stock portfolio. Banks are glorified money mausoleums; the interest you can get from them is rarely noticeable. Index investing is the best alternative. How so? Because 'you can't beat the market'. Nobody can; but people like to try and fail. So instead of trying, some fund managers simply track a market index (always successfully) while others try to beat it (consistently failing). Actively managed mutual funds have higher costs for the extra work involved. Avoid them like the plague. Look for a diversified index fund with low TER (Total Expense Ratio). These are the most important factors. Diversification will increase safety, while low costs guarantee that you get the most out of your money. Vanguard has truly good index funds, as well as Blackrock (iShares). Since you can't simply buy equity by yourself, you need a broker to buy and sell. Luckily, there are many good online brokers in Europe. What we're looking for in a broker is safety (run background checks, ask other wise individual investors that have taken time out of their schedules to read the small print) and that charges us with low fees. You probably can do this through the bank, but... well, it defeats its own purpose. US citizens have their 401(k) accounts. Very neat stuff. Check your country's law to see if you can make use of something similar to reduce the tax cost of investing. Your government will want a slice of those juicy dividends. An alternative is to buy an index fund on which dividends are not distributed, but are automatically reinvested instead. Some links for further reference: Investment 101, and why index investment rocks: However the author is based in the US, so you might find the next link useful. Investment for Europeans: Very useful to check specific information regarding European investing. Portfolio Ideas: You'll realise you don't actually need many equities, since the diversification is built-in the index funds. I hope this helps! There's not much more, but it's all condensed in a handful of blogs.",
"title": ""
},
{
"docid": "fedc731ab6ca2dc898e6b0f3972279a9",
"text": "\"Put it in a Vanguard fund with 80% VTI and 20% VXUS. That's what you'll let set for 10-15 years. For somebody that is totally new to investing, use \"\"play money\"\" in the stock market. It's easy for young people to get dreams of glory and blow it all on some stock tip they've seen on Twitter.\"",
"title": ""
},
{
"docid": "ff00d276dc2faab32131924447924ce4",
"text": "There are lots of sub-parts to your question. Let's takle them one at a time. Should I worry about an IRA at this age? Absolutely! Or at least some form of retirement account. When you are young is the BEST time to start putting money into a retirement account because you have so much time for it to grow. Compounding interest is a magical thing. Even if you can only afford to put a very small amount in the account, do it! You will have to put a heck of a lot less money into the account over your working career if you start now. Is there a certain amount you need for the IRA deduction? No. Essentially with a traditional IRA you can just subtract the amount you deposited (up to the contribution limit) from your income when calculating your taxes. What kind of IRA should I get? I suggest a ROTH IRA, but be warned that with that kind you get the tax breaks when you retire, not now. If you think taxes will be higher in 40 years or so, then the Roth is a clear winner. Traditional IRA: Tax deduction this year for contribution; investment plus gains are taxed as income when you take the money out at retirement. Roth IRA: Investment amount is taxed in the year you put it in; no taxes on investment amount or gains when you take it out at retirement. Given the long horizon that you will be investing, the money is likely going to at least double. So the total amount you are taxed on over your lifetime would probably be less with the ROTH even if tax rates remain the same. Is the 401K a better option? If they offer a match (most do) then it is a no-brainer, the employer 401K always comes out on top because they are basically paying you extra to put money into savings. If there is no match, I suggest a Roth because company 401K plans usually have hidden fees that are much higher than you are going to pay for setting up your own IRA or Roth IRA with a broker.",
"title": ""
},
{
"docid": "30feb5a4ba881b67248e3400ceb0ad70",
"text": "\"What a lovely position to find yourself in! There's a lot of doors open to you now that may not have opened naturally for another decade. If I were in your shoes (benefiting from the hindsight of being 35 now) at 21 I'd look to do the following two things before doing anything else: 1- Put 6 months worth of living expenses in to a savings account - a rainy day fund. 2- If you have a pension, I'd be contributing enough of my salary to get the company match. Then I'd top up that figure to 15% of gross salary into Stocks & Shares ISAs - with a view to them also being retirement funds. Now for what to do with the rest... Some thoughts first... House: - If you don't want to live in it just yet, I'd think twice about buying. You wouldn't want a house to limit your career mobility. Or prove to not fit your lifestyle within 2 years, costing you money to move on. Travel: - Spending it all on travel would be excessive. Impromptu travel tends to be more interesting on a lower budget. That is, meeting people backpacking and riding trains and buses. Putting a resonable amount in an account to act as a natural budget for this might be wise. Wealth Managers: \"\"approx. 12% gain over 6 years so far\"\" equates to about 1.9% annual return. Not even beat inflation over that period - so guessing they had it in ultra-safe \"\"cash\"\" (a guaranteed way to lose money over the long term). Give them the money to 'look after' again? I'd sooner do it myself with a selection of low-cost vehicles and equal or beat their return with far lower costs. DECISIONS: A) If you decided not to use the money for big purchases for at least 4-5 years, then you could look to invest it in equities. As you mentioned, a broad basket of high-yielding shares would allow you to get an income and give opportunity for capital growth. -- The yield income could be used for your travel costs. -- Over a few years, you could fill your ISA allowance and realise any capital gains to stay under the annual exemption. Over 4 years or so, it'd all be tax-free. B) If you do want to get a property sooner, then the best bet would to seek out the best interest rates. Current accounts, fixed rate accounts, etc are offering the best interest rates at the moment. Usual places like MoneySavingExpert and SavingsChampion would help you identify them. -- There's nothing wrong with sitting on this money for a couple of years whilst you fid your way with it. It mightn't earn much but you'd likely keep pace with inflation. And you definitely wouldn't lose it or risk it unnecessarily. C) If you wanted to diversify your investment, you could look to buy-to-let (as the other post suggested). This would require a 25% deposit and likely would cost 10% of rental income to have it managed for you. There's room for the property to rise in value and the rent should cover a mortgage. But it may come with the headache of poor tenants or periods of emptiness - so it's not the buy-and-forget that many people assume. With some effort though, it may provide the best route to making the most of the money. D) Some mixture of all of the above at different stages... Your money, your choices. And a valid choice would be to sit on the cash until you learn more about your options and feel the direction your heart is pointing you. Hope that helps. I'm happy to elaborate if you wish. Chris.\"",
"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": "8e1d0b430b37edba8ebb7bd4beea39ae",
"text": "First of all I recommend reading this short e-book that is aimed at young investors. The book is written for American investors but they same rules apply with different terms (e.g. the equivalent tax-free savings wrappers are called ISAs in the UK). If you don't anticipate needing the money any time soon then your best bet is likely a stocks and share ISA in an aggressive portfolio of assets. You are probably better off with an even more aggressive asset allocation than the one in the book, e.g. 0-15% bond funds 85-100% equity funds. In the long term, this will generate the most income. For an up-to-date table of brokers I recommend Monevator. If you are planning to use the money as a deposit on a mortgage then your best bet might be a Help to Buy ISA, you'll have to shop around for the best deals. If you would rather have something more liquid that you can draw into to cover expenses while at school, you can either go for a more conservative ISA (100% bond funds or even a cash ISA) or try to find a savings account with a comparable interest rate.",
"title": ""
},
{
"docid": "a0ee72e0f45538a89c714aff65edec8b",
"text": "James, money saved over the long term will typically beat inflation. There are many articles that discuss the advantage of starting young, and offer: A 21 year old who puts away $1000/yr for 10 years and stops depositing will be ahead of the 31 yr old who starts the $1000/yr deposit and continues through retirement. If any of us can get a message to our younger selves (time travel, anyone?) we would deliver two messages: Start out by living beneath your means, never take on credit card debt, and save at least 10%/yr as soon as you start working. I'd add, put half your raises to savings until your rate is 15%. I can't comment on the pension companies. Here in the US, our accounts are somewhat guaranteed, not for value, but against theft. We invest in stocks and bonds, our funds are not mingled with the assets of the investment plan company.",
"title": ""
},
{
"docid": "68c2ed7fd4fb4f18c56d58438d284b64",
"text": "Investing in the stock market early is a good thing. However, it does have a learning curve, and that curve can, and eventually will, cost you. One basic rule in investing is that risk and reward are proportional. The greater the reward, the higher the risk that you either (a) won't get the reward, or (b) lose your money instead. Given that, don't invest money you can't afford to lose (you mentioned you're on a student budget). If you want to start with short but sercure investments, try finding a high-interest savings account or CD. For example, the bank I use has an offer where the first $500 in your account gets ~6% interest - certainly not bad if you only put $500 in the account. Unfortunately, most banks are offering a pittance for savings rates or CDs. If you're willing to take more risk, you could certainly put money into the stock market. Before you do, I would recommend spending some time learning about how the stock market works, it's flows and ebbs, and how stock valuations work. Don't buy a stock because you hear about it a lot; understand why that stock is being valued as such. Also consider buying index funds (such as SPY) which is like a stock but tracks an entire index. That way if a specific company suddenly drops, you won't be nearly as affected. On the flip side, if only 1 company goes up, but the market goes down, you'll miss out. But consider the odds of having picked that 1 company.",
"title": ""
},
{
"docid": "a1d7295c043ae09e650db137040a74ed",
"text": "How do I start? (What broker do I use?) We don't make specific recommendations because in a few years that might not be the best recommendation any more. You are willing to do your own research, so here are some things to look for when choosing a broker: What criticism do you have for my plan? Seeking dividend paying stock is a sensible way to generate income, but share prices can still be very volatile for a conservative investor. A good strategy might be to invest in several broad market index and bond funds in a specific allocation (for example you might choose 50% stocks and 50% bonds). Then as the market moves, your stocks might increase by 15% one year while bonds stay relatively flat, so at the beginning of the next year you can sell some of your stocks and buy bonds so that you are back to a 50-50 allocation. The next year there might be a stock market correction, so you sell some of your bonds and buy stock until you are back to a 50-50 allocation. This is called rebalancing, and it doesn't require you to look at the market daily, just on a regular interval (every 3 months, 6 months, or 1 year, whatever interval you are comfortable with). Rebalancing will give you greater gains than a static portfolio, and it can insulate you from losses when the stock market panics occasionally if you choose a conservative allocation.",
"title": ""
},
{
"docid": "eecd86f6b715a52cd18cb0f621378177",
"text": "It's really not possible to know what your best investment strategy is without knowing more about you, which isn't the place of a site like this. However I'll make some general comments about insurance policies as savings. Insurance policies are extremely inflexible. They lay down specific payments, and specific returns that you will get back. However typically if you don't follow the shcedule of payments laid down, you will lose almost all the benefit of the investment. Since you say you are a beginner, I'll assume you are young too. Maybe in a few years you will want to buy a house, or a nice car, or get married, or put money into some other investment opportunity. If you are committed to making insurance policy payments you will have less available for the other things you want to do. Related to this is the 'estimated returns'. You say the 'nonguaranteed bonus is around 3.75%-5.25%'. But because an insurance policy locks you in, if it turns out that it's the low end of that - or worse - you can't get out, even if other investments are outperforming it.",
"title": ""
},
{
"docid": "a65594a18d3dd998b566955e0836c790",
"text": "If you're sure you want to go the high risk route: You could consider hot stocks or even bonds for companies/countries with lower credit ratings and higher risk. I think an underrated cost of investing is the tax penalties that you pay when you win if you aren't using a tax advantaged account. For your speculating account, you might want to open a self-directed IRA so that you can get access to more of the high risk options that you crave without the tax liability if any of those have a big payout. You want your high-growth money to be in a Roth, because it would be a shame to strike it rich while you're young and then have to pay taxes on it when you're older. If you choose not to make these investments in a tax-advantaged account, try to hold your stocks for a year so you only get taxed at capital gains rates instead of as ordinary income. If you choose to work for a startup, buy your stock options as they vest so that if the company goes public or sells privately, you will have owned those stocks long enough to qualify for capital gains. If you want my actual advice about what I think you should do: I would increase your 401k percentage to at least 10% with or without a match, and keep that in low cost index funds while you're young, but moving some of those investments over to bonds as you get closer to retirement and your risk tolerance declines. Assuming you're not in the 25% tax bracket, all of your money should be in a Roth 401k or IRA because you can withdraw it without being taxed when you retire. The more money you put into those accounts now while you are young, the more time it all has to grow. The real risk of chasing the high-risk returns is that when you bet wrong it will set you back far enough that you will lose the advantage that comes from investing the money while you're young. You're going to have up and down years with your self-selected investments, why not just keep plugging money into the S&P which has its ups and downs, but has always trended up over time?",
"title": ""
}
] |
fiqa
|
0e9bb490f19ddc132161c113aa072bf5
|
Foreign company incorporated in US and W9
|
[
{
"docid": "fe5cfb09968ac4444f604fac9e9b16c9",
"text": "According to the W9 instructions you are considered a U.S. person if: According to the following section, it looks like a C corporation may be easier then an LLC: All of this information can be found here: http://www.irs.gov/pub/irs-pdf/fw9.pdf Hope this helps!",
"title": ""
}
] |
[
{
"docid": "f32db279288b5726c22159492891b6d4",
"text": "\"Since as you say, an LLC is a pass-through entity, you will be making income in the U.S. when you sell to U.S. customers. And so you will need to file the appropriate personal tax forms in the US. As well as potentially in one or more States. The US government does not register LLCs. The various States do. So you'll be dealing with Oregon, Wisconsin, Wyoming, one of those for the LLC registration. You will also need to have a registered agent in the State. That is a big deal since the entire point of forming an LLC is to add a liability shield. You would lose the liability shield by not maintaining the business formalities. Generally nations aim to tax income made in their nation, and many decline to tax income that you've already paid taxes on in another nation. A key exception: If money is taxed by the U.S. it may also be taxed by one of the States. Two States won't tax the same dollar. Registering an LLC in one State does not mean you'll pay state taxes there. Generally States tax income made in their State. It's common to have a Wyoming LLC that never pays a penny of tax in Wyoming. Officially, an LLC doing business in a State it did not form in, must register in that State as a \"\"foreign LLC\"\" even though it's still in the USA. The fee is usually the same as for a domestic LLC. \"\"Doing business\"\" means something more than incidental sales, it means having a presence specifically in the State somehow. It gets complicated quick. If you are thinking of working in someone's app ecosystem like the Apple Store, Google Play, Steam etc. Obviously they want their developers coding, not wrestling with legalities, so some of them make a priority out of clearing and simplifying legal nuisances for you. Find out what they do for you.\"",
"title": ""
},
{
"docid": "f732bdd6254aa7f83b1bfdb31ddc9704",
"text": "*Disclaimer: I am a tax accountant , but I am not your professional accountant or advocate (unless you have been in my office and signed a contract). This communication is not intended as tax advice, and no tax accountant / client relationship results. *Please consult your own tax accountant for tax advise.** A foreign citizen may form a limited liability company. In contrast, all profit distributions (called dividends) made by a C corporation are subject to double taxation. (Under US tax law, a nonresident alien may own shares in a C corporation, but may not own any shares in an S corporation.) For this reason, many foreign citizens form a limited liability company (LLC) instead of a C corporation A foreign citizen may be a corporate officer and/or director, but may not work/take part in any business decisions in the United States or receive a salary or compensation for services provided in the United States unless the foreign citizen has a work permit (either a green card or a special visa) issued by the United States. Basically, you should be looking at benefiting only from dividends/pass-through income but not salaries or compensations.",
"title": ""
},
{
"docid": "42bb64664ad39c4ddb15eb14658076b3",
"text": "We offer a variety of business enterprise formation applications designed to make putting in a private organization as simple and straightforward as feasible. They range from the simple Digital Package - providing the minimum prison requirements for reputable Company formation - to the All Inclusive, which includes a variety of beneficial extras, including a prestigious registered office, a commercial enterprise provider. This corporation shape is usually utilized by non-earnings Company inside the United States. It protects the private finances of the business enterprise owners in a comparable manner as a corporation limited via stocks. Instead of getting shareholders and stocks.",
"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": "d96a217cfd999cfcfdccb979a8068a15",
"text": "\"Q) Will I have to submit the accounts for the Swiss Business even though Im not on the payroll - and the business makes hardly any profit each year. I can of course get our accounts each year - BUT - they will be in Swiss German! You will have to submit on your income from the business. The term \"\"partnership\"\" refers to a specific business entity type in the U.S. I'm not sure if you're using it the same way. In a partnership in the U.S. you pay income tax on your share of the partnership's income whether or not you actually receive income in your personal account. There's not enough information here to know if that applies in your case. (In the U.S., the partnership itself does not pay income tax - It is a \"\"disregarded entity\"\" for tax purposes, with the tax liability passed through to the partners as individuals.) Q) Will I need to have this translated!? Is there any format/procedure to this!? Will it have to be translated by my Swiss accountants? - and if so - which parts of the documentation need to be translated!? As regards language, you will file a tax return on a U.S. form presumably in English. You will not have to submit your account information on any other form, so the fact that your documentation is in German does not matter. The only exception that comes to mind is that you could potentially get audited (just like anyone else filing taxes in the U.S.) in which case you might need to produce your documentation. That situation is rare enough that I wouldn't worry about it though. I'm not sure if they'd take it in German or force you to get a translation. I was told that if I sell the business (and property) after I aquire a greencard - that I will be liable to 15% tax of the profit I'd made. I also understand that any tax paid (on selling) in Switzerland will be deducted from the 15%!? Q) Is this correct!? The long-term capital gains rate is 15% for most people. (At very high incomes it is 20%.) It sounds like you would qualify for long-term (held for greater than 1 year) capital gains in this case, although the details might matter. There is a foreign tax credit, but I'm not completely sure if it would apply in this case. (If forced to guess, I would say that it does.) If you search for \"\"foreign tax credit\"\" and \"\"IRS\"\" you should get to the information that you need pretty quickly. I will effectively have ALL the paperwork for this - as we'll need to do the same in Switzerland. But again, it will be in Swiss German. Q) Would this be a problem if its presented in Swiss German!? Even in this case you will not need to submit any of your paperwork to the IRS, unless you get audited. See earlier comments.\"",
"title": ""
},
{
"docid": "f08dea59bc4403adf5766bf5c83627e7",
"text": "Hi, apologize for my English. Extremely moronic question incoming (corporate finance, Modigliani&Miller). Let's say an unlevered company is valued at 1 bln: it issues 200 mln of debt and the corporate tax is at 40%. What is its value now? The sum of unlevered value, fiscal shield (200*0.4) and debt or just the sum of unlevered value and fiscal shield?",
"title": ""
},
{
"docid": "2948cd0e63af02de801485656a7996bc",
"text": "\"Tax US corporate \"\"persons (citizens)\"\" under the same regime as US human persons/citizens, i.e., file/pay taxes on all income earned annually with deductions for foreign taxes paid. Problem solved for both shareholders and governments. [US Citizens and Resident Aliens Abroad - Filing Requirements](https://www.irs.gov/individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad-filing-requirements) >If you are a U.S. citizen or resident alien living or traveling outside the United States, **you generally are required to file income tax returns, estate tax returns, and gift tax returns and pay estimated tax in the same way as those residing in the United States.** Thing is, we know solving this isn't the point. It is to misdirect and talk about everything, but the actual issues, i.e., the discrepancy between tax regimes applied to persons and the massive inequality it creates in tax responsibility. Because that would lead to the simple solutions that the populace need/crave. My guess is most US human persons would LOVE to pay taxes only on what was left AFTER they covered their expenses.\"",
"title": ""
},
{
"docid": "e20a9c8c36738492aa0363c1113b6ca9",
"text": "\"I'm working on similar problem space. There seems to be some working ambiguity in this space - most focus seems to be on more complex cases of income like Dividends and Capital Gains. The US seems to take a position of \"\"where the work was performed\"\" not \"\"where the work was paid\"\" for purposes of the FEIE. See this link. The Foreign Tax Credit(FTC) is applied (regardless of FEIE) based on taxes paid in the other Country. In the event you take the FEIE, you need to exclude that from the income possible to claim on the FTC. i.e. (TOTAL WAGES(X) - Excluded Income) There is a weird caveat on TOTAL WAGES(X) that says you can only apply the FTC to foreign-sourced income which means that potentially we are liable for the on-US-soil income at crazy rates. See this link.. Upon which... there is probably not a good answer short of writing your congressperson.\"",
"title": ""
},
{
"docid": "d97c06abad3c4a42d88565ee028e4e58",
"text": "\"It appears as others have said that companies are not required to state this on as any sort of Asset. I remembered a friend of mine is a lawyer specializing in Intellectual Property Rights so asked him and confirmed that there's no document companies are required to file which states all patent holdings as assets. There are two ways he suggested for finding out. Once you find a company you're interested in can search patents by company using one of the two following: US Patent Office website's advanced search: http://patft.uspto.gov/netahtml/PTO/search-adv.htm aanm/company for example entering into the textarea, \"\"aanm/google\"\" without the quotation marks will find patents by Google. The other is a Google Patent Search: http://www.google.com/patents/\"",
"title": ""
},
{
"docid": "fb0647f840b95233af703f5eabf08a32",
"text": "\"1. What forms do I need to file to receive money from Europe None. Your client can pay you via wire transfer. They need to know your name, address, account number, and the name of your bank, its SWIFT number and its associated address. The addresses and names are required to make sure there are no typos in the numbers. 2. What forms do I need to file to pay people in Latin America (or any country outside the US) None. 1099s only need to be filled out when the contractor has a US tax ID. Make sure they are contractors. If they work for you for more than 2 years, that can create a problem unless they incorporate because they might look like \"\"employees\"\" to the IRS in which case you need to be reporting their identitites to the IRS via a W-8BEN form. Generally speaking any foreign contractor you have for more than 2 years should incorporate in their own country and you bill that corporation to prevent employee status from occurring. 3. Can I deduct payments I made to contractors from other countries as company expense Of course.\"",
"title": ""
},
{
"docid": "40d2d9a6d76c74ae1e084e4f54346719",
"text": "See I believe that it's pretty in the open. A shell company whose only purpose is to license out some intellectual property to an affiliate company should be easy to spot. A company with 5 employees and a tiny office should not be claiming millions of income that originated in an affiliate company. My point is that these things are not clearly defined in the code and should be, not that they are necessarily being hidden. I've seen at least 5 articles in the last year similar to this one about other large companies, so I wish congress and whoever else would do something about it.",
"title": ""
},
{
"docid": "503261d5bff005c524a8682b785a5b54",
"text": "International equity are considered shares of companies, which are headquartered outside the United States, for instance Research in Motion (Canada), BMW (Germany), UBS (Switzerland). Some investors argue that adding international equities to a portfolio can reduce its risk due to regional diversification.",
"title": ""
},
{
"docid": "a79425e75db9bb30af8a6dfaf1f9aef4",
"text": "> foreign company I mean, I agree with the rest of the post but this dude is from the US and works in NY. The equity research division has nothing to do with foreign entities, especially when the foreign country of origin is Germany......Being a foreign company really doesnt have anything to do with this.",
"title": ""
},
{
"docid": "80d9204384953c46d31e6ba2bec967c0",
"text": "\"By living in Sweden and having a Swedish personal identification number (personnummer), you are required to declare your entire worldwide income for tax purposes with the Swedish tax authorities, Skatteverket. It would seem to not make any difference if some of that income is kept outside of Sweden. A company that has no permanent base of operations within Sweden should not deduct any preliminary taxes for an employee that lives in Sweden. Rather, the employee should apply for \"\"special A tax\"\" (\"\"SA\"\" tax status), and pay the taxes that, had the company had a permanent base of operations in Sweden, the company would have paid. The information available on the tax authority's web site in English seems limited, but the relevant page in Swedish in your situation is very likely Lön från utländska arbetsgivare utan fast driftställe i Sverige. There is a summary at Paying taxes – for individuals. Particularly do note the summary section: When staying for at least six months, you are considered as resident in Sweden for tax purposes, and are liable for taxation in Sweden on all of your worldwide income. You must also file a Swedish income tax return. Your tax return must be filed no later than May 2nd of the year after the fiscal year. as well as that: If you stay in Sweden for a continuous period of at least six months you are considered to be resident in Sweden. /.../ As a resident you are liable for taxation in Sweden on all of your worldwide income. In some cases a tax treaty with with your ordinary country of residence may limit the Swedish taxation. /.../ For a more detailed answer, including which exact forms you need to fill out and what data is needed, I strongly recommend that you either contact Skatteverket (they are usually quite nice to deal with, and they tend to realize that everyone benefits from getting the tax paperwork and payments right from the beginning), or find an attorney specializing in Swedish tax law. They even point out themselves that (my emphasis): the practical applications of these rules are relatively complicated and for more information you can contact the Tax Information (“Skatteupplysningen”) at 0771 567 567.\"",
"title": ""
},
{
"docid": "3045b1ad7e9c1c05dfbe5e0f484b250c",
"text": "According to the Form W-8BEN instructions for Part II, Line 10: Line 10. Line 10 must be used only if you are claiming treaty benefits that require that you meet conditions not covered by the representations you make on line 9 and Part III. For example, persons claiming treaty benefits on royalties must complete this line if the treaty contains different withholding rates for different types of royalties. In tax treaties, some of the benefits apply to every resident of a foreign country. Other benefits only apply to certain groups of people. Line 10 is where you affirm that you meet whatever special conditions are necessary in the treaty to obtain the benefit. If you are claiming that Article 15 of the U.S.-India Tax Treaty, you could use Line 10 to do this. It is important to remember that this form goes to the company paying you; it does not actually get sent to the IRS. Therefore, you can ask the company themselves if filling out Line 9 only will result in them withholding nothing, or if they would need you to fill out Line 10.",
"title": ""
}
] |
fiqa
|
d65a238bd7438cb81eae0a544108ba05
|
What effect would a company delisting from the LSE to move to china have on shareholders?
|
[
{
"docid": "052087c34f7b586e9f89059e1a3ec865",
"text": "Source Rule 41 of the AIM Rules sets out the procedure for delisting. In summary, a company that wishes to cancel the right of any of its trading securities must: The notification to the Exchange should be made by the company’s nominated adviser and should be given at least 20 business days prior to the intended cancellation date (the 20 business days’ notice requirement is a minimum). Any cancellation of a company’s securities on AIM will be conditional upon seeking shareholder approval in general meeting of not less than 75% of votes cast by its shareholders present and voting (in person or by proxy) at the meeting. The notification to shareholders should set out the preferred date of cancellation, the reasons for seeking the cancellation (for example annual fees to the Exchange, the cost of maintaining a nominated adviser and broker, professional costs, corporate governance compliance, inability to access funds on the market), a description of how shareholders will be able to effect transactions in the AIM securities once they have been cancelled and any other matters relevant to shareholders reaching an informed decision upon the issue of the cancellation. Cancellation will not take effect until at least 5 business days after the shareholder approval is obtained and a dealing notice has been issued by the Exchange. It should be noted that there are circumstances where the Exchange may agree that shareholder consent is not required for the cancellation of admission of a company’s shares, for example (i) where comparable dealing facilities on an EU regulated market or AIM designated market are put in place to enable shareholders to trade their AIM securities in the future or (ii) where, pursuant to a takeover which has become wholly unconditional, an offeror has received valid acceptances in excess of 75% of each class of AIM securities. The company’s Nominated Adviser will liaise with the Exchange to secure a dispensation if relevant. So you should receive information from the company regarding the due process informing you about your options.",
"title": ""
},
{
"docid": "32feefcea4d58b75470f821ea0aaa317",
"text": "You would still be the legal owner of the shares, so you would almost certainly need to transfer them to a broker than supports the Hong Kong Stock Exchange (which allows you to trade on the Shanghai exchange). In order to delist they would need to go through a process which would include enabling shareholders to continue to access their holdings.",
"title": ""
}
] |
[
{
"docid": "95ed38e69290471c4ff58513f465c7b1",
"text": "\"Any shares you buy when a company is listed on one market will remain yours if the company moves to another market. Markets and exchanges like AIM are just venues for dealing in shares - indeed you can deal in those shares anywhere else that will allow you as well as on the AIM. The benefit of being listed in a market is that trade in the shares will be more \"\"liquid\"\" - there's more likely to be people who want to buy and sell them at any given time. The bigger concern would be what happens if the company does badly and drops out of the AIM entirely. You'd still be able to sell your shares to any willing buyer, but finding that buyer might get harder.\"",
"title": ""
},
{
"docid": "85a1dc1faedb99d0afe67c678d523509",
"text": "Would make sense that the higher liquidation cost and Transaction costs are driving the share price down. Higher liq and transaction means higher investors would require higher return, driving down the share price. The other possibilities I can think of off the top of my head, based on looking at the firm for five minutes 1) In transaction costs, did you include tax? Disclaimer: math below done on the back of the envelope in between meetings; So, NAV says they are at ~$75M. Liquidating that entire portfolio means about 22% capital gains tax rate. Which means after tax value is about $60M. Add in any fees you'd incur from trying to sell this stuff, and it's not unreasonable to assume you'll only get about $55M once all is said and done, which is pretty close to the actual market cap. If you have accounted for the above, consider ; 2) Bulk of their investments seem to be in private assets. Which implies that they have some discretion in how they mark the value of those investments. And, there is the chance that the market doesn't have confidence in these guys. What's their performance been like in recent years? Especially with a private asset portfolio, I'd be weary. If I was to invest in them, I'd want a higher return for the opaque portfolio.",
"title": ""
},
{
"docid": "ca19675b030e68b3aa2c000b08464550",
"text": "I work at BATS Chi-X Europe and wanted to provide some clarity/answers to these questions. BATS Chi-X Europe is a Recognised Investment Exchange, so it is indeed a stock exchange. Sometimes the term “equity market” could be used when explaining our business, but essentially we are a stock exchange. As some background, BATS Chi-X Europe was formed by the acquisition of Chi-X Europe by BATS Trading in November 2011. At the time of the acquisition, each company operated as a Multilateral Trading Facility (MTF) for the trading of pan-European equities via a single trading platform. The category of MTF was introduced by MIFID (markets in Financial Instrument Directive) in 2007, which introduced competition in equities trading and allowed European stocks, to be traded on any European platform. Until 2007, many European stocks had to be traded only their local exchanges due to so-called “Concentration Rules”. Following the acquisition, BATS Chi-X Europe became the largest MTF in Europe, offering trading in more than 2,000 securities (2,700 securities by September 2013) across 15 major European markets, on a single trading platform. In May 2013, BATS Chi-X Europe received Recognised Investment Exchange status from the UK Financial Conduct Authority, meaning that BATS Chi-X Europe has changed from an MTF status to full exchange status. In response to question 1: The equities traded on BATS Chi-X Europe are listed on stock exchanges such as the LSE but also listed on the other European Exchanges. The term “third party” equities is not particularly useful as all stock trading in Europe is generally a “second hand” business referred to as “secondary market” trading. At the time of listing a firm issues shares; trading in these shares after the listing exercise is generally what happens in equity markets and these shares can be bought and sold on stock exchanges across Europe. Secondary market trading describes all trading on all exchanges or MTFs that takes place after the listing. In response to question 2: BATS Chi-X Europe trades over 2,700 stocks on its own trading platform. When trading on BATS Chi-X Europe, orders are executed on their own platform and will not end up of the LSE order books or platform. The fact that a stock was first listed on the LSE, does not mean that all trading in this stock happens via the LSE. However settlement process ensures that stocks end up being logged in a single depository. This means that a stock bought on BATS Chi-X Europe can be offset against the same stock sold on the LSE. In response to question 3: As noted above, BATS Chi-X Europe received Recognised Investment Exchange (RIE) status from the UK Financial Conduct Authority in May 2013, meaning that BATS Chi-X Europe has changed from an MTF status to full stock exchange status. As an exchange / RIE, BATS Chi-X Europe is authorised to offer primary and secondary listings alongside its existing business. According to the Federations of European Securities Exchanges (FESE), BATS Chi-X Europe has been the largest equity exchange in Europe by value traded in every month so far in 2013. In August, 24.1% of European equities trading in the 15 markets covered were traded on BATS Chi-X Europe. In July and August, the average notional value traded on BATS Chi-X Europe was around €7.2 billion per day. Hope this information is helpful.",
"title": ""
},
{
"docid": "bab22f69e6faf8339b42cea2dd528cea",
"text": "When a delisting happens, the primary process involves, the firm or the entity, trying to buy everyone out so that they can take the firm private by delisting from the stock exchanges. As the firm wants to buy everyone out, the current owners of the equity have the upper hand. They wouldn't want to sell if they believe the firm has a brighter future. So to compensate the existing holders, the buyer needs to compensate the current holders of any future loss, so they pay a premium to buy them out. Hence the prices offered will be more than the current existing price. And in anticipation of a premium the stocks price rises on this speculation. The other scenario is if the current holder(s) decide no to sell their holdings and are small in number, dependent on exchange regulations, and the buyer manages to de-list the stock, the holders might loose out i.e. they have to find another buyer who wants to buy which becomes difficult as the liquidity for the stock is very minimal. if any stock is DE-listed and then we can not trade on it, In India if the promoters capital is more than 90%, he can get the stock de-listed. There is a process, he has to make an open offer at specified price to minority shareholders. The minority shareholder can refuse to sell. Once the stock is de-listed, it means it cannot be traded on a given exchange. However you can still sell / buy by directly finding a buyer / seller and it's difficult compared to a listed stock.",
"title": ""
},
{
"docid": "62dde17ebd37c396d6b19d81e0eb7530",
"text": "One more scenario is when the company already has maturing debt. e.g Company took out a debt of 2 billion in 2010 and is maturing 2016. It has paid back say 500 million but has to pay back the debtors the remaining 1.5 billion. It will again go to the debt markets to fund this 1.5 billion maybe at better terms than the 2010 issue based on market conditions and its business. The debt is to keep the business running or grow it. The people issuing debt will do complete research before issuing the debt. It can always sell stock but that results in dilution and affects shareholders. Debt also affects shareholders but when interest rates are lower, companies tend to go to debt markets. Although sometimes they can just do a secondary and be done with it if the float is low.",
"title": ""
},
{
"docid": "83daadb1d3d40283d29d23eec7043f22",
"text": "Could well be a good work enviroment. The story widely reported back in Nov '11 before the IPO was that workers who had been given shares and options in lieu of salaries in the start-up days were then being pressured prior to the IPO to give up their shares or face possible job loss. Maybe just a few senior people were affected, but it didnt sound good.",
"title": ""
},
{
"docid": "b1fd26ee58a9ba5d07e635ce82827285",
"text": "Good questions. I can only add that it may be valuable if the company is bought, they may buy the options. Happened to me in previous company.",
"title": ""
},
{
"docid": "9cb9607f632f7b754230d57add0e87a0",
"text": "\"Many investors don't invest for the short term and so a stock \"\"nose-diving\"\" in the short run will not affect their long term strategy so they will simply hold on to it until it recovers. Additionally funds that track an index have to hold on to the constituents of that index no matter what happens to its value over the period (within trading limits). Both of these kinds of investors will be able to lend stock in a company out and not trigger a forced buy-in on a short term change. If the underlying long-term health of the company changes or it is removed from indices it is likely that this will change, however. Employee stock plans and other investors who are linked directly to the company or who have a vested interest in the company other than in a financial way will also be unwilling (or unable) to sell on a down turn in the company. They will similarly be able to lend their stock in the short term.\"",
"title": ""
},
{
"docid": "fc41920a42710dffa8387e0de43b0ec2",
"text": "GBP has already lost part of his value just because of the fear of Brexit. An actual Brexit may not change GBP as much as expected, but a no-Brexit could rise GBP really a lot.",
"title": ""
},
{
"docid": "feea3c7cd647080a887e72b9affeb790",
"text": "\"Others have mentioned the exchange rate, but this can play out in various ways. One thing we've seen since the \"\"Brexit\"\" vote is that the GBP/USD has fallen dramatically, but the value of the FTSE has gone up. This is partly due to many the companies listed there operating largely outside the UK, so their value is more linked to the dollar than the pound. It can definitely make sense to invest in stocks in a country more stable than your own, if feasible and not too expensive. Some years ago I took the 50/50 UK/US option for my (UK) pension, and it's worked out very well so far.\"",
"title": ""
},
{
"docid": "bc4c5b81b457c266564306a0a073fab8",
"text": "Absolutely nothing, and it's not their call to make. The shareholders will want to cut it into as many parts as they can sell to recoup some of their lost investment. The judge will demand it even if they suddenly had a moral thought. This will happen when this (and all those other companies) go under, refocuses priorities, or shuts down departments.",
"title": ""
},
{
"docid": "d2cf5d93ef9d46587a07d38d03c16659",
"text": "Public companies sometimes buy up all their shares in order to go private^(1). Is that the sort of thing you're talking about? If so, [this article](http://www.investopedia.com/articles/stocks/08/public-companies-privatize-go-private.asp) might be of interest to you. ^(1) Actually, most of the time, they partner with private equity firms to do it, but I think the effect is essentially what you're describing.",
"title": ""
},
{
"docid": "66c2e069c3503182b76c10aac73e22e5",
"text": "Thanks to the other answers, I now know what to google for. Frankfurt Stock Exchange: http://en.boerse-frankfurt.de/equities/newissues London Stock Exchange: http://www.londonstockexchange.com/statistics/new-issues-further-issues/new-issues-further-issues.htm",
"title": ""
},
{
"docid": "7816daea1863b97ee7b1d43035a98e4b",
"text": "Activist investors can control as little as 2% of a company and still have a large effect on strategy. Since the demand is so low (removal of one account) isn't it a pretty easy choice to just make the shareholders happy?",
"title": ""
},
{
"docid": "c5a1e02a83ece448b4cfddd099a90eeb",
"text": "People who provide services like that are called debt councilors or debt advisors. They help you to organize your debts, advise you in prioritizing them and also help you to negotiate or legally challenge any unreasonable levies.",
"title": ""
}
] |
fiqa
|
36a0b7953752b66acab3eda070fc2d35
|
How long should I keep my tax documents, and why?
|
[
{
"docid": "6b0f1f9f15d0cd893ee255ff1d5b8e9f",
"text": "How long you need to keep tax records will depend on jurisdiction. In general, if you discard records in a period of time less than your tax authority recommends, it may create audit problems down the road. ie: if you make a deduction supported by business expense receipts, and you discard those receipts next year, then you won't be able to defend the deduction if your tax authority audits you in 3 years. Generally, how long you keep records would depend on: (a) how much time your tax authority has to audit you; and (b) how long after you file your return you are allowed to make your own amendments. In your case (US-based), the IRS has straight-forward documentation about how long it expects you to keep records: https://www.irs.gov/businesses/small-businesses-self-employed/how-long-should-i-keep-records Period of Limitations that apply to income tax returns Keep records for 3 years if situations (4), (5), and (6) below do not apply to you. Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return. Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction. Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return. Keep records indefinitely if you do not file a return. Keep records indefinitely if you file a fraudulent return. Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later. Note that the above are the minimum periods to keep records; for your own purposes you may want to keep them for longer periods than that. For example, you may be in a position to discover that you would like to refile a prior tax return, because you forgot to claim a tax credit that was available to you. If you would have been eligible to refile in that period but no longer have documentation, you are out of luck.",
"title": ""
},
{
"docid": "5ecd6e0d6e53174eb4327a0d37e38bde",
"text": "Unfortunately, my taxes tend to be complicated This. In and of itself, is a greater reason to keep the documents. The other answer offered a good summary, but keep in mind, if the IRS decides you fraudulently withheld claiming income, they can go back 7 years. I bought a rental property in 1987, and sold it in 2016. In that case, keeping the returns seemed the right thing to do to have the paper trail for basis, else I could claim anything, and hope for the best. I have all my tax returns since my first tax return, 1980. It's one drawer of a file cabinet. Not too great a burden.",
"title": ""
}
] |
[
{
"docid": "bf7662a065b8944e12c197ad5175fda5",
"text": "\"A few practical thoughts: A practical thing that helps me immensely not to loose important paperwork (such as bank statements, bills, payroll statement, all those statements you need for filing tax return, ...) is: In addition to the folder (Aktenordner) where the statements ultimately need to go I use a Hängeregistratur. There are also standing instead of hanging varieties of the same idea (may be less expensive if you buy them new - I got most of mine used): you have easy-to-add-to folders where you can just throw in e.g. the bank statement when it arrives. This way I give the statement a preliminary scan for anything that is obviously grossly wrong and throw it into the respective folder (Hängetasche). Every once in a while I take care of all my book-keeping, punch the statements, file them in the Aktenordner and enter them into the software. I used to hate and never do the filing when I tried to use Aktenordner only. I recently learned that it is well known that Aktenordner and Schnellhefter are very time consuming if you have paperwork arriving one sheet at a time. I've tried different accounting software (being somewhat on the nerdy side, I use gnucash), including some phone apps. Personally, I didn't like the phone apps I tried - IMHO it takes too much time to enter things, so I tend to forget it. I'm much better at asking for a sales receipt (Kassenzettel) everywhere and sticking them into a calendar at home (I also note cash payments for which I don't have a receipt as far as I recall them - the forgotten ones = difference ends up in category \"\"hobby\"\" as they are mostly the beer or coke after sports). I was also to impatient for the cloud/online solutions I tried (I use one for business, as there the archiving is guaranteed to be according to the legal requirements - but it really takes far more time than entering the records in gnucash).\"",
"title": ""
},
{
"docid": "b0fe4f46c95a1af4c1c188eddc55166d",
"text": "For tax purposes you will need to file as an employee (T4 slips and tax withheld automatically), but also as an entrepreneur. I had the same situation myself last year. Employee and self-employed is a publication from Revenue Canada that will help you. You need to fill out the statement of business activity form and keep detailed records of all your deductible expenses. Make photocopies and keep them 7 years. May I suggest you take an accountant to file your income tax form. More expensive but makes you less susceptible to receive Revenue Canada inspectors for a check-in. If you can read french, you can use this simple spreadsheet for your expenses. Your accountant will be happy.",
"title": ""
},
{
"docid": "424791cb4ca491c8cee40a0ab6b52f40",
"text": "Just like with IRS refunds issued in errors, after 3 years it's legally yours, they can't go after you anymore. So savings account until then or just mail them a check if that is what your conscious is saying.",
"title": ""
},
{
"docid": "c980bab86b11f8a11a08b697e3987cf5",
"text": "The I-9 form is required because you are working. It is kept by the employer as proof that you have the proper documents to work. If the government was to inspect their records they can be fined if they don't have those document, in fact they have to keep them for several years after your employment is done. A w-4 form is a federal tax form. There also was probably a state version of the form. When you completed the w-4 it is used by your employer to determine how much in taxes need to be withheld. Employers don't know your tax situation. Even though you are on work study, you still could have made enough money over the summer to pay taxes. But if this is your only job, and you will not make enough money to have to pay taxes, you can fill out the form as exempt. That means that last year you didn't make enough money to have to pay taxes, and you don't expect to make enough to have to pay taxes this year. If you are exempt, no federal income tax will be withheld. They might still withhold for social security and medicare. The state w-4 can also be used to be exempt from state taxes. If they withhold any income taxes you have to file one of the 1040 tax forms to get that income tax money back. You will have to do so for the state income tax withholding. A note about social security and medicare. If you have an on campus job, at the campus you attend, during the school year; they don't withhold money for social security and medicare. That law applies to students on work study jobs, and on non-work-study jobs. for single dependents the federal threshold where you must file is: > You must file a return if any of the following apply. Your gross income was more than the larger of— a. $1,000, or b. Your earned income (up to $5,850) plus $350.",
"title": ""
},
{
"docid": "394ed244fd3cbe28d8540aeaaa6914e9",
"text": "If you were NRI during the period you earned the income, its tax free in India and you can bring it back anytime within 7 years. There is a limit on total amount but its quite huge. If you were not an NRI during that period [when you earned in US] then whatever you have earned is taxable even in India, it does not matter whether you keep the funds in US or bring it back to India. You get the benefit of Double Tax and can deduct the tax already paid.",
"title": ""
},
{
"docid": "e55daa3355f5efdf6e80a5c3081f2a87",
"text": "I've found it's just simpler to keep all of my receipts rather than debate which receipts to keep and which to throw away. I shove all my receipts from August in an envelope labeled August. Then, next year (12 months later) I shred the envelope. That way, if I see a bank error, need to find a receipt to do a return or warranty work, etc. I have all of them available for a year. Doing 1 envelope per month means I only have 12 envelopes at any time and I can shred an entire envelope without bothering to sort through receipts inside the envelope.",
"title": ""
},
{
"docid": "a6c958f80703d863eece8776a95b0b4a",
"text": "I don't like keeping my tax information online. Personally, I buy TaxCut from Amazon for $25-30. I store my info securely on resources under my control. Call me a luddite or a weirdo, but I also file using paper, because I don't see the advantage of paying for the privilege of saving the government time and money.",
"title": ""
},
{
"docid": "c7925c388a4ae383d3f58c8a67ecb5e9",
"text": "Maybe it's just because of the foundation date. If I start a company on August 1st, I would like its FY starts on that date too, in order to track my first whole year. Would be quite useless to finish my year on December, after just five months. I want to have data of my first year after a twelve months activity.",
"title": ""
},
{
"docid": "b693d1e182c3ed28bb173f8f81004e15",
"text": "\"There are probably many correct answers to this question, but for most people, the main reason is qualified dividends. To be a qualified dividend (and therefore eligible for lower tax rates), the dividend-paying stock or fund must be held for \"\"more than 60 days during the 121-day period that begins 60 days before the ex-dividend date\"\". Since many stocks and funds pay out dividends at the end of the year, that means it takes until mid- to late February to determine if you held them, and therefore made the dividend qualified. Brokerages don't want to send out 1099s in January and then possibly have to send out revised versions if you decide to sell something that paid a dividend in December that otherwise would have been qualified.\"",
"title": ""
},
{
"docid": "034e29cd4e755643f5e95ac6daae8337",
"text": "I got notice from Charles Schwab that the forms weren't being mailed out until the middle of February because, for some reason, the forms were likely to change and rather than mail them out twice, they mailed them out once. Perhaps some state tax laws took effect (such as two Oregon bills regarding tax rates for higher incomes) and they waited on that. While I haven't gotten my forms mailed to me yet, I did go online and get the electronic copies that allowed me to finish my taxes already.",
"title": ""
},
{
"docid": "90d0f60baf23f68e50157d52c6ab539b",
"text": "\"I would advise against \"\"pencil and paper\"\" approach for the following reasons: You should e-file instead of paper filing. Although the IRS provides an option of \"\"Fillable Forms\"\", there's no additional benefit there. Software ensures correctness of the calculations. It is easy to make math errors, lookup the wrong table It is easy to forget to fill a line or to click a checkbox (one particular checkbox on Schedule B cost many people thousands of dollars). Software ask you questions in a \"\"interview\"\" manner, and makes it harder to miss. Software can provide soft copies that you can retrieve later or reuse for amendments and carry-overs to the next year, making the task next time easier and quicker. You may not always know about all the available deductions and credits. Instead of researching the tax changes every year, just flow with the interview process of the software, and they'll suggest what may be available for you (lifetime learners credit? Who knows). Software provides some kind of liability protection (for example, if there's something wrong because the software had a bug - you can have them fix it for you and pay your penalties, if any). It's free. So why not use it? As to professional help later in life - depending on your needs. I'm fully capable of filling my own tax returns, for example, but I prefer to have a professional do it since I'm not always aware about all the intricacies of taxation of my transactions and prefer to have a professional counsel (who also provides some liability coverage if she counsels me wrong...). Some things may become very complex and many people are not aware of that (I've shared the things I learned here on this forum, but there are many things I'm not aware of and the tax professional should know).\"",
"title": ""
},
{
"docid": "5bd407c65ebee10970a1a0a65835fcd0",
"text": "If you live in a country that taxes interest, and if this is a significant amount of money in a high interest account then the tax forms will serve as a reminder. Even though the advice is to forget about the money, so that you don't dip into it for trivial things; you do need to look at it every so often to make sure it is still in a high interest account. The info about the account also needs to be kept in a place where somebody else can track it down if a spouse or dependent has to use the money in the emergency.",
"title": ""
},
{
"docid": "15718d45c58e87edb9c4696bed4f7991",
"text": "\"Rob - I'm sorry your first visit here has been unpleasant. What you are asking for is beyond the capability of most software. If you look at Fairmark.com, you find the standard deduction for married filing joint is $12,200 in 2012, and $12,400 in 2013. I offer this anecdote to share a 'deduction' story - The first year I did my MIL's taxes, I had to explain that she didn't have enough deductions to itemize. Every year since, she hands me a file full of paper substantiating medical deductions that don't exceed 7.5% of her income. In turn, I give her two folders back, one with the 5 or so documents I needed, and the rest labeled \"\"trash\"\". Fewer than 30% of filers itemize. And a good portion of those that do, have no question that's the right thing to do. e.g. my property tax is more than the $12K, so anything else I have that's a deduction adds right to the number. It's really just those people who are at the edge that are likely frustrated. I wrote an article regarding Standard Deduction vs Itemizing, in which I describe a method of pulling in one's deductible expenses into Odd years, reducing the number in Even years, to allow a bi-annual itemization. If this is your situation, you'll find the concept interesting. You also ask about filing status. Think on this for a minute. After pulling in our W2s (TurboTax imports the data right from ADP), I do the same for our stock info. The stock info, and all Schedule A deductions aren't assigned a name. So any effort to split them in search of savings by using Married Filing Separate, would first require splitting these up. TurboTax has a 'what-if' worksheet for this function, but when the 'marriage penalty' was lifted years ago, the change in status had no value. Items that phaseout over certain income levels are often lost to the separate filer anyway. When I got married, I found my real estate losses each year could not be taken, they accumulated until I either sold, or until our income dropped when the Mrs retired. So, while is respect your desire for these magic dials within the software, I think it's fair to say they would provide little value to most people. If this thread stays open, I'd be curious if anyone can cite an example where filing separately actually benefits the couple.\"",
"title": ""
},
{
"docid": "69b86f3654b9194f188b80eabf2295ae",
"text": "For purposes of the EIN the address is largely inconsequential. The IRS cannot (read: won't) recover the EIN if you fail to write it down after the website generates it for you. On your actual tax form the address is more consequential, and this is more so a question of consistency than anything. But an entity can purchase property anywhere and have a different address subsequent years. Paying the actual taxes means more than the semantical inconsistencies. The whole purpose of separate accounts is to make an audit easier, so even if someone imagines that some action (such as address ambiguity) automatically triggers an audit, all your earnings/purchases are not intermingled with personal stuff, which just streamlines the audit process. Consequences (or lack thereof) aside, physical means where physical property is. So if you have an actual mailing address in your state, you should go with that. Obviously, this depends on what arrangement you have with your registered agent, if all addresses are in Wyoming then use the Wyoming address and let the Registered Agent forward all your mail to you. Don't forget your $50 annual report in Wyoming ;) How did you open a business paypal without an EIN? Business bank accounts? Hm... this is for liability purposes...",
"title": ""
},
{
"docid": "f87fe8e98e124dc629edf77abcd2f338",
"text": "Considering your question, I have been in the market for a house to buy. There is a house that I like and I wanted to know if I could afford it. You state your Assets: Awesome! Current Income: Great job putting $1000/month into your 401k! That is $12,000/year saved for retirement. Excellent! Current expenses: Why do you want to buy a house for more than 4x your gross income, and 3x median house price (U.S.)? Are you planning on living in the house for at least 5-7 years? There is a risk that interest rates will rise, and that will affect your ability to sell the house. Expected expenses: Adding your other essentials, You are considering increasing your expenses by $1000-1200/month. Looking at the amounts you quoted for direct housing expenses, you will have committed $2600/month to a mortgage payment. Adding your other estimated essentials, you will spend over $3700/month (leaving $2200/month for everything else). You may have higher utilities for a house than an apartment, you are doing well with your food budget, and your cellphone is lower than many. You anticipate $650/month ($7800/year) tax savings (be careful, congress is looking for ways to increase tax revenue). You want to keep your essential expenses under 50% (much more than 50% is difficult, and I am trying to get to 40%). You may live in an area where housing costs are an out-sized expense. But an option would be to save more, and a larger down payment could lower the monthly expenses below that 50% mark.",
"title": ""
}
] |
fiqa
|
d64e524ac6a07963c9a7bbd108a5b0aa
|
Making higher payments on primary residence mortgage or rental?
|
[
{
"docid": "250a7730477a33972e154998d713b752",
"text": "You're in the same situation I'm in (bought new house, didn't sell old house, now renting out old house). Assuming that everything is stable, right now I'd do something besides pay down your new mortgage. If you pay down the mortgage at your old house, that mortgage payment will go away faster than if you paid down the one on the new house. Then, things start to get fun. You then have a lot more free cash flow available to do whatever you like. I'd tend to do that before searching for other investments. Then, once you have the free cash flow, you can look for other investments (probably a wise risk) or retire the mortgage on your residence earlier.",
"title": ""
},
{
"docid": "e4ad5de991424ab48e01a72ac5cbd3ac",
"text": "\"I'll assume you live in the US for the start of my answer - Do you maximize your retirement savings at work, at least getting your employer's match in full, if they do this. Do you have any other debt that's at a higher rate? Is your emergency account funded to your satisfaction? If you lost your job and tenant on the same day, how long before you were in trouble? The \"\"pay early\"\" question seems to hit an emotional nerve with most people. While I start with the above and then segue to \"\"would you be happy with a long term 5% return?\"\" there's one major point not to miss - money paid to either mortgage isn't liquid. The idea of owing out no money at all is great, but paying anything less than \"\"paid in full\"\" leaves you still owing that monthly payment. You can send $400K against your $500K mortgage, and still owe $3K per month until paid. And if you lose your job, you may not so easily refinance the remaining $100K to a lower payment so easily. If your goal is to continue with real estate, you don't prepay, you save cash for the next deal. Don't know if that was your intent at some point. Disclosure - my situation - Maxing out retirement accounts was my priority, then saving for college. Over the years, I had multiple refinances, each of which was a no-cost deal. The first refi saved with a lower rate. The second, was in early 2000s when back interest was so low I took a chunk of cash, paid principal down and went to a 20yr from the original 30. The kid starts college, and we target retirement in 6 years. I am paying the mortgage (now 2 years into a 10yr) to be done the month before the kid flies out. If I were younger, I'd be at the start of a new 30 yr at the recent 4.5% bottom. I think that a cost of near 3% after tax, and inflation soon to near/exceed 3% makes borrowing free, and I can invest conservatively in stocks that will have a dividend yield above this. Jane and I discussed the plan, and agree to retire mortgage free.\"",
"title": ""
},
{
"docid": "1ab5fbddc232cbe6f468ada3377e5260",
"text": "A lot depends on whether your mortgage payments are interest only or 'repayment' and what the remaining term is on each of the mortgages. Either way I suspect that the best value for the money you put in will be had by making payments to the larger, newer mortgage. This is because the quicker you reduce the capital owed the less interest you will pay over the whole term of the mortgage and you've already had the older mortgage for sometime (unless you remortgaged) so the benefit you can get from an arbitrary reduction in the capital is inevitably less than you will get from the same reduction in the capital of the newer mortgage. Even if the two mortgages are the same age then the benefit of putting money into the one on the new house is greater due to the greater interest charged on it.",
"title": ""
},
{
"docid": "f1ff2e2812a352997c7928a5cd5d9e34",
"text": "Pay down the lower balance on the rental property. Generally speaking, you are more likely to need/want to sell the rental house as business conditions change or if you need the money for some other purpose. If you pay down your primary residence first, you are building equity, but that equity isn't as liquid as equity in the rental. Also, in the US, you cannot deduct the interest on a rental property, so the net interest after taxes that you're paying on the rental narrows the gap between the 4.35% loan and the 5% loan.",
"title": ""
},
{
"docid": "763dca18472ae2314ce65c377eb644a0",
"text": "One advantage of paying down your primary residence is that you can refinance it later for 10-15 years when the balance is low. Refinancing a rental is much harder and interest rates are often higher for investors. This also assumes that you can refinance for a lower rate in the nearest future. The question is really which would you rather sell if you suddenly need the money? I have rental properties and i'd rather move myself, than sell the investments (because they are income generating unlike my own home). So in your case i'd pay off primary residence especially since the interest is already higher on it (would be a harder decision if it was lower)",
"title": ""
}
] |
[
{
"docid": "28add8d067474fc049e881940e368e57",
"text": "How is the current mortgage payment broken out? I have a mortgage on a rental property with a payment of $775, but $600 is principal. If I were at breakeven on a sale or a bit underwater, I'd be better off just holding still, the tenant paying the loan down over $7000/year. You question is a good one, but a good answer would require more details. A bank may not agree to a short sale on an investment property, especially since there's a second property to go after. I'm not making a judgement, just saying, it's not a slam-dunk to just short sell it.",
"title": ""
},
{
"docid": "7e37fc63b4815fe300399ed119c76dcb",
"text": "Make sure to get a Homestead Exemption if your state has one. This can keep your taxes from rising quite as steeply, and in some cases the county assessment office can get you a retroactive refund when your application is approved. Also, if you really think you're paying too high based on home resale values around you, most county assessors will also let you dispute your valuation. A higher value is great if you intend to sell, not so good if you're staying long term. Kind of like the difference between trading bonds and investing in them. Also, as I think one of the other posters pointed out, you can usually make extra small payments and direct them to escrow or to principal.",
"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": "a5a476e5354b28a79ba529d42d2dabdd",
"text": "When I was a contractor I prioritize this way. 6 months salary nest egg while contributing to tax deferred retirement then after that you can pre pay your mortgage. Remember you can't skip a month even if you prepay. So once you pay that extra to your mortgage you lose that flexibility.",
"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": "f700e0dd68358d02092e7bada926aa0d",
"text": "\"Even if the price of your home did match inflation or better — and that's a question I'll let the other answers address — I propose that owning a home, by itself, is not a sufficient hedge against inflation. Consider: Inflation will inflate your living expenses. If you're lucky, they'll inflate at the average. If you're unlucky, a change in your spending patterns (perhaps age-related) could result in your expenses rising faster than inflation. (Look at the sub-indexes of the CPI.) Without income also rising with inflation (or better), how will you cope with rising living expenses? Each passing year, advancing living expenses risk eclipsing a static income. Your home is an illiquid asset. Generally speaking, it neither generates income for you, nor can you sell only a portion. At best, owning your principal residence helps you avoid a rent expense and inflation in rents — but rent is only one of many living expenses. Some consider a reverse-mortgage an option to tap home equity, but it has a high cost. In other words: If you don't want to be forced to liquidate [sell] your home, you'll also need to look at ways to ensure your income sources rise with inflation. i.e. look at your cash flow, not just your net worth. Hence: investing in housing, as in your own principal residence, is not an adequate hedge against inflation. If you owned additional properties to generate rental income, and you retained pricing power so you could increase the rent charged at least in line with inflation, your situation would be somewhat improved — except you would, perhaps, be adopting another problem: Too high a concentration in a single asset class. Consequently, I would look at ways other than housing to hedge against inflation. Consider other kinds of investments. \"\"Safe as houses\"\" may be a cliché, but it is no guarantee.\"",
"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": "504db960177f3094e6a274c3880f6531",
"text": "The other thing that you may or may not be considering is the fact that when she moves or otherwise ceases to live in that condo, you could then rent the unit out to others at the inflation adjusted rent price for the area. You could continue to build equity in the property for a fraction of the cost, and it would continue to be a tax write-off once your mother is not living there. While you have more maintenance and repairs cost when renters live there (typically, anyway), if inflation continues to carry on at about 4-5%, then you would be potentially renting the unit out at between $2,500 and $2,850 by the 10th year from now. Obviously, there are other considerations to be made as well, but those are some additional factors that don't seem to have been addressed in any of the above comments.",
"title": ""
},
{
"docid": "4bf65001c063594bdc70a9d5a0562c5b",
"text": "\"that would deprive me of the rental income from the property. Yes, but you'd gain by not paying the interest on your other mortgage. So your net loss (or gain) is the rental income minus the interest you're paying on your home. From a cash flow perspective, you'd gain the difference between the rental income and your total payment. Any excess proceeds from selling the flat and paying off the mortgage could be saved and use later to buy another rental for \"\"retirement income\"\". Or just invest in a retirement account and leave it alone. Selling the flat also gets rid of any extra time spent managing the property. If you keep the flat, you'll need a mortgage of 105K to 150K plus closing costs depending on the cost of the house you buy, so your mortgage payment will increase by 25%-100%. My fist choice would be to sell the flat and buy your new house debt-free (or with a very small mortgage). You're only making 6% on it, and your mortgage payment is going to be higher since you'll need to borrow about 160k if you want to keep the flat and buy a $450K house, so you're no longer cash-flow neutral. Then start saving like mad for a different rental property, or in non-real estate retirement investments.\"",
"title": ""
},
{
"docid": "5b7e69c4462182ca6b9aaf0ccf110ab1",
"text": "First, let me fill in the gaps on your situation, based on the numbers you've given so far. I estimate that your student loan balance (principal) is $21,600. With the variable rate loan option that you've presented, the maximum interest rate you could be charged would be 11.5%, which would bring your monthly payment up to that $382 number you gave in the comments. Your thoughts are correct about the advantage to paying this loan off sooner. If you are planning on paying off this loan sooner, the interest rate on the variable rate loan has less opportunity to climb. One thing to be cautious of with the comparison, though: The $1200 difference between the two options is only valid if your rate does not increase. If the rate does increase, of course, the difference would be less, or it could even go the other way. So keep in mind that the $1200 savings is only a theoretical maximum; you won't actually see that much savings with the variable rate option. Before making a decision, you need to find out more about the terms of this variable rate loan: How often can your rate go up? What is the loan rate based on? I'm not as familiar with student loan variable rate loans, but there are other variable rate loans I am familiar with: With a typical adjustable rate home mortgage, the rate is locked for a certain number of years (perhaps 5 years). After that, the bank might be allowed to raise the rate once every period of months (perhaps once every year). There will be a limit to how much the rate can rise on each increase (perhaps 1.0%), and there will be a maximum rate that could be charged over the life of the loan (perhaps 12%). The interest rate on your mortgage can adjust up, inside of those parameters. (The actual formula used to adjust will be found in the fine print of your mortgage contract.) However, the bank knows that if they let your rate get too high above the current market rates, you will refinance to a different bank. So the mortgage is typically structured so that it will raise your rate somewhat, but it won't usually get too far above the market rate. If you knew ahead of time that you would have the house paid off in 5 years, or that you would be selling the house before the 5 years is over, you could confidently take the adjustable rate mortgage. Credit cards, on the other hand, also typically have variable rates. These rates can change every month, but they are usually calculated on some formula determined ahead of time. For example, on my credit card, the interest rate is the published Prime Rate plus 13.65%. On my last statement, it said the rate was 17.15%. (Of course, because I pay my balance in full each month, I don't pay any interest. The rate could go up to 50%, for all I care.) As I said, I don't know what determines the rate on your variable rate student loan option, and I don't know what the limits are. If it climbs up to 11.5%, that is obviously ridiculously high. I recommend that you try to pay off this student loan as soon as you possibly can; however, if you are not planning on paying off this student loan early, you need to try to determine how likely the rate is to climb if you want to pick the variable rate option.",
"title": ""
},
{
"docid": "96bb905904cb63b7f21c3154fe64a705",
"text": "You say My work is steady; even if I lost my job it'd be easy to get another. Location has been static for a few years now, but I'm not sure that'll extrapolate to the future; I'm lazy, so I don't want to move, but for a significantly better job opportunity I wouldn't mind. The general rule of thumb is that you'll come out ahead if you buy a house (with a mortgage) and live there for five years. What you lose in interest, you make up in rent. And living there for five years, you make back your closing costs in equity. If you're there less than five years though, you don't make back the closing costs. You'd have been better off renting. Historically (up to about twenty years ago), your mortgage payment and rent payment for the same basic property would be about the same. I.e. if your current landlord sold you what you are renting, your mortgage payment would be roughly the same as your rent. Maybe a little lower or a little higher but about the same. More recently, it hasn't been strange to see a divergence in those. Now it is not uncommon for a mortgage payment to be 50% higher than rent on the same property. This has some consequences. First, your $1000 rent probably won't stretch as far as a $1000 mortgage payment. So you'll be buying something that you'd only pay $650 or $700 rent. Second, if you move and can't sell immediately, you'll get less in rent than you'd pay in mortgage. Rather than contributing to your income, the property will require subsidy just to maintain the mortgage. And in the early years of the mortgage, this means that you're paying all of the principal (equity) and some of the interest. Buying a duplex makes this worse. You have your side and their side. You can substitute your $1000 rent for half of the mortgage payment. Meanwhile, they are paying $700 in rent. You have to subsidize the mortgage by $300. Plus, you are talking about hiring a property management company to do things like lawn maintenance. There goes another $100 a month. So you are subsidizing the mortgage by $400. I don't know real estate prices in Utah, but a quick search finds a median house price over $200,000. So it seems unlikely that you are buying new construction with new appliances. More likely you are buying an existing duplex with existing appliances. What happens when they fail? The renter doesn't pay for that. The property management company doesn't pay for that (although they'll likely arrange for it to happen). You pay for it. Also, it often takes a bit of time to clean up the apartment after one tenant leaves before the new tenant starts paying rent. That's a dead weight loss. If this happens during a local recession, you could be carrying the mortgage on a property with no offsetting rental income for months. There are some countervailing forces. For example, if house prices in your area are increasing, the rent will increase with them (not necessarily at the same pace). But your mortgage payment stays the same. So eventually the rent may catch up with the mortgage payment. If you wait long enough in a strong enough market, the rent on the other half of the duplex may cover the entire mortgage payment. If you currently have an urban apartment within walking distance of work and switch to a suburban apartment with a commute, you have a better chance of finding a duplex where the entire mortgage payment is only the $1000 that you pay in rent. Your half of the duplex won't be as nice as your apartment is, and you'll have a half hour or hour long commute every morning (and the same to get home in the evening). But on strictly fiscal terms you'll be doing about as well. Plus you have the income from the other half. So even if your mortgage payment is more than your rent payment, you can still break even if the rent covers it. Consider a $1400 mortgage and $400 in rent from the other half (after property management fees). So long as nothing goes wrong, you break even. Perhaps the agreement is that your parents take care of things going wrong (broken appliances, troublesome tenants, time between tenants). Or perhaps you drain your emergency fund and adjust your 401(k) payment down to the minimum when that happens. Once your emergency fund is replenished, restore the 401(k). If you're willing to live in what's essentially a $500 apartment, you can do better this way. Of course, you can also do better by living in a $500 apartment and banking the other $500 that you spend on rent. Plus you now have the expenses of a commute and five hours less free time a week. You describe yourself as essentially living paycheck to paycheck. You have adequate savings but no building excess. Whatever you get paid, you immediately turn around and spend. Your parents may view you as profligate. Your apartment is nicer than their early apartments were. You go out more often. You're not putting anything aside for later (except retirement). It didn't use to be at all strange for people to move out of the city because they needed more space. For the same rent they were paying in the city, they could buy a house in the suburbs. Then they'd build up equity. So long as they stayed in roughly the same work location, they didn't need to move until they were ready to upgrade their house. The duplex plan leads to one of two things. Either you sell the duplex and use the equity to buy a nicer regular house, or you move out of the duplex and rent your half. Now you have a rental property providing income. And if you saved enough for a down payment, you can still buy a regular house. From your parents' perspective, encouraging you to buy a duplex may be the equivalent of asking you to cut back on spending. Rather than reducing your 401(k) deposits, they may be envisioning you trading in your car for a cheaper one and trading in your nice but expensive apartment for something more reasonable in a cheaper neighborhood. Rather than working with a property management company, you'll be out doing yardwork rather than cavorting with your friends. And maybe the new place would have more space to share when you meet someone--you aren't going to provide many grandkids alone. If you get a mortgage on a duplex, you are responsible for paying the mortgage. You are responsible even if something happens to the house. For example, if a fire burns it down or a tornado takes it away. Or you just find that the house isn't solid enough to support that party where all of your friends are jumping up and down to the latest pop sensation. So beyond losing whatever you invest in the property, you may also lose what you borrowed. Now consider what happens if you invest the same amount of money in General Motors as in the house. Let's call that $10,000 and give the house a value of $200,000. With General Motors, even if they go bankrupt tomorrow, you're only out $10,000. With the house, you're out $200,000. Admittedly it's much hard to lose the entire $200,000 value of the house. But even if the house loses $80,000 in value, you are still $70,000 in the hole. You don't need a disaster for the house to lose $80,000 in value. That's pretty much what happened in the 2006-2010 period. People were losing all of what they invested in houses plus having to declare bankruptcy to get out of the excess debt. Of course, if they had been able to hold on until 2015 markets mostly recovered. But if you lost your job in 2008, they wouldn't let you not make mortgage payments until you got a new one in 2012. When you declare bankruptcy, you don't just lose the house. You also lose all your emergency savings and may lose some of your belongings. There are some pretty prosaic disasters too. For example, you and your tenant both go away for a weekend. It rains heavily and your roof starts to leak due to weak maintenance (so not covered by insurance). The house floods, destroying all the electronics and damaging various other things. Bad enough if it's just you, but you're also responsible for the tenant's belongings. They sue you for $20,000 and they move out. So no rent and big expenses. To get the house livable again is going to take $160,000. Plus you have a $190,000 mortgage on a property that is only worth about $40,000. That's at the extreme end.",
"title": ""
},
{
"docid": "df4449c7883b32e00a325fda321ca845",
"text": "Obviously the best way to consolidate the real-estate loans is with a real-estate loan. Mortgages, being secured loans, provide much better interest rates. Also, interest can be deducted to some extent (depending on how the proceeds are used, but up to $100K of the mortgage can have deductible interest just for using the primary residence as a collateral). Last but not least, in many states mortgages on primary residence are non-recourse (again, may depend on the money use). That may prove useful if in the future your mother runs into troubles repaying it. So yes, your instincts are correct. How to convince your mother - that's between you and her.",
"title": ""
},
{
"docid": "4647b65189f441f7930a360106a9f1bf",
"text": "I would go with the 2nd option (put down as little as possible) with a small caveat: avoid the mortgage insurance if you can and put down 20%. Holding your rental property(ies)'s mortgage has some benefits: You can write off the mortgage interest. In Canada you cannot write off the mortgage interest from your primary residence. You can write off stuff renovations and new appliances. You can use this to your advantage if you have both a primary residence and a rental property. Get my drift? P.S. I do not think it's a good time right now to buy a property and rent it out simply because the housing prices are over-priced. The rate of return of your investment is too low. P.S.2. I get the feeling from your question that you would like to purchase several properties in the long-term future. I would like to say that the key to good and low risk investing is diversification. Don't put all of your money into one basket. This includes real estate. Like any other investment, real estate goes down too. In the last 50 or so years real estate has only apprepriated around 2.5% per year. While, real estate is a good long term investment, don't make it 80% of your investment portfolio.",
"title": ""
},
{
"docid": "bfa0272d5b3a2671dfda9ee449eee319",
"text": "\"littleadv's first comment - check the note - is really the answer. But your issue is twofold - Every mortgage I've had (over 10 in my lifetime) allows early principal payments. The extra principal can only be applied at the same time as the regular payment. Think of it this way - only at that moment is there no interest owed. If a week later you try to pay toward only principal, the system will not handle it. Pretty simple - extra principal with the payment due. In fact, any mortgage I've had that offered a monthly bill or coupon book will have that very line \"\"extra principal.\"\" By coincidence, I just did this for a mortgage on my rental. I make these payments through my bank's billpay service. I noted the extra principal in the 'notes' section of the virtual check. But again, the note will explicitly state if there's an issue with prepayments of principal. The larger issue is that your friend wishes to treat the mortgage like a bi-weekly. The bank expects the full amount as a payment and likely, has no obligation to accept anything less than the full amount. Given my first comment above here is the plan for your friend to do 99% of what she wishes: Tell her, there's nothing magic about bi-weekly, it's a budget-clever way to send the money, but over a year, it's simply paying 108% of the normal payment. If she wants to burn the mortgage faster, tell her to add what she wishes every month, even $10, it all adds up. Final note - There are two schools of thought to either extreme, (a) pay the mortgage off as fast as you can, no debt is the goal and (b) the mortgage is the lowest rate you'll ever have on borrowed money, pay it as slow as you can, and invest any extra money. I accept and respect both views. For your friend, and first group, I'm compelled to add - Be sure to deposit to your retirement account's matched funds to gain the entire match. $1 can pay toward your 6% mortgage or be doubled on deposit to $2 in your 401(k), if available. And pay off all high interest debt first. This should stand to reason, but I've seen people keep their 18% card debt while prepaying their mortgage.\"",
"title": ""
},
{
"docid": "e315fc91c8c4152825de79bf564a253f",
"text": "I will preface saying that I only have personal experience to go on (purchased home in KS earlier this year, and have purchased/sold a home in AR). You do not give the seller the document stating the amount you have been approved for. Your real estate agent (I recommend having one if you don't) will want to see it to make sure you will actually be able to purchase a house though. But the contract that is sent to the Seller states the total purchase price you are willing to pay and how much of that will be financed. Link to blank KS real estate contract shows what would be listed. Looks like it is from 2012 - it is similar to the one I had back in March, but not exactly the same format.",
"title": ""
}
] |
fiqa
|
c6aca853b7916acb747096db45470d3c
|
EIN for personal LLC: Is this an S-Corp?
|
[
{
"docid": "907c06c0b11341ee4ff7f1ae8fad9493",
"text": "Having an EIN does not make the LLC a corporation -- your business can have an EIN even when treated like a sole proprietorship. An EIN is required to have a Individual 401(k), for example. But you can still be an LLC, taxed as a sole proprietor, and have a 401(k). You would need to file a Form 2553 with the IRS to elect S Corporation status. If you don't do that, you're still treated as a disregarded LLC. Whether or not you should make the election is another question.",
"title": ""
}
] |
[
{
"docid": "b15d163a90235fed85ed81ab71d178ac",
"text": "\"Do I understand correctly, that we still can file as \"\"Married filing jointly\"\", just add Schedule C and Schedule SE for her? Yes. Business registration information letter she got once registered mentions that her due date for filing tax return is January 31, 2016. Does this prevent us from filing jointly (as far as I understand, I can't file my income before that date)? IRS sends no such letters. IRS also doesn't require any registration. Be careful, you might be a victim to a phishing attack here. In any case, sole proprietor files a regular individual tax return with the regular April 15th deadline. Do I understand correctly that we do not qualify as \"\"Family partnership\"\" (I do not participate in her business in any way other than giving her money for initial tools/materials purchase)? Yes. Do I understand correctly that she did not have to do regular estimated tax payments as business was not expected to generate income this year? You're asking or saying? How would we know what she expected? In any case, you can use your withholding (adjust the W4) to compensate.\"",
"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": "fb4538721131cc3f19655a02ffa66286",
"text": "\"If you start an LLC with you as the sole member it will be considered a disregarded entity. This basically means that you have the protection of being a company, but all your revenues will go on your personal tax return and be taxed at whatever rate your personal rate calculates to based on your situation. Now here is the good stuff. If you file Form 2553 you can change your sole member LLC to file as an S Corp. Once you have done this it changes the game on how you can pay out what your company makes. You will need to employ yourself and give a \"\"reasonable\"\" salary. This will be reported to the IRS and you will file your normal tax returns and they will be taxed based on your situation. Now as the sole member you can then pay yourself \"\"distribution to share holders\"\" from your account and this money is not subject to normal fica and social security tax (check with your tax guy) and MAKE SURE to document correctly. The other thing is that on that same form you can elect to have a different fiscal year than the standard calendar IRS tax year. This means that you could then take part of profits in one tax year and part in another so that you don't bump yourself into another tax bracket. Example: You cut a deal and the company makes 100,000 in profit that you want to take as a distribution. If you wrote yourself a check for all of it then it could put you into another tax bracket. If your fiscal year were to end say on sept 30 and you cut the deal before that date then you could write say 50,000 this year and then on jan 1 write the other check.\"",
"title": ""
},
{
"docid": "4e5c747746142c0d25d8674c0f3044c0",
"text": "\"They are basically asking for the name of the legal entity that they should write on the check. You, as a person, are a legal entity, and so you can have them pay you directly, by name. This is in effect a \"\"sole proprietorship\"\" arrangement and it is the situation of most independent contractors; you're working for yourself, and you get all the money, but you also have all the responsibility. You can also set up a legal alias, or a \"\"Doing Business As\"\" (DBA) name. The only thing that changes versus using your own name is... well... that you aren't using your own name, to be honest. You pay some trivial fee for the paperwork to the county clerk or other office of record, and you're now not only John Doe, you're \"\"Zolani Enterprises\"\", and your business checks can be written out to that name and the bank (who will want a copy of the DBA paperwork to file when you set the name up as a payable entity on the account) will cash them for you. An LLC, since it was mentioned, is a \"\"Limited Liability Company\"\". It is a legal entity, incorporeal, that is your \"\"avatar\"\" in the business world. It, not you, is the entity that primarily faces anyone else in that world. You become, for legal purposes, an agent of that company, authorized to make decisions on its behalf. You can do all the same things, make all the same money, but if things go pear-shaped, the company is the one liable, not you. Sounds great, right? Well, there's a downside, and that's taxes and the increased complexity thereof. Depending on the exact structure of the company, the IRS will treat the LLC either as a corporation, a partnership, or as a \"\"disregarded entity\"\". Most one-man LLCs are typically \"\"disregarded\"\", meaning that for tax purposes, all the money the company makes is treated as if it were made by you as a sole proprietor, as in the above cases (and with the associated increased FICA and lack of tax deductions that an \"\"employee\"\" would get). Nothing can be \"\"retained\"\" by the company, because as far as the IRS is concerned it doesn't exist, so whether the money from the profits of the company actually made it into your personal checking account or not, it has to be reported by you on the Schedule C. You can elect, if you wish, to have the LLC treated as a corporation; this allows the corporation to retain earnings (and thus to \"\"own\"\" liquid assets like cash, as opposed to only fixed assets like land, cars etc). It also allows you to be an \"\"employee\"\" of your own company, and pay yourself a true \"\"salary\"\", with all the applicable tax rules including pre-tax healthcare, employer-paid FICA, etc. However, the downside here is that some money is subject to double taxation; any monies \"\"retained\"\" by the company, or paid out to members as \"\"dividends\"\", is \"\"profit\"\" of the company for which the company is taxed at the corporate rate. Then, the money from that dividend you receive from the company is taxed again at the capital gains rate on your own 1040 return. This also means that you have to file taxes twice; once for the corporation, once for you as the individual. You can't, of course, have it both ways with an LLC; you can't pay yourself a true \"\"salary\"\" and get the associated tax breaks, then receive leftover profits as a \"\"distribution\"\" and avoid double taxation. It takes multiple \"\"members\"\" (owners) to have the LLC treated like a partnership, and there are specific types of LLCs set up to handle investments, where some of what I've said above doesn't apply. I won't get into that because the question inferred a single-owner situation, but the tax rules in these additional situations are again different.\"",
"title": ""
},
{
"docid": "e3690f57050d3a70467bddf10e4f5f4c",
"text": "\"It might be best to step back and look at the core information first. You're evaluating an LLC vs a Corporation (both corporate entities). Both have one or more members, and both are seen similarly (emphasis on SIMILAR here, they're not all the same) to the IRS. Specifically, LLC's can opt for a pass-through tax system, basically seen by the IRS the same way an S-Corp is. Put another way, you can be taxed as a corporate entity, or it's P/L statements can \"\"flow through\"\" to your personal taxes. When you opt for a flow-through, the business files and you get a separate schedule to tie into your taxes. You should also look at filing a business expense schedule (Schedule C) on your taxes to claim legitimate business expenses (good reference point here). While there are several differences (see this, and this, and this) between these entities, the best determination on which structure is best for you is usually if you have full time employ while you're running the business. S corps limit shares, shareholders and some deductions, but taxes are only paid by the shareholders. C corps have employees, no restrictions on types or number of stock, and no restrictions on the number of shareholders. However, this means you would become an employee of your business (you have to draw monies from somewhere) and would be subject to paying taxes on your income, both as an individual, and as a business (employment taxes such as Social Security, Medicare, etc). From the broad view of the IRS, in most cases an LLC and a Corp are the same type of entity (tax wise). In fact, most of the differences between LLCs and Corps occur in how Profits/losses are distributed between members (LLCs are arbitrary to a point, and Corps base this on shares). Back to your question IMHO, you should opt for an LLC. This allows you to work out a partnership with your co-worker, and allows you to disburse funds in a more flexible manner. From Wikipedia : A limited liability company with multiple members that elects to be taxed as partnership may specially allocate the members' distributive share of income, gain, loss, deduction, or credit via the company operating agreement on a basis other than the ownership percentage of each member so long as the rules contained in Treasury Regulation (26 CFR) 1.704-1 are met. S corporations may not specially allocate profits, losses and other tax items under US tax law. Hope this helps, please do let me know if you have further questions. As always, this is not legal or tax advice, just what I've learned in setting several LLCs and Corporate structures up over the years. EDIT: As far as your formulas go, the tax rate will be based upon your personal income, for any pass through entity. This means that the same monies earned from and LLC or an S-corp, with the same expenses and the same pass-through options will be taxed the same. More reading: LLC and the law (Google Group)\"",
"title": ""
},
{
"docid": "4d9bdb78150f5089baeab672332d02d2",
"text": "Federal income taxes are indeed expenses, they're just not DEDUCTIBLE expenses on your 1120. Federal Income Tax Expense is usually a subcategory under Taxes. This is one of the items that will be a book-to-tax difference on Schedule M-1. I am presuming you are talking about a C corporation, as an S corporation is not likely to be paying federal taxes itself, but would pass the liability through to the members. If you're paying your personal 1040 taxes out of an S-corporation bank account, that's an owner's draw just like paying any of your personal non-business expenses. I would encourage you to get a tax professional to prepare your corporate tax returns. It's not quite as simple as TurboTax Business makes it out to be. ;) Mariette IRS Circular 230 Notice: Please note that any tax advice contained in this communication is not intended to be used, and cannot be used, by anyone to avoid penalties that may be imposed under federal tax law.",
"title": ""
},
{
"docid": "5d86ebab266bf0a5d9f55be7a5222389",
"text": "I am assuming this is USA. While it is a bit of a pain, you are best off to have separate accounts for your business and personal. This way, if it comes to audit, you hand the IRS statements for your business account(s) and they match your return. As a further precaution I would have the card(s) you use for business expenses look different then the ones you use for personal so you don't mess another one up.",
"title": ""
},
{
"docid": "e0c51eea3ded591cacec119ff328abda",
"text": "Payment of taxes for your personal return filed with the IRS always come from your personal account, regardless of how the money was earned. Sales tax would be paid from your business account, so would corporate taxes, if those apply; but if you're talking about your tax payments to the IRS for your personal income that should be paid from your personal account. Also, stating the obvious, if you're paying an accountant to handle things you can always ask them for clarification as well. They will have more precise answers. EDIT Adding on for your last part of the question I missed: In virtually all cases LLC's are what's called a pass through entity. For these entities, all income in the eyes of the federal government passes directly through the entity to the owners at the end of each year. They are then taxed personally on this net income at their individual tax rate, that's the very abridged version at least. The LLC pays no taxes directly to the federal government related to your income. Here's a resource if you'd like to learn more about LLC's: http://www.nolo.com/legal-encyclopedia/llc-basics-30163.html",
"title": ""
},
{
"docid": "765e60af2e9d1a54d09edc1026346916",
"text": "\"According to IRS Publication 1635, Understanding your EIN (PDF), under \"\"What is an EIN?\"\" on page 2: Caution: An EIN is for use in connection with your business activities only. Do not use your EIN in place of your social security number (SSN). As you say your EIN is for your business as a sole proprietor, I would also refer to Publication 334, Tax Guide for Small Business, under \"\"Identification Numbers\"\": Social security number (SSN). Generally, use your SSN as your taxpayer identification number. You must put this number on each of your individual income tax forms, such as Form 1040 and its schedules. Employer identification number (EIN). You must also have an EIN to use as a taxpayer identification number if you do either of the following. Pay wages to one or more employees. File pension or excise tax returns. If you must have an EIN, include it along with your SSN on your Schedule C or C-EZ as instructed. While I can't point to anything specifically about bank accounts, in general the guidance I see is that your SSN is used for your personal stuff, and you have an EIN for use in your business where needed. You may be able to open a bank account listing the EIN as the taxpayer identification number on the account. I don't believe there's a legal distinction between what makes something a \"\"business\"\" account or not, though a bank may have different account offerings for different purposes, and only offer some of them to entities rather than individuals. If you want to have a separate account for your business transactions, you may want them to open it in the name of your business and they may allow you to use your EIN on it. Whether you can do this for one of their \"\"personal\"\" account offerings would be up to the bank. I don't see any particular advantages to using your EIN on a bank account for an individual, though, and I could see it causing a bit of confusion with the bank if you're trying to do so in a way that isn't one of their \"\"normal\"\" account types for a business. As a sole proprietor, there really isn't any distinction between you and your business. Any interest income is taxable to you in the same way. But I don't think there's anything stopping you legally other than perhaps your particular bank's policy on such things. I would suggest contacting your bank (or trying several banks) to get more information on what account offerings they have available and what would best fit you and your business's needs.\"",
"title": ""
},
{
"docid": "ae5066c9a5bc07ef196332219cdba89b",
"text": "\"I'm no lawyer and no expert, so take my remarks as entertainment only. Also see this question. If you have a U.S. SSN which is eligible for work, they may be able to pay you on 1099 basis with your SSN as a sole proprietor, unless they have some personal reason for avoiding that. So perhaps try asking about that specifically. HR policies can be weird and tricky, maybe a nudge in the right direction will help. Not What You Asked: regardless, I might recommend you register as an LLC and get an EIN (sort of SSN for companies) for a variety of reasons. It's called a \"\"limited liability\"\" company for a reason. You may also have an easier time reaping various business-related rewards, like writing off expenses. If you do so, consider a state with no income tax like Wyoming. (Or, for convenience sake, WA if you live in BC, or maybe NH if you live in Ontario.. etc.)\"",
"title": ""
},
{
"docid": "692ae1c3e6eb2eca7e42bcebfcb1293a",
"text": "Mods decided to leave it here, so I'll summarize some of my answers on this question given @OnStartups. You can find them here, here and here. Your options are : You and your business are one and the same. You report your income and expenses for taxes on a Schedule C (for each sole proprietorship a separate schedule), and taxed at your personal rates. There's no liability protection or legal separation between you and your business, and you don't need to have any bureaucratic overhead of managing an entity. You can use your own bank account and have checks written to you directly. You can register for DBA if you want a store-front name to be different from your own name. Depending on State, can cost a lot or close to nothing. Provides certain liability protection (depending on State, single-member and multi-member LLC's may have different liability protections). You can chose to be taxed as either a sole-proprietor (partnership, for multi-member) or as a corporation. You have to separate your activities, have a separate bank account, and some minimal bureaucracy is required to maintain the entity. Benefits include the limited liability, relatively easy to add partners to the business or sell it as a whole, and provides for separation of your personal and business finances. Drawbacks - bureaucracy, additional fees and taxes (especially in CA), and separation of assets. Corporation is an entirely separate entity from yourself, files its own tax returns, has separate bank accounts and is run by the board of directors (which in some cases may require more than 1 person to be on the board, check your state laws on that). As an officer of the corporation you'll have to pay salary to yourself. S-Corp has the benefit of pass-through taxation, C-Corp doesn't and has double taxation. Benefits - liability protection, can sell shares to investors, legally distinct entity. Disadvantages - have to deal with payroll, additional accounting, significant bureaucracy and additional layer of taxes for C-Corp (double taxation). Selling corporate assets is always a taxable event (although in your case it is probably not of an importance). You have to talk to a lawyer in your state about the options re the liability protection and how to form the entities. The formation process is usually simple and straight forward, but the LLC/Partnership operating agreements and Corporation charters/bylaws must be drafted by a lawyer if you're not going to be the sole owner (even if you are - better get a lawyer draft something for you, its just easier to fix and change things when you're the sole owner). You have to talk to a CPA/EA in your state about the taxes and how the choice of entity affects them.",
"title": ""
},
{
"docid": "e23eda4b8b64a62749c8eb12447ab724",
"text": "\"Generally if you're a sole S-Corp employee - it is hard to explain how the S-Corp earned more money than your work is worth. So it is reasonable that all the S-Corp profits would be pouring into your salary. Especially when the amounts are below the FICA SS limits when separating salary and distributions are a clear sign of FICA tax evasion. So while it is hard to say if you're going to be subject to audit, my bet is that if you are - the IRS will claim that you underpaid yourself. One of the more recent cases dealing with this issue is Watson v Commissioner. In this case, Watson (through his S-Corp which he solely owned) received distributions from a company in the amounts of ~400K. He drew 24K as salary, and the rest as distributions. The IRS forced re-characterizing distributions into salary up to 93K (the then-SS portion of the FICA limit), and the courts affirmed. Worth noting, that Watson didn't do all the work himself, and that was the reason that some of the income was allowed to be considered distribution. That wouldn't hold in a case where the sole shareholder was the only revenue producer, and that is exactly my point. I feel that it is important to add another paragraph about Nolo, newspaper articles, and charlatans on the Internet. YOU CANNOT RELY ON THEM. You cannot defend your position against IRS by saying \"\"But the article on Nolo said I can not pay SE taxes on my earnings!\"\", you cannot say \"\"Some guy called littleadv lost an argument with some other guy called Ben Miller because Ben Miller was saying what everyone wants to hear\"\", and you can definitely not say \"\"But I don't want to pay taxes!\"\". There's law, there are legal precedents. When some guy on the Internet tells you exactly what you want to hear - beware. Many times when it is too good to be true - it is in fact not true. Many these articles are written by people who are interested in clients/business. By the time you get to them - you're already in deep trouble and will pay them to fix it. They don't care that their own \"\"advice\"\" got you into that trouble, because it is always written in generic enough terms that they can say \"\"Oh, but it doesn't apply to your specific situation\"\". That's the main problem with these free advice - they are worth exactly what you paid for them. When you actually pay your CPA/Attorney - they'll have to take responsibility over their advice. Then suddenly they become cautious. Suddenly they start mentioning precedents and rulings telling you to not do things. Or not, and try and play the audit roulette, but these types are long gone when you get caught.\"",
"title": ""
},
{
"docid": "a3536cc618e291ed7fa8cd499d035587",
"text": "I'm not sure why you're confusing the two unrelated things. 1040ES is your estimated tax payments. 941 is your corporation's payroll tax report. They have nothing to do with each other. You being the corporation's employee is accidental, and can only help you to avoid 1040ES and use the W2 withholding instead - like any other employee. From the IRS standpoint you're not running a LLC - you're running a corporation, and you're that corporation's employee. While technically you're self-employed, from tax perspective - you're not (to the extent of your corporate salary, at least).",
"title": ""
},
{
"docid": "15ad22bcdc1ba71d64e2cdba622599e3",
"text": "Do not mix personal accounts and corporate accounts. If you're paid as your self person - this money belongs to you, not the corporation. You can contribute it to the corporation, but it is another tax event and you should understand fully the consequences. Talk to a tax adviser (EA/CPA licensed in your State). If they pay to you personally (1099) - it goes on your Schedule C, and you pay SE taxes on it. If they pay to your corporation, the corporation will pay it to you as salary, and will pay payroll taxes on it. Generally, payroll through corporation will be slightly more expensive than regular schedule C. If you have employees/subcontractors, though, you may earn money which is not from your own performance, in which case S-Corp may be an advantage.",
"title": ""
},
{
"docid": "7fd6d379a23acdd8369d63e87fb51d0e",
"text": "You're not physically present in the US, you're not a US citizen, you're not a green card holder, and you don't have a business that is registered in the US - US laws do not apply to you. You're not in any way under the US jurisdiction. Effectively connected income is income effectively connected to your business in the US. You're not in the US, so there's nothing to effectively connect your income to. Quote from the link: You usually are considered to be engaged in a U.S. trade or business when you perform personal services in the United States. You ask: If I form an LLC or C corp am I liable for this withholding tax? If you form a legal entity in a US jurisdiction - then that entity becomes subjected to that jurisdiction. If you're physically present in the US - then ECI may become an issue, and you also may become a resident based on the length of your stay.",
"title": ""
}
] |
fiqa
|
4edf20cdb2236e67c2ec8972df5ec841
|
What are institutional investors?
|
[
{
"docid": "8c1451567018ae65689b6bac99a969b5",
"text": "\"Professional investors managing large investment portfolios for \"\"institutions\"\" -- a college, a museum, a charitable organization, et cetera. I'm not sure whether those managing investments for a business are considered institutional investors or not. The common factor tends to be large to immense portfolios (let's call it $100M and up, just for discussion) and concern with preserving that wealth. Having that much money to work with allows some investment strategies that don't make sense for smaller investors, and makes some others impractical to impossible. These folks can make mistakes too; Madoff burned a lot of charities when his scam collapsed.\"",
"title": ""
},
{
"docid": "a39e5f0fa23d8f3eef2d9f75eafd4b26",
"text": "FINRA defines institutional investors as: Institutional investors include banks, savings and loan associations, insurance companies, registered investment companies, registered investment advisors, a person or entity with assets of at least $50 million, government entities, employee benefit plans and qualified plans with at least 100 participants, FINRA member firms and registered persons, and a person acting solely on behalf of an institutional investor. From: http://www.finra.org/industry/issues/faq-advertising Based on Rules 2210(a)(4) and 4512(c). Institutional investors are expected to understand market risks and as a result, disclosure requirements are much lower (perhaps no SEC filings and no prospectus).",
"title": ""
}
] |
[
{
"docid": "e3542af0fa7a035b01c65284f3a39088",
"text": "Investment banks don't have to buy anything. If they don't think the stock is worth buying - they won't. If they think it is - others on the secondary market will probably think so too. Initial public offering is offering to the public - i.e.: theoretically anyone can participate and purchase stocks. The major investment firms are not buying the stocks for themselves - but for their clients who are participating in this IPO. I, for example, receive email notifications from my brokerage firm each time there's another IPO that they have access to, and I can ask the brokerage to buy stocks from the IPO on my behalf. When that happens - they don't buy the stocks themselves and then sell to me. No, what happens is that I buy a stock, through them, and they charge me a commission for the service. Usually IPO participation commissions are higher than regular trading commissions. Most of the time those who purchase stocks at IPO are institutional investors - i.e.: mutual funds, pension plans, investment banks for their managed accounts, etc. Retail investors would probably not participate in the IPO because of the costs, limited access (not all the brokerage firms have access to all the IPOs), and the uncertainty, and rather purchase the stocks later on a secondary market.",
"title": ""
},
{
"docid": "af07ba093ad3bf3c12d63cecac20e87c",
"text": "\"In the article itself, it's stated: *\"\"Yale University, where we work, has a de minimis exposure to IEX through an investment by one of the university’s external managers.\"\"* I mean, that's pretty straightforward to me. I promise you that Yale is also indirectly invested in every single public exchange out there.\"",
"title": ""
},
{
"docid": "18bf086eb9e21e1d63410fb0a3786dab",
"text": "The role of business investors differs greatly within different organisations. If you are starting a business or already have a small business, business investors can be a key tool to get your business of the ground. Business investors give money to small businesses or start-ups in exchange for ownership in a part of the company.",
"title": ""
},
{
"docid": "b18dfb2f980c7c6e0d47ae978440fba3",
"text": "\"The definition you cite is correct, but obscure. I prefer a forward looking definition. Consider the real investment. You make an original investment at some point in time. You make a series of further deposits and withdrawals at specified times. At some point after the last deposit/withdrawal, (the \"\"end\"\") the cash value of the investment is determined. Now, find a bank account that pays interest compounded daily. Possibly it should allow overdrafts where it charges the same interest rate. Make deposits and withdrawals to/from this account that match the investment payments in amount and date. At the \"\"end\"\" the value in this bank account is the same as the investment. The bank interest rate that makes this happen is the IRR for the investment...\"",
"title": ""
},
{
"docid": "c285533b113f9073d2326dd82af1a7a2",
"text": "Little investors rarely have a say in it. If you have direct control over routing, that's one thing (some platforms allow it). But if you're a fund investor or a pension beneficiary, it's completely out of your hands. Re: The author. One of them - [David Swensen](https://en.wikipedia.org/wiki/David_F._Swensen) - is actually the chief investment officer at Yale University. I'm pretty sure he has a clue.",
"title": ""
},
{
"docid": "f619e556111df0fd3eaf002df79a9597",
"text": "Yep, you have it pretty much right. The volume is the number of shares traded that day. The ticker is giving you the number of shares bought at that price in a given transaction, the arrow meaning whether the stock is up or down on the day at that price. Institutional can also refer to pensions, mutuals funds, corporates; generally any shareholder that isn't an individual person.",
"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": "3e1635a637bbb1a5c4363476bdfa51e1",
"text": "\"For US equities, Edgar Online is where companies post their government filings to the SEC. On Google Finance, you would look at the \"\"SEC filings\"\" link on the page, and then find their 10K and 10Q documents, where that information is listed and already calculated. Many companies also have these same documents posted on their Investor Relations web pages.\"",
"title": ""
},
{
"docid": "09d73bab00ea66f3a7bab0e5279f1939",
"text": "> Also the institutional investor only has the advantage of leverage And, you know, capital, better data, better technical knowledge, and better just about everything else. It's the same reason why the average investor is better off buying a blue-chip stock while a buy-side guy buys more complex financial products.",
"title": ""
},
{
"docid": "38f347119ddb7ea280ce6191e1008d26",
"text": "\"1) When it says \"\"an investment or mutual fund\"\", is a mutual fund not an investment? If no, what is the definition of an investment? A mutual fund is indeed an investment. The article probably mentions mutual funds separately from other investments because it is not uncommon for mutual funds to give you the option to automatically reinvest dividends and capital gains. 2) When it says \"\"In terms of stocks\"\", why does it only mention distribution of dividends but not distribution of capital gains? Since distributions are received as cash deposits they can be used to buy more of the stock. Capital gains, on the other hand, occur when an asset increases in value. These gains are realized when the asset is sold. In the case of stocks, reinvestment of capital gains doesn't make much sense since buying more stock after selling it to realize capital gains results in you owning as much stock as you had before you realized the gains. 3) When it says \"\"In terms of mutual funds\"\", it says about \"\"the reinvestment of distributions and dividends\"\". Does \"\"distributions\"\" not include distributions of \"\"dividends\"\"? why does it mention \"\"distributions\"\" parallel to \"\"dividends\"\"? Used in this setting, dividend and distribution are synonymous, which is highlighted by the way they are used in parallel. 4) Does reinvestment only apply to interest or dividends, but not to capital gain? Reinvestment only applies to dividends in the case of stocks. Mutual funds must distribute capital gains to shareholders, making these distributions essentially cash dividends, usually as a special end of year distribution. If you've requested automatic reinvestment, the fund will buy more shares with these capital gain distributions as well.\"",
"title": ""
},
{
"docid": "84684ca8001220b80db21a461e7b2e21",
"text": "You won't be able to know the trading activity in a timely, actionable method in most cases. The exception is if the investor (individual, fund, holding company, non-profit foundation, etc) is a large shareholder of a specific company and therefore required to file their intentions to buy or sell with the SEC. The threshold for this is usually if they own 5% or greater of the outstanding shares. You can, however, get a sense of the holdings for some of the entities you mention with some sleuthing. Publicly-Traded Holding Companies Since you mention Warren Buffett, Berkshire Hathaway is an example of this. Publicly traded companies (that are traded on a US-based exchange) have to file numerous reports with the SEC. Of these, you should review their Annual Report and monitor all filings on the SEC's website. Here's the link to the Berkshire Hathaway profile. Private Foundations Harvard and Yale have private, non-profit foundations. The first place to look would be at the Form 990 filings each is required to file with the IRS. Two sources for these filings are GuideStar.org and the FoundationCenter.org. Keep in mind that if the private foundation is a large enough shareholder in a specific company, they, too, will be required to file their intentions to buy or sell shares in that company. Private Individuals Unless the individual publicly releases their current holdings, the only insight you may get is what they say publicly or have to disclose — again, if they are a major shareholder.",
"title": ""
},
{
"docid": "8cec8e3718d450184a4146aeaa725fb9",
"text": "\"**David F. Swensen** David F. Swensen (born 1954) is an American investor, endowment fund manager, and philanthropist. He has been the chief investment officer at Yale University since 1985. Swensen is responsible for managing and investing Yale's endowment assets and investment funds, which total $25.4 billion as of September 2016. He invented The Yale Model with Dean Takahashi, an application of the modern portfolio theory commonly known in the investing world as the \"\"Endowment Model.\"\" His investing philosophy has been dubbed the \"\"Swensen Approach\"\" and is unique in that it stresses allocation of capital in Treasury inflation protection securities, government bonds, real estate funds, emerging market stocks, domestic stocks, and developing world international equities. *** ^[ [^PM](https://www.reddit.com/message/compose?to=kittens_from_space) ^| [^Exclude ^me](https://reddit.com/message/compose?to=WikiTextBot&message=Excludeme&subject=Excludeme) ^| [^Exclude ^from ^subreddit](https://np.reddit.com/r/finance/about/banned) ^| [^FAQ ^/ ^Information](https://np.reddit.com/r/WikiTextBot/wiki/index) ^| [^Source](https://github.com/kittenswolf/WikiTextBot) ^] ^Downvote ^to ^remove ^| ^v0.24\"",
"title": ""
},
{
"docid": "7e683e94cf2644484ac1676cade3c202",
"text": "\"private investors that don't have the time or expertise for active investment. This may be known as every private investor. An index fund ensures average returns. The bulk of active trading is done by private institutions with bucketloads of experts studying the markets and AI scraping every bit of data it can get (from the news, stock market, the weather reports, etc...). Because of that, to get above average returns an average percent of the time, singular private investors have to drastically beat the average large team of individuals/software. Now that index ETF are becoming so fashionable, could there be a tipping point at which the market signals that active investors send become so diluted that this \"\"index ETF parasitism\"\" collapses? How would this look like and would it affect only those who invest in index ETF or would it affect the stock market more generally? To make this question perhaps more on-topic: Is the fact (or presumption) that index ETF rely indirectly on active investment decisions by other market participants, as explained above, a known source of concern for personal investment? This is a well-covered topic. Some people think this will be an issue. Others point out that it is a hard issue to bootstrap. I gravitate to this view. A small active market can support a large number of passive investors. If the number of active investors ever got too low, the gains & likelihood of gains that could be made from being an active investor would rise and generate more active investors. Private investing makes sense in a few cases. One example is ethics. Some people may not want to be invested, even indirectly, in certain companies.\"",
"title": ""
},
{
"docid": "93e6f4f2c4c147ccebf57367703b8672",
"text": "Its less about retail investors and more about the large institutions. Harvard's endowment for example, is held in trust. So is the endowment for every university, charity, and foundation. In terms of retail investors its probably much less than 50%. Its just that the massive amount of wealth in the wealthiest people tips the balance drastically. The top 20 wealthiest people in the world have ALL of their assets in trust. They probably dont have much personal ownership in anything and they hold more money than almost everyone else combined.",
"title": ""
},
{
"docid": "1c020cee61c8b52238f5db2dd9a7d507",
"text": "Perhaps this is lasting result of the recession. I realize that the article specifically states that Lego notably grew and profited through the recession. However, other parts of society and other markets didn't. Now, years later, perhaps those other scenarios are affecting Lego's market. Specifically, I'm drawing a parallel to my personal experience. My kids were born just before the recession. Their grade is the largest grade in the school system. Every grade behind them (the kids born during the recession) is significantly smaller. Whatever the driver(s) was, people were having fewer kids during the recession. Further, although the general view is that the recession is over and the stock markets are back, household spending and income continues to stagnate. With fewer kids and a reluctance to spend, perhaps people in the US and Europe just aren't buying as many premium toys.",
"title": ""
}
] |
fiqa
|
4db710359b76084c27451ad0a849aafc
|
What is the added advantage of a broker being a member of NFA in addition to IIROC
|
[
{
"docid": "6601f5906ee8f2dc1dc633f9e2504c40",
"text": "\"This shows that in each market (US and Canada) the company is registered with the appropriate regulatory organization. OANDA is registered in the US with the National Futures Association which is a \"\"self-regulatory organization for the U.S. derivatives industry\"\". OANDA Canada is registered in Canada with IIROC which is the \"\"Investment Industry Regulatory Organization of Canada\"\". The company does business in both the US and in Canada so the US arm is registered with the US regulatory organization and the Canadian arm is registered with the Canadian regulatory organization.\"",
"title": ""
}
] |
[
{
"docid": "6590ecc6b4a69571c3a81eb2aee1eb8d",
"text": "For the lenders to sell their positions they need buyers on the other side. For a large brokerage that means they should always be able to find another lender. For many contracts the client may have no idea they are a lender as lending is part of their agreement with the broker",
"title": ""
},
{
"docid": "f3a9f10cfc3042e45f13c953b15086aa",
"text": "\"By their agreements with the central counterparty - in the US, the exchange or the Options Clearing Corporation, which interposes itself between the counterparties of each trade and guarantees that they settle. From the CCP article: A clearing house stands between two clearing firms (also known as member firms or participants). Its purpose is to reduce the risk a member firm failing to honor its trade settlement obligations. A CCP reduces the settlement risks by netting offsetting transactions between multiple counterparties, by requiring collateral deposits (also called \"\"margin deposits\"\"), by providing independent valuation of trades and collateral, by monitoring the credit worthiness of the member firms, and in many cases, by providing a guarantee fund that can be used to cover losses that exceed a defaulting member's collateral on deposit. Exercisers on most contracts are matched against random writers during the assignment process, and if the writer doesn't deliver/buy the stock, the OCC does so using its funds and goes after the defaulting party.\"",
"title": ""
},
{
"docid": "026e3c198ad75498e618bd0b17111839",
"text": "There are no legal reasons preventing you from trading as a F-1 visa holder, as noted in this Money.SE answer. Per this article, here are the things you need to set up an account: What do I need to have for doing Stock trading as F1 student ? Typically, most of the stock brokerage firms require Social Security Number (SSN) for stock trading. The reason is that, for your capital gains, it is required by IRS for tax purposes. If you work on campus, then you would already get SSN as part of the job application process…Typically, once you get the on-campus job or work authorization using CPT or OPT , you use that offer letter and take all your current documents like Passport, I-20, I-94 and apply for SSN at Social Security Administration(SSA) Office, check full details at SSA Website . SSN is typically used to report job wages by employer for tax purposes or check eligibility of benefits to IRS/Government. I do NOT have SSN, Can I still do stock trading as F1 student ? While many stock brokerage firms require SSN, you are not out of luck, if you do not have one…you will have to apply for an ITIN Number ( Individual Taxpayer Identification Number ) and can use the same when applying for stock brokerage account. While some of the firms accept ITIN number, it totally depends on the stock brokering firm and you need to check with the one that you are interested in. The key thing is that you'll need either a SSN or ITIN to open a US-based brokerage account.",
"title": ""
},
{
"docid": "b235004e22e3e1e2bc35f1b4309da30e",
"text": "\"Brokers need to assess your level of competency to ensure that they don't allow you to \"\"bite off more than you can chew\"\" and find yourself in a bad situation. Some brokers ask you to rate your skills, others ask you how long you've been trading, it always varies based on broker. I use IB and they gave me a questionairre about a wide range of instruments, my skill level, time spent trading, trades per year, etc. Many brokers will use your self-reported experience to choose what types of instruments you can trade. Some will only allow you to start with stocks and restrict access to forex, options, futures, etc. until you ask for readiness and, for some brokers, even pass a test of knowledge. Options are very commonly restricted so that you can only go long on an option when you own the underlying stock when you are a \"\"newbie\"\" and scale out from there. Many brokers adopt a four-tiered approach for options where only the most skilled traders can write naked options, as seen here. It's important to note that all of this information is self-reported and you are not legally bound to answer honestly in any way. If, for example, you are well aware of the risks of writing naked options and want to try it despite never trading one before, there is nothing stopping you from saying you've traded options for 10 years and be given the privilege by your broker. Of course, they're just looking out for your best interest, but you are by no means forced into the scheme if you do not wish to be.\"",
"title": ""
},
{
"docid": "0ddce88f9a98be71c1e47392b3719f53",
"text": "Yea that example is a little skewed when you made the aum differ by 200%. Those two candidates would never apply for the same role. Networking is essential to get you looked at but at the end of the day it is still all about risk adjusted pnl. Not to mention that pnl is really all you have to judge a trader",
"title": ""
},
{
"docid": "f5aa74ee3c7e92d2297cb3dbe1e37866",
"text": "\"Real target of commisions is providing \"\"risk shelter\"\". It is kind of \"\"insurance\"\", which is actually last step for external risks to delete all your money. In part it cuts some of risks which you provide, brokers track history of all your actions for you (nobody else does). When brokerage firm fails, all your money is zero. It depends from case to case if whole account goes zero, but I wouldn't count on that.\"",
"title": ""
},
{
"docid": "f3ca94d4bc0bef19aabce03c94cbe1f3",
"text": "There are still human brokers on the floor primarily due to tradition. Their numbers have certainly dwindled, however, and it's reasonable to expect the number of floor traders to decrease even more as electronic trading continues to grow. A key reason for human brokers, however, is due to privacy. Certain private exchanges such as dark pools maintain privacy for high profile clients and institutional investors, and human brokers are needed to execute anonymous deals in these venues. Even in this region, however, technology is supplanting the need for brokers. I don't believe there is any human-broker-free stock exchange, but Nasdaq and other traditionally OTC (over the counter) exchanges are as close as it gets since they never even had trading floors.",
"title": ""
},
{
"docid": "fbca77f91a3bfecbbbdc58c5647c8e10",
"text": "My local credit Union has insured IRA accounts or IRA certificates that get the same low interest rates that non-IRA accounts receive. They get NCUA insurance, which is the equivalence of FDIC insurance.",
"title": ""
},
{
"docid": "7bf6f54427f3880dfd708cee58504ab8",
"text": "Yes and very very few people get accepted to those prop shops. I work at one of the ones you listed and this year we didn't even bother looking at applicants with under 3 years of trading. And even with bonus, this year many people are not hitting 100k for first years. Before it was true, but not that much anymore.",
"title": ""
},
{
"docid": "df5b065cb05a89d4e4f2b3b525e02327",
"text": "\"Brokerages offer you the convenience of buying and selling financial products. They are usually not exchanges themselves, but they can be. Typically there is an exchange and the broker sends orders to that exchange. The main benefit that brokers offer is a simpler commission structure. Not all brokers have their own liquidity, but brokers can have their own allotment of shares of a stock, for example, that they will sell you when you make an order, so that you get what you want faster. Regarding accounts at the exchanges to track actual ownership and transfer of assets, it is not safe to assume thats how that works. There are a lot of shortcomings in how the actual exchange works, since the settlement time is 1 - 3 business days, depending on the product (so upwards of 5 to 6 actual days). In a fast market, the asset can change hands many many times making the accounting completely incorrect for extended time periods. Better to not worry about that part, but if you'd like to read more about how that is regulated look up \"\"Failure To Deliver\"\" regulations on short selling to get a better understanding of market microstructure. It is a very antiquated system.\"",
"title": ""
},
{
"docid": "36347183e3c2c8963ed56ec4fa8468dc",
"text": "If the share is listed on a stock exchange that creates liquidity and orderly sales with specialist market makers, such as the NYSE, there will always be a counterparty to trade with, though they will let the price rise or fall to meet other open interest. On other exchanges, or in closely held or private equity scenarios, this is not necessarily the case (NASDAQ has market maker firms that maintain the bid-ask spread and can do the same thing with their own inventory as the specialists, but are not required to by the brokerage rules as the NYSE brokers are). The NYSE has listing requirements of at least 1.1 million shares, so there will not be a case with only 100 shares on this exchange.",
"title": ""
},
{
"docid": "90da52d0db0ff30eb04f78eb18a7a3d0",
"text": "While most all Canadian brokers allow us access to all the US stocks, the reverse is not true. But some US brokers DO allow trading on foreign exchanges. (e.g. Interactive Brokers at which I have an account). You have to look and be prepared to switch brokers. Americans cannot use Canadian brokers (and vice versa). Trading of shares happens where-ever two people get together - hence the pink sheets. These work well for Americans who want to buy-sell foreign stocks using USD without the hassle of FX conversions. You get the same economic exposure as if the actual stock were bought. But the exchanges are barely policed, and liquidity can dry up, and FX moves are not necessarily arbitraged away by 'the market'. You don't have the same safety as ADRs because there is no bank holding any stash of 'actual' stocks to backstop those traded on the pink sheets.",
"title": ""
},
{
"docid": "9c8e35e35c5f8ae1c2031f9cc2fee911",
"text": "While you are correct that no broker-dealer ever qualifies for FDIC and it could be sufficient for customers to know that general rule, for broker-dealers located at or 'networked' with a bank -- and nowadays many probably most are -- these explicit statements that non-bank investments are not guaranteed by the bank or FDIC and may lose principal (often stated as 'may lose value') are REQUIRED; see http://finra.complinet.com/en/display/display_main.html?rbid=2403&element_id=9093 .",
"title": ""
},
{
"docid": "81a6ee7d7f7b8ef9e63c33641f686053",
"text": "A broker does not have to allow the full trading suite the regulations permit. From brokersXpress: Do you allow equity and index options trading in brokersXpress IRAs? Yes, we allow trading of equity and index options in IRAs based on the trading level assigned to an investor. Trading in IRAs includes call buying, put buying, cash-secured put writing, spreads, and covered calls. I understand OptionsXpress.com offers the same level of trading. Disclosure - I have a Schwab account and am limited in what's permitted just as your broker does. The trade you want is no more risky that a limit (buy) order, only someone is paying you to extend that order for a fixed time. The real answer is to ask the broker. If you really want that level of trading, you might want to change to one that permits it.",
"title": ""
},
{
"docid": "f8192a8b59e7dc34d8ba75d13043d01f",
"text": "\"So, the term \"\"ready market\"\" simply means that a market exists in which there are legitimate buy/sell offers, meaning there are investors willing to own or trade in the security. A \"\"spot market\"\" means that the security/commodity is being delivered immediately, rather at some predetermined date in the future (hence the term \"\"futures market\"\"). So if you buy oil on the spot market, you'd better be prepared to take immediate delivery, where as when you buy a futures contract, the transaction doesn't happen until some later date. The advantage for futures contract sellers is the ability to lock in the price of what they're selling as a hedge against the possibility of a price drop between now and when they can/will deliver the commodity. In other words, a farmer can pre-sell his grain at a set price for some future delivery date so he can know what he's going to get regardless of the price of grain at the time he delivers it. The downside to the farmer is that if grain prices rise higher than what he sold them for as futures contracts then he loses that additional money. That's the advantage to the buyer, who expects the price to rise so he can resell what he bought from the farmer at a profit. When you trade on margin, you're basically borrowing the money to make a trade, whether you're trading long (buying) or short (selling) on a security. It isn't uncommon for traders to pledge securities they already own as collateral for a margin account, and if they are unable to cover a margin call then those securities can be liquidated or confiscated to satisfy the debt. There still may even be a balance due after such a liquidation if the pledged securities don't cover the margin call. Most of the time you pay a fee (or interest rate) on whatever you borrow on margin, just like taking out a bank loan, so if you're going to trade on margin, you have to include those costs in your calculations as to what you need to earn from your investment to make a profit. When I short trade, I'm selling something I don't own in the expectation I can buy it back later at a lower price and keep the difference. For instance, if I think Apple shares are going to take a steep drop at some point soon, I can short them. So imagine I short-sell 1000 shares of AAPL at the current price of $112. That means my brokerage account is credited with the proceeds of the sale ($112,000), and I now owe my broker 1000 shares of AAPL stock. If the stock drops to $100 and I \"\"cover my short\"\" (buy the shares back to repay the 1000 I borrowed) then I pay $100,000 for them and give them to my broker. I keep the difference ($12,000) between what I sold them for and what I paid to buy them back, minus any brokerage fees and fees the broker may charge me for short-selling. In conclusion, a margin trade is using someone else's money to make a trade, whether it's to buy more or to sell short. A short trade is selling shares I don't even own because I think I can make money in the process. I hope this helps.\"",
"title": ""
}
] |
fiqa
|
8f9fe5af2b2b9531c17e7e92d400e6c9
|
How much life insurance do I need?
|
[
{
"docid": "34a8ccab29c715ab8f710990a74ebf3d",
"text": "\"If I remember the information in \"\"The Wealthy Barber\"\" correctly, he said: And as someone once said to me, \"\"make sure you're worth more alive than dead!\"\" :-)\"",
"title": ""
},
{
"docid": "8883da34bb8dfe1b1945916c50d64449",
"text": "After some thought, I follow Dave Ramsey's advice because it's simple and I can do the math in my head - no online calculator needed. :) You need Life Insurance if someone depends on your income. You can replace your income with a single lump sum of 8-10 times your current income where those who need your income, can get roughly your salary each year from the life insurance proceeds.",
"title": ""
},
{
"docid": "5cb871765cef7636b0ae4f9b40607303",
"text": "\"Life Insurance can be a difficult decision. We have to first assess the \"\"want\"\" for it vs. the \"\"need\"\" for it, and that differs from person to person. Any Life licensed agent should be happy to do this calculation for you at no cost and no obligation. Just be sure you are well educated in the subject to make sure they are looking after YOUR needs and not their wallets. For the majority of clients, when looking at \"\"needs\"\" we will be sure to look at income coverage (less what the household needs with one less body) as well as debt coverage, education costs etc. More importantly make sure you are buying the RIGHT insurance, as much as the right amount.\"",
"title": ""
},
{
"docid": "4830aaf75a25d06ab7211b1830786118",
"text": "One simple calculation to determine your life insurance need: D.I.M.E. method D: Debt All your car loan balances, credit card balances, student loans, business loans, etc. I: Income Your annual income times 10 (for 10 years of income replacement). M: Mortgage Your home mortgage balance. E: Education Your children's education expenses. You add up all these items, and you'll come up with a proper amount of life insurance coverage. This should be sufficient model for a majority of people. Yes, your life insurance needs will change as you move through life. Therefore you should sit down with your life insurance agent to review your policy every year and adjust it accordingly.",
"title": ""
}
] |
[
{
"docid": "0a7cce082fb6e563fe5325f7f55b1de4",
"text": "From everything I have read I still cannot be convinced of Whole Life Insurance Good! You have a brain! but it seems to be the first thing any financial advisor is trained to sell. The commissions on whole life are sick. The selling agent gets upward of 90% of your first year's premium. I imagine that the regional and district managers split the remaining 10%, but that is speculation. This is why there is typically a 15 year surrender charge on whole life. The LI company is not getting any of the money! You may want to reevaluate any financial adviser that promotes whole life. If it was me, I would fire them the moment the words came out of their mouth.",
"title": ""
},
{
"docid": "1d6cb3330fa9904be50280896d240930",
"text": "\"All life insurance is pretty much the same when it comes to cost. You can run the numbers over certain time period and the actual cost of insurance is about the same. A simplified way to explain life insurance and the differences between them below: The 3 characteristics of life insurance: There are 5 popular types of life insurance and they are: Term Whole Life Universal Life Variable Universal Life Indexed Universal Life But first, one must understand the most basic life insurance which is called Annual Renewable Term: This is a policy that covers 1 year and is renewable every year after. The cost of insurance typically increases each year as the insured ages. So for every year of coverage, your premium increases like in the simplified illustration above. This is the building block of all life insurance, term or permanent. There is no cash value; all premium goes to the cost of insurance. This is an ART that spans over a longer time period than 1 year (say 5, 10, 15, 20 or 30 years). All the cost is added together then divided by the number of years of coverage to give a level premium payment for the duration of the policy. The longest coverage offered these days is 30 years. There is no cash value; all premium goes to the cost of insurance. The premium is fixed (level) for the term specified. If the policy comes to an end and the owner wishes to renew it, it will be at higher premium. This can be seen in the simplified illustration above for a 15-year term policy. Because life insurance gets very expensive as you reach old age, life insurance companies came up with a way to make it affordable for the consumer wishing to have coverage for their entire lifespan. They allow you to have interest rate crediting on the cash value account inside the policy. To have cash value in the first place, you must pay premiums that are more than the cost of insurance. The idea is: your cash value grows over time to help pay for the cost of insurance in the later stages of the policy, where the cost of insurance is typically higher. This is illustrated above in an overly simplified way. This is a permanent life insurance policy that is designed to cover the lifespan of the insured. There is cash value that is credited on a fixed interest rate specified by the insurance company (typically 3-5%). The premium is fixed for the life of the policy. It was designed for insuring the entire lifespan of the insured. This is variation of Whole Life. There is cash value; it is credited on a fixed interest rate specified by the insurance company, but it does fluctuate year to year depending on the economy (typically 3-6%). The premium is flexible; you can increase/decrease the premium. This is basically a universal life policy, but the cash value sits in an account that is invested in the market, normally mutual funds. Your interest that is being credited (to your account with your cash value from investments) is subjected to risk in the market, rise/fall with the market depending on the portfolio of your choosing, hence the word \"\"Variable\"\". You take on the risk instead of the insurance company. It can be a very good product if the owner knows how to manage it (just like any other investment products). This is a hybrid of the UL and the VUL. The interest rate depends on the performance of a market index or a set of market indices. The insurance company states a maximum interest rate (or cap) you can earn up to and a guaranteed minimum floor on your cash value interest that will be credited (typically 0% floor and 12% cap). It is purely a method to credit you interest rate. It takes the market risk out of the equation but still retains some of the growth potential of the market. Term policy is designed for temporary coverage. There is no cash value accumulation. Permanent policies such as whole life, universal life, variable universal life and indexed universal life have a cash value accumulation component that was originally designed to help pay for the cost of insurance in the later stages of the policy when the insured is at an advanced age, so it can cover the entire lifespan of the insured. People do take advantage of that cash value component and its tax advantages for retirement income supplement and maximize the premium contribution. Always remember that life insurance is a life insurance product, and not an investment vehicle. There is a cost of insurance that you are paying for. But if you have life insurance needs, you might as well take advantage of the cash value accumulation, deferred tax growth, and tax-free access that these permanent policies offer.\"",
"title": ""
},
{
"docid": "e7c606e17d41f33ef5ca789b461f6c8b",
"text": "(Disclosure - I am a real estate agent, involved with houses to buy/sell, but much activity in rentals) I got a call from a man and his wife looking for an apartment. He introduced itself, described what they were looking for, and then suggested I google his name. He said I'd find that a few weeks back, his house burned to the ground and he had no insurance. He didn't have enough savings to rebuild, and besides needing an apartment, had a building lot to sell. Insurance against theft may not be at the top of your list. Don't keep any cash, and keep your possessions to a minimum. But a house needs insurance for a bank to give you a mortgage. Once paid off, you have no legal obligation, but are playing a dangerous game. You are right, it's an odds game. If the cost of insurance is .5% the house value and the chance of it burning down is 1 in 300 (I made this up) you are simply betting it won't be yours that burns down. Given that for most people, a paid off house is their largest asset, more value that all other savings combined, it's a risk most would prefer not to take. Life insurance is a different matter. A person with no dependents has no need for insurance. For those who are married (or have a loved one), or for parents, insurance is intended to help survivors bridge the gap for that lost income. The 10-20 times income value for insurance is just a recommendation, whose need fades away as one approaches independence. I don't believe in insurance as an investment vehicle, so this answer is talking strictly term.",
"title": ""
},
{
"docid": "9923fcbf3827d405cbd89f1b2cbdfa15",
"text": "This is snarky, but I really consider life insurance only to be an investment for THE INSURANCE COMPANY, if you don't have dependents who will need the insurance in case you are hurt or die.",
"title": ""
},
{
"docid": "a06d0f962d79ab8e476d9ed71d01f442",
"text": "\"Buy term and invest the rest is something you will hear all the time, but actually cash value life insurance is a very misunderstood, useful financial product. Cash value life insurance makes sense if: If you you aren't maxing out your retirement accounts, just stick with term insurance, and save as much as you can for retirement. Otherwise, if you have at least 5 or 10k extra after you've funded retirement (for at least 7 years), one financial strategy is to buy a whole life policy from one of the big three mutual insurance firms. You buy a low face value policy, for example, say 50k face value; the goal is to build cash value in the policy. Overload the policy by buying additional paid up insurance in the first 7 years of the policy, using a paid-up addition rider of the policy. This policy will then grow its cash value at around 2% to 4% over the life of the policy....similar perhaps to the part of your portfolio that would would be in muni bonds; basically you are beating inflation by a small margin. Further, as you dump money into the policy, the death benefit grows. After 7 or 8 years, the cash value of the policy should equal the money you've put into it, and your death benefit will have grown substantially maybe somewhere around $250k in this example. You can access the cash value by taking a policy loan; you should only do this when it makes sense financially or in an emergency; but the important thing to realize is that your cash is there, if you need it. So now you have insurance, you have your cash reserves. Why should you do this? You save up your cash and have access to it, and you get the insurance for \"\"free\"\" while still getting a small return on your investment. You are diversifying your financial portfolio, pushing some of your money into conservative investments.\"",
"title": ""
},
{
"docid": "bdea0f94441eba4e4c4c84bc4f917503",
"text": "\"The following is from Wikipedia - Term life insurance (with very minor editing) Because term life insurance is a pure death benefit, its primary use is to provide coverage of financial responsibilities, for the insured. Such responsibilities may include, but are not limited to, consumer debt, dependent care, college education for dependents, funeral costs, and mortgages. Term life insurance is generally chosen in favor of permanent life insurance because it is usually much less expensive (depending on the length of the term). Many financial advisors or other experts commonly recommend term life insurance as a means to cover potential expenses until such time that there are sufficient funds available from savings to protect those whom the insurance coverage was intended to protect. For example, an individual might choose to obtain a policy whose term expires near his or her retirement age based on the premise that, by the time the individual retires, he or she would have amassed sufficient funds in retirement savings to provide financial security for their dependents. This suggests the questions \"\"why do you have this policy?\"\" also \"\"how many term life policies do you need?\"\" or \"\"how much insurance do you need?\"\" Clearly you will be better off investing the premiums in the market. Your beneficiaries may be better off either way (depends when you die and to a lesser extent on market performance). If you are not able to retire now but expect to be able to later, you should strongly consider having sufficient insurance to provide income replacement for your spouse. This is a fairly common why.\"",
"title": ""
},
{
"docid": "af19b454b8a330dacf5f0faa0727ab30",
"text": "Buy term and invest the rest is in fact the easiest plan. Just buy the term insurance based on your current and expected needs. Review those needs every few years, or after a life event (marriage, divorce, kids, buying a house...) For the invest the rest part: invest in your 401K, IRA or the equivalent. There are index funds, or age based funds that can help the inexperienced. Those index funds have low costs; the age based funds change as you get older. The biggest issue with the whole life type products is that what your care about for the term insurance doesn't mean that the company has a good investment program. You also want to have the ability to decide to change insurance companies or investment companies without impacting the other.",
"title": ""
},
{
"docid": "a57e6f00e1669cbbae7bd48f648cfc03",
"text": "To one extreme, there's term. Aside from the commission, the premium is buying insurance and that's it. But when the tax and math wiz guys started to get together, they were able to use insurance as a wrapper to create products that might have some tax benefits. Whole life created a product that had an investment component which was able to pay the ever increasing premium costs. To the other extreme, there are variable annuities with a fixed $20/mo mortality fee which on a large valued account can be a tiny fraction of a percent of the funds invested. In effect, it's not an insurance product, but an investment, one that wrapped in a very thin insurance veil to keep it away from certain security regulations. This is likely the product you are being offered, or some variation of it.",
"title": ""
},
{
"docid": "a2f0b4e0345db20d3607499f4a1ebc64",
"text": "You have 3 companies now that you work with. I would start there. Ask one of them to show you what would happen if you bought the other two policies from them. This may not be something that they will show via the quotes generated on the web page. So you would be better off talking to a person who can generate a quote with that additional information. Make sure that you are comparing exact matches for the limits and options for the policies. Once you have done that with the first then do the same for the other two. I would have to dig into my policy bills for life insurance, but I do know that the bills for the home and auto insurance do show exactly how much I am saving by having multiple polices.",
"title": ""
},
{
"docid": "56f564b7cc8b32bf7a7cf60fcef35f1d",
"text": "If you are looking to begin living off the money now, then Dheer's answer is correct - it is not possible. However, if you are looking to grow that money (and potentially additional money added at later dates), then you could make this work. 250 a month corresponds to 3000 per year. A first approximation is that you will need a diversified portfolio of 20-25x that amount (60k-75k) to get the required return. This approximation is based on the rule of thumb for how much life insurance to buy. Therefore you need to determine how to grow the 4k you currently have into 60-75k. These numbers, however, are not adjusted for inflation. In the US I would like put the long term inflation adjust diversified market return at 4% per year (your money doubles about every 18 years). So your best approach if you have time is a diversified portfolio with rebalancing and adding additional money each year.",
"title": ""
},
{
"docid": "a5e4fb3f7b53f5d5f231896e4de3370c",
"text": "\"On reflection there are financial products that do what you want, whole-life insurance policies that guarantee an annual dividend calculation on some index with a ceiling and floor. So you will have a return within a defined minimum and maximum range. There are a lot of opinions on the internet on this. This Consumer Reports article is balanced These have a reputation for being bad for the consumer compared to buying term life and investing in a mutual fund separately, but if you want the guarantee (or are a \"\"moral hazard\"\" for a life insurance policy, closer to death than you appear on paper) it may be a product for you. If you're very wealthy, there is an estate tax exploit in insurance death benefits that can make this an exceptional shield on assets for your heirs, with the market return just the gravy.\"",
"title": ""
},
{
"docid": "3c666ea6cb3a77befcdf56abf9e1537c",
"text": "> This after paying thousands a month for decades. By my math, that's about (if not well over) half a million dollars they've spent on life insurance. Even using the minimums for what you said, that's 2k/month\\*12months/year\\*2decades\\*10years/decade=$480,000. Edit:formatting",
"title": ""
},
{
"docid": "a11b3faa4f2d442093ab3f4f0a497ccc",
"text": "\"If your meaning of \"\"asset protection\"\" is buying gold and canned food in the name of a Nevada LLC because some radio guy said so, bad idea. For a person, if you have assets, buy appropriate liability limits with your homeowner/renter insurance policy or purchase an \"\"umbrella\"\" liability policy. This type of insurance is cheap. If you don't have assets, it may not be worth the cost of insuring yourself beyond the default limits on your renter's or homeowner's policy. If you have a business, you need to talk to your insurance agent about what coverage is appropriate for the business as a whole vs. you personally. You also need to talk to your attorney about how to conduct yourself so that your business interests are separated from your personal interests.\"",
"title": ""
},
{
"docid": "3393f7c349cd30df4749a2c59947f9ae",
"text": "To add to JoeTaxpayer's answer, the cost of providing (term) life insurance for one year increases with the age of the insured. Thus, if you buy a 30-year term policy with level premiums (the premium is the same for 30 years) then, during the earlier years, you pay more than the cost to the insurance company for providing the benefit. In later years, you pay somewhat less than the cost of providing the insurance. The excess premiums that the insurance company charged in earlier years and the earnings from investing that money covers the difference between the premium paid in later years and the true cost of providing the coverage. If after 20 years you decide that you no longer need the protection (children have grown up and now have jobs etc) and you cancel the policy, you will have overpaid for the protection that you got. The insurance company will not give you backsies on the overpayment. As an alternative, you might want to consider a term life insurance policy in which the premiums increase each year (or increase every 5 years) and thus better approximate the actual cost to the insurance company. One advantage is that you pay less in early life and pay more in later years (when hopefully your income will have increased and you can afford to pay more). Thus, you can get a policy with a larger face value (150K for your wife and 400K for yourself is really quite small) with annual premium of $550 now and more in later years. Also if you decide to cancel the policy after 20 years, you will not have overpaid for the level of coverage provided. Finally, in addition to a policy with larger face value, I recommend that you include the mortgage (if any) on your house in the amount that you decide is enough for your family to live on and to send the kids to college, etc., or get a separate (term life insurance) policy to cover the mortgage on your home. Many mortgage contracts have clauses to the effect that the entire principal owed becomes immediately due if either of the borrowers dies. Yes, the widow or widower can get a replacement mortgage, or prove to the lender that the monthly payments will continue as before, (or pay off the mortgage from that $150K or $400K which will leave a heck of a lot less for the family to survive on) etc., but in the middle of dealing with all the hassles created by a death in the family, this is one headache that can be taken care of now. The advantage of including the mortgage amount in a single policy that will support the family when you are gone is that you get a bit of a break; the sum of the annual premiums on ten policies for $100K is more than the premiums for a single $1M policy. There is also the consideration that the principal owed on the mortgage declines over the years (very slowly at first, though) and so there will be more money available for living expenses in later years. Alternatively, consider a special term life insurance policy geared towards mortgage coverage. The face value of this policy reduces each year to match the amount still due on the mortgage. Note that you may already have such a policy in place because the lender has insisted on you getting such a policy as a condition for issuing the loan. In this case, keep in mind that not only is the lender the beneficiary of such a policy, but if you bought the policy through the lender, you are providing extra profit to the lender; you can get a similar policy at lower premiums on the open market than the policy that your lender has so thoughtfully provided you. I bought mine from a source that caters to employees of nonprofit organizations and public sector employees; your mileage may vary.",
"title": ""
},
{
"docid": "8556398e6e591a6e2ab338b1ae6087d6",
"text": "In a way this is good because it encourages people to move out of these high cost areas to lower cost. Over time that will tend to even out the problem and move resources around the country. Anyone waiting for NYC to become cheap again is just plain stupid. It didn't even get cheap in the 2008 crash.",
"title": ""
}
] |
fiqa
|
de9598a186d8d1a6f7e4f9d54f09051a
|
Is there a catch to offers of $100 when opening up a new checking account?
|
[
{
"docid": "f9a6f8b595a8eec56b76488996cc97a2",
"text": "There's no catch. Banks need to acquire customers just like any other business. One common way to acquire new customers is by advertising on the radio, TV, print, etc. Another common way to acquire new customers is by offering incentives like the one you linked to. Basically, PNC is confident that they will make more than $100 in profit over the entire lifetime of a customer. This is a very reasonable assumption, considering that:",
"title": ""
},
{
"docid": "9b37851cc5fb0bc5aee4673672fc4735",
"text": "\"To add in a brief expansion to Portman's complete answer. The payment can also be thought of as compensation for your \"\"switching cost\"\". Obviously it is inconvenient to transfer your account from one bank to another (changing static payments, stationery, that sort of thing). The cash is offered as payment towards that inconvenience. Given the profits that banks make you can think of the $100 in much the same way as a store offering you a 5% discount on your next shopping trip.\"",
"title": ""
}
] |
[
{
"docid": "d146a6977cc30bc9a7693a2d74881d0e",
"text": "Technically, it's only when you need to pass money through. However consider that the length the account has been open builds history with the financial institution, so I'd open ASAP. Longer history with the bank can help with getting approved for things like business credit lines, business cards, and other perks, though if you're not making money with that business, seek out a bank that does not charge money to have a business account open with them.",
"title": ""
},
{
"docid": "f74cfd2c8a46f886fb3b125b25e254eb",
"text": "For $100 you better just hold it in Mexico. The cost of opening an account could eat 10% or more of your capital easily, and that won't be able to buy enough shares of an ETF or similar investment to make it worthwhile.",
"title": ""
},
{
"docid": "463f746157b54531abef89d0c5cebc9d",
"text": "\"In the United States, many banks aim to receive $ 100 per year per account in fees and interest markup. There are several ways that they can do this on a checking account. These examples assume that there is a 3 % difference between low-interest-rate deposit accounts and low-interest rate loans. Or some combination of these markups that adds up to $ 100 / year. For example: A two dollar monthly fee = $ 24 / year, plus a $ 2,000 average balance at 0.05% = $ 29 / year, plus $ 250 / month in rewards debit card usage = $ 24 / year, plus $ 2 / month in ATM fees = $ 24 / year. Before it was taken over by Chase Manhattan in 2008, Washington Mutual had a business strategy of offering \"\"free\"\" checking with no monthly fees, no annual fees, and no charges (by Washington Mutual) for using ATMs. The catch was that the overdraft fees were not free. If the customers averaged 3 overdraft fees per year at $ 34 each, Washington Mutual reached its markup target for the accounts.\"",
"title": ""
},
{
"docid": "a72d3d0c6af58a24af1bad27a75d7846",
"text": "If it's always the same person, you could open a joint account. Then fees are avoided altogether. How fast the funds are available depends on what you deposit. Cash is immediate.",
"title": ""
},
{
"docid": "9d9b8106c6faa5826c974441dda0bf78",
"text": "Almost any financial institution has the technical ability to do this (simply called sweeps, auto sweeps, or deposit sweeps); the issue you face is finding an institution that is willing to do it for you. I think you will have the most luck at your primary financial institution where you currently keep the majority of your banking relationship. You will have better luck at small-town banks and credit unions. The mega banks will likely not waver from their established policies. Deposit sweeps are common for business accounts. They are usually tied to a savings account, which is usually held within the same institution, however this is not a requirement. The sweep can send money to any US bank if you can provide the routing number and account number. The sweep will establish a peg balance, or floor balance, on the checking account. At the end of the day, any amount above the peg is swept into the savings account automatically. I doubt you will find what you’re asking for within an online banking system. You will likely have to go into a branch and speak with a personal banker. Explain to them you want to establish a sweep on your checking account and want to send the funds to another financial institution. You will have better luck asking for a peg of $100, or some other small amount. They may not take your request seriously if you want to completely empty the checking account to zero.",
"title": ""
},
{
"docid": "c7b257f2709405b41df0a6ea0a3eacf7",
"text": "Yes. it is possible, I have seen many times banks permitting overdrawing and later charging a high courtesy fees. Of course in many countries this is not permitted. In one of my account, I am running negative balance as the bank has charged its commission which is not due.",
"title": ""
},
{
"docid": "fa00b34cb37c39234a063ce5118d2230",
"text": "Sure, you'd make an $8.33 during that first month with little extra risk. Sounds like free money, right? (Assuming no hidden fees in the fine print.) I don't know that the extra money is worth the time you will spend monitoring the account, especially after inflation claims its share of your pie. If you're going to use leverage to invest, you should probably pick an investment that will return at a much higher rate. If you can get an unsecured line of credit at 1%, there aren't a lot of downsides. Hopefully interest rates don't rise high enough to eat your earnings, but if they do, you can always liquidate your investments and pay the remainder of the loan.",
"title": ""
},
{
"docid": "f3ecabffdd4a12b406fec0aef8903650",
"text": "\"A checking account almost never earns any significant interest. A checking accounts often does not have any limits in terms of how many times you can draw funds from it. A checking account often comes with a debit card allowing you to pay online, draw cash from an ATM machine etc. A savings accounts has much higher yields, so you should be getting a decent interest. Unfortunately in the current climate this is not always true (especially not with the big banks) so you may want to look into a high-yield savings account. A savings account is often limited in terms of number of transactions, meaning you can't constantly draw funds from it, it must be stable. A savings account often does not come with a debit card. No, a savings account should not be used for regular transactions. It's an account to park your money for a medium/long time. Understand that banks loan out the money in your savings account to third-parties, so if it would constantly fluctuate, they can't have this money available to others. In return of you parking your money with your bank, you should get a nice return (interest). Yes, but it's not common. Assuming you are from USA, passing banking data (account number and routing number) to third-parties is not safe. In Europe it's totally safe to share your account number to accept money. Depends, some banks do charge fees, some don't. Often there are fees when you're not using the account (no transactions), or when you don't have a certain minimum in an account. Assuming you are American (please specify this information clearly in future) I would look into an \"\"internet bank\"\", like Ally. They don't have many fees and they have an excellent high-yield savings account. They also give you a debit card. Disadvantage is that they don't have physical branches.\"",
"title": ""
},
{
"docid": "394bb6647586be1013b72bbe7b8f1858",
"text": "Wells Fargo. They have an account called PMA, an umbrella account for checking, savings, mortgage, and brokerage accounts. It would cost $30/month, but I never had to pay because I have a rollover retirement account that is enough to waive the fees. They count all accounts, including mortgage, which I used to have. Oh, and no restrictions. An added advantage is there are no fees for any of the accounts, nor for some other things, like bank checks, outside ATM fees, etc. I'm in California, so I don't know if the same deal exists in other states. But if you qualify for the free account, it's pretty good. Actually, most of my investments are Vanguard funds. And I have another rollover account with Vanguard, and never pay fees, but I only buy or sell from one Vanguard fund to another, and rarely since I have targeted retirement funds that are designed to be no maintenance. For some reason, I trust Vanguard more than most other funds; maybe because I like their philosophy on low-cost funds, which they started but are now getting more popular.",
"title": ""
},
{
"docid": "0fd2da9df7baaa52029b315da91a9a2b",
"text": "A) Q1) No, you beat the system, you benefit from flip side of 'use it or lose it' Q2) You need to ask, they may have a $50/week limit, or they may divide the amount you wish by remaining time in year. They may also not let you start till next enrollment period. B) Q1) No, in fact, you just lost $400 that you deposited but didn't spend. Q2) You missed the opportunity to spend an extra $1000 as well, but the loss was opportunity not pocket. Q3) Same as Q2 above, ask them. C) These accounts are not coupled. I'd change the law to do so, however, I am not a congressman.",
"title": ""
},
{
"docid": "4b06b55e7949a1b9fc96d28ee15df6dc",
"text": "\"If your son endorses the check or better still, endorses it with \"\"for deposit only\"\" and places the account number in the endorsement, it's likely the bank will accept it for deposit. In this manner, you are not putting it in your account, you are putting it in his. I have a family member perform this action occasionally with zero complications and she does not have an account at the same bank.\"",
"title": ""
},
{
"docid": "4201f0db350d44ceacf0e9361bc26368",
"text": "Check with a small local bank or credit union, they might offer better terms. That said, my local credit union still charges $6/month for a checking account if you don't have a direct deposit into it.",
"title": ""
},
{
"docid": "fb3753742a02e902d9c4e04e8e2cb515",
"text": "\"the easiest thing would be to go to walmart and stock up on 1000$ money orders paying a 70 cents fee for each. your landlord would almost certainly accept money orders, but double check first just in case. i say stock up because you can't get a money order for more than 1000$ and they usually won't let you buy more than 3 per day. alternatively, you can probably open a bank account using your ssn and your passport. look for any bank offering \"\"free\"\" checking, and they should be able to give you a few \"\"starter\"\" checks on the spot when you open the account. in any case, they can certainly get you a cashier's check for free or a small fee. side note: if you want to shop around for a checking account, look for a bank or credit union offering a \"\"kasasa\"\" account.\"",
"title": ""
},
{
"docid": "a2e0b3360d9040b962450b64262b6f04",
"text": "You may still get an exception hold on the transfer if all of the named account holders on the checking and savings do not match. In my time in banking such an internal hold was exceedingly rare but did occur if other red flags were present. Usually a hold is not an issue when transferring to savings. Further, regardless of the factors above, your institution may require you to complete the transfer with a teller rather than digitally, but that's the institution's choice. Side note about large transfers: When you're doing an internal transfer of $100,000.00 or more, even if named account holders match, some banks' back-end systems will only process this amount in one day as a wire. If so, they will likely waive the wire fee.",
"title": ""
},
{
"docid": "bc84d9ca973aeea4e184a8ddea4f3d16",
"text": "\"In theory, the term of the bond does not affect the priority. It does not matter whether a \"\"Junior Subordinated Debenture\"\" is due in one year or sixty, it is still lower priority than a \"\"Secured Note\"\". On the other hand, if the \"\"Secured Note\"\" is secured by something that is not worth as much as the note, the excess is an unsecured debt. In practice, the term of the bond has two effects: Short term debt holders are more likely to get out just before the company goes broke. Sometimes their efforts to get out are exactly what causes the company to go broke! (\"\"Commercial paper\"\" is even more fickle than banks.) All other things being equal, and depending on the terms of the loan, some bonds get priority over bonds of the same type that are issued later. For example, your first mortgage usually takes precedence over your second mortgage.\"",
"title": ""
}
] |
fiqa
|
f1e765413dd78c0c8037d77499b3a63d
|
Shorting: What if you can't find lenders?
|
[
{
"docid": "e4cd2570f701bfec4ecfd194f62cc6a1",
"text": "\"If you can't find anyone to lend you the shares, then you can't short. You can attempt to raise the interest rate at which you will borrow at, in order to entice others to lend you their shares. In practice, broadcasting this information is pretty convoluted. If there aren't any stocks for you to buy back, then you have to buy back at a higher price. As in, place a limit buy order higher and higher until someone decides to sell to you. This affects your profit. Regarding the public ledger: This functions different in different markets. United States stock markets have an evolving body of regulations to alleviate the exact concerns you detailed, but Canada's or Dubai's stock markets would have different provisions. You make the assumption that it is an efficient process, but it is not and it is indeed ripe for abuse. In US stocks, the public ledger has a 3 business day delay between showing change of ownership. Many times brokers and clearing firms and other market participants allow a customer to go short with fake shares, with the idea that they will find real shares within the 3 business day time period to cover the position. During the time period that there is no real shares hitting the market, this is called a \"\"naked short\"\". The only legal system that attempts to deter this practice is the \"\"fail to deliver\"\" (FTD) list. If someone fails to deliver, that means there is a short position active with fake shares for which no real shares have been borrowed against. Too many FTD's allow for a short selling restriction to be placed, meaning nobody else can be short, and existing short sellers may be forced to cover.\"",
"title": ""
},
{
"docid": "4894f981a005fe6d1bc95629a65b44ea",
"text": "Your question has 6 questions marks along with comments on what you'd like to know. Yes, there are stocks that are tough to short, a combination of low float, high current short positions, etc. Interest charged on the position rises in a supply/demand fashion. To unwind the position, there's always going to be stock available to buy. A shortage of willing sellers will cause the price to go up, but you'll see a bid/ask and the market will clear, i.e. The buy order fills.",
"title": ""
},
{
"docid": "63b8920f416f92450a92c5689afde1c1",
"text": "\"You at least have some understanding of the pitfalls of shorting. You might not be able to borrow stock. You might not be able to buy it back when the time comes. You're moves are monitored, so you can't \"\"run away\"\" because the rules are enforced. (You don't want to find out how, personally.) \"\"Shorting\"\" is a tough, risky business. To answer your implicit question, if you have to ask about it on a public forum like this, you're not good enough to do it.\"",
"title": ""
}
] |
[
{
"docid": "85e7e5ab0f2b5157a9fe6f4bbf32e8c8",
"text": "\"Pay someone a fee to borrow their private Uber shares, then sell those private shares to someone else, then find someone else you can buy their private shares from for less than the net of the proceeds you made selling the borrowed shares you sold plus the fees you've paid to the first person and return your newly purchased shares back to the person you initially borrowed the shares from. On a serious note, Uber is private; there is no liquid public market for the shares so there is no mechanism to short the company. The valuations you see might not even be legitimate because the company's financials are not public. You could try to short a proxy for Uber but to my knowledge there is no public \"\"rideshare\"\"/taxi service business similar enough to Uber to be a reasonably legitimate proxy.\"",
"title": ""
},
{
"docid": "ddfe0fd135b294be3b3199c6a3eced9e",
"text": "Your original example is a little confusing because just shorting for 1k and buying for 1k is 100% leveraged or an infinitive leverage ratio. (and not allowed) Brokerage houses would require you to invest some capital in the trade. One example might be requiring you to hold $100 in the brokerage. This is where the 10:1 ratio comes from. (1000/10) Thus a return of 4.5% on the 1000k bond and no movement on the short position would net you $45 and voila a 45% return on your $100 investment. A 40 to 1 leverage ratio would mean that you would only have to invest $25 to make this trade. Something that no individual investor are allowed to do, but for some reason some financial firms have been able to.",
"title": ""
},
{
"docid": "13d344c7642c5990a4d0b92f3dcccdf9",
"text": "A bit of poking around brought me to this thread on the Motley Fool, asking the same basic question: I think the problem is the stock price. For a stock to be sold short, it has to be marginable which means it has to trade over $ 5.00. The broker, therefore, can't borrow the stock for you to sell short because it isn't held in their clients' margin accounts. My guess is that Etrade, along with other brokers, simply exclude these stocks for short selling. Ivestopedia has an explanation of non-marginable securities. Specific to stocks under $5: Other securities, such as stocks with share prices under $5 or with extremely high betas, may be excluded at the discretion of the broker itself.",
"title": ""
},
{
"docid": "e3b31f6ff09ba86956fe3909c37414b4",
"text": "\"As the other answer said, the person who owns the lent stock does not benefit directly. They may benefit indirectly in that brokers can use the short lending profits to reduce their fees or in that they have the option to short other stocks at the same terms. Follow-up question: what prevents the broker lending the shares for a very short time (less than a day), pocketing the interest and returning the lenders their shares without much change in share price (because borrowing period was very short). What prevents them from doing that many times a day ? Lack of market. Short selling for short periods of time isn't so common as to allow for \"\"many\"\" times a day. Some day traders may do it occasionally, but I don't know that it would be a reliable business model to supply them. If there are enough people interested in shorting the stock, they will probably want to hold onto it long enough for the anticipated movement to happen. There are transaction costs here. Both fees for trading at all and the extra charges for short sale borrowing and interest. Most stocks do not move down by large enough amounts \"\"many\"\" times a day. Their fluctuations are smaller. If the stock doesn't move enough to cover the transaction fees, then that seller lost money overall. Over time, sellers like that will stop trading, as they will lose all their money. All that said, there are no legal blocks to loaning the stock out many times, just practical ones. If a stock was varying wildly for some bizarre reason, it could happen.\"",
"title": ""
},
{
"docid": "def659aae548de1cffe0daa87eeb0196",
"text": "I believe that it's not possible for the public to know what shares are being exchanged as shorts because broker-dealers (not the exchanges) handle the shorting arrangements. I don't think exchanges can even tell the difference between a person selling a share that belongs to her vs. a share that she's just borrowing. (There are SEC regulations requiring some traders to declare that trades are shorts, but (a) I don't think this applies to all traders, (b) it only applies to the sells, and (c) this information isn't public.) That being said, you can view the short interest in a symbol using any of a number of tools, such as Nasdaq's here. This is often cited as an indicator similar to what you proposed, though I don't know how helpful it would be from an intra-day perspective.",
"title": ""
},
{
"docid": "3372ab2c637d4541156521cfb61737d7",
"text": "\"Learn something new every day... I found this interesting and thought I'd throw my 2c in. Good description (I hope) from Short Selling: What is Short Selling First, let's describe what short selling means when you purchase shares of stock. In purchasing stocks, you buy a piece of ownership in the company. You buy/sell stock to gain/sell ownership of a company. When an investor goes long on an investment, it means that he or she has bought a stock believing its price will rise in the future. Conversely, when an investor goes short, he or she is anticipating a decrease in share price. Short selling is the selling of a stock that the seller doesn't own. More specifically, a short sale is the sale of a security that isn't owned by the seller, but that is promised to be delivered. Still with us? Here's the skinny: when you short sell a stock, your broker will lend it to you. The stock will come from the brokerage's own inventory, from another one of the firm's customers, or from another brokerage firm. The shares are sold and the proceeds are credited to your account. Sooner or later, you must \"\"close\"\" the short by buying back the same number of shares (called covering) and returning them to your broker. If the price drops, you can buy back the stock at the lower price and make a profit on the difference. If the price of the stock rises, you have to buy it back at the higher price, and you lose money. So what happened? The Plan The Reality Lesson I never understood what \"\"Shorting a stock\"\" meant until today. Seems a bit risky for my blood, but I would assume this is an extreme example of what can go wrong. This guy literally chose the wrong time to short a stock that was, in all visible aspects, on the decline. How often does a Large Company or Individual buy stock on the decline... and send that stock soaring? How often does a stock go up 100% in 24 hours? 600%? Another example is recently when Oprah bought 10% of Weight Watchers and caused the stock to soar %105 in 24 hours. You would have rued the day you shorted that stock - on that particular day - if you believed enough to \"\"gamble\"\" on it going down in price.\"",
"title": ""
},
{
"docid": "10816707b5c52aac08723ba5d56c1ca8",
"text": "The most obvious route is to short the lenders, preferably subprime. Since there are no lenders that operate exclusively in San Francisco, you could look north at Canada. The Canadian real estate market (esp. Vancouver) is just as overheated as the San Francisco market. As a start, famous short seller Marc Cohodes recommends HCG (Home Capital Group) as an opportune short.",
"title": ""
},
{
"docid": "8f913c481b6e6bedab9ea544c959e216",
"text": "You're going to have a hard time finding a legit investment planner that is willing to do things like take short-term positions in shorts, etc for a small investor. Doing so would put them at risk of getting sued by you for mismanagement and losing their license or affiliation with industry associations.",
"title": ""
},
{
"docid": "a16dce6dfae89c8957a21dedaf4f3116",
"text": "\"Q: A: Everyone that is short is paying interest to the owners of the shares that the short seller borrowed. Although this quells your conundrum, this is also unrelated to the term. Interest in this context is just the number. In the options market, each contract also has an open interest, which tells you how many of that contract is being held. For your sake, think of it as \"\"how many are interested\"\", but really its just a completely different context.\"",
"title": ""
},
{
"docid": "485023b813893e67c05daaa3fd16dd2d",
"text": "For every seller, there's a buyer. Buyers may have any reason for wanting to buy (bargain shopping, foolish belief in a crazy business, etc). The party (brokerage, market maker, individual) owning the stock at the time the company goes out of business is the loser . But in a general panic, not every company is going to go out of business. So the party owning those stocks can expect to recover some, or all, of the value at some point in the future. Brokerages all reserve the right to limit margin trading (required for short selling), and during a panic would likely not allow you to short a stock they feel is a high risk for them.",
"title": ""
},
{
"docid": "91c50e774803034969f7d5fb7a32d253",
"text": "\"It is true, as farnsy noted, that you generally do not know when stock that you're holding has been loaned by your broker to someone for a short sale, that you generally consent to that when you sign up somewhere in the small print, and that the person who borrows has to make repay and dividends. The broker is on the hook to make sure that your stock is available for you to sell when you want, so there's limited risk there. There are some risks to having your stock loaned though. The main one is that you don't actually get the dividend. Formally, you get a \"\"Substitute Payment in Lieu of Dividends.\"\" The payment in lieu will be taxed differently. Whereas qualified dividends get reported on Form 1099-DIV and get special tax treatment, substitute payments get reported on Form 1099-MISC. (Box 8 is just for this purpose.) Substitute payments get taxed as regular income, not at the preferred rate for dividends. The broker may or may not give you additional money beyond the dividend to compensate you for the extra tax. Whether or not this tax difference matters, depends on how much you're getting in dividends, your tax bracket, and to some extent your general perspective. If you want to vote your shares and exercise your ownership rights, then there are also some risks. The company only issues ballots for the number of shares issued by them. On the broker's books, however, the short sale may result in more long positions than there are total shares of stock. Financially the \"\"extra\"\" longs are offset by shorts, but for voting this does not balance. (I'm unclear how this is resolved - I've read that the the brokers essentially depend on shareholder apathy, but I'd guess there's more to it than that.) If you want to prevent your broker from loaning out your shares, you have some options:\"",
"title": ""
},
{
"docid": "d017040c94172cb755166031ca073f4d",
"text": "I've been a P2P Lending investor for ~18 months now with Lending Club with no complaints. Money wise, I'm making a 15.6% NAR w/ ~270 notes. I've had a few late payers, and one couple (oddly enough in both are in law enforcement) declare Ch.13 Bankruptcy, but b/c I've invested as little money as possible into each note ($25/note), my diversification helps reduce volatility and risk to capital. Having tough underwriting standards is very important, but I think it all comes down to loaning only to those you think will pay you back, not someone with a sob story or a long history of defaults. That might sound like a no-brainer, but if you're a bit of a cynic and have really tough screening criteria, it's possible to lower your default rate if you're patient and deploy your money slowly over time. At least, my returns and default rate of zero would imply it's possible so far. I blog about it quite a bit, so if anyone wants to check out my Lending Club investments thus far, please check it out. (Apologies if this is considered spam since I'm a new member of the site, but thought it relevant to the discussion.)",
"title": ""
},
{
"docid": "f01c3fd25989e6673978d1e948cba8e1",
"text": "No that will not count as a short sale although it may still affect your chances of getting a loan because some lenders wont want to see it on your credit if you are pursuing a new FHA loan. In the best case scenario you will need an explanation letter of why you did this. In the worst case scenario the lender will want you to wait to get financing. Try and find a lender with NO FHA overages which means they don't put additional restrictions on giving you an FHA insured loan. That type of lender will be your best choice because they just follow FHA rules and don't add any additional requirements.",
"title": ""
},
{
"docid": "7d2fcf90325654ef54b9d2fb7dc1f6ff",
"text": "First utilize a security screener to identify the security profiles you are looking to identify for identifying your target securities for shorting. Most online brokers have stock screeners that you can utilize. At this point you may want to look at your target list of securities to find out those that are eligible for shorting. The SHO thresold list is also a good place to look for securities that are hard to borrow to eliminate potential target securities. http://regsho.finra.org/regsho-Index.html Also your broker can let you know the stocks that are available for borrowing. You can then take your target securities and then you can look at the corporate filings on the SEC's Edgar site to look for the key words you are looking for. I would suggest that you utilize XBRL so you can electronically run your key word searched in an automated manner. I would further suggest that you can run the key word XBRL daily for issuer filings of your target list of securities. Additional word searches you may want to consider are those that could indicate a dilution of the companies stock such as the issuance of convertible debt. Also the below link detailing real short interest may be helpful. Clearing firms are required to report short interest every two weeks. http://www.nasdaq.com/quotes/short-interest.aspx",
"title": ""
},
{
"docid": "5dcf7e294498674a4dcbe9ce8598061c",
"text": "\"Yes, you could sell what you have and bet against others that the stock price will continue to fall within a period of time \"\"Shorting\"\". If you're right, your value goes UP even though the stock price goes down. This is a pretty darn risky bet to make. If you're wrong, there's no limit to how much money you can owe. At least with stocks they can only fall to zero! When you short, and the price goes up and up and up (before the deadline) you owe it! And just as with stocks, someone else has to agree to take the bet. If a stock is pretty obviously tanking, its unlikely that someone would oppose your bet. (It's probably pretty clear that I barely know what I'm talking about, but I was surprised not to see this listed among the answers.)\"",
"title": ""
}
] |
fiqa
|
b32b27ae9be421e36a26a15be3367ae1
|
Where to categorize crypto-currencies
|
[
{
"docid": "1951fc9ac20beeb7cd1e29922454d7ce",
"text": "\"Forex. I will employ my skill for \"\"suspension of disbelief\"\" and answer with no visceral reaction to Bitcoin itself. The Euro is not an 'investment.' It's a currency. People trade currencies in order to capture relative movements between pairs of currencies. Unlike stocks, that have an underlying business and potential for growth (or failure, of course) a currency trade is a zero sum game, two people on opposite sides of a bet. Bitcoin has no underlying asset either, no stock, no commodity. It trades, de facto, like a currency, and for purposes of objective classification, it would be considered a currency, and held similar to any Forex position.\"",
"title": ""
}
] |
[
{
"docid": "201879ebc9892ec649a92f8e1e2abb26",
"text": "That doesn't make it the perfect medium for theft. The system makes it okay to make non controversial items because its not like someone is going to put in the effort to track you for that. Yet if you are buying something illicit, a large part of the blockchain can already be analyzed to see where stuff is coming from and they can start dective work from there. For example, let's say you buy off Local Bitcoin. Well even if the FBI doesn't know your address or who it belongs to, they monitor the site and know that the funds came from a certain account. They know this because that certain someone bought coins from a regulated company. Its not the perfect medium for theft at all. Do you actually research bitcoin or are you just looking for any reason not to like it? Its really much more complex/grand than most make it out to be.",
"title": ""
},
{
"docid": "ecb089e03de5c97a18620bac7f5006e7",
"text": "\"This is the best tl;dr I could make, [original](https://hackernoon.com/cryptoeconomics-paving-the-future-of-blockchain-technology-13b04dab971?source=linkShare-2ce646a74d1c-1500791146) reduced by 96%. (I'm a bot) ***** > When you dig deep enough into the concepts underlying blockchain technology and specific systems built on it, you will find that they heavily incorporate cryptoeconomic tools specifically designed to minimize the impact of evildoers and hostile actors. > Cryptoeconomic Assumptions of BehaviorThe exciting thing about cryptoeconomics is that its terminology and theory are being pioneered day-by-day by blockchain developers and thought leaders. > To underscore the cutting-edge innovation within this field, some of the terms associated with cryptoeconomics have less than 100 results when googled at the time of writing! While many of the ideas in this area are very theoretical, rest assured that their application will have incredible consequences on the development and adoption of blockchain technology. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6p2tm0/cryptoeconomics_paving_the_future_of_blockchain/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~173828 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*: **cryptoeconomic**^#1 **Bitcoin**^#2 **attack**^#3 **protocol**^#4 **blockchain**^#5\"",
"title": ""
},
{
"docid": "e9b2ef38d9bed2f93f7f404506dfbee4",
"text": "Regulated vs unregulated crypto makes sense - it seems like it's easier for government officials to simply enforce a blanket restriction on cryptocurrency transactions of all kinds than bother to make the distinctions between different types. I expect China's shutdown will be the first of many in terms of national governments on cryptocurrency.",
"title": ""
},
{
"docid": "bd7cca078aeb10e6c4dd0b7e900bdeb8",
"text": "This is a long [article](https://www.bcg.com/blockchain/thinking-outside-the-blocks.html?linkId=32278919&utm_content=buffer1d4c7&utm_medium=social&utm_source=pinterest.com&utm_campaign=buffer) written by some leaders from the Boston Consulting Group. It is worth the read; however, based on your comment, I think the biggest piece to pay attention to is this [graph](http://i.imgur.com/q0SPYVQ.png) which does an excellent job of showing the layers from blockchain to app. For clarity, Bitcoin is a blockchain, and is also the name of the currency for that blockchain, Ethereum is a blockchain and uses Ether as its currency. Given the structure of Ethereum it allows for apps and services to be built on top of its blockchain, such as the [Golem Network](https://golem.network/) which uses its own currency for its specific ecosystem known as [Golem Token](https://coinmarketcap.com/assets/golem-network-tokens/).",
"title": ""
},
{
"docid": "f8793f001dbcf6f8b83d7d5ab4769e11",
"text": "All governments need to do is figure out how to monitor, regulate and tax whenever BTC (or any crypto) is converted into dollars or merchandise. The public ledger doesn't have names associated with it, but it does have public keys, which can be used to determine what other transactions have taken place that might not have been reported and how much crypto is in that wallet? I agree with Ballsy12, there could be a dark side to crypto that we're not paying attention to because we're all so excited about the money we're making, but it's only money if we can spend it, and that's where it starts to get concerning. Every transaction recorded is a bean counters wet dream.",
"title": ""
},
{
"docid": "b45f748a0c31dd76eb6f670978f51320",
"text": "Fist money does not have legal tender. And technically there are thousands of people willing to fight for bitcoin, who can be seen as an army so in that logic bitcoin has some intrinsic value. But both don't have intrinsic value. Most sources on the internet I can find agree with that. Wikipedia, investopedia and many others. Not that money needs intrinsic value. If the market value is 1000 times above the intrinsic value then the intrinsic value is not even relevant. But 1000 * 0 = 0 and the intrinsic value of the dollar itself (not coins) will always be 0. Same for the EUR and then YUAN.",
"title": ""
},
{
"docid": "51a6ca6a32a72b6063be3ac0e7c42d47",
"text": "\"Alright, so this is all out of the way. As a further note, I have a degree in computer science so I'm not oblivious to the technical aspects of bitcoin. I reject the idea that banning bitcoin is akin to banning the internet - in fact, I reject the notion that bitcoin is anywhere as revolutionary as \"\"the internet\"\" was (which itself, as a construct, is far older than most people let on). I've always acknowledged that there are many innovative technical aspects to bitcoin which are likely to find their way into our current system of money and transactions. The reality, however, goes back to my original contentions - that bitcoin is difficult (if not nearly impossible) to track, and thus serves as a black-market vehicle for those who wish to transact outside the power of the government. Whether or not you see this as \"\"good\"\" or \"\"bad\"\" doesn't matter; \"\"the government\"\" within any defined national border is the plenary power - period - and thus (for lack of a better phrase) \"\"resistance is mostly futile.\"\"\"",
"title": ""
},
{
"docid": "1ebe64ae34acfabbb767ba96a5b00dc0",
"text": "If the vendor accepts cryptocurrencies, this may be your only option. It's not clear if exporting cryptocurrency violates Ethiopian law, but at least cryptocurrencies have not yet been banned. If you can find someone who can trade you cryptocurrency, you can send it anywhere. Because cryptocurrencies are still extremely price volatile, I recommend you use Ripple, the fastest I can find. It can 100% confirm transactions on average within 10 seconds. This will keep your exposure to price volatility at a minimum if you send the cryptocurrency as soon as you buy it. If you choose this route, please take precausions. Your government may retroactively ban it and pursue you. Considering the Ethiopian government's history, this is not unlikely, and banning cryptocurrencies outright is.",
"title": ""
},
{
"docid": "0e3c8da73cfebc2e9766cc39a64caaf9",
"text": "It's already happening. Cryptocurrencies are your friend in this case. The other day I was on a torrent website which replaced ads with Monero based Captcha. I believe the website was using my CPU power to mine small amount Monero for themselves. If this is true, you won't need ads. Revenue will come straight from mining cryptos using the consumer's CPU.",
"title": ""
},
{
"docid": "b5cb9014490f54e93bdd3c759e17a493",
"text": "Granted, currencies don't have intrinsic value. Cryptocurrency is worse than government currencies in a few ways: - it costs real resources to produce - no institution keeps values stable - values are volatile in practice In those respects, crypto is more similar to a precious metal than a currency. Except it's worse than precious metals too, as metals have some intrinsic value. Crypto won't be able to overcome these disadvantages to compete with government-issued currencies in the long term. It might compete with gold long term. There are a lot of nuts and gold bugs in the world, and crypto might live on in that fringe space.",
"title": ""
},
{
"docid": "fe6bfcafa9fe332c03b44fbb3d4bc8e3",
"text": "You won't hear me calling crypto a safe haven as such. The local price volatility is more than most people can handle. And it takes a level of tech savvy to be able to separate facts from nonsense. By my personal analysis, Ethereum (ETH) would be the safest crypto investment by far. Bitcoin (BTC) is also surprisingly resilient in terms of value, but has been deprecated on multiple levels at this point, so it seems quite overvalued (or Ethereum undervalued for that matter). The rest of crypto can probably best be compared to investing in startups. High risk, high reward.",
"title": ""
},
{
"docid": "a37f6d49f503c2f398792f367fbfce6d",
"text": "Cryptocurrency investments. Got lucky and turned 1k into 50k in a month. 25k given to me from family members and 25k saved from working. I have a college degree btw. I just can't use it because i have deeprooted anxiety issues keeping me underemployed. Anyway 100k isn't a lot. I can't even buy a house and can barely even get a downpayment where i live and i wouldn't come close to being able to pay my mortgage.",
"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": "97d5af46b971eae008c61bce2217c2f2",
"text": "SECTION | CONTENT :--|:-- Title | Как можно быстро заработать Биткоин? Майнинг Сатошей Bitcoin. Сайты по заработку криптовалюты 2017 Description | ¦ Ссылка на регистрацию в проектах: | Elitemining: https://goo.gl/a1UEKz | Cryptostar: https://goo.gl/fQdECh =========================================== ¦ Бинарные опционы Олимп Трейд https://goo.gl/DKryBH ====== Вступайте в Мою команду! =============== ¦? Моя группа https://vk.com/criptovaluta2016 ====== Как связаться со мной =============== ¦? Я в VK №1: https://vk.com/a.alex81 ¦? Я в Одноклассниках: https://ok.ru/alex6373 ¦? Я в Facebook: https://www.facebook.com/Alex6373 ¦? Мой Skype: samara... Length | 0:04:36 **** ^(I am a bot, this is an auto-generated reply | )^[Info](https://www.reddit.com/u/video_descriptionbot) ^| ^[Feedback](https://www.reddit.com/message/compose/?to=video_descriptionbot&subject=Feedback) ^| ^(Reply STOP to opt out permanently)",
"title": ""
},
{
"docid": "2c2b955bf4fa0ba14e8f6a07cb47818f",
"text": "Actually, I misspoke. Arcade City doesn't use crypto. It just connects riders and drivers and lets them work out the payment on their own. There is an offshoot of Arcade City called Swarm City that does use crypto but it's only in the early development stages. There is a ton happening in the cryptocurrency space right now. Lots of really complex applications and development platforms - it's no longer just about funds transfer. If you are interested, here's a list of 1100 active projects: https://coinmarketcap.com/ On each project's detail page you'll find a link to its web site for further info.",
"title": ""
}
] |
fiqa
|
e771ed39982803c289cd7cb0aacd3a75
|
How smart is it really to take out a loan right now?
|
[
{
"docid": "9000b94ce73103322b8f7a9335d6b9c8",
"text": "but I can't help but feel that these low rates are somehow a gimmick to trick people into taking out loans Let me help you: it's not a feeling. That's exactly what it is. Since the economy is down, people don't want to jeopardize what they have, and keep the cash in their wallets. But, while keeping the money safe in the pocket, it makes the economy even worse. So in order to make people spend some money, the rates go down so that the cost of money is lower. It also means that the inflation will be on the rise, which is again a reason not to keep money uninvested. So yes, the rates are now very low, and the housing market is a buyers' market, so it does make sense to take out a loan at this time (provided of course that you can actually repay it over time, and don't take loans you can't handle). Of course, you shouldn't be taking loans just because the rates are low. But if you were already planning on purchasing a house - now would be a good time to go on with that.",
"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": "1c074e41e3cb931ec2dfbfc915fdbe0e",
"text": "\"The logic \"\"the interest rate on the mortgage was so low it didn't make sense not to buy\"\" is one reason the housing bubble happened. The logic was that it made the house affordable even at high prices. Once the prices collapsed people still had affordable payments, but were unable to sell because they were upside down on the mortgage. If you can refinance to a 15-year mortgage, or from a adjustable mortgage to a fixed rate mortgage. it can make sense. You can save on the monthly payment, and on the total cost of the mortgage. But don't buy to take advantage of rates; or to save on taxes; or to build a guaranteed equity. These can be false economies or things that can't be gaurenteed. Of course if nobody spends money, the economy will stay poor. As to hidden details. Only purchase housing you want to own for the long haul. If you expect to flip it in a few years, you might not be able to. You might end up stuck as a long distance landlord.\"",
"title": ""
},
{
"docid": "1707e391b50fb6601344bdb077f3ff93",
"text": "I think it's smart. It's the same game, just stiffer regulations, so your lender will ask more from you. Buy if you... If someone has been saving for years and years and still can't put 20% down, I think they're taking a significant risk. Buy something where your mortgage payment is around one week's salary at most. Try to buy only what you can afford to live in if you lost your job and couldn't find work for 3-6 months. You might want to do a 30-yr fixed instead of a 15-yr if you're worried about cash-flow.",
"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": "3dd66282abc2576d2df51f5815fca851",
"text": "\"You are not \"\"the economy\"\". The economy is just the aggregate of what is going on with everyone else. You should make the decision based on your own situation now and projected into the future as best you can. Loan rates ARE at historical lows, so it is a great time to take a loan if you actually need one for some reason. However, I wouldn't go looking for a loan just because the rates are low for the same reason it doesn't make sense to buy maternity clothes if you are a single guy just because they are on sale.\"",
"title": ""
},
{
"docid": "05f65e79d17fa5283838c5212626126e",
"text": "so this is a loan for a house? a loan on a house? a new mortgage? you shouldn't just get a loan for the hell of it any time. interests rates are low because the yields on US treasuries have been pushed closer to zero, and thats pretty much that. the risk is on the bank that approves the loan, and not you. (your ability to repay should be truthful, but your payments are smaller because the interest is so low)",
"title": ""
}
] |
[
{
"docid": "7c79b64e3f2aa98865def2c68e6e07b6",
"text": "Does this plan make sense mathematically? - No not really. The housing market can be fairly volatile (depending on your location), and it is really a good market for buying right now. You're going to make 1 or 2% on your money over the next year and risk paying 10% more for the house (or more). Even if you had a loan at 5% - that would be 5% of what you still owe, not the full value of the house. Does it make sense in terms of the common rules about paying a mortgage off early? - Yes, though make sure you have at least 80% of the house value so you don't get nailed with PMI (which may have a fixed duration). Is there a better strategy that I am overlooking? - Yes, investigate buying a house now. I'm not saying rush into it - shop around and find a really good deal. Get a 15-year mortgage (or less) and put what you're able to down (maybe 80% down). You can then payoff the mortgage over the next year or two and not have the risk of the volatility of the market raising the prices on houses and you getting less for your money.",
"title": ""
},
{
"docid": "522126a55f542900e3ee89f63cfd3395",
"text": "\"Given the current low interest rates - let's assume 4% - this might be a viable option for a lot of people. Let's also assume that your actual interest rate after figuring in tax considerations ends up at around 3%. I think I am being pretty fair with the numbers. Now every dollar that you save each month based on the savings and invest with a higher net return of greater than 3% will in fact be \"\"free money\"\". You are basically betting on your ability to invest over the 3%. Even if using a conservative historical rate of return on the market you should net far better than 3%. This money would be significant after 10 years. Let's say you earn an average of 8% on your money over the 10 years. Well you would have an extra $77K by doing interest only if you were paying on average of $500 a month towards interest on a conventional loan. That is a pretty average house in the US. Who doesn't want $77K (more than you would have compared to just principal). So after 10 years you have the same amount in principal plus $77k given that you take all of the saved money and invest it at the constraints above. I would suggest that people take interest only if they are willing to diligently put away the money as they had a conventional loan. Another scenario would be a wealthier home owner (that may be able to pay off house at any time) to reap the tax breaks and cheap money to invest. Pros: Cons: Sidenote: If people ask how viable is this. Well I have done this for 8 years. I have earned an extra 110K. I have smaller than $500 I put away each month since my house is about 30% owned but have earned almost 14% on average over the last 8 years. My money gets put into an e-trade account automatically each month from there I funnel it into different funds (diversified by sector and region). I literally spend a few minutes a month on this and I truly act like the money isn't there. What is also nice is that the bank will account for about half of this as being a liquid asset when I have to renegotiate another loan.\"",
"title": ""
},
{
"docid": "3188ba3af58c8955a687b494fcb5883d",
"text": "\"I strongly doubt your numbers, but lets switch the question around anyway. Would you borrow 10k on your house to buy stocks on leverage? That's putting your house at risk to have the chance of a gain in the stock market (and nothing in the market is sure, especially in the short term), and I would really advise against it. The decision you're considering making resolves down to this one. Note: It is always better to make any additional checks out as \"\"for principal only\"\", unless you will be missing a future payment.\"",
"title": ""
},
{
"docid": "a77ce45759fedc4b9142759f19d2ed37",
"text": "\"Well hindsight tells us now that by and large, doing 100% borrowing was not the best policy we could have taken. It gets nitpicky, but in the US the traditional 20% is the answer I presently feel comfortable with. It could be a reactionary judgement I am making to the current mess (in which I have formed the opinion that all parties are responsible) and arm-chair quarterbacking \"\"if we had only stuck with the 20% rule, we wouldn't be here right now. The truth is probably much more gray than that, but like all things personal finance it is really up to you. If the law allows 100% financing ask yourself if it really makes sense that a bank would just loan you hundreds of thousands of dollars to live somewhere.\"",
"title": ""
},
{
"docid": "8565cf0b7da77351974b7bf617d705d7",
"text": "the math makes sense to invest instead of paying down, but... how much would you borrow at 3.5%, to invest the money into the stock market? It's the same question, just turned around.",
"title": ""
},
{
"docid": "d89733e4b32e3be48a54e2f273de7a57",
"text": "\"The article said $65,000 (rounds numbers imply an estimate) was the original amount she borrowed. However she isn't on the hook for only $65,000. Her loans have interest and ***one*** of the loans had an 8% interest rate. Let's ASSUME (for the purposes of this exercise to illustrate what compound interest can do to \"\"good debt\"\") that all of her loans are at 8% interest over a 30 year repayment period. Her total payments over the course of the 30 years will amount to $172,000. Yes that's a big number. $107,000 going to INTEREST and $65,000 going towards the original loan balance. More realistically her loans are probably in the 6-8% interest range (since interest rates were higher 20 years ago) so the amount is a little smaller, but the bulk of her payments will be for paying interest not paying down her loan balance. She really couldn't afford to borrow for a master's degree to make so little in a high cost of living area.\"",
"title": ""
},
{
"docid": "e6f35098b4eace30b2e36802e1eef540",
"text": "I don't agree with others regarding paying off debt ASAP. You only have auto loan and auto loans are actually good for your credit score. With a mere $6k balance, it is not like you are going to have a problem paying off the loan. Not only that you will build your credit score and this will come in handy when you are purchasing a home. With the Federal Reserve setting the interest rate at 0% until 2015, I can't understand why people would pay off anything ASAP. As long as you don't have revolving credit card balances, you are in the clear. I don't know your salary nor how big your porfolio is but I would save 5 months expense in cash and dump the rest in precious metals. Holding cash is the worst thing you could be doing (unless you predict a deflation). You said you already have 40% in precious metals. You are already way ahead of other 95% of Americans by protecting your purchasing power. Follow your gut. The stormg is coming and it's not going to get any better.",
"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": "f18fc365689652e6ace8938a416fef9d",
"text": "\"In most cases of purchases the general advice is to save the money and then make the purchase. Paying cash for a car is recommended over paying credit for example. For a house, getting a mortgage is recommended. Says who? These rules of thumb hide the actual equations behind them; they should be understood as heuristics, not as the word of god. The Basics The basic idea is, if you pay for something upfront, you pay some fixed cost, call it X, where as with a loan you need to pay interest payments on X, say %I, as well as at least fixed payments P at timeframe T, resulting in some long term payment IX. Your Assumption To some, this obviously means upfront payments are better than interest payments, as by the time the loan is paid off, you will have paid more than X. This is a good rule of thumb (like Newtonian's equations) at low X, high %I, and moderate T, because all of that serves to make the end result IX > X. Counter Examples Are there circumstances where the opposite is true? Here's a simple but contrived one: you don't pay the full timeframe. Suppose you die, declare bankruptcy, move to another country, or any other event that reduces T in such a way that XI is less than X. This actually is a big concern for older debtors or those who contract terminal illnesses, as you can't squeeze those payments out of the dead. This is basically manipulating the whole concept. Let's try a less contrived example: suppose you can get a return higher than %I. I can currently get a loan at around %3 due to good credit, but index funds in the long run tend to pay %4-%5. Taking a loan and investing it may pay off, and would be better than waiting to have the money, even in some less than ideal markets. This is basically manipulating T to deal with IX. Even less contrived and very real world, suppose you know your cash flow will increase soon; a promotion, an inheritance, a good market return. It may be better to take the loan now, enjoy whatever product you get until that cash flows in, then pay it all off at once; the enjoyment of the product will make the slight additional interest worth it. This isn't so much manipulating any part of the equation, it's just you have different goals than the loan. Home Loan Analysis For long term mortgages, X is high, usually higher than a few years pay; it would be a large burden to save that money for most people. %I is also typically fairly low; P is directly related to %I, and the bank can't afford to raise payments too much, or people will rent instead, meaning P needs to be affordable. This does not apply in very expensive areas, which is why cities are often mostly renters. T is also extremely long; usually mortgages are for 15 or 30 years, though 10 year options are available. Even with these shorter terms, it's basically the longest term loan a human will ever take. This long term means there is plenty of time for the market to have a fluctuation and raise the investments current price above the remainder of the loan and interest accrued, allowing you to sell at a profit. As well, consider the opportunity cost; while saving money for a home, you still need a place to live. This additional cost is comparable to mortgage payments, meaning X has a hidden constant; the cost of renting. Often X + R > IX, making taking a loan a better choice than saving up. Conclusion \"\"The general advice\"\" is a good heuristic for most common human payments; we have relatively long life spans compared to most common payments, and the opportunity cost of not having most goods is relatively low. However, certain things have a high opportunity cost; if you can't talk to HR, you can't apply for jobs (phone), if you can't get to work, you can't eat (car), and if you have no where to live, it's hard to keep a job (house). For things with high opportunity costs, the interest payments are more than worth it.\"",
"title": ""
},
{
"docid": "9a8d7995d7303fd33d5e096f3635f99c",
"text": "\"There is a substantial likelihood over the next several years that the US Dollar will experience inflation. (You may have heard terms like \"\"Quantitative Easing.\"\") With inflation, the value of each dollar you have will go down. This also means that the value of each dollar you owe will go down as well. So, taking out a loan / issuing a bond at a very good rate, converting it into an asset that's a better way to store value (possibly including stock in a big stable company like MSFT) and then watching inflation reduce the (real) value of the loan faster than the interest piles up... that's like getting free money. Combine that with the tax-shelter games alluded to by everyone else, and it starts to look like a very profitable endeavour.\"",
"title": ""
},
{
"docid": "10a507f344ac4ddd357f62b4226c4b24",
"text": "Just for another opinion, radio host Clark Howard would suggest killing the private student loans as quickly as possible. The only reason is the industry around private student loans has fewer rules as to how they interact with you, and they have historically been very unpleasant if you have to deal with them in bad financial times. As a safety net, get rid of the private student loans as your main focus while you have the money and rates are low. Not for financial reasons per se, but for peace of mind. The other advice in this question are great, but nobody mentioned the potential dark side of private student loans.",
"title": ""
},
{
"docid": "8a32ff455ef9ede9b3f4850281372c9a",
"text": "The answer to your question depends on your answer to this question: Would you be willing to take out a loan at that interest rate and invest that money straight into stocks? That's basically what you're planning to do. You leverage your stock investment, which is a valid and often used way to improve returns. Better returns ALWAYS come with more risk. Depending on your location there might be a tax advantage to a mortage, which you can take into account.",
"title": ""
},
{
"docid": "dbb1cccd1b4441b98a23745c915152d9",
"text": "As a personal advice, its best avoided to take a loan for a vacation. Having said that it would also depend on the amount of loan that one is planning to take and the duration for repaying the loan and the rate of interest. One has to also consider if you borrow; when you are paying the loan back, is that money comming out of something else that was budgeted. Say paying this loan means that you can't save enough for the downpayment for your house you plan to buy next year or will mean less contributions to retirement savings. If so then its definately advisable to forego the vacation travel. You can still take the holiday and enjoy at home doing something else that of meaning.",
"title": ""
},
{
"docid": "d928ef4d9e926330853c2e5a63a88b80",
"text": "\"Debt increases your exposure to risk. What happens if you lose your job, or a major expense comes up and you have to make a hard decision about skipping a loan payment? Being debt free means you aren't paying money to the bank in interest, and that's money that can go into your pocket. Debt can be a useful tool, however. It's all about what you do with the money you borrow. Will you be able to get something back that is worth more than the interest of the loan? A good example is your education. How much more money will you make with a college degree? Is it more than you will be paying in interest over the life of the loan? Then it was probably worth it. Instead of paying down your loans, can you invest that money into something with a better rate of rate of return than the interest rate of the loan? For example, why pay off your 3% student loan if you can invest in a stock with a 6% return? The money goes to better use if it is invested. (Note that most investments count as taxable income, so you have to factor taxes into your effective rate of return.) The caveat to this is that most investments have at least some risk associated with them. (Stocks don't always go up.) You have to weigh this when deciding to invest vs pay down debts. Paying down the debt is more of a \"\"sure thing\"\". Another thing to consider: If you have a long-term loan (several years), paying extra principal on a loan early on can turn into a huge savings over the life of the loan, due to power of compound interest. Extra payments on a mortgage or student loan can be a wise move. Just make sure you are paying down the principal, not the interest! (And check for early repayment penalties.)\"",
"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": ""
}
] |
fiqa
|
0b6f282adc6a7524dcd65bd74ccde1b0
|
In a house with shared ownership, if one person moves out and the other assumes mortgage, how do we determine who owns what share in the end?
|
[
{
"docid": "d677a11a780b131bf2cfc25150b0f47e",
"text": "This is something you should decide as part of entering a partnership with someone. Ideally before you make the initial purchase you have a detailed contract written up. If you have already bought the house and someone is now ready to move out the easiest thing to do is sell the house. If that is not an option, you'll have to decide on a plan together and then get it in writing.",
"title": ""
},
{
"docid": "312a0b54124fbd8649a9f9aecd4b5b30",
"text": "I second (or fifth?) the answers of the other users in that this should have been foreseen and discussed prior to entering the partnership. But to offer a potential solution: If the mortgage company allows you to assume the whole mortgage (big if) you could buy the other partner out. To determine what a fair buyout would be, take the current value of the house less the remaining mortgage to get the current equity. Half that is each partner's current gain (or potentially loss), and could be considered a fair buyout. At this point the partner realizes any gains made in the last 5 years, and from now on the whole house (and any future gains or losses) will be yours. Alternatively your partner could remain a full partner (if s/he so desires) until the house sells. You would see the house as a separate business, split the cost as you have, and you would pay fair market rent each month (half of which would come back to you). A third option would be to refinance the house, with you as a sole mortgage holder. To factor in how much your partner should receive out of the transaction, you can take his/her current equity and subtract half of the costs associated with the refi. I would also recommend both of you seek out the help of a real estate lawyer at this point to help you draft an agreement. It sounds like you're still on good terms, so you could see a lawyer together; this would be helpful because they should know all the things you should look out for in a situation like this. Good luck!",
"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": "34cbea7b9d29d901933199def820b5fa",
"text": "\"The answer is \"\"it depends\"\". What does it depend on? If it's a breakup situation, good luck. Whatever you do, get this issue settled as quickly as possible. In the future, don't make significant purchases with people unless you have a written contract or you are married.\"",
"title": ""
},
{
"docid": "b09536c018ae55f2e49ef12bf93dd070",
"text": "\"Both names are on the deed, so the property is jointly owned. You're going to need the second person's signature to be able to sell the property. Ideally the way to know \"\"what happens now\"\" is to consult the written agreement you made before you purchased the house together. The formula for dividing up assets when dissolving your partnership is whatever you agreed to up front. (Your up-front agreement could have said \"\"if you move out, you forfeit any claim to the property\"\".) It sounds like you don't have that, so you'll have to come to some (written) agreement with your partner before you proceed. If you can't come to an agreement, then you'll end up in court, a judge will split up the assets, and the only winners there are the lawyers...\"",
"title": ""
},
{
"docid": "edf293cb61271cd6b16a00b44d079fee",
"text": "Let's look at the logical extreme. Two people get a house, no money down, 10 year mortgage. One moves out the day after the closing, and the gal left pays the full mortgage. Why in the world would the one who left be entitled to a dime? You offer no information about the downpayment or amount paid during the time both lived there. That's the data needed to do any math.",
"title": ""
},
{
"docid": "05fdd68eae7c96476e7ec9e175d4cc54",
"text": "This is typically an issue for local law and regulation. Once one person moves out, I would recommend one of the following options: Generally speaking, if there are clear records of all of the payments made by both parties, all of the costs associated with the maintenance and who made what use of the place, the final ownership can be resolved fairly even in the absence of a clear agreement. The pain and hassle to do it, though, is generally not worth the effort - even if it's an amicable relationship between the two owners. Your best bet is to agree as early as possible on what you plan to do, and to write it down - if you didn't have a contract before moving in together, write one up now.",
"title": ""
},
{
"docid": "390c96166261f9bf506a17f728d14e90",
"text": "Market value and assessments are two different things. No matter how amical the agreement seems on buying and selling, the future could result in damaged relationships without an absolute sale. I would strongly recommend getting into an agreement to split the purchase of a house as a means to save money. If it's too late, sell immediately.",
"title": ""
}
] |
[
{
"docid": "add0339c544855d4a40c557705a5dc6b",
"text": "Ultimately the bank will have first call on the house and you will be the only one on the hook directly to the bank if you don't make the mortgage payments. There's nothing you can do to avoid that if you can't get a joint mortgage. What you could do is make a side agreement that your girlfriend would be entitled to half the equity in the house, and would be required to make half the payments (via you). You could perhaps also add that she would be part responsible for helping you clear any arrears. But in the end it'd just be a deal between you and her. She wouldn't have any direct rights over the house and she wouldn't be at risk of the bank pursuing her if you don't pay the mortgage. You'd probably also need legal advice to make it watertight, but you could also not worry about that too much and just write it all down as formally as possible. It really depends if you're just trying to improve your feelings about the process or whether you really want something that you could both rely on in the event of a later split. I don't think getting married would make any make any real difference day-to-day. In law, with rare exceptions, the finances of spouses are independent from each other. However in the longer term, being married would mean your now-wife would have a stronger legal claim on half the equity in the house in the event of you splitting up.",
"title": ""
},
{
"docid": "919c215dc649a8d23306318f5a6a9451",
"text": "Many partnership agreements include a shotgun clause: one person sets a price, the other can either buy at that price or sell at it. It's rather brutal. You can make offers that you know are less than the company is worth if you're sure the other person will have to take that money from you, say if you know they can't run the company without you. He has asked for $X to be bought out, and failing that he would like to keep owning his half and send his wife (who may very well be competent, but who among other things has a very ill husband to deal with) to take his place. If he can occasionally contribute to the overall vision, and she can do the day to day, then keeping things as they are may be the smart move. But if that's not possible, it doesn't mean you have to buy him out for twice what you think it's worth. In the absence of a partnership agreement, it's going to be hard to know what to do. But one approach might be to pretend there is a shotgun clause. Ask him, if he thinks half the company is worth $X, if he's willing to buy you out for that price and have his wife run it without you. He is likely to blurt out that it isn't worth that and she can't do that. And at that point, you'll actually be negotiating.",
"title": ""
},
{
"docid": "89d9ea459669caeb89bd33fb1fbaf6fc",
"text": "It seems likely that the mortgage is not in your boyfriend's name because he never would have qualified if he can't even afford utilities after paying the mortgage. It also seems unfair that his sister continues to have a 50% share of the equity if your boyfriend has been making the entire payment on the mortgage every month. What would happen if your boyfriend stopped making the payments? His sister would have no choice if the property went into foreclosure. Your boyfriend has all the leverage he needs by simply refusing to continue making the payments. Why he won't push his sister to make a deal is the real question you need to ask him. In the meantime, if he wants out, all he has to do is decide not to keep paying whether his sister feels attached or not.",
"title": ""
},
{
"docid": "98745389a9c404c24dae73985ec90c7c",
"text": "Generally, no. A mortgage is a lien against the property, which allows the bank to exercise certain options, primarily Power of Sale (Force you to sell the property) and outright seizure. In order to do this, title needs to be clear, which it isn't if you have half title. However, if you have a sales agreement, you can buy your brother's half, and then mortgage the entire property. This happens all the time. When you buy a house from someone, you get pre-approved for that house, which, at the time, you have no title to. Through some black magic lawyering and handwaving, this is all sorted out at closing time.",
"title": ""
},
{
"docid": "5f2563cad205c94298096d00029a66ad",
"text": "Depending on jurisdiction, the fact that you made some payments might give you an ownership share in the house in your own right. What share would be a complex question because you might need to consider both the mortgage payments made and maintenance. Your sister might also be able to argue that she was entitled to some recompense for the risk she describes of co-signing, and that's something that would be very hard to quantify, but clearly you would also be entitled to similar recompense in respect of that, as you also co-signed. For the share your mother owned, the normal rules of inheritance apply and by default that would be a 50-50 split as JoeTaxpayer said. You imply that the loan is still outstanding, so all of this only applies to the equity previously built up in the house prior to your mother's death. If you are the only one making the ongoing payments, I would expect any further equity built up to belong solely to you, but again the jurisdiction and the fact that your sister's name is on the deeds could affect this. If you can't resolve this amicably, you might need to get a court involved and it's possible that the cost of doing so would outweigh the eventual benefit to you.",
"title": ""
},
{
"docid": "97a18181ea7766c38540dd8c3eadfd38",
"text": "Just as a renter doesn't care what the landlord's mortgage is, the buyer of a house shouldn't care what the seller paid, what the current mortgage is, or any other details of the seller's finances. Two identical houses may be worth $400K. One still has a $450K loan, the other is mortgage free. You would qualify for the same value mortgage on both houses. All you and your bank should care about is that the present mortgage is paid or forgiven by the current mortgage holder so your bank can have first lien, and you get a clean title. To answer the question clearly, yes, it's common for a house with a mortgage to be sold, mortgage paid off, and new mortgage put in place. The profit or loss of the homeowner is not your concern.",
"title": ""
},
{
"docid": "6367a64d7d90c90398434f3ab1a8814c",
"text": "Unfortunately, there isn't much you can do. If your name was on the mortgage, you owe the money, regardless of who kept the house. They can (and likely will) come after you for the money as well. A bit late in your case, but that's why when people divorce, refinancing the house into one person's name (and the other quit-claiming their interest) is usually part of the settlement. ETA: As others have mentioned, since you are in California, it appears that they cannot come after you for the difference.",
"title": ""
},
{
"docid": "b80cd12b199c52298cec99dc26f6ee26",
"text": "\"That ain't nothing. It's really easy to get \"\"whipped up\"\" into a sense of entitlement, and forget to be grateful for what you do have. If this house doesn't exist, what would his costs of housing be elsewhere? Realistically. Would landlords rent to him? Would other bankers lend him money to buy a house? Would those costs really be any better? What about the intangible benefits like not having any landlord hassles or having a good relationship with the neighbors? It's entirely possible he has a sweet deal here, and just doesn't make enough money. If your credit rating is poor, your housing options really suck. Banks won't lend you money for a house unless you have a huge ton of upfront cash. Most landlords won't rent to you at all, because they are going to automated scoring systems to avoid accusations of racism. In this day and age, there are lots of ways to make money with a property you own. In fact, I believe very firmly in Robert Allen's doctrine: Never sell. That way you avoid the tens of thousands of dollars of overhead costs you bear with every sale. That's pure profit gone up in smoke. Keep the property forever, keep it working for you. If he doesn't know how, learn. To \"\"get bootstrapped\"\" he can put it up on AirBnB or other services. Or do \"\"housemate shares\"\". When your house is not show-condition, just be very honest and relatable about the condition. Don't oversell it, tell them exactly what they're going to get. People like honesty in the social sharing economy. And here's the important part: Don't booze away the new income, invest it back into the property to make it a better money-maker - better at AirBnB, better at housemate shares, better as a month-to-month renter. So it's too big - Is there a way to subdivide the unit to make it a better renter or AirBnB? Can he carve out an \"\"in-law unit\"\" that would be a good size for him alone? If he can keep turning the money back into the property like that, he could do alright. This is what the new sharing economy is all about. Of course, sister might show up with her hand out, wanting half the revenue since it's half her house. Tell her hell no, this pays the mortgage and you don't! She deserves nothing, yet is getting half the equity from those mortgage payments, and that's enough, doggone it! And if she wants to go to court, get a judge to tell her that. Not that he's going to sell it, but it's a huge deal. He needs to know how much of his payments on the house are turning into real equity that belongs to him. \"\"Owning it on paper\"\" doesn't mean you own it. There's a mortgage on it, which means you don't own all of it. The amount you own is the value of the house minus the mortgage owed. This is called your equity. Of course a sale also MINUS the costs of bringing the house up to mandatory code requirements, MINUS the cost of cosmetically making the house presentable. But when you actually sell, there's also the 6% Realtors' commission and other closing costs. This is where the mortgage is more than the house is worth. This is a dangerous situation. If you keep the house and keep paying the mortgage all right, that is stable, and can be cheaper than the intense disruption and credit-rating shock of a foreclosure or short sale. If sister is half owner, she'll get a credit burn also. That may be why she doesn't want to sell. And that is leverage he has over her. I imagine a \"\"Winter's bone\"\" (great movie) situation where the family is hanging on by a thread and hasn't told the bank the parents died. That could get very complex especially if the brother/sister are not creditworthy, because that means the bank would simply call the loan and force a sale. The upside is this won't result in a credit-rating burn or bankruptcy for the children, because they are not owners of the house and children do not inherit parents' debt.\"",
"title": ""
},
{
"docid": "6564b849fddb495c63f688e149b585d0",
"text": "Are there any known laws explicitly allowing or preventing this behavior? It's not the laws, it's what's in the note - the mortgage contract. I read my mortgage contracts very carefully to ensure that there's no prepayment penalty and that extra funds are applied to the principal. However, it doesn't have to be like that, and in older mortgages - many times it's not like that. Banks don't have to allow things that are not explicitly agreed upon in the contract. To the best of my knowledge there's no law requiring banks to allow what your friend wants.",
"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": "a2fdf74a17ba25e4650efadf59e8b366",
"text": "The first and most important thing to consider is that this is a BUSINESS TRANSACTION, and needs to be treated as such. Nail down Absolutely All The Details, specifically including what happens if either of you decides it's time to move and wants to sell off your share of the property. Get at least one lawyer involved in drawing up that contract, perhaps two so there's no risk of conflict of interest. What's your recourse, or his, if the other stops making their share of the payments? Who's responsible for repairs and upkeep? If you make renovations, how does that affect the ownership percentage, and what kind of approval do you need from him first, and how do you get it, and how quickly does he have to respond? If he wants to do something to maintain his investment, such as reroofing, how does he negotiate that with you -- especially if it's something that requires access to the inside of the house? Who is the insurance paid by, or will each of you be insuring it separately? What are the tax implications? Consider EVERY possible outcome; the fact that you're friends now doesn't matter, and in fact arguments over money are one of the classic things that kill friendships. I'd be careful making this deal with a relative (though in fact I did loan my brother a sizable chunk of change to help him bridge between his old house and new house, and that's registered as a mortgage to formalize it). I'd insist on formalizing who owns what even with a spouse, since marriages don't always last. With someone who's just a co-worker and casual friend, it's business and only business, and needs to be both evaluated and contracted as such to protect both of you. If you can't make an agreement that you'd be reasonably comfortable signing with a stranger, think long and hard about whether you want to sign it at all. I'll also point out that nobody is completely safe from long-term unemployment. The odds may be low, but people do get blindsided. The wave of foreclosures during and after the recent depression is direct evidence of that.",
"title": ""
},
{
"docid": "e652dcbf9b0131cec38a4dde5d48dcb5",
"text": "The two of you inherited the house. unless the will specified otherwise, it's half each.",
"title": ""
},
{
"docid": "c10ace4aedb72bf50cc35dc0869e866d",
"text": "\"I'm not an attorney or a tax advisor. The following is NOT to be considered advice, just general information. In the US, \"\"putting your name on the deed\"\" would mean making you a co-owner. Absent any other legal agreement between you (e.g. a contract stating each of you owns 50% of the house), both of you would then be considered to own 100% of the house, jointly and severally: In addition, the IRS would almost certainly interpret the creation of your ownership interest as a gift from your partner to you, making them liable for gift tax. The gift tax could be postponed by filing a gift tax return, which would reduce partner's lifetime combined gift/estate tax exemption. And if you sought to get rid of your ownership interest by giving it to your partner, it would again be a taxable gift, with the tax (or loss of estate tax exemption) accruing to you. However, it is likely that this is all moot because of the mortgage on the house. Any change to the deed would have to be approved by the mortgage holder and (if so approved) executed by a title company/registered closing agent or similar (depending on the laws of your state). In my similar case, the mortgage holder refused to add or remove any names from the deed unless I refinanced (at a higher rate, naturally) making the new partners jointly liable for the mortgage. We also had to pay an additional title fee to change the deed.\"",
"title": ""
},
{
"docid": "0d2d02163258915703d7cc13ec404b8d",
"text": "In effect, you are paying for 70% of the house but he gets half the gain. On the flip side, you're living there, so that probably makes up this difference. It will be toughest if the house jumps in value, to the point you might be forced to sell. You might want to think about that a bit.",
"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": ""
}
] |
fiqa
|
2b9b49848acd73e0956999c6b0fe62e3
|
Live in Oregon and work in Washington: Do I need to file Oregon state taxes?
|
[
{
"docid": "6f99de8c7958c0d3021748790f921142",
"text": "Yes. Here's the answer to this question from oregon.gov: 3. I am moving into Oregon. What income will be taxed by Oregon? As an Oregon resident, you are taxed on ALL income regardless of the source of the income. This includes, but is not limited to: You may need to pay estimated taxes if you don't have Oregon withholding on your income.",
"title": ""
},
{
"docid": "f4aa07f26f949b47c07d71acff501526",
"text": "Unfortunately, you are required, but most states do have agreements with neighboring states that let the states share the collected taxes without the person having to pay double taxes. So being as this is your first tax return in your current situation, you might be wise to have a professional fill it out for you this year and then next year you can use it as a template. Additionally, I really would like to see someone challenge this across state lines taxation in court. It sure seems to me that it is a inter-state tariff/duty, which the state's are expressly forbidden from doing in the constitution.",
"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": "911df199ca187b4ee1e9ef008adcf0a7",
"text": "Yes, you do. You also need to file a tax return every year, and if you have more than $50k of total savings you need to declare this every year.",
"title": ""
},
{
"docid": "28526f65abdc2985664cffeb477ba4eb",
"text": "\"IRS Pub 554 states (click to read full IRS doc): \"\"Do not file a federal income tax return if you do not meet the filing requirements and are not due a refund. ... If you are a U.S. citizen or resident alien, you must file a return if your gross income for the year was at least the amount shown on the appropriate line in Table 1-1 below. \"\" You may not have wage income, but you will probably have interest, dividend, capital gains, or proceeds from sale of a house (and there is a special note that you must file in this case, even if you enjoy the exclusion for primary residence)\"",
"title": ""
},
{
"docid": "b80f37a9693776121b787c7f4caa04d8",
"text": "No, you probably do not need to file a tax return if you received no income, and if you meet a number of other criteria. The below is copied and pasted, slightly edited, from the CRA: You must file a return for 2014 if any of the following situations apply: You have to pay tax for 2014. We sent you a request to file a return. You and your spouse or common-law partner elected to split pension income for 2014. See lines 115, 116, 129, and 210. You received working income tax benefit (WITB) advance payments in 2014. You disposed of capital property in 2014 (for example, if you sold real estate or shares) or you realized a taxable capital gain (for example, if a mutual fund or trust attributed amounts to you, or you are reporting a capital gains reserve you claimed on your 2013 return). You have to repay any of your old age security or employment insurance benefits. See line 235. You have not repaid all amounts withdrawn from your registered retirement savings plan (RRSP) under the Home Buyers’ Plan or the Lifelong Learning Plan. For more information, go to Home Buyers' Plan (HBP) or see Guide RC4112, Lifelong Learning Plan (LLP) or You have to contribute to the Canada Pension Plan (CPP). This can apply if, for 2014, the total of your net self-employment income and pensionable employment income is more than $3,500. See line 222. You are paying employment insurance premiums on self-employment and other eligible earnings. See lines 317 and 430. In general, you will want to file a tax return even if none of the above applies. You could, for example, claim a GST/HST credit even with no income. Now, if you receive any income at all, you are going to have to pay taxes, which means you are obligated to file a tax return. If sufficient taxes were deducted from your paycheque, you are still obligated to file a tax return. However, you will not have to pay penalties if you file late, even if you file very late, at least not until the CRA sends you a request to file. But be aware, you won't likely be able to tell if you owe the CRA money until you do your taxes, and if you do end up owing, there are substantial penalties for filing late. In general, I'd strongly advise filing your tax return in almost all circumstances.",
"title": ""
},
{
"docid": "8d7a63f5121c2c343600372138c27dbe",
"text": "Having 401k or HSA is not income and doesn't trigger filing requirements. Withdrawing from 401k or HSA does. Also, in some States, HSA gains are taxed as investment income, so if you have gains in an HSA and you're a resident of such a State - you'll need to file a State tax return and pay taxes on the gains.",
"title": ""
},
{
"docid": "4670b0910632a066c4f05dc13cb178eb",
"text": "Answering for just the US part, yes, you should be able to do this and it's a good strategy. The only additional gotcha I can think of is that if you've made after-tax contributions to your traditional IRA, you need to prorate the conversion, you can't just convert all the pre-tax or all the after-tax. I'm not familiar with Oregon personal income tax so there may be additional gotchas there.",
"title": ""
},
{
"docid": "1318010b545beed42ab41bb2b647d1b5",
"text": "A couple things. First of all, most people's MAIN source of income is from their job, but they have others, such as bank interest, stock dividends, etc. So that income has to be reported with their wage income. The second thing is that most people have deductions NOT connected with their job. These deductions reduce income (and generate refunds). So it's in their interest to file.",
"title": ""
},
{
"docid": "caac26bdd391f8e851b7ad6108cc0407",
"text": "Yes, you do. Depending on your country's laws and regulations, since you're not an employee but a self employed, you're likely to be required to file some kind of a tax return with your country's tax authority, and pay the income taxes on the money you earn. You'll have to tell us more about the situation, at least let us know what country you're in, for more information.",
"title": ""
},
{
"docid": "734867313a623f2f57edf5c18acbae18",
"text": "Yes, you need to include income from your freelance work on your tax return. In the eyes of the IRS, this is self-employment income from your sole-proprietorship business. The reason you don't see it mentioned in the 1040EZ instructions is that you can't use the 1040EZ form if you have self-employment income. You'll need to use the full 1040 form. Your business income and expenses will be reported on a Schedule C or Schedule C-EZ, and the result will end up on Line 12 of the 1040. Take a look at the requirements at the top of the C-EZ form; you probably meet them and can use it instead of the more complicated C form. If you have any deductible business expenses related to your freelance business, this would be done on Schedule C or C-EZ. If your freelance income was more than $400, you'll also need to pay self-employment tax. To do this, you file Schedule SE, and the tax from that schedule lands on form 1040 Line 57.",
"title": ""
},
{
"docid": "58fd1222e8565395bee7290f7a71a3e3",
"text": "\"In the U.S., Form 1040 is known as the tax return. This is the form that is filed annually to calculate your tax due for the year, and you either claim a refund if you have overpaid your taxes or send in a payment if you have underpaid. The form is generally due on April 15 each year, but this year the due date is April 18, 2016. When it comes to filing your taxes, there are two questions you need to ask yourself: \"\"Am I required to file?\"\" and \"\"Should I file?\"\" Am I required to file? The 1040 instructions has a section called \"\"Do I have to file?\"\" with several charts that determine if you are legally required to file. It depends on your status and your gross income. If you are single, under 65, and not a dependent on someone else's return, you are not required to file if your 2015 income was less than $10,300. If you will be claimed as a dependent on someone else's return, however, you must file if your earned income (from work) was over $6300, or your unearned income (from investments) was over $1050, or your gross (total) income was more than the larger of either $1050 or your earned income + $350. See the instructions for more details. Should I file? Even if you find that you are not required to file, it may be beneficial to you to file anyway. There are two main reasons you might do this: If you have had income where tax has been taken out, you may have overpaid the tax. Filing the tax return will allow you to get a refund of the amount that you overpaid. As a student, you may be eligible for student tax credits that can get you a refund even if you did not pay any tax during the year. How to file For low income tax payers, the IRS has a program called Free File that provides free filing software options.\"",
"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": "9e54f8026b89f25711e7092dcbbaf3e1",
"text": "From the Massachusetts Department of Revenue: 1st - Massachusetts Source Income That is Excluded Massachusetts gross income excludes certain items of income derived from sources within Massachusetts: non-business related interest, dividends and gains from the sale or exchange of intangibles, and qualified pension income. 2nd - Massachusetts Source Income That is Included: Massachusetts gross income includes items of income derived from sources within Massachusetts. This includes income: 3rd - Trade or business, Including Employment Carried on in Massachusetts: A nonresident has a trade or business, including any employment carried on in Massachusetts if: A nonresident generally is not engaged in a trade or business, including any employment carried on in Massachusetts if the nonresident's presence for business in Massachusetts is casual, isolated and inconsequential. A nonresident's presence for business in Massachusetts will ordinarily be considered casual, isolated and inconsequential if it meets the requirements of the Ancillary Activity Test (AAT) and Examples. When nonresidents earn or derive income from sources both within Massachusetts and elsewhere, and no exact determination can be made of the amount of Massachusetts source income, an apportionment of income must be made to determine that amount considered Massachusetts gross income. 4th - Apportionment of Income: Apportionment Methods: The three most common apportionment methods used to determine Massachusetts source income are as follows: Gross income is multiplied by a: So if you go to Massachusetts to work, you have to pay the tax. If you collect a share of the profit or revenue from Massachusetts, you have to pay tax on that. If you work from Oregon and are paid for that work, then you don't pay Massachusetts tax on that. If anything, your company might have to pay Oregon taxes on revenue you generate (you are their agent or employee in Oregon). Does the answer change depending on whether the income is reported at 1099 or W-2? This shouldn't matter legally. It's possible that it would be easier to see that the work was done in Oregon in one or the other. I.e. it doesn't make any legal difference but may make a practical difference. All this assumes that you are purely an employee or contractor and not an owner. If you are an owner, you have to pay taxes on any income from your Massachusetts business. Note that this applies to things like copyrights and real estate as well as the business. This also assumes that you are doing your work in Oregon. If you live in Oregon and travel to Massachusetts to work, you pay taxes on your Massachusetts income in Massachusetts.",
"title": ""
},
{
"docid": "d402dc885d5d6ef6afda8b49de969880",
"text": "You're doing business in the US and derive income from the US, so I'd say that yes, you should file a non-resident tax return in the US. And in Connecticut, as well, since that's where you're conducting business (via your domestic LLC registered there). Since you paid more than $600 to your contractor, you're probably also supposed to send a 1099 to him on that account on behalf of your LLC (which is you, essentially, if you're the only member).",
"title": ""
},
{
"docid": "c8429265033f2b74acb269e7e2c43e9f",
"text": "In the USA, you probably owe Self Employment Tax. The cutoff for tax on this is 400$. You will need to file a tax return and cover the medicaid expenses as if you were both the employer and employee. In addition, if he earns income from self-employment, he may owe Self-Employment Tax, which means paying both the employee’s and employer's share of Social Security and Medicaid taxes. The trigger for Self Employment Tax has been $400 since 1990, but the IRS may change that in the future. Also see the IRS website. So yes, you need to file your taxes. How much you will pay is determined by exactly how much your income is. If you don't file, you probably won't be audited, however you are breaking the law and should be aware of the consequences.",
"title": ""
},
{
"docid": "b00dcf0b2faaae67c0b38a657cffcb20",
"text": "\"I'm not a tax professional, but as I understand it, you are not expected to commute from San Francisco to Boston. :) If your employer has not provided you with an external office, then yes, you have very likely met the \"\"convenience of the employer\"\" test. However, to take the home office deduction, there are many requirements that have to be met. You can read more at the Nolo article Can You Deduct Your Home Office When You're an Employee? (Thanks, keshlam) The home office deduction has many nuances and is enough of an IRS red flag that you would be well-advised to talk to an accountant about it. You need to be able to show that it is exclusively and necessarily used for your job. Another thing to remember: as an employee, the home office deduction, if you take it, will be deducted on Schedule A, line 21 (unreimbursed employee expenses), among other Miscellaneous Deductions. Deductions in this section need to exceed 2% of your adjusted gross income before you can start to deduct. So it will not be worth it to pursue the deduction if your income is too high, or your housing expenses are too low, or your office is too small compared to the rest of your house, or you don't itemize deductions.\"",
"title": ""
}
] |
fiqa
|
f3715b52e767434faeab6dde2335d228
|
How smart is it to really be 100% debt free?
|
[
{
"docid": "83cfaea5fdada9fde86278b2b24a2eab",
"text": "If you can borrow for an asset that gives you income that's more than the cost of carrying the debt, then go for it. But the kinds of debts you have now aren't those kinds of debt, so get rid of them.",
"title": ""
},
{
"docid": "d928ef4d9e926330853c2e5a63a88b80",
"text": "\"Debt increases your exposure to risk. What happens if you lose your job, or a major expense comes up and you have to make a hard decision about skipping a loan payment? Being debt free means you aren't paying money to the bank in interest, and that's money that can go into your pocket. Debt can be a useful tool, however. It's all about what you do with the money you borrow. Will you be able to get something back that is worth more than the interest of the loan? A good example is your education. How much more money will you make with a college degree? Is it more than you will be paying in interest over the life of the loan? Then it was probably worth it. Instead of paying down your loans, can you invest that money into something with a better rate of rate of return than the interest rate of the loan? For example, why pay off your 3% student loan if you can invest in a stock with a 6% return? The money goes to better use if it is invested. (Note that most investments count as taxable income, so you have to factor taxes into your effective rate of return.) The caveat to this is that most investments have at least some risk associated with them. (Stocks don't always go up.) You have to weigh this when deciding to invest vs pay down debts. Paying down the debt is more of a \"\"sure thing\"\". Another thing to consider: If you have a long-term loan (several years), paying extra principal on a loan early on can turn into a huge savings over the life of the loan, due to power of compound interest. Extra payments on a mortgage or student loan can be a wise move. Just make sure you are paying down the principal, not the interest! (And check for early repayment penalties.)\"",
"title": ""
},
{
"docid": "92a764065e2df9ef7f06405c84739887",
"text": "\"The responses here are excellent. I'd add just a couple points. Debt is not generic. It ranges from low (my HELOC is 2.5%) to insane (24% credit card, anyone?). When I read about the obsession to be completely debt free, I ask questions. Are you saving in your 401(k) at least up to the match? I disagree with the \"\"debt is evil\"\" people who advise to ignore retirement savings while paying off every last debt. My company offers a dollar for dollar match on the first 5% of income deposited. So a $60K earner will see a $3000 deposit doubled. 5 years of this, and he has 1/2 a year's income in his retirement account, more with positive returns. (note - for those so fearful of losses, all 401(k) accounts have to offer a fixed income, low risk choice. currently 1% or less, but the opposite of \"\"I can lose it all\"\".) After that, paying off the higher debt is great. When it's time to hack away at student debt and mortgage, I am concerned that if it's at the risk of having no savings, I'd hold off. Consider - Two people in homes worth $250K. One has a mortgage of $250K and $100K in the bank. The other has his mortgage paid down to $150K. When they lose their jobs, the guy with the $100K in the bank has the funds to float himself through a period of unemployment as well as a house the bank is less likely to foreclose on. The guy with no money is in deep trouble, and the bank can sell his house for $150K and run away (after proper foreclosure proceedings of course.) My mortgage is one bill, like any other, and only a bit more than my property tax. I don't lose sleep over it. It will be paid before I retire, and before my 11yr old is off to college. I don't think you stupid for paying your low interest debt at your own pace.\"",
"title": ""
},
{
"docid": "b678d9bf10967e623523f9e00eec5380",
"text": "You might miss an opportunity or three by strictly avoiding debt, but I can't think of a problem you will create by being debt free. So maybe it isn't the absolutely smartest thing to avoid debt on principle*, but it certainly is pretty smart at the very least.",
"title": ""
},
{
"docid": "3302e7d2dee6b7ea5b454ce9dc2ea555",
"text": "Keep in mind that you NEED to have a cash reserve. Blindly applying all stray cash to debt reduction is a bad idea. Your lenders do not care about your balance. All they care about is your NEXT payment. It is therefore imperative that you have a cash reserve that can carry these payments for several months. Having zero cash reserves puts you at high risk for such simple things as the payroll clerk at work missing the monthly deposit (Rare, but it happens.) I've also been in situations where a major client had a cash flow issue and delayed payment, and our company had to borrow to meet payroll that month. Fortunately, we were in good standing with the bank and had low debt, but it could have been catastrophic for any employees living paycheque to paycheque.",
"title": ""
},
{
"docid": "fa1fa0e337a398984ee768b2991a4bd5",
"text": "No matter what, it is never a bad decision to go 100% debt free. However, you can make debt work in your favor in some cases (investments, education, etc.), but you need to approach it with a plan and long term strategy. Interest, fees, and loss of value can quickly eat up any gains.",
"title": ""
},
{
"docid": "3bf2007efcb1606b85d40d03de6b5b05",
"text": "I think about debt as a good option for capital investments that offer a return. In my opinion, a house and clothes you need for that new job are good things to borrow for. School is ok, depending on the amount. Car is ok, if it's a 3 year loan. The rest is not good. You should try to carry as little debt as possible, but don't let it dominate your life. If faced between the choice of paying ahead on your student loan and blowing $300 on an XBox, you should pay the loan. If the choice is between taking your kid to the zoo and paying the loan, have fun at the zoo.",
"title": ""
},
{
"docid": "d9829f67dd8b32ae0f8d1936e2b28bc9",
"text": "When you're debt free everything you own feels different. The lack of financial stress in your life goes away. BUT! before you do go gung-ho on paying down debt think through these steps (and no I did not come up with them. Dave Ramsey did and others). Truncated from - http://www.daveramsey.com/new/baby-steps/ I have 1 credit card. Only use it for business/travel but pay it off every month (yay for auto-draft). Everthing else is cash/debit and we live by a budget. If it's not in the budget we don't buy it. Easy as pie. The hard part is disciplining yourself to wait. Our society is gear for BUY NOW! PAY LATER! and well you can see where that has taken our country and families. And celebrate the small victories. Pay off 1 debt then go have a nice dinner. Things like that help keep you motivated and pursuing the end goal.",
"title": ""
},
{
"docid": "914a20d33cb61e05c1165a20b706d9ae",
"text": "\"The day I paid my last student loan payment and my last car payment was (January 4, 2000) a very happy day for me, being then 100% debt free. It is a very good feeling, especially since I was saving cash as well. It's a great thing to know that no-one \"\"owns\"\" you. Many others here have provided useful information about debt, and I know that paying off your existing loans will improve your credit rating, in case you want to go back into debt (which I did later in 2000, by buying a house). For most people, borrowing money to invest it is complicated (make sure you're not paying more on your borrowed $ than you make on your investment) due to the fact that most investments have risk involved. I would say that being debt-free is a very good goal, and there's a level of freedom it gives you. Just make sure you have your \"\"rainy day\"\" fund building while you're on your way to getting there.\"",
"title": ""
},
{
"docid": "6f67e8b5447b029d46b9d56735be9c51",
"text": "\"Would you run a marathon with ankle weights on? It starts off as ankle weights, but then grows into a ball and chain as you dig yourself a little deeper each time you use your credit card (and then don't payoff the balance because \"\"something more important came up\"\"). I would love for my wife to be able to be home and raise our son, but we simply can't afford to do that with the amount of debt we have. We are clawing our way out, and will pay off one student loan and a car loan, then start saving for a house and once we have that, we'll get back to debt reduction. Get debt free. That's where we are headed. Most of it is student loans at this point, but debt will take away your freedom to do whatever you like down the line. It just increases your overhead in the long run.\"",
"title": ""
},
{
"docid": "db1d25136b1a5627b3cca03271cc50d5",
"text": "\"100% debt free is an objective. Being there is good, but as long as you have a plan to get there, are sticking to it and it's moving you towards it at a reasonable rate (e.g. \"\"I will be debt free by the end of 2011.\"\"), you should be in good shape. It's when you don't ever expect to be debt free that you have a problem. Going into debt is one question and a very situation dependent one. Getting back out is another and a very easy one: pay off all debts as a fast as you reasonably can, starting with the highest interest ones. OTOH this doesn't imply that you should forgo every optional expense (including things like savings and entertainment) to pay off debts, that would be unreasonable, but just that paying down debts should always be considered when thinking about what to do with money.\"",
"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": "447e36756a611039b1bd682cce45a182",
"text": "As others mentioned, the only clear reason to remain in debt is if you can find an investment that yields more than what you're paying to maintain the debt. This can happen if a debt was established during low-rate period and you're in a high-rate period (not what is happening now.) A speculative reason to keep debt is as an inflation bet. If you believe money will shortly lose value, you are better off postponing repayment until the drop occurs. However you're not likely to be able to make these bets successfully. Hope this helps",
"title": ""
},
{
"docid": "6bbdaf38d825fac7f305bed6486205c2",
"text": "Having no debt should be the ultimate goal for every household, IMHO, but at what cost? As an example, I had some clients (before they started working with me) that had outstanding debt when they retired and were gung-ho to pay it off. They opted to take it out of their retirement accounts. They didn't set aside enough for taxes which was their first mistake. After a few years, they now have realized they should not have paid off everything as now they have other medical issues that have arisen and not enough in their retirement accounts to satisfy their monthly requirement.",
"title": ""
},
{
"docid": "5ef0345c3be658f9d7ef4203ac5e33e2",
"text": "A Simple Rule to discern between good and bad debt: Does this mean you should never buy a house or car? Of course not. But if you accrue bad debt, make sure that you can handle it and understand the costs and repercussions.",
"title": ""
},
{
"docid": "527dc07cc1b99bcf5b9582e706aad4b0",
"text": "My take is that there are many factors to consider when deciding whether to accelerate payment of a debt beyond the require minimum. Ideally you would want to be debt-free with a home owned outright, a pension big enough to lead a nice life for the rest of your days and plenty of savings to cover any unexpected expenses. Being debt-free is not a bad thing but it should not come at the expense of your overall financial health.",
"title": ""
},
{
"docid": "31b635917f55546f1a1adadfd49cbb96",
"text": "Very smart. Let other people pay you interest. Don't pay other people interest. And, yes, I know it's possible to borrow money from one place and lend it to another place at a slightly higher rate, but why bother.",
"title": ""
},
{
"docid": "b9bfa7300ae614868340e72491b9e9aa",
"text": "Considering that we are in a low-interest rate period (the lowest in history), it's smart to loan money from the bank to reinvest in property or other investments as far as you get a better yield (ROI) than the interest.",
"title": ""
},
{
"docid": "8c245a5000b1b536b0c03c48ffce9242",
"text": "Around 3 months back, I paid back my last loan from my father which he gave for the car. Now I am totally debt free from 2 months. I have paid back following loans, 1. Education loan. 2. Car loan. I don't have my own property yet. I have a 3 months emergency fund saved which helps me overcome if there is a sudden expense. Overall, its a great idea to be debt free. I used to get extreme thoughts while I had a loan. I paid back and now I am doing good.",
"title": ""
}
] |
[
{
"docid": "3b4a71f1757cedfab7de46ccf168bda1",
"text": "Alas, institutions do not always act rationally, and being an outlier by never having debt may be bad enough. Therein is your problem. The question, then, is do you want to do business with institutions that are not acting rationally? While I cannot specifically speak to Canadian business practices, I have to imagine that in terms of credit history as a prerequisite to a lease, it can't be too different than America. It is possible to live without a credit score. This is typically done by those with enough resources that do not need to borrow money. To make transactions that commonly use credit scores, such as a lease, they will provide personal financial statements (balance sheets, personal income statements, bank statements, pay stubs, tax returns, etc...) to show that they are credit-worthy. References from prior landlords may also be beneficial. Again, the caveat is to elect to only conduct business with those individuals and institutions that are intelligent and rational enough to be able to analyze your financial position (and ability to pay) without a credit score. Therefore, you'll probably have better luck working with individual landlords, as opposed to corporate-owned rental complexes.",
"title": ""
},
{
"docid": "6ff686a1b505bc0321186daa6657e650",
"text": "\"From a purely financial standpoint (psychology aside) the choice between paying off debt and investing on risky investments boils down to a comparison of risk and reward. Yes, on average the stock market has risen an average of 10% (give or take) per year, but the yearly returns on the S&P 500 have ranged from a high of 37.6% in 1995 to a low of -37% in 2008. So there's a good chance that your investment in index funds will get a better return than the guaranteed return of paying off the loan, but it's not certain, and you might end up much worse. You could even calculate a rough probability of coming out better with some reasonable assumptions (e.g. if you assume that returns are normally distributed, which historically they're not), but your chances are probably around 30% that you'll end up worse off in one year (your odds are better the longer your investment horizon is). If you can tolerate (meaning you have both the desire and the ability to take) that risk, then you might come out ahead. The non-financial factors, however - the psychology of debt, the drain on discretionary cash flow, etc. cannot be dismissed as \"\"irrational\"\". Paying off debt feels good. Yes, finance purists disagree with Dave Ramsey and his approaches, but you cannot deny the problems that debt causes millions of households (both consumer debt and student loan debt as well). If that makes them mindless \"\"minions\"\" because they follow a plan that worked for them then so be it. (disclosure - I am a listener and a fan but don't agree 100% with him)\"",
"title": ""
},
{
"docid": "1e1c620054027351698e7137c660e877",
"text": "It does make sense to combine debts and pay off the worst (highest interest rate). However, if you can't get any loan, you should focus on the worst debt and pay that off. Then take the same amount of money you were paying to the next worse debt, and so on until you're clean. Let's look at an example. Debt A is at 5%, Debt B is at 10% and Debt C is at 15%. You are paying AB and C. On a monthly basis, you save 100€ to pay off C. Once C is payed off, you keep on saving 100€ and add whatever you were paying to Debt C to those savings. This way, you can pay off Debt B at an increased rate. When B is cleared, you save 100€ + whatever you were paying to Debt B and Debt C to clear Debt A. That's the theory.",
"title": ""
},
{
"docid": "d090dd085d2a07d824cdcc6e0db439e3",
"text": "No. Unless you are ten Bill Gates rolled into one man, you can not possibly hope to make a dent in the 14 trillion debt. Even if you were and paid off whole debt in one payment, budget deficits would restore it to old glory in a short time. If you have some extra money, I'd advise to either choose a charity and donate to somebody who needs your help directly or if you are so inclined, support a campaign of a financially conservative politician (only if you are sure he is a financial conservative and doesn't just tell this to get elected - I have no idea how you could do it :).",
"title": ""
},
{
"docid": "2bcdda60f3b4d3e30dc4ab0a0479d764",
"text": "\"Dave Ramsey would tell you to pay the smallest debt off first, regardless of interest rate, to build momentum for your debt snowball. Doing so also gives you some \"\"wins\"\" sooner than later in the goal of becoming debt free.\"",
"title": ""
},
{
"docid": "ce8676528e1a2a117a0179043c2db82d",
"text": "\"Money is a token that you can trade to other people for favors. Debt is a tool that allows you to ask for favors earlier than you might otherwise. What you have currently is: If the very worst were to happen, such as: You would owe $23,000 favors, and your \"\"salary\"\" wouldn't make a difference. What is a responsible amount to put toward a car? This is a tricky question to answer. Statistically speaking the very worst isn't worth your consideration. Only the \"\"very bad\"\", or \"\"kinda annoying\"\" circumstances are worth worrying about. The things that have a >5% chance of actually happening to you. Some of the \"\"very bad\"\" things that could happen (10k+ favors): Some of the \"\"kinda annoying\"\" things that could happen (~5k favors): So now that these issues are identified, we can settle on a time frame. This is very important. Your $30,000 in favors owed are not due in the next year. If your student loans have a typical 10-year payoff, then your risk management strategy only requires that you keep $3,000 in favors (approx) because that's how many are due in the next year. Except you have more than student loans for favors owed to others. You have rent. You eat food. You need to socialize. You need to meet your various needs. Each of these things will cost a certain number of favors in the next year. Add all of them up. Pretending that this data was correct (it obviously isn't) you'd owe $27,500 in favors if you made no money. Up until this point, I've been treating the data as though there's no income. So how does your income work with all of this? Simple, until you've saved 6-12 months of your expenses (not salary) in an FDIC or NCUSIF insured savings account, you have no free income. If you don't have savings to save yourself when bad things happen, you will start having more stress (what if something breaks? how will I survive till my next paycheck? etc.). Stress reduces your life expectancy. If you have no free income, and you need to buy a car, you need to buy the cheapest car that will meet your most basic needs. Consider carpooling. Consider walking or biking or public transit. You listed your salary at \"\"$95k\"\", but that isn't really $95k. It's more like $63k after taxes have been taken out. If you only needed to save ~$35k in favors, and the previous data was accurate (it isn't, do your own math): Per month you owe $2,875 in favors (34,500 / 12) Per month you gain $5,250 in favors (63,000 / 12) You have $7,000 in initial capital--I mean--favors You net $2,375 each month (5,250 - 2,875) To get $34,500 in favors will take you 12 months ( ⌈(34,500 - 7,000) / 2,375⌉ ) After 12 months you will have $2,375 in free income each month. You no longer need to save all of it (Although you may still need to save some of it. Be sure recalculate your expenses regularly to reevaluate if you need additional savings). What you do with your free income is up to you. You've got a safety net in saved earnings to get you through rough times, so if you want to buy a $100,000 sports car, all you have to do is account for it in your savings and expenses in all further calculations as you pay it off. To come up with a reasonable number, decide on how much you want to spend per month on a car. $500 is a nice round number that's less than $2,375. How many years do you want to save for the car? OR How many years do you want to pay off a car loan? 4 is a nice even number. $500 * 12 * 4 = $24,000 Now reduce that number 10% for taxes and fees $24,000 * 0.9 = $21,600 If you're getting a loan, deduct the cost of interest (using 5% as a ballpark here) $21,600 * 0.95 = $20,520 So according to my napkin math you can afford a car that costs ~$20k if you're willing to save/owe $500/month, but only after you've saved enough to be financially secure.\"",
"title": ""
},
{
"docid": "f5bbd155106252bac19ade8abd48cacc",
"text": "\"Is it not that bad? Depends how bad is bad. The problems causes by a government having large debt are similar to those caused by an individual having large debt. The big issue is: More and more of your income goes to paying interest on the debt, and is thus not available for spending on goods and services. If it gets bad enough, you find you cannot make payments, you start defaulting on loans, and then you have to make serious sacrifices, like selling your property to pay the debt. Nations have an advantage over individuals in that they can sometimes repudiate debt, i.e. simply declare that they are not going to pay. Lenders can then refuse to give them more money, but that doesn't get their original loans paid back. In theory other nations could send in troops to seize property to pay the loan, but this is a very extreme solution. Totally aside from any moral considerations, modern warfare is very expensive, it's likely the war would cost you more than you'd recover on the debt. How much debt is too much? It's hard to give a number, any more than one could give a \"\"maximum acceptable debt\"\" for an individual. American banks have a rule of thumb that they won't normally loan you money if your total debt payments would be more than 1/3 of your income. I've never come close to that, that seems awfully high to me. But, say, a young person just starting out so he's not making a lot of money, and he lives someplace with high housing prices, might find this painful but acceptable. Etc.\"",
"title": ""
},
{
"docid": "50cf006c613b501efd048b5b2c44065e",
"text": "\"Victor addressed the card issue with an excellent answer, I'd like to take a stab at the budget and income side. Your question clearly stated \"\"I am left with no extra money\"\" each month. Whenever I read such an assertion, I ask the person, \"\"but surely, X% of people in your country get by on a salary that's 95% of yours.\"\" In other words, there's the juggling of the debt itself, which as Victor's math shows, is one piece of the puzzle. The next piece is to sift through your budget and find $100/mo you spend that could be better spent reducing your debt. Turn down the temperature in the winter, up in the summer, etc. Take lunch to work. No Lattes. Really look at the budget and do something. On the income side. There are countless ways to earn a bit of extra money. I knew a blogger who started a site called \"\"Deliver away Debt.\"\" He told a story of delivering pizza every Friday and Saturday night. The guy had a great day job, in high tech, but it didn't lend itself to overtime, and he had the time available those two evenings to make money to kill off the debt he and his wife had. Our minimum wage is currently just over $7, but I happened to see a sign in a pizza shop window offering this exact position. $10/hr plus gas money. They wanted about 8 hours a weekend and said in general, tips pushed the rate to well over $15/hr. (They assumed I was asking for the job, and I said I was asking for a friend). This is just one idea. Next, and last. I knew a gal with a three bedroom small house. Tight budget. I suggested she find a roommate. She got so many responses, she took in two people, and the rents paid her mortgage bill in full. Out of debt in just over a year, instead of 4+. And in her case, no extra hours at all. There are sites with literally 100's of ideas. It takes one to match your time, interest, and skill. When you are at $0 extra, even finding $250/mo will change your life.\"",
"title": ""
},
{
"docid": "6856197742bcbab76c7f3726f14eda60",
"text": "\"Old question I know, but I have some thoughts to share. Your title and question say two different things. \"\"Better off\"\" should mean maximizing your ex-ante utility. Most of your question seems to describe maximizing your expected return, as do the simulation exercises here. Those are two different things because risk is implicitly ignored by what you call \"\"the pure mathematical answer.\"\" The expected return on your investments needs to exceed the cost of your debt because interest you pay is risk-free while your investments are risky. To solve this problem, consider the portfolio problem where paying down debt is the risk-free asset and consider the set of optimal solutions. You will get a capital allocation line between the solution where you put everything into paying down debt and the optimal/tangent portfolio from the set of risky assets. In order to determine where on that line someone is, you must know their utility function and risk parameters. You also must know the parameters of the investable universe, which we don't.\"",
"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": "43bcbeaea5441f622674e2cede1d0b6b",
"text": "With your windfall, you've been given a second chance. You've become debt free again, and get to start over. Here is what I would recommend from this point on: Decide that you want to remain debt free. It sounds like you've already done this, since you are asking this question. Commit to never borrowing money again. It sounds overly simplistic, but if you stop using your credit cards to spend money you don't have and you don't take out any loans, you won't be in debt. Learn to budget. Here is what is going to make being debt free possible. At the beginning of each month, you are going to write down your income for the month. Then write down your expenses for the month. Make sure you include everything. You'll have fixed monthly expenses, like rent, and variable monthly expenses, like electricity and phone. You'll also have ongoing expenses, like food, transportation, and entertainment. You'll have some expenses, like tuition, which doesn't come up every month, but is predictable and needs to be paid. (For these, you'll can set aside part of the money for the expense each month, and when the bill comes, you'll have the funds to pay it ready to go.) Using budgeting software, such as YNAB (which I recommend) will make this whole process much easier. You are allowed to change your plan if you need to at any time, but do not allow yourself to spend any money that is not in the plan. Take action to address any issues that become apparent from your budget. As you do your budget, you will probably struggle, at first. You will find that you don't have enough income to cover your expenses. Fortunately, you are now armed with data to be able to tackle this problem. There are two causes: either your expenses are too high, or your income is too low. Cut your expenses, if necessary. Before you had a written budget, it was hard to know where your money went each month. Now that you have a budget, it might be apparent that you are spending too much on food, or that you are spending too much on entertainment, or even that a roommate is stealing money. Do what you need to do to cut back the expenses that need cutting. Increase your income, if necessary. You might find from your budget that your expenses aren't out of line. You live in as cheap a place as possible, you eat inexpensively, you don't go out to eat, etc. In this case, the problem isn't your spending, it is your income. In order to stay out of debt, you'll need to increase your income (get a job). I know that you said that this will slow your studies, but because you are now budgeting, you have an advantage you didn't have before: you now know how short you are each month. You can take a part time job that will earn you just enough income to remain debt free while maximizing your study time. Build up a small emergency fund. Emergencies that you didn't plan for in your budget happen. To remain debt free, you should have some money set aside to cover something like this, so you don't have to borrow when it comes up. The general rule of thumb is 3 to 6 months of expenses, but as a college kid with low expenses and no family to take care of, you won't need a huge fund. $500 to $1000 extra in the bank to cover an unexpected emergency expense could be all it takes to keep you debt free.",
"title": ""
},
{
"docid": "bfced950704f4900a5c9c7de9bbf87f5",
"text": "I struggle with 0% interest things in my personal life. A responsible me that thinks logically says continue to pay it on time and take advantage of the benefit of the interest free loan you got. It will keep your funds liquid in the case of an emergency, build your credit and teach you self control. Paying it off now has little to no benefit. It does however tie up $3,000 worth of capital you could be using for building interest or leveraging against other purchases.",
"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": "caeb923f77b21e2486ed1b64f5c179df",
"text": "\"From what I've heard in the past, debt can be differentiated between secured debt and unsecured debt. Secured debt is a debt for which something stands good such as a mortgage on your house. You have a debt, but that debt is covered by the value of an asset and if you needed to free yourself of the debt, then you could by selling that asset. This is what is known as \"\"good\"\" debt. Unsecured debt is debt that is incurred where the only thing that is available to pay it back is your income. An example of this is credit card debt where you purchase something that couldn't be sold again to pay off the debt. This is know as \"\"bad\"\" debt. You have to be careful about thinking that house debt is always \"\"good\"\" debt because the house stands good for it though. The problem with that is that the house could go down in value and then suddenly your \"\"good\"\" debt is \"\"bad\"\" debt (or no longer secured). Cars are very risky this way because they go down in value. It is really easy to get a car loan where before long you are upside down. This is the problem with the term \"\"good\"\" debt. The label makes it sound like it is a good idea to have that debt, and the risk associated with having the debt is trivialized and allows yourself to feel good about your financial plan. Perhaps this is why so many houses are in foreclosure right now, people believed the \"\"good\"\" debt myth and thought that it was ok to borrow MORE than the home was worth to get into a house. Thus they turned a secured debt into an unsecured debt and put their residence at risk by levels of debt they couldn't afford. Other advice I've heard and tend to agree with, is that you should only borrow for a house, an education and maybe a car (danger on that last one), being careful to buy a modest house, car etc that is well within your means to repay. So if you do have to borrow for a car, go for basic transportation instead of the $40,000 BMW. Keep you house payment less than 1/4th of your take home pay. Pay off the school loans as quickly as possible. Regardless of the label, \"\"good\"\" \"\"bad\"\" \"\"unsecured\"\" \"\"secured\"\", I think that less debt is better than more debt. There is definitely such a thing as too much \"\"good\"\" debt!\"",
"title": ""
},
{
"docid": "e215380be65e1d229d6662ffc05ffa45",
"text": "A bullish (or 'long') call spread is actually two separate option trades. The A/B notation is, respectively, the strike price of each trade. The first 'leg' of the strategy, corresponding to B, is the sale of a call option at a strike price of B (in this case $165). The proceeds from this sale, after transaction costs, are generally used to offset the cost of the second 'leg'. The second 'leg' of the strategy, corresponding to A, is the purchase of a call option at a strike price of A (in this case $145). Now, the important part: the payoff. You can visualize it as so. This is where it gets a teeny bit math-y. Below, P is the profit of the strategy, K1 is the strike price of the long call, K2 is the strike price of the short call, T1 is the premium paid for the long call option at the time of purchase, T2 is the premium received for the short call at the time of sale, and S is the current price of the stock. For simplicity's sake, we will assume that your position quantity is a single option contract and transaction costs are zero (which they are not). P = (T2 - max(0, S - K2)) + (max(0, S - K1) - T1) Concretely, let's plug in the strikes of the strategy Nathan proposes, and current prices (which I pulled from the screen). You have: P = (1.85 - max(0, 142.50 - 165)) - (max(0, 142.50 - 145)) = -$7.80 If the stock goes to $150, the payoff is -$2.80, which isn't quite break even -- but it may have been at the time he was speaking on TV. If the stock goes to $165, the payoff is $12.20. Please do not neglect the cost of the trades! Trading options can be pretty expensive depending on the broker. Had I done this trade (quantity 1) at many popular brokers, I still would've been net negative PnL even if NFLX went to >= $165.",
"title": ""
}
] |
fiqa
|
427007d5ed3b07779d7ff4e0d37680d9
|
Can't the account information on my checks be easily used for fraud?
|
[
{
"docid": "02edd927316d3a17f1b61bb55968e196",
"text": "Yes, and there are almost no checks (no pun intended) on people pulling money from your account using a routing number. It is an EXTREMELY insecure system. If you want a real Halloween scare, read this article: Easy Check Fraud Technique Draws Scrutiny. Unfortunately you just have to live with it. If you are curious why this loophole is allowed to continue, consider how hard it is to close it without undermining the convenience of checks. Short of you going to the bank with each person you write a check to and showing ID to validate the transaction, I don't see how you could continue to use a negotiable instrument like this without such a security hole. The ultimate answer is going to have to be replacing checks with other means of payment.",
"title": ""
},
{
"docid": "259214949481607d982ee738ff17c7a3",
"text": "Yes, those numbers are all that is needed to withdraw funds, or at least set online payment of bills which you don't owe. Donald Knuth also faced this problem, leading him to cease sending checks as payment for finding errors in his writings.",
"title": ""
},
{
"docid": "14ab055436f15aed3e2ca0ee8ecd6fcf",
"text": "The bottom line is to keep most of your money in accounts with no check privileges and to not give the account numbers for these accounts to anyone. Keep just enough in your checking account for the checks you are going to write.",
"title": ""
},
{
"docid": "4d75262261aaee4439569628a663c0d7",
"text": "\"That's accurate. Here is another risk with the current checking system, which many people are not aware of: Anyone who knows your checking account number can learn what your balance in that account is. (This is bank-specific, but it is possible at the major banks I've checked.) How does that work? Many banks have a phone line where you can dial up and interact with an automated voice response system, for various customer service tasks. One of the options is something like \"\"merchant check verification\"\". That option is intended to help a merchant who receives a check to verify whether the person writing the check has enough money in their account for the check to clear. If you select that option in the phone tree, it will prompt you to enter in the account number on the check and the amount of the check, and then it will respond by telling you either \"\"there are currently sufficient funds in the account to cash this check\"\" or \"\"there are not sufficient funds; this check would bounce\"\". Here's how you can abuse this system to learn how much someone has in their bank account, if you know their account number. You call up and check whether they've enough money to cash a $10,000 check (note that you don't actually have to have a check for $10,000 in your hands; you just need to know the account number). If the system says \"\"nope, it'd bounce\"\", then you call again and try $5,000. If the system says \"\"yup, sufficient funds for a $5,000 check\"\", then you try $7,500. If it says \"\"nope, not enough for that\"\", you try $6,250. Etcetera. At each step, you narrow the range of possible account balances by a factor of two. Consequently, after about a dozen or so steps, you will likely know their balance to within a few dollars. (Computer scientists know this procedure by the name \"\"binary search\"\". The rest of us may recognize it as akin to a game of \"\"20 questions\"\".) If this bothers you, you may be able to protect your self by calling up your bank and asking them how to prevent it. When I talked to my bank (Bank of America), they told me they could put a fraud alert flag on your account, which would disable the merchant check verification service for my account. It does mean that I have to provide a 3-digit PIN any time I phone up my bank, but that's fine with me. I realize many folks may terribly not be concerned about revealing their bank account balance, so in the grand scheme of things, this risk may be relatively minor. However, I thought I'd document it here for others to be aware of.\"",
"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": "a96543e87a7d692090fe7441ce7b12c7",
"text": "I was a victim of this. I'm not sure who got my routing and account number off my check, but someone subscribed to Playboy.com using my bank account information. Luckily it was only for about $30 and the bank refunded my money. However, it was a mess in that I had to open a new checking account and keep the other one open until all checks cleared. The bank was extremely helpful and monitored the account to make sure only the checks I told them about were processed. I then had to close the old account. This is why I believe checks are much less secure than credit cards or debit cards. A paper check can lay on someone's desk for anyone to pick up or write the information down off of it. I avoid checks if at all possible. For things like Craig's list, I would try to use PayPal or some other intermediate processing service.",
"title": ""
},
{
"docid": "1d946609ef38fb86422a19d3d63a6971",
"text": "Yes this is a huge security loophole and many banks will do nothing to refund if you are scammed. For example for business accounts some Wells Fargo branches say you must notify within 24 hours of any check withdrawal or the loss is yours. Basically banks don't care - they are a monopoly system and you are stuck with them. When the losses and complaints get too great they will eventually implement the European system of electronic transfers - but the banks don't want to be bothered with that expense yet. Sure you can use paypal - another overpriced monopoly - or much better try Dwolla or bitcoin.",
"title": ""
}
] |
[
{
"docid": "7b379bedf230127771cc0de462510532",
"text": "This is the information required to wire money into your account from abroad. They would only need the account number and the ABA (routing) number to withdraw, and it is printed on every check you give.",
"title": ""
},
{
"docid": "7d5890e675f59e1fbb5cf3627c912696",
"text": "The only way someone can take money out of your account using just your sort code and account number is if you set up a direct debit to pay them (or someone pretending to be you sets up the direct debit). Even with Paperless DD's this can take some time. Anyone who can process debit card transactions can take money from your account if they have your debit card number, expiry date and cvv number. Direct debits do not have an expiry date so they are normally used for paying automatic regular long term bills (like rent, rates, electricity etc). Note, anyone with an ordinary bank account can pay money into account, using your sort code and account number.",
"title": ""
},
{
"docid": "de461907150698ed96ffed19f2e047fb",
"text": "From personal experience, I can tell you that bank account numbers are not unique. Someone from another branch of my bank was able to withdraw money from my account at my branch because they had the same account number. You are supposed to enter your branch number on the withdrawal slip in front of your account number. The person who got my money did not do this. Because it was at my branch, the teller debited my account for the transaction. I caught this on my monthly statement and immediately complained to my branch manager. He was able to retrieve the withdrawal slip and saw what had happened. He credited my account and said he was going to talk to the teller who should have asked for the branch number and/or should have noticed that the name and address on the withdrawal slip did not match those on my account. I would not have thought that the bank would allow this situation considering how many numbers are available to assign but they did.",
"title": ""
},
{
"docid": "da0a33e57f0f0404070c71c19c000933",
"text": "\"First, there are not necessarily two accounts involved. Usually the receiving party can take the check to the bank on which it is drawn and receive cash. In this case, there is only one bank, it can look to see that the account on which the check is drawn has sufficient funds, and make an (essentially irrevocable) decision to pay the bearer. (Essentially irrevocable precisely because the bearer did not necessarily have to present account information.) The more usual case is that the receiving party deposits the check into an account at their own bank. The receiving party's bank then (directly or indirectly - in the US via the Federal Reserve) presents the check to the paying party's bank. At that point if the there are insufficient funds, the check \"\"bounces\"\" and the receiving party's account will be debited. The receiving party's bank knows that account number because, in this case, the receiving party is a customer of the bank. This is why funds from check deposits are typically not available for immediate withdrawal.\"",
"title": ""
},
{
"docid": "43e11b61c582bfaf936b78eedc373fcc",
"text": "When I last asked a certain large bank in the US (in 2011 or 2012), they didn't offer expiring personal checks. (I think they did offer something like that for business customers.) They also told me that, even if the payee cashes the check a year later and the check bounces, even if it's because I have closed the respective account, he will be able to go to the police and file a report against me for non-payment. (This is what the customer service rep told me on the phone after a bit of prodding, but someone else feel free to improve this answer and fix details or disagree; it's hard to believe and quite outrageous if true.)",
"title": ""
},
{
"docid": "2d797e0c5aeb688f536cd46d2b3308dd",
"text": "\"Here's a hack for getting the \"\"free\"\" checking that requires direct deposit. Some effort to set up, but once everything is in place, it's all autopilot. (If your transfer into savings is higher than your transfer out of savings, you'll build up a nice little stash over time.) I don't know if there are deposit amounts or frequencies that you must have to qualify for the free account, if these are public or secret, or if this works everywhere. If anyone else has experience using this kind of hack, please leave a comment.\"",
"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": "43bf814aee8a481c647ff68c9defa496",
"text": "\"As others have noted, in the U.S. a checking account gives you the ability to write a check, while a savings account does not. I think you know what a check is even if you don't use them, right? Let me know if you need an explanation. Personally, I rarely write paper checks any more. I have an account for a small side business, and I haven't bothered to get new checks printed since I moved 6 years ago even though the checks still have my old address, because I've only written I think 3 paper checks on that account in that time. From the bank's point of view, there are all sorts of government regulations that are different for the two types of accounts. But that is probably of little concern to you unless you own a bank. If the software you have bought allows you to do the things you need to do regardless of whether you call the account \"\"savings\"\" or \"\"checking\"\", then ... who cares? I doubt that the banking software police will come to your house and beat you into unconsciousness and arrest you because you labeled an account \"\"checking\"\" that you were supposed to label \"\"savings\"\". If one account type does what you need to do and the other doesn't, then use the one that works.\"",
"title": ""
},
{
"docid": "c78c7ad755e34be77c564bf31073b601",
"text": "I'm guessing you're in the US? If so, yes, you can be prosecuted, but it's unlikely. Fraud crimes are up to a prosecutor to pursue, there are a lot of fraud cases and bystanders take low priority, I'm assuming you're passively complicit, not actively. If this is the case it's best to work with the bank to get your situation cleaned up and move on. These days, most banks have dealt with wire fraud at least once, and they're familiar with cashiers check fraud. A fair warning, the bank will report you, if they think you're involved, so if you are not a complete bystander, you may want to lawyer up. So hopefully you didn't try to spend any of the fraudulent money and hopefully you have proof of a third party, because they will want a connection to that person (name/number/other) to file their report.",
"title": ""
},
{
"docid": "47fe6feea862a9e94ee988d3f57832a7",
"text": "You encountered a quite common scam: You are supposed to perform a job, they send you a check for too much money, and you are supposed to pay them some money back. Ten weeks later the check bounces and your money is gone. That's these people's job. They do this all day long. The success rate isn't very high, so they are busy doing this all day. These scammers might have your name and address, but if that is all there is, they can get names and addresses of 100s of people by using the phone book, and they don't. I wouldn't say that it is impossible to turn your name and address into money, but it is hard work. So it is quie unlikely to happen.",
"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": "d8c78aabc5f37a828f69b2ed51edda39",
"text": "If you have the expired check in hand and take it back to the bank that issued it to you, I'd think they could do something for you. (I'd hope they would, anyway.) But automatically? I don't think so.",
"title": ""
},
{
"docid": "4bc0051425fa5f3365e51dec08592589",
"text": "I agree with you that smartphone deposits make you more vulnerable to a variety of issues. Checks are completely insecure, since anyone with your routing/account number can create a check, and individuals are less likely to shred or otherwise secure the check properly. Ways to control this risk are:",
"title": ""
},
{
"docid": "8dec97805d71df6a1e4966b5cb02aa13",
"text": "\"If someone gains access to these data, he could use social engineering approach to impersonate you - i.e. call the American Express and ask tell he he is you and he lost the access to the account and he needs the access to be reset and sent to certain email, and if they doubt it's you he would send them the statement data, even on company letterhead (which he would be able to fake since he has the data from the statements, and AE has no idea how the authentic letterhead looks like). He could also do the opposite trick - like calling your assistant or even yourself and saying something like \"\"I'm from American Express, calling about the transaction at this-and-this date and this-and-this time, this amount, please confirm you are {your name} and your address is {your address}, I need to confirm something\"\" - which would make it appear as he is really from AE since he knows all these details - and then ask you some detail he's missing \"\"for security\"\" - like your birth date or last digits of SSID or anything like that - and then use these details to impersonate you to AE. So putting all this info together where it can be accessed by strangers does have risks. It may not work out if both you and AE personnel are vigilant and follow instructions to the letter, but we know it not always so.\"",
"title": ""
},
{
"docid": "77f21ce3d3ec8bae1cde5b264f8112e6",
"text": "POS stands for Point of Sale (like a specific store location) which indicates that the purchase occurred by using your debit card, but it can also be the on-line transaction done via 3-D Secure. Checking with bank, they said that Kirchstrasse transaction could be related to direct marketing subscription service ordered on-line. Investigating further what I've found these kind of transactions are performed by 2BuySafe company registered at Kirchstrasse in Liechtenstein with went through the MultiCards on-line cashier which can be used for paying different variety of services (e.g. in this case it was polish on-line storage service called Chomikuj). These kind of transactions can be tracked by checking the e-mail (e.g. in gmail by the following query: after:2014/09/02 before:2014/09/02 Order). Remember, that if you still don't recognise your transaction, you should call your bank. I have found also some other people concerns about that kind of transactions who ask: Is 2BuySafe.com and www.multicards.com some sort of Scam? Provided answer says: MultiCards Internet Billing is a provider of online credit card and debit card processing and payment solutions to many retailers worldwide. MultiCards was one of the pioneer companies offering this type of service since 1995 and is a PCI / DSS certified Internet Payment Service Provider (IPSP) providing service to hundreds of retail websites worldwide MultiCards is a registered Internet Payment Service Provider and has implemented various fraud protection tools including, but not limited to, MultiCards Fraud Score Tool and 'Verified by Visa' and 'MasterCard SecureCode' to protect card holder's card details. 2BuySafe.com Is also Secured and Verified By GeoTrust The certificate should be trusted by all major web browsers (all the correct intermediate certificates are installed). The certificate was issued by GeoTrust. Entering Incorrect information can lead to a card being rejected as @ TOS 2BuySafe.com is hosted on the Multicards Server site",
"title": ""
}
] |
fiqa
|
de1880a5850661a98d0527077ad872e2
|
How to share income after marriage and kids?
|
[
{
"docid": "590852108b061575c8815783e9c46e36",
"text": "\"My suggestion would be that you're looking at this the wrong way, though for good reasons. Once you are a family, you should - and, in most cases I've seen, will - think of things differently than you do now. Right now, your post above is written from a selfish perspective. Not to be insulting, and not implying selfish is a bad thing - I don't mean it negatively. But it is how you're defining this problem: from a self-interested, selfish point of view. \"\"Fair\"\" and \"\"unfair\"\" only have meaning from this point of view; something can only be unfair to you if you come from a self-centered viewpoint. Try to think of this from a family-centric viewpoint, and from your significant other's point of view. You're absolutely right to want both of you to be independent financially as far as is possible; but think about what that means from all three points of view (your family's, yours, and hers)? Exactly what it means will depend on the two of you separately and together, but I would encourage you to start with a few basics that make it likely you'll find a common ground: First of all, ensure your significant other has a retirement account of her own that is funded as well as yours is. This will both make life easier if you split up, and give her a safety net if something happens to you than if you have all of the retirement savings. I don't know how your country manages pensions or retirement accounts, but figure out how to get her into something that is as close to equal to yours as possible. Make sure both of you have similar quality credit histories. You should both have credit cards in your own names (or be true joint owners of the accounts, not just authorized users, where that is possible), and both be on the mortgage/etc. when possible. This is a common issue for women whose spouse dies young and who have no credit history. (Thanks @KateGregory for reminding me on this one) Beyond that, work out how much your budget allows for in spending money for the two of you, and split that equally. This spending money (i.e., \"\"fun money\"\" or money you can do whatever you like with) is what is fundamentally important in terms of financial independence: if you control most of the extra money, then you're the one who ultimately has control over much (vacations, eating out, etc.) and things will be strained. This money should be equal - whether it is literally apportioned directly (each of you has 200 a month in an account) or simply budgeted for with a common account is up to you, whatever works best for your personal habits; separate accounts works well for many here to keep things honest. When that money is accounted for, whatever it is, split the rest of the bills up so that she pays some of them from her income. If she wants to be independent, some of that is being in the habit of paying bills on time. One of you paying all of the bills is not optimal since it means the other will not build good habits. For example, my wife pays the warehouse club credit card and the cell phone bill, while I pay the gas/electric utilities. Whatever doesn't go to spending money and doesn't go to the bills she's personally responsible for or you're responsible for (from your paycheck) should go to a joint account. That joint account should pay the larger bills - mortgage/rent, in particular - and common household expenses, and both of you should have visibility on it. For example, our mortgage, day-care costs, major credit card (which includes most of our groceries and other household expenses) come from that joint account. This kind of system, where you each have equal money to spend and each have some household responsibilities, seems the most reasonable to me: it incurs the least friction over money, assuming everyone sticks to their budgeted amounts, and prevents one party from being able to hold power over another. It's a system that seems likely to be best for the family as a unit. It's not \"\"fair\"\" from a self-centered point of view, but is quite fair from a family-centered point of view, and that is the right point of view when you are a family, in my opinion. I'll emphasize here also that it is important that no one party hold the power, and this is set up to avoid that, but it's also important that you not use your earning power as a major arguing point in this system. You're not \"\"funding her lifestyle\"\" or anything like that: you're supporting your family, just as she is. If she were earning more than you, would you cut your hours and stay at home? Trick question, as it happens; regardless of your answer to that question, you're still at the same point: both of you are doing the thing you're best suited for (or, the thing you prefer). You're both supporting the family, just in different ways, and suggesting that your contribution is more valuable than hers is a great way to head down the road to divorce: it's also just plain incorrect. My wife and I are in almost the identical situation - 2 kids, she works part time in the biological sciences while spending plenty of time with the kids, I'm a programmer outearning her significantly - and I can tell you that I'd more than happily switch roles if she were the bread earner, and would feel just as satisfied if not more doing so. And, I can imagine myself in that position, so I can also imagine how I'd feel in that position as far as how I value my contribution.\"",
"title": ""
},
{
"docid": "6d2aadc3cf9a6ff75c0c7a52820d5c2c",
"text": "You remind me a lot of myself as I was thinking about marriage. Luckily for me, my wife was much smarter about all this than I was. Hopefully, I can pass along some of her wisdom. Both of us feel very strongly about being financially independent and if possible we both don't want to take money from each other. In marriage, there is no more financial independence. Do not think in those terms. Life can throw so many curve balls that you will regret it. Imagine sitting down with your new bride and running through the math. She is to contribute $X to the family each month and you are to contribute $Y. Then next thing you know, 6 months later, she has cancer and has to undergo expensive and debilitating treatment. There is no way she can contribute her $X anymore. You tell her that is okay and that you understand, but the pressure weighs down on her every day because she feels like she is not meeting your expectations. Or alternatively, everything goes great with your $X, $Y plan. A few years down the road your wife is pregnant, so you revisit the plan, readjust, etc. Everything seems great. When your child is born, however, the baby has a severe physical or mental handicap. You and your wife decide that she will quit her job to raise your beautiful child. But, the whole time, in the back of her mind she can't get out of her head that she is no longer financially independent and not living up to your expectations. These stresses are not what you want in your marriage. Here is what we do in my family. Hopefully, some of this will be helpful to you. Every year my wife and I sit down and determine what our financial goals are for the year. How much do we want to be putting in retirement? How much do we want to give to charity? Do we want to take any family vacations? We set goals together on what we want to achieve with our money. There is no my money or her money, just ours. Doesn't matter where it comes from. At the beginning of every month, we create a budget in a spreadsheet. It has categories like (food, mortgage or rent, transportation, clothing, utilities) and we put down how much we expect to spend on each of those. It also has categories for entertainment, retirement, charity, cell phones, internet, and so on. Again, we put down how much we expect to spend on each of those. In the spreadsheet, we also track how much income we expect that month and our totals (income minus expenses). If that value is positive, we determine what to do with the remainder. Maybe we save some for a rainy day or for car repairs. Maybe we treat ourselves to an extra fancy dinner. The point is, every dollar should be accounted for. If she wants to go to dinner with some friends, we put that in the budget. If I want a new video game, we put that in the budget. Once a week, we take all our receipts and tally up where we spent our money. We then see how we are doing on our budget. Maybe we were a little high in one category and lower than expected in another. We adjust. We are flexible. But, we go over our finances often to make sure we are achieving our goals. Some specific goals I'd recommend that the two of you consider in your first such yearly meeting: You get out of life what you put into it, and you will get out of your finances what the two of you put into them. By being on the same page, your marriage will be much happier. Money/finances are one of the top causes of divorce. If you two are working together on this, you are much more likely to succeed.",
"title": ""
},
{
"docid": "dcc20635328d993b4b926dcedd1615d7",
"text": "I started out thinking like you but I quickly realised this was a bad approach. You are a team, aren't you? Are you equals or is one of you an inferior of lower value? I think you'll generate more shared happiness by acting as a team of equals. I'd pool your resources and share them as equals. I'd open a joint account and pay both your incomes directly into it. I'd pay all household bills from this. If you feel the need, have separate personal savings accounts paid into (equally) from the joint account. Major assets should be in joint names. This usually means the house. In my experience, it is a good idea to each have a small amount of individual savings that you jointly agree each can spend without consulting the other, even if the other thinks it is a shocking waste of money. However, spending of joint savings should only be by mutual agreement. I would stop worrying about who is bringing in the most income. Are you planning to gestate your children? How much is that worth? - My advice is to put all this aside, stop trying to track who adds what value to the joint venture and make it a partnership of equals where each contributes whatever they can. Suppose you fell ill and were unable to earn. Should you wife then retain all her income and keep you in poverty? I really believe life is simpler and happier without adding complex and stressful financial issues to the relationship. Of course, everyone is different. The main thing is to agree this between the two of you and be open to change and compromise.",
"title": ""
},
{
"docid": "583731e4e2db5633a8cf29dacde300e0",
"text": "\"I haven't seen this addressed anywhere else, so I'll make a small answer to add on to the great ones already here. Money isn't the only way a person can contribute to a relationship. Time and effort are valuable contributions. Who runs the household? Who cooks, cleans, does laundry? How will you share these duties? My husband and I have a couple of rules. One of which is that we don't keep count. \"\"I did dishes, so you do laundry\"\". \"\"I made coffee last time, so now it's your turn\"\". \"\"I paid this, so you pay that\"\". That's not allowed. I happen to make ~4x as much as my husband, but I work 4x the hours (he's part time at the moment). So, he does the dishes, he cooks, he does laundry, he runs the household. Do I value him less? No! I value him more, because he is part of the team, and he feeds me coffee while I work (we have our own business). Even though I make so much more than him, we still split everything down the middle. Because his contribution to this relationship, to this household, is so much more than just money. And I value him. I value his contribution. At the end of the day, you are a team - and if you split hairs over finances, you'll find yourself splitting hairs over everything.\"",
"title": ""
},
{
"docid": "beab52bb4c7e60ec7d8ba5666b415278",
"text": "Now I have been trying to figure out how to split the money that we both earn. From what I can see there are several concepts but none of them really seems ideal to me. There is nothing fair or unfair in such arrangements. It is what you both agree. You can try and make this as scientific as possible. But then there is no golden rule. For example, your girlfriend makes 2200 now and due to child, she is making 1100. The child is both of your responsibility; so you need to compensate half of her salary loss. 550 and she takes the other half. If you hire a nanny to look after you kinds, it would say cost you 500. But your girlfriend is doing that job, so she should get additional 500 from common pot. Plus due to loss of few years in looking after the children, she has a lost opportunity in career growth. i.e. she may indefinitely make less money than she can... So one gets into all kinds of theories and analysis and any arrangements will have some or the other gaps. So my suggestion, don't get too scientific about it. Just talk it out as to what you both feel how this should be and arrive it. It is something every individual has to agree. It also make sense to have the large assets [or assets that matter], like house, car etc in clear title and who gets what in case you decide to separate. Other should be incidental.",
"title": ""
},
{
"docid": "af738cb9cc41c09d0b1ad2e8d0738a76",
"text": "I started this off as a comment to Joe's answer, but it got rather messy in that form so I'll just post it as a separate answer instead. I suggest that you read Joe's answer first. I believe you are overthinking this. First, you really should be discussing the matter with your girlfriend. We can provide suggestions, but only the two of you can decide what feels right for the two of you. Strangers on the Internet can never have as complete a picture of your financial situations, your plans, and your personalities, as the two of you together. That said, here's a starting point that I would use as input to such a discussion: As you can see, a common theme to all of this is transparency and communication. There is a reason for this: a marriage without proper communication can never work out well in the long term. I don't know about Germany specifically, but disagreements about money tends to be a major reason in couples splitting up. By setting your lives up for transparency in money matters from the beginning, you significantly reduce the risk of this happening to you. Scott Hanselman discusses a very similar way of doing things, but phrases it differently, in Relationship Hacks: An Allowance System for Adults.",
"title": ""
},
{
"docid": "0a6ec7acfcc016deaeedb5070d157e0a",
"text": "I won't answer in a detailed manner because most people at this site like answers with certain bias' on these questions, like pool resources always relative to which partner is asking. If you follow the above advice, you are hoping things work out. Great! What if they don't? It will be very messy. Unlike most of my peers, I did NOT follow the above advice and had a very clean exit with both of us feeling very good (and no lawyers got involved either; win-win for both of us with all the money we saved). One assumption people make is the person with the lowest income has the strictest limits. This is not always true; I grew up in poverty, but have a very high income and detest financial waste. I can live on about €12,000 a year and even though my partner made a little less, my partner liked to spend. Counter intuitive, right? I was supposed to be the spender because I had a large income, but I wasn't. Also, think about an example with food - sharing expenses. Is it fair for one partner to split whey protein if one partner consumes it, but the other doesn't (answer: in my view, no)? My advice based on your questions: Balance the frugal vs. spendthrift mentality rather than income ratios. If you're both frugal, then focus on income ratios - but one may be more frugal than the other and the thought of spending €300 a month on housing is just insane to a person like me, whereas to most it's too little. Are you both exactly the same with this mentality - and be honest? Common costs that you both agree on can be easily split 50-50 and you can often benefit from economies of scale (like internet, cell phone). Both of us feel very strongly about being financially independent and if possible we both don't want to take money from each other. This is so healthy for a relationship. My partner and I split and we both still really love each other. We're headed in different directions, but we did not want to end bitterly. What you wrote is part of why we ended so well; we both were very independent financially. Kids are going to be a challenge because they come with expenses that partners don't always agree on. What do you and her think of childcare, for instance? You really want to know all this upfront; again a frugal vs. spendthrift mindset could cause some big tensions.",
"title": ""
},
{
"docid": "ae7d658afa170215f375dc479c85bef3",
"text": "\"I think you have succumbed to a category error. The rational course forward is to classify all property as either his, hers, or family's. Each contributes a portion of wages to the family. Each logs hours spent performing familial duties and is \"\"paid\"\" in virtual dollars into their family account at market rates for that service. At any point actual plus virtual dollars are summed to assess the value of the family and percentages are allocated to each party on this basis. Put this into a pre-nuptual agreement. At the time of the inevitable divorce you leave with yours, she leaves with hers, family's assets are divided as described, and division of children should be as King Solomon suggested. Or you could do what I did: Put all your property (and debts) into one pot. Make sure each partner can competently manage bookkeeping and investments. Accumulate a family net worth sufficient to divide in two and each have financial independence. (I'm working on this last step.)\"",
"title": ""
},
{
"docid": "cd7b2260cf22b2b28ded192e30046001",
"text": "\"I can only share with you my happened with my wife and I. First, and foremost, if you think you need to protect your assets for some reason then do so. Be open and honest about it. If we get a divorce, X stays with me, and Y stays with you. This seems silly, even when your doing it, but it's important. You can speak with a lawyer about this stuff as you need to, but get it in writing. Now I know this seems like planning for failure, but if you feel that foo is important to you, and you want to retain ownership of foo no mater what, then you have to do this step. It also works both ways. You can use, with some limitations, this to insulate your new family unit from your personal risks. For example, my business is mine. If we break up it stays mine. The income is shared, but the business is mine. This creates a barrier that if someone from 10 years ago sues my business, then my wife is protected from that. Keep in mind, different countries different rules. Next, and this is my advise. Give up on \"\"his and hers\"\" everything. It's just \"\"ours\"\". Together you make 5400€ decide how to spend 5400€ together. Pick your goals together. The pot is 5400€. End of line. It doesn't matter how much from one person or how much from another (unless your talking about mitigating losses from sick days or injuries or leave etc.). All that matters is that you make 5400€. Start your budgeting there. Next setup an equal allowance. That is money, set aside for non-sense reasons. I like to buy video games, my wife likes to buy books. This is not for vacation, or stuff together, but just little, tiny stuff you can do for your self, without asking \"\"permission\"\". The number should be small, and equal. Maybe 50€. Finally setup a budget. House Stuff 200€, Car stuff 400€. etc. etc. then it doesn't matter who bought the house stuff. You only have to coordinate so that you don't both buy house stuff. After some time (took us around 6 months) you will find out how this works and you can add on some rules. For example, I don't go to Best Buy alone. I will spend too much on \"\"house stuff\"\". My wife doesn't like to make the budget, so I handle that, then we go over it. Things like that.\"",
"title": ""
},
{
"docid": "6719cd28cc9b851df3d1bdebb5deddb2",
"text": "\"My own personal point of view. I earn about twice what my wife to be earns. We are planning on getting married next year. I ultimately do all the finances (basically because she hates that kind of thing) not because I'm in charge or whatever. To work out how we do this I wrote a spreadsheet: At the top it has my monthly pay in one column and her's in another. I add all our bills (against me initally). At the bottom I have a total of both of our \"\"spending money\"\". Spending money is wage - bills - savings I then move money out of my column into her column. My goal is that we pay all the bills and save a decent amount and have roughly the same amount to spend each month. So each persons spending money should be roughly equal. I then fine tune this as things change (if we get a pay rise we alter it, if a bill goes up or down we alter it) To manage this we have 4 accounts, a joint account to pay bills (both give a set amount to each mont), a savings acount (both give a set amount to each month) and our own accounts (where we get paid and where our spending money lives). Like everyone else says, this seems fair to me. I don't earn more, we both earn \"\"an amount\"\" and this should be split equally.\"",
"title": ""
},
{
"docid": "896ecdc76adf361bedab88e8940f59a4",
"text": "You currently have 5400€ between you and 2600€ expenses leaving you 2800€. You currently keep 1900€ and she keeps 900€ at the end of each month splitting 68/32. If you marry and have a child, your combined income will go down to 4900€ while your expenses will increase by 300€ to 2900€ leaving 2000€. You could continue to split 68/32 leaving you 1360€ and her 640€. If you use this split you will lose 540€ and she will lose 260€. That's a 28% loss for you and a 28% loss for her from your end of month take home. So far it sounds reasonably fair. What about the future? For each raise, the person getting the raise keeps 66% of their raises. If you get the majority of the raises, you keep the majority of the benefit, but both benefit from the increase. Any future increases in expenses can be split as negotiated based on who benefits from those increases. That's basically what you are doing now considering that adding a child will cost a lot of her time, not just your money.",
"title": ""
},
{
"docid": "d41d8cd98f00b204e9800998ecf8427e",
"text": "",
"title": ""
},
{
"docid": "3f2c800c6d662e4c1f9c0dd469ed73e5",
"text": "\"Some basic thoughts, mostly on fairness. I guess the answer doesn't really fit this site, it's more about ethics, but this fits the question which isn't really just about money either. So when both work the same amount, it seems appropriate that both get the same mount of money, doesn't it? That is, the scheme of (as already contained in your question and in some other answers) is fair by this logic. Pay attention to hidden money: for example the one who works more for money might automatically get a pension funded this way. This is hidden money which already goes to only one partner, so when dividing equally, you'll need to take that into account (or just include \"\"equal pensions for both\"\" in the family's needs directly).\"",
"title": ""
},
{
"docid": "3230ced50890e9ff193c42bbecc20c96",
"text": "This would be my suggestion: I would approach the problem thinking about the loss of monthly income you (as a couple) will be facing due to your wife's change to a part time job and divide that loss between the two of you. This means that if she goes from 2200 to 1100 monthly, you'd be losing 1100 per month. To share this loss, you could repay your wife your part of the loss (550) so both of you are 550 euro down. However, this 550 loss is a bigger burden for your wife than it is for you, so this amount could be adjusted to make up for this inequality. To make calculations simple and avoid developing a complicated model, you could give the 800 euro above your 3k to your wife for as long as she has to work part time.",
"title": ""
},
{
"docid": "0db97a3b2b5ee2916d13af303468b91b",
"text": "What equal percentage of both you and your girlfriend's income will cover the essential household expenses? Although we earned different amounts, both of us turned over half our income over to the household. Between us this percentage slice from each of our earnings neatly covered all the essentials. The amounts contributed were different, but the contributions where nonetheless equal. Beyond this the financial relationship was fast and loose.",
"title": ""
},
{
"docid": "3d0b492d17450d5ab481897f478a4633",
"text": "The bottom line is choosing the right partner. If your partner works as hard as you do, than everything should be split, irregardless of who makes more. Unfortunately, my bf, now by separated husband, borrowed money from me before we were married. I saw a lack of work ethic in him from the beginning, loved him anyway and married him but decided to keep my money separate as a result. This was a beginning with lack of trust and knowing I would be the higher earner, harder worker, and better provider. Down the road he won a lawsuit and got about $700k. I saw about $25k of this money to pay bills created with the intention of him paying them off when he got the money, and because he pilfered it away, we lost our house and it ended in my leaving.... I'm still doing ok because I work hard for what I have. He is struggling. We were never on the same page, never discussed finances because of his lack of work ethic and my mistrust of how he would decide how the money would be used. Sadly, who you decide to be your partner is the most important decision here...It should be based on mutual respect, both working hard to achieve a common goal, and communicating the budget every year, perhaps even each month.... I'm the terrible example.",
"title": ""
},
{
"docid": "221ff78be259c4c339509545a80f78b4",
"text": "\"I think the problem is that you've made a math error. This child would not be costing you 300 per month, it will be costing you 1400 per month. 1100 of this is in a donation of salable hours rather than cash, but helpfully you have a number right there as to how much someone is willing to pay for these hours so the math is still doable. So, if you are indeed splitting your expenses fifty-fifty, you should chip 1100 into the pot to match your wife's contribution. It would make the most sense, I think, to have your part of this contribution cover some of your mutual expenses, and if any is left over, save it up for the day that your child would cost more than that 300 in a month - when you need extra clothes, or have to replace something they destroyed, or want to pay for extra opportunities (camps, educational games, lessons), or a a savings that can be used for major future expenses (higher education, first car, milestone celebrations, safety net when starting out). Of course, if your family is indeed a priority, you might consider making an equal investment in your family - say, half your income (1800) to match half her time going into the building of the family. After all, the decision to start a family should be an investment of time and value, not just a minimum bid for expenses. And again, any extra can be spent on mutual expenses, saved up for future costs, or left as your child's \"\"savings\"\" for major expenses or safety net. I suppose I should mention that you perhaps could get away with covering half her contribution (550 per month, on the face of it), as that should also \"\"balance\"\" out the monthly expenses. Even this much would be enough to put her back into the green on her covering her own costs. Of course, in this case you might want to take into account that while she's working 38,5 hours per week now, running a household is, I've heard, more closely equivalent to a 60-hour week, plus or minus being \"\"on call\"\" for a further 100 hours a week. Trying to calculate the absolute minimum payment on your part to match the investment of hours on hers is likely to be a bit more tricky than just matching the salable hours not worked, if you're set on income ratios and splitting costs \"\"as they are\"\". Also, you might want to rethink your criteria for sharing income completely or what makes certain divisions of costs \"\"unfair\"\". You mention one reason it would be unfair is that you have a \"\"more stressful job\"\" - well, your job may well be more stressful than her job now, but it is likely to be less so than raising a child (her new job). As for investment of time and energy for your education entitling you to a larger amount of pay, again, raising a child is likely to be a larger investment of time, money, and anxiety than your education, but her pay (or even share of the costs) doesn't seem to be balanced in response. I'm not gonna tell you what is fair, that's for you to work out, just suggesting you really think it through before deciding what would be fair or not.\"",
"title": ""
}
] |
[
{
"docid": "af0b1df1287ed9403409abff8d5d9e1c",
"text": "Wow! First, congratulations! You are both making great money. You should be able to reach your goals. Are we on the right track ? Are we doing any mistakes which we could have avoided ? Please advice if there is something that we should focus more into ! I would prioritize as follows: Get on the same page. My first red flag is that you are listing your assets separately. You and your wife own property together and are raising your daughter together. The first thing is to both be on the same page with your combined income and assets. This is critical. Set specific goals for the future. Dreaming and big-picture life planning will be the foundation for building a detailed plan for reaching your goals. You will see more progress with more sacrifice. If you both are not equally excited about the goals, you will not both be equally willing to sacrifice lifestyle now. You have the income now to be able to set yourselves up to do whatever you want in 10 years, if you can agree on what you want. Hire a financial planner you trust. Interview people, ask someone who is where you want to be in 10 years. You need someone with experience that can guide you through these questions and understands how to manage your income stream. Start saving for retirement in tax-advantaged accounts. This should be as much as 10%-15% of your income combined, so $30k-$45k per year. You need to start diversifying your investments. Real estate is great, but I would never recommend it as this large a percentage of net worth. Start saving for your child's education. Hard to say what you need here, since I don't know your goals. A financial planner should assist you with this. Get rid of your debt. Out of your $2.1M of rental real estate and land, you have $1.4M of debt. It will be difficult to start a business with that much additional debt. It will also put stress on your retirement that you don't need. You are taking on lots of risk here. I would sell all but maybe one of the properties and let it cash flow. This will free up cash to start investing for retirement or future business too. Buy more rental in the future with cash only. You have plenty of income to do it this way, and you will be setting yourself up for a great future. At this point you can continue to pile funds into any/all your investments, with the goal of using the funds to start a business or to live on. If all your investments are tied up in real estate, you wont have anything to draw on if needed for a business opportunity. You need to weigh this out in your goal and planning. What should we do to prepare for a comfortable retirement and safety You cannot plan for or see all scenarios. However, good planning will give you more options and more choices. Investing driven by fear will set you up for failure. Spend less than you make. Be patient. Be generous. Cheers!",
"title": ""
},
{
"docid": "0f4799662e6609d40e0197bf2d5d1714",
"text": "Other than the two answers (both of which recommend waiting until marriage to actually combine finances, and which I agree with), there's the general question: how does a couple choose to manage finances? In our marriage, it's me. I'm more numbers-minded than my spousal-unit. I'm also more a sticker for time. I work and spousal-unit does not. We had some good friends -- upon marriage, spouse1 felt like he should take on the role. He went on a several-week trip (leaving spouse2 at home), and upon returning home asked spouse2 about the late fees. Spouse2 was appalled. Spouse2 ended up keeping the job of managing household finances. There's enough pieces to the puzzle that it can be divided any way you choose -- any way that works for you and your spouse/virtual-spouse. One other point: talk about how to manage your money, before you marry. Dave Ramsey recommends a strict monthly budget. I like listening to Dave Ramsey, but we've never had a budget. Instead, we agreed during marriage counseling two things:",
"title": ""
},
{
"docid": "9021ee044ffe953dad127d98ff65fa9e",
"text": "\"I don't think it would be counted as income, and if it's a short-term loan it doesn't really matter as the notional interest on the loan would be negligible. But you can avoid any possible complications by just having two accounts in the name of the person trying to get the account benefits, particularly if you're willing to just provide the \"\"seed\"\" money to get the loop started.\"",
"title": ""
},
{
"docid": "e1803daa7f5119c4709425e1429bd533",
"text": "\"My wife and I use to file \"\"married file separately\"\". I consulted a tax accountant and it does not matter who's name the accounts are under. The interest from the accounts can be counted as income on either person's tax return regardless of whose name is on the account. You can even split the interest income between the returns if that is advantageous. This is true for any income earned between the two of you. It use to be a big hassle to file this way even using the software programs. The programs would not attempt to allocate the income between the tax returns in order to minimize my tax liability. I had to do this manually. Most of the loopholes have been closed and the last couple of years I've filed \"\"married filed jointly\"\". I'm not sure how your wife's citizenship status affects any of this.\"",
"title": ""
},
{
"docid": "165838891ff5bef8d05ebdadfb44004b",
"text": "has very little idea about how much we earn and how high up we are in terms of income percentile. The first part of this sentence is tough to understand. My daughter was 12 when she told us what she estimated our income to be. She looked up the price of our home, worked backwards using conservative numbers, and was pretty close. Here you are saying your wife doesn't know the family income? Percentiles are meaningless. There are $60k couples who donate 10%, and there are $300k earners who are not charitable at all, and don't even save. It's time to have a general budget conversation with her. Perhaps starting with the rate of savings, and show how there's room for charity. If your charitable desire is based on a religious compulsion, share that as well, the 10% is what many feel commanded to share by their maker, and feel that it comes off the top regardless of their income level. In reality, this issue is not financial, it's about open dialog between 2 people. Money is difficult for some to discuss, but you need to start somewhere.",
"title": ""
},
{
"docid": "4a914636434e452ac8d108f7450b5140",
"text": "I can't quite follow your question, so I'm proceeding under the following assumptions: - You paid £31,000 - Your partner paid £4,242 - You have at least one mortgage, which you both pay equally. If the relationship terminates, sell the property. You are reimbursed £31,000 and your partner is reimbursed £4,242. Any remaining proceeds from the sale are split 50-50. If the result is a net loss (i.e. you are underwater on your mortgage), you split the debt 50-50. If you are not both paying the same toward the mortgage, I'd split the profit or loss according to how much you each pay toward the mortgage. Of course, this is not the only possible way you can split things up. You can use pretty much any way you both think is fair. For example, maybe you should get more benefits from a profit because you contributed more up-front. The key thing, though, is that you must both agree in writing, in advance. This is reasonable; this is what I did, for example. Note that if the relationship ends, one or the other of you may wish to keep the property. I'd suggest including a clause in your written agreement simply disallowing this; specify criteria to force a sale. But I know lots of people are happy to allow this. They treat that situation as a forced sale from both people to one person. For example, if your partner chooses to stay in the house, he or she must buy the property from you at prevailing market rates.",
"title": ""
},
{
"docid": "305299bd0445f70b928a386809b620c3",
"text": "\"(Yes, I know this is a seven year old question.) Does this only apply to debts that were taken on during marriage Yes or to all debts of both partners? No. The important thing to remember is that it's both debts and assets acquired during the marriage which are shared. This comes from the reality that men in the olden times were the ones in business, accumulating wealth, etc while the woman \"\"made the home\"\". The working assumption was that the woman who made the home was an equal partner with the man, since he benefited from a good home, and she benefited from his income. The fact that pre-marriage debts and assets were not community property also protected the woman, because she was able to then take back her dowry and use that to support herself. (N.B. - I live in a CP state.)\"",
"title": ""
},
{
"docid": "7af6de2300ef6bb4adbd025f53c0dfad",
"text": "\"Do you have other income that you are not considering? Interest and dividends would be an example, but there are all sorts of options. Also with your witholding is it set up such that your employers have any idea of your tax bracket ultimately based on your combined incomes? Usually what they do is take out money assuming you will be in the tax bracket of any given paycheck spread out over the course of a year. For example, for federal I had an option to select (in an online form that fills out my W4 for me) \"\"married: withold at higher single rate\"\" and did to try and cover this fact. Eventually I may end up having to calculate my own witholding to fix a too-low problem like yours.\"",
"title": ""
},
{
"docid": "5c7179b41c1d08a2b507c2bc0e6835a8",
"text": "\"If my wife and I tried this, we'd call it grounds for divorce. However, I think most long term couples actually do this, and it is just a budget. It is common practice for two spouses to deposit money into a single checking account. All of the household expenses are then paid from that single account. Same as you describe: if I spend money from the joint checking that is less money available to my wife. Based on your dollar amount, I'd have to say great work on thinking about saving early on in life. I think though, if you are actually starting out, getting into the habit of saving a \"\"dime of every dollar\"\" would be more beneficial. At some point your income will increase, and when it does so should your savings. By \"\"paying yourself first\"\" your savings will keep pace with your spending and you will be a happier person when you income starts to fall again.\"",
"title": ""
},
{
"docid": "9d39c6456e750dfb85f62ca446ac5b05",
"text": "\"If you have a huge disparity in incomes, \"\"maybe\"\". If you make roughly in the same ballpark, **Noooooo!** The ability to file separately and have one partner (the higher earner) itemize and claim all the home-related deductions while the other takes the standard deduction is one of the greatest (middle-class) loopholes in modern tax law. When married, even if filing separately, you have to both itemize or both take the standard deduction. You just need to take care that the person itemizing has provably contributed *at least* the amount they claim toward the house. So have one of you write the checks for the mortgage and property tax, and the other pay for everything else, and it'll probably come out roughly even over time. Going back to my first line, the US tax code seems to be designed around the stereotypical Donna Reed 1950s household, with a single earner. The closer you are to equal, the bigger the marriage tax **penalty** gets.\"",
"title": ""
},
{
"docid": "588e4dad1483f699baa40a4ac1131474",
"text": "It depends on where you live and how you can think out of the box on earning little extra income on the side. If you live in North America and based on the needs in your city, you can try out these ideas. Here is what one of my friend has done, The family has two kids and the wife started a home day care as she was already taking care of two kids anyways. Of course, she had to be qualified and she took the relevant child care classes and got certified, which took six months. And she is managing 4 kids in addition to her two kids bringing in at least 2000$ per month in addition. And my friend started a part time property management business on the side, with one client. For example there is always work on real estate whether its going up or going down. You have to be involved locally to increase your knowledge on real estate. You can be a property manager for local real estate investors. If its going down, you can get involved in helping people sell and buy real estate. Be a connector, bring the buyers and sellers together.",
"title": ""
},
{
"docid": "5d5e4e1d4f9c4dd063b662a9cce9501c",
"text": "\"If you ask ten different couples what they do, depending on a variety of factors, you'll get anywhere between two and ten different answers. One personal finance blogger that I read swears by the fact that he and his wife keep their finances totally separate. His wife has her own retirement account, he has his. His wife has her own checking and savings, he has his. They pay fifty-fifty for expenses and each buy their own \"\"toys\"\" from their own accounts. He views this as valuable for allowing them to have their own personal finance styles, as his wife is a very conservative investor and he is more generous. My spouse and I have mostly combined finances, and view all of our money as joint (even though there are a smattering of accounts between us with just one name on them as holdovers from before we were married). Almost all of our purchasing decisions except regular groceries are joint. I couldn't imagine it any other way. It leaves us both comfortable with our financial situation and forces us to be on the same page with regards to our lifestyle decisions. There's also the ideological view that since we believe marriage united us, we try to live that out. That's just us, though. We don't want to force it on others. Some couples find a balance between joint accounts and his and her fun money stashes. You might find yet another arrangement that works for you, such as the one you already described. What's going to be important is that you realize that all couples have the same six basic arguments, finances being one of them. The trick is in how you disagree. If you can respectfully and thoughtfully discuss your finances together to find the way that has the least friction for you, you're doing well. Some amount of friction is not just normal, it's almost guaranteed.\"",
"title": ""
},
{
"docid": "4a478fa0ea54f8f2d9ad677ee7525e5a",
"text": "hmmm. I think it's because in both cases, you must pay for it up front, before the positions are closed out. You own nothing except the right to buy the stock re: the call, and the obligation to buy the stock re: the short. You buy a call, but must borrow the stock, for which you must put some margin collateral and there is a cost to borrow. You pay for that, of course. I wouldn't call it lending though.",
"title": ""
},
{
"docid": "022e5bdbc1a6959fb1bafc31923db57d",
"text": "If they're making 100k a month in sales, why do they need your 92k so badly that they're willing to pay 200% annual interest? Going to a loanshark or the mob would be cheaper, to say nothing of all the legal options available to them. Or they could just wait three weeks for revenue to cover it. Nothing about this adds up to anything other than a scam. Your friend might be well-meaning, but someone along the line is looking for a sucker.",
"title": ""
}
] |
fiqa
|
00e8f7045c9c154d05b71b74f0a93cd4
|
What are some time tested passive income streams?
|
[
{
"docid": "85b1a08cb97369960f092c4dede5bb8d",
"text": "Dividends are a form of passive income.",
"title": ""
},
{
"docid": "dd5273d1dcd1d4b6c16e0917fb27801b",
"text": "Royalties. (Once you start getting them.)",
"title": ""
},
{
"docid": "186949c06eb488b98bb884fff413d4d4",
"text": "Renting a house out using a management company is mostly passive income. Earning affiliate income from companies that pay on a recurring basis is closer to passive income.",
"title": ""
},
{
"docid": "a7b91dc1c07a589d4591d9519b9d8c74",
"text": "Last year was a great opportunity for dividend stocks and MLPs. I have a few which are earning 6-9% of my investment basis cost. Municipal bonds are a good value now. If you have the connections, passive investments in convenience franchises or other commercial property are a good income stream. A Dunkin Donuts used to be an amazing money printing machine.",
"title": ""
},
{
"docid": "32aaf840826396ad416a1abd2792e59a",
"text": "Any kind of savings account is a passive income stream.",
"title": ""
},
{
"docid": "32f65fc97fd635d2e2758c4e3e51da9d",
"text": "I owned and managed a few residential properties. At one time the net cash flow was on the order of $1000 per month. But it was work. Lots of work. I was managing about 7 units. This does not count the gains in capital appreciation which were significant. Using a management company would have put the cash flow at 0 or in the negative and would have lowered the quality of management IMO. Nothing comes for free...",
"title": ""
},
{
"docid": "9cac2f8096f2ec2234d0b587551f30b9",
"text": "You could buy debt/notes or other instruments that pay out periodically. Some examples are If there is an income stream you can discount the present value and then buy it/own the rights to income stream. Typically you pay a discounted price for the face value and then receive the income stream over time.",
"title": ""
},
{
"docid": "38b1c484d23f6bd6605e7aa55bb6899f",
"text": "Interest payments You can make loans to people and collect interest.",
"title": ""
},
{
"docid": "0232795273db35aec6b64da0b50f514b",
"text": "There are lots of different ways to generate passive income. What is Passive Income? Basically it is income you receive without having to consistently work for it i.e. paid to do your day job or get paid by the hour; instead you do the work once and then receive ongoing payments like a recording artist getting paid royalties or a book author etc... Online Passive income Also some online business models can be great ways to generate passive income, you set up an automated system online to drive traffic and sell products either as the merchant or an affiliate and get paid regularly without having to do any more work... You just need to use SEO or PPC or media buys or online advertising to generate the automated traffic to your website which will have special landing pages and sales funnels that do the conversion and selling for you. If you are an affiliate you don't even have to handle any products, packaging, delivering etc... And if it’s a digital product like software or information products they can be sent straight to the customers automatically online then you can set up a system that can generate true passive income. Time consuming or expensive! However the above mentioned methods of generating passive income tend to require a lot of work or special skills, talent or knowledge and can be expensive or time consuming to set up. Preferred Method Therefore for many people the preferred passive income method is fully-managed hands free property investing or other types of investing for that matter. But for people who want full ownership of the income generating asset then property investing is the best as they can sell and have control over the capital invested, whereas investing in a business for example will have a lot of other variables to consider, like the business sector, the market factors, the management team and even down to individual employee performance. So in my opinion, if you have the money to invest then fully-managed hands free buy-to-let property investing is one of the best types of passive income available to us today. Some of the most popular income generating property assets today in the UK include • Student property • Care Homes • Residential buy-to-let",
"title": ""
}
] |
[
{
"docid": "990d7cea7a0d872a8b50cca148e7d234",
"text": "\"This is a common and good game-plan to learn valuable life skills and build a supplemental income. Eventually, it could become a primary income, and your strategic risk is overall relatively low. If you are diligent and patient, you are likely to succeed, but at a rate that is so slow that the primary beneficiaries of your efforts may be your children and their children. Which is good! It is a bad gameplan for building an \"\"empire.\"\" Why? Because you are not the first person in your town with this idea. Probably not even the first person on the block. And among those people, some will be willing to take far more extravagant risks. Some will be better capitalized to begin with. Some will have institutional history with the market along with all the access and insider information that comes with it. As far as we know, you have none of that. Any market condition that yields a profit for you in this space, will yield a larger one for them. In a downturn, they will be able to absorb larger losses than you. So, if your approach is to build an empire, you need to take on a considerably riskier approach, engage with the market in a more direct and time-consuming way, and be prepared to deal with the consequences if those risks play out the wrong way.\"",
"title": ""
},
{
"docid": "c0e0b365c44284f072a16b31557e837f",
"text": "I thought it was such a useful suggestion that I went ahead and created them. I'm sure you're not the only one who could derive some benefit from them, I know I will. http://www.investy.com/tools When I have some additional time, I will add the option for grace-periods, but for now I wanted to get them up so you could use the calculations as-is from the article. Enjoy. (Disclosure: I'm the founder of the site they are hosted on and I wrote the code for the calculators)",
"title": ""
},
{
"docid": "9f5cef0c013e144b150e7ae77cdb5141",
"text": "Looks like what you are considering is buying an existing book of clients from a retiring planner. These are hit and miss as some have no connection, but other times that can be quite lucrative. If you want to know more PM me and we can chat about it more.",
"title": ""
},
{
"docid": "4e12ed80eefb5bca7e5891e488a49432",
"text": "This is a very interesting question. I'm going to attempt to answer it. Use debt to leverage investment. Historically, stock markets have returned 10% p.a., so today when interest rates are very low, and depending on which country you live in, you could theoretically borrow money at a very low interest rate and earn 10% p.a., pocketing the difference. This can be done through an ETF, mutual funds and other investment instruments. Make sure you have enough cash flow to cover the interest payments! Similar to the concept of acid ratio for companies, you should have slightly more than enough liquid funds to meet the monthly payments. Naturally, this strategy only works when interest rates are low. After that, you'll have to think of other ideas. However, IMO the Fed seems to be heading towards QE3 so we might be seeing a prolonged period of low interest rates, so borrowing seems like a sensible option now. Since the movements of interest rates are political in nature, monitoring this should be quite simple. It depends on you. Since interest rates are the opportunity cost of spending money, the lower the interest rates, the lower the opportunity costs of using money now and repaying it later. Interest rates are a market mechanism so that people who prefer to spend later can lend to people who prefer to spend now for the price of interest. *Disclaimer: Historically stocks have returned 10% p.a., but that doesn't mean this trend will continue indefinitely as we have seen fixed income outperform stocks in the recent past.",
"title": ""
},
{
"docid": "1328d512f1bbce05712bbb70484c3909",
"text": "The standard advice is to have 3-6 months worth of expenses saved up in a highly liquid savings or money market account. After you have that saved you could look to start investing. I would recommend reading the bogleheads investment wiki (https://www.bogleheads.org/wiki/Getting_started). Even if you aren't planning on following the bogle head's way of passive investing it will give you a lot of good info on options available to you to start investing.",
"title": ""
},
{
"docid": "738492868cfe3b53ce96b43f677db390",
"text": "Making a profit in trading is not a function of time, it's a function of information, speed, and consistency. Regardless of how much time you spend learning about trading, there is no guarantee that you will ever become profitable because you will always be competing against a counter-party who is either better- or more poorly-informed than you are. Since trading is a zero-sum game, someone is always a winner and someone else is always a loser. So you need to be either better informed than your counter-party, or you need to be as well informed as them but beat them to the punch. You also need to be able to be consistent, or else eventually you will get wiped out when the unexpected happens or you make a mistake. This is why resources such as full-time professional analysts, high-speed trading terminals/platforms, and sophisticated algorithms can provide significant advantages. Personally, I think that people with talent and those kinds of resources would take all my lunch money, so I don't trade and stick to passive investing. One funny story, I once knew a trader who was in the money on a particular trade and went out to have a drink to celebrate. The next day, she remembered that she had forgotten to exercise the options. Luckily, they had expired while in the money, and by rule had been exercised automatically as a result.",
"title": ""
},
{
"docid": "18dc11038b704c39f7953a3b7ce11b67",
"text": "I think the dividend fund may not be what youre looking for. You mentioned you want growth, not income. But I think of dividend stocks as income stocks, not growth. They pay a dividend because these are established companies that do not need to invest so much in capex anymore, so they return it to shareholders. In other words, they are past their growth phase. These are what you want to hold when you have a large nest egg, you are ready to retire, and just want to make a couple percent a year without having to worry as much about market fluctuations. The Russel ETF you mentioned and other small caps are I think what you are after. I recently made a post here about the difference between index funds and active funds. The difference is very small. That is, in any given year, many active ETFs will beat them, many wont. It depends entirely on the market conditions at the time. Under certain conditions the small caps will outperform the S&P, definitely. However, under other conditioned, such as global growth slowdown, they are typically the first to fall. Based on your comments, like how you mentioned you dont want to sell, I think index funds should make up a decent size portion of your portfolio. They are the safest bet, long term, for someone who just wants to buy and hold. Thats not to say they need be all. Do a mixture. Diversification is good. As time goes on dont be afraid to add bond ETFs either. This will protect you during downturns as bond prices typically rise under slow growth conditions (and sometimes even under normal conditions, like last year when TLT beat the S&P...)",
"title": ""
},
{
"docid": "82cce7e98f05e442a949f64095925756",
"text": "\"I compared investing in real estate a few years ago to investing in stocks that paid double digit dividends (hard to find, however, managing and maintaining real estate is just as hard). After discussing with many in the real estate world, I counted the average and learned that most averaged about 6 - 8% on real estate after taxes. This does not include anything else like Dilip mentions (maintenance, insurance, etc). For those who want to avoid that route, you can buy some companies that invest in real estate or REIT funds like Dilip mentions. However, they are also susceptible to the problems mentioned above this. In terms of other investment opportunities like stocks or funds, think about businesses that will always be around and will always be needed. We won't outgrow our need for real estate, but we won't outgrow our need for food or tangible goods either. You can diversify into these companies along with real estate or buy a general mutual fund. Finally, one of your best investments is your career field - software. Do some extra work on the side and see if you can get an adviser position at a start-up (it's actually not that hard and it will help you build your skill set) or create a site which generates passive revenue (again, not that hard). One software engineer told me a few years ago that the stock market is a relic of the past and the new passive income would be generated by businesses that had tools which did all the work through automation (think of a smart phone application that you build once, yet continues to generate revenue). This was right before the crash, and after it, everyone talked about another \"\"lost decade.\"\" While it does require extra work initially, like all things software related, you'll be discovering tools in programming that you can use again and again in other applications - meaning your first one may be the most difficult. All it takes in this case is one really good idea ...\"",
"title": ""
},
{
"docid": "a0df265d0fc10366cd384ff52dbfec00",
"text": "Possible alternative: In my case, the part-time locksmithing is a small enough portion of my I come that I just submit it as hobby income, rather than trying to track it as a separate entity.",
"title": ""
},
{
"docid": "21e155150e3ba5ad7e9cb5751b147ff3",
"text": "As a general rule of thumb, age and resiliency of your profession (in terms of high and stable wages) in most cases imply that you have the ABILITY to accept higher than average level of risk by investing in stocks (rather than bonds) in search for capital appreciation (rather than income), simply because you have more time to offset any losses, should you have any, and make capital gains. Dividend yield is mostly sough after by people at or near retirement who need to have some cash inflows but cannot accept high risk of equity investments (hence low risk dividend stocks and greater allocation to bonds). Since you accept passive investment approach, you could consider investing in Target Date Funds (TDFs), which re-allocate assets (roughly, from higher- to lower-risk) gradually as the fund approaches it target, which for you could be your retirement age, or even beyond. Also, why are you so hesitant to consider taking professional advice from a financial adviser?",
"title": ""
},
{
"docid": "7c626a81745be5fed0815f903726cceb",
"text": "As mentioned in the other answer, you can't invest all of your money in one slightly risky place, and to receive a significant return on your investment, you must take on a reasonable amount of risk, and must manage that risk by diversifying your portfolio of investments. Unfortunately, answers to this question will be somewhat opinion and experience-based. I have two suggestions, however both involve risk, which you will likely experience in any situation. Peer to Peer Lending In my own situation, I've placed a large sum of money into peer-to-peer lending sites, such as LendingClub. LendingClub specifically advertises that 98% of its user base that invests in 100 notes or more of relatively equal size receive positive returns, and I'm sure you'll see similar statements in other similarly established vendors in this area. Historical averages in this industry can be between 5-7%, you may be able to perform above or below this average. The returns on peer to peer lending investments are paid out fairly frequently, as each loan you invest in on the site pays back into your account every time the recipient of the loan makes a payment. If you invest in small amounts / fractions of several hundred loans, you're receiving several small payments throughout the month on various dates. You can withdraw any money you have received back that hasn't been invested, or money you have in the account that hasn't been invested, at any time for personal spending. However, this involves various risks, which have to be considered (Such as someone you've loaned money to on the site defaulting). Rental Property / Property itself I'm also considering purchasing a very cheap home, and renting it out to tenants for passive income. This is something I would consider a possibility for you. On this front, you have the savings to do the same. It would be possible for you to afford the 20% downpayment on a very low cost home (Say, $100,000 or less up to $200,000 depending on your area), but you'd need to be able to pay for the monthly mortgage payment until you had a tenant, and would need to be able to afford any on-going maintenance, however ideally you'd factor that into the amount you charged tenants. You could very likely get a mortgage for a place, and have a tenant that pays you rent that exceeds the amount you pay for the mortgage and any maintenance costs, earning you a profit and therefore passive income. However, rental properties involve risks in that you might have trouble finding tenants or keeping tenants or keeping the property in good shape, and it's possible the property value could decrease. One could also generalize that property is a somewhat 'safe' investment, in that property values tend to increase over time, and while you may not significantly over-run inflation's increase, you may be able to get more value out of the property by renting it out in the mean time. Additional Note on Credit You mention you have a credit card payment that you're making, to build credit. I'd like to place here, for your reference, that you do not need to carry a balance to build credit. Having active accounts and ensuring you don't miss payments builds your history. To be more specific, your history is based off of many different aspects, such as: I'm sure I missed a couple of things on this front, you should be able to find this information with some research. Wanted to make sure you weren't carrying a balance simply due to the common myth that you must do so to build credit. Summary The items mentioned above are suggestions, but whatever you choose to invest in, you should carefully spread out / diversify your portfolio across a variety of different areas. It would not be advisable to stick to just one investment method (Say, either of the two above) and not also invest in stocks / bonds or other types of investments as well. You can certainly decide what percentage of your portfolio you want to invest in different areas (for instance X% of assets in Stocks/bonds, Y% in real-estate, etc), but it does make the most sense to not have all of your eggs in one basket.",
"title": ""
},
{
"docid": "6e74fea104e655bf02e315036375f80b",
"text": "\"Income generated from online sales is not considered \"\"passive income\"\", so you need to be authorized to work in the U.S. Those without work authorization can acquire passive income (through investments, lending, competition/contest earnings, etc.) In order to sell products on eBay (the description you've given leads me to believe that this is operated as a business), you need to be authorized to work in the U.S., and register a business. See:\"",
"title": ""
},
{
"docid": "4ea38d521dc9ddf679ca1260bc44b9d4",
"text": "You mean sites like prosper.com? I see that they are growing but is this really substainable when the novely wears off? Also I find the low volatility claim interesting since I thought low vol portfolios would be a hard sell. How have you experienced this?",
"title": ""
},
{
"docid": "e66746619ffcf4577934749040602793",
"text": "If you have no paycheck, I presume you are doing your own business. That is included. Also, that is only limited to business, Studies, personal growth and other things are different again. Oh, and if you can predict with high probability a high profit event in 5 years time, considering today's climate, I'm V.impressed. I'm relying on having as many basis as possible covered. It's a bit like a lottery (Though the odds are a lot better), the more tickets you have, the better your chances of hitting the big one.",
"title": ""
},
{
"docid": "e0da1c350ee0704b3a89e3d114cd5e5e",
"text": "I have been doing e-filing and I get the return in my account in 10 to 14 days over the past couple of years. It is worth the e-filing cost to get my money back a month faster.",
"title": ""
}
] |
fiqa
|
295bbbf6abfd8498eca6983f12fb2da0
|
How secure is my 403(b)? Can its assets be “raided”?
|
[
{
"docid": "e879f38fa58808c3ac90ce38ebcf6904",
"text": "The simple answer is that with the defined contribution plan: 401k, 403b, 457 and the US government TSP; the employer doesn't hold on to the funds. When they take your money from your paycheck there is a period of a few days or at the most a few weeks before they must turn the money over to the trustee running the program. If they are matching your contributions they must do the same with those funds. The risk is in that window of time between payday and deposit day. If the business folds, or enters bankruptcy protection, or decides to slash what they will contribute to the match in the future anything already sent to the trustee is out of their clutches. In the other hand a defined a benefit plan or pension plan: where you get X percent of your highest salary times the number of years you worked; is not protected from the company. These plans work by the company putting aide money each year based on a formula. The formula is complex because they know from history some employees never stick around long enough to get the pension. The money in a pension is invested outside the company but it is not out of the control of the company. Generally with a well run company they invest wisely but safely because if the value goes up due to interest or a rising stock market, the next year their required contribution is smaller. The formula also expects that they will not go out of business. The problems occur when they don't have the money to afford to make the contribution. Even governments have looked for relief in this area by skipping a deposit or delaying a deposit. There is some good news in this area because a pension program has to pay an annual insurance premium to The Pension Benefit Guaranty Corporation a quai-government agency of the federal government. If the business folds the PBGC steps in to protect the rights of the employees. They don't get all they were promised, but they do get a lot of it. None of those pension issues relate to the 401K like program. Once the money is transferred to the trustee the company has no control over the funds.",
"title": ""
},
{
"docid": "1bed398557ab5aed028262e5a1c0a590",
"text": "\"I assume you get your information from somewhere where they don't report the truth. I'm sorry if mentioning Fox News offended you, it was not my intention. But the way the question is phrased suggests that you know nothing about what \"\"pension\"\" means. So let me explain. 403(b) is not a pension account. Pension account is generally a \"\"defined benefit\"\" account, whereas 403(b)/401(k) and similar - are \"\"defined contribution\"\" accounts. The difference is significant: for pensions, the employer committed on certain amount to be paid out at retirement (the defined benefit) regardless of how much the employee/employer contributed or how well the account performed. This makes such an arrangement a liability. An obligation to pay. In other words - debt. Defined contribution on the other hand doesn't create such a liability, since the employer is only committed for the match, which is paid currently. What happens to your account after the employer deposited the defined contribution (the match) - is your problem. You manage it to the best of your abilities and whatever you have there when you retire - is yours, the employer doesn't owe you anything. Here's the problem with pensions: many employers promised the defined benefit, but didn't do anything about actually having money to pay. As mentioned, such a pension is essentially a debt, and the retiree is a debt holder. What happens when employer cannot pay its debts? Employer goes bankrupt. And when bankrupt - debtors are paid only part of what they were owed, and that includes the retirees. There's no-one raiding pensions. No-one goes to the bank with a gun and demands \"\"give me the pension money\"\". What happened was that the employers just didn't fund the pensions. They promised to pay - but didn't set aside any money, or set aside not enough. Instead, they spent it on something else, and when the time came that the retirees wanted their money - they didn't have any. That's what happened in Detroit, and in many other places. 403(b) is in fact the solution to this problem. Instead of defined benefit - the employers commit on defined contribution, and after that - it's your problem, not theirs, to have enough when you're retired.\"",
"title": ""
}
] |
[
{
"docid": "8eabb4ee0cac8a619ce1562d3648991d",
"text": "\"Your 401K (and IRA) is a legally distinct entity from yourself. In fact, it is a \"\"trust,\"\" and your Administrator is a \"\"trustee,\"\" while you are both creator and benefactor. This fact, and the 10% early withdrawal penalty, makes it immune from most judgments. The IRS can \"\"levy\"\" your 401K or IRA for back taxes, but must waive the 10% penalty (under the 1997 Tax Reform law). That gives them the power to do what most others can't. A \"\"tricky\"\" banker may persuade you to take money out of your 401K to pay the bank. If you do, s/he has won. But s/he can't go after your 401k.\"",
"title": ""
},
{
"docid": "1da2dcdf3961aa33415eaac5f39da5ee",
"text": "\"Hah! Edit: to elaborate, markets are closed. Unless your firm made a bunch of moves before EOD Friday, there's very little they can do to avoid the bloodshed (if there is any after the vote on Sunday) come Monday morning. Not to mention most 401k funds have contractual limits placed on them in terms of how much they can do in terms of buy/sell actions in a given window of time - usually that's a good protection, however in \"\"outlier\"\" occurrences it's a really, really bad thing. Now, if you're in it for the long haul (in your 20s-early 30s) it's no big deal (yes, you'd be better off in a panic if you divested, but short-term drops are somewhat built into the long-term model). If you're about to retire I'd be really, really nervous.\"",
"title": ""
},
{
"docid": "2f3f20391a674351bf4cf88b48934415",
"text": "It's odd to me that they manage their own pensions closely enough to divest of anything and that they'd have been invested in private prisons enough to have anything to get rid of. I'm also not sure that I'd feel better as a NYC pensioner knowing that my retirement fund is becoming politicized. In this case it's probably a good thing, but in the future who knows.",
"title": ""
},
{
"docid": "632a3b522f740db1e97e07b5c53b219a",
"text": "Everything here is yours and can be rolled into your new plan or IRA. You can generally move your 403(b) assets into your traditional IRA or into your new employer's plans, assuming your new employer's plan allowing incoming roll overs. You can probably roll your pension out as well. Actually, the right person to ask about this is the company with whom you have your IRA. The easiest and best way to get assets from one tax-sheltered account to another is by contacting the company you want to roll INTO and having them take care of everything for you.",
"title": ""
},
{
"docid": "72f8406a31741459ff9869a0c5d52123",
"text": "\"Does your job give you access to \"\"confidential information\"\", such that you can only buy or sell shares in the company during certain windows? Employees with access to company financial data, resource planning databases, or customer databases are often only allowed to trade in company securities (or derivatives thereof) during certain \"\"windows\"\" a few days after the company releases its quarterly earnings reports. Even those windows can be cancelled if a major event is about to be announced. These windows are designed to prevent the appearance of insider trading, which is a serious crime in the United States. Is there a minimum time that you would need to hold the stock, before you are allowed to sell it? Do you have confidence that the stock would retain most of its value, long enough that your profits are long-term capital gains instead of short-term capital gains? What happens to your stock if you lose your job, retire, or go to another company? Does your company's stock price seem to be inflated by any of these factors: If any of these nine warning flags are the case, I would think carefully before investing. If I had a basic emergency fund set aside and none of the nine warning flags are present, or if I had a solid emergency fund and the company seemed likely to continue to justify its stock price for several years, I would seriously consider taking full advantage of the stock purchase plan. I would not invest more money than I could afford to lose. At first, I would cash out my profits quickly (either as quickly as allowed, or as quickly as lets me minimize my capital gains taxes). I would reinvest in more shares, until I could afford to buy as many shares as the company would allow me to buy at the discount. In the long-run, I would avoid having more than one-third of my net worth in any single investment. (E.g., company stock, home equity, bonds in general, et cetera.)\"",
"title": ""
},
{
"docid": "905e1874e230a833a96dc43ac34cb6ff",
"text": "\"A well diversified retirement portfolio is going to have some component in cash or near-liquid investments. So I tend to put it all in one place knowing that I can draw on it (at least from the ROTH account) in the event of an emergency. Obviously, you don't want to do this very often, but hopefully emergencies don't happen often either. You also have to attenuate your idea of an emergency so that it doesn't mean \"\"I didn't get a bonus check this year and can't afford gifts for the kids as nice as last year!\"\"\"",
"title": ""
},
{
"docid": "671a7c03188d20ca748faab01b5e0b28",
"text": "Asset protection is broad subject. In your examples it is certainly possible to have accounts that exist undisclosed from a spouse and legally inaccessible by said spouse. In the US, balances in 401k retirement accounts are exempt from forfeitures in bankruptcy. The only trick to secret stashes is that it involves you having any wealth in the first place, that you don't need to access. It is more worth it, for most people, to use all of their access to wealth to get out of debt, earn claims to property, and save for retirement. This takes up all of their earnings, making hidden wealth of any significant portion to be an impractical pipe dream. But with trust laws, corporate laws, and marriage property laws being different in practically every jurisdiction, there is plenty of flexibility to construct the form of your secret wealth. Cryptocurrency makes it much easier, at the expense of net asset value volatility.",
"title": ""
},
{
"docid": "28ffc0062a3460bb1ff52241820a905e",
"text": "For such a small amount, I really don't think it's worth the time and effort to withdraw it. Why not roll it over into a traditional IRA or a new 401k / 403b?",
"title": ""
},
{
"docid": "3c41ff28eba1d099e3365364925679be",
"text": "I said I knew about FEIE. So what happens when you want to open a private tax-deferred pension that is common in most industrialized countries? Now you have capital gains that are not taxed. Uh oh. Oh, you want to work for yourself, have fun paying US social security even though you may never actually receive any benefit and aren't providing anything to the US, oh and that income not being counted in the FEIE. Oh you made a mistake on reporting your retirement account, the US government is now authorized to penalize you 40% of the balance of your retirement savings. That's great that you found an organization that says IRS won't use it for now, but who knows how long that will last. But things like retirement savings and working for yourself must only be for crazy rich people, right?",
"title": ""
},
{
"docid": "a2bf1c47d53d91b23541aff73656f0c7",
"text": "\"is it worth it? That is for you to judge. The risks are having it blowup in your face, and you having to pay a penalty, or go to jail. The issue is how you keep it secret, and who you keep it secret from. If you have money in a secret account and keep it hidden even though you: You are taking a big risk. If the knowledge of the contents of the secret stash would cause a judge or government agency to make a different decision, you could face penalties ranging from monetary to jail time. The government could also decide that they need to determine the source of the funds. They may want to know if the money was \"\"earned\"\" through illegal means. They will want to determine if the funds should haven taxed not just on the interest but if the original income tax was ever collected. If the amounts are large enough the taxing authority and police will have a lot of fun pulling apart your entire financial history. Oh and the lawyers you pay to keep you out of jail will also have their fun. why do some people do it? They are greedy; or paranoid; or they don't trust others; or they are criminals.\"",
"title": ""
},
{
"docid": "b57b3a32bfd52fec3ec9ac55da0dc76a",
"text": "Kudos to you on having money in a retirement account as early as after college. Many people don't start investing towards retirement until far to late and compound interest makes a major difference in those early years. Ideally, neither withdraw nor borrow from these accounts. Withdrawing from your 403b will incur a 10% penalty unless you are over the minimum age on top of the normal tax on that income. With a 401K loan you're putting yourself at risk if you run into a situation where you can't pay the loan back of incurring the same penalties as an early withdrawal. This article covers the concerns well. In general, you want to view your retirement money as untouchable until the distributions need to start coming in retirement. It's your future in there. Of course, this doesn't help the short term cash need. Do you have money in an emergency fund somewhere? Could a relative loan you money? Can you move to a less expensive place in advance and squirrel away some of what would have been your rent cash? Can you cut back to bare necessities and do the same? Do you have some nice stuff sitting around that you could sell to make up that needed cash? Will your current employer pay out unused vacation or are you getting any severance from this situation? Will you qualify for unemployment? I other words, think about what you would do to get the money if your retirement accounts weren't there. Then do that - as long as it's legal and doesn't involve running up debt on high interest lines of credit - instead of borrowing against your future.",
"title": ""
},
{
"docid": "c22d700fbd117eef17a7c1ab81b51933",
"text": "There are API libraries available to various banks in various programming languages. For example, in Perl there are many libraries in the Finance::Bank:: namespace. Some of these use screen-scraping libraries and talk to the GUI underneath, so they are vulnerable to any changes the bank makes to their interface, but some of the better banks do seem to provide back-end interfaces, which can then be used directly. In either case, you should still be sure that the transactions are secure. Some bank sites have appallingly bad security. :( A good place to start is to call your bank and ask if they offer any programming APIs for accessing their back end.",
"title": ""
},
{
"docid": "04bf3102076b8f40d2cadb5470734f44",
"text": "The biggest thing for me still is how they knew 2 months prior to publicly releasing the information that they had been massively breached. And what did they do? Well, they cashed out their stocks and decided to wait a whole 2 months. I will be surprised if they get fined or even jail time though. Too big to imprison.",
"title": ""
},
{
"docid": "6032cebf2e997f9a0e8ab8ce5a0903f4",
"text": "It's an infosec rule at my 200 person software company that really doesn't have much of a security risk (i.e. no one would gain much by getting into our records). If it wasn't a rule at equifax, at least on paper, I'll eat my hat or a dictionary or something. To be clear, I'm not claiming I know this, I'm just basing it on experience working in smaller tech companies. And let's put it this way... the failings of big companies are very rarely a *lack* of rules and bureaucracy.",
"title": ""
},
{
"docid": "099e15df86c88e40eec0f9aaaa072526",
"text": "\"403b plans are used by school districts, colleges and universities, nonprofit hospitals, charitable foundations and the like for their employees while 401k plans are used by most everybody else. I would suspect that a school district etc can use a 401k plan instead of a 403b plan if it chooses to do so, but the reverse direction is most likely forbidden: a (for-profit) company cannot use a 403b plan. One difference between a 403b plan and a 401k plan is that the employer can choose to offer, and the employee can choose to purchase, stock in the company inside the 401k plan. This option obviously is not available to charities etc. which don't issue stock. Your comment that the 403b plan invests solely in (variable) annuities suggests that the plan administrator is an insurance company and that the employer is moving to more \"\"modern\"\" version that allows investments in mutual funds and the like. Forty years ago, my 403b plan was like that; the only investment choice was an annuity, but some time in the 1980s, the investment choices were broadened to include mutual funds (possibly because the 1986 Tax Reform Act changed the rules governing 403b plans). So, are you sure that your employer is changing from a 403b plan to a 401k plan, or is it just a change of 403b plan administrator from the insurance company to another administrator who offers investment choices other than an annuity? Note, of course, that insurance companies have changed their options too. For example, TIAA (the Teachers' Insurance and Annuity Association) which was the 403b plan administrator for many schools and colleges became TIAA/CREF (College Retirement Equities Fund) where the CREF mutual funds actually were pretty good investments.\"",
"title": ""
}
] |
fiqa
|
178001ed8e888532a1aded6a69e84e08
|
How is an ETF's NAV determined?
|
[
{
"docid": "5acb6d88c6363d318d1539663550de7f",
"text": "An ETF manager will only allow certain financial organisations to create and redeem ETF shares. These are called Authorised Participants (APs). The APs have the resources to bundled up packages of shares that they already own and hold in order to match the ETFs requirements. In the case of the EDEN ETF, this portfolio is the MSCI Denmark Index. Only APs transact business directly with the ETF manager. When ETF shares need to be created, the AP will bundle up the portfolio of shares and deliver them to the ETF manager. In return, the ETF manager will deliver to the AP the corresponding number of shares in the ETF. Note that no cash changes hands here. (These ETF shares are now available for trading in the market via the AP. Note that investors do not transact business directly with the ETF manager.) Similarly, when ETF shares need to be redeemed, the AP will deliver the ETF shares to the ETF manager. In return, the ETF manager will deliver to the AP the corresponding portfolio of shares. Again, no cash changes hands here. Normally, with an established and liquid ETF, investors like you and me will transact small purchases and sales of ETF shares with other small investors in the market. In the event that an AP needs to transact business with an investor, they will do so by either buying or selling the ETF shares. In the event that they have insufficient ETF shares to meet demand, they will bundle up a portfolio deliver them to the ETF provider in return for ETF shares, thus enabling them to meet demand. In the event that a lot of investors are selling and the AP ends up holding an excessive amount of ETF shares, they will deliver unwanted shares to the ETF manager in exchange for a portfolio of the underlying shares. According to this scheme, large liquidations of ETF holdings should not effect the share prices of the underlying portfolio. This is because the underlying shares are not sold in the market, rather they are simply returned to the AP in exchange for the ETF shares (Recall that no cash is changing hands in this type of transaction). The corresponding trail of dividends and distributions to ETF share holders follows the same scheme.",
"title": ""
}
] |
[
{
"docid": "6db8ff167a2027d4fa6c4eb9c132fc41",
"text": "\"I think the key concept here is future value. The NAV is essentially a book-keeping exercise- you add up all the assets and remove all the liabilities. For a public company this is spelled out in the balance sheet, and is generally listed at the bottom. I pulled a recent one from Cisco Systems (because I used to work there and know the numbers ;-) and you can see it here: roughly $56 billion... https://finance.yahoo.com/q/bs?s=CSCO+Balance+Sheet&annual Another way to think about it: In theory (and we know about this, right?) the NAV is what you would get if you liquidated the company instantaneously. A definition I like to use for market cap is \"\"the current assets, plus the perceived present value of all future earnings for the company\"\"... so let's dissect that a little. The term \"\"present value\"\" is really important, because a million dollars today is worth more than a million dollars next year. A company expected to make a lot of money soon will be worth more (i.e. a higher market cap) than a company expected to make the same amount of money, but later. The \"\"all future earnings\"\" part is exactly what it sounds like. So again, following our cisco example, the current market cap is ~142 billion, which means that \"\"the market\"\" thinks they will earn about $85 billion over the life of the company (in present day dollars).\"",
"title": ""
},
{
"docid": "86187aff29a5958bb1351d248820ce19",
"text": "NO. All the leveraged ETFs are designed to multiply the performance of the underlying asset FOR THAT DAY, read the prospectus. Their price is adjusted at the end of the day to reflect what is called a NAV unit. Basically, they know that their price is subject to fluctuations due to supply and demand throughout the day - simply because they trade in a quote driven system. But the price is automatically corrected at the end of the day regardless. In practice though, all sorts of crazy things happen with leveraged ETFs that will simply make them more and more unfavorable to hold long term, the longer you look at it.",
"title": ""
},
{
"docid": "c1cfbd0fec76678e5f433988678292d4",
"text": "\"Assuming that the ETF is tracking an index, is there a reason for not looking at using details on the index? Typically the exact constituents of an index are proprietary, and companies will not publish them publicly without a license. S&P is the heavyweight in this area, and the exact details of the constituents at any one time are not listed anywhere. They do list the methodology, and announcements as to index changes, but not a full list of actual underlying constituents. Is there a easy way to automatically (ie. through an API or something, not through just reading a prospectus) get information about an ETF's underlying securities? I have looked for this information before, and based on my own searches, in a word: no. Index providers, and providers of APIs which provide index information, make money off of such services. The easiest way may be to navigate to each provider and download the CSV with the full list of holdings, if one exists. You can then drop this into your pipeline and write a program to pull the data from the CSV file. You could drop the entire CSV into Excel and use VBA to automagically pull the data into a usable format. For example, on the page for XIU.TO on the Blackrock site, after clicking the \"\"All Holdings\"\" tab there is a link to \"\"Download holdings\"\", which will provide you with a CSV. I am not sure if all providers look at this. Alternatively, you could write the ETF company themselves.\"",
"title": ""
},
{
"docid": "87ea66c4f598e96d55550813d79da5aa",
"text": "ETFs are legally required to publicly disclose their positions at every point in time. The reason for this is that for an ETF to issue shares of ETF they do NOT take cash in exchange but underlying securities - this is called a creation unit. So people need to know which shares to deliver to the fund to get a share of ETF in exchange. This is never done by retail clients, however, but by nominated market makers. Retail persons will normally trade shares only in the secondary market (ie. on a stock exchange), which does not require new shares of the ETF to be issued. However, they do not normally make it easy to find this information in a digestible way, and each ETF does it their own way. So typically services that offer this information are payable (as somebody has to scrape the information from a variety of sources or incentivise ETF providers to send it to them). If you have access to a Bloomberg terminal, this information is available from there. Otherwise there are paid for services that offer it. Searching on Google for ETF constituent data, I found two companies that offer it: See if you can find what you need there. Good luck. (etfdb even has a stock exposure tool freely available that allows you to see which ETFs have large exposure to a stock of your choosing, see here: http://etfdb.com/tool/etf-stock-exposure-tool/). Since this data is in a table format you could easily download it automatically using table parsing tools for your chosen programming language. PS: Don't bother with underlying index constituents, they are NOT required to be made public and index providers will normally charge handsomely for this so normally only institutional investors will have this information.",
"title": ""
},
{
"docid": "d1eee4f33571648fb95733b26e6f5736",
"text": "\"Here's an example that I'm trying to figure out. ETF firm has an agreement with GS for blocks of IBM. They have agreed on daily VWAP + 1% for execution price. Further, there is a commission schedule for 5 mils with GS. Come month end, ETF firm has to do a monthly rebalance. As such must buy 100,000 shares at IBM which goes for about $100 The commission for the trade is 100,000 * 5 mils = $500 in commission for that trade. I assume all of this is covered in the expense ratio. Such that if VWAP for the day was 100, then each share got executed to the ETF at 101 (VWAP+ %1) + .0005 (5 mils per share) = for a resultant 101.0005 cost basis The ETF then turns around and takes out (let's say) 1% as the expense ratio ($1.01005 per share) I think everything so far is pretty straight forward. Let me know if I missed something to this point. Now, this is what I'm trying to get my head around. ETF firm has a revenue sharing agreement as well as other \"\"relations\"\" with GS. One of which is 50% back on commissions as soft dollars. On top of that GS has a program where if you do a set amount of \"\"VWAP +\"\" trades you are eligible for their corporate well-being programs and other \"\"sponsorship\"\" of ETF's interests including helping to pay for marketing, rent, computers, etc. Does that happen? Do these disclosures exist somewhere?\"",
"title": ""
},
{
"docid": "5a9de080444de75c710b8e60527623c7",
"text": "\"I'm trying to understand how an ETF manager optimized it's own revenue. Here's an example that I'm trying to figure out. ETF firm has an agreement with GS for blocks of IBM. They have agreed on daily VWAP + 1% for execution price. Further, there is a commission schedule for 5 mils with GS. Come month end, ETF firm has to do a monthly rebalance. As such must buy 100,000 shares at IBM which goes for about $100 The commission for the trade is 100,000 * 5 mils = $500 in commission for that trade. I assume all of this is covered in the expense ratio. Such that if VWAP for the day was 100, then each share got executed to the ETF at 101 (VWAP+ %1) + .0005 (5 mils per share) = for a resultant 101.0005 cost basis The ETF then turns around and takes out (let's say) 1% as the expense ratio ($1.01005 per share) I think everything so far is pretty straight forward. Let me know if I missed something to this point. Now, this is what I'm trying to get my head around. ETF firm has a revenue sharing agreement as well as other \"\"relations\"\" with GS. One of which is 50% back on commissions as soft dollars. On top of that GS has a program where if you do a set amount of \"\"VWAP +\"\" trades you are eligible for their corporate well-being programs and other \"\"sponsorship\"\" of ETF's interests including helping to pay for marketing, rent, computers, etc. Does that happen? Do these disclosures exist somewhere?\"",
"title": ""
},
{
"docid": "f5f224b6fc38f1c0aa1c127dc0e0c132",
"text": "If I invest X each month, where does X go - an existing (low yield) bond, or a new bond (at the current interest rate)? This has to be viewed in a larger context. If the fund has outflows greater than or equal to inflows then chances are there isn't any buying being done with your money as that cash is going to those selling their shares in the fund. If though inflows are greater than outflows, there may be some new purchases or not. Don't forget that the new purchase could be an existing bond as the fund has to maintain the duration of being a short-term, intermediate-term or long-term bond fund though there are some exceptions like convertibles or high yield where duration isn't likely a factor. Does that just depend on what the fund manager is doing at the time (buying/selling)? No, it depends on the shares being created or redeemed as well as the manager's discretion. If I put Y into a fund, and leave it there for 50 years, where does Y go when all of the bonds at the time I made the purchase mature? You're missing that the fund may buy and sell bonds at various times as for example a long-term bond fund may not have issues nearing maturity because of what part of the yield curve it is to mimic. Does Y just get reinvested in new bonds at the interest rate at that time? Y gets mixed with the other money in the fund that may increase or decrease in value over time. This is part of the risk in a bond fund where NAV can fluctuate versus a money market mutual fund where the NAV is somewhat fixed at $1/share.",
"title": ""
},
{
"docid": "5ae06451df0a095d66d02dd73776f07a",
"text": "\"Trading on specific ECNs is the easy part - you simply specify the order routing in advance. You are not buying or selling the *exact* same shares. Shares are fungible - so if I simultaneously buy one share and sell another share, my net share position is zero - even if those trades don't settle until T+3. PS \"\"The Nasdaq\"\" isn't really an exchange in the way that the CME, or other order-driven markets are. It's really just a venue to bring market makers together. It's almost like \"\"the internet,\"\" as in, when you buy something from Amazon, you're not buying it from \"\"the internet,\"\" but it was the internet that made your transaction with Amazon possible.\"",
"title": ""
},
{
"docid": "c02e759961fc1045b5c3846be9ea8436",
"text": "The process would look something like: 1. Register your investment company with the SEC 2. Get the ETF approved by the SEC 3. Get a custodian bank (likely requires min assets of a few million) 4. Get listed on an exchange like NYSEARCA by meeting requirements and have an IPO 1 and 2 probably require a lot of time and fees and would be wise to have a lawyer advising, 3 is obviously difficult due to asset requirements and 4 would probably involve an investment bank plus more fees",
"title": ""
},
{
"docid": "80b1b71e85c9750a58d2fe8403945c6a",
"text": "It depends on your cost structure and knowledge of the exchanges. It could be optimal to make a manual exchange selection so long as it's cheaper to do so. For brokers with trade fees, this is a lost cause because the cost of the trade is already so high that auto routing will be no cheaper than manual routing. For brokers who charge extra to manually route, this could be a good policy if the exchange chosen has very high rebates. This does not apply to equities because they are so cheap, but there are still a few expensive option exchanges. This all presumes that one's broker shares exchange rebates which nearly all do not. If one has direct access to the exchanges, they are presumably doing this already. To do this effectively, one needs: For anyone trading with brokers without shared rebates or who does not have knowledge of the exchange prices and their liquidities, it's best to auto route.",
"title": ""
},
{
"docid": "d37d9a994626f347749725d7d6066a17",
"text": "With the disclaimer that I am not a technician, I'd answer yes, it does. SPY (for clarification, an ETF that reflects the S&P 500 index) has dividends, and earnings, therefore a P/E and dividend yield. It would follow that the tools technicians use, such as moving averages, support and resistance levels also apply. Keep in mind, each and every year, one can take the S&P stocks and break them up, into quintiles or deciles based on return and show that not all stock move in unison. You can break up by industry as well which is what the SPDRs aim to do, and observe the movement of those sub-groups. But, no, not all the stocks will perform the way the index is predicted to. (Note - If a technician wishes to correct any key points here, you are welcome to add a note, hopefully, my answer was not biased)",
"title": ""
},
{
"docid": "8cb549009ae9d2f1a8976238da587253",
"text": "\"My knowledge relates to ETFs only. By definition, an ETF's total assets can increase or decrease based upon how many shares are issued or redeemed. If somebody sells shares back to the ETF provider (rather than somebody else on market) then the underlying assets need to be sold, and vice-versa for purchasing from the ETF provider. ETFs also allow redemptions too in addition to this. For an ETF, to determine its total assets, you need to you need to analyze the Total Shares on Issue multipled by the Net Asset Value. ETFs are required to report shares outstanding and NAV on a daily basis. \"\"Total assets\"\" is probably more a function of marketing rather than \"\"demand\"\" and this is why most funds report on a net-asset-value-per-share basis. Some sites report on \"\"Net Inflows\"\" is basically the net change in shares outstanding multiplied by the ETF price. If you want to see this plotted over time you can use a such as: http://www.etf.com/etfanalytics/etf-fund-flows-tool which allows you to see this as a \"\"net flows\"\" on a date range basis.\"",
"title": ""
},
{
"docid": "e3bf8deef4aa1a57d273ab02cd54fbce",
"text": "I'm not sure how detailed of an explanation you're hoping for. Bear ETFs basically just short sell the underlying asset. The more highly levered ETFs will also use a combination of options, futures, and swaps to achieve their target leverage. The inversion isn't perfect though, and their target is usually just to close inverse to the *daily* return of their underlying asset. If you feel like reading, [here is an example.](http://direxioninvestments.onlineprospectus.net/DirexionInvestments//SPXS/index.html?open=Summary%20Prospectus) You can find the investment overview on page 4.",
"title": ""
},
{
"docid": "e3cc2326e8fa93452b5c41bfe54f0584",
"text": "Right now, the unrealized appreciation of Vanguard Tax-Managed Small-Cap Fund Admiral Shares is 28.4% of NAV. As long as the fund delivers decent returns over the long term, is there anything stopping this amount from ballooning to, say, 90% fifty years hence? I'd have a heck of a time imagining how this grows to that high a number realistically. The inflows and outflows of the fund are a bigger question along with what kinds of changes are there to capital gains that may make the fund try to hold onto the stocks longer and minimize the tax burden. If this happens, won't new investors be scared away by the prospect of owing taxes on these gains? For example, a financial crisis or a superior new investment technology could lead investors to dump their shares of tax-managed index funds, triggering enormous capital-gains distributions. And if new investors are scared away, won't the fund be forced to sell its assets to cover redemptions (even if there is no disruptive event), leading to larger capital-gains distributions than in the past? Possibly but you have more than a few assumptions in this to my mind that I wonder how well are you estimating the probability of this happening. Finally, do ETFs avoid this problem (assuming it is a problem)? Yes, ETFs have creation and redemption units that allow for in-kind transactions and thus there isn't a selling of the stock. However, if one wants to pull out various unlikely scenarios then there is the potential of the market being shut down for an extended period of time that would prevent one from selling shares of the ETF that may or may not be as applicable as open-end fund shares. I would however suggest researching if there are hybrid funds that mix open-end fund shares with ETF shares which could be an alternative here.",
"title": ""
},
{
"docid": "7252370787b0eb06f8699bd008627e83",
"text": "\"Most of your money doesn't exist as physical cash, but simply as numbers in a ledger. At any given time, banks expect their clients to withdraw a certain percentage of their balances... For instance, checking accounts are frequently drawn down to zero, savings accounts might be emptied once our twice a year, CDs are almost never withdrawn, etc. To cover those withdrawals, banks keep a certain amount of physical cash on hand, and an additional amount remains on the ledgers. The rest gets loaned out to their customers for use in buying homes, cars, credit cards,etc. Anything they can't loan out directly gets deposited with the federal reserve or loaned directly to other institutions who need it. However, those last two options tend to be short term (ie overnight) loans. With debit cards functioning 24/7, you could get cash at an atm or make a purchase anytime of the day our night. The weekend has nothing to do with it. Which is a long way of saying \"\"No, they do it all the time, not just on weekends\"\" ;)\"",
"title": ""
}
] |
fiqa
|
25f4a231141b5093c3f1572cada5ec04
|
Why do some people go through contortions to avoid paying taxes, yet spend money on expensive financial advice, high-interest loans, etc?
|
[
{
"docid": "52a75d02a2beef424a950f133c568c09",
"text": "\"One is a choice the other is not. While they are both liabilities on the balance sheet, in the real world they are quite different. We do not feel as much ownership over our money that goes to interest payments as we do over our tax payments. Taxes pay for our government and the services it provides. Interest, on the other hand, is what we pay in order to have a bank loan us money. Similar to paying for a good or service obtained from some other business, we do not feel we have a say in what the bank does with that money. If we disapprove of a business' practices, we stop doing business with them; assuming there are other choices. We can not practically avoid dealing with our government. We certainly feel that we should have a say in what is done with our tax money. I doubt there is anyone in the world that completely approves of their government's spending. It is very easy to feel marginalized with regard to our tax payments. For example, some people feel resentment because their taxes fund the welfare rolls. All that said, I believe there is little overlap between the two groups. It seems to me that you are referring to those with large amounts of high interest (e.g. credit card) debt. I doubt that a large percentage of them are scouring the tax laws, looking for deductions and loopholes. If they had that mindset, they would also be working hard to get out of the hole they are in. In summary, we choose to pay a financial adviser, to take out a loan or to obtain a credit card. We do not choose to pay taxes. Since taxes are supposed to pay for our government and things which should benefit everyone, we want a say in what is done with it. This is also the case because it is forced on us. (\"\"Fine son, I'll lend you some money, but I don't want you buying cigarettes with it.\"\") Since our say is limited and we likely will not approve of everything our government does, we want to exert what control we do have: reduce our payments as best we can.\"",
"title": ""
},
{
"docid": "992674f8684d5708dcff9648a574e10e",
"text": "I think sometimes this is simply ignorance. If my marginal tax rate is 25%, then I can either pay tax deductible interest of $10K or pay income tax of $2.5K. I think most americans don't realize that paying $10K of tax deductible interest (think mortgage) only saves them $2.5K in taxes. In other words, I'd be $7.5K ahead if I didn't have the debt, but did pay higher taxes.",
"title": ""
},
{
"docid": "7ded606c0cebdfa826fce881e5532323",
"text": "\"To some extent, I suppose, most people are okay with paying Some taxes. But, as they teach in Intro to Economics, \"\"Decisions are made on the margin\"\". Few are honestly expecting to get away with paying no taxes at all. They are instead concerned about how much they spend on taxes, and how effectively. The classic defense of taxes says \"\"Roads and national defense and education and fire safety are all important.\"\" This is not really the problem that people have with taxes. People have problems with gigantic ongoing infrastructure boondoggles that cost many times what they were projected to cost (a la Boston's Big Dig) while the city streets aren't properly paved. People don't have big problems with a city-run garbage service; they have problems with the garbagemen who get six-figure salaries plus a guaranteed union-protected job for life and a defined-benefit pension plan which they don't contribute a penny to (and likewise for their health plans). People don't have a big problem with paying for schools; they have a big problem with paying more than twice the national average for schools and still ending up with miserable schools (New Jersey). People have a problem when the government issues bonds, invests the money in the stock market for the public employee pension plan, projects a 10% annual return, contractually guarantees it to the employees, and then puts the taxpayers on the hook when the Dow ends up at 11,000 instead of ~25,000 (California). And people have a problem with the attitude that when they don't pay taxes they're basically stealing that money, or that tax cuts are morally equivalent to a handout, and the insinuation that they're terrible people for trying to keep some of their money from the government.\"",
"title": ""
},
{
"docid": "05499d1ee7d3b9a87dbbc72901db975b",
"text": "\"The bank provides a service that the customer voluntarily agreed to - the bank will provide funds to the customer now and the customer will pay back those funds plus interest in the future. The arragement wasn't forced onto the customer. The government, on the other hand, takes money (the exchange is not volutary) from people to provide a \"\"service\"\". This frustrates a lot of people - myself included - since people do not have a choice. They must pay the taxes or go to jail (or have their house confisicated, wages garnished, etc.). It gets even more frustrating when the government takes money from the people and gives it to the banks, auto companies, insurance companies, etc..\"",
"title": ""
},
{
"docid": "535266e2040482ce5e44ce6baca813c3",
"text": "An example, where I live. When you buy a house, the seller wants 'black' money. This is because that way the seller pays less taxes. However, it's not smart for the buyer to pay in black, as the tax reductions are lower. Eventually, when the buyer tries to sell the house, he has to declare the difference, so a higher buy price should not have affected... apart from the notary minutes.",
"title": ""
}
] |
[
{
"docid": "eb22f51c5e620c368ae9efe4b3d807f8",
"text": "They are using several banks, hedge funds or other financial institutions, in order to diversify the risk inherent to the fact that the firm holding (a fraction of) their cash, can be insolvent which would makes them incur a really big loss. Also, the most available form of cash is very often reinvested everyday in overnight*products and any other highly liquid products, so that it can be available quickly if needed. Since they are aware that they are not likely to need all of their cash in one day, they also use longer terms or less liquid investments (bonds, stocks, etc..).",
"title": ""
},
{
"docid": "702197ebee40acb2606c51b0c874d874",
"text": "Im pretty sure its a moral application of the forceful basis of taxation. And most people get rich by providing goods and services, or via investing in goods in services. The rest, the hyperwealthy banksters, international weapons/ death merchants, wall street, fraudsters, the-good-ole-boys-network, etc... that was via government, and its probably not a good idea to give them more. Pay your taxes, please. I dont want them to ruin your life.",
"title": ""
},
{
"docid": "a17f801749c61e70721be29bae27a51d",
"text": "There is the underpayment penalty, and of course the general risk of any balloon-style loan. While you think that you have enough self-discipline, you never know what may happen that may prevent you from having enough cash at hands to pay the accumulated tax at the end of the year. If you try to do more risky investments (trying to maximize the opportunity) you may lose some of the money, or have some other kind of emergency that may preempt the tax payment.",
"title": ""
},
{
"docid": "8c16681aea3ef338b41737376e044218",
"text": "Credit is very important even if you are wealthy. One thing you may not realize is that rich people typically have comparatively little cash on hand. If they're smart, most of their assets are not liquid - they're tied up in safe, long-term investments. They use credit for their day-to-day expenses and pay it off from the dividends on their investments (which might only come in once a quarter). There are also tax advantages to using credit. If a rich person wanted a new car, he'd be smarter leasing it for his business (immediate write-off of the lease payments on taxes) versus buying it (depreciation over several years plus property tax liability in some states). There are more elaborate tax dodges but the point is that buying a car outright is the worst option in terms of tax avoidance. Another way the rich (mis) use credit is so that they don't risk their own money on business ventures. Let's say I have $1,000,000 in my personal bank account, and I want to buy a business that costs $1M. If I am dumb, I clean out my bank account and put all my money in the business. I get 100% of the profits, but I also bear 100% of the risk. If I'm smart, I loan 200K of my own money in the business and put the rest someplace safe, and get a loan from a bank for the other 800K. If the business succeeds, the bank gets their money back plus interest. If it fails, the business declares bankruptcy and the bank eats the 800k loss. If I structured the debt right, my personal loan to the failed business gets paid back first when the company is liquidated, and the bank gets whatever is left over (if anything). The most of my own money I can possibly lose is 200k, and probably it's closer to zero if I have a good accountant.",
"title": ""
},
{
"docid": "73b127d58b51f1016763b2b24a668843",
"text": "\"They're hiding income. The IRS is a likely candidate for who they are hiding it from but not the only option. Another possibility that comes to mind is someone who had a judgment against them--a check made out to \"\"cash\"\" could be handled by someone else and thus not ever appear in their bank accounts.\"",
"title": ""
},
{
"docid": "234cf72f241171d43cbde38967aed249",
"text": "Where I am you pay annual taxes on a house, pay state and county transfer taxes when you buy/sell, and then have to pay capital gains the year you sell if it appreciated and you don't meet one of the exemptions. So I think your whole premise may be flawed.",
"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": "8269bcb47854a203c450e0d4e7173fab",
"text": "A major reason that I can think of is financial security. Most people have reoccurring costs such as housing, car, medical expenses. If you were to put all you money into dept, and live from check to check, than you could be increasing risk of financial loss. Think about what would happen if one were to default on their mortgage? Risk management plays a huge role in personal finance, and a way of preventing financial loss is to have enough money in an accessible place to pay reoccurring costs in the event that ones situation changes unexpectedly.",
"title": ""
},
{
"docid": "94e274d66650337c888a371d404e2d7b",
"text": "People just love becoming more well-off than they currently are, and one of the ways they do it is with leverage. Leverage requires credit. That desire is not exclusive to people who are not already well-off. For a well-off person who wants to become more well-off by expanding their real estate ventures, paying cash for property is a terrible way to go about it. The same goes for other types of business or market investment. Credit benefits the well-off even more greatly than it benefits the poor or the middle-class.",
"title": ""
},
{
"docid": "4426152f670c737393e775ba018d2875",
"text": "In principle, the US taxes both income and gifts. Simply thinking good thoughts is not necessarily sufficient to avoid filing or payment obligations. Giving somebody money with no repayment date, no interest, and no enforceable note looks an awful lot like either income or a gift. A loan normally has interest, money sitting in a savings account is insured, and other investments generally have an expected return. Why would somebody give a loan with no interest, with only flexible or informal payment expectations, in a way where it has neither deposit insurance nor any expectation of net returns? That looks a lot like a gift - at the very least, a gift of the time value and the default risk. The IRS definitely polices loan rates. The latest release is Revenue Ruling 2014-13. The AFR is useful for tax concepts such as Original Issue Discount (when issuers sell low-interest or no-interest bonds or loans at less than face value, attempting to recharacterize interest income as return of principal), various grantor trusts (e.g. GRATs), and so forth. It's a simple way for the IRS to link to market rates of interest. Documentation and sufficient interest, as well as clear payment schedule (and maybe call or demand rights) make it a bona fide loan. There is no real way for the IRS to distinguish between an informal arrangement and a post-hoc lie to conceal a gift. Moreover, an undocumented loan is generally difficult to enforce, so it looks less like a true loan. The lender declares the interest payments as income on his Form 1040, line 8a and if necessary Schedule B.",
"title": ""
},
{
"docid": "ec85acaa5e7a5eaacb3c6992e311e19f",
"text": "High taxes and tax breaks have done. Tax breaks can only be accessed if you can essentially afford a descent accountant. For that to makes sense you need to earn a large amount of money. So proportionally the middle classes end up paying the most tax and gets the least for it.",
"title": ""
},
{
"docid": "4dceaf523ac9a71169632ad3f2e7dde8",
"text": "\"Most well-off people have investments which they have held for long periods of time, often of very substantial value such as a large part of a company. They also have influence on legislators and officials through various social contacts, lobbyists, and contributions. They managed to convince these law makers to offer a lower tax on income derived from sales of such investments. The fig leaf covering this arrangement is that it \"\"contributes to the growth of economy by encouraging long-term investment in new enterprises.\"\"\"",
"title": ""
},
{
"docid": "22134f97c9279b484342d04421ff2d5e",
"text": "\"'Note that \"\"to keep an investor from lowering their tax bill\"\" is not an explanation'. Well, yes it is. In fact it is the only explanation. The rule plainly exists to prevent someone from realizing a loss when their economic situation remains unchanged before/after a sale. Now, you might say 'but I have suffered a loss, even if it is unrealized!' But, would you want to pay tax on unrealized gains? The tax system still caters to reducing the tax impact of investments, particularly capital investments. Part and parcel with the system of taxing gains only when realized, is that you can recognize losses only when realized. Are there other ways to 'artificially' reduce taxable income? Yes. But the goal of a good tax system should be to reduce those opportunities. Whether you agree that it is fair for the government to prevent this tax-saving opportunity, when others exist, is another question. But that is why the rule exists.\"",
"title": ""
},
{
"docid": "c2a80bbadd20bcfeb527a72ff20e820a",
"text": "\"These types of diagrams appear all throughout Kiyosaki's Rich Dad, Poor Dad book. The arrows in the diagrams represent cash flow. For example, the first two diagrams of this type in the book are: The idea being presented here is that an asset generates income, and a liability generates expenses. According to the book, rich people spend their money buying assets, while middle class people buy liabilities. The diagram you posted above does not appear in the edition of the book I have (Warner Books Edition, printed in 2000). However, the following similar diagram appears in the chapter titled \"\"The History of Taxes and the Power of Corporations\"\": The idea behind this diagram is to demonstrate what the author considers the tax advantages of a personal corporation: using a corporation to pay for certain expenses with pre-tax dollars. Here is a quote from this chapter: Employees earn and get taxed and they try to live on what is left. A corporation earns, spends everything it can, and is taxed on anything that is left. It's one of the biggest legal tax loopholes that the rich use. They're easy to set up and are not expensive if you own investments that are producing good cash flow. For example; by owning your own corporation - vacations are board meetings in Hawaii. Car payments, insurance, repairs are company expenses. Health club membership is a company expense. Most restaurant meals are partial expenses. And on and on - but do it legally with pre-tax dollars. This piece of advice, like so much of the book, may contain a small amount of truth, but is oversimplified and potentially dangerous if taken a face value. There are many examples, as JoeTaxpayer mentioned, of people who tried to deduct too many expenses and failed to make a business case for them that would satisfy the IRS.\"",
"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": ""
}
] |
fiqa
|
40d4a122de1e2190621ddbe63b086262
|
Capital Gains in an S Corp
|
[
{
"docid": "73cccbaae914b8dac683a086c810dac6",
"text": "These are all factually correct claims. S-Corporation is a pass-through entity, so whatever gain you have on the corporate level - is passed to the shareholders. If your S-Corp has capital gains - you'll get your pro-rata share of the capital gains. Interest? The same. Dividends? You get it on your K-1. Earned income? Taxed as such to you. I.e.: whether you earn income as a S-Corp or as a sole proprietor - matters not. That's the answer to your bottom line question. The big issue, however, is this: you cannot have more than 25% passive income in your S-Corp. You pass that limit (three consecutive years, one-off is ok) - your S-Corp automatically converts to C-Corp, and you're taxed at the corporate level at the corporate rates (you then lose the capital gains rates, personal brackets, etc). This means that an S-Corp cannot be an investment company. Most (75%+) of its income has to be earned, not passive. Another problem with S-Corp is that people who work as self-proprietors incorporated as S-Corp try to abuse it and claim that the income they earned by the virtue of their own personal performance shouldn't be taxed as self-employed income. IRS frowns upon such a position, and if considerable amounts are at stake will take you all the way up to the Tax Court to prove you wrong. This has happened before, numerously. You should talk to a licensed tax adviser (EA/CPA/Attorney licensed in your state) to educate you about what S-Corp is and how it is taxed, and whether or not it is appropriate for you.",
"title": ""
},
{
"docid": "829ff126b899af4b65aa225ce89badc3",
"text": "Lets just get to the point...Ordinary income (gains) earned from S-Corp operations (i.e. income earned after all expenses for providing services or selling products) is passed through to the owners/shareholders and taxed at the owner's personal tax rate. Separately, if an S-Corp earns capital gains (i.e. the S-Corp buys and sells stock, earns dividends from investments, etc), those gains are passed through to the owners and taxed at a capital gains rate Capital gains are not the same as ordinary income (gains). Don't get the two confused, they are as different for S-Corp taxation as they are for personal taxation. In some cases an exception occurs, but only when the S-Corp was formally a C-Corp and the C-Corp had non-distributed earnings or losses. This is a separate issue whereas the undistributed C-Corp gains/losses are treated differently than the S-Corp gains/losses. It takes years of college coursework and work experience to grasp the vast arena of tax. It should not be so complex, but it is this complex. It is not within the scope of the non-tax professional to make sense of this stuff. The CPA exams, although very difficult and thorough, only scrape the surface of tax and accounting. I hope this provides some perspective on any questions regarding business tax for S-Corps and any other entity type. Hire a good CPA... if you can find one.",
"title": ""
},
{
"docid": "306bbfcbeb9d36a4dfe629c06c6049d9",
"text": "\"A nondividend distribution is typically a return of capital; in other words, you're getting money back that you've contributed previously (and thus would have been taxed upon in previous years when those funds were first remunerated to you). Nondividend distributions are nontaxable, so they do not represent income from capital gains, but do effect your cost basis when determining the capital gain/loss once that capital gain/loss is realized. As an example, publicly-traded real estate investment trusts (REITs) generally distribute a return of capital back to shareholders throughout the year as a nondividend distribution. This is a return of a portion of the shareholder's original capital investment, not a share of the REITs profits, so it is simply getting a portion of your original investment back, and thus, is not income being received (I like to refer to it as \"\"new income\"\" to differentiate). However, the return of capital does change the cost basis of the original investment, so if one were to then sell the shares of the REIT (in this example), the basis of the original investment has to be adjusted by the nondividend distributions received over the course of ownership (in other words, the cost basis will be reduced when the shares are sold). I'm wondering if the OP could give us some additional information about his/her S-Corp. What type of business is it? In the course of its business and trade activity, does it buy and sell securities (stocks, etc.)? Does it sell assets or business property? Does it own interests in other corporations or partnerships (sales of those interests are one form of capital gain). Long-term capital gains are taxed at rates lower than ordinary income, but the IRS has very specific rules as to what constitutes a capital gain (loss). I hate to answer a question with a question, but we need a little more information before we can weigh-in on whether you have actual capital gains or losses in the course of your S-Corporation trade.\"",
"title": ""
}
] |
[
{
"docid": "93b6457e8a48c4363e86f317dbc0934e",
"text": "From 26 CFR 1.1012(c)(1)i): ... if a taxpayer sells or transfers shares of stock in a corporation that the taxpayer purchased or acquired on different dates or at different prices and the taxpayer does not adequately identify the lot from which the stock is sold or transferred, the stock sold or transferred is charged against the earliest lot the taxpayer purchased or acquired to determine the basis and holding period of the stock. From 26 CFR 1.1012(c)(3): (i) Where the stock is left in the custody of a broker or other agent, an adequate identification is made if— (a) At the time of the sale or transfer, the taxpayer specifies to such broker or other agent having custody of the stock the particular stock to be sold or transferred, and ... So if you don't specify, the first share bought (for $100) is the one sold, and you have a capital gain of $800. But you can specify to the broker if you would rather sell the stock bought later (and thus have a lower gain). This can either be done for the individual sale (no later than the settlement date of the trade), or via standing order: 26 CFR 1.1012(c)(8) ... A standing order or instruction for the specific identification of stock is treated as an adequate identification made at the time of sale, transfer, delivery, or distribution.",
"title": ""
},
{
"docid": "a16cdeba56a7edbdb8277e7c90b16dce",
"text": "\"You can exclude up to $250000 ($500000 for married filing jointly) of capital gains on property which was your primary residence for at least 2 years within the 5 years preceding the sale. This is called \"\"Section 121 exclusion\"\". See the IRS publication 523 for more details. Gains is the difference between your cost basis (money you paid for the property) and the proceeds (money you got when you sold it). Note that the amounts you deducted for depreciation (or were allowed to deduct during the period the condo was a rental, even if you chose not to) will be taxed at a special rate of 25% - this is called \"\"depreciation recapture\"\", and is discussed in the IRS publication 544.\"",
"title": ""
},
{
"docid": "00d92ce163cbaa2219366d5a87720ef9",
"text": "You increase the capital account by the additional contributions and retained earnings and decrease the capital account by the distributions of return of capital and/or losses. Distributing gains doesn't change the capital account. So in your case it would be: 1st year we lost money Assuming you lost 20K, and the interests are even, it will look like this: 1st year we break even Nothing changes - you break even, means the balance sheet doesn't change (in this example). 1st year we made money Assume you gained 20K and kept it: If you didn't retain the earnings, it would look the same as case 2 - no change. Note that this is only the financial accounting, tax accounting might look differently. For example, in the US Partnerships (or LLCs taxed as) are pass-through entities, on in case 3 while you retained the earnings, the partners will still be taxed. I'm of course neither CPA nor a licensed tax adviser. I suggest you get a consultation with one. Only a CPA can provide a reliable accounting advice or sign official financial statements, reviews and audits. Only a EA, CPA or an Attorney specializing in tax law can provide a tax advice.",
"title": ""
},
{
"docid": "69cae92454c28e2e4d04cda5494408f7",
"text": "That's really not something that can be answered based on the information provided. There are a lot of factors involved: type of income, your wife's tax bracket, the split between Federal and State (if you're in a high bracket in a high income-tax rate State - it may even be more than 50%), etc etc. The fact that your wife didn't withdraw the money is irrelevant. S-Corp is a pass-through entity, i.e.: owners are taxed on the profits based on their personal marginal tax rates, and it doesn't matter what they did with the money. In this case, your wife re-invested it into the corp (used it to pay off corp debts), which adds back to her basis. You really should talk to a tax adviser (EA/CPA licensed in your State) to learn how S-Corps work and how to use them properly. Your wife, actually, as she's the owner.",
"title": ""
},
{
"docid": "72659982bcc756ea19515bf267862f2d",
"text": "I think you're misunderstanding how S-Corp works. Here are some pointers: I suggest you talk with a EA/CPA licensed in your state and get yourself educated on what you're getting yourself into.",
"title": ""
},
{
"docid": "dc36a99ffea70f0b1e78475c3ad6fcb7",
"text": "Yes. You incur income tax on the RSU on they date they vest. At this point you own the actual shares and you can decide to sell them or to hold them. If you hold them for the required period, and sell them later, the difference between your price at vesting and the sales price would be taxed as long term capital gains. Caution: if you decide to hold, you are still liable to pay income tax in the year they vest. You have to pay taxes on income that you haven't made yet. This is fairly dangerous: if the stock goes down, you may lose a lot of this tax payment. Technically you could recover some of this through claiming capital losses, but that this is severely restricted: the IRS makes it much easier to increase taxes through gains than reducing taxes through losses.",
"title": ""
},
{
"docid": "d04463611f1cc42a2614271873cb0e89",
"text": "I don't know the legal framework for RSUs, so I'm not sure what is mandatory and what is chosen by the company issuing them. I recently reviewed one companies offering and it basically looked like a flat purchase of stock on the VEST date. So even if I got a zillion shares for $1 GRANTED to me, if it was 100 shares that vested at $100 on the 1st, then I would owe tax on the market value on the day of vest. Further, the company would withhold 25% of the VEST for federal taxes and 10% for state taxes, if I lived in a state with income tax. The withholding rate was flat, regardless of what my actual tax rate was. Capital gains on the change from the market value on the VEST date was calculated as short-term or long-term based on the time since the VEST date. So if my 100 shares went up to $120, I would pay the $20 difference as short term or long term based on how long I had owned them since the VEST. That said, I don't know if this is universal. Your HR folks should be able to help answer at least some of these questions, though I know their favorite response when they don't know is that you should consult a tax professional. Good luck.",
"title": ""
},
{
"docid": "9a1d3611099cbee3136ec36c06127dd7",
"text": "Now assume these shares are vested, held for at least 1 year, and are then sold for $5 each. Everything I've read implies that the grantee now owes long-term capital gains taxes on the difference, which would be 10k * ($5 - $1). No. That's exactly what the SO is NQ for. Read more on the differences between ISO and NQSO here. Now assume these shares are vested, held for at least 1 year, and are then sold for $5 each. Everything I've read implies that the grantee now owes long-term capital gains taxes on the difference, which would be 10k * ($5 - $1). At this point you no longer have NQSO, you have RSU. If you filed 83(b) when you exercised, then you pay capital gains tax when they vest. If you didn't - its ordinary income to you. NQSO is a red herring here since once exercised they no longer exist. If you didn't file 83(b), then when the stock vests the difference between the FMV at vest and the money you spent on it when exercising (if any) is considered wages and taxed as ordinary income (+FICA etc). From that point the RSU becomes a regular stock investment and the capital gains clock starts ticking.",
"title": ""
},
{
"docid": "4286585f14be963a8f314ca32f310036",
"text": "\"This is actually quite a complicated issue. I suggest you talk to a properly licensed tax adviser (EA/CPA licensed in your State). Legal advice (from an attorney licensed in your State) is also highly recommended. There are many issues at hand here. Income - both types of entities are pass-through, so \"\"earnings\"\" are taxed the same. However, for S-Corp there's a \"\"reasonable compensation\"\" requirement, so while B and C don't do any \"\"work\"\" they may be required to draw salary as executives/directors (if they act as such). Equity - for S-Corp you cannot have different classes of shares, all are the same. So you cannot have 2 partners contribute money and third to contribute nothing (work is compensated, you'll be getting salary) and all three have the same stake in the company. You can have that with an LLC. Expansion - S-Corp is limited to X shareholders, all of which have to be Americans. Once you get a foreign partner, or more than 100 partners - you automatically become C-Corp whether you want it or not. Investors - it would be very hard for you to find external investors if you're a LLC. There are many more things to consider. Do not make this decision lightly. Fixing things is usually much more expensive than doing them right at the first place.\"",
"title": ""
},
{
"docid": "4d9bdb78150f5089baeab672332d02d2",
"text": "Federal income taxes are indeed expenses, they're just not DEDUCTIBLE expenses on your 1120. Federal Income Tax Expense is usually a subcategory under Taxes. This is one of the items that will be a book-to-tax difference on Schedule M-1. I am presuming you are talking about a C corporation, as an S corporation is not likely to be paying federal taxes itself, but would pass the liability through to the members. If you're paying your personal 1040 taxes out of an S-corporation bank account, that's an owner's draw just like paying any of your personal non-business expenses. I would encourage you to get a tax professional to prepare your corporate tax returns. It's not quite as simple as TurboTax Business makes it out to be. ;) Mariette IRS Circular 230 Notice: Please note that any tax advice contained in this communication is not intended to be used, and cannot be used, by anyone to avoid penalties that may be imposed under federal tax law.",
"title": ""
},
{
"docid": "b3bb25844cb10bfb674a0e794e241cf7",
"text": "Capital gains taxes for a year are calculated on sales of assets that take place during that year. So if you sell some stock in 2016, you will report those gains/losses on your 2016 tax return.",
"title": ""
},
{
"docid": "28736c47950db9528b1fd9ac554aa8c6",
"text": "If you have held the stocks longer than a year, then there is no tax apart from the STT that is already deducted when you sell the shares. If you have held the stock for less than a year, you would have to pay short term capital gains at the rate of 15% on the profit. Edit: If you buy different shares from the total amount or profits, it makes no difference to taxes.",
"title": ""
},
{
"docid": "57390fc75c7c0b3a47269f7ea8e90c07",
"text": "\"If you have an S-Corp with several shareholders - you probably also have a tax adviser who suggested using S-Corp to begin with. You're probably best off asking that adviser about this issue. If you decided to use S-Corp for multiple shareholders without a professional guiding you, you should probably start looking for such a professional, or you may get yourself into trouble. That said, and reminding you that: 1. Free advice on the Internet is worth exactly what you paid for it, and 2. I'm not a tax professional or tax adviser, you should talk to a EA/CPA licensed in your state, here's this: Generally S-Corps are disregarded entities for tax purposes and their income flows to their shareholders individual tax returns through K-1 forms distributed by the S-Corp yearly. The shareholders don't have to actually withdraw the profits, but if not withdrawing - they're added to their cost bases in the shares. I'm guessing your corp doesn't distribute the net income, but keeps it on the corporate account, only distributing enough to cover the shareholders' taxes on their respective income portion. In this case - the amount not distributed is added to their basis, the amount distributed has already been taxed through K-1. If the corporation distributes more than the shareholder's portion of net income, then there can be several different choices, depending on the circumstances: The extra distribution will be treated as salary to the shareholder and a deduction to the corporation (i.e.: increasing the net income for the rest of the shareholders). The extra distribution will be treated as return of investment, reducing that shareholder's basis in the shares, but not affecting the other shareholders. If the basis is 0 then it is treated as income to the shareholder and taxed at ordinary rates. The extra distribution will be treated as \"\"buy-back\"\" - reducing that shareholder's ownership stake in the company and reallocating the \"\"bought-back\"\" portion among the rest of the shareholders. In this case it is treated as a sale of stock, and the gain is calculated as with any other stock sale, including short-term vs. long-term taxation (there's also Sec. 1244 that can come in handy here). The extra distribution will be treated as dividend. This is very rare for S-Corp, but can happen if it was a C-Corp before. In that case it will be taxed as dividends. Note that options #2, #3 and #4 subject the shareholder to the NIIT, while option #1 subjects the shareholder to FICA/Self Employment tax (and subjects the company to payroll taxes). There might be other options. Your licensed tax adviser will go with you through all the facts and circumstances and will suggest the best way to proceed.\"",
"title": ""
},
{
"docid": "dc0f5b39efa96f612d974c9271078571",
"text": "As the owner of the S-corp, it is far easier for you to move money in/out of the company as contributions and distributions rather than making loans to the company. Loans require interest payments, 1099-INT forms, and have tax consequences, whereas the distributions don't need to be reported because you pay taxes on net profits regardless of whether the money was distributed. If you were paid interest, disregard this answer. I don't know if or how you could re-categorize the loan once there's a 1099-INT involved. If no interest was ever paid, you just need to account for it properly: If the company didn't pay you any interest and never issued you a 1099-INT form (i.e. you wrote a check to the company, no promissory note, no tax forms, no payments, no interest, etc.) then you can categorize that money as a capital contribution. You can likewise take that money back out of the company as a capital distribution and neither of these events are taxable nor do they need to be reported to the IRS. In Quickbooks, create the following Equity accounts -- one for each shareholder making capital contributions and distributions: When putting money into the company, deposit into your corporate bank account and use the Capital Contribution equity account. When taking money out of the company, write yourself a check and use the Distributions account. At the end of every tax year, you can close out your Contributions and Distributions to Retained Earnings by making a general journal entry. For example, debit retained earnings and credit distributions on Dec 31 every year to zero-out the distributions account. For contributions, do the reverse and credit retained earnings. There are other ways of recording these transactions -- for example I think some people just use a Member Capital equity account instead of separate accounts for contributions and distributions -- and QB might warn you about posting journal entries to the special Retained Earnings account at the end of the year. In any case, this is how my CPA set up my books and it's been working well enough for many years. Still, never a bad idea to get a second opinion from your CPA. Be sure to pay yourself a reasonable salary, you can't get out of payroll taxes and just distribute profits -- that's a big red flag that can trigger an audit. If you're simply distributing back the money you already put into the company, that should be fine.",
"title": ""
},
{
"docid": "2af033af3f8b981e4e7147ebc864cc28",
"text": "\"You probably don't need S-Corp. There's no difference between what you can deduct on your Schedule C and what you can deduct on 1120S, it will just cost you more money. Since you're gambling yourself, you don't need to worry about liability - but if you do, you should probably go LLC route, much cheaper and simpler. The \"\"reasonable salary\"\" trick to avoid FICA won't work. Don't even try. Schedule C for professional gamblers is a very accepted thing, nothing extraordinary about it.\"",
"title": ""
}
] |
fiqa
|
f08e7989db1b528a583ad757d27bfe7e
|
Does the rise in ACA premiums affect employer-provided health insurance premiums?
|
[
{
"docid": "b266013fea10adc50a12245328216415",
"text": "There are a lot of moving parts, individual premiums and annual increases have little to do with employer premiums and annual increases and vice versa. Most people think of XYZ insurer as a single company with a single pool of insured folks. This common knowledge isn't accurate. Insurers pool their business segments separately. This means that Individual, small business, mid-size business, and large business are all different operating segments from the viewpoint of the insurer. It's possible to argue that because so many people are covered by employer plans that individual plans have a hard time accumulating the required critical mass of subscribers to keep increases reasonable. Age banded rating: Individual coverage and small group coverage is age rated, meaning every year you get older. In addition to your age increase, the premium table for your plan also receives an increase. Employers with 100+ eligible employees are composite rated (in general), meaning every employee costs the same amount. The 18 year old employee costs $500 per month, the 64 year old costs $500 per month. Generally, the contributions an employee pays to participate in the plan are also common among all ages. This means that on a micro level increases can be more incremental because the employer is abstracting the gross premium. Composite rating generally benefits older folks while age rating generally benefits younger folks. Employer Morale Incentive: Generally the cost to an employee covered by an employer plan isn't directly correlated to the gross premium, and increases to the contribution(s) aren't necessarily correlated to the increases the employer receives. Employers are incentivised by employee morale. It's pretty common for employers to shoulder a disproportionate amount of an increase to keep everyone happy. Employers may offset the increase by shopping some ancillary benefit like group life insurance, or bundling the dental program with the medical carrier. Remember, employees don't pay premiums they pay contributions and some employers are more generous than others. Employers are also better at budgeting for planned increases than individuals are. Regulators: In many of the states that are making the news because of their healthcare premium increases there simply isn't a regulator scrutinizing increases. California requires all individual and small group premiums to be filed with the state and increases must be justified with some sort of math and approved by a regulator. Without this kind of oversight insurers have only the risk of subscriber flight to adjust plan provisions and press harder during provider contract negotiations. Expiring Transitional Reinsurance Fee and Funds: One of the fees introduced by healthcare reform paid by insurers and self-insured employers established a pot of money that individual plans could tap to cope with the new costs of the previously uninsurable folks. This fee and corresponding pot of money is set to expire and can no longer be taken in to account by underwriters. Increased Treatment Availability: It's important that as new facilities go online, insurer costs will increase. If a little town gets a new cancer clinic, that pool will see more cancer treatment costs simply as a result of increased treatment availability. Consider that medical care inflation is running at about 4.9% annually as of the most recent CPI table, the rest of the increases will result from the performance of that specific risk pool. If that risk pool had a lot of cancer diagnoses, you're looking at a big increase. If that risk pool was under priced the prior year you will see an above average increase, etc.",
"title": ""
},
{
"docid": "8685de0fcc65597ee7162ebf237035d2",
"text": "\"It's likely impossible to determine why premiums are increasing in a meaningful way; not only is the interrelationship between the various data points very complex, but some of the increases are likely due to decisions by people who do not and will not publicly post what they decided and why. However, it is possible to compare health insurance premium increases over time to see if the increases in employer-sponsored health insurance premiums are comparable or not to the pre-ACA timeframe. Since the ACA phased in over a few years, we can compare the period 2008-2010 \"\"pre-ACA\"\" and 2013-2015 \"\"post-ACA\"\", ignoring 2011-2012 as being unclearly affected by the ACA phase-in. For this, I will look at single coverage premiums only for the purpose of simplifying the analysis. I found a good table of 2008-2010 premiums from the NCSL; they list the following: Kaiser Permanente had a good list for 2013-2015 here: From 2008-2010, the average growth was around 6% per year. From 2013-2015, the growth averaged about 3%. In both of these cases we are comparing total premiums (sum of employer and employee contributions). So, from a data-driven look, it seems that the premium growth is lower post-ACA than pre-ACA, so it's unlikely that the ACA could be accused of causing increased premium growth. Of course, this is US-wide average, and on a state-by-state basis there may well be significant differences that may or may not be related to the ACA. One thing that is covered on the NCSL page linked above that is interesting: while the premium growth has slowed significantly (about 50% of the growth pre-ACA), health insurance premiums are a higher proportion of employee's wages, and that growth is continuing - because wage growth has not kept pace with inflation post-2008 recession. Employee contributions also may be higher post-recession; many companies reduced their contribution percentage (as my then employer did, for example). Finally, increases in the ACA plans are also commonly overstated. They largely are in line with employer plans or even less. In 2015, premiums were basically flat, decreasing slightly in fact - see the KFF analysis here. 2016 saw a 3.6% by this methodology (see the 2016 analysis). It's very easy to cherrypick examples that are favorable to any interpretation from the data, though; there are such big swings as a result of the different conditions in the marketplaces that it's easy to pick a few that have high swings and claim the ACA has massive premium increases, or pick a few that have low swings and claim it's reducing costs.\"",
"title": ""
},
{
"docid": "e1ee9f7dcf9fda1ad435740a4384463f",
"text": "Depends on the insurance company itself, as well as the costs of treatments. Imagine an ideal scenario where costs of treatments stayed the same, and that all insurance plans were segregated and pulled from the same pool of funds to pay for treatments. Then employer subsidized health insurance plans would be unaffected by the drama in the ACA plans. Those are the factors to consider, from my understanding. But I wouldn't be surprised if the burdens of accepting people that would previously never have been serviced by these companies has greatly distorted the market as a whole.",
"title": ""
}
] |
[
{
"docid": "d4865bf33d080ef1aa4f98af145ce6e4",
"text": "\"I disagree. If nobody got their health insurance through their employer, then everyone would go out on the market and acquire them. This would create a more dynamic health insurance market which would, over time, drive down the cost of getting health insurance. I don't follow your logic about how \"\"wages wouldn't keep up\"\" 10 or 20 years down the road. If anything, not having to worry about benefits in a particular job would give employees more job mobility, causing the job market to be more competitive. In other words, it would be more likely to cause wages to up. Also, ancillary benefits of getting employers out of the health insurance/benefit dynamic would be to create more efficiencies within those businesses (reduce staff spent on coordinating plans and such), make small businesses more competitive (they are at a disadvantage now with regard to big companies with pools of employees), and get more people to acquire at least some form of insurance (health coverage goes up). I, for one, welcome a world in which our employers have absolutely nothing to do with our benefits choices and we choose them at our own discretion, just as I do with my car insurance.\"",
"title": ""
},
{
"docid": "09df67680f9bc925db52339f3d0918ad",
"text": "It's working well by one metric: covering the uninsured. However, Obamacare doesn't do enough to control costs. Wait a few years for double-digit premium increases due to the continuing spiral of costs and it's not going to be working so well. IMHO",
"title": ""
},
{
"docid": "65a58ef0375ce0dc273460f030224e16",
"text": "\"J Gruber's consulting reports for the various states (Minnesota, Wisconsin, etc). * http://www.washingtonpost.com/blogs/ezra-klein/post/jon-gruber-on-the-premiums-in-health-care-reform/2011/08/25/gIQAN0TUWS_blog.html ...and the article it addresses (which included some numbers from the reports): * http://dailycaller.com/2012/02/11/obamacare-architect-expect-steep-increase-in-health-care-premiums/ Note that Gruber has made a whole spectrum of claims (from initially claiming that premiums would go DOWN for a consulting agreement with the Obama administration, to later \"\"revisions\"\" showing significant increases {to varying degrees depending on the individuals specific demographic}), to wit: >Gruber’s new reports are in direct contrast Obama’s words — and with claims Gruber himself made in 2009. Then, the economics professor said that based on figures provided by the independent Congressional Budget Office, “[health care] reform will significantly reduce, not increase, non-group premiums.” >During his presentation to Wisconsin officials in August 2011, Gruber revealed that while about 57 percent of those who get their insurance through the individual market will benefit in one way or another from the law’s subsides, an even larger majority of the individual market will end up paying drastically more overall. >“After the application of tax subsidies, **59 percent of the individual market will experience an average premium increase of 31 percent,”** Gruber reported. >The reason for this is that an estimated 40 percent of Wisconsin residents who are covered by individual market insurance don’t meet the Affordable Care Act’s minimum coverage requirements. Under the Affordable Care Act, they will be required to purchase more expensive plans. >Asked for his own explanation for the expected health-insurance rate hikes, Gruber told TheDC that his reports “reflect the high cost of folding state high risk pools into the [federal government's] exchange — without using the money the state was already spending to subsidize those high risk pools.” Note: Emphasis added. Note 2: To begin with, an \"\"average\"\" increase of 31% qualifies as \"\"significant\"\" (hell, it's a lot more than merely \"\"significant\"\", that's a HUGE increase); and secondly, that is an AVERAGE, meaning that while some of the people in that \"\"59%\"\" will probably not see such a high increase, a fairly large segment {and per the provisions of the Act versus current premium calculation methods, we KNOW these will be \"\"young healthy singles\"\", and especially males} will face increases that are substantially HIGHER than 31%, and in fact will probably be in the nature of double or triple previous premiums {as would be required in order to meet another provision of the act, that highest premiums for older/sicker pool members cannot be higher than 3x that of the youngest/lowest tier premiums -- and if the company is to balance the books, it can only \"\"bring down\"\" the one end if it makes a compensating increase at the other end.}) None of that is \"\"rocket science\"\" and it is entirely predictable. (The only things that would be \"\"odd\"\" would be that anyone should expect anything different, and that Gruber's initial claims of across the board lower costs were ever accepted in the first place.)\"",
"title": ""
},
{
"docid": "b9090faf818d09a9ba72969f059ff365",
"text": "As the premiums go up, so do the individuals subsidies because they are limited in how much they have to pay. John has to pay $450 if his total insurance costs $11k or $15 k. So, in effect, he will get more money. To pay for his increased insurance costs. This increases the overall costs to the taxpayers by millions of dollars. The money goes to the person to pay premiums instead of straight to insurance companies. The taxpayers would be much better off if the payments to insurance companies continue to prevent the raise in premiums. If Trump stops the payments, we are all going to pay more, except for those near the poverty level.",
"title": ""
},
{
"docid": "b29218638d78e9b10227d3fdda3655af",
"text": "\"I am very late to this forum and post - but will just respond that I am a sole proprietor, who was just audited by the IRS for 2009, and this is one of the items that they disallowed. My husband lost his job in 2008, I was unable to get health insurance on my own due to pre-existing ( not) conditions and so we had to stay on the Cobra system. None of the cost was funded by the employer and so I took it as a SE HI deduction on Line 29. It was disallowed and unfortunately, due to AGI limits, I get nothing by taking it on Sch. A. The auditor made it very clear that if the plan was not in my name, or the company's name, I could not take the deduction above the line. In his words, \"\"it's not fair, but it is the law!\"\"\"",
"title": ""
},
{
"docid": "4035be1d64d9972c7b1817ff2f6b84a2",
"text": "For the record I am not the one that downvoted you because you raise a decent point/opinion. However, you should consider the impact this has on the rest of us. Many employers have already said that they are not hiring people because of concerns on what the ruling means for them. That could have been a ploy to pressure politicians to back down from it. However, that probably wouldn't explain everything. They are going to paying more for insurance when hiring no doubt. That isn't good when we are already having a hard time getting them back to work. So I wouldn't write off capitalists concerns so easily. Secondly, they aren't going to be able externalize it anymore than before unless they are forced to pay for part-time workers and others previously exempt. I didn't read enough on this to know one way or the other. However, if workers aren't getting anymore coverage from their employers then the added cost (higher premiums) wouldn't mean much for any of us. Actually they would still be externalizing the cost. Instead of the government picking up the bill it would be Americans who aren't getting insurance from the employer who are forced to pay for the penalty.",
"title": ""
},
{
"docid": "19565826fefff8930651d68899ab5bd6",
"text": "\"Discounting premiums based on some past history is not unique to auto policies. Other insurers will discount premiums based on past claims history they just don't shout about it as a marketing means to attract customers. Life insurance is underwritten based on your health history; if you want to consider your \"\"preferred\"\" underwriting status based on your clear health history a \"\"discount based on your healthy habits\"\" you're free to do so. All sorts of lines of insurance use all sorts of things to determine an underwriting classes. The fact that auto insurers trumpet specific discounts does not mean the same net effect is not available on other lines of coverage. Most states require auto rates and discounts to be filed and approved with some state regulator, some regulatory bodies even require that certain discounts exist. You could likely negotiate with your business insurance underwriters about a better rate and if the underwriters saw fit they could give you a discount. Auto insurers can offer discounts but are generally beholden to whatever rate sheet is on file with the applicable regulatory body. For the person who downvoted, here's a link to a spreadsheet outlining one of the CA department of insurance allowable rating factor sheets related to auto insurance.\"",
"title": ""
},
{
"docid": "54c61d2d88276a215c365b346476ca43",
"text": "\"Even though this isn't really personal finance related I still feel like there are some misconceptions here that could be addressed. I don't know where you got the phrase \"\"pass-through\"\" insurance from. What you're describing is a self-funded plan. In a self-funded arrangement an employer contracts a third-party-administrator (TPA), usually one of the big health insurance carriers, to use it's provider network, process and adjudicate claims, etc. In addition to the TPA there will be some sort of stop-loss insurance coverage on each participant. Stop-loss coverage usually provides a maximum amount of risk on a given member and on the entire population for a given month and/or year and/or lifetime. The employer's risk is in between the plan deductible and the stop loss coverage (assuming the stop-loss doesn't have a maximum). Almost all of the claim dollars in a given plan will come from very very few people. These costs typically arise out of very unforeseen diagnoses not chronic issues. A cancer patient can easily cost $1,000,000 in a year. Someone's diabetes maintenance medicine or other chronic maintenance will cost no where near what a botched surgery will in a year. If we take a step back there are really four categories of employer insurance. Small group is tightly regulated. Usually plan premiums are filed with a state authority, there is no negotiating, your group's underwriting performance has zero impact on your premiums. Employers have no way of obtaining any medical/claim information on employees. Mid-market is a pooled arrangement. The overall pool has a total increase, and your particular group performs better or worse than the pool which may impact premiums. Employers get very minor claims data, things like the few highest claims, or number of claims over a certain threshold, but no employee specific information. Large-group is a mostly unpooled arrangement. Generally your group receives it's own rating based on its individual underwriting performance. In general the carrier is offloading some risk to a stop-loss carrier and employer's get a fair amount of insight in to claims, though again, not with employee names. Self-funded is obviously self-contained. The employer sets up a claims checking account. The TPA has draft authority on the account. The employee's typically have no idea the plan is self funded, their ID cards will have the carrier logo, and the carrier deals with them just as it would any other member. Generally when a company is this size it has a separate benefits committee, those few people will have some level of insight in to claims performance and stop-loss activity. This committee will have nothing to do with the hiring process. There are some new partially self-funded arrangements, which is just a really low-threshold (and relatively expensive) stop-loss program, that's becoming somewhat popular in the mid-market group size as employers attempt to reduce medical spend. I think when you start thinking on a micro, single employee level, you really lose sight of the big picture. Why would an employer hire this guy who has this disease/chronic problem that costs $50,000 per year? And logically you can get to the conclusion that with a self-funded plan it literally costs the company the money so the company has an incentive not to hire the person. I understand the logic of the argument, but at the self funded level the plan is typically costing north of half a million dollars each month. So a mid-level HR hiring manager 1. isn't aware of specific plan claims or costs and is not part of the benefits executive committee, 2. won't be instructed to screen for health deficiencies because it's against the law, 3. a company generally won't test the water here because $50,000 per year is less than 1% of the company's annual medical expenses, 4. $50,000 is well below the cost to litigate a discrimination law-suit. Really the flaw in your thought process is that $50,000 in annual medical expense is a lot. A harsh child-birth can run in the $250,000 range, so these companies never hire women? Or never hire men who could add a spouse who's in child bearing years? Or never hire women who might have a female spouse who could be in child bearing years? A leukemia diagnosis will ratchet up $1,000,000 in a year. Spend a bit of time in intensive care for $25,000 per day and you're fired? A few thousand bucks on diabetes meds isn't anything relative to the annual cost of your average self-funded plan. The second flaw is that the hiring managers get insight in to specific claims. They don't. Third, you don't hand over medical records on your resume anyway. I typed this out in one single draft and have no intention of editing anything. I just wanted paint a broad picture, I'm sure things can be nit-picked or focused on.\"",
"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": "7aeccd8d70a17e60f0e13c3bd7c0bad7",
"text": "\"Yes, you can. See the instructions for line 29 of form 1040. Self employed health insurance premiums are an \"\"above the line\"\" deduction.\"",
"title": ""
},
{
"docid": "74b478d1a73400e594f986d6cb52b716",
"text": "Your title question, Who could afford a higher premium who couldn't afford a higher monthly payment?, contrasts premium with monthly payment, but those are the same thing. In the body of your question, you list monthly payment and deductible, which is entirely different. The deductible is paid only if you need that much medical care in any one year. Most years a person in good health pays little because of the deductible. Thus, the higher deductible options offer catastrophic health insurance without giving much in the way of reimbursement for regular medical expenses. Note - the original question has been edited since.",
"title": ""
},
{
"docid": "fa6ac13302f1dbb944a16ed0a367581a",
"text": "1) When you apply for insurance you indicate your expected income, they figure the subsidy based on this. Note that while this data isn't checked it's only an estimate, any errors will be fixed at tax time so lying is just going to gain you an unpleasant tax bill come April 15. 2) It's not paid in installments, it's just a monthly premium. It's quite possible for someone to be on the ACA for only part of a year. 3) I can't address the issue of the fines. However, you are wrong on who it's for--it's for anyone who doesn't have employer-provided insurance, whatever the reason. I've been on it since it's inception because I have been self employed for most of that time--there's no employer to even offer me insurance.",
"title": ""
},
{
"docid": "218ed6c344298840bc60cbe89e0643f7",
"text": "ACA has market stabilizing mechanisms like cost-sharing reduction subsidies. Republicans have been blocking that in recently, causing many insurance companies to pull out of some states. I imagine repeal will just be a continuation of that until there is less competition and insurance companies make higher margins to offset the risk of unprofitable quarters. So maybe they make more money because of higher margins or maybe they don't because they lose subsidies.",
"title": ""
},
{
"docid": "256c3abee2955e1b8497993a152e0dbf",
"text": "(the average person doesn't care nor are they affected by how much their employer spends in healthcare) It may be true that the average person doesn't care how much their employer spends on healthcare, but it's not true that we aren't affected. From an employer's perspective, healthcare, wages, and all other benefits are part of the cost of having an employee. When healthcare goes up, it increases the total employee cost. Employers can handle this in several ways. They could reduce the amount they give investors (as dividends, stock buybacks, etc.). But then the stock is worth less and they have to make up the money somewhere else. They could pass the expense on to customers. But then the loss in business can easily cost more than the revenue raised. They can cut wages or other benefits. Then the average person will start caring...and might get a different job. (I found this article saying that 12M households spend >=50% of income on rent, so I'm assuming that an even greater number spend more than the recommended 30%, which means rent should be weighted as high as it is in CPI.) According to the census, that's only about 10% of households. It also notes that 64.4% of households are owner-occupied. They don't pay rent. The CPI makes up a number called owner's equivalent rent for those households to get to the higher percentage. The CPI is intended for things like wages. This makes it a good choice for a cost of living adjustment, but it doesn't quite represent the overall economy. And for investments, it's the broader economy that matters. Household consumption is less important. What the Fed says.",
"title": ""
},
{
"docid": "6aef669b02f60c86f1b9516ea890b1e2",
"text": "http://www.ehow.com/about_4625753_cobra-as-selfemployed-health-insurance.html This link makes it clear... it has to be itemized, and is subject to the > than 7.5% AGI rule.",
"title": ""
}
] |
fiqa
|
55785768885e4d1ebc54dca1935b89ff
|
How to secure one's effort when working on a contract?
|
[
{
"docid": "4aa33a503e0a58c2362514f8e47c9658",
"text": "\"Anytime you do work without any payment until the work is complete, you are effectively extending credit to the party receiving your service. How much credit you are willing to extend will vary greatly, depending on the amount and the trustworthiness of the party. For example, if you are charging $50 for something, you probably won't bother to collect money upfront, whereas if you are charging $5,000 you probably would collect some upfront. But if the party you are working for is a large financially sound company, the number may be even much higher than $5K as you can trust you will be paid. Obviously there are many factors that go into how much credit you are willing to extend to your customer. (This is why credit reports exist for banks to determine how much credit to extend to you.) As for the specific case you are asking about, which may be classified as a decent amount of work for a small business, I would default to having a written scope of work, a place in the document for both parties to sign, and specify 50% upfront payment and 50% payment at completion. When you receive the signed document and the upfront payment (and possibly even after the check clears), you begin work. I would call this my \"\"default contract\"\" and adjust according to your needs depending on the size of the job and the trustworthiness of the customer. As for your question about how to deposit the check, that depends on what type of entity you are. If you are a sole proprietor you should ask for the checks to be made out to you. If you are a business then the checks should be made out to your business name. You don't need \"\"in trust\"\" or anything similar because your customer, after paying the upfront fee, must trust that you will do the work you promise to do, just like you have to trust that after completing the work you will receive the final payment. This is the reason the default is 50% before and after. Both parties are risking (roughly) the same amount. Tip: having done the \"\"default\"\" contract many times in my career, both as a sole proprietor and a business owner, I can assure you there is a big difference between a potential customer agreeing to something in advance, and actually writing a check. The upfront payment definitely helps weed out those that were never going to end up paying you, even if their intentions were good. Tip 2: be as specific as possible as to what the scope of work will include. If you don't, particularly with software, they'll be adding feature after feature and expecting it to be \"\"included\"\".\"",
"title": ""
},
{
"docid": "dfbbd6a3615712f356ba0ae1b8ff2aa7",
"text": "I don't think you need to bother with trust accounts. The point of a trust account is holding funds that aren't yours yet. You take a retainer fee that you have yet to earn. As you work, you bill your hourly rate, your client signs off and you take possession of the funds. You're going to work a project, you'll take a partial payment as a deposit and partial payment upon completion. But this is a payment to you, not money transferred to you to hold until you earn it at a later date. Your contract can specify remedies for missing a deadline, or any other thing that could happen.",
"title": ""
}
] |
[
{
"docid": "7fa5d6e2c6e9414b0e84b77cfb96dcfa",
"text": "\"EmploymentProTip, especially regarding boilerplate employment forms and larger companies: When you get to something disagreeable like that, line it out and initial it. I've done it several times over the years and nobody's ever come back to ask me about it. (Because they don't look at it - they just file it). **IF** they ever tried to enforce it, you just tell them to take a look at your contract. They're either going to end up with a) no enforceable noncompete or b) since they never counter-signed the agreement, it's not a valid contract (which still means - no noncompete) Note that (b) above might come back to bite you if **you** need to depend on the employment contract, but I'm not sure that's ever happened in the modern \"\"employees are disposable resources\"\" age. NOTE: While I am an attorney, this is not legal advice. Please seek the advice of an attorney licensed in your state.\"",
"title": ""
},
{
"docid": "a2dd5540db63905132ff6419c895d1df",
"text": "\"Because I'll be investing time, effort, energy and take some initial risks I would like to receive more shares (more than just purely financial contribution would suggest) I don't see money in that list. How much money will you be contributing to your own project? Mutual understanding, focusing on big image, rather that covering each and every edge case. These kinds of one page agreements are an excellent \"\"idea\"\" and they work just fine when everyone is happy and everything is working well; they are an utter nightmare if anything goes sideways. Coincidently, the reason you write anything down at all is to have everyone agree on the same big picture at the same time. People's memory of the original big picture gets fuzzy when their money might not come back to them. You don't need to cover all edge cases, but you need to cover obvious negative outcomes. What if you can't find a renter? What if you're late paying someone back? What if your vendor \"\"repairs\"\" something incorrectly? What if you forget to get a permit and the vendor needs to come back to tear it all apart and redo the work? What if your project needs more money, who is required to contribute, who has the option to contribute, who gets diluted? Who is doing the work of managing the project, how much is that person getting paid, how is that person's pay determined, how can it be adjusted? Is any work expected from any other investor, on what terms, who decides the terms? What if you get an offer to buy the building, who decides to sell, etc and so forth and on and on and on... You write down an agreement so everyone's understanding of the agreement is recorded. You write down what will happen in XYZ event so you don't argue about what you all should do when that event does ultimately occur. You take as much equity as your other investors will allow you to have, and you give them as much as required to get their money. Understand that the more cooks there are in the kitchen the more difficult it is to act on a problem when one arises; when not if. Your ego-stroking play to \"\"open source crowd-sourced wisdom\"\" is nothing more than a silly request for vague advice at no cost. Starting a project on trust, transparency and integrity is naive. This is about money. Why on earth should anyone trust you with their money if you won't do the most basic step of stewardship and spend a couple hundred pounds to talk to a local professional about organizing your first ever project. To answer your question directly, the first precaution you should take is not taking money from any of your friends or family.\"",
"title": ""
},
{
"docid": "ba7722e7261c515046b9329c5c3fdafa",
"text": "Yes he did. But what Cuban means is that your motivation has to be for the love of the work, not the exit. If you constantly have one eye on the door, it's going to distract you from building something great. When the time is right, an obvious exit will present itself.",
"title": ""
},
{
"docid": "c58daa07acae659b5335af1ae1dfa254",
"text": "Keep in mind a good lawyer will have the contract cover the five D's: Its really best to lay these things out ahead of time. I watched, first hand, two friends start a business. When they were broke and struggling the worked very well together. Then the money started rolling in. Despite exceeding their dreams they were constantly at each other's throats fighting and bickering over stupid stuff. In the end, because they had decent legal docs, they both were able to pull money out of the business. Had that not been worked out they would have destroyed the business so that no one would have profited.",
"title": ""
},
{
"docid": "81313094b66471c9a79a5e748296daf5",
"text": "Get a lawyer. If you're having legal issues - get a lawyer. If you're having contract issues - get a lawyer.",
"title": ""
},
{
"docid": "40e9d293bd41571c2c549d53e800c95e",
"text": "If it changes, should get new bids. That will prevent making stupid irrelevant changes. Leaving a contract open ended so contractors can come back for more money over and over and over just isn't smart and is an open call for corruption.",
"title": ""
},
{
"docid": "48ded5000df4ac102a0442e44683b48e",
"text": "In addition to the other answers, consultants and contractors face a real risk (though admittedly small) of not getting paid. The more short-term the gigs are, the higher the risk of not getting paid for a particular job. As an employee, there are laws to ensure that you get your paycheck. As a contractor, you're just another creditor. I know a couple of contractors (software engineers) who have had difficulty collecting after a job. (I'm not even sure one ever got paid the full amount.) I also personally witnessed a contractor show up for a job who was then told by the company that they unilaterally decided that they would pay half of their pre-arranged rate.",
"title": ""
},
{
"docid": "bcb7fc910fe1d242fcc4a395828b5462",
"text": "\"This isn't negotiations anymore. They are trying to change the deal after the fact. Stop negotiating and tell them they are bound to the agreement they signed. They are leaning on you because they know you are small and likely can't fight them. Document every conversation. Do not allow them to keep pushing after they've signed the agreement. They accepted your bid (after giving your pricing to a competitor, which is shitty and should have been your first red flag). Then they started working on you. At that point your answer should have been \"\"we have a verbal agreement of x services for y price. A different scope of work is not scalable and would require a new quote.\"\" At this point you can either accept that they will continue to beat you up, or you can jam the contract down their throats until they agree or walk away. I've been in a situation like this before. A major multinational asked for bid pricing that was agreed to be estimated only based on very loose requirements. Then they handed us a contract with that pricing included as \"\"not to exceed\"\". We ended up walking away. It sounds like you may want to do the same if you can. Big companies often will have legal and payables departments that basically exist to fight any obligation to pay out money. In our case shortly after we ran into someone in our industry who'd worked with that company, and they said to assume that company would reject 30% of all invoices we sent. If nothing else, to delay payment just a bit longer so they could keep earning interest on the money. Also, in the future I wouldn't turn away work until you are under a signed contract for a big project like this. You can't rely on such a contract to come through. If they drag feet and your schedule is full that's on them, or you bring in additional help or subcontract the work to deliver.\"",
"title": ""
},
{
"docid": "e2e2d820b8ce55de76713014e9e6a76d",
"text": ">provide cheap, commoditized services. This is crux to the article's argument. But the point should be taken from the article that you need to value your time (so there is a higher chance of success with the business endeavor). If you can hire someone else to do other (lower level) tasks (i.e. farm out, delegate, contract) you free up time for yourself to do those tasks that bring more results to your efforts. And hence has more value. Perhaps this is where the [80/20 rule](http://en.wikipedia.org/wiki/Pareto_principle) comes into play.",
"title": ""
},
{
"docid": "24815a52609847107b389c44b91c9565",
"text": "Me too. Haven't failed because it's shit that I do/did for free. There have have instances where if I didn't have a saved up cushion to fall back on times would have been hard waiting to get paid on some municipal and corporate contracts (can take up to 90 days sometimes).",
"title": ""
},
{
"docid": "bbce3cbd9575790b00f7cbb2ec0986f7",
"text": "\"To take a different tack from qdot - it is advice. Maybe good, maybe bad. In the early 1990s I did exactly what you are intending to do and was stunned at the expenses involved in maintaining the company - primarily the accounting costs. This would have all been different if I'd been making a lot more money out of the situation, but the work was on the side, a few hours a week here and there, and I closed the \"\"business\"\" after just one year. Probably broke even on the deal, but certainly did not come out in front. I'd also strongly recommend you take a look at issues like basic book keeping, claiming VAT, setting up corporate bank accounts, and the like. Whether it is \"\"not a lot of work\"\" is purely a personal thing - some folks breeze through it all, some hate it. Time Is Money. My 0.02.\"",
"title": ""
},
{
"docid": "a5a476e5354b28a79ba529d42d2dabdd",
"text": "When I was a contractor I prioritize this way. 6 months salary nest egg while contributing to tax deferred retirement then after that you can pre pay your mortgage. Remember you can't skip a month even if you prepay. So once you pay that extra to your mortgage you lose that flexibility.",
"title": ""
},
{
"docid": "4b370f4cf544b9d16301ff173ab8e399",
"text": "The essential (and obvious) thing to avoid getting back into debt (or to reduce debt if you have it) is to make your total income exceed your total expenses. That means either increasing your income or reducing your total expenses. Either take effort. Basically, you need a plan. If your plan is to increase income, work out how. If the plan is to increase hours in your current, you need to allow for your needs (sleep, rest, etc) and also convince your employer they will benefit by paying you to work more hours. If your intent is to increase your hourly rate, you need to convince a current or prospective employer that you have the capacity, skills, etc to deliver more on the job, so you are worth paying more. If your intent is to get qualifications so you can get a better paying job, work out how much effort (studying, etc) you will apply, over how long, what expenses you will carry (fees, textbooks, etc), and how long you will carry them for (will you accept working some years in a higher paying job, to clear the debt?). Most of those options involve a lot of work, take time, and often mean carrying debt until you are in a position to pay it off. There is nothing wrong with getting a job while studying, but you have to be realistic about the demands. There is nothing sacrosanct about studying that means you shouldn't have a job. However, you need to be clear how many hours you can work in a job before your studies will suffer unnecessarily, and possibly accept the need to study part time so you can work (which means the study will take longer, but you won't struggle as much financially). If your plan is to reduce expenses, you need a budget. Itemize all of your spend. Don't hide anything from that list, no matter how small. Work out which of the things you need (paying off debt is one), which you can get rid of, which you need to reduce - and by how much. Be brutal with reducing or eliminating the non-essentials no matter how much you would prefer otherwise. Keep going until you have a budget in which your expenses are less than your income. Then stick to it - there is no other answer. Revisit your budget regularly, so you can handle things you haven't previously planned for (say, rent increase, increase fees for something you need, etc). If your income increases (or you have a windfall), don't simply drop the budget - the best way to get in trouble is to neglect the budget, and get into a pattern of spending more than you have. Instead, incorporate the changes into your budget - and plan how you will use the extra income. There is nothing wrong with increasing your spend on non-essentials, but the purpose of the budget is to keep control of how you do that, by keeping track of what you can afford.",
"title": ""
},
{
"docid": "1484da23928ea9ad33dfc7b4d4ebfa0b",
"text": "What city are you in? > I got a call for contract work and it only lasted two weeks. This can happen. Sometimes contracts don't work out. > With that contract I was finally getting paid what I was getting paid at my last permanent position, but again I did not receive the same benefits as a full time employee. That contract let me go after 18 months due to policy that they couldn't string contractors along. This is very common. Unfortunately due to a court case involving Microsoft contractors 25-30 years ago, many firms limit contracts to a hard stop at 18 months - 2 years. Not all firms have this policy. I am interested what city you are in. My career has taken me throughout flyover country, and finding 6 figure contracts has always been reasonably achievable. Most cities appeared to have a shortage of workers with 5+ years experience in most specializations. Fellow IT contractors have felt that IT unemployment insurance is $45 per hour jobs where you compete with H1B body shops, since those almost never get filled. It sounds like you are in an economically depressed area.",
"title": ""
},
{
"docid": "7561647c86ee2f2e4b5a95ab543ff10a",
"text": "You are planning on signing a contract for, likely, hundreds of thousands of dollars, and plan on paying, likely, tens of thousands of dollars in a deposit. For a house that is not built yet. This isn't particularly unusual, lots of people do this. But, you need a lawyer. Now, before you sign anything. Your agent may be able to recommend a lawyer, but beware; your agent may have a conflict of interest here.",
"title": ""
}
] |
fiqa
|
3c736bbcaa6b020f8783c70a89e4ddd4
|
Is accident insurance worth it for my kids who play sports
|
[
{
"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": "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": "c73e81e82c0d59a519f5f9f268ff482b",
"text": "You're trading a fixed liability for an unknown liability. When I graduated from college, I bought a nice used car. Two days later, a deer came out of nowhere, and I hit it going 70 mph on a highway. The damage? $4,500. If I didn't have comprehensive insurance, that would have been a real hit to me financially. For me, I'd rather just pay the modest cost for the comprehensive.",
"title": ""
},
{
"docid": "b303d2f98047b406c05fdfe635ca779c",
"text": "\"There's not a single answer here, as the premium you pay for car insurance depends on multiple factors, including (but not limited to): All these factors contribute to the likelihood of getting into an accident, and the expected damage from an accident. So just having an accident and making a claim will likely raise your premium (all else being equal), but whether or not it will be cheaper in the long run depends (obviously) on how much your premium goes up, which cannot determined without all of the facts. Your agent could tell you how much it would go up, but even making such an inquiry would likely be noted on your insurance record, and may cause your premium to go up (although probably not by as much). However, the point of insurance is to reduce the out-of-pocket expenses from future accidents, so the question to ask is: How likely am I to have another accident, and if I do, can I pay cash for it or will I need to offset some cost with an insurance claim. Do you risk making a claim and having your rates go up by more than $700 over the next 3-4 years (the rough time it takes for a \"\"surcharge\"\" to expire)? Or do you just pay for the repair out-of-pocket and keep your premiums lower?\"",
"title": ""
},
{
"docid": "0f06c64f3954dc1ce53ca1017d37773a",
"text": "\"I've lived this decision, and from my \"\"anecdata\"\": do #3 I have been car-free since 2011 in a large United States city. I was one month into a new job on a rail line out in the suburbs, and facing a $3000 bill to pass state inspection (the brakes plus the emissions system). I live downtown. I use a combination of transit, a carshare service, and 1-2 day rentals from full service car rental businesses (who have desks at several downtown hotels walking distance from my house). I have not had a car insurance policy since 2011; the carshare includes this and I pay $15 per day for SLI from full service rentals. I routinely ask insurance salesmen to run a quote for a \"\"named non-owner\"\" policy, and would pull the trigger if the premium cost was $300/6 months, to replace the $15/day SLI. It's always quoted higher. In general, our trips have a marginal cost of $40-100. Sure, this can be somewhat discouraging. But we do it for shopping at a warehouse club, visiting parents and friends in the suburbs. Not every weekend, but pretty close. But with use of the various services ~1/weekend, it's come out to $2600 per year. I was in at least $3200 per year operating the car and often more, so there is room for unexpected trips or the occasional taxi ride in cash flow, not to mention the capital cost: I ground the blue book value of the car from $19000 down to $3600 in 11 years. Summary: Pull the trigger, do it :D\"",
"title": ""
},
{
"docid": "53565154111376f435af2c4d8b50d458",
"text": "As you say life insurance is about covering the loss of income, so unless your child is an actor or musical prodigy or similar and already earning money, there is no income to cover, and in fact you would have less of a financial commitment without a child to provide for. The other angle is that child life insurance is cheap and they'll have lower premiums than an adult. I'll quote the referenced article directly to address that: Another ploy is that children's life insurance is cheap. It is inexpensive compared to adult life insurance because, plain and simply, children rarely die. While the numbers that the sales agent puts together may make children's life insurance sound like a great deal, take the time to run what you'd have if you instead invested the exact same amount used on the insurance fees into a Roth IRA and you'll find the true cost of purchasing this type of life insurance.",
"title": ""
},
{
"docid": "25c73c24fa91cd5756013eee21f7adfb",
"text": "I'm not the guy you're responding to, but you asked a good question. There's a dearth of data, but [about 1% is the estimate.] (http://www.businessinsurance.com/article/20110814/NEWS03/308149986#) Either way, having increased young adults on an insurance plan is a good thing. Socially, this demographic is exceptionally stinging from the Great Recession and I think the ability to give young adults health insurance (and thus the freedom to start developing a career without worrying about health coverage) outweighs the nominal additional premium costs. Fiscally, having young adults in a group plan decreases the risk profile of that plan since young adults don't incur the same expenses that a 45 or 50 year old would.",
"title": ""
},
{
"docid": "5e37f85cd922fdb9702e05ac45d345b6",
"text": "So far all insurances start from the perspective of the insurance taker. However, I find it much more intuitive to look from the perspective of the insurance giver: Note that the exact amount may differ, but management fees of a few dozen percent are quite realistic. Note that it is not as unreasonable as it may sound at first, some costs: And of course most insurance companies will want to keep some profit as well. If you are completely risk averse, typically it is only financial beneficial to get insurance if you have a significantly higher risk profile. Examples of this (not an expert on boats): Note that piece of mind may also be worth getting the insurance for, for instance if you frequently put others in the position to crash your boat, and don't want to create an awkward financial discussion when they do.",
"title": ""
},
{
"docid": "fd279259b01d20f763a01c8e1039cfca",
"text": "You may not have considered this, and it will depend on your local laws, but if someone causes you damage, you can sue them for the damages. In your case, two drivers forced you to be involved in an accident, which made your premiums go up, which is a real damage for which they might be responsible.",
"title": ""
},
{
"docid": "7c1674dbe0971d64da0bdbd3313c7196",
"text": "\"There are (at least) two problems with the argument suggested in the OP. First, the ability to cover the cost, doesn't mean willingness, ease, or no major side effects of doing so. Second is the mitigation of \"\"upside risk\"\". It might be true that the most usual loss is small and manageable, but 10% of incidents could be considerably larger and 1% may be very much larger - without limit. Your own attitude to risk and loss will determine how much these are seen as unlikely+ignore, or worst case situation+avoid.\"",
"title": ""
},
{
"docid": "54c61d2d88276a215c365b346476ca43",
"text": "\"Even though this isn't really personal finance related I still feel like there are some misconceptions here that could be addressed. I don't know where you got the phrase \"\"pass-through\"\" insurance from. What you're describing is a self-funded plan. In a self-funded arrangement an employer contracts a third-party-administrator (TPA), usually one of the big health insurance carriers, to use it's provider network, process and adjudicate claims, etc. In addition to the TPA there will be some sort of stop-loss insurance coverage on each participant. Stop-loss coverage usually provides a maximum amount of risk on a given member and on the entire population for a given month and/or year and/or lifetime. The employer's risk is in between the plan deductible and the stop loss coverage (assuming the stop-loss doesn't have a maximum). Almost all of the claim dollars in a given plan will come from very very few people. These costs typically arise out of very unforeseen diagnoses not chronic issues. A cancer patient can easily cost $1,000,000 in a year. Someone's diabetes maintenance medicine or other chronic maintenance will cost no where near what a botched surgery will in a year. If we take a step back there are really four categories of employer insurance. Small group is tightly regulated. Usually plan premiums are filed with a state authority, there is no negotiating, your group's underwriting performance has zero impact on your premiums. Employers have no way of obtaining any medical/claim information on employees. Mid-market is a pooled arrangement. The overall pool has a total increase, and your particular group performs better or worse than the pool which may impact premiums. Employers get very minor claims data, things like the few highest claims, or number of claims over a certain threshold, but no employee specific information. Large-group is a mostly unpooled arrangement. Generally your group receives it's own rating based on its individual underwriting performance. In general the carrier is offloading some risk to a stop-loss carrier and employer's get a fair amount of insight in to claims, though again, not with employee names. Self-funded is obviously self-contained. The employer sets up a claims checking account. The TPA has draft authority on the account. The employee's typically have no idea the plan is self funded, their ID cards will have the carrier logo, and the carrier deals with them just as it would any other member. Generally when a company is this size it has a separate benefits committee, those few people will have some level of insight in to claims performance and stop-loss activity. This committee will have nothing to do with the hiring process. There are some new partially self-funded arrangements, which is just a really low-threshold (and relatively expensive) stop-loss program, that's becoming somewhat popular in the mid-market group size as employers attempt to reduce medical spend. I think when you start thinking on a micro, single employee level, you really lose sight of the big picture. Why would an employer hire this guy who has this disease/chronic problem that costs $50,000 per year? And logically you can get to the conclusion that with a self-funded plan it literally costs the company the money so the company has an incentive not to hire the person. I understand the logic of the argument, but at the self funded level the plan is typically costing north of half a million dollars each month. So a mid-level HR hiring manager 1. isn't aware of specific plan claims or costs and is not part of the benefits executive committee, 2. won't be instructed to screen for health deficiencies because it's against the law, 3. a company generally won't test the water here because $50,000 per year is less than 1% of the company's annual medical expenses, 4. $50,000 is well below the cost to litigate a discrimination law-suit. Really the flaw in your thought process is that $50,000 in annual medical expense is a lot. A harsh child-birth can run in the $250,000 range, so these companies never hire women? Or never hire men who could add a spouse who's in child bearing years? Or never hire women who might have a female spouse who could be in child bearing years? A leukemia diagnosis will ratchet up $1,000,000 in a year. Spend a bit of time in intensive care for $25,000 per day and you're fired? A few thousand bucks on diabetes meds isn't anything relative to the annual cost of your average self-funded plan. The second flaw is that the hiring managers get insight in to specific claims. They don't. Third, you don't hand over medical records on your resume anyway. I typed this out in one single draft and have no intention of editing anything. I just wanted paint a broad picture, I'm sure things can be nit-picked or focused on.\"",
"title": ""
},
{
"docid": "d1ec144af98b1761447a9fa17d518ec0",
"text": "But they did have the accident. The insurance is in case they become unemployed which they did. If you want to come up with some alternative concept called destitution insurance or some such then go for it. So far that has turned out to be both technically and politically impossible.",
"title": ""
},
{
"docid": "7cf3a0af9562c14c623d6225f986f0ce",
"text": "\"The key point to answer the question is to consider risk aversion. Assume I suggest a game to you: Throw a coin and if you win, you get $5, if you lose nothing happens. Will you play the game? Of course, you will - you have nothing to lose! What if I suggest this: If you win, you get $10,000,005 and if you lose you must pay $10,000,000 (I also accept cars, houses, spouses, and kidneys as payment). While the expected value of the second game is the same as for the first, if you lose the second game you are more or less doomed to spend the rest of your life in poverty or not even have a rest of your life. Therefore, you will not wish to play the second game. Well, maybe you do - but probably only if you are very, very rich and can easily afford a loss (even if you had $11,000,000 you won't be as happy with a possible raise to $21,000,005 as you'd be unhappy with dropping to a mere $1,000,000, so you'd still not like to play). Some model this by taking logarithms: If your capital grows from $500 to $1000 or from $1000 to $2000, in both cases it doubles, hence is considered the same \"\"personal gain\"\", effectively. And, voíla, the logartithm of your capital grows by the same amount in both cases. This refelcts that a rich man will not be as happy about finding a $10 note as a poor man will be about finding a nickel. The effect of an insurance is that you replace an uncertain event of great damage with a certain event of little damage. Of course, the insurance company plays the same game, with roles swapped - so why do they play? One point is that they play the game very often, which tends to nivel the risks - unless you do something stupid and insure all inhabitants of San Francisco (and nobody else) against eqarthquakes. But also they have enough capital that they can afford to lose the game. In a fair situation, i.e. when the insurance costs just as much as damage cost multiplied with probability of damage, a rational you would eagerly buy the insurance because of risk aversion. Therefore, the insurance will in effect be able to charge more than the statistically fair price and many will still (gnawingly) buy it, and that's how they make a living. The decision how much more one is willing to accept as insurance cost is also a matter of whether you can afford a loss of the insured item easily, with regrets, barely, or not all.\"",
"title": ""
},
{
"docid": "f2e56eec51fa0c7f632286583267210f",
"text": "\"I think at this point you and the other person who seems to ask this question in multiple permutations needs to talk to a local expert rather than continuing to ask the same questions with slight fact variations. This all happened when you were 9. If you think there was foul play involved, at the minimum it will be difficult to prove 16 years on. Somehow I doubt there are 2 people on Toronto whose parents bought them whole life insurance policies in 2000 asking the same questions at the same time. If you don't want the coverage or you think the whole thing was a mistake, cash the policy out. According to the other question about this policy there's nearly $7,000 of cash value there. Just take the money out and move on with your life. Unless you're willing to sue your \"\"mentally ill\"\" mother over the $1,500 net loss ($530 premium times 16 years minus $7,000 cash value) I'm not sure what recourse or advice you're looking for. And even that assumes she's paying the premium with your money. Separately, if your mother is the owner of the policy and paying with her money I'm not sure why this involves you at all. Parents buy life insurance on their children all the time.\"",
"title": ""
},
{
"docid": "1f79e57b1d86b5de06f91f3c14f674b8",
"text": "As for a formula, there isn't a simple one that you can apply to every type insurance. I'll try my best for a simple answer. Is the event devastating enough to change your lifestyle (looking at life necessities, not wants and nice to haves)? Is the event very likely to happen? Do you have enough emergency funds to cover such an event? Once that emergency fund is utilized, how long does it take you to restore that fund to be ready for the next event? If the event is devastating enough and is very likely to happen and you do not have the cash to cover the event, and/or it would take too long to restore that emergency fund, then it makes sense to consider insurance. Then you would have to examine if the benefit(s) outweight cost of the premium paid for the insurance. If it is pennies of premium for a dollar of benefit, then it makes sense.",
"title": ""
},
{
"docid": "0986fd839af7054f8dc1c66d227bf882",
"text": "The smaller and more quantifiable and consistent risks will probably result (obviously in addition to smaller premiums) in a smaller spread in favor of the insurance company since there is a lot more leverage for companies like Tesla to negotiate with to drive down prices. It may reduce costs for Geico but it sure as hell will reduce profits too.",
"title": ""
}
] |
fiqa
|
84cd94dd212ab105dfe2dea3e1c420b9
|
Why is it not a requirement for companies to pay dividends?
|
[
{
"docid": "187da176de28134ca36a1b9726d3e13a",
"text": "The shareholders have a claim on the profits, but they may prefer that claim to be exercised in ways other than dividend payments. For example, they may want the company to invest all of its profits in growth, or they may want it to buy back shares to increase the value of the remaining shares, especially since dividends are generally taxed as income while an increase in the share price is generally taxed as a capital gain, and capital gains are often taxed at a lower rate than income.",
"title": ""
},
{
"docid": "1754c182047fa24bb9978d4df8af2c42",
"text": "Cash flow is needed for expansion, either to increase manufacturing capacity or to expand the workforce. Other times companies use it to purchase other companies. Microsoft and Google have both used their cash or stocks to purchase companies. Examples by Google include YouTube, Keyhole (Google Earth), and now part of Motorola to expand into Phones. If you are investing for the future, you don't want a lot of dividends. They do bring tax issues. That is not a big problem if you are investing in an IRA or 401K. It is an issue if the non-tax-defered mutual fund distributes those dividends via the 1099, forcing you to address it on your taxes each year. Some investors do like dividends, but they are looking for their investments to generate cash. Who would require it? Would it be an SEC requirement? Even more government paperwork for companies.",
"title": ""
},
{
"docid": "9ff4b83c8e5627b710d84964fc9b0a85",
"text": "\"This answer will expand a bit on the theory. :) A company, as an entity, represents a pile of value. Some of that is business value (the revenue stream from their products) and some of that is assets (real estate, manufacturing equipment, a patent portfolio, etc). One of those assets is cash. If you own a share in the company, you own a share of all those assets, including the cash. In a theoretical sense, it doesn't really matter whether the company holds the cash instead of you. If the company adds an extra $1 billion to its assets, then people who buy and sell the company will think \"\"hey, there's an extra $1 billion of cash in that company; I should be willing to pay $1 billion / shares outstanding more per share to own it than I would otherwise.\"\" Granted, you may ultimately want to turn your ownership into cash, but you can do that by selling your shares to someone else. From a practical standpoint, though, the company doesn't benefit from holding that cash for a long time. Cash doesn't do much except sit in bank accounts and earn pathetically small amounts of interest, and if you wanted pathetic amounts of interests from your cash you wouldn't be owning shares in a company, you'd have it in a bank account yourself. Really, the company should do something with their cash. Usually that means investing it in their own business, to grow and expand that business, or to enhance profitability. Sometimes they may also purchase other companies, if they think they can turn a profit from the purchase. Sometimes there aren't a lot of good options for what to do with that money. In that case, the company should say, \"\"I can't effectively use this money in a way which will grow my business. You should go and invest it yourself, in whatever sort of business you think makes sense.\"\" That's when they pay a dividend. You'll see that a lot of the really big global companies are the ones paying dividends - places like Coca-Cola or Exxon-Mobil or what-have-you. They just can't put all their cash to good use, even after their growth plans. Many people who get dividends will invest them in the stock market again - possibly purchasing shares of the same company from someone else, or possibly purchasing shares of another company. It doesn't usually make a lot of sense for the company to invest in the stock market themselves, though. Investment expertise isn't really something most companies are known for, and because a company has multiple owners they may have differing investment needs and risk tolerance. For instance, if I had a bunch of money from the stock market I'd put it in some sort of growth stock because I'm twenty-something with a lot of savings and years to go before retirement. If I were close to retirement, though, I would want it in a more stable stock, or even in bonds. If I were retired I might even spend it directly. So the company should let all its owners choose, unless they have a good business reason not to. Sometimes companies will do share buy-backs instead of dividends, which pays money to people selling the company stock. The remaining owners benefit by reducing the number of shares outstanding, so they own more of what's left. They should only do this if they think the stock is at a fair price, or below a fair price, for the company: otherwise the remaining owners are essentially giving away cash. (This actually happens distressingly often.) On the other hand, if the company's stock is depressed but it subsequently does better than the rest of the market, then it is a very good investment. The one nice thing about share buy-backs in general is that they don't have any immediate tax implications for the company's owners: they simply own a stock which is now more valuable, and can sell it (and pay taxes on that sale) whenever they choose.\"",
"title": ""
},
{
"docid": "4d44307f7d77cfc92dde439165d51a5c",
"text": "You have plenty of good answers, but I want to add something that might help you grow your intuition on stocks. There are a lot of differences between the example I am going to give and how the stock market actually runs, but the basic concepts are the same. Lets say your friend asks you if he can borrow some money to start up a company, in exchange you will have some ownership in this company. You have essentially just bought yourself some stock. Now as your friend starts to grow, he is doing well, but he needs more cash to buy assets in order to grow the company more. He is forced with an option, either give you some of the profits, or buy these assets sooner. You decide you don't really need the money right now, and think he can do a lot better with spending the money to buy stuff. This is essentially the same as a company electing to not pay dividends, but instead invest into the future. You as a stock holder are fine with it since you know the money is going toward investing in the future. Even if you never get paid a dividend, as a company grows, you can then turn around and sell the stock to someone else for more money then you gave originally. Of course you always take the risk of having the company failing and loosing some if not all of your investment, but that is just the risk of the market.",
"title": ""
}
] |
[
{
"docid": "0fd8ecaa4e48f0176054c42c39d7c412",
"text": "\"Dividends are a way of distributing profits from operating a business to the business owners. Why would you call it \"\"wasting money\"\" is beyond me. Decisions about dividend distribution are made by the company based on its net revenue and the needs of future capital. In some jurisdictions (the US, for example), the tax policy discourages companies from accumulating too much earnings without distributing dividends, unless they have a compelling reason to do so. Stock price is determined by the market. The price of a stock is neither expensive nor cheap on its own, you need to look at the underlying company and the share of it that the stock represents. In case of Google, according to some analysts, the price is actually quite cheap. The analyst consensus puts the target price for the next 12 months at $921 (vs. current $701).\"",
"title": ""
},
{
"docid": "c8ea35706b4e844f515d4c3bf0cadab8",
"text": "\"From Wikipedia - Stock: The stock (also capital stock) of a corporation constitutes the equity stake of its owners. It represents the residual assets of the company that would be due to stockholders after discharge of all senior claims such as secured and unsecured debt. Stockholders' equity cannot be withdrawn from the company in a way that is intended to be detrimental to the company's creditors Wikipedia - Dividend: A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits. When a corporation earns a profit or surplus, it can re-invest it in the business (called retained earnings), and pay a fraction of this reinvestment as a dividend to shareholders. Distribution to shareholders can be in cash (usually a deposit into a bank account) or, if the corporation has a dividend reinvestment plan, the amount can be paid by the issue of further shares or share repurchase. Wikipedia - Bond: In finance, a bond is an instrument of indebtedness of the bond issuer to the holders. It is a debt security, under which the issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay them interest (the coupon) and/or to repay the principal at a later date, termed the maturity date. Interest is usually payable at fixed intervals (semiannual, annual, sometimes monthly). Very often the bond is negotiable, i.e. the ownership of the instrument can be transferred in the secondary market. This means that once the transfer agents at the bank medallion stamp the bond, it is highly liquid on the second market. Thus, stock is about ownership in the company, dividends are the payments those owners receive, which may be additional shares or cash usually, and bonds are about lending money. Stocks are usually bought through brokers on various stock exchanges generally. An exception can be made under \"\"Employee Stock Purchase Plans\"\" and other special cases where an employee may be given stock or options that allow the purchase of shares in the company through various plans. This would apply for Canada and the US where I have experience just as a parting note. This is without getting into Convertible Bond that also exists: In finance, a convertible bond or convertible note or convertible debt (or a convertible debenture if it has a maturity of greater than 10 years) is a type of bond that the holder can convert into a specified number of shares of common stock in the issuing company or cash of equal value. It is a hybrid security with debt- and equity-like features. It originated in the mid-19th century, and was used by early speculators such as Jacob Little and Daniel Drew to counter market cornering. Convertible bonds are most often issued by companies with a low credit rating and high growth potential.\"",
"title": ""
},
{
"docid": "3c4b1904fafa3ab88a40e26f539a6fc4",
"text": "\"Yes, they are, and you've experienced why. Generally speaking, stocks that pay dividends will be better investments than stocks that don't. Here's why: 1) They're actually making money. They can finagle balance sheets and news releases, but cash is cash, it tells no lies. They can't fake it. 2) There's less good they can do with that money than they say. When a business you own is making money, they can do two things with it: reinvest it into the company, or hand it over to you. All companies must reinvest to some degree, but only a few companies worth owning can find profitable ways of reinvesting all of it. Having to hand you, the owner, some of the earnings helps keep that money from leaking away on such \"\"necessities\"\" like corporate jets, expensive printer paper, or ill-conceived corporate buyouts. 3) It helps you not freak out. Markets go up, and markets go down. If you own a good company that's giving you a nice check every three months, it's a lot easier to not panic sell in a downturn. After all, they're handing you a nice check every three months, and checks are cash, and cash tells no lies. You know they're still a good company, and you can ride it out. 4) It helps others not freak out. See #3. That applies to everyone. That, in turn means market downturns weigh less heavily on companies paying solid dividends than on those that do not. 5) It gives you some of the reward of investing in good companies, without having to sell those companies. If you've got a piece of a good, solid, profitable, growing company, why on earth would you want to sell it? But you'd like to see some rewards from making that wise investment, wouldn't you? 6) Dividends can grow. Solid, growing companies produce more and more earnings. Which means they can hand you more and more cash via the dividend. Which means that if, say, they reliably raise dividends 10%/year, that measly 3% dividend turns into a 6% dividend seven years later (on your initial investment). At year 14, it's 12%. Year 21, 24%. See where this is going? Companies like that do exist, google \"\"Dividend Aristocrats\"\". 7) Dividends make growth less important. If you owned a company that paid you a 10% dividend every year, but never grew an inch, would you care? How about 5%, and it grows only slowly? You invest in companies, not dividends. You invest in companies to make money. Dividends are a useful tool when you invest -- to gauge company value, to smooth your ride, and to give you some of the profit of the business you own. They are, however, only part of the total return from investing -- as you found out.\"",
"title": ""
},
{
"docid": "dc59461adf247c800ede67afc91e7d2e",
"text": "I would prefer a dividend paying company, rather than share appreciation. And I would prefer that the dividends increase over time.",
"title": ""
},
{
"docid": "d7a74283b5d312d5d5b84245bf4dc5e0",
"text": "\"In the unlikely case that noone finds a way to extract resources from the company and distribute them to shareholders periodically in a way that's de facto equivalent to dividends, any company can be dissolved. The assets of the company would be sold for their market value, the liabilities would have to be settled, and the net result of all this (company cash + sale results - liabilities) would be distributed to shareholders proportionally to their shares. The 'liquidation value' is generally lower than the market value of a company as an ongoing concern that's making business and earning profit, but it does put a floor on it's value - if the stock price is too low, someone can buy enough stock to get control of the company, vote to dissolve it, and make a profit that way; and the mere fact that this can happen props up the stock price. Companies could even be created for a limited time period in the first hand (which has some historical precedent with shareholders of 'trading companies' with lifetime of a single trade voyage). Imagine that there is some company Megacorp2015 where shareholders want to receive $1M of its cash as \"\"dividends\"\". They can make appropriate contracts that will form a new company called Megacorp2016 that will take over all the ongoing business and assets except $1M in cash, and then liquidate Megacorp2015 and distribute it's assets (shares of Megacorp2016 and the \"\"dividend\"\") among themselves. The main difference from normal dividends is that in this process, you need cooperation from any lenders involved, so if the company has some long-term debts then they would need agreement from those banks in order to pay out \"\"dividends\"\". Oh, and everyone would have to pay a bunch more to lawyers simply to do \"\"dividends\"\" in this or some other convoluted way.\"",
"title": ""
},
{
"docid": "709d76dc519d425b8b5da7e48547fd43",
"text": "\"Dividend yields can also reflect important information about the company's status. For example, a company that has never lowered or stopped paying dividends is a \"\"strong\"\" company because it has the cash/earnings power to maintain its dividend regardless of the market. Ideally, a company should pay dividends for at least 10 years for an investor to consider the company as a \"\"consistent payer.\"\" Furthermore, when a company pays dividend, it generally means that it has more cash than it can profitably reinvest in the business, so companies that pay dividends tend to be older but more stable. An important exception is REIT's and their ilk - to avoid taxation, these types of funds must distribute 90% of their earnings to their shareholders, so they pay very high dividends. Just look at stocks like NLY or CMO to get an idea. The issue here, however, is two fold: So a high dividend can be great [if it has been paid consistently] or risky [if the company is new or has a short payment history], and dividends can also tell us about what the company's status is. Lastly, taxation on dividend income is higher than taxation on capital gains, but by reinvesting dividends you can avoid this tax and lower your potential capital gain amount, thus limiting taxes. http://www.tweedy.com/resources/library_docs/papers/highdiv_research.pdf is an excellent paper on dividend yields and investing.\"",
"title": ""
},
{
"docid": "c4fe313697ab1f1eda3dfb44d0d27106",
"text": "Yes. Instead of paying a cash dividend to shareholders, the company grants existing shareholders new shares at a previously determined price. I'm sorry, but scrip issues are free (for all ordinary shareholders) and are in proportion to existing share holding. No payment is required from shareholders. So instead of having 10 $1 shares, the shareholder (if accepts) now could have 20 50p shares, if it was a one-for-one scrip issue.",
"title": ""
},
{
"docid": "10d8658ae1f278bd82771c88cacf32fa",
"text": "The ultimate reason to own stock is to receive cash or cash equivalents from the underlying security. You can argue that you make money when stock is valued higher by the market, but the valuation should (though clearly not necessarily is) be based on the expected payout of the underlying security. There are only three ways money can be returned to the shareholder: As you can see, if you don't ask for dividends, you are basically asking for one of the top two too occur - which happens in the future at the end of the company's life as an independent entity. If you think about the time value of money, money in the hand now as dividends can be worth more than the ultimate appreciation of liquidation or acquisition value. Add in uncertainty as a factor for ultimate value, and my feeling is that dividends are underpaid in today's markets.",
"title": ""
},
{
"docid": "71e70c6c3d426e2f03e616d2b9f7092d",
"text": "\"Let me provide a general answer, that might be helpful to others, without addressing those specific stocks. Dividends are simply corporate payouts made to the shareholders of the company. A company often decides to pay dividends because they have excess cash on hand and choose to return it to shareholders by quarterly payouts instead of stock buy backs or using the money to invest in new projects. I'm not exactly sure what you mean by \"\"dividend yield traps.\"\" If a company has declared an dividend for the upcoming quarter they will almost always pay. There are exceptions, like what happened with BP, but these exceptions are rare. Just because a company promises to pay a dividend in the approaching quarter does not mean that it will continue to pay a dividend in the future. If the company continues to pay a dividend in the future, it may be at a (significantly) different amount. Some companies are structured where nearly all of there corporate profits flow through to shareholders via dividends. These companies may have \"\"unusually\"\" high dividends, but this is simply a result of the corporate structure. Let me provide a quick example: Certain ETFs that track bonds pay a dividend as a way to pass through interest payments from the underlying bonds back to the shareholder of the ETF. There is no company that will continue to pay their dividend at the present rate with 100% certainty. Even large companies like General Electric slashed its dividend during the most recent financial crisis. So, to evaluate whether a company will keep paying a dividend you should look at the following: Update: In regards to one the first stock you mentioned, this sentence from the companies of Yahoo! finance explains the \"\"unusually\"\" dividend: The company has elected to be treated as a REIT for federal income tax purposes and would not be subject to income tax, if it distributes at least 90% of its REIT taxable income to its share holders.\"",
"title": ""
},
{
"docid": "fa8e0c64174269d2bd8ace9c51271d15",
"text": "The upvoted answers fail to note that dividends are the only benefit that investors collectively receive from the companies they invest in. If you purchase a share for $100, and then later sell it for $150, you should note that there is always someone that purchases the same share for $150. So, you get $150 immediately, but somebody else has to pay $150 immediately. So, investors collectively did not receive any money from the transaction. (Yes, share repurchase can be used instead of dividends, but it can be considered really another form of paying dividends.) The fair value of a stock is the discounted value of all future dividends the stock pays. It is so simple! This shows why dividends are important. Somebody might argue that many successful companies like Berkshire Hathaway do not pay dividend. Yes, it is true that they don't pay dividend now but they will eventually have to start paying dividend. If they reinvest potential dividends continuously, they will run out of things to invest in after several hundred years has passed. So, even in this case the value of the stock is still the discounted value of all future dividends. The only difference is that the dividends are not paid now; the companies will start to pay the dividends later when they run out of things to invest in. It is true that in theory a stock could pay an unsustainable amount of dividend that requires financing it with debt. This is obviously not a good solution. If you see a company that pays dividend while at the same time obtaining more cash from taking more debt or from share issues, think twice whether you want to invest in such a company. What you need to do to valuate companies fairly is to estimate the amount of dividend that can sustain the expected growth rate. It is typically about 60% of the earnings, because a part of the earnings needs to be invested in future growth, but the exact figure may vary depending on the company. Furthermore, to valuate a company, you need the expected growth rate of dividends and the discount rate. You simply discount all future dividends, correcting them up by the expected dividend growth rate and correcting them down by the discount rate.",
"title": ""
},
{
"docid": "34c9f459817d83133cb77ce55d4178e9",
"text": "\"There are a few reason why the stock price decreases after a dividend is paid: What's the point of paying a dividend if the stock price automatically decreases? Don't the shareholders just break even? Companies have to do something with their profits. They beholden to their shareholders to make them money either by increasing the share value or paying dividends. So they have the choice between reinvesting their profits into the company to grow the business or just handing the profits directly to the owners of the business (the shareholders). Some companies are as big as they want to be and investing their profits into more capital offers them diminishing returns. These companies are more likely to pay dividends to their shareholders. I assume the price of the stock \"\"naturally\"\" increases over the year to reflect the amount of the dividend payment. This is kind of a vague question but then doesn't it make it difficult to evaluate the fluctuations in stock price (in the way that you would a company that doesn't pay a dividend)? It depends on the company. The price may recover the dividend drop... could take a few days to a week. And that dependings on the company's performance and the overall market performance. With respect to options, I assume nothing special happens? So say I bought $9 call options yesterday that were in the money, all of a sudden they're just not? Is this typically priced into the option price? Is there anything else I need to know about buying options in companies that pay dividends? What if I had an in-the-money option, and all of a sudden out of nowhere a company decides to pay a dividend for the first time. Am I just screwed? One key is that dividends are announced in advance (typically at least, if not always; not sure if it's required by law but I wouldn't be surprised). This is one reason people will sometimes exercise a call option early, because they want to get the actual stock in order to earn the dividend. For \"\"out of the ordinary\"\" large cash dividends (over 10% is the guideline), stock splits, or other situations an option can be adjusted: http://www.888options.com/help/faq/splits.jsp#3 If you have an options account, they probably sent you a \"\"Characteristics and Risks of Standardized Options\"\" booklet. It has a section discussing this topic and the details of what kinds of situations trigger an adjustment. A regular pre-announced <10% dividend does not, while a special large dividend would, is what I roughly get from it. That \"\"Characteristics and Risks of Standardized Options\"\" is worth reading by the way; it's long and complicated, but well, options are complicated. Finally, do all companies reduce their stock price when they pay a dividend? Are they required to? I'm just shocked I've never heard of this before. The company doesn't directly control the stock price, but I do believe this is automatic. I think the market does this automatically because if they didn't, there would be enough people trying to do dividend capture arbitrage that it would ultimately drive down the price.\"",
"title": ""
},
{
"docid": "521df5e113f22567afd3acdd292d5b3f",
"text": "It comes down to the practical value of paying dividends. The investor can continually receive a stream of income without selling shares of the stock. If the stock did not pay a dividend and wanted continual income, the investor would have to continually sell shares to gain this stream of income, incurring transaction costs and increased time and effort involved with making these transactions.",
"title": ""
},
{
"docid": "226d14004f8da97cc73ed47b9a00ca7c",
"text": "The shareholders can't all re-invest their dividends -- it's not possible. Paying a dividend doesn't issue any new shares, so unless some of the existing shareholders sell their shares instead of re-investing, there aren't any shares available for the shareholders to re-invest in.",
"title": ""
},
{
"docid": "8275ea015abe08b1d099c7fdeb640a42",
"text": "It is just a different category of stock issued by a company that gives its owners different treatment when it comes to dividend payment and a few other financial transactions. Preferred stock holders get treated with some preference with regard to the company's profits and assets. For example, dividends are typically guaranteed to preferred stock holders whereas the leadership in the company can elect at any time not to pay dividends to common stockholders. In the event the company is liquidated, the preferred stockholders also get to be in line ahead of common stockholders when the assets are distributed.",
"title": ""
},
{
"docid": "ac33ea50dc277176327736a8f2fae978",
"text": "\"I think this is possible under very special conditions. The important part of the description here is probably retired and rich. The answers so far apply to people with \"\"normal\"\" incomes - both in the sense of \"\"not rich\"\" and in the sense of \"\"earned income.\"\" If you sit at the top tax bracket and get most of your income through things like dividends, then you might be able to win multiple ways with the strategy described. First you get the tax deduction on the mortgage interest, which everyone has properly noted is not by itself a winning game - You spend more than you save. BUT... There are other factors, especially for the rich and those whose income is mostly passive: I'm not motivated enough on the hypothetical situation to come up with a detailed example, but I think it's possible that this could work out. In any case, the current answers using \"\"normal sized\"\" incomes and middle tax brackets don't necessarily give the insight that you might hope if the tax payer really is unusually wealthy and retired.\"",
"title": ""
}
] |
fiqa
|
51b2b62710d7d2686b37740ce5067cc9
|
MasterCard won't disclose who leaked my credit card details
|
[
{
"docid": "ca9c5511d15fe54b47293c8e20c70d94",
"text": "\"As indicated in comments, this is common practice in the US as well as EU. For example, in this Fox Business article, a user had basically the same experience: their card was replaced but without the specific merchant being disclosed. When the reporter contacted Visa, they were told: \"\"We also believe that the public interest is best served by quickly notifying financial institutions with the information necessary to protect themselves and their cardholders from fraud losses. Even a slight delay in notification to financial institutions could be costly,” the spokesperson said in an e-mail statement. “Visa works with the breached entity to collect the necessary information and provides payment card issuers with the affected account numbers so they can take steps to protect consumers through independent fraud monitoring, and if needed, reissuing cards. The most critical information needed is the affected accounts, which Visa works to provide as quickly as possible.” What they're not saying, of course, is that it's in Visa's best interests that merchants let Visa know right away when a leak occurs, without having to think about whether it's going to screw that merchant over in the press. If the merchant has to consider PR, they may not let the networks know in as timely of a fashion - they may at least wait until they've verified the issue in more detail, or even wait until they've found who to pin it on so they don't get blamed. But beyond that, the point is that it's easier for the network (Visa/Mastercard/etc.) to have a system that's just a list of card numbers to submit to the bank for re-issuing; nobody there really cares which merchant was at fault, they just want to re-issue the cards quickly. Letting you know who's at fault is separate. There's little reason for the issuing bank to ever know; you should find out from the merchant themselves or from the network (and in my experience, usually the former). Eventually you may well find out - the article suggest that: [T]he situation is common, but there is some good news: consumers do in many cases find out the source of the breach. But of course doesn't go into detail about numbers.\"",
"title": ""
},
{
"docid": "b8843fe9bca74bcb7d197cc97362eaae",
"text": "I found a german article describing the legal situation in Germany. To summarize As outlined by the many possible reasons in the other answer, it is unclear from the information I have, whether condition 1 holds. Also condition 2 may not hold since the credit card was frozen. I suppose this makes a good argument to MasterCard and my bank, but I also suspect they will not care unless it comes with a attorney letterhead.",
"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": "422e6a852c0f6568b2848a07cab29dfa",
"text": "\"File a John Doe lawsuit, \"\"plaintiff to be determined\"\", and then subpoena the relevant information from Mastercard. John Doe doesn't countersue, so you're pretty safe doing this. But it probably won't work. Mastercard would quash your subpoena. They will claim that you lack standing to sue anyone because you did not take a loss (which is a fair point). They are after the people doing the hacking, and the security gaps which make the hacking possible. And how those gaps arise among businesses just trying to do their best. It's a hard problem. And I've done the abuse wars professionally. OpSec is a big deal. You simply cannot reveal your methods or even much of your findings, because that will expose too much of your detection method. The ugly fact is, the bad guys are not that far from winning, and catching them depends on them unwisely using the same known techniques over and over. When you get a truly novel technique, it costs a fortune in engineering time to unravel what they did and build defenses against it. If maybe 1% of attacks are this, it is manageable, but if it were 10%, you simply cannot staff an enforcement arm big enough - the trained staff don't exist to hire (unless you steal them from Visa, Amex, etc.) So as much as you'd like to tell the public, believe me, I'd like to get some credit for what I've done -- they just can't say much or they educate the bad guys, and then have a much tougher problem later. Sorry! I know how frustrating it is! The credit card companies hammered out PCI-DSS (Payment Card Industry Data Security Standards). This is a basic set of security rules and practices which should make hacking unlikely. Compliance is achievable (not easy), and if you do it, you're off the hook. That is one way Amy can be entirely not at fault. Example deleted for length, but as a small business, you just can't be a PCI security expert. You rely on the commitments of others to do a good job, like your bank and merchant account salesman. There are so many ways this can go wrong that just aren't your fault. As to the notion of saying \"\"it affected Amy's customers but it was Doofus the contractor's fault\"\", that doesn't work, the Internet lynch mob won't hear the details and will kill Amy's business. Then she's suing Mastercard for false light, a type of defamtion there the facts are true but are framed falsely. And defamation has much more serious consequences in Europe. Anyway, even a business not at fault has to pay for a PCI-DSS audit. A business at fault has lots more problems, at the very least paying $50-90 per customer to replace their cards. The simple fact is 80% of businesses in this situation go bankrupt at this point. Usually fraudsters make automated attacks using scripts they got from others. Only a few dozen attacks (on sites) succeed, and then they use other scripts to intercept payment data, which is all they want. They are cookie cutter scripts, and aren't customized for each site, and can't go after whatever personal data is particular to that site. So in most cases all they get is payment data. It's also likely that primary data, like a cloud drive, photo collection or medical records, are kept in completely separate systems with separate security, unlikely to hack both at once even if the hacker is willing to put lots and lots of engineering effort into it. Most hackers are script kiddies, able to run scripts others provided but unable to hack on their own. So it's likely that \"\"none was leaked\"\" is the reason they didn't give notification of private information leakage. Lastly, they can't get what you didn't upload. Site hacking is a well known phenomenon. A person who is concerned with privacy is cautious to not put things online that are too risky. It's also possible that this is blind guesswork on the part of Visa/MC, and they haven't positively identified any particular merchant, but are replacing your cards out of an abundance of caution.\"",
"title": ""
}
] |
[
{
"docid": "11b39e366f3d2845e53b28c60886fc9e",
"text": "\"This question has the [united kingdom] tag, so the information about USA or other law and procedures is probably only of tangential use. Except for understanding that no, this is not something to ignore. It may well indicate someone trying to use your id fraudulently, or some other sort of data-processing foul-up that may adversely impact your credit rating. The first thing I would do is phone the credit card company that sent the letter to inform them that I did not make his application, and ask firmly but politely to speak to their fraud team. I would hope that they would be helpful. It's in their interests as well as yours. (Added later) By the way, do not trust anything written on the letter. It may be a fake letter trying to lure or panic you into some other sort of scam, such as closing your \"\"compromised\"\" bank account and transferring the money in it to the \"\"fraud team\"\" for \"\"safety\"\". (Yes, it sounds stupid, but con-men are experts at what they do, and even finance industry professionals have fallen victim to such scams) So find a telephone number for that credit card company independently, for example Google, and then call that number. If it's the wrong department they'll be able to transfer you internally. If the card company is unhelpful, you have certain legal rights that do not cost much if anything. This credit company is obliged to tell you as an absolute minimum, which credit reference agencies they used when deciding to decline \"\"your\"\" application. Yes, you did not make it, but it was in your name and affected your credit rating. There are three main credit rating agencies, and whether or not the bank used them, I would spend the statutory £2 fee (if necessary) with each of them to obtain your statutory credit report, which basically is all data that they hold about you. They are obliged to correct anything which is inaccurate, and you have an absolute right to attach a note to your file explaining, for example, that you allege entries x,y, and z were fraudulently caused by an unknown third party trying to steal your ID. (They may be factually correct, e.g. \"\"Credit search on \"\", so it's possible that you cannot have them removed, and it may not be in your interests to have them removed, but you certainly want them flagged as unauthorized). If you think the fraudster may be known to you, you can also use the Data Protection Act on the company which write to you, requiring them to send you a copy of all data allegedly concerning yourself which it holds. AFAIR this costs £10. In particular you will require sight of the application and signature, if it was made on paper, and the IP address details, if it was made electronically, as well as all the data content and subsequent communications. You may recognise the handwriting, but even if not, you then have documentary evidence that it is not yours. As for the IP address, you can deduce the internet service provider and then use the Data Protection act on them. They may decline to give any details if the fraudster used his own credentials, in which case again you have documentary evidence that it was not you ... and something to give the police and bank fraud investigators if they get interested. I suspect they won't be very interested, if all you uncover is fraudulent applications that were declined. However, you may uncover a successful fraud, i.e. a live card in your name being used by a criminal, or a store or phone credit agreement. In which case obviously get in touch with that company a.s.a.p. to get it shut down and to get the authorities involved in dealing with the crime. In general, write down everything you are told, including phone contact names, and keep it. Confirm anything that you have agreed in writing, and keep copies of the letters you write and of course, the replies you receive. You shouldn't need any lawyer. The UK credit law puts the onus very much on the credit card company to prove that you owe it money, and if a random stranger has stolen your id, it won't be able to do that. In fact, it's most unlikely that it will even try, unless you have a criminal record or a record of financial delinquency. But it may be an awful lot of aggravation for years to come, if somebody has successfully stolen your ID. So even if the first lot of credit reference agency print-outs look \"\"clean\"\", check again in about six weeks time and yet again in maybe 3 months. Finally there is a scheme that you can join if you have been a victim of ID theft. I've forgotten its name but you will probably be told about it. Baically, your credit reference files will be tagged at your request with a requirement for extra precautions to be taken. This should not affect your credit rating but might make obtaining credit more hassle (for example, requests for additional ID before your account is opened after the approval process). Oh, and post a letter to yourself pdq. It's not unknown for fraudsters to persuade the Post Office to redirect all your mail to their address!\"",
"title": ""
},
{
"docid": "681489e97842e3ce37a0159511a631ab",
"text": "I don't see a way that this would make matters worse than just giving them the credit card info... Except that it would make abusing the card easier at some other site (or the bank) if they have a similar (unreasonably weak) security-by-photo test. Still, I'd strongly recommend you use a separate card for this so you can cancel it without disrupting your other credit card uses. (Actually I'd strongly recommend not doing business with folks who have already demonstrated questionable ethics, but you seem to have made that decision.)",
"title": ""
},
{
"docid": "578003eb790b6bde3db23b654c5a00a5",
"text": "\"Perhaps mysterious in the sense that any dubious story involving a powerful and influential firm will not have their name actually mentioned? I've often found when American media runs a story like this, with no details, I can go look at London's Financial Times and they will name-names. For example CNBC or CNN might run a story \"\"top wall street firms fined\"\" and not name the actual firms. You have to look at non-American media to get actual names.\"",
"title": ""
},
{
"docid": "433b494a76f2be1a4253d23adf3facad",
"text": "\"tl;dr: Anyone who doesn't like what VISA and MasterCard did to wikileaks should not be in favour of this. This is a slippery slope (yes, really), where participating the the marketplace shall only be allowed by people the powers that be likes. What is \"\"intolerance\"\"? Should James Damore never be allowed to use paypal for any purpose? How about VISA, MasterCard, should he never be allowed to have a credit card again? If the government doesn't \"\"like\"\" what you're doing then they have made (or can make) it illegal, and you are taken out of the marketplace of ideas and money, if the government thinks this is best. This is government-sized actions (denying people the possibility to deal with money) done extrajudicially by private entities. \"\"I have decided that your legal enterprise should not be allowed to make money\"\" is terrible! If you are in favour of this then you should be in favour of the phone company, the electricity company, and gas company to deny service to anyone who's ever been accused of being a paedophile.\"",
"title": ""
},
{
"docid": "8f5bbfa9b7b8ea9c8f0e19bce5c9d5f7",
"text": "What can I do to make sure it won't happen? Who is the right person to report this to? (apparently, the police can't make sure that it won't be used for identity theft) You want to contact any one of the credit bureaus and put a fraud alert on your account. Once you contact one, they automatically contact the other bureaus for you. As part of this, they should send you a credit report. Review it carefully and note any items that are not yours. You'll then need to dispute any items that are a result of this identity theft. You may be required to file a police report regarding the stolen identity, but if you filed one for your stolen wallet, that may be sufficient. If the person who stole your wallet wants to steal your identity, it may be months before it shows up on your credit report. Make it a practice to regularly check your credit reports. How do I check at any given time whether my identity was stolen? Unfortunately, there is no easy way to check if your identity was stolen. The most common way is to check your credit report, but that only checks things that are reported to the credit reporting bureaus. If they use your information to start an account with a utility company at a rental house that typically won't go on your credit report until they are substantially delinquent. If they use your information to check into a hospital, that information typically won't show up on your credit report until the hospital sends the bill to collections. I've had a case where the identity theft happened at Chase, but was never reported on my credit. So my credit report was clear, but Chase disallowed me from banking with them because the identity thief had delinquent accounts with Chase that for whatever reason were not reported to the bureaus. How likely is it that it will be used in any form of identity theft? My gut feeling is that someone who snatches a wallet and immediately runs up the credit cards isn't looking to steal identities, but rather for a quick score. I don't know if there are statistics that back up my hunch.",
"title": ""
},
{
"docid": "e57f4deb0fd8fe7f89b86f1b55d1942c",
"text": "Visa, Mastercard have very strong consumer protection. I have been wondering about this question for a while but never got around to asking it here: What happens if a retailer knowingly defrauds me? My guess is the first party to ask for help is Visa, Mastercard: a retailer knowingly defrauding you is unlikely to refund you any money. However, slip-ups do happen. If this is a retailer of good repute, they will not only refund you the money but send you a gift card too! Please do followup this post with what helped you in the end, but my guess is, your first (and last) line of defense would be Visa, Mastercard. Anything that would go through the bank would take such a lot of time and effort, that you would be better off writing it off.",
"title": ""
},
{
"docid": "09d640fa44daec311b0df416028a0caa",
"text": "Yes. I doubt I'll see a penny of that money, but will now forever have to wait for the other shoe to stop, not only on my credit cards being stolen but also potentially my identity. There's no time limit to this, could be years later. It really sucks, you're lucky not to be involved.",
"title": ""
},
{
"docid": "3da1291762d8a2d0cae24144a0b1e1a0",
"text": "Like email and spam, fighting creditcard fraud is a cat and mouse game, with technology and processes constantly being developed to reduce fraud. The CVV on the back of the card is just one more layer of security. Requiring the CVV generally requires you to physically have access to the card. CVV should not be stored by any merchant. This frustrates card skimming fraud as the CVV is not present in the track data and fraud caused by database compromises. You should never use your PIN online. MC/VISA both have implementations of 3D-Secure (SecureCode for MC and Verified by VISA) which require a password / code to confirm card ownership. Depends on both Issuer and Merchant implementing the standard. Regarding not needing a PIN at the airport, some low value transactions no longer need PINs, depending on the Issuer and Scheme (VISA/MC). MasterCard PayPass or VISA PayWave enable low value contactless transactions without PIN. In Australia, the maximum value for a contactless transactions is $100 AUD. At some merchants (McDonalds for example) a PIN is not required for for meals purchased with VISA (at least, for the cheeseburger I bought there as a test). This makes sense - if you don't need a PIN for a contactless purchase, why do you need it for a chip based purchase? So - why allow PIN free transactions? On average customers report stolen credit cards / wallet very quickly and the losses are correspondingly small. As card issuers are always online, cards can be cancelled very quickly after being reported lost / stolen. Finally, by performing transactions for just a few cents or pennies, the merchant (Spotify) can likely validate you are the owner of the card as you'd need access to your online bank to confirm the transactions. PayPal do this with bank account to confirm ownership. (Unless I've misunderstood your statement).",
"title": ""
},
{
"docid": "194eadca81d09c4e06a17d67d22b4d59",
"text": "You are correct, I didn't understand that at all. Apparently us consumers don't need to know when our financial information is susceptible to being compromised. One question: Is your username based on the Redwall book series? I loved all those books.",
"title": ""
},
{
"docid": "d19f41f826d36fa3b68b21b5343bc402",
"text": "\"> But I explicitly mentioned the customer experience, which is completely different and no matter how much you want your industry experience to matter for that, it doesn't affect it. You mentioned the customer experience randomly in some parts, then threw in Wikileaks in others. If we're talking about the customer experience, we need to drop the payment processors aspect, because the majority of the time, the consumer doesn't even know who processes their card payments let alone care, and again, PayPal is not even close to the only option. If this were 1998 and people were really wary of buying online, then it would be a bigger deal to be banned from PayPal. But it's not 1998, and a ton of people don't care, and there are all kinds of alternatives. PayPal can deny service all it wants (and it does that on a regular basis) and that in no way means that a business can't accept cards. You're \"\"customer experience\"\" premise is flawed. I literally spend all day helping businesses set up credit card processing, and PayPal is a drop in the bucket. >Could you clarify for me how VISA/MasterCard managed to block a merchant, who presumably wasn't a direct customer (but instead a payment processor customer), but cannot block a card holder? (yes, this is an honest question) Visa and Mastercard have relationships with banks and/or processors, who have relationships with merchants. Visa and MC's agreements with banks and processors stipulate that those banks and processors can't offer services to companies engaging in illegal activity. Wikileaks was (allegedly) engaging in illegal activity, and it's on that basis that Visa and MC denied service to WL. Visa and Mastercard have almost nothing to do with cardholders. They don't issue credit cards to cardholders, they aren't the ones that do credit checks to determine creditworthiness, they aren't the ones helping you with your monthly statement or a dispute, etc. Cardholders aren't Visa and MC's clients. When a transaction is run, it's authenticated by the bank that issued the card, not by Visa or MC, and it's the bank, not Visa or MC, that would block transactions or freeze a cardholder account. >The WikiLeaks blockade was clearly political. What makes you say otherwise? And this is political. So your argument is that anything political is the same as anything else political? Kind of a stretch.. Wikileaks was denied service by the card brands for allegedly engaging in illegal activity. PayPal is denying service of its own volition, which FYI, it does every day to legal businesses. As long as their reasons for doing so aren't discriminatory based on status in a protected class, they are (and should be) allowed to refuse service.\"",
"title": ""
},
{
"docid": "179b9fdd54981b3261551dad61161e8a",
"text": "\">You could say the same about any public utility. (except the one largest one, technically) There are literally thousands and thousands of processors, which is not the case with utilities. Additionally, processors don't need to have any kind of office or presence anywhere near the business they're serving, which means being able to choose without geographical restrictions. Also, PayPal is not a utility. This is not a relevant comparison. >Are you saying they are unable, both contractually and technically, to affect the consumer side? They'd have to revoke their partnerships with banks who issue cards, which they aren't going to do, because consumers using cards is how they make money. Banks could choose not to issue cards, but they're already free to do that. (There's no right to a credit card.) >But also by selectively quoting me you are (deliberately?) side-stepping what actually happened in the WikiLeaks case, to focus on the consumer side. Visa and Mastercard prohibited payments to Wikileaks on the basis of WL allegedly facilitating illegal activity. How is that relevant to what PayPal's doing? >You must buy things in different corners of the Internet than I do. The customer experience (to me) is that there is \"\"the store\"\" or you can pay with PayPal. Yes, \"\"the store\"\" is actually a payment processor but this is a quick slippery slope to \"\"what? You can just set up your own payment processor once they've all blocked your legal business\"\". What are you talking about? You acknowledge that the store has its own processing but somehow that's not enough because someday they might not have processing and have to go through PayPal? Processors *already* deny service to legal businesses. Notably, anything considered \"\"high risk\"\" - which includes travel services, pharmaceuticals, firearms, adult entertainment, telemarketing, debt collection, tobacco, and more - but also for businesses with poor credit, high chargebacks, business practices they don't agree with, lots of international transactions, etc. It literally happens all the time. And, there are so many processors (tens of thousands) that there's another processor willing to step in. Tons of websites don't even use PayPal anymore, and the ones that do often layer it on top of a different payment option. (PayPal is trying hard to increase their presence in stores because of the competition in the internet space.) No one is unable to accept payments if they're barred from PayPal. PayPal actually cuts off accounts all the time because people use it for things against PayPal's TOS. Amazon payments, Shopify, and Stripe are the ones that most people know off the tops of their heads for online processing, but there are literally thousands. No one is somehow unable to conduct business if they can't use PayPal. The only time that businesses can't really get processing is if they do something like rack up chargebacks and disappear or commit fraud against a processor. In those cases, the processor can put that business on the Terminated Merchant File (or MATCH list) and other processors will see that there's been a problem with that customer and not take them on. Even in those cases, businesses can rectify the issue and get off the MATCH list or they can look for processors that will serve them anyway and expect to pay a premium for it.\"",
"title": ""
},
{
"docid": "58798764a5f701a63768787f72841c06",
"text": "Chip and Pin cards are popular in Europe, however in the US we don't have them. Visa/MC and Amex can issue chip and pin cards but no merchants or machines are set up here to take them. Only certain countries in Europe use them and since you could possibly have a US visitor or a non-chip and pin person using your machine or eating at your restaurant they usually allow you to sign or just omit the pin if the card doesn't have a chip. It is definitely less secure, but the entire credit card industry in the US is running right now without it, so I don't think the major credit card companies care too much (they just pass the fraud on to the merchants anyway).",
"title": ""
},
{
"docid": "ee10bef197b094349fbf84f63dd63f07",
"text": "I have read numerous accounts of this, and yes, it is criminal, but no, they can't figure out who did, though presumably the people handling the accounts were guilty of this. Mutant human [Angelo Mozilo](http://en.wikipedia.org/wiki/Angelo_Mozilo)'s organization stands out as the worst offender in this regard with no trickery too extreme. Ironically sourcing these particular accounts is difficult because of the sheer amount of material pertaining to subprime mortgages and fraud in general.",
"title": ""
},
{
"docid": "963461a2922f65173425e0d5ade73c8a",
"text": "Its not public information but it would be hard to keep it a secret. By its very nature, a custodial bank has to interact with various brokers, middle office systems, back office systems - many of which are third party. And the investment firm will likely be giving out their custodial information to these third parties to set up interfaces and whatnot.",
"title": ""
},
{
"docid": "44eeacf3e01e8a9cfbae847a310f1752",
"text": "So, my questions: Are payment cards provide sufficient security now? Yes. If so, how is that achieved? Depending on your country's laws, of course. In most places (The US and EU, notably), there's a statutory limit on liability for fraudulent charges. For transactions when the card is not present, proving that the charge is not fraudulent is merchants' task. Why do online services ask for all those CVV codes and expiration date information, if, whenever you poke the card out of your wallet, all of its information becomes visible to everyone in the close area? What can I do to secure myself? Is it? Try to copy someones credit card info next time you're in the line at the local grocery store. BTW, some of my friends tend to rub off the CVV code from the cards they get immediately after receiving; nevertheless, it could have already been written down by some unfair bank employee. Rubbish.",
"title": ""
}
] |
fiqa
|
ce2fb3e3bed607c7deaea5b6df7166c9
|
What steps are required to transfer real estate into a LLC?
|
[
{
"docid": "7d32f67dee90c90b21760138c97c9086",
"text": "\"especially considering it has a mortgage on it (technically a home equity loan on my primary residence). I'm not following. Does it have a mortgage on it, or your primary residence (a different property) was used as a security for the loan? If it is HELOC from a different property - then it is really your business what to do with it. You can spend it all on casinos in Vegas for all that the bank cares. Is this a complicated transaction? Any gotchas I should be aware of before embarking on it? Obviously you should talk to an attorney and a tax adviser. But here's my two cents: Don't fall for the \"\"incorporate in Nevada/Delaware/Wyoming/Some other lie\"\" trap. You must register in the State where you live, and in the State where the property is. Incorporating in any other State will just add complexity and costs, and will not save you anything whatsoever. 2.1 State Taxes - some States tax LLCs. For example, in California you'll pay at least $800 a year just for the right of doing business. If you live in California or the property is in California - you will pay this if you decide to set up an LLC. 2.2 Income taxes - make sure to not elect to tax your LLC as a corporation. The default for LLC is \"\"disregarded\"\" status and it will be taxed for income tax purposes as your person. I.e.: IRS doesn't care and doesn't know about it (and most States, as well). If you actively select to tax it as a corporation (there's such an option) - it will cost you very dearly. So don't, and if someone suggest such a thing to you - run away from that person as fast as you can. Mortgages - it is very hard to get a mortgage when the property is under the LLC. If you already have a mortgage on that property (the property is the one securing the loan) - it may get called once you transfer it into LLC, since from bank's perspective that would be transferring ownership. Local taxes - transferring into LLC may trigger a new tax assessment. If you just bought the property - that will probably not matter much. If it appreciated - you may get hit with higher property taxes. There are also many little things - once you're a LLC and not individual you'll have to open a business bank account, will probably need a new insurance policy, etc etc. These don't add much to costs and are more of an occasional nuisance.\"",
"title": ""
}
] |
[
{
"docid": "253e522d2dd91c6bd1ce2204b9fc9e21",
"text": "Some businesses sell a franchise. You will be buying the name and reputation, access to the corporate infrastructure, requirements to use specific supplies and procedures. These tend to come with financing from the parent company. You will need to bring cash to the table, but they will loan you the rest. When purchasing a business, like buying a house, what is part of the deal can be negotiated. Sometimes the new owner and the seller agree to transfer everything. In other cases almost nothing except one item is included. The one item could be the location, the name, the inventory, the customer/client list. All these can be assets or liabilities depending on the specific situation, and which side of the table you are on. In the United states the US government has the Small Business Administration. They also have Small Business Development Centers SMDC to help. These are also supported by state governments and colleges and universities. They can help identify the steps needed to start a small business.",
"title": ""
},
{
"docid": "72684d4f21bf2b2b5d71ece186c61e17",
"text": "\"I'll answer in general terms, since I'm not familiar with the price ranges in Florida. The LLC formation costs $125 (state fee). In addition you'll need a registered agent. Registered agent could be your CPA/EA/bookkeeper/property manager/local friend, or you can pay firms specializing in providing registration and agents services such as NorthWestern or LegalZoom (there are many others). You'll need to pay an annual fee of ~$140 in Florida. If you are using someone to do the formation, they'll charge more (usually the on-line services are cheaper than a local CPA or attorney, by $100-$300). Bookkeeping will probably be charged by the hour, but some bookkeepers charge flat fees for small accounts. Per hour would be probably in the range of $40-$80. You'll have to pay taxes - both in Florida (where the property is) and on the Federal level to the IRS. You'll be paying them as a non-Resident individual. Your CPA/EA will charge you anywhere between $150 to $500 for that (if they charge more - run away, unless there's some specific complication that requires extra costs). You will need a ITIN for that, your CPA/EA can help you get one or you can apply yourself. Be careful with all those people selling cr@p about organizing in Delaware/Wyoming/Nevada (like CQM in his answer). Organizing in a state other than where the properties are located (or off-shore) won't save you a dime, and not only that - it will add to the costs. Because you'll have to pay to the state where you organized (CQM mentioned Wyoming - $50/year), keep registered agent in the state of organization (+$99) and also do all the things I've described above about Florida - as a \"\"Foreign\"\" (out of state) entity, which may mean higher fees. It won't save you any taxes as well, because you pay taxes to the state from which you derive income, which is Florida, either way. Remember that what you call LLC in Italy may be in fact a \"\"Corporation\"\" as defined in the US, and there's a huge difference. You should probably not put a real-estate property in a Corporation in the US. You must get a legal advice from a (Florida) lawyer ($0-$500/hr consultation), and a tax advice from a (Florida) CPA/EA ($0-$200/hr consultation). Do not consider anything I write here as a legal or tax advice, because it is not. You need a professional to help you because as an Italian, you don't know how things work exactly and relying on rumours and half-truths that you may find and get over the Internet may end up costing you significantly in damages. Also, talk to a reliable real estate agent and property manager before making any purchases.\"",
"title": ""
},
{
"docid": "f32db279288b5726c22159492891b6d4",
"text": "\"Since as you say, an LLC is a pass-through entity, you will be making income in the U.S. when you sell to U.S. customers. And so you will need to file the appropriate personal tax forms in the US. As well as potentially in one or more States. The US government does not register LLCs. The various States do. So you'll be dealing with Oregon, Wisconsin, Wyoming, one of those for the LLC registration. You will also need to have a registered agent in the State. That is a big deal since the entire point of forming an LLC is to add a liability shield. You would lose the liability shield by not maintaining the business formalities. Generally nations aim to tax income made in their nation, and many decline to tax income that you've already paid taxes on in another nation. A key exception: If money is taxed by the U.S. it may also be taxed by one of the States. Two States won't tax the same dollar. Registering an LLC in one State does not mean you'll pay state taxes there. Generally States tax income made in their State. It's common to have a Wyoming LLC that never pays a penny of tax in Wyoming. Officially, an LLC doing business in a State it did not form in, must register in that State as a \"\"foreign LLC\"\" even though it's still in the USA. The fee is usually the same as for a domestic LLC. \"\"Doing business\"\" means something more than incidental sales, it means having a presence specifically in the State somehow. It gets complicated quick. If you are thinking of working in someone's app ecosystem like the Apple Store, Google Play, Steam etc. Obviously they want their developers coding, not wrestling with legalities, so some of them make a priority out of clearing and simplifying legal nuisances for you. Find out what they do for you.\"",
"title": ""
},
{
"docid": "9627263f23bbb0b74445f31afdf6fe8c",
"text": "While it may not be your preferred outcome, and doesn't eliminate the income, in the event you find yourself in the path described here you have a way to defer gains to the future. but I would then want to buy another house as a rental If you sell this house and buy another investment property (within strict time windows: 45 days to written contract and closed in 180 days), you can transfer your basis and defer your gains via what is called a 1031 like-kind exchange",
"title": ""
},
{
"docid": "ffb80c3cb2326ad48361b84743963ec9",
"text": "Also, does anyone know of any books on doing this sort of thing, i.e. renting out half of your home to a tenant and living in the ret? Head down to your local library. Mine has a state guide for renters and another one for landlords. There will likely be a lot of Nolo Press books around there too. You can also research the property tax on a lot; many counties run an arcGIS server that will tell you who owns a given property, what the assessed value is and the total tax bill, etc.",
"title": ""
},
{
"docid": "8d28aa994d28e9404b96d8ac04f34c79",
"text": "LLC doesn't explain the tax structure. LLCs can file as a partnership (1065) Scorp (1120S) or nothing at all, if it's a SMLLC. (Single Member LLC). I really enjoy business, and helping people get started. If you PM me your contact information, id be more than happy to go over any issues you may have, and help you with your current issue.",
"title": ""
},
{
"docid": "bf1ba57006b76a4812f39d1644608ce8",
"text": "You need to first visit the website of whatever state you're looking to rent the property in and you're going to want to form the LLC in that particular state. Find the Department of Licensing link and inquire about forming a standard LLC to register as the owner of the property and you should easily see how much it costs. If the LLC has no income history, it would be difficult for the bank to allow this without requiring you to personally guarantee the loan. The obvious benefit of protecting yourself with the LLC is that you protect any other personal assets you have in your name. Your liability would stop at the loan. The LLC would file its own taxes and be able to record the income against the losses (i.e. interest payments and other operating expenses.). This is can be beneficial depening on your current tax situation. I would definitely recommend the use of a tax accountant at that point. You need to be sure you can really afford this property in the worst case scenario and think about market leasing assumption, property taxes, maintenance and management (especially if you've moved to another state.)",
"title": ""
},
{
"docid": "2ff2c8d04f80b637da2b51de86a1c16e",
"text": "First, determine the workload he will expect. Will you have to quit your other work, either for time or for competition? How much of your current business will be subsumed into his business, if any? Make sure to understand what he wants from you. If you make an agreement, set it in writing and set some clear expectations about what will happen to your business (e.g. it continues and is not part of your association with the client). Because he was a client for your current business, it can blur the lines. Second, if you join him, make sure there is a business entity. By working together for profit, you will have already formed a partnership for tax purposes. Best to get an entity, both for the legal protection and also for the clarity of law and accounting. LLCs are simplest for small ventures; C corps are useful if you have lots of early losses and owners that can't use them personally, or if you want to be properly formed for easy consumption by a strategic. Most VCs and super-angels prefer everybody be a straight C. Again, remember to define, as necessary, what you are contributing to be an owner and what you are retaining (your original business, which for simplicity may already be in an entity). As part of this process, make sure he defines the cap table and any outstanding loans. Auntie June and Cousin Steve might think their gifts to him were loans or equity purchases; best to clear this issue up early before there's any more money in it. Third, with regard to price, that is an intensely variable question. It matters what the cap table looks like, how early you are, how much work he's already done, how much work remains to be done, and how much it will pay off. Also, if you do it, expect to be diluted by other employees, angels, VCs, other investors, strategics, and so on. Luckily, more investors usually indicates a growing pie, so the dilution may not be at all painful. But it should still be on your horizon. You also need to consider your faith in your prospective partner's ability to run the business and to be a trustworthy partner (so you don't get Zuckerberg'd), and to market the business and the product to customers and investors. If you don't like the prospects, then opt for cash. If you like the business but want to hedge, ask for compensation plus equity. There are other tricks you could use to get out early, like forced redemption, but they probably wouldn't help either because it'd sour your relationship or the first VC or knowledgeable angel to come along will want you to relinquish that sort of right. It probably comes down to a basic question of your need for cash, his willingness to let you pursue outside work (hopefully high) and your appraisal of the business' prospects.",
"title": ""
},
{
"docid": "01dd98454df723d9121bf03883bafa71",
"text": "* Yes, you should incorporate if you plan on seriously investing in real estate. This not only limits liability in terms of paying back the debt but also in case your tenants sue you. * Pass-through entities. Typically an LLC but it depends on the state if they have good or bad LLC laws. Pennsylvania is a state where you would not want to incorporate as an LLC. Other options include S-corps and LPs. * Loans are taken out by corporations against the property. Typically mortgage loans are non-recourse. If you set up a company for each property, this further insulates you against the bank capturing other properties within the pool. However, recourse carveouts can still end up getting you on the hook personally for the loans. These typically include voluntary bankruptcy. You would very rarely have to file for bankruptcy anyway for your real estate investments. At worst, it will end in foreclosure but banks typically would prefer deed-in-lieu just because it is faster and easier for them too. You just turn over the keys and walk away. It will have very little impact on your personal finances or record. Everyone in real estate walks away from properties and leaves them with the bank. It's a fact of doing business and your lender should have been comfortable owning your property at the basis they lent money to you. If they weren't, they were just stupid. * Yes, every real estate investment requires equity in the property. Typically it's a 20% equity check but if the lender underwrites the property to a lower value than what you purchased it for, you may have to line up more expensive financing.",
"title": ""
},
{
"docid": "7d62d84853dcd1a2c31e36d5c397c1a6",
"text": "The company may not permit a transfer of these options. If they do permit it, you simply give him the money and he has them issue the options in your name. As a non-public company, they may have a condition where an exiting employee has to buy the shares or let them expire. If non-employees are allowed to own shares, you give him the money to exercise the options and he takes possession of the stock and transfers it to you. Either way, it seems you really need a lawyer to handle this. Whenever this kind of money is in motion, get a lawyer. By the way, the options are his. You mean he must purchase the shares, correct?",
"title": ""
},
{
"docid": "694e4dbdd825671eef18d0f11af75368",
"text": "The only thing the book advises to do is to start an LLC that invests in real estate, then deduct everything you do as a business expense related to investing in real estate. Going on a vacation to Hawaii? Deduct it, you were checking out real estate. And so on and so forth.",
"title": ""
},
{
"docid": "29bee6cf3c5e3539af8867ea50a27cef",
"text": "It is a bit of work and expense to form a LLC. In the long run it is the best approach because it shields your personal assets from business liability. In the short run, you can form as a sole proprietor and operate that way, and later convert to a LLC.",
"title": ""
},
{
"docid": "f95c453a4c6f86cf44211f7041719aab",
"text": "\"You are opening up a large can of worms with how you are doing this. In very positive years, you'll have taxes based on your income, potential Alternative Minimum Tax (AMT), etc. Each of the family members may be in a lower bracket, perhaps even needing to pay zero on capital gains. Even if you are 100% honest, if you are subject to a lawsuit, these funds are all in your name, and you'd be in a tough situation explaining to a court that these assets aren't \"\"really\"\" yours, but belong to family. And last, the movement of large chunks of money needs to be accounted for, and can easily run afoul of gifting rules. As mhoran stated, a Power of Attorney (POA) avoids this. When my father-in-law passed, I took over my mother-in-law's finances, via POA. I sign in to my brokerage account, and her accounts are there. I can trade, deal with her Individual Retirement Account (IRA) Required Minimum Distributions (RMDs) each year, and issue checks to her long term care facility. It's all under her social security number - our money isn't intermingled.\"",
"title": ""
},
{
"docid": "f9757d4c102e4eb3fc99b6d4ebfdc2d6",
"text": "There are a lot of things that can be specified in the LLC agreement / charter, such as unequal distribution profits, sales restrictions, classes of ownership, etc. You should read your LLC paperwork. That said, you are generally allowed to sell ownership in an LLC in a private transaction. If you advertise the share of the LLC for sale, it's probably a violation of SEC rules. So Craig's List is a bad idea. Word of mouth or a broker is the way to go. I am not a lawyer or accountant -- you should double check this information; it might be wrong.",
"title": ""
},
{
"docid": "c7c01e532e699f91dbf3b441b7b6a50c",
"text": "It may clarify your thinking if you look at this as two transactions: I am an Australian so I cannot comment on US tax laws but this is how the Australian Tax Office would view the transaction. By thinking this way you can allocate the risks correctly, Partnership Tenancy Two things should be clear - you will need a good accountant and a good lawyer. I do not agree that there is a conflict of interest in the lawyer acting for both parties - his role should only be for advice and to document what the two of you agree to. If you end up in dispute, then you need two lawyers.",
"title": ""
}
] |
fiqa
|
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