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4514 | What intrinsic, non-monetary value does gold have as a commodity? | [
{
"docid": "337764",
"title": "",
"text": "This site shows a list of (mostly) industrial uses of gold: http://geology.com/minerals/gold/uses-of-gold.shtml If you ignore the first two uses, jewelry and coinage, there remains aerospace, computers, electronics, dentistry and medicine. It's worth noting that gold comes in the same chemical family as both copper and silver, meaning that gold can serve most of their uses, although not as well."
}
] | [
{
"docid": "512734",
"title": "",
"text": "\"Currencies don't really have intrinsic value. You can't compare bitcoins to tulips because you can't grow 200x more bitcoins next winter to push the price down to its intrinsic value. Bitcoins are scarce and like gold, the intrinsic value doesn't matter anymore, it's all about supply and demand and there will always be bitcoin fans with money that won't let it go to 0$. And compared to gold, bitcoin is still very very cheap, so even if the bubble \"\"bursts\"\", it will grow again.\""
},
{
"docid": "190772",
"title": "",
"text": "I think most financial planners or advisors would allocate zero to a gold-only fund. That's probably the mainstream view. Metals investments have a lot of issues, more elaboration here: What would be the signs of a bubble in silver? Also consider that metals (and commodities, despite a recent drop) are on a big run-up and lots of random people are saying they're the thing to get in on. Usually this is a sign that you might want to wait a bit or at least buy gradually. The more mainstream way to go might be a commodities fund or all-asset fund. Some funds you could look at (just examples, not recommendations) might include several PIMCO funds including their commodity real return and all-asset; Hussman Strategic Total Return; diversified commodities index ETFs; stuff like that has a lot of the theoretical benefits of gold but isn't as dependent on gold specifically. Another idea for you might be international bonds (or stocks), if you feel US currency in particular is at risk. Oh, and REITs often come up as an inflation-resistant asset class. I personally use diversified funds rather than gold specifically, fwiw, mostly for the same reason I'd buy a fund instead of individual stocks. 10%-ish is probably about right to put into this kind of stuff, depending on your overall portfolio and goals. Pure commodities should probably be less than funds with some bonds, stocks, or REITs, because in principle commodities only track inflation over time, they don't make money. The only way you make money on them is rebalancing out of them some when there's a run up and back in when they're down. So a portfolio with mostly commodities would suck long term. Some people feel gold's virtue is tangibility rather than being a piece of paper, in an apocalypse-ish scenario, but if making that argument I think you need physical gold in your basement, not an ETF. Plus I'd argue for guns, ammo, and food over gold in that scenario. :-)"
},
{
"docid": "288156",
"title": "",
"text": "\"The reason I don't want to get into here it is because internet debates over these things turn into an absolute shit-show, instantly. In a nutshell, the (sane parts of) argument comes down to very difficult-to-prove assumptions about how perfectly fiat currency can/will be implemented. - The (sane) case for gold is that it is very difficult to get into the kind of money-printing mischief that places like Zimbabwe and Argentina have got into when your currency is based on something with a finite and slow-growing supply. It's hard to print more gold. - The (sane) case for fiat currency is that it is ridiculous to hamstring the entire economy by tying it to one arbitrary commodity with a fluctuating value and supply that does not correlate well with overall economic output. A perfectly-implemented fiat currency, printed and ordained by a perfectly omniscient, perfectly competent, and perfectly benevolent central bank (let's call it \"\"God money\"\"), is the ideal. That's pretty much axiomatic, and even sane gold-bugs would tend to allow the above, so far as it goes, including all stipulations. In fact, someone inclined to believe in divine intervention might make a case that gold is precisely that: a hard-to-forge, easy-to-detect, easy-to-handle metal placed on earth by God in quantities just right to serve as currency. The problem is that a really *bad* fiat currency is absolutely terrible: leads to nightmare-scenarios; people starving on one side of a fence while tons of crops are being burned on the other side because of runaway price-discrepancies, stuff like that. Again, even (sane) Keynesians will allow as much. The problem is that the crazies, ideologues, and single-issue zealots come out of the woodwork when you start getting into this stuff, and tend to dominate the conversation (if \"\"conversation\"\" is a fair word to use). In a sense, the \"\"sane\"\" spectrum of debate boils down to an almost ideological divide: - Whether you believe that a sort of permanent, technocratic, central-bank/currency-issuer is possible/plausible. Because if it *is* achievable, it is almost certainly better than just tying the whole economy to the price of a single commodity. If it is *not* achievable, then it is almost certainly better to let the markets adjust and correct, however imperfectly, than to tie the whole economy to the whims and wishes of incompetent and politically-motivated money-printers. (I hope that makes sense, and that it is a fair representation of the conundrum). The problem with making an argument is that you've got a hodge-podge of technical (and sometimes fairly complicated) nitty-gritty, plus a certain amount of starting-assumption/worldview/ideological stuff, all smooshed together, and almost all of it is very hard/impossible to \"\"prove\"\" via evidential scientific testing. Both the technical and historical stuff have strong conflicting indicators, and it's obviously not possible to, say, set up two identical societies and let them run for a thousand years, controlling for everything but monetary policy, and see what happens. Macro-economics is a very imperfect science. It has certainly given the world some very useful and valuable insights and axioms, but the testing methods are extremely indirect and heavily subject to interpretation: you really have only the historical record to draw on, and it is almost impossible to find examples that control for whatever variable is in question. Macro, ideally, *tries* really hard to be science, but you're always kind of picking from bad examples when testing a hypothesis, trying to line up vaguely similar historical periods to isolate for some common factor. It's kind of like geology or theoretical physics, except with much smaller and messier data-sets. Ten thousand years from now, it will be much easier to look at the historical data and isolate for particular variables over multiple hundred-year spans across a variety of cultural, political, and socio-economic backgrounds. For now, the peanut-gallery is chock full of questions that the experts cannot answer, and the record is full of exceptions to every rule, and a lot of it frankly boils down to worldview and ideology (with a healthy dollop of \"\"I'm smarter than you\"\" to finish the sauce). Since I personally prefer technical questions to politics, I will leave it to others to formulate and debate those things.\""
},
{
"docid": "540011",
"title": "",
"text": "\"Once a currency loses value, it never regains it. Period. Granted there have been short term periods of deflation, as well as periods where, due to relative value fluctuation, a currency may temporarily gain value against the U.S. dollar (or Euro, Franc, whatever) but the prospect of a currency that's lost 99.99% of its value will reclaim any of that value is an impossibility. Currency is paper. It's not stock. It's not a hard commodity. It has no intrinsic value, and no government in history has ever been motivated to \"\"re-value\"\" its currency. Mind you, there have been plenty of \"\"reverse splits\"\" where a government will knock off the extraneous zeroes to make handling units of the currency more practical.\""
},
{
"docid": "520769",
"title": "",
"text": "No. If you have to ignore a price spike, obviously its value is not constant. Gold is a commodity, just like every other commodity."
},
{
"docid": "482590",
"title": "",
"text": "Currencies don't have intrinsic value. Just because you have to pay taxes in USD does not mean it has intrinsic value. The government could theoretically switch currency every second, not that that will ever happen. But yes the USD is supported by the US government and that's like a safety net for the value of the USD. Bitcoin doesn't have a government accepting bitcoin in taxes (except maybe liberland or something) so BTC doesn't have that safenet. But with such a liquid market and millions of buyorders bitcoin doesn't really need a safenet. There will always be demand. I prefer a scarce currency with growing demand than an inflationary currency backed by a corrupt government that loses value over time."
},
{
"docid": "296306",
"title": "",
"text": "It was the sole creditor we're trying to avoid here is what I meant to say, not the broker him/herself. The reason a firm might extend their debt would be to extend their credit into monetary value, in the scenario I just discussed, and it would more often be the more well known firms that would be the most likely to provide a Bond-Money Supply--Think IBM Bonds, Google Bonds, Cheese Board Collective Bonds, Tesla Motor Bonds, GE Bonds, etc. All these firms would find a way to apply their bond funds in a way that would expand their output and henceforth make repaying the bonds much more likely, just like a normal firm would today. The only difference is that in the mean time, that bond becomes a monetary commodity which people can trade for goods and services until it is repaid. Once repaid/neutralized, people can see that the bond is worth using and the demand for that bond as money will increase, just like how the demand for money will increase and that prompts a normal central bank to print more money. Which means, the firm is safe to take on stable debt again which people can reuse again. The major difference here is that we have a money supply that you can choose to participate in or not, and it is up to the consumers of that currency how the money supply flows, as opposed to a central authority. It does matter who's first in line to get the new money in any economy, and with multiple policies competing, power is less concentrated: http://www.youtube.com/watch?v=hx16a72j__8"
},
{
"docid": "240211",
"title": "",
"text": "The previous answers have raised very good points, but I believe one facet of this has been neglected. While it's true that the total accessible supply of gold keeps growing(although rather slowly as was mentioned earlier) the fact remains that gold, like oil, is a non-renewable natural resource. So, at some point, we are going to run out of gold to mine. Due to this fact, I believe gold will always be highly valued. Of course it can certainly always fluctuate in value. In fact, I expect in the reasonably near future to see a decline in the price of gold due to investors selling it en masse to re-enter the stock market when the economy has recovered more substantially."
},
{
"docid": "177484",
"title": "",
"text": "\"Monetary policy has always been in play. The Romans frequently debased (that is, increased the alloy/base metal ratio) their coinage and the U.S. went off the gold standard numerous times, especially during wars. Really the gold standard was only adhered to when it was convenient, so historically it did not play the role that Austrians wish it would. Basically just because gold was historically used as currency does not mean that it controlled the money supply. For example, most sovereign transactions were simply recorded by symbolic \"\"money things.\"\"* And even if the gold standard did automatically protect the value of money, inflation is a hell of a lot better than deflation anyway. You want to reward people for putting their money to work, not sticking it in a mattress. *For further information on the history of gold currency and money in general, see section 2 of this article from the LSE: http://www.sciencedirect.com/science/article/pii/S0176268098000159\""
},
{
"docid": "80141",
"title": "",
"text": "\"This is only true if you define \"\"intrinsic value\"\" to mean backed by an asset. I think that is a stupid definition, and so too do lawmakers and economists which is why we abolished the gold standard. There is intrinsic demand for dollars because of US federal law, to me an asset with automatic government-backed demand has intrinsic value because I don't believe people and companies will suddenly decide to be tax delinquents en masse.\""
},
{
"docid": "129309",
"title": "",
"text": "\"I was wondering how \"\"future cash flows of the asset\"\" are predicted? Are they also predicted using fundamental and/or technical analysis? There are a many ways to forecast the future cash flows of assets. For example, for companies: It seems like calculating expected/required rate using CAPM does not belong to either fundamental or technical analysis, does it? I would qualify the CAPM as quantitative analysis because it's mathematics and statistics. It's not really fundamental since its does not relies on economical data (except the prices). And as for technical analysis, the term is often used as a synonym for graphical analysis or chartism, but quantitative analysis can also be referred as technical analysis. the present value of future cash flows [...] (called intrinsic price/value, if I am correct?) Yes you are correct. I wonder when deciding whether an asset is over/fair/under-valued, ususally what kind of price is compared to what other kind of price? If it's only to compare with the price, usually, the Net asset value (which is the book value), the Discount Cash flows (the intrinsic value) and the price of comparable companies and the CAPM are used in comparison to current market price of the asset that you are studying. Why is it in the quote to compare the first two kinds of prices, instead of comparing the current real price on the markets to any of the other three kinds? Actually the last line of the quote says that the comparison is done on the observed price which is the market price (the other prices can't really be observed). But, think that the part: an asset is correctly priced when its estimated price is the same as the present value of future cash flows of the asset means that, since the CAPM gives you an expected rate of return, by using this rate to compute the present value of future cash flows of the asset, you should have the same predicted price. I wrote this post explaining some valuation strategies. Maybe you can find some more information by reading it.\""
},
{
"docid": "435023",
"title": "",
"text": "It seems to me that your main question here is about why a stock is worth anything at all, why it has any intrinsic value, and that the only way you could imagine a stock having value is if it pays a dividend, as though that's what you're buying in that case. Others have answered why a company may or may not pay a dividend, but I think glossed over the central question. A stock has value because it is ownership of a piece of the company. The company itself has value, in the form of: You get the idea. A company's value is based on things it owns or things that can be monetized. By extension, a share is a piece of all that. Some of these things don't have clear cut values, and this can result in differing opinions on what a company is worth. Share price also varies for many other reasons that are covered by other answers, but there is (almost) always some intrinsic value to a stock because part of its value represents real assets."
},
{
"docid": "336282",
"title": "",
"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."
},
{
"docid": "408336",
"title": "",
"text": "\"Gold had value because it could be stamped with a value. The value is the number on the coin. Gold really doesn't have intrinsic value and it's value during a actual famines is very very low. For more info, see a very interesting digression in \"\"Wealth of Nations.\"\"\""
},
{
"docid": "407551",
"title": "",
"text": "\"Also note that a share of voting stock is a vote at the stockholder's meeting, whether it's dividend or non-dividend. That has value to the company and major stockholders in terms of protecting their own interests, and has value to anyone considering a takeover of the company or who otherwise wants to drive the company's policy. Similarly, if the company is bought out, the share will generally be replaced by shares in whatever the new owning company is. So it really does represent \"\"a slice of the company\"\" in several vary practical ways, and thus has fairly well-defined intrinsic value linked to the company's perceived value. If its price drops too low the company becomes more vulnerable to hostile takeover, which means the company itself will often be motivated to buy back shares to protect itself from that threat. One of the questions always asked when making an investment is whether you're looking for growth (are you hoping its intrinsic value will increase) or income (are you hoping it will pay you a premium for owning it). Non-dividend stocks are a pure growth bet. Dividend-paying stocks are typically a mixture of growth and income, at various trade-off points. What's right for you depends on your goals, timeframe, risk tolerance, and what else is already in your portfolio.\""
},
{
"docid": "503516",
"title": "",
"text": "The monetary supply isn't a fixed number like in the old days of the [gold standard](https://en.wikipedia.org/wiki/Gold_standard) is part of the answer. Also, the actual spending of that one thousand dollars -- where the money is spent and on what -- does make a significant difference on how the overall economy is effected: People spending it on food, transportation and housing isn't going to drive up the costs of a Porshe 911."
},
{
"docid": "326280",
"title": "",
"text": "Yes, money is created out of thin air, and it is a good and necessary thing. All money, even commodity money such as gold, is given value only by what can be traded for it. So in that sense *all* money is created out of thin air, because it represents the payment of a future debt. Money merely serves as IOUs between traders. Who do you think should be responsible for adding money to the system? Inndividuals? Been tried, doesn't work so well. Individual banks? Been tried, doesn't work so well. Nation states? Works a lot better, although can still fail. So far having a central bank issue money as an economy needs it for trade has been the most successful method to deal with who gets to issue the IOUs. EDIT: see my post above on a little how and why it works as it does."
},
{
"docid": "532381",
"title": "",
"text": "\"Everything is worth what its purchaser will pay for it. --Publilius Syrus. Gold has value because people want to buy it. Electronics manufacturers like the fact that it's conductive. Jewellers like that its shiny. Glenn Beck likes that he's selling it and his audience will buy it. Proponents of gold claim that it has \"\"real\"\" value, as opposed to fiat currency (which has no commodity backing). Opponents of gold claim that all wealth is illusory, and that gold has no more inherent value than the paper we use now. I'm inclined to agree with the latter (money is only money because we agree that it is, and the underlying material is meaningless), however the issue is hotly debated.\""
},
{
"docid": "588101",
"title": "",
"text": "\"Great, so we agree it's not a fraud and the title of the bloomberg article is grossly misleading. Even still, to call it a bubble, you'd need to first agree to what the non-bubble valuation of Bitcoin would be. The consensus among those who use the word \"\"tulip\"\" frequently when talking about bitcoin is that the non-bubble valuation of bitcoin is zero (0). This, of course, means that Bitcoin has been in a bubble ever since the first exchange of good was made with it (which folklore tells us was a purchase of 2 pizzas for 10,000 bitcoins, establishing a price of under $0.01 per bitcoin. Ever since, for the past 7 years, Bitcoin has been in a bubble. Furthermore, for as long as Bitcoin's market value remains at or above $0.01 per bitcoin, it will still be in a bubble. If me and a few hundred thousand of my closest friends have anything to say about it, that will never happen. And therefore Bitcoin will remain in a bubble indefinitely. Now that, to me, seems like a very unusual bubble. If that strikes you as a stretch of the concept too, then maybe we need to revisit an assumption or two here. For one, is the non-bubble valuation of bitcoin really zero? Is there perhaps something about bitcoin that might give it some intrinsic value that, say, tulips or beanie babies may not have? And if there is, is there a way to estimate what that value may be? Does that value change over time? Is it perhaps possible that the value of bitcoin correlates in some fashion with its reach and its network effect? Those are harder questions to answer, and their answers is certainly not as neat and precise as \"\"zero\"\" or \"\"bubble\"\", but maybe it's useful to think about them when trying to reason about what bitcoin is and isn't.\""
}
] |
4514 | What intrinsic, non-monetary value does gold have as a commodity? | [
{
"docid": "156211",
"title": "",
"text": "\"Extrinsic value is not a factor with respect to gold. Intrinsic value by definition is the natural value of a commodity set by the market -- extrinsic value is externally set. The \"\"extrinsic\"\" value of gold in the United States is $50/oz. If the market value of gold fell below $50/oz, a US American Eagle coin would be worth $50 in the US. If you take away the attributes that make a commodity valuable, the value drops. Substitutes of equal or better quality for most industrial or other uses of gold exist, so if if the popularity of gold declines, or if the hoarders of gold have to liquidate, it's value will diminish. I have no idea what that value would be, but it would set by the market demand for gold jewelry and other valuable industrial uses.\""
}
] | [
{
"docid": "156240",
"title": "",
"text": "Coin regardless of the metal content proportion, all have intrinsic and face value. The more the silver and gold presence in coins the more the value. Pure Nickle and copper coin have intrinsic value. The more zinc, and manganese presense in coin the less value the coin becomes."
},
{
"docid": "83316",
"title": "",
"text": "Always a good time to buy gold. Think less in terms of commodities, more in terms of true money that can not be inflated out of existence. Buy it as cheap as you can, hold it for as long as possible. The historical graphs never lie and it proves time and time again its a good store of value. I would never think of it in terms of a speculative bet though. If it does reward you, its because the global currency system is broken. I think its broken, it may reward you. But never expect it to reward you. In the short term (2-3 years), the gold price can be manipulated. In the long term (10 years) less so."
},
{
"docid": "80141",
"title": "",
"text": "\"This is only true if you define \"\"intrinsic value\"\" to mean backed by an asset. I think that is a stupid definition, and so too do lawmakers and economists which is why we abolished the gold standard. There is intrinsic demand for dollars because of US federal law, to me an asset with automatic government-backed demand has intrinsic value because I don't believe people and companies will suddenly decide to be tax delinquents en masse.\""
},
{
"docid": "140795",
"title": "",
"text": "\">I was rooting for the cancer. If you can't figure out by 30 that basic decency not only is intrinsically good, but is also in your own self interest you don't deserve the basic respect of others. Your post is so hilariously ironic. Are you under 30? Because you obviously must have not figured out that basic decency is intrinsically good, or else you wouldn't be 'rooting for the cancer.' So much for being a non-shitty human. >Shitty humans do more damage to the planet on a day to day basis than any \"\"genius\"\" does good. Where does this claim even come from? >This stupid prick took an existing technology, dumbed it down to attract the stupid, and prettied it up to attract the narcissistic. Jobs was an asshole, but he was also an amazing individual in a lot of other respectable ways. I used to dislike him because he came off extremely arrogant in interviews, but after watching several documentaries, I came to respect him a lot. It's so easy to sit back in your arm chair and call him a stupid prick who \"\"only\"\" took existing technology and prettied it up to attract the narcissist idiots, but at the end of the day, Apple would not be what it is today without Jobs' relentless drive for success. Whatever he did, he was very good at it. To write him off as if he just got lucky by putting 2+2 together is just idiotic.\""
},
{
"docid": "82637",
"title": "",
"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."
},
{
"docid": "75650",
"title": "",
"text": "As the value of a currency declines, commodities, priced in that currency, will rise. The two best commodities to see a change in would be oil and gold."
},
{
"docid": "363899",
"title": "",
"text": "The problem with commodities is that they don't produce income. With a stock or bond, even if you never sold it to anyone or it wasn't publicly traded, you know you can collect the money the company makes or collect interest. That's a quantifiable income from the security. By computing the present value of that income (cf. http://blog.ometer.com/2007/08/26/money-math/) you can have at least a rough sense of the value of the stock or bond investment. Commodities, on the other hand, eat income (insurance and storage). Their value comes from their practical uses e.g. in manufacturing (which eventually results in income for someone); and from psychological factors. The psychological factors are inherently unpredictable. Demand due to practical uses should keep up with inflation, since in principle the prices on whatever products you make from the commodity would keep up with inflation. But even here there's a danger, because it may be that over time some popular uses for a given commodity become obsolete. For example this commodity used to be a bigger deal than now, I guess: http://en.wikipedia.org/wiki/Frankincense. The reverse is also possible, that new uses for a commodity drive up demand and prices. To the extent that metals such as silver and gold bounce around wildly (much more so than inflation), I find it hard to believe the bouncing is mostly due to changes in uses of the metals. It seems far more likely that it's due to psychological factors and momentum traders. To me this makes metals a speculative investment, and identifying a bubble in metals is even harder than identifying one in income-producing assets that can more easily be valued. To identify a bubble you have to figure out what will go on in the minds of a horde of other people, and when. It seems safest for individual investors to just assume commodities are always in a bubble and stay away. The one arguable reason to own commodities is to treat them as a random bouncing number, which may enhance returns (as long as you rebalance) even if on average commodities don't make money over inflation. This is what people are saying when they suggest owning a small slice of commodities as part of an asset allocation. If you do this you have to be careful not to expect to make money on the commodities themselves, i.e. they are just something to sell some of (rebalance out of) whenever they've happened to go up a lot."
},
{
"docid": "502832",
"title": "",
"text": "\">There is no obvious reason why, even in a perfect world, we would go looking for a malleable, highly-conductive, corrosion-resistant metal as something to peg the value of our banknotes to. If this were true, why force citizens to use a specific central bank's paper money via \"\"legal tender laws\"\"? ;) >I will leave it to others to argue over whether a return to the gold standard would be a good idea, but the argument has nothing to with the intrinsic utility of gold. I'm sure we can all agree that gold is a fine metal with many good qualities. Then what was the point of your post? If you don't want to use gold as money, I would never force you to use gold. It is the contention of the Austrian economists that there should be free and open competition in the money industry. Allow people to choose their money. Allow entrepreneurs to create systems to simplify the communication of prices across various monies. The root of the problem is force and monopoly.\""
},
{
"docid": "248544",
"title": "",
"text": "But how valuable is it in the Star Trek world? How much gold is available and how much do they need?Are there alternatives? Will they ever find another element that replaces it? These all affect the actual value... Nothing has value without demand, so how can anything be intrinsically valuable?"
},
{
"docid": "129309",
"title": "",
"text": "\"I was wondering how \"\"future cash flows of the asset\"\" are predicted? Are they also predicted using fundamental and/or technical analysis? There are a many ways to forecast the future cash flows of assets. For example, for companies: It seems like calculating expected/required rate using CAPM does not belong to either fundamental or technical analysis, does it? I would qualify the CAPM as quantitative analysis because it's mathematics and statistics. It's not really fundamental since its does not relies on economical data (except the prices). And as for technical analysis, the term is often used as a synonym for graphical analysis or chartism, but quantitative analysis can also be referred as technical analysis. the present value of future cash flows [...] (called intrinsic price/value, if I am correct?) Yes you are correct. I wonder when deciding whether an asset is over/fair/under-valued, ususally what kind of price is compared to what other kind of price? If it's only to compare with the price, usually, the Net asset value (which is the book value), the Discount Cash flows (the intrinsic value) and the price of comparable companies and the CAPM are used in comparison to current market price of the asset that you are studying. Why is it in the quote to compare the first two kinds of prices, instead of comparing the current real price on the markets to any of the other three kinds? Actually the last line of the quote says that the comparison is done on the observed price which is the market price (the other prices can't really be observed). But, think that the part: an asset is correctly priced when its estimated price is the same as the present value of future cash flows of the asset means that, since the CAPM gives you an expected rate of return, by using this rate to compute the present value of future cash flows of the asset, you should have the same predicted price. I wrote this post explaining some valuation strategies. Maybe you can find some more information by reading it.\""
},
{
"docid": "117902",
"title": "",
"text": "\"The \"\"conventional wisdom\"\" is that you should have about 5% of your portfolio in gold. But that's an AVERAGE. Meaning that you might want to have 10% at some times (like now) and 0% in the 1980s. Right now, the price of gold has been rising, because of fears of \"\"easing\"\" Fed monetary policy (for the past decade), culminating in recent \"\"quantitative easing.\"\" In the 1980s, you should have had 0% in gold given the fall of gold in 1981 because of Paul Volcker's monetary tightening policies, and other reasons. Why did gold prices drop in 1981? And a word of caution: If you don't understand the impact of \"\"quantitative easing\"\" or \"\"Paul Volcker\"\" on gold prices, you probably shouldn't be buying it.\""
},
{
"docid": "461325",
"title": "",
"text": ">Huh? Agriculture is down to single digits as part of the GDP. What does that have to do with a gold standard and monetary policy? I was being sarcastic. >But as soon as the USA left the gold exchange standard, total factor productivity began to dramatically stagnate. Correlation doesn't equal causation. Remember that this is also the same time that European, Japanese, and Soviet economies were picking back up after WW2. Global production picked up and there was more international competition. >Because our massive debt is doing so well for us? In the beginning it looks nice because there is very little pain and is practically unnoticible, but as we see current events playing out in the US and to a greater extent Europe which isnt as tightly knit economically as the US, fiat currency has huge problems. The EU cannot print money in the same way the USA can. If anything the Euro is a cautionary tale about currency's with too stringent printing limitations. Along with tying together a set of countries at vastly different levels of economic development. The USA is not anywhere near the point of no return, and seeing as we can finance our debt at ridiculously low rates compared to the rest of the world, it would be much simpler to do that, than try and restructure the entire monetary system of the USA. >Established over what? the last 40 years? We are at about 80-90 years now. >Thats hardly enough time to call practical fact when the gold standard existed for hundreds and thousands of years. The gold standard has not been in use for hundreds of thousands of years. Nor was it the only currency previous to fiat. >I am not sure why you think that the USA is in such a great position. The american dream is faultering if you're just starting out in life. Just ask any number of recent college grads who are increasingly living with parents, not getting married and can't find jobs. I don't think asking my local college grad is a good way of determining the USA's macro-economic situation. You're absolutely right that there is a major major disparity of wealth problem. But the gold standard isn't the reason for that. Unemployment Insurance and Welfare are also comically small portions of the budget. If you wanna talk about cutting spending, Defense and Medicare are where it's at. And you don't even have to hurt old people or soldiers to fix them."
},
{
"docid": "501276",
"title": "",
"text": "\"Not cumulative volatility. It's cumulative probability density. Time value isn't linear because PDFs (probability distribution function) aren't linear. It's a type of distribution e.g. \"\"bell-curves\"\") These distributions are based on empirical data i.e. what we observe. BSM i.e. Black-Scholes-Merton includes the factors that influence an option price and include a PDF to represent the uncertainty/probability. Time value is based on historical volatility in the underlying asset price, in this case equity(stock). At the beginning, time value is high since there's time until expiration and the stock is expected to move within a certain range based on historical performance. As it nears expiration, uncertainty over the final value diminishes. This causes probability for a certain price range to become more likely. We can relate that to how people think, which affects the variation in the stock market price. Most people who are hoping for a value increase are optimistic about their chances of winning and will hold out towards the end. They see in the past d days, the stock has moved [-2%,+5%] so as a call buyer, they're looking for that upside. With little time remaining though, their hopes quickly drop to 0 for any significant changes beyond the market price. (Likewise, people keep playing the lottery up until a certain age when they're older and suddenly determine they're never going to win.) We see that reflected in the PDF used to represent options price movements. Thus your time value which is a function of probability decreases in a non-linear fashion. Option price = intrinsic value + time value At expiration, your option price = intrinsic value = stock price - strike price, St >= K, and 0 for St < K.\""
},
{
"docid": "243714",
"title": "",
"text": "\"The answer to the question, can I exercise the option right away? depends on the exercise style of the particular option contract you are talking about. If it's an American-style exercise, you can exercise at any moment until the expiration date. If it's an European-style exercise, you can only exercise at the expiration date. According to the CME Group website on the FOPs on Gold futures, it's an American-style exercise (always make sure to double check this - especially in the Options on Futures world, there are quite a few that are European style): http://www.cmegroup.com/trading/metals/precious/gold_contractSpecs_options.html?optionProductId=192#optionProductId=192 So, if you wanted to, the answer is: yes, you can exercise those contracts before expiration. But a very important question you should ask is: should you? Option prices are composed of 2 parts: intrinsic value, and extrinsic value. Intrinsic value is defined as by how much the option is in the money. That is, for Calls, it's how much the strike is below the current underlying price; and for Puts, it's how much the strike is above the current underlying price. Extrinsic value is whatever amount you have to add to the intrinsic value, to get the actual price the option is trading at the market. Note that there's no negative intrinsic value. It's either a positive number, or 0. When the intrinsic value is 0, all the value of the option is extrinsic value. The reason why options have extrinsic value is because they give the buyer a right, and the seller, an obligation. Ie, the seller is assuming risk. Traders are only willing to assume obligations/risks, and give others a right, if they get paid for that. The amount they get paid for that is the extrinsic value. In the scenario you described, underlying price is 1347, call strike is 1350. Whatever amount you have paid for that option is extrinsic value (because the strike of the call is above the underlying price, so intrinsic = 0, intrinsic + extrinsic = value of the option, by definition). Now, in your scenario, gold prices went up to 1355. Now your call option is \"\"in the money\"\", that is, the strike of your call option is below the gold price. That necessarily means that your call option has intrinsic value. You can easily calculate how much: it has exactly $5 intrinsic value (1355 - 1350, undelrying price - strike). But that contract still has some \"\"risk\"\" associated to it for the seller: so it necessarily still have some extrinsic value as well. So, the option that you bought for, let's say, $2.30, could now be worth something like $6.90 ($5 + a hypothetical $1.90 in extrinsic value). In your question, you mentioned exercising the option and then making a profit there. Well, if you do that, you exercise your options, get some gold futures immediately paying $1350 for them (your strike), and then you can sell them in the market for $1355. So, you make $5 there (multiplied by the contract multiplier). BUT your profit is not $5. Here's why: remember that you had to buy that option? You paid some money for that. In this hypothetical example, you payed $2.30 to buy the option. So you actually made only $5 - $2.30 = $2.70 profit! On the other hand, you could just have sold the option: you'd then make money by selling something that you bought for $2.30 that's now worth $6.90. This will give you a higher profit! In this case, if those numbers were real, you'd make $6.90 - $2.30 = $4.60 profit, waaaay more than $2.70 profit! Here's the interesting part: did you notice exactly how much more profit you'd have by selling the option back to the market, instead of exercising it and selling the gold contracts? Exactly $1.90. Do you remember this number? That's the extrinsic value, and it's not a coincidence. By exercising an option, you immediately give up all the extrinsic value it has. You are going to convert all the extrinsic value into $0. So that's why it's not optimal to exercise the contract. Also, many brokers usually charge you much more commissions and fees to exercise an option than to buy/sell options, so there's that as well! Always remember: when you exercise an option contract, you immediately give up all the extrinsic value it has. So it's never optimal to do an early exercise of option contracts and individual, retail investors. (institutional investors doing HFT might be able to spot price discrepancies and make money doing arbitrage; but retail investors don't have the low commissions and the technology required to make money out of that!) Might also be interesting to think about the other side of this: have you noticed how, in the example above, the option started with $2.30 of extrinsic value, and then it had less, $1.90 only? That's really how options work: as the market changes, extrinsic value changes, and as time goes by, extrinsic value usually decreases. Other factors might increase it (like, more fear in the market usually bring the option prices up), but the passage of time alone will decrease it. So options that you buy will naturally decrease some value over time. The closer you are to expiration, the faster it's going to lose value, which kind of makes intuitive sense. For instance, compare an option with 90 days to expiration (DTE) to another with 10 DTE. One day later, the first option still has 89 DTE (almost the same as 90 DTE), but the other has 9 DTE - it relatively much closer to the expiration than the day before. So it will decay faster. Option buyers can protect their investment from time decay by buying longer dated options, which decay slower! edit: just thought about adding one final thought here. Probabilities. The strategy that you describe in your question is basically going long an OTM call. This is an extremely bullish position, with low probability of making money. Basically, for you to make money, you need two things: you need to be right on direction, and you need to be right on time. In this example, you need the underlying to go up - by a considerable amount! And you need this to happen quickly, before the passage of time will remove too much of the extrinsic value of your call (and, obviously, before the call expires). Benefit of the strategy is, in the highly unlikely event of an extreme, unanticipated move of the underlying to the upside, you can make a lot of money. So, it's a low probability, limited risk, unlimited profit, extremely bullish strategy.\""
},
{
"docid": "285606",
"title": "",
"text": ">Since gold in this very simple hypothetical system has absolutely no use other than a store of value, it is debt. But gold does have other uses. It is a metal that's used for jewelry, it has decorative value. Exchanging something for gold is like a caveman giving you a stone ax if you do some cave paintings for him. If all the civilization disappeared, gold would still have a value, different from bank notes. Gold is a convenient standard commodity for exchange for several reasons: it's indestructible, it's compact, it's easily recognizable. All the gold ever mined in the world would fit inside a typical five-story apartment building. Yet it doesn't burn, doesn't spoil, can be stored forever, different from apples or oranges. >these firms would be adjusting their capacity, and not sitting on trillions of dollars of currency that ought to be liquid. Here s where the difference between actual work that has been performed and a promise make a real difference. These companies are sitting on trillions of dollars of promises, not products. What they have is paper, shares, bonds, debentures, whatever. They are unable to transform those papers into products, because they lack the manufacturing capacity to do so. They do not have a million apples, they have a paper where the farmer said he would grow a million apples. Overall, the corporations in the US have invested heavily in acquisitions of other corporations, this trend has been going on for several decades now. These papers cannot be easily converted into anything useful. For the moment they are just there, with their nominal value that people agreed upon. It's not easy to turn that investment into production."
},
{
"docid": "540011",
"title": "",
"text": "\"Once a currency loses value, it never regains it. Period. Granted there have been short term periods of deflation, as well as periods where, due to relative value fluctuation, a currency may temporarily gain value against the U.S. dollar (or Euro, Franc, whatever) but the prospect of a currency that's lost 99.99% of its value will reclaim any of that value is an impossibility. Currency is paper. It's not stock. It's not a hard commodity. It has no intrinsic value, and no government in history has ever been motivated to \"\"re-value\"\" its currency. Mind you, there have been plenty of \"\"reverse splits\"\" where a government will knock off the extraneous zeroes to make handling units of the currency more practical.\""
},
{
"docid": "380714",
"title": "",
"text": "\"> As I currently understand, we owe much of our national debt to ourselves. Debtors owe creditors. Creditors are, by and large, the banks. Forget about we/ourselves. One thing we are taught in school is that banks earn money on the spread between what a creditor pays, minus what a saver earns in interest on his deposit. In reality, such private savings pretty much do not exist. When someone borrows from the bank, they mostly aren't borrowing another person's savings. The bank is creating *new* currency through the issuance of debt. > The reason for this is that people are being charged interest that does not exist in the system. I'm not sure what you mean by \"\"does not exist in the system\"\". The way it works is you borrow a dollar, and now you owe a dollar plus the interest on the dollar. Since each new loan creates more debt than currency, the monetary system can never shrink or it implodes. If you mean that the currency is unbacked by any objective measure of value, that is correct. > Therefore, if we tried to pay the debt (like some conservative politicians are fighting for) it would be a massive transfer of wealth from the 99% to the 1%, since most of the debt is owed to the 1% (banks). There is no possibility of repaying it. Both the Red Team and the Blue Team are in on this. If you're worried about the 99% you should be advocating commodity money, because that is the only way to stop theft by inflation. If you're worried about yourself, get informed as to how these plans have played out in history and how you might protect yourself.\""
},
{
"docid": "512734",
"title": "",
"text": "\"Currencies don't really have intrinsic value. You can't compare bitcoins to tulips because you can't grow 200x more bitcoins next winter to push the price down to its intrinsic value. Bitcoins are scarce and like gold, the intrinsic value doesn't matter anymore, it's all about supply and demand and there will always be bitcoin fans with money that won't let it go to 0$. And compared to gold, bitcoin is still very very cheap, so even if the bubble \"\"bursts\"\", it will grow again.\""
},
{
"docid": "392317",
"title": "",
"text": "If I hold a bond then I have a debt asset. If I hold physical silver then I have a commodity asset. If I hold the stock of an individual company then I have an equity asset. Equities, commodities and debts are the three kinds of assets that a person can hold. Edit: I forgot one other kind of asset; monetary asset. If I stuff my mattress with cash (USD) I am holding a monetary asset. Short-term Treasury Bills really behave more like a monetary asset than a bond. So besides actual, physical, currency I would categorize T-bill as a monetary asset. https://www.treasurydirect.gov/indiv/products/prod_tbills_glance.htm"
}
] |
4514 | What intrinsic, non-monetary value does gold have as a commodity? | [
{
"docid": "426270",
"title": "",
"text": "\"Gold has no \"\"intrinsic\"\" value. None whatsoever. This is because \"\"value\"\" is a subjective term. \"\"Intrinsic value\"\" makes just as much sense as a \"\"cat dog\"\" animal. \"\"Dog\"\" and \"\"cat\"\" are referring to two mutually exclusive animals, therefore a \"\"cat dog\"\" is a nonsensical term. Intrinsic Value: \"\"The actual value of a company or an asset based on an underlying perception of its true value ...\"\" Intrinsic value is perceived, which means it is worth whatever you, or a group of people, think it is. Intrinsic value has nothing, I repeat, absolutely nothing, to do with anything that exists in reality. The most obvious example of this is the purchase of a copy-right. You are assigning an intrinsic value to a copy-right by purchasing it. However, when you purchase a copy-right you are not buying ink on a page, you are purchasing an idea. Someone's imaginings that, for all intensive purposes, doesn't even exist in reality! By definition, things that do not exist do not have \"\"intrinsic\"\" properties - because things that don't exist, don't have any natural properties at all. \"\"Intrinsic\"\" according to Websters Dictionary: \"\"Belonging to the essential nature or constitution of a thing ... (the intrinsic brightness of a star).\"\" An intrinsic property of an object is something we know that exists because it is a natural property of that object. Suns emit light, we know this because we can measure the light coming from it. It is not subjective. \"\"Intrinsic Value\"\" is the OPPOSITE of \"\"Intrinsic\"\"\""
}
] | [
{
"docid": "222635",
"title": "",
"text": "Stocks, gold, commodities, and physical real estate will not be affected by currency changes, regardless of whether those changes are fast or slow. All bonds except those that are indexed to inflation will be demolished by sudden, unexpected devaluation. Notice: The above is true if devaluation is the only thing going on but this will not be the case. Unfortunately, if the currency devalued rapidly it would be because something else is happening in the economy or government. How these asset values are affected by that other thing would depend on what the other thing is. In other words, you must tell us what you think will cause devaluation, then we can guess how it might affect stock, real estate, and commodity prices."
},
{
"docid": "48947",
"title": "",
"text": "You'd likely be most familiar with them with respect to options and futures on commodities but they're used for credit/interest as well. The intrinsic value of an option is *derived* from the spread between call/put price and strike price; the value of the contract I've paid for or sold is derived from the current market value of the underlying asset, be it rice, platinum, or the Swedish kroner"
},
{
"docid": "541321",
"title": "",
"text": "\"The relative value of Gold (or any other commodity) as measured against any given currency (such as the USD), is not a constant function either. If you have inflationary pressure, the \"\"value\"\" of an ounce of gold (or barrel of oil, etc) may \"\"double\"\", but it's really because the underlying comparator has lost \"\"half\"\" its value.\""
},
{
"docid": "296306",
"title": "",
"text": "It was the sole creditor we're trying to avoid here is what I meant to say, not the broker him/herself. The reason a firm might extend their debt would be to extend their credit into monetary value, in the scenario I just discussed, and it would more often be the more well known firms that would be the most likely to provide a Bond-Money Supply--Think IBM Bonds, Google Bonds, Cheese Board Collective Bonds, Tesla Motor Bonds, GE Bonds, etc. All these firms would find a way to apply their bond funds in a way that would expand their output and henceforth make repaying the bonds much more likely, just like a normal firm would today. The only difference is that in the mean time, that bond becomes a monetary commodity which people can trade for goods and services until it is repaid. Once repaid/neutralized, people can see that the bond is worth using and the demand for that bond as money will increase, just like how the demand for money will increase and that prompts a normal central bank to print more money. Which means, the firm is safe to take on stable debt again which people can reuse again. The major difference here is that we have a money supply that you can choose to participate in or not, and it is up to the consumers of that currency how the money supply flows, as opposed to a central authority. It does matter who's first in line to get the new money in any economy, and with multiple policies competing, power is less concentrated: http://www.youtube.com/watch?v=hx16a72j__8"
},
{
"docid": "360310",
"title": "",
"text": "you dont understand the way markets work if you think that. speculators exist in every market. there are FX speculators, does that mean that the the US dollar, yuan, or yen is a game of musical chairs? If an asset or commodity has a use for everyday people, then they are going to buy that asset or commodity. Speculators or traders bring liquidity and reduce volatility to make the price less volatile so everyday people will be able to use it. Bitcoin is a new technology and people are trying to figure out what its value should be. This is r/finance and I have to explain this? Obviously there are many people out there who find value in a decentralized digital currency."
},
{
"docid": "449941",
"title": "",
"text": "\"These are meaningless statistics on multiple levels: 1. These value rises are as of 2016. This does not indicate any sort of significant trend in the rise in value of these bags over time. Did they lose 30% in 2015? Will value stagnate in 2018? 2. Even if a trend were established (it is not), it doesn't suggest any sort of future movements whatsoever, as past price movements don't ensure future movements. 3. The fundamental idea of \"\"investing\"\" in an accessory is questionable at best. While collectors will buy things like cars and art, and some will sit on them as stores of value, the economics of generating future returns on these items is not so logically sound as with stocks or bonds. These collectors items do not generate future value in a way that produces cash flows. An individual has to purely hope that somebody is willing to pay more for it in the future; the item does not fundamentally necessitate higher payment. This is the fundamental problem also with \"\"investing\"\" in commodities, and why a fundamentalist like Buffet would never do it. You bet on a commodity move (hopefully with information that you believe the market to be incorrectly synthesizing); you don't really \"\"invest\"\" in one. What makes a stock or bond (a company) different is that a company can be thought of as a black box that prints more money than it is fed. We feed money into a company as investors; the company uses that money to buy assets (e.g. Machines, inventory) at book value; the assets are made to work in tandem to produce goods/services that have more value than the sum of their parts; those goods/services are sold at the now higher value for a profit, and cash flows are returned to investors for an annual return on your investment (sometimes dividends aren't paid, but are reinvested with the expectation that reinvestment will lead to far larger dividends in the future). As such, the money investors feed into a company is turned into more money at the other end, and thus the company has produced more value than it's inputs alone. It has done so through the combination of resources (assets) in a way that makes their value greater than the sum of their parts. A company fundamentally is a logical investment (barring doubts about management's ability to create this value). It is like a black box that prints more money over time than you feed it. Purses do not; gold does not; oil does not. Don't invest in purses. Collect then if you love them, but don't bank on a payday.\""
},
{
"docid": "36066",
"title": "",
"text": "I use to play marbles at school. Marbles were like gold the more you had the richer you were. They were a scarce commodity only a few in circulation. Once I secured a wealth of marbles I realized they were of little real value. They were only of illusory value. As long as we all were deceived into believe they had value they I was rich. Sure marble could be used to make marble floors ;) they were lovely to look at, and every one wanted them. Then one day, I discovered the emperor had no clothes. Wow, the day that everyone sees the true value of gold, what a stock market crash that will be. I tried to avoid gold as much as possible, but this is hard to do in todays stock market. My solace is that we will all be in the same golden (Titanic) boat, only I hope to limit my exposure as much as possible. Anyone want a gold watch for a slice of bread?"
},
{
"docid": "240628",
"title": "",
"text": "Reddit doesn't have a ton of resources to offer you as you learn about where to invest, you want to start reading up on actual investing sites. You might start with Motley Fool, StockTwits, Seeking Alpha, Marketwatch, etc. I agree with hipster's take, if all countries are going to keep printing money and expanding their debts and craziness, gold has a bright future. Land, petroleum, commodities, and precious metals have an intrinsic worth that will still be there regardless of what currencies are doing, versus bonds which are merely promises to pay, which will be paid off in devalued money, or stocks which are just promises of future earnings. Think about spreading your risk in a few different places, one chunk here, one chunk there. Some people in the US now are big on dividend paying stocks in lieu of bonds which only pay a percent, which is negative return after inflation. Some people buy 'royalty trust' units, which throw off income from oil leases as dividends. You might want to park a portion in a different currency, but dollar funds aren't going to pay interest and Switzerland plans to keep devaluing its currency as people keep bidding the price up. I don't know if you are allowed to buy CEF, a bullion-backed fund out of Canada in your country, but that's one way to own gold & silver. But with the instability out there, you might prefer a bit of the real thing stashed in a safe place. Or if you have a bit of family land, maybe just be sure you can pay the taxes to keep it; or pursue any other way to own 'real stuff' that will still be worth something after all hell breaks loose."
},
{
"docid": "288156",
"title": "",
"text": "\"The reason I don't want to get into here it is because internet debates over these things turn into an absolute shit-show, instantly. In a nutshell, the (sane parts of) argument comes down to very difficult-to-prove assumptions about how perfectly fiat currency can/will be implemented. - The (sane) case for gold is that it is very difficult to get into the kind of money-printing mischief that places like Zimbabwe and Argentina have got into when your currency is based on something with a finite and slow-growing supply. It's hard to print more gold. - The (sane) case for fiat currency is that it is ridiculous to hamstring the entire economy by tying it to one arbitrary commodity with a fluctuating value and supply that does not correlate well with overall economic output. A perfectly-implemented fiat currency, printed and ordained by a perfectly omniscient, perfectly competent, and perfectly benevolent central bank (let's call it \"\"God money\"\"), is the ideal. That's pretty much axiomatic, and even sane gold-bugs would tend to allow the above, so far as it goes, including all stipulations. In fact, someone inclined to believe in divine intervention might make a case that gold is precisely that: a hard-to-forge, easy-to-detect, easy-to-handle metal placed on earth by God in quantities just right to serve as currency. The problem is that a really *bad* fiat currency is absolutely terrible: leads to nightmare-scenarios; people starving on one side of a fence while tons of crops are being burned on the other side because of runaway price-discrepancies, stuff like that. Again, even (sane) Keynesians will allow as much. The problem is that the crazies, ideologues, and single-issue zealots come out of the woodwork when you start getting into this stuff, and tend to dominate the conversation (if \"\"conversation\"\" is a fair word to use). In a sense, the \"\"sane\"\" spectrum of debate boils down to an almost ideological divide: - Whether you believe that a sort of permanent, technocratic, central-bank/currency-issuer is possible/plausible. Because if it *is* achievable, it is almost certainly better than just tying the whole economy to the price of a single commodity. If it is *not* achievable, then it is almost certainly better to let the markets adjust and correct, however imperfectly, than to tie the whole economy to the whims and wishes of incompetent and politically-motivated money-printers. (I hope that makes sense, and that it is a fair representation of the conundrum). The problem with making an argument is that you've got a hodge-podge of technical (and sometimes fairly complicated) nitty-gritty, plus a certain amount of starting-assumption/worldview/ideological stuff, all smooshed together, and almost all of it is very hard/impossible to \"\"prove\"\" via evidential scientific testing. Both the technical and historical stuff have strong conflicting indicators, and it's obviously not possible to, say, set up two identical societies and let them run for a thousand years, controlling for everything but monetary policy, and see what happens. Macro-economics is a very imperfect science. It has certainly given the world some very useful and valuable insights and axioms, but the testing methods are extremely indirect and heavily subject to interpretation: you really have only the historical record to draw on, and it is almost impossible to find examples that control for whatever variable is in question. Macro, ideally, *tries* really hard to be science, but you're always kind of picking from bad examples when testing a hypothesis, trying to line up vaguely similar historical periods to isolate for some common factor. It's kind of like geology or theoretical physics, except with much smaller and messier data-sets. Ten thousand years from now, it will be much easier to look at the historical data and isolate for particular variables over multiple hundred-year spans across a variety of cultural, political, and socio-economic backgrounds. For now, the peanut-gallery is chock full of questions that the experts cannot answer, and the record is full of exceptions to every rule, and a lot of it frankly boils down to worldview and ideology (with a healthy dollop of \"\"I'm smarter than you\"\" to finish the sauce). Since I personally prefer technical questions to politics, I will leave it to others to formulate and debate those things.\""
},
{
"docid": "588101",
"title": "",
"text": "\"Great, so we agree it's not a fraud and the title of the bloomberg article is grossly misleading. Even still, to call it a bubble, you'd need to first agree to what the non-bubble valuation of Bitcoin would be. The consensus among those who use the word \"\"tulip\"\" frequently when talking about bitcoin is that the non-bubble valuation of bitcoin is zero (0). This, of course, means that Bitcoin has been in a bubble ever since the first exchange of good was made with it (which folklore tells us was a purchase of 2 pizzas for 10,000 bitcoins, establishing a price of under $0.01 per bitcoin. Ever since, for the past 7 years, Bitcoin has been in a bubble. Furthermore, for as long as Bitcoin's market value remains at or above $0.01 per bitcoin, it will still be in a bubble. If me and a few hundred thousand of my closest friends have anything to say about it, that will never happen. And therefore Bitcoin will remain in a bubble indefinitely. Now that, to me, seems like a very unusual bubble. If that strikes you as a stretch of the concept too, then maybe we need to revisit an assumption or two here. For one, is the non-bubble valuation of bitcoin really zero? Is there perhaps something about bitcoin that might give it some intrinsic value that, say, tulips or beanie babies may not have? And if there is, is there a way to estimate what that value may be? Does that value change over time? Is it perhaps possible that the value of bitcoin correlates in some fashion with its reach and its network effect? Those are harder questions to answer, and their answers is certainly not as neat and precise as \"\"zero\"\" or \"\"bubble\"\", but maybe it's useful to think about them when trying to reason about what bitcoin is and isn't.\""
},
{
"docid": "327271",
"title": "",
"text": "\"I do not know anything about retail investing in India, since I am in the US. However, there are a couple of general things to keep in mind about gold that should be largely independent of country. First, gold is not an investment. Aside from a few industrial uses, it has no productive value. It is, at best, a hedge against inflation, since many people feel more comfortable with what they consider \"\"real\"\" money that is not subject to what seems to be arbitrary creation by central banks. Second, buying tiny amounts of gold as coin or bullion from a retail dealer will always involve a fairly significant spread from the commodity spot price. The spot price only applies to large transactions. Retail dealers have costs of doing business that necessitate these fees in order for them to make a profit. You must also consider the costs of storing your gold in a way that mitigates the risk of theft. (The comment by NL7 is on this point. It appeared while I was typing this answer.) You might find this Planet Money piece instructive on the process, costs, and risks of buying gold bullion (in the US). If you feel that you must own gold as an inflation hedge, and it is possible for residents of India, you would be best off with some kind of gold fund that tracks the price of bullion.\""
},
{
"docid": "528833",
"title": "",
"text": "I still don't fully understand how gold is debt. I get that you made the connection that gold is money, and previously explained how money is debt. But that doesn't make gold debt. Gold is a commodity just as oil, apples, deer, shoes, etc. It might not provide any utility, but is still something people have come to value in and of itself."
},
{
"docid": "180404",
"title": "",
"text": "\"Intrinsic value is a myth. There is no such thing. Subjective human demand is the only thing that gives anything value. This subjectivity is different person to person and can change very quickly. Historically there are two main uses for gold: jewelry and money. How can you tell when a particular type of money is undervalued? It disappears from circulation since people prefer to use money that is overvalued. This phenomenon is paraphrased in Gresham's Law: Bad money drives out good money. The Coinage Act of 1792 established the US dollar as 371.25 grains of silver or 24.75 grains of gold. This established a government ratio of 15 ounces of silver to 1 ounce of gold. In the late 18th century there was a large production of silver from Mexico and the market ratio of silver to gold increased to 15.75 to 1 by 1805. The government ratio, however, was still 15 to 1. This was enough incentive for people to exchange their silver coins for gold coins at the government ratio, melt the gold, and sell the gold bullion overseas at the market value. Thus, gold coins disappeared from circulation as people either hoarded the gold or sent it abroad. People used the overvalued silver coins (i.e. the \"\"bad\"\" money) domestically and gold coins disappeared from the market. In an attempt to correct the problem of disappearing gold coins the Coinage Act of 1834 was enacted. It kept the US dollar at 371.25 grains of silver but changed the definition to 23.2 grains of gold which established a government ratio of 16 to 1. This was close to the market ratio of gold to silver at the time so both gold and silver coins appeared in circulation again. The gold rush of 1849 produced a lot of gold and the market ratio of silver to gold became 15.46 to 1. Now gold was overvalued so people began exchanging their gold coins for silver coins at the government ratio, melt the silver, and sell the silver bullion overseas at the market value. People used the overvalued gold coins (i.e. the \"\"bad\"\" money) domestically and silver coins disappeared from the market. When you see gold circulating everywhere you will know it is overvalued compared to other types of money. Paper money always drives gold out of circulation since the market ratio of paper to gold severely under values gold. Source here.\""
},
{
"docid": "83638",
"title": "",
"text": "\"This is somewhat of a non-answer but I'm not sure you'll ever find a satisfying answer to this question, because the premises on which the question is based on are flawed. Money itself does not \"\"exist physically,\"\" at least not in the same sense that a product you buy does. It simply does not make sense to say that you \"\"physically own money.\"\" You can build a product out of atoms, but you cannot build a money out of atoms. If you could, then you could print your own money. Actually, you can try to print your own money, but nobody would knowingly accept it and thus is it functionally nonequivalent to real money. The paper has no intrinsic value. Its value is derived from the fact that other people perceive it as valuable and nowhere else. Ergo paper money is no different than electronic money. It is for this reason that, if I were you, I would be okay with online Forex trading.\""
},
{
"docid": "343823",
"title": "",
"text": "I think the key to intrinsic value is that if you have something with *intrinsic* value, you can derive some direct benefit from it without trading. For example a house has intrinsic value because without trading it, you can use it to stay warm and dry, and use it to store your stuff. Money - whether it's federal currency or bitcoin - has a very low intrinsic value. What can you do with cash without trading it? Maybe make some paper art or patch a leaking boat, but a $20 bill has very little practical (intrinsic) value until you trade it for goods or services. The same with bitcoin - you can't play it like a video game or drink it if you're thirsty, all you can do is trade it for things that you can use directly."
},
{
"docid": "568006",
"title": "",
"text": "Another disadvantage is the inability to value commodities in an accounting sense. In contrast with stocks, bonds and real estate, commodities don't generate cash flows and so any valuation methodology is by definition speculative. But as rhaskett notes, there are diversification advantages. The returns for gold, for instance, tend to exhibit low/negative correlation with the performance of stocks. The question is whether the diversification advantage, which is the primary reason to hold commodities in a multi-asset class portfolio through time, overcomes the disadvantages? The answer... maybe."
},
{
"docid": "407551",
"title": "",
"text": "\"Also note that a share of voting stock is a vote at the stockholder's meeting, whether it's dividend or non-dividend. That has value to the company and major stockholders in terms of protecting their own interests, and has value to anyone considering a takeover of the company or who otherwise wants to drive the company's policy. Similarly, if the company is bought out, the share will generally be replaced by shares in whatever the new owning company is. So it really does represent \"\"a slice of the company\"\" in several vary practical ways, and thus has fairly well-defined intrinsic value linked to the company's perceived value. If its price drops too low the company becomes more vulnerable to hostile takeover, which means the company itself will often be motivated to buy back shares to protect itself from that threat. One of the questions always asked when making an investment is whether you're looking for growth (are you hoping its intrinsic value will increase) or income (are you hoping it will pay you a premium for owning it). Non-dividend stocks are a pure growth bet. Dividend-paying stocks are typically a mixture of growth and income, at various trade-off points. What's right for you depends on your goals, timeframe, risk tolerance, and what else is already in your portfolio.\""
},
{
"docid": "285606",
"title": "",
"text": ">Since gold in this very simple hypothetical system has absolutely no use other than a store of value, it is debt. But gold does have other uses. It is a metal that's used for jewelry, it has decorative value. Exchanging something for gold is like a caveman giving you a stone ax if you do some cave paintings for him. If all the civilization disappeared, gold would still have a value, different from bank notes. Gold is a convenient standard commodity for exchange for several reasons: it's indestructible, it's compact, it's easily recognizable. All the gold ever mined in the world would fit inside a typical five-story apartment building. Yet it doesn't burn, doesn't spoil, can be stored forever, different from apples or oranges. >these firms would be adjusting their capacity, and not sitting on trillions of dollars of currency that ought to be liquid. Here s where the difference between actual work that has been performed and a promise make a real difference. These companies are sitting on trillions of dollars of promises, not products. What they have is paper, shares, bonds, debentures, whatever. They are unable to transform those papers into products, because they lack the manufacturing capacity to do so. They do not have a million apples, they have a paper where the farmer said he would grow a million apples. Overall, the corporations in the US have invested heavily in acquisitions of other corporations, this trend has been going on for several decades now. These papers cannot be easily converted into anything useful. For the moment they are just there, with their nominal value that people agreed upon. It's not easy to turn that investment into production."
},
{
"docid": "336282",
"title": "",
"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."
}
] |
4514 | What intrinsic, non-monetary value does gold have as a commodity? | [
{
"docid": "209804",
"title": "",
"text": "This was answered wonderfully in a recent Planet Money podcast: Why Gold?. Here are some higlights of gold: If listening to podcasts isn't your thing, read this summary."
}
] | [
{
"docid": "556936",
"title": "",
"text": "\"Over on Quantitative Finance Stack Exchange, I asked and answered a more technical and broader version of this question, Should the average investor hold commodities as part of a broadly diversified portfolio? In short, I believe the answer to your question is that gold is neither an investment nor a hedge against inflation. Although many studies claim that commodities (such as gold) do offer some diversification benefit, the most credible academic study I have seen to date, Should Investors Include Commodities in Their Portfolios After All? New Evidence, shows that a mean-variance investor would not want to allocate any of their portfolio to commodities (this would include gold, presumably). Nevertheless, many asset managers, such as PIMCO, offer funds that are marketed as \"\"real return\"\" or \"\"inflation-managed\"\" and include commodities (including gold) in their portfolios. PIMCO has also commissioned some research, Strategic Asset Allocation and Commodities, claiming that holding some commodities offers both diversification and inflation hedging benefits.\""
},
{
"docid": "502832",
"title": "",
"text": "\">There is no obvious reason why, even in a perfect world, we would go looking for a malleable, highly-conductive, corrosion-resistant metal as something to peg the value of our banknotes to. If this were true, why force citizens to use a specific central bank's paper money via \"\"legal tender laws\"\"? ;) >I will leave it to others to argue over whether a return to the gold standard would be a good idea, but the argument has nothing to with the intrinsic utility of gold. I'm sure we can all agree that gold is a fine metal with many good qualities. Then what was the point of your post? If you don't want to use gold as money, I would never force you to use gold. It is the contention of the Austrian economists that there should be free and open competition in the money industry. Allow people to choose their money. Allow entrepreneurs to create systems to simplify the communication of prices across various monies. The root of the problem is force and monopoly.\""
},
{
"docid": "363899",
"title": "",
"text": "The problem with commodities is that they don't produce income. With a stock or bond, even if you never sold it to anyone or it wasn't publicly traded, you know you can collect the money the company makes or collect interest. That's a quantifiable income from the security. By computing the present value of that income (cf. http://blog.ometer.com/2007/08/26/money-math/) you can have at least a rough sense of the value of the stock or bond investment. Commodities, on the other hand, eat income (insurance and storage). Their value comes from their practical uses e.g. in manufacturing (which eventually results in income for someone); and from psychological factors. The psychological factors are inherently unpredictable. Demand due to practical uses should keep up with inflation, since in principle the prices on whatever products you make from the commodity would keep up with inflation. But even here there's a danger, because it may be that over time some popular uses for a given commodity become obsolete. For example this commodity used to be a bigger deal than now, I guess: http://en.wikipedia.org/wiki/Frankincense. The reverse is also possible, that new uses for a commodity drive up demand and prices. To the extent that metals such as silver and gold bounce around wildly (much more so than inflation), I find it hard to believe the bouncing is mostly due to changes in uses of the metals. It seems far more likely that it's due to psychological factors and momentum traders. To me this makes metals a speculative investment, and identifying a bubble in metals is even harder than identifying one in income-producing assets that can more easily be valued. To identify a bubble you have to figure out what will go on in the minds of a horde of other people, and when. It seems safest for individual investors to just assume commodities are always in a bubble and stay away. The one arguable reason to own commodities is to treat them as a random bouncing number, which may enhance returns (as long as you rebalance) even if on average commodities don't make money over inflation. This is what people are saying when they suggest owning a small slice of commodities as part of an asset allocation. If you do this you have to be careful not to expect to make money on the commodities themselves, i.e. they are just something to sell some of (rebalance out of) whenever they've happened to go up a lot."
},
{
"docid": "394374",
"title": "",
"text": "\"I am a healthcare compliance consultant making good money. I understand the logic behind ROI and education. I was trying to raise the point that choosing what to study is more than what you make when you're done with college or what the \"\"value\"\" of your degree is. Can't we value education intrinsically? Why does it have to be tied to ROI? Maybe the business sub isnt the best place for this debate, but I think its important.\""
},
{
"docid": "222635",
"title": "",
"text": "Stocks, gold, commodities, and physical real estate will not be affected by currency changes, regardless of whether those changes are fast or slow. All bonds except those that are indexed to inflation will be demolished by sudden, unexpected devaluation. Notice: The above is true if devaluation is the only thing going on but this will not be the case. Unfortunately, if the currency devalued rapidly it would be because something else is happening in the economy or government. How these asset values are affected by that other thing would depend on what the other thing is. In other words, you must tell us what you think will cause devaluation, then we can guess how it might affect stock, real estate, and commodity prices."
},
{
"docid": "13885",
"title": "",
"text": "You could buy shares of an Exchange-Traded Fund (ETF) based on the price of gold, like GLD, IAU, or SGOL. You can invest in this fund through almost any brokerage firm, e.g. Fidelity, Etrade, Scotttrade, TD Ameritrade, Charles Schwab, ShareBuilder, etc. Keep in mind that you'll still have to pay a commission and fees when purchasing an ETF, but it will almost certainly be less than paying the markup or storage fees of buying the physical commodity directly. An ETF trades exactly like a stock, on an exchange, with a ticker symbol as noted above. The commission will apply the same as any stock trade, and the price will reflect some fraction of an ounce of gold, for the GLD, it started as .1oz, but fees have been applied over the years, so it's a bit less. You could also invest in PHYS, which is a closed-end mutual fund that allows investors to trade their shares for 400-ounce gold bars. However, because the fund is closed-end, it may trade at a significant premium or discount compared to the actual price of gold for supply and demand reasons. Also, keep in mind that investing in gold will never be the same as depositing your money in the bank. In the United States, money stored in a bank is FDIC-insured up to $250,000, and there are several banks or financial institutions that deposit money in multiple banks to double or triple the effective insurance limit (Fidelity has an account like this, for example). If you invest in gold and the price plunges, you're left with the fair market value of that gold, not your original deposit. Yes, you're hoping the price of your gold investment will increase to at least match inflation, but you're hoping, i.e. speculating, which isn't the same as depositing your money in an insured bank account. If you want to speculate and invest in something with the hope of outpacing inflation, you're likely better off investing in a low-cost index fund of inflation-protected securities (or the S&P500, over the long term) rather than gold. Just to be clear, I'm using the laymen's definition of a speculator, which is someone who engages in risky financial transactions in an attempt to profit from short or medium term fluctuations This is similar to the definition used in some markets, e.g. futures, but in many cases, economists and places like the CFTC define speculators as anyone who doesn't have a position in the underlying security. For example, a farmer selling corn futures is a hedger, while the trading firm purchasing the contracts is a speculator. The trading firm doesn't necessarily have to be actively trading the contract in the short-run; they merely have no position in the underlying commodity."
},
{
"docid": "117902",
"title": "",
"text": "\"The \"\"conventional wisdom\"\" is that you should have about 5% of your portfolio in gold. But that's an AVERAGE. Meaning that you might want to have 10% at some times (like now) and 0% in the 1980s. Right now, the price of gold has been rising, because of fears of \"\"easing\"\" Fed monetary policy (for the past decade), culminating in recent \"\"quantitative easing.\"\" In the 1980s, you should have had 0% in gold given the fall of gold in 1981 because of Paul Volcker's monetary tightening policies, and other reasons. Why did gold prices drop in 1981? And a word of caution: If you don't understand the impact of \"\"quantitative easing\"\" or \"\"Paul Volcker\"\" on gold prices, you probably shouldn't be buying it.\""
},
{
"docid": "75650",
"title": "",
"text": "As the value of a currency declines, commodities, priced in that currency, will rise. The two best commodities to see a change in would be oil and gold."
},
{
"docid": "541321",
"title": "",
"text": "\"The relative value of Gold (or any other commodity) as measured against any given currency (such as the USD), is not a constant function either. If you have inflationary pressure, the \"\"value\"\" of an ounce of gold (or barrel of oil, etc) may \"\"double\"\", but it's really because the underlying comparator has lost \"\"half\"\" its value.\""
},
{
"docid": "248544",
"title": "",
"text": "But how valuable is it in the Star Trek world? How much gold is available and how much do they need?Are there alternatives? Will they ever find another element that replaces it? These all affect the actual value... Nothing has value without demand, so how can anything be intrinsically valuable?"
},
{
"docid": "532381",
"title": "",
"text": "\"Everything is worth what its purchaser will pay for it. --Publilius Syrus. Gold has value because people want to buy it. Electronics manufacturers like the fact that it's conductive. Jewellers like that its shiny. Glenn Beck likes that he's selling it and his audience will buy it. Proponents of gold claim that it has \"\"real\"\" value, as opposed to fiat currency (which has no commodity backing). Opponents of gold claim that all wealth is illusory, and that gold has no more inherent value than the paper we use now. I'm inclined to agree with the latter (money is only money because we agree that it is, and the underlying material is meaningless), however the issue is hotly debated.\""
},
{
"docid": "461325",
"title": "",
"text": ">Huh? Agriculture is down to single digits as part of the GDP. What does that have to do with a gold standard and monetary policy? I was being sarcastic. >But as soon as the USA left the gold exchange standard, total factor productivity began to dramatically stagnate. Correlation doesn't equal causation. Remember that this is also the same time that European, Japanese, and Soviet economies were picking back up after WW2. Global production picked up and there was more international competition. >Because our massive debt is doing so well for us? In the beginning it looks nice because there is very little pain and is practically unnoticible, but as we see current events playing out in the US and to a greater extent Europe which isnt as tightly knit economically as the US, fiat currency has huge problems. The EU cannot print money in the same way the USA can. If anything the Euro is a cautionary tale about currency's with too stringent printing limitations. Along with tying together a set of countries at vastly different levels of economic development. The USA is not anywhere near the point of no return, and seeing as we can finance our debt at ridiculously low rates compared to the rest of the world, it would be much simpler to do that, than try and restructure the entire monetary system of the USA. >Established over what? the last 40 years? We are at about 80-90 years now. >Thats hardly enough time to call practical fact when the gold standard existed for hundreds and thousands of years. The gold standard has not been in use for hundreds of thousands of years. Nor was it the only currency previous to fiat. >I am not sure why you think that the USA is in such a great position. The american dream is faultering if you're just starting out in life. Just ask any number of recent college grads who are increasingly living with parents, not getting married and can't find jobs. I don't think asking my local college grad is a good way of determining the USA's macro-economic situation. You're absolutely right that there is a major major disparity of wealth problem. But the gold standard isn't the reason for that. Unemployment Insurance and Welfare are also comically small portions of the budget. If you wanna talk about cutting spending, Defense and Medicare are where it's at. And you don't even have to hurt old people or soldiers to fix them."
},
{
"docid": "156240",
"title": "",
"text": "Coin regardless of the metal content proportion, all have intrinsic and face value. The more the silver and gold presence in coins the more the value. Pure Nickle and copper coin have intrinsic value. The more zinc, and manganese presense in coin the less value the coin becomes."
},
{
"docid": "351154",
"title": "",
"text": "\"You might want to read about about the Coase Theorem. \"\"In law and economics, the Coase theorem, attributed to Ronald Coase, describes the economic efficiency of an economic allocation or outcome in the presence of externalities. The theorem states that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights. In practice, obstacles to bargaining or poorly defined property rights can prevent Coasian bargaining.\"\" This is similar to what you are asking. Each country has an endowment of gold, and they must create a set amount of money to represent their endowment of gold. This will establish an exchange rate. If I have 5 tons of gold and you have 5 tons, and I print 10 dollars and you print 20, then one of my dollars is worth two of your dollars. Thus, the amount of money is not relevant- it's the exchange rate between the countries. If all the nations know each other's gold endowment, then we will have a perfect exchange rate. If we don't, then currency printing will vary but arbitrage should drive it to an accurate price. Gold and diamonds are both valuable in part due to scarcity, but gold has been used as a measure of value because it's been historically used as a medium of exchange. People just realized that swapping paper was safer and cheaper than physically transporting gold, but the idea of gold as a measure of value is present because \"\"that's how it's always been.\"\" Nobody \"\"creates/supervises\"\" these procedures, but organizations like the IMF, ECB, Fed Reserve, etc implement monetary policy to regulate the money supply and arbitrage drives exchange rates to fair values.\""
},
{
"docid": "151867",
"title": "",
"text": "He's made a profit on gold the same way you make money on any commodity, because demand (largely as an inflation hedge) has outpaced supply. It has nothing to do with using gold as a currency (which no one is doing.) I'm not saying gold can't have value as money, but that's not where we're at right now. Dollars are accepted to settle transactions all over the world, and inflation is negligible. A lot of speculators buying gold that sits in vaults is not the same thing as a return to specie based currency."
},
{
"docid": "463451",
"title": "",
"text": "10% is way high unless you really dedicate time to managing your investments. Commodities should be a part of the speculative/aggressive portion of your portfolio, and you should be prepared to lose most or all of that portion of your portfolio. Metals aren't unique enough to justify a specific allocation -- they tend to perform well in a bad economic climate, and should be evaluated periodically. The fallacy in the arguments of gold/silver advocates is that metals have some sort of intrinsic value that protects you. I'm 32, and remember when silver was $3/oz, so I don't know how valid that assertion is. (Also recall the 25% price drop when the CBOE changed silver's margin requirements.)"
},
{
"docid": "177484",
"title": "",
"text": "\"Monetary policy has always been in play. The Romans frequently debased (that is, increased the alloy/base metal ratio) their coinage and the U.S. went off the gold standard numerous times, especially during wars. Really the gold standard was only adhered to when it was convenient, so historically it did not play the role that Austrians wish it would. Basically just because gold was historically used as currency does not mean that it controlled the money supply. For example, most sovereign transactions were simply recorded by symbolic \"\"money things.\"\"* And even if the gold standard did automatically protect the value of money, inflation is a hell of a lot better than deflation anyway. You want to reward people for putting their money to work, not sticking it in a mattress. *For further information on the history of gold currency and money in general, see section 2 of this article from the LSE: http://www.sciencedirect.com/science/article/pii/S0176268098000159\""
},
{
"docid": "137353",
"title": "",
"text": "\"My question boiled down: Do stock mutual funds behave more like treasury bonds or commodities? When I think about it, it seems that they should respond the devaluation like a commodity. I own a quantity of company shares (not tied to a currency), and let's assume that the company only holds immune assets. Does the real value of my stock ownership go down? Why? On December 20, 1994, newly inaugurated President Ernesto Zedillo announced the Mexican central bank's devaluation of the peso between 13% and 15%. Devaluing the peso after previous promises not to do so led investors to be skeptical of policymakers and fearful of additional devaluations. Investors flocked to foreign investments and placed even higher risk premia on domestic assets. This increase in risk premia placed additional upward market pressure on Mexican interest rates as well as downward market pressure on the Mexican peso. Foreign investors anticipating further currency devaluations began rapidly withdrawing capital from Mexican investments and selling off shares of stock as the Mexican Stock Exchange plummeted. To discourage such capital flight, particularly from debt instruments, the Mexican central bank raised interest rates, but higher borrowing costs ultimately hindered economic growth prospects. The question is how would they pull this off if it's a floatable currency. For instance, the US government devalued the US Dollar against gold in the 30s, moving one ounce of gold from $20 to $35. The Gold Reserve Act outlawed most private possession of gold, forcing individuals to sell it to the Treasury, after which it was stored in United States Bullion Depository at Fort Knox and other locations. The act also changed the nominal price of gold from $20.67 per troy ounce to $35. But now, the US Dollar is not backed by anything, so how do they devalue it now (outside of intentionally inflating it)? The Hong Kong Dollar, since it is fixed to the US Dollar, could be devalued relative to the Dollar, going from 7.75 to 9.75 or something similar, so it depends on the currency. As for the final part, \"\"does the real value of my stock ownership go down\"\" the answer is yes if the stock ownership is in the currency devalued, though it may rise over the longer term if investors think that the value of the company will rise relative to devaluation and if they trust the market (remember a devaluation can scare investors, even if a company has value). Sorry that there's too much \"\"it depends\"\" in the answer; there are many variables at stake for this. The best answer is to say, \"\"Look at history and what happened\"\" and you might see a pattern emerge; what I see is a lot of uncertainty in past devaluations that cause panics.\""
},
{
"docid": "149988",
"title": "",
"text": "\"I've mostly seen this term peddled by those with large portfolios in gold/commodities. The incentive for these guys, who for example may have a large portfolio in gold, is to drive demand for gold up - which in turn drives the value of the gold they're holding up and makes their assets more valuable. The easiest way to get a large amount of people to invest in gold is to scare them into thinking the whole market is going to fall apart and that gold is their best/only option. I personally think that the path we're on is not particularly sustainable and that we're heading for a large correction/recession anyways - but for other reasons. **Example:** [Peter Shiff YouTube Channel called \"\"The Economist\"\" with conspiracy videos](https://www.youtube.com/user/PeterSchiffChannel/videos) [Actual \"\"The Economist\"\" magazine researching the market](https://www.youtube.com/user/EconomistMagazine/videos) (edit: formatting)\""
}
] |
4523 | What should I do with my $25k to invest as a 20 years old? | [
{
"docid": "594257",
"title": "",
"text": "\"My original plan was to wait for the next economic downturn and invest in index funds. These funds have historically yielded 6-7% annually when entered at any given time, but maybe around 8-9% annually when entered during a recession. These numbers have been adjusted for inflation. Questions or comments on this strategy? Educate yourself as index funds are merely a strategy that could be applied to various asset classes such as US Large-cap value stocks, Emerging Market stocks, Real Estate Investment Trusts, US Health Care stocks, Short-term bonds, and many other possibilities. Could you be more specific about which funds you meant as there is some great work by Fama and French on the returns of various asset classes over time. What about a Roth IRA? Mutual fund? Roth IRA is a type of account and not an investment in itself, so while I think it is a good idea to have Roth IRA, I would highly advise researching the ins and outs of this before assuming you can invest in one. You do realize that index funds are just a special type of mutual fund, right? It is also worth noting that there are a few kinds of mutual funds: Open-end, exchange-traded and closed-end. Which kind did you mean? What should I do with my money until the market hits another recession? Economies have recessions, markets have ups and downs. I'd highly consider forming a real strategy rather than think, \"\"Oh let's toss it into an index fund until I need the money,\"\" as that seems like a recipe for disaster. Figure out what long-term financial goals do you have in mind, how OK are you with risk as if the market goes down for more than a few years straight, are you OK with seeing those savings be cut in half or worse?\""
}
] | [
{
"docid": "396694",
"title": "",
"text": "\"Now, my own answer: If you join and receive equity, do the 1/3 split as a max. Truthfully, if it were my company, I would try to negotiate with you to only give you 15%--20% because as an advisor you're not going to be involved in executing the idea to turn it into a business. If you contribute capital, do it as a loan. End of story. You don't own more because you financed growth... you shouldn't. The growth will have come because of the collective performance of the whole team. You should get paid back at a \"\"fair\"\" rate for your investment... if the company can handle it, I would argue something like 10% interest is reflective of the risk you're taking with your money. If the finances are so tight that the interest repayment isn't an option, do the math behind what you should be paid for the loan in interest, and convert that to shares or equity somehow, and get paid back for the invested capital. If the company can't repay your loan, the business model may not be sound enough, or developed enough, to be investing in to begin with.\""
},
{
"docid": "172778",
"title": "",
"text": "The amount of money you have should be enough for you to live a safe but somewhat restricted life if you never worked again - but it could set you up for just about any sort of financial goal (short of island buying) if you do just about any amount of work. The basic math for some financial rules of thumb to keep in mind: If your money is invested in very low-risk ways, such as a money market fund, you might earn, say, 3% in interest every year. That's $36k. But, if you withdraw that $36k every year, then every year you have the same principal amount invested. And a dollar tomorrow can't buy as much as a dollar today, because of inflation. If we assume for simplicity that inflation is 1% every year, then you need to contribute an additional $12k to your principal balance every year, just so that it has the same buying power next year. This leaves you with a net $24k of interest income that you can freely spend every year, for the rest of your life, without ever touching your principal balance. If your money is invested more broadly, including equity investments [stocks], you might earn, say, 7% every year. Some years you might lose money on your investments, and would need to draw down your principal balance to pay your bills. Some years you might do quite well - but would need to remain conservative and not withdraw your 'excess' earnings every year, because you will need that 'excess' to make up for the bad years. This would leave you with about $74k of income every year before inflation, and about $62k after inflation. But, you would be taking on more risk by doing this. If you work enough to pay your daily bills, and leave your investments alone to earn 7% on average annually, then in just 10 years your money would have doubled to ~ $2.4 Million dollars. This assumes that you never save another penny, and spend everything you make. It's a level of financial security that means you could retire at a drop of the hat. And if don't start working for 20 years [which you might need to do if you spend in excess of your means and your money dries up], then the same will not be true - starting work at 45 with no savings would put you at a much greater disadvantage for financial security. Every year that you work enough to pay your bills before 'retirement' could increase your nest egg by 7% [though again, there is risk here], but only if you do it now, while you have a nest egg to invest. Now in terms of what you should do with that money, you need to ask yourself: what are your financial goals? You should think about this long and hard (and renew that discussion with yourself periodically, as your goals will change over time). You say university isn't an option - but what other ways might you want to 'invest in yourself'? Would you want to go on 'sabbatical'-type learning trips? Take a trade or learn a skill? Start a business? Do you want to live in the same place for 30 years [and thus maybe you should lock-down your housing costs by buying a house] or do you want to travel around the world, never staying in the same place twice [in which case you will need to figure out how to live cheaply and flexibly, without signing unnecessary leases]. If you want to live in the middle of nowhere eating ramen noodles and watching tv, you could do that without lifting a finger ever again. But every other financial goal you might have should be factored into your budget and work plan. And because you do have such a large degree of financial security, you have a lot of options that could be very appealing - every low paying but desirable/hard-to-get job is open to you. You can pursue your interests, even if they barely pay minimum wage, and doing so may help you ease into your new life easier than simply retiring at such a young age [when most of your peers will be heavy into their careers]. So, that is my strongest piece of advice - work now, while you're young and have motivation, so that you can dial back later. This will be much easier than the other way around. As for where you should invest your money in, look on this site for investing questions, and ultimately with that amount of money - I suggest you hire a paid advisor, who works based on an hourly consultation fee, rather than a % management fee. They can give you much more directed advice than the internet (though you should learn it yourself as well, because that will give you the best piece of mind that you aren't being taken advantage of)."
},
{
"docid": "152839",
"title": "",
"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."
},
{
"docid": "175226",
"title": "",
"text": "\"As JoeTaxpayer notes in his comment, \"\"answers\"\" to this are really just opinions, so here's mine, for what it's worth. If your risk tolerance is 5 out of 5, you shouldn't have anything in Treasuries. Those are basically the most conservative of all investments. This would probably mean no TIPS as well. If you're more like 4.5 out of 5, you could have some, but just a little; a 30% allocation to government securities is quite conservative. If you want to diversify across different asset classes, you could consider a bond fund like (for instance VBMFX, the Vanguard total bond market index fund). Your portfolio doesn't currently contain any (non-government) bonds, which is something to consider. 20% seems like quite a large allocation to REITs. Most sample portfolios I've seen allocate no more than 10% to REITs, often no more than 5%. There are some that have more like the 20% you're envisioning, but you might want to ponder that a bit more especially in light of your concerns about REITs being at an all-time high. As for your question about all-time highs, it's reasonable to think about, but I think waiting for 30-50% off all-time highs is unrealistic. Looking at a chart of VFINX (essentially the S&P 500), I see that at the nadir of the recent downturn, in early 2009, the market was at about 50% of its pre-crash all-time high. At the nadir of the dot-com bust, the market was about 45% off its pre-crash high. If you're waiting for it to be 50% off it's all-time high, you're not just waiting for \"\"a good time to invest\"\", you're waiting for a major crash. It could certainly make sense not to immediately put everything into US stocks, but that doesn't mean you should put nothing in. As Trevor Wilson commented, you could put some of the money in and then gradually add the rest over time, reducing the risk of unluckily buying at the peak. (This can also reduce the psychological angst of worrying about whether you're doing the right thing, which is worth taking into account.) Also note that if you get rid of the treasuries, you eliminate a good chunk of the stuff that you thought was too close to the peak anyway. Your two basic points (asset allocation and low-cost funds) have a strong Boglehead flavor. You may already have looked at the Bogleheads wiki; if not you should take a look. If you are comfortable with that philosophy (and I think it's a sound one), you should remember that part of that philosophy is not worrying about \"\"timing the market\"\". You pursue a buy-and-hold strategy if you believe the market will go up in the long term and don't care much about what it does in the short term. That said, as mentioned above, you might want to ease in your investment over time, rather than buying all at once, if only to avoid tearing your hair out if the market goes down in the short term. Incidentally, your proposed portfolio is similar to this one that they mention, although as I said above I think this is too conservative if you are 30 years old and consider yourself a \"\"5 out of 5\"\" in terms of risk tolerance. I'm not sure if you already saw that in your research, but since that portfolio apparently has a name and is known, you might be able to find information about its risks and benefits by searching for discussion of it by name.\""
},
{
"docid": "559529",
"title": "",
"text": "Prior to having children we did exactly what you describe. We would visit my mother in law about four to six times a year, a 350-mile-each-way trip for a weekend. We'd simply rent a car, drive down, drive back, return it, out $150 or so for the weekend, a total of under $1000 a year; far cheaper than owning. You should factor in whether you will save money, though, on things you might not immediately consider. Will you spend less on groceries, in particular, if you can drive to Costco or Sam's Club (or even just to a regular grocery store)? I doubt you'll save the cost of the car ($2000/year as you say), but it's possible it will factor into the mix. I definitely would discourage purchasing a new car, if you're considering the financial side primarily. I suspect you can get a used car - maybe the $10k car you would've sold - and spend more like $1000 a year on it, or less. I don't know if I'd go to the $5000 level as those in comments suggested, as if you're doing long trips you want something with higher than average reliability; but even a car like a 5 year old mid-level sedan, easily costing you less than $10k, would be fine and likely sell in 5 years for $5k itself while hopefully not having too much maintenance (especially if you choose something with lower mileage; shop around!). But even with those assumptions, 20 days a year of rental which you can probably get less than $50 rates on (particularly if you look at some of the car sharing options, Zipcar and Enterprise both allow you to do longer term rentals for reasonable prices) seems like a fine deal compared to the hassle of owning."
},
{
"docid": "62882",
"title": "",
"text": "It's difficult to quantify the intangible benefits, so I would recommend that you begin by quantifying the financials and then determine whether the difference between the pay of the two jobs justifies the value of the intangible benefits to you. Some Explainations You are making $55,000 per year, but your employer is also paying for a number of benefits that do not come free as a contractor. Begin by writing down everything they are providing you that you would like to continue to have. This may include: You also need to account for the FICA tax that you need to pay completely as a part time employee (normally a company pays half of it for you). This usually amounts to 7.8% of your income. Quantification Start by researching the cost for providing each item in the list above to yourself. For health insurance get quotes from providers. For bonuses average your yearly bonuses for your work history with the company. Items like stock options you need to make your best guess on. Calculations Now lets call your original salary S. Add up all of the costs of the list items mentioned above and call them B. This formula will tell you your real current annual compensation (RAC): Now you want to break your part time job into hours per year, not hours per month, as months have differing numbers of working days. Assuming no vacations that is 52 weeks per year multiplied by 20 hours, or 1040 hours (780 if working 15 hours per week). So to earn the same at the new job as the old you would need to earn an hourly wage of: The full equation for 20 hours per week works out to be: Assumptions DO NOT TAKE THIS SECTION AS REPRESENTATIVE OF YOUR SITUATION; ONLY A BALLPARK ESTIMATE You must do the math yourself. I recommend a little spreadsheet to simplify things and play what-if scenarios. However, we can ballpark your situation and show how the math works with a few assumptions. When I got quoted for health insurance for myself and my partner it was $700 per month, or $8400 per year. If we assume the same for you, then add 3% 401k matching that we'll assume you're taking advantage of ($1650), the equation becomes: Other Considerations Keep in mind that there are other considerations that could offset these calculations. Variable hours are a big risk, as is your status as a 'temporary' employee. Though on the flip side you don't need to pay taxes out of each check, allowing you to invest that money throughout the year until taxes are due. Also, if you are considered a private contractor you can write off many expenses that you cannot as a full time employee."
},
{
"docid": "447353",
"title": "",
"text": "\"I think that people only use the phrase \"\"only spend what you can afford to lose\"\" when they are talking about the most risky or speculative investments, or even gambling. When talking about gambling, the following quote is a bottom line: The speculative investment that brought me to this question via google is how much should I invest in Bitcoin? I was tempted to put in 10% of my investments, not including the 6 month safety fund and not including equity in my home. Now thinking about this question, it seems that it depends on your income as a percentage of your investment income (which should grow in proportion to the whole over time). For example: Early stage of career, not much investment income: 20% Mid career: 5% Mid-late career, moving to more safe investments: 5% Late career, retirement: 1% Another way to calculate would be as a percentage of the amount you put into retirement savings per year. Maybe 10% of this figure when you're young and 1% nearer to retirement.\""
},
{
"docid": "147245",
"title": "",
"text": "\"I don't have a lot of time to keep going back and forth. It seems like we differ on a bunch of things. But I do want to respect your final question when you ask me what I thought was wrong in that post. You mention things like the government regulating things like water and air. Those are common goods. These cannot be in the hands of a corporation. Man did not put those things there. So, man cannot take ownership of these things. Bottled water, running water, oxygen tanks, etc, those things are man-made products or services for a market. I can go to a public body of water and swim in it because no one owns it. I can go to the shore in my favorite bathing suit and swim in the beautiful ocean water if I so please without needing to pay or trade with anyone for access to the ocean. But I cannot start pumping water out of the ocean and into a big tank for me to haul away. The government needs to step in and put an end to anyone that does that sort of thing. Same goes for anyone trying to tamper with the water or doing something that is harmful to people or the life living in the water. Government needs to stop all of that. Also, yes the \"\"municipality then cleans and purifies the water and pumps it to your house in public facilities and treats the resultant sewage\"\". But are you also claiming that it was the government that created the solution to clean and purify our water supplies? Because they sure didn't. As for electricity, the way it is delivered and made available to our homes is a commodity. Electricity is natural, but just like how water when bottled becomes a consumer product, the generation and delivery of electricity to our homes is a product and service. If a company delivering electricity to customers in a city is using public infrastructure, then of course they have to share it. That makes sense as the electric company does not own the utility poles, streets, etc. The government should regulate that. The government handling trade agreements is a job of the government. We need them to do that. I believe in an open, free, and consumer-driven market. I don't want a lot of regulation on this - such as tariffs that Trump has talked about - because history shows that could lead to the costs inflating with quality not following suit. His rants on jobs fleeing offshores followed by his talks of tariffs on foreign imports would be a terrible idea. I want the government to negotiate trade deals as long as it is in the best interest for this country. This is what grows an economy. Imagine if Apple couldn't import iPhones unless they paid a 30% tax since it was assembled in China. That would kill sales of iPhones because Apple would have to pass most - if not all - of that cost on to the consumer. Samsung phones (for argument's sake, let's say these aren't made in China. I don't think they are anyway, but just saying) would begin to take a larger share of the consumer market because prices would be lower since Samsung didn't have to pay a 30% tax. As for the coffee pot from china starting a fire in my house. No one would by a coffee pot if there was a known fire-starting issue with those coffee pots. The government telling china that coffee pots need to be a certain specification is really irrelevant. The issue would resolve itself because no one would by the coffee pots. Once this became a known problem, stores would take it off the shelves and no longer sell it. We have cars that are recalled left and right. Car seats for infants and toddlers that are recalled every year. So on and so forth. I know the federal government has a recall process, but usually its the manufacturer that will announce the recall first. If there is a bad product out there, it will die out and no longer be made available for purchase. I don't see the the federal government slapping regulations on car manufacturers that mandate \"\"all tires must not fall off of the car while in motion\"\". No. Instead, the manufacturer, who is in the business of making money, which they need to sell cars to make money, would create a car where the tires are not likely to ever fall off while a car is in motion (or even when idle). The last thing I want to touch on is the Obamacare mandate. If I don't want something, why am I being forced to pay for it? Why do you agree with this? I am already paying into social security and I wish I wasn't. I will make my own investments with my income to prepare for retirement. Why should I pay for health insurance if I don't want it. The government should not be making my life choices for me. I have one responsibility on this earth as it pertains to my behavior. That is to respect others inalienable rights such as the right to life, liberty, property, and the pursuit of happiness. As long as I do not harm someone in an immoral way (e.g. steal, kill, physical harm, property damage, disclose personally identifiable information, etc), I should be free to live my life without government interference. I am fine with paying into a system for true welfare cases. Some people fall into bad situations that they could not help. Some people are born into a terrible situation. Those people need help. But I don't want to pay for stupid ass things like Chuck Schumer's idiotic idea of Medicare for people over 55. He wants to lower the medicare age by 10 years. This is the insane progressive ideas that literally just worsen societies. [\"\"In 2016, Medicare benefit payments totaled $675 billion, up from $375 billion in 2006.](http://www.kff.org/medicare/issue-brief/the-facts-on-medicare-spending-and-financing/) A $300 billion increase in just 10 years and that schmuck wants to lower eligibility by 10 years. If this were ever signed into law, I am (plus other American workers) going to be forced to pay into this. That means less money for me to save and invest for retire or an emergency. Less for my daughter. Less for my mortgage. Less for me to continue my education. Less on whatever I choose to do with my money that I spend 40 hours/week in an office for. My time is spent doing something asked of me by a corporation. That corporation pays me for my time. It's a mutual agreement resulting in a trade of money for my services. I do it because I want to do things and provide for my family. I don't do it because someone decided to spend 4 years for a degree in graphic design and can't get a job. I also don't do it for people that have a cash only income (both illegal immigrants and legal citizens do this) and don't declare all of their income making them eligible for Obamacare. And, lastly, I do not do it for people that decide to live off of the system and are physically and mentally fit to work in some capacity. I should not be forced to pay a mandate just because I'm here breathing. Obama - just like all progressives - normalized this \"\"breathing\"\" tax. It isn't right. Of course, Obamacare falls apart if there aren't enough healthy people to subsidize the sick people. That's why the mandate was obviously put in place. But just because the mandate is needed to make it work, doesn't make it right to force on people. My mortgage needs to get paid. If all my neighbors chipped in $75/month, I could make it work. Well, is it right to force my neighbors to pay my mortgage? Nope. I made the decision to buy my house. They did not. Not to mention, with socialized health care, services are rationed and that is just sickening. Big Gov: \"\"Oh, you're 80 years old and you need a knew knee? Well, you did live for 80 years, so we're going to deny that request.\"\" In a system where I pay for my own health care and insurance, I can get a new hip and a new knew if I needed it and it would all be done within a week or 2 most likely. You have 51 week-old Charlie Gard who Britain and the wonderful EU (sarcasm) ordered to die. He did so just last week even though his parents had the money to fly him here and have a doctor perform a potentially life-saving surgery. Yep. When the government owns healthcare, they own your health. That's my other big reason for hating Obamacare. It truly is a bad thing. We have world history that can easily show anyone what it looks like if we keep going down this path. I am done for now. I am not trying to convince you of anything. That usually doesn't happen as people are set in their ways. If anything, this exchange of messages is for the person(s) out there that want to learn what is right and what is wrong. What liberty is and what it isn't. Taxing people as a way to redistribute wealth is wrong. Imposing mandates so people buy a product/service is just straight up wrong. Our income is a representation of our time spent fulfilling the responsibilities of an agreement that we voluntarily made with an employer. Our money is our time. Our time is our liberty. And if we aren't infringing on the rights of others during our time, then the government needs to stay out. Catch you later.\""
},
{
"docid": "390582",
"title": "",
"text": "\"Oh look, exactly what technology folks have been saying for a while now! \"\"They're just asking for the moon, and not expecting to pay very much for it,\"\" Cappelli says. \"\"And as a result they [can't] find those people. Now that [doesn't] mean there was nobody to do the job; it just [means] that there was nobody at the price they were willing to pay.\"\" Wanted, graybeard with 20 years programming experience in obscure languages on expensive and rare systems. Starting pay $25k, expected to work 60 hours a week and be oncall all the time.\""
},
{
"docid": "5602",
"title": "",
"text": "You're losing money. And a lot of it. Consider this: the inflation is 2-4% a year (officially, depending on your spending pattern your own rate might be quite higher). You earn about 1/2%. I.e.: You're losing 3% a year. Guaranteed. You can do much better without any additional risk. 0.1% on savings account? Why not 0.9%? On-line savings account (Ally, CapitalOne-360, American Express, E*Trade, etc) give much higher rates than what you have. Current Ally rates are 0.9% on a regular savings account. 9 times more than what you have, with no additional risk: its a FDIC insured deposit. You can get a slightly higher rate with CDs (0.97% at the same bank for 12 months deposit). IRA - why is it in CD's? Its the longest term investment you have, that's where you can and should take risks, to maximize your compounding returns. Not doing that is actually more risky to you because you're guaranteeing compounding loss, of the said 3% a year. On average, more volatile stock investments have shown to be not losing money over periods of decades, even if they do lose money over shorter periods. Rental - if you can buy a property that you would pay the same amount of money for as for a comparable rental - you should definitely buy. Your debt will be secured by the property, and since you're paying the same amount or less - you're earning the equity. There's no risk here, just benefits, which again you chose to forgo. In the worst case if you default and walk away from the property you lost exactly (or less) what you would have paid for a rental anyway. 14 years old car may be cheaper than 4 years old to buy, but consider the maintenance, licensing and repairs - will it not some up to more than the difference? In my experience - it is likely to. Bottom line - you think you're risk averse, but you're exactly the opposite of that."
},
{
"docid": "402051",
"title": "",
"text": "(a) 5 funds for $15K is not too many or too few ? A bit high as I'd wonder if you've thought of how you'll rebalance the funds over time so you aren't investing too much in a particular market segment. I'd also question if you know what kinds of fees you may have with those funds as some of Vanguard's index funds had fees if the balance is under $10K that may change how much you'll be paying. From Vanguard's site: We charge a $20 annual account service fee for each Vanguard fund with a balance of less than $10,000 in an account. This fee doesn’t apply if you sign up for account access on Vanguard.com and choose electronic delivery of statements, confirmations, and Vanguard fund reports and prospectuses. This fee also doesn’t apply to members of Flagship®, Voyager Select®, and Voyager Services®. So, if you don't do the delivery this would be an extra $100/year that I wonder if you factored that into things here. (b) Have I diversified my portfolio too much or not enough ? Perhaps I am missing something that would be recommended for the portfolio of this kind with this goal. Both, in my opinion. Too much in the sense that you are looking at Morningstar's style box to pick a fund for this box and that which I'd consider consolidating on one hand yet at the same time I notice that you are sticking purely to US stocks and ignoring international funds. I do think taxes may be something you haven't considered too much as stocks will outgrow most of those funds and trigger capital gains that you don't mention at all. (c) If not my choice of my portfolio, where would you invest $15K under similar circumstances and similar goals. What is the goal here? You state that this is your first cash investment but don't state if this is for retirement, a vacation in 10 years, a house in 7 years or a bunch of other possibilities which is something to consider. If I consider this as retirement investments, I'd like pick 1 or 2 funds known for being tax-efficient that would be where I'd start. So, if a fund goes down 30%, that's OK? Do you have a rebalancing strategy of any kind? Do you realize what taxes you may have even if the fund doesn't necessarily have gains itself? In not stating a goal, I wonder how well do you have a strategy worked out for how you'll sell off these funds down the road at some point as something to ponder."
},
{
"docid": "457118",
"title": "",
"text": "Funny that this shows up on my feed right now... I installed ICQ a couple of months ago. I put it on my 7 year old son's iPad first, using his mum's phone number (we're divorced). It is really the best way we can communicate quickly as she doesn't often let him pick up the phone and call - for whatever reason. But, at 7, watching him send me messages and spell out words, it's amazing. I haven't used ICQ in years, but it worked very well for our purposes and made me very happy. As I'm typing this right now (no BS), someone from Indonesia has just started to message and converse with me (Canada). Just like the old days when people used to randomly message others around the world to say hello and get to know what they were about, and what life was like (I have 20+ years online with things like this, so it's bringing back a lot of memories lol). It's much different than what you experience in many other apps... ads, local singles, etc. I'm glad that it's growing again... nostalgic for a lot of people!"
},
{
"docid": "168983",
"title": "",
"text": "\"The statement \"\"Finance is something all adults need to deal with but almost nobody learns in school.\"\" hurts me. However I have to disagree, as a finance student, I feel like everyone around me is sound in finance and competition in the finance market is so stiff that I have a hard time even finding a paid internship right now. I think its all about perspective from your circumstances, but back to the question. Personally, I feel that there is no one-size-fits-all financial planning rules. It is very subjective and is absolutely up to an individual regarding his financial goals. The number 1 rule I have of my own is - Do not ever spend what I do not have. Your reflected point is \"\"Always pay off your credit card at the end of each month.\"\", to which I ask, why not spend out of your savings? plan your grocery monies, necessary monthly expenditures, before spending on your \"\"wants\"\" should you have any leftovers. That way, you would not even have to pay credit every month because you don't owe any. Secondly, when you can get the above in check, then you start thinking about saving for the rainy days (i.e. Emergency fund). This is absolutely according to each individual's circumstance and could be regarded as say - 6 months * monthly income. Start saving a portion of your monthly income until you have set up a strong emergency fund you think you will require. After you have done than, and only after, should you start thinking about investments. Personally, health > wealth any time you ask. I always advise my friends/family to secure a minimum health insurance before venturing into investments for returns. You can choose not to and start investing straight away, but should any adverse health conditions hit you, all your returns would be wiped out into paying for treatments unless you are earning disgusting amounts in investment returns. This risk increases when you are handling the bills of your family. When you stick your money into an index ETF, the most powerful tool as a retail investor would be dollar-cost-averaging and I strongly recommend you read up on it. Also, because I am not from the western part of the world, I do not have the cultural mindset that I have to move out and get into a world of debt to live on my own when I reached 18. I have to say I could not be more glad that the culture does not exist in Asian countries. I find that there is absolutely nothing wrong with living with your parents and I still am at age 24. The pressure that culture puts on teenagers is uncalled for and there are no obvious benefits to it, only unmanageable mortgage/rent payments arise from it with the entry level pay that a normal 18 year old could get.\""
},
{
"docid": "160170",
"title": "",
"text": "What explains the most of the future returns of a portfolio is the allocation between asset classes. In the long term, stock investments are almost certain to return more than any other kinds of investments. For 40+ years, I would choose a portfolio of 100% stocks. How to construct the portfolio, then? Diversification is the key. You should diversify in time (don't put a large sum of money into your stock portfolio immediately; if you have a large sum to invest, spread it around several years). You should diversify based on company size (invest in both large and small companies). You should also diversify internationally (don't invest in just US companies). If you prefer to pick individual stocks, 20 very carefully selected stocks may provide enough diversification if you keep diversification in mind during stock picking. However, careful stock picking cannot be expected to yield excess returns, and if you pick stocks manually, you need to rebalance your portfolio occasionally. Thus, if you're lazy, I would recommend a mutual fund, or many mutual funds if you have difficulty finding a low-cost one that is internationally diversified. The most important consideration is the cost. You cannot expect careful fund selection to yield excess returns before expenses. However, the expenses are certain costs, so prefer low-cost funds. Almost always this means picking index funds. Avoid funds that have a small number of stocks, because they typically invest only in the largest companies, which means you fail to get diversification in company size. So, instead of Euro STOXX 50, select STOXX 600 when investing to the European market. ETFs may have lower costs than traditional mutual funds, so keep ETFs in mind when selecting the mutual funds in which to invest. For international diversification, do not forget emerging markets. It is not excessive to invest e.g. 20% to emerging markets. Emerging markets have a higher risk but they also have a higher return. A portfolio that does not include emerging markets is not in my opinion well diversified. When getting close to retirement age, I would consider increasing the percentage of bonds in the portfolio. This should be done primarily by putting additional money to bonds instead of selling existing investments to avoid additional taxes (not sure if this applies to other taxation systems than the Finnish one). Bond investments are best made though low-cost mutual funds as well. Keep bond investments in your local currency and risk-free assets (i.e. select US government bonds). Whatever you do, remember that historical return is no guarantee of future return. Actually, the opposite may be true: there is a mean reversion law. If a particular investment has returned well in the past, it often means its price has gone up, making it more likely that the price goes down in the future. So don't select a fund based on its historical return; instead, select a fund based on low costs. However, I'm 99% certain that over a period of 40 years, stocks will return better than other investments. In addition to fund costs, taxes are the other certain thing that will be deducted from your returns. Research what options you have to reduce the taxes you need to pay. 401-K was explained in another answer; this may be a good option. Some things recommended in other answers that I would avoid:"
},
{
"docid": "293897",
"title": "",
"text": "\"Let me run some simplistic numbers, ignoring inflation. You have the opportunity to borrow up to 51K. What matters (and varies) is your postgraduation salary. Case 1 - you make 22K after graduation. You pay back 90 a year for 30 years, paying off at most 2700 of the loan. In this case, whether you borrow 2,800 or 28,000 makes no difference to the paying-off. You would do best to borrow as much as you possibly can, treating it as a grant. Case 2 - you make 100K after graduation. You pay back over 7K a year. If you borrowed the full 51, after 7 or 8 years it would be paid off (yeah, yeah, inflation, interest, but maybe that might make it 9 years.) In this case, the more you borrow the more you have to pay back, but you can easily pay it back, so you don't care. Invest your sponsorships and savings into something long term since you know you won't be needing to draw on them. Case 3 - you make 30K after graduation. Here, the payments you have to make actually impact how much disposable income you have. You pay back 810 a year, and over 30 years that's about 25K of principal. It will be less if you account for some (even most) of the payment going to interest, not principal. Anything you borrow above 25K (or the lower, more accurate amount) is \"\"free\"\". If you borrow substantially less than that (by using your sponsorship, savings, and summer job) you may be able to stop paying sooner than 30 years. But even if you borrow only 12K (or half the more accurate number), it will still be 15 years of payments. Running slightly more realistic versions of these calculations where your salary goes up, and you take interest into account, I think you will discover, for each possible salary path, a number that represents how much of your loan is really loan: everything above that is actually a grant you do not pay back. The less you are likely to make, the more of it is really grant. On top of that, it seems to me that no matter the loan/grant ratio, \"\"borrow as much as you can from this rather bizarre source\"\" appears to be the correct answer. In the cases where it's all loan, you have a lot of income and don't care much about this loan payment. Borrowing the whole 51K lets you invest all the money you get while you're a student, and you can use the returns on those investments to make the loan payments.\""
},
{
"docid": "129255",
"title": "",
"text": "Investing is really about learning your own comfort level. You will make money and lose money. You will make mistakes but you will also learn a great deal. First off, invest in your own financial knowledge, this doesn't require capital at all but a commitment. No one will watch or care for your own money better than yourself. Read books, and follow some companies in a Google Finance virtual portfolio. Track how they're doing over time - you can do this as a virtual portfolio without actually spending or losing money. Have you ever invested before? What is your knowledge level? Investing long term is about trying to balance risk while reducing losses and trying not to get screwed along the way (by people). My personal advice: Go to an independent financial planner, go to one that charges you per hour only. Financial planners that don't charge you hourly get paid in commissions. They will be biased to sell you what puts the most money in their pockets. Do not go to the banks investment people, they are employed by the banks who have sales and quota requirements to have you invest and push their own investment vehicles like mutual funds. Take $15k to the financial planner and see what they suggest. Keep the other $5K in something slow and boring and $1k under your mattress in actual cash as an emergency. While you're young, compound interest is the magic that will make that $25k increase hand over fist in time. But you need to have it consistently make money. I'm young too and more risk tolerant because I have time. While I get older I can start to scale back my risk because I'm nearing retirement and preserve instead of try to make returns."
},
{
"docid": "528475",
"title": "",
"text": "\"This is an old post I feel requires some more love for completeness. Though several responses have mentioned the inherent risks that currency speculation, leverage, and frequent trading of stocks or currencies bring about, more information, and possibly a combination of answers, is necessary to fully answer this question. My answer should probably not be the answer, just some additional information to help aid your (and others') decision(s). Firstly, as a retail investor, don't trade forex. Period. Major currency pairs arguably make up the most efficient market in the world, and as a layman, that puts you at a severe disadvantage. You mentioned you were a student—since you have something else to do other than trade currencies, implicitly you cannot spend all of your time researching, monitoring, and investigating the various (infinite) drivers of currency return. Since major financial institutions such as banks, broker-dealers, hedge-funds, brokerages, inter-dealer-brokers, mutual funds, ETF companies, etc..., do have highly intelligent people researching, monitoring, and investigating the various drivers of currency return at all times, you're unlikely to win against the opposing trader. Not impossible to win, just improbable; over time, that probability will rob you clean. Secondly, investing in individual businesses can be a worthwhile endeavor and, especially as a young student, one that could pay dividends (pun intended!) for a very long time. That being said, what I mentioned above also holds true for many large-capitalization equities—there are thousands, maybe millions, of very intelligent people who do nothing other than research a few individual stocks and are often paid quite handsomely to do so. As with forex, you will often be at a severe informational disadvantage when trading. So, view any purchase of a stock as a very long-term commitment—at least five years. And if you're going to invest in a stock, you must review the company's financial history—that means poring through 10-K/Q for several years (I typically examine a minimum ten years of financial statements) and reading the notes to the financial statements. Read the yearly MD&A (quarterly is usually too volatile to be useful for long term investors) – management discussion and analysis – but remember, management pays themselves with your money. I assure you: management will always place a cherry on top, even if that cherry does not exist. If you are a shareholder, any expense the company pays is partially an expense of yours—never forget that no matter how small a position, you have partial ownership of the business in which you're invested. Thirdly, I need to address the stark contrast and often (but not always!) deep conflict between the concepts of investment and speculation. According to Seth Klarman, written on page 21 in his famous Margin of Safety, \"\"both investments and speculations can be bought and sold. Both typically fluctuate in price and can thus appear to generate investment returns. But there is one critical difference: investments throw off cash flow for the benefit of the owners; speculations do not. The return to the owners of speculations depends exclusively on the vagaries of the resale market.\"\" This seems simple and it is; but do not underestimate the profound distinction Mr. Klarman makes here. (and ask yourself—will forex pay you cash flows while you have a position on?) A simple litmus test prior to purchasing a stock might help to differentiate between investment and speculation: at what price are you willing to sell, and why? I typically require the answer to be at least 50% higher than the current salable price (so that I have a margin of safety) and that I will never sell unless there is a material operating change, accounting fraud, or more generally, regime change within the industry in which my company operates. Furthermore, I then research what types of operating changes will alter my opinion and how severe they need to be prior to a liquidation. I then write this in a journal to keep myself honest. This is the personal aspect to investing, the kind of thing you learn only by doing yourself—and it takes a lifetime to master. You can try various methodologies (there are tons of books) but overall just be cautious. Money lost does not return on its own. I've just scratched the surface of a 200,000 page investing book you need to read if you'd like to do this professionally or as a hobbyist. If this seems like too much or you want to wait until you've more time to research, consider index investing strategies (I won't delve into these here). And because I'm an investment professional: please do not interpret anything you've read here as personal advice or as a solicitation to buy or sell any securities or types of securities, whatsoever. This has been provided for general informational purposes only. Contact a financial advisor to review your personal circumstances such as time horizon, risk tolerance, liquidity needs, and asset allocation strategies. Again, nothing written herein should be construed as individual advice.\""
},
{
"docid": "404732",
"title": "",
"text": "As a young investor, you should know that the big secret is that profitable long term investing is boring. It is is not buying one day and selling the next and keeping very close tabs on your investments and jumping on the computer and going 'Buy!' , 'Sell'. That makes brokers rich, but not you. So look at investments but not everyday and find something else that's exciting, whether it's dirt biking or WOW or competitive python coding. As a 19 year old, you have a ton of time and you don't need to swing for the fences and make 50% or 30% or even 20% returns every year to do well. And you don't have to pick the best performing stocks, and if you do, you don;t have to buy them at their lowest or sell them at their highest. Go read A Random Walk's guide to Investing by Burton Malkiel and The only Investment Guide you'll ever need by Andrew Tobias. Buy them at used bookstores because it's cheaper that way. And if you want more excitement read You Can Be a Stock Market Genius by Joel GreenBlatt, One up On Wall Street By Peter Lynch, something by Warren Buffet and if you want to be really whacked, read Fooled By Randomness by Nassim Nicholas Talib, But never forget about Tobias and Malkiel, invest a regular amount of money every month from 19 to 65 according to what they write and you'll be a wealthy guy by 65."
},
{
"docid": "252653",
"title": "",
"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.\""
}
] |
4523 | What should I do with my $25k to invest as a 20 years old? | [
{
"docid": "119165",
"title": "",
"text": "I don't like your strategy. Don't wait. Open an investment account today with a low cost providers and put those funds into a low cost investment that represents as much of the market as you can find. I am going to start by assuming you are a really smart person. With that assumption I am going to assume you can see details and trends and read into the lines. As a computer programmer I am going to assume you are pretty task oriented, and that you look for optimal solutions. Now I am going to ask you to step back. You are clearly very good at managing your money, but I believe you are over-thinking your opportunity. Reading your question, you need a starting place (and some managed expectations), so here is your plan: Now that you have a personal retirement account (IRA, Roth IRA, MyRA?) and perhaps a 401(k) (or equivalent) at work, you can start to select which investments go into that account. I know that was your question, but things you said in your question made me wonder if you had all of that clear in your head. The key point here is don't wait. You won't be able to time the market; certainly not consistently. Get in NOW and stay in. You adjust your investments based on your risk tolerance as you age, and you adjust your investments based on your wealth and needs. But get in NOW. Over the course of 40 years you are likely to be working, sometimes the market will be up, and sometimes the market will be down; but keep buying in. Because every day you are in, you money can grow; and over 40 years the chances that you will grow substantially is pretty high. No need to wait, start growing today. Things I didn't discuss but are important to you:"
}
] | [
{
"docid": "475632",
"title": "",
"text": "In the US you can get a home warranty when you buy a house that will cover major repairs for the first few years of owning a home. The costs vary based on age and the results of the home inspection. Ours cost ~$250 a year. This was put into our closing costs. Unfortunately this market does have some disreputable companies that come im with prices that seem too good to be true. As is usually the case they are. Do research on the company you are getting the home warrenty from to make sure you are dealing with a reputable company that will honor its commitments. By having 20% down you will avoid needing Mortgage insurance which will save you a considerable amout. My PMI cost me about $70 a month. However once you get to 20% equity in your home the pmi drops off. So if you can put down 15% you should be able to get out from under your pmi in a few years if you want to keep that 5% cushion while making extra payments. The question is how much do you feel you need. So far owning a 70 year old home my extra maintence costs have been around 2500 a year. But they seem to be in 1k chunks every 4 or 5 months."
},
{
"docid": "505151",
"title": "",
"text": "Buddy I know how a student investment club works, my school had a great one but thanks for the explanation. Doesn't change the fact that a valuation by some college kids is meaningless, but you wouldn't understand that because you're still a 20 year old kid with no industry experience. I love that you're bragging about your college to someone who has already graduated and made it into the industry, shows you really have no accomplishments to speak of."
},
{
"docid": "5602",
"title": "",
"text": "You're losing money. And a lot of it. Consider this: the inflation is 2-4% a year (officially, depending on your spending pattern your own rate might be quite higher). You earn about 1/2%. I.e.: You're losing 3% a year. Guaranteed. You can do much better without any additional risk. 0.1% on savings account? Why not 0.9%? On-line savings account (Ally, CapitalOne-360, American Express, E*Trade, etc) give much higher rates than what you have. Current Ally rates are 0.9% on a regular savings account. 9 times more than what you have, with no additional risk: its a FDIC insured deposit. You can get a slightly higher rate with CDs (0.97% at the same bank for 12 months deposit). IRA - why is it in CD's? Its the longest term investment you have, that's where you can and should take risks, to maximize your compounding returns. Not doing that is actually more risky to you because you're guaranteeing compounding loss, of the said 3% a year. On average, more volatile stock investments have shown to be not losing money over periods of decades, even if they do lose money over shorter periods. Rental - if you can buy a property that you would pay the same amount of money for as for a comparable rental - you should definitely buy. Your debt will be secured by the property, and since you're paying the same amount or less - you're earning the equity. There's no risk here, just benefits, which again you chose to forgo. In the worst case if you default and walk away from the property you lost exactly (or less) what you would have paid for a rental anyway. 14 years old car may be cheaper than 4 years old to buy, but consider the maintenance, licensing and repairs - will it not some up to more than the difference? In my experience - it is likely to. Bottom line - you think you're risk averse, but you're exactly the opposite of that."
},
{
"docid": "233100",
"title": "",
"text": "\"Goodness, I wish I could put away half my paycheck. Not to rain on your parade, but a 6-month emergency fund is not quite \"\"very good.\"\" It is the typical starting time frame. Personally, I would feel more comfortable with a 2+ year fund. That is a bit extreme, but only because many of us can barely seem to make it around to a 6-month fund. So, we focus on the more attainable goal. I say you do all three. Make saving money your priority, but do enjoy some of it; in moderation. Do not plan on making any big purchases with it, but know that you will eventually be able able to do so. Money not spent is worthless Idle money is worthless. Make some -- hopefully -- prudent investments with some of your money. A small portion of that investment portfolio can/should be in speculative investments. Maybe even as much as 20% of your investment portfolio, since you are young. Consider that money gone and you will hopefully be surprised by one of those speculative investments. That is the crucial point: earmark a small portion of your investment portfolio which you are willing to lose. However, do not gamble with it. Research the hot emerging technologies, for example, and find a way to make an investment. So, in summary: You may have more money that you know what do with, right now. However, that does not mean you need to go out and spend it all. Trust me, as you get older you will think of plenty of good uses for that money.\""
},
{
"docid": "72578",
"title": "",
"text": "\"You are in your mid 30's and have 250,000 to put aside for investments- that is a fantastic position to be in. First, let's evaluate all the options you listed. Option 1 I could buy two studio apartments in the center of a European capital city and rent out one apartment on short-term rental and live in the other. Occasionally I could Airbnb the apartment I live in to allow me to travel more (one of my life goals). To say \"\"European capital city\"\" is such a massive generalization, I would disregard this point based on that alone. Athens is a European capital city and so is Berlin but they have very different economies at this point. Let's put that aside for now. You have to beware of the following costs when using property as an investment (this list is non-exhaustive): The positive: you have someone paying the mortgage or allowing you to recoup what you paid for the apartment. But can you guarantee an ROI of 10-15% ? Far from it. If investing in real estate yielded guaranteed results, everyone would do it. This is where we go back to my initial point about \"\"European capital city\"\" being a massive generalization. Option 2 Take a loan at very low interest rate (probably 2-2.5% fixed for 15 years) and buy something a little nicer and bigger. This would be incase I decide to have a family in say, 5 years time. I would need to service the loan at up to EUR 800 / USD 1100 per month. If your life plan is taking you down the path of having a family and needed the larger space for your family, then you need the space to live in and you shouldn't be looking at it as an investment that will give you at least 10% returns. Buying property you intend to live in is as much a life choice as it is an investment. You will treat the property much different from the way something you rent out gets treated. It means you'll be in a better position when you decide to sell but don't go in to this because you think a return is guaranteed. Do it if you think it is what you need to achieve your life goals. Option 3 Buy bonds and shares. But I haven't the faintest idea about how to do that and/or manage a portfolio. If I was to go down that route how do I proceed with some confidence I won't lose all the money? Let's say you are 35 years old. The general rule is that 100 minus your age is what you should put in to equities and the rest in something more conservative. Consider this: This strategy is long term and the finer details are beyond the scope of an answer like this. You have quite some money to invest so you would get preferential treatment at many financial institutions. I want to address your point of having a goal of 10-15% return. Since you mentioned Europe, take a look at this chart for FTSE 100 (one of the more prominent indexes in Europe). You can do the math- the return is no where close to your goals. My objective in mentioning this: your goals might warrant going to much riskier markets (emerging markets). Again, it is beyond the scope of this answer.\""
},
{
"docid": "152839",
"title": "",
"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."
},
{
"docid": "100039",
"title": "",
"text": "I Usually would not say this but if you can just put down 20% I would do that and get a 15 year mortgage. The rates are so low on 15 year mortgage that you should be able to make more than the 3% in the market per year and make some money. I wouldn't be surprised if for 1/2 of the term of your loan you will be able to make that just in interest. Basically I have done this for my house and my rental properties. So I have put my money where my mouth is on this. I have made over 9% each of the last three years which has made me $12,000 dollars above and beyond over what I would have paid in interest per year. So it a decision that net me $36,000 for doing nothing. Now the market is going to be down some of those years so lets see how it works out but I have history on my side. Its not about timing the market its about time in the market. And 15 years in the market is a pretty safe bet albeit not as safe as just dumping you money in the mortgage."
},
{
"docid": "161295",
"title": "",
"text": "You're right, of course - But that's not something you would ever want to do *accidentally*. Five years from now, the OP may well decide to convert some of his traditional funds to Roth; for now, even though Roth was his original intent, that would mean a tax bloodbath come next April. As an aside, the biggest reason (for most people) to have Roth funds **isn't** because you expect to make more (inflation - or more importantly, tax-code - adjusted) in retirement than now. If that were the case, the entire concept would be almost worthless - Who the heck makes more *after* retiring than *before*? The best reason to have substantial Roth funds in your retirement portfolio is the way that Social Security is taxed. If you can keep your AGI under $25k (note that includes half of your SS benefits, but since the standard deduction is roughly $10k, those more-or-less cancel each other out), you don't pay a dime in taxes on your SSI. So, if you have a solid budget, take your yearly expenses, subtract out $25k, and that's what you should (sustainably) have in Roth funds. The remaining $25k is what you should have in traditional funds."
},
{
"docid": "99521",
"title": "",
"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."
},
{
"docid": "202987",
"title": "",
"text": "If you're truly ready to pay an extra $1000 every month, and are confident you'll likely always be able to, you should refinance to a 15 year mortgage. 15 year mortgages are typically sold at around a half a point lower interest rates, meaning that instead of your 4.375% APR, you'll get something like 3.875% APR. That's a lot of money over the course of the mortgage. You'll end up paying around a thousand a month more - so, exactly what you're thinking of doing - and not only save money from that earlier payment, but also have a lower interest rate. That 0.5% means something like $25k less over the life of the mortgage. It's also the difference in about $130 or so a month in your required payment. Now of course you'll be locked into making that larger payment - so the difference between what you're suggesting and this is that you're paying an extra $25k in exchange for the ability to pay it off more slowly (in which case you'd also pay more interest, obviously, but in the best case scenario). In the 15 year scenario you must make those ~$4000 payments. In the 30 year scenario you can pay ~$2900 for a while if you lose your job or want to go on vacation or ... whatever. Of course, the reverse is also true: you'll have to make the payments, so you will. Many people find enforced savings to be a good strategy (myself among them); I have a 15 year mortgage and am happy that I have to make the higher payment, because it means I can't spend that extra money frivolously. So what I'd do if I were you is shop around for a 15 year refi. It'll cost a few grand, so don't take one unless you can save at least half a point, but if you can, do."
},
{
"docid": "294822",
"title": "",
"text": "Disclaimer: I am not Canadian and have no experience with their laws and regulations. There really aren't any safe short term investment options at the moment (with interest rates being close to zero). So, just put the money aside you will need for the car and the computer, maybe on a callable savings account to make at least a few Dollars. Do not take out any loans, it is very unlikely you will earn more than the cost of the loan. You didn't say how much will be left but, unfortunately, it really is not much to go on anyway. Considering that you seem to have enough income to cover your expenses, you could transfer the rest to your RRSP, invest and just forget about it. I suggest to follow this rule of thumb: the growth portion of your portfolio, which for you means equities, should be directly related to the number of years you won't need to touch these funds. 1 year, 0 equity. 2 years, 10%, 3 years, 20%, and so on. What's not in equities, you could put in short term bonds, meaning an average duration of about 3 years. Needless to say, single stocks/bonds are out of question, ideally you can find 2 ETFs, one for stocks and one for bonds, respectively. However, if there is any possibility you did not mention that you could suddenly depend on this money, you have to keep your equity exposure, and thus your potential earnings, low. Just a humble thought: i really don't know your specific situation, my apologies if I'm out of line. Often disability means that you are not capable of doing one particular thing anymore, i.e. work physically. Just maybe you would still be capable to do some other type of work, maybe even from the comfort of your home, that would allow you to generate a certain income (and also keep you busy). I hope this helps. Good luck."
},
{
"docid": "442776",
"title": "",
"text": "\"In my opinion, the key variable for you (and others) is not age, but \"\"vintage.\"\" Your \"\"age\"\" suggests that you were born in the mid-1980s, in the middle of a bull market. The most remunerative investing periods for you are likely to be in your childhood (past) and middle age (forties and early fifties). Also your, \"\"old-old\"\" period (around age 80, in the 2060s), if you live that long. For now, you can, and perhaps should invest cautiously, like today's 40-year olds, with a heavy emphasis on bonds. The main difference between you and them is that you can shift to stocks in about ten years, in your mid to late 30s, while they will find it harder to do so when approaching old age.\""
},
{
"docid": "160105",
"title": "",
"text": "\"I was going to ask, \"\"Do you feel lucky, punk?\"\" but then it occurred to me that the film this quote came from, Dirty Harry, starring Clint Eastwood, is 43 years old. And yet, the question remains. The stock market, as measured by the S&P has returned 9.67% compounded over the last 100 years. But with a standard deviation just under 20%, there are years when you'll do better and years you'll lose. And I'd not ignore the last decade which was pretty bad, a loss for the decade. There are clearly two schools of thought. One says that no one ever lost sleep over not having a mortgage payment. The other school states that at the very beginning, you have a long investing horizon, and the chances are very good that the 30 years to come will bring a return north of 6%. The two decades prior to the last were so good that these past 30 years were still pretty good, 11.39% compounded. There is no right or wrong here. My gut says fund your retirement accounts to the maximum. Build your emergency fund. You see, if you pay down your mortgage, but lose your job, you'll still need to make those payments. Once you build your security, think of the mortgage as the cash side of your investing, i.e. focus less on the relatively low rate of return (4.3%) and more on the eventual result, once paid, your cash flow goes up nicely. Edit - in light of the extra information you provided, your profile reads that you have a high risk tolerance. Low overhead, no dependents, and secure employment combine to lead me to this conclusion. At 23, I'd not be investing at 4.3%. I'd learn how to invest in a way I was comfortable with, and take it from there. Disclosure (Updated) - I am older, and am semi-retired. I still have some time left on the mortgage, but it doesn't bother me, not at 3.5%. I also have a 16 year old to put through college but her college account i fully funded.\""
},
{
"docid": "332719",
"title": "",
"text": "I would agree with the other answers about it being a bad idea to invest in stocks in the short term. However, do consider also long-term repairs. For example, you should be prepared to a repair happening in 20 years in addition to repairs happening in a couple of months. So, if it is at all possible for you to save a bit more, put 2% of the construction cost of a typical new house (just a house, not the land the house is standing on) aside every year into a long-term repair fund and invest it into stocks. I would recommend a low-cost index fund or passive ETF instead of manually picking stocks. When you have a long-term repair that requires large amounts of money but will be good for decades to come, you will take some money out of the long-term repair fund. Where I live, houses cost about 4000 EUR per square meter, but most of that is the land and building permit cost. The actual construction cost is about 2500 EUR per square meter. So, I would put away 50 EUR per square meter every year. So, for example, for a relatively small 50 square meter apartment, that would mean 2500 EUR per year. There are quite many repairs that are long-term repairs. For example, in apartment buildings, plumbing needs to be redone every 40 years or so. Given such a long time period, it makes sense to invest the money into stocks. So, my recommendation would be to have two repair funds: short-term repairs and long-term repairs. Only the long-term repair fund should be invested into stocks."
},
{
"docid": "393337",
"title": "",
"text": "\"I realize I'm drudging up a somewhat old post here (apologies), but I've found myself in a similar situation recently and thought I would chime in. I was considering buying a car where the loan amount would be right around 25k. I tried justifying this by saying it's ridiculously fast (I'm young and stupid, this is appealing), has AWD (nice for Colorado), and a hatchback with plenty of room for snowboards and whatnot in back. This is in comparison to my Civic which has high mileage, can hardly make it up hills due to the high altitude, sucks in snow, and has little room for anything. You have your reasons, I have mine. The thing is, our reasons are just us trying to rationalize an unwise purchase - just admit it, you know it's true. Just so you can see I'm in a similar financial situation, I'm 22, just graduated, and started a job making well over 80k with salary and signing bonus, plus 20k in RSUs on the side. After budgeting I can still put away over 2k/month after I've factored in a car payment, insurance, rent, etc etc. Yes, I could \"\"afford\"\" this car... it's just dumb though dude. Don't do it. There are better things we can do with our money. And guess what, I've been drooling over this car since middle school too.\""
},
{
"docid": "62882",
"title": "",
"text": "It's difficult to quantify the intangible benefits, so I would recommend that you begin by quantifying the financials and then determine whether the difference between the pay of the two jobs justifies the value of the intangible benefits to you. Some Explainations You are making $55,000 per year, but your employer is also paying for a number of benefits that do not come free as a contractor. Begin by writing down everything they are providing you that you would like to continue to have. This may include: You also need to account for the FICA tax that you need to pay completely as a part time employee (normally a company pays half of it for you). This usually amounts to 7.8% of your income. Quantification Start by researching the cost for providing each item in the list above to yourself. For health insurance get quotes from providers. For bonuses average your yearly bonuses for your work history with the company. Items like stock options you need to make your best guess on. Calculations Now lets call your original salary S. Add up all of the costs of the list items mentioned above and call them B. This formula will tell you your real current annual compensation (RAC): Now you want to break your part time job into hours per year, not hours per month, as months have differing numbers of working days. Assuming no vacations that is 52 weeks per year multiplied by 20 hours, or 1040 hours (780 if working 15 hours per week). So to earn the same at the new job as the old you would need to earn an hourly wage of: The full equation for 20 hours per week works out to be: Assumptions DO NOT TAKE THIS SECTION AS REPRESENTATIVE OF YOUR SITUATION; ONLY A BALLPARK ESTIMATE You must do the math yourself. I recommend a little spreadsheet to simplify things and play what-if scenarios. However, we can ballpark your situation and show how the math works with a few assumptions. When I got quoted for health insurance for myself and my partner it was $700 per month, or $8400 per year. If we assume the same for you, then add 3% 401k matching that we'll assume you're taking advantage of ($1650), the equation becomes: Other Considerations Keep in mind that there are other considerations that could offset these calculations. Variable hours are a big risk, as is your status as a 'temporary' employee. Though on the flip side you don't need to pay taxes out of each check, allowing you to invest that money throughout the year until taxes are due. Also, if you are considered a private contractor you can write off many expenses that you cannot as a full time employee."
},
{
"docid": "488820",
"title": "",
"text": "As far as I can tell, it works like this: (Note, I am assuming you were 18 on Jan 1 2009) Contribution limits: So by the end of 2012, you will have been allowed to contribute $20,000 of new money. You say you've contributed $10,000, so you still can contribute another $10,000 of new money this year (But let's assume you do not...). Now, your original $10,000 has grown to $25,000. You can withdraw this without penalty. Next year, you will be given an allotment of another $5000 of new money (bringing your total lifetime limit to $25,000 - $10,000 = $15,000 new money) PLUS, you will be allowed to re-contribute up to $25,000 of OLD money. Of course, the government doesn't make a distinction between old and new money, so the net effect is (assuming a 25k withdrawal): 2012 limit: $10 000 2013 limit: $40 000 less 2012 contributions. From http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/cntrbtn-eng.html: The TFSA contribution room is made up of: From this wording, it means the 25 k you withdraw will go to the 2013 contribution room (bullet 3). If you don't re-contribute, it will roll over into the 2014 contribution room (Under bullet 2) For correctness, I must add that I did not include any indexing of the annual amount."
},
{
"docid": "404278",
"title": "",
"text": "\"Let me paint you a picture to show you why this does not make sense. It is never fair to ask a business to pay a \"\"living wage\"\". It is always fair to ask a worker to chose their jobs based on their needs. Here's why. I ran a business when I was a teenager, doing web development. I did not make very good money but it pushed me to learn and to teach myself to meet the needs of the few clients that I did manage to find. Over the course of the business the thought had crossed my mind to maybe get help from my peers, maybe talk to classmates and see if any of them might have wanted to go into business with me, help me drum up more work, or help me do design or development. As soon as the thought crossed my mind I realized right away that I would never be able to do it, because the regulation was just way too big for little old sole-proprietorship me to deal with. Not only was it confusing, but it was dangerous to me, if I did it wrong I knew I could be sued and lose more than my tiny little business made. On top of the regs involved, I personally was not making minimum wage! What I was making though, was experience. This was more valuable than all the money I made combined, because I worked this way by myself for three years, learning more about my craft all the while. I have parlayed that experience into a ten year long career that currently supports my family, working for someone else. Now imagine if I could pay anyone whatever we both agreed on. Imagine if I could talk to a classmate in highschool and say \"\"hey, im not making much, but I can pay you x to start with and I will certainly teach you what I know\"\". it always struck me as selfish, unearned moral superiority to sit here and mandate a minimum wage, you price teenagers and entry-level workers out of the market because people can't afford an army of $20 per hour workers. Its so ignorant of the narrow margins that these business have to face. It is also really short-sighted and money-obsessed to boil a job down to it's wages alone. Minimum wage destroys an ancient method of generating skilled workers: the apprentice system. Also, there is a really ugly moral side to this. Person A offers person B X amount to do Y... Why does the government have the right to say \"\"No! you can't pay them X because it is not X enough!\"\". Our economy and work is far more complex than minimum wage. it is an old idea that is nothing but a drain on our economy. TL;DR - I would have added three or more skilled workers to our economy in high school if I did not have to pay them minimum wage. I personally was priced out of hiring people because of it, so I hate it. Millennials need not wonder why no one can find a job.\""
},
{
"docid": "293897",
"title": "",
"text": "\"Let me run some simplistic numbers, ignoring inflation. You have the opportunity to borrow up to 51K. What matters (and varies) is your postgraduation salary. Case 1 - you make 22K after graduation. You pay back 90 a year for 30 years, paying off at most 2700 of the loan. In this case, whether you borrow 2,800 or 28,000 makes no difference to the paying-off. You would do best to borrow as much as you possibly can, treating it as a grant. Case 2 - you make 100K after graduation. You pay back over 7K a year. If you borrowed the full 51, after 7 or 8 years it would be paid off (yeah, yeah, inflation, interest, but maybe that might make it 9 years.) In this case, the more you borrow the more you have to pay back, but you can easily pay it back, so you don't care. Invest your sponsorships and savings into something long term since you know you won't be needing to draw on them. Case 3 - you make 30K after graduation. Here, the payments you have to make actually impact how much disposable income you have. You pay back 810 a year, and over 30 years that's about 25K of principal. It will be less if you account for some (even most) of the payment going to interest, not principal. Anything you borrow above 25K (or the lower, more accurate amount) is \"\"free\"\". If you borrow substantially less than that (by using your sponsorship, savings, and summer job) you may be able to stop paying sooner than 30 years. But even if you borrow only 12K (or half the more accurate number), it will still be 15 years of payments. Running slightly more realistic versions of these calculations where your salary goes up, and you take interest into account, I think you will discover, for each possible salary path, a number that represents how much of your loan is really loan: everything above that is actually a grant you do not pay back. The less you are likely to make, the more of it is really grant. On top of that, it seems to me that no matter the loan/grant ratio, \"\"borrow as much as you can from this rather bizarre source\"\" appears to be the correct answer. In the cases where it's all loan, you have a lot of income and don't care much about this loan payment. Borrowing the whole 51K lets you invest all the money you get while you're a student, and you can use the returns on those investments to make the loan payments.\""
}
] |
4523 | What should I do with my $25k to invest as a 20 years old? | [
{
"docid": "393009",
"title": "",
"text": "Waiting for the next economic downturn probably isn't the best plan at this point. While it could happen tomorrow, you may end up waiting a long time. If you would prefer not to think much about your investment and just let them grow then mutual funds are a really good option. Make sure you research them before you buy into any and make sure to diversify, as in buy into a lot of different mutual funds that cover different parts of the market. If you want to be more active in investing then start researching the market and stick to industries you have very good understanding of. It's tough to invest in a market you know nothing about. I'd suggest putting at least some of that into a retirement savings account for long term growth. Make sure you look at both your short term and long term goals. Letting an investment mature from age 20 through to retirement will net you plenty of compound interest but don't forget about your short term goals like possible cars, houses and families. Do as much research as you can and you will be fine!"
}
] | [
{
"docid": "152839",
"title": "",
"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."
},
{
"docid": "475632",
"title": "",
"text": "In the US you can get a home warranty when you buy a house that will cover major repairs for the first few years of owning a home. The costs vary based on age and the results of the home inspection. Ours cost ~$250 a year. This was put into our closing costs. Unfortunately this market does have some disreputable companies that come im with prices that seem too good to be true. As is usually the case they are. Do research on the company you are getting the home warrenty from to make sure you are dealing with a reputable company that will honor its commitments. By having 20% down you will avoid needing Mortgage insurance which will save you a considerable amout. My PMI cost me about $70 a month. However once you get to 20% equity in your home the pmi drops off. So if you can put down 15% you should be able to get out from under your pmi in a few years if you want to keep that 5% cushion while making extra payments. The question is how much do you feel you need. So far owning a 70 year old home my extra maintence costs have been around 2500 a year. But they seem to be in 1k chunks every 4 or 5 months."
},
{
"docid": "336550",
"title": "",
"text": "\"I don't think this is a good model to sell cloths - very costly, slow and a lot of returns. Clothing and fashion stores could easily fight this and sell more than they do now. I say \"\"could\"\" because they should have done it many many years ago. To stuck in their old-fashioned way. I would prefer to go to a Showroom (not a store) that has huge selection on display, possibly fashion expert who can help select/suggest for me, try/touch the cloths there, and what I like will be ordered and shipped to my house exactly to my size. (the old Service Merchandise mode of selling, but for clothing and fashion).\""
},
{
"docid": "338700",
"title": "",
"text": "It sounds like something is getting lost in translation here. A business owner should not have to pay personal income tax on business expenses, with the caveat that they are truly business expenses. Here's an example where what you described could happen: Suppose a business has $200K in revenue, and $150K in legitimate business expenses (wages and owner salaries, taxes, services, products/goods, etc.) The profit for this example business is $50K. Depending on how the business is structured (sole proprietor, llc, s-corp, etc), the business owner(s) may have to pay personal income tax on the $50K in profit. If the owner then decided to have the business purchase a new vehicle solely for personal use with, say, $25K of that profit, then the owner may think he could avoid paying income tax on $25K of the $50K. However, this would not be considered a legitimate business expense, and therefore would have to be reclassified as personal income and would be taxed as if the $25K was paid to the owner. If the vehicle truly was used for legitimate business purposes then the business expenses would end up being $175K, with $25K left as profit which is taxable to the owners. Note: this is an oversimplification as it's oftentimes the case that vehicles are partially used for business instead of all or nothing. In fact, large items such as vehicles are typically depreciated so the full purchase price could not be deducted in a single year. If many of the purchases are depreciated items instead of deductions, then this could explain why it appears that the business expenses are being taxed. It's not a tax on the expense, but on the income that hasn't been reduced by expenses, since only a portion of the big ticket item can be treated as an expense in a single year."
},
{
"docid": "41627",
"title": "",
"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."
},
{
"docid": "13357",
"title": "",
"text": "If your goal is to simply save money on shaving supplies, there are easier ways to do so. If you are buying the latest Gillette multi-blade razor cartridge, then yes, you are spending a lot of money on razor blades. Consider switching to an old-fashioned double-edge safety razor. Pick up a nice razor for $20 - $50 (I like my Merkur HD), then buy the blades for cheap. I buy a 2 year supply of double-edge blades for less than $20. If you really want to turn in your man card and get your facial hair permanently removed, then it is really easy to calculate the payback time. Just figure out what you are spending in razor blades, get a quote for lasering your face off, and compare. If you are paying $10 a year for blades like I am, the payback time is going to be long. One more thought: remember, permanent means permanent. This is comparable to a tattoo, except tattoos are easier to reverse. Others have noted that the procedure isn't really permanent. What I understand from reading (I don't have firsthand experience) is that it is temporary in the sense that you will eventually need to start shaving again, but permanent in the sense that you will never be able to grow a proper beard again, if you wish. Basically, it is the worst of both worlds: it won't accomplish your goal of not having to shave anymore, but will make permanent changes to your face. The fact that you will need to shave again, even if only occasionally, affects your payback time calculation."
},
{
"docid": "81548",
"title": "",
"text": "\"For the really big money, you've missed the boat. Most will have MSc's in finance by now; which, even in my day 20 years ago, was a minimum entry requirement. There's a well known book of questions that used to get asked in interviews called \"\"Heard on the Street\"\". It'll let you know whether you can cut it on the floor or you're better off in middle or back office. It's very old but typical of the understanding and mind type you need. Investment management should be a possible. It's a totally different pace of life. If you're talking accounting, you'll be fine!\""
},
{
"docid": "599436",
"title": "",
"text": "\"1. Interest rates What you should know is that the longer the \"\"term\"\" of a bond fund, the more it will be affected by interest rates. So a short-term bond fund will not be subject to large gains or losses due to rate changes, an intermediate-term bond fund will be subject to moderate gains or losses, and a long-term bond fund will be subject to the largest gains or losses. When a book or financial planner says to buy \"\"bonds\"\" with no other qualification, they almost always mean investment-grade intermediate-term bond funds (or for individual bonds, the equivalent would be a bond ladder averaging an intermediate term). If you want technical details, look at the \"\"average duration\"\" or \"\"average maturity\"\" of the bond fund; as a rough guide, if the duration is 10, then a 1% change in interest rates would be a 10% gain or loss on the fund. Another thing you can do is look at long-term (10 years or ideally longer) performance history on some short, intermediate, and long term bond index funds, and you can see how the long term funds bounced around more. Non-investment-grade bonds (aka junk bonds or high yield bonds) are more affected by factors other than interest rates, including some of the same factors (economic booms or recessions) that affect stocks. As a result, they aren't as good for diversifying a portfolio that otherwise consists of stocks. (Having stocks, investment grade bonds, and also a little bit in high-yield bonds can add diversification, though. Just don't replace your bond allocation with high-yield bonds.) A variety of \"\"complicated\"\" bonds exist (convertible bonds are an example) and these are tough to analyze. There are also \"\"floating rate\"\" bonds (bank loan funds), these have minimal interest rate sensitivity because the rate goes up to offset rate rises. These funds still have credit risks, in the credit crisis some of them lost a lot of money. 2. Diversification The purpose of diversification is risk control. Your non-bond funds will outperform in many years, but in other years (say the -37% S&P 500 drop in 2008) they may not. You will not know in advance which year you'll get. You get risk control in at least a few ways. There's also an academic Modern Portfolio Theory explanation for why you should diversify among risky assets (aka stocks), something like: for a given desired risk/return ratio, it's better to leverage up a diverse portfolio than to use a non-diverse portfolio, because risk that can be eliminated through diversification is not compensated by increased returns. The theory also goes that you should choose your diversification between risk assets and the risk-free asset according to your risk tolerance (i.e. select the highest return with tolerable risk). See http://en.wikipedia.org/wiki/Modern_portfolio_theory for excruciating detail. The translation of the MPT stuff to practical steps is typically, put as much in stock index funds as you can tolerate over your time horizon, and put the rest in (intermediate-term investment-grade) bond index funds. That's probably what your planner is asking you to do. My personal view, which is not the standard view, is that you should take as much risk as you need to take, not as much as you think you can tolerate: http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/ But almost everyone else will say to do the 80/20 if you have decades to retirement and feel you can tolerate the risk, so my view that 60/40 is the max desirable allocation to stocks is not mainstream. Your planner's 80/20 advice is the standard advice. Before doing 100% stocks I'd give you at least a couple cautions: See also:\""
},
{
"docid": "10476",
"title": "",
"text": "As a 22 year old planning for your financial life, it is obvious to say that saving as much as you can to invest for the long run is the smartest thing to do from a financial point of view. In general, at this point, aged 22, you can take as much risk as you'll ever will. You're investing for the very long term (+30/+40 years). The downside of risk, the level of uncertainty on returns (positive or negative), is most significant on the short term (<5years). While the upside of risk, assuming you can expect higher returns the more risk you take, are most significant on the long term. In short: for you're financial life, it's smart to save as much as you can and invest these savings with a lot of risk. So, what is smart to invest in? The most important rule is to keep your investment costs as low as possible. Risk and returns are strongly related, however investment costs lower the returns, while you keep the risk. Be aware of the investment industry marketing fancy investment products. Most of them leave you with higher costs and lower returns. Research strongly suggests that an lowcost etf portfolio is our best choice. Personally, i disregard this new smart beta hype as a marketing effort from the financial industry. They charge more investment costs (that's a certain) and promise better returns because they are geniuses (hmmm...). No thanks. As suggested in other comments, I would go for an low cost (you shouldn't pay more than 0.2% per year) etf portfolio with a global diversification, with at least 90% in stocks. Actually that is what I've been doing for three years now (I'm 27 years old)."
},
{
"docid": "458943",
"title": "",
"text": "\"Compared to a lot of other parts of the country it most certainly is, specially near the coast. My old neighbors in NH just sold their 2200 sqft 20 year-old home on about an acre for $420k. 4 bed, 3 bath, pool, 2 car garage, nice driveway on a quiet cul-de-sac, updated inside, excellent school district and all that crap. Listed for $405k and sold in less than 2 days. That home is 15 mins from the MA state line and 30 mins West of Hampton Beach. Now I'm in San Diego and $420k would buy me a 1100 sqft 60 year-old home on maybe a 7-10k sqft lot out in East County (mountains and desert, not the CA most people think of). Still only 30 mins from the beach, which is nice, but if it was anything close to my neighbor's old house it would be $800k-$1M, so yeah, while maybe not \"\"cheap\"\", Southern NH is pretty affordable for what you get.\""
},
{
"docid": "453963",
"title": "",
"text": "I place 90% of the blame on Carly, and then the board: that bitch was primed by her contract to gut and fillet the company. When a board links a CEOs remuneration to annual profit, it makes unscrupulous individuals do things which have clear and obvious negative long term impacts, but which will hike the annual profit for THIS year and another YEAR or so, but then turn badly negative. Because Carly is a little bitch, and wanted to extract as much money as was humanly possible from her position at HP, she embarked on the most disastrous set of actions possible. The direct result is what we see now. CEO compensation should NEVER be linked to profitability for an individual year, but to their performance throughout their tenure, and then beyond. It's my belief a CEO should take a base salary of no more than 50 times the MEAN worker's salary is. NOT the average. Because that simply encourages the board to enrich the management team, rather than the workers. If the company is profitable for a single year, CEOs should receive a large bonus - say no more than 20 times the MEAN salary at the company. AND 3 years AFTER the CEO leaves, he'd be entitled to another round of payments base on long term performance of the company. This means CEOs have a duty and a very large responsibility to ensure that their replacement is actually a better CEO than they are! When board members leave, there's no incentive to them personally, to ensure their replacement is even capable, let alone excellent. The other issue I have with CEOs is their stock options, or stock grants. I believe all companies should have strict rules about stock ownership by the board. They must own a certain number of shares, and those shares must be purchased before they join the board, and demonstrably NOT by any mechanism which the company pays for. Directors and officers with no personal investment interest in the performance of the company are a concern."
},
{
"docid": "129255",
"title": "",
"text": "Investing is really about learning your own comfort level. You will make money and lose money. You will make mistakes but you will also learn a great deal. First off, invest in your own financial knowledge, this doesn't require capital at all but a commitment. No one will watch or care for your own money better than yourself. Read books, and follow some companies in a Google Finance virtual portfolio. Track how they're doing over time - you can do this as a virtual portfolio without actually spending or losing money. Have you ever invested before? What is your knowledge level? Investing long term is about trying to balance risk while reducing losses and trying not to get screwed along the way (by people). My personal advice: Go to an independent financial planner, go to one that charges you per hour only. Financial planners that don't charge you hourly get paid in commissions. They will be biased to sell you what puts the most money in their pockets. Do not go to the banks investment people, they are employed by the banks who have sales and quota requirements to have you invest and push their own investment vehicles like mutual funds. Take $15k to the financial planner and see what they suggest. Keep the other $5K in something slow and boring and $1k under your mattress in actual cash as an emergency. While you're young, compound interest is the magic that will make that $25k increase hand over fist in time. But you need to have it consistently make money. I'm young too and more risk tolerant because I have time. While I get older I can start to scale back my risk because I'm nearing retirement and preserve instead of try to make returns."
},
{
"docid": "457118",
"title": "",
"text": "Funny that this shows up on my feed right now... I installed ICQ a couple of months ago. I put it on my 7 year old son's iPad first, using his mum's phone number (we're divorced). It is really the best way we can communicate quickly as she doesn't often let him pick up the phone and call - for whatever reason. But, at 7, watching him send me messages and spell out words, it's amazing. I haven't used ICQ in years, but it worked very well for our purposes and made me very happy. As I'm typing this right now (no BS), someone from Indonesia has just started to message and converse with me (Canada). Just like the old days when people used to randomly message others around the world to say hello and get to know what they were about, and what life was like (I have 20+ years online with things like this, so it's bringing back a lot of memories lol). It's much different than what you experience in many other apps... ads, local singles, etc. I'm glad that it's growing again... nostalgic for a lot of people!"
},
{
"docid": "180686",
"title": "",
"text": "If he can't manage, best is he sells it off. Its easier to manage cash. Not sure what tax you are talking about. He should have already paid tax on fair market value of the 20 flats. If the intention of Mr X is to gift to son by way of death, then yes the tax will be less. Else whenever Mr X sells there will be tax. how to manage these 20 apartments? Hire a broker. He may front run quite a few things like showing the place etc. There is a risk if he is given a free hand, he may not get good quality tenant. There are quite a few shark brokers [its unregulated] who may arm twist seeing the opportunity of an old man with 20 flats. See if you can do long term lease with companies looking for guest house etc, or certain companies who run guest house. They would like the scale, generally 3-5 years contracts are done. The rent is good and overall less hassle. The risk is most would ask to invest more in furnishing and contracts can be terminated in months notice. If the property is in large metro [Delhi/Bangalore/Chennai/etc] These places have good property management companies. Ensure that you have independent lawyer; there are certain aspects of law that may need to be studied."
},
{
"docid": "294822",
"title": "",
"text": "Disclaimer: I am not Canadian and have no experience with their laws and regulations. There really aren't any safe short term investment options at the moment (with interest rates being close to zero). So, just put the money aside you will need for the car and the computer, maybe on a callable savings account to make at least a few Dollars. Do not take out any loans, it is very unlikely you will earn more than the cost of the loan. You didn't say how much will be left but, unfortunately, it really is not much to go on anyway. Considering that you seem to have enough income to cover your expenses, you could transfer the rest to your RRSP, invest and just forget about it. I suggest to follow this rule of thumb: the growth portion of your portfolio, which for you means equities, should be directly related to the number of years you won't need to touch these funds. 1 year, 0 equity. 2 years, 10%, 3 years, 20%, and so on. What's not in equities, you could put in short term bonds, meaning an average duration of about 3 years. Needless to say, single stocks/bonds are out of question, ideally you can find 2 ETFs, one for stocks and one for bonds, respectively. However, if there is any possibility you did not mention that you could suddenly depend on this money, you have to keep your equity exposure, and thus your potential earnings, low. Just a humble thought: i really don't know your specific situation, my apologies if I'm out of line. Often disability means that you are not capable of doing one particular thing anymore, i.e. work physically. Just maybe you would still be capable to do some other type of work, maybe even from the comfort of your home, that would allow you to generate a certain income (and also keep you busy). I hope this helps. Good luck."
},
{
"docid": "122485",
"title": "",
"text": "Its hard to write much in those comment boxes, so I'll just make an answer, although its really not a formal answer. Regarding commissions, it costs me $5 per trade, so that's actually $10 per trade ($5 to buy, $5 to sell). An ETF like TNA ($58 per share currently) fluctuates $1 or $2 per day. IXC is $40 per share and fluctuates nearly 50 cents per day (a little less). So to make any decent money per trade would mean a share size of 50 shares TNA which means I need $2900 in cash (TNA is not marginable). If it goes up $1 and I sell, that's $10 for the broker and $40 for me. I would consider this to be the minimum share size for TNA. For IXC, 100 shares would cost me $4000 / 2 = $2000 since IXC is marginable. If IXC goes up 50 cents, that's $10 for the broker and $40 for me. IXC also pays a decent dividend. TNA does not. You'll notice the amount of cash needed to capture these gains is roughly the same. (Actually, to capture daily moves in IXC, you'll need a bit more than $2000 because it doesn't vary quite a full 50 cents each day). At first, I thought you were describing range trading or stock channeling, but those systems require stop losses when the range or channel is broken. You're now talking about holding forever until you get 1 or 2 points of profit. Therefore, I wouldn't trade stocks at all. Stocks could go to zero, ETFs will not. It seems to me you're looking for a way to generate small, consistent returns and you're not seeking to strike it rich in one trade. Therefore, buying something that pays a dividend would be a good idea if you plan to hold forever while waiting for your 1 or 2 points. In your system you're also going to have to define when to get back in the trade. If you buy IXC now at $40 and it goes to $41 and you sell, do you wait for it to come back to $40? What if it never does? Are you happy with having only made one trade for $40 profit in your lifetime? What if it goes up to $45 and then dips to $42, do you buy at $42? If so, what stops you from eventually buying at the tippy top? Or even worse, what stops you from feeling even more confident at the top and buying bigger lots? If it gets to $49, surely it will cover that last buck to $50, right? /sarc What if you bought IXC at $40 and it went down. Now what? Do you take up gardening as a hobby while waiting for IXC to come back? Do you buy more at lower prices and average down? Do you find other stocks to trade? If so, how long until you run out of money and you start getting margin calls? Then you'll be forced to sell at the bottom when you should be buying more. All these systems seem easy, but when you actually get in there and try to use them, you'll find they're not so easy. Anything that is obvious, won't work anymore. And even when you find something that is obvious and bet that it stops working, you'll be wrong then too. The thing is, if you think of it, many others just like you also think of it... therefore it can't work because everyone can't make money in stocks just like everyone at the poker table can't make money. If you can make 1% or 2% per day on your money, that's actually quite good and not too many people can do that. Or maybe its better to say, if you can make 2% per trade, and not take a 50% loss per 10 trades, you're doing quite well. If you make $40 per trade profit while working with $2-3k and you do that 50 times per year (50 trades is not a lot in a year), you've doubled your money for the year. Who does that on a consistent basis? To expect that kind of performance is just unrealistic. It much easier to earn $2k with $100k than it is to double $2k in a year. In stocks, money flows TO those who have it and FROM those who don't. You have to plan for all possibilities, form a system then stick to it, and not take on too much risk or expect big (unrealistic) rewards. Daytrading You make 4 roundtrips in 5 days, that broker labels you a pattern daytrader. Once you're labeled, its for life at that brokerage. If you switch to a new broker, the new broker doesn't know your dealings with the old broker, therefore you'll have to establish a new pattern with the new broker in order to be labeled. If the SEC were to ask, the broker would have to say 'yes' or 'no' concering if you established a pattern of daytrading at that brokerage. Suppose you make the 4 roundtrips and then you make a 5th that triggers the call. The broker will call you up and say you either need to deposit enough to bring your account to $25k or you need to never make another daytrade at that firm... ever! That's the only warning you'll ever get. If you're in violation again, they lock your account to closing positions until you send in funds to bring the balance up to $25k. All you need to do is have the money hit your account, you can take it right back out again. Once your account has $25k, you're allowed to trade again.... even if you remove $15k of it that same day. If you trigger the call again, you have to send the $15k back in, then take it back out. Having the label is not all bad... they give you 4x margin. So with $25k, you can buy $100k of marginable stock. I don't know... that could be a bad thing too. You could get a margin call at the end of the day for owning $100k of stock when you're only allowed to own $50k overnight. I believe that's a fed call and its a pretty big deal."
},
{
"docid": "528475",
"title": "",
"text": "\"This is an old post I feel requires some more love for completeness. Though several responses have mentioned the inherent risks that currency speculation, leverage, and frequent trading of stocks or currencies bring about, more information, and possibly a combination of answers, is necessary to fully answer this question. My answer should probably not be the answer, just some additional information to help aid your (and others') decision(s). Firstly, as a retail investor, don't trade forex. Period. Major currency pairs arguably make up the most efficient market in the world, and as a layman, that puts you at a severe disadvantage. You mentioned you were a student—since you have something else to do other than trade currencies, implicitly you cannot spend all of your time researching, monitoring, and investigating the various (infinite) drivers of currency return. Since major financial institutions such as banks, broker-dealers, hedge-funds, brokerages, inter-dealer-brokers, mutual funds, ETF companies, etc..., do have highly intelligent people researching, monitoring, and investigating the various drivers of currency return at all times, you're unlikely to win against the opposing trader. Not impossible to win, just improbable; over time, that probability will rob you clean. Secondly, investing in individual businesses can be a worthwhile endeavor and, especially as a young student, one that could pay dividends (pun intended!) for a very long time. That being said, what I mentioned above also holds true for many large-capitalization equities—there are thousands, maybe millions, of very intelligent people who do nothing other than research a few individual stocks and are often paid quite handsomely to do so. As with forex, you will often be at a severe informational disadvantage when trading. So, view any purchase of a stock as a very long-term commitment—at least five years. And if you're going to invest in a stock, you must review the company's financial history—that means poring through 10-K/Q for several years (I typically examine a minimum ten years of financial statements) and reading the notes to the financial statements. Read the yearly MD&A (quarterly is usually too volatile to be useful for long term investors) – management discussion and analysis – but remember, management pays themselves with your money. I assure you: management will always place a cherry on top, even if that cherry does not exist. If you are a shareholder, any expense the company pays is partially an expense of yours—never forget that no matter how small a position, you have partial ownership of the business in which you're invested. Thirdly, I need to address the stark contrast and often (but not always!) deep conflict between the concepts of investment and speculation. According to Seth Klarman, written on page 21 in his famous Margin of Safety, \"\"both investments and speculations can be bought and sold. Both typically fluctuate in price and can thus appear to generate investment returns. But there is one critical difference: investments throw off cash flow for the benefit of the owners; speculations do not. The return to the owners of speculations depends exclusively on the vagaries of the resale market.\"\" This seems simple and it is; but do not underestimate the profound distinction Mr. Klarman makes here. (and ask yourself—will forex pay you cash flows while you have a position on?) A simple litmus test prior to purchasing a stock might help to differentiate between investment and speculation: at what price are you willing to sell, and why? I typically require the answer to be at least 50% higher than the current salable price (so that I have a margin of safety) and that I will never sell unless there is a material operating change, accounting fraud, or more generally, regime change within the industry in which my company operates. Furthermore, I then research what types of operating changes will alter my opinion and how severe they need to be prior to a liquidation. I then write this in a journal to keep myself honest. This is the personal aspect to investing, the kind of thing you learn only by doing yourself—and it takes a lifetime to master. You can try various methodologies (there are tons of books) but overall just be cautious. Money lost does not return on its own. I've just scratched the surface of a 200,000 page investing book you need to read if you'd like to do this professionally or as a hobbyist. If this seems like too much or you want to wait until you've more time to research, consider index investing strategies (I won't delve into these here). And because I'm an investment professional: please do not interpret anything you've read here as personal advice or as a solicitation to buy or sell any securities or types of securities, whatsoever. This has been provided for general informational purposes only. Contact a financial advisor to review your personal circumstances such as time horizon, risk tolerance, liquidity needs, and asset allocation strategies. Again, nothing written herein should be construed as individual advice.\""
},
{
"docid": "299176",
"title": "",
"text": "The key thing to consider in a question like this is, What return am I getting on my investment versus what interest am I paying on the loan? If the investment returns more than what you're paying on the loan, than it makes sense to keep the investment and pay off the loan with other income. If the investment returns less, than it makes sense to cash it out to pay off the loan. One complicating factor is taxes. In the case of an IRA, you're not paying taxes on the profits. You do pay a tax penalty for an early withdrawal. Those are both factors that tend to make keeping the money in the IRA more desirable. And of course, if the choice is between keeping your investment and defaulting on the loan, you probably want to close out the investment. I don't know what return you're getting on your IRA, but it's probably more than 6.8%. I'd have to check but I think my retirement funds got over 20% last year. If you're not getting 6.8%, you might want to investigate switching to another investment fund. I'm sure there's a lot I don't know about your situation, but I'd think that keeping the IRA would be a better plan. If you can't add to it for some time well you get these debts paid off, well, that's how it is."
},
{
"docid": "126836",
"title": "",
"text": "For a non-technical investor (meaning someone who doesn't try to do all the various technical analysis things that theoretically point to specific investments or trends), having a diverse portfolio and rebalancing it periodically will typically be the best solution. For example, I might have a long-term-growth portfolio that is 40% broad stock market fund, 40% (large) industry specific market funds, and 20% bond funds. If the market as a whole tanks, then I might end up in a situation where my funds are invested 30% market 35% industry 35% bonds. Okay, sell those bonds (which are presumably high) and put that into the market (which is presumably low). Now back to 40/40/20. Then when the market goes up we may end up at 50/40/10, say, in which case we sell some of the broad market fund and buy some bond funds, back to 40/40/20. Ultimately ending up always selling high (whatever is currently overperforming the other two) and buying low (whatever is underperforming). Having the industry specific fund(s) means I can balance a bit between different sectors - maybe the healthcare industry takes a beating for a while, so that goes low, and I can sell some of my tech industry fund and buy that. None of this depends on timing anything; you can rebalance maybe twice a year, not worrying about where the market is at that exact time, and definitely not targeting a correction specifically. You just analyze your situation and adjust to make everything back in line with what you want. This isn't guaranteed to succeed (any more than any other strategy is), of course, and has some risk, particularly if you rebalance in the middle of a major correction (so you end up buying something that goes down more). But for long-term investments, it should be fairly sound."
}
] |
4523 | What should I do with my $25k to invest as a 20 years old? | [
{
"docid": "129255",
"title": "",
"text": "Investing is really about learning your own comfort level. You will make money and lose money. You will make mistakes but you will also learn a great deal. First off, invest in your own financial knowledge, this doesn't require capital at all but a commitment. No one will watch or care for your own money better than yourself. Read books, and follow some companies in a Google Finance virtual portfolio. Track how they're doing over time - you can do this as a virtual portfolio without actually spending or losing money. Have you ever invested before? What is your knowledge level? Investing long term is about trying to balance risk while reducing losses and trying not to get screwed along the way (by people). My personal advice: Go to an independent financial planner, go to one that charges you per hour only. Financial planners that don't charge you hourly get paid in commissions. They will be biased to sell you what puts the most money in their pockets. Do not go to the banks investment people, they are employed by the banks who have sales and quota requirements to have you invest and push their own investment vehicles like mutual funds. Take $15k to the financial planner and see what they suggest. Keep the other $5K in something slow and boring and $1k under your mattress in actual cash as an emergency. While you're young, compound interest is the magic that will make that $25k increase hand over fist in time. But you need to have it consistently make money. I'm young too and more risk tolerant because I have time. While I get older I can start to scale back my risk because I'm nearing retirement and preserve instead of try to make returns."
}
] | [
{
"docid": "30340",
"title": "",
"text": "How do I get into Harvard Business School? I'm starting my first year in college next year and had to pass up Harvard (dream school) and two other ivies to go to my state school for financial reasons. I don't have to decide my major for two years. What should I do (classes, internships/work experience, major, etc.) to get into HBS? What tests do I need and what are the important parts of MBA application? Also, what jobs open up to someone with an MBA. I understand that this is a good way to get into Investment Banking? What level/salary would I start at and what other jobs/fields/companies do MBAs get hired for. What are other good business schools? How good is UVAs Darden?"
},
{
"docid": "41627",
"title": "",
"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."
},
{
"docid": "332719",
"title": "",
"text": "I would agree with the other answers about it being a bad idea to invest in stocks in the short term. However, do consider also long-term repairs. For example, you should be prepared to a repair happening in 20 years in addition to repairs happening in a couple of months. So, if it is at all possible for you to save a bit more, put 2% of the construction cost of a typical new house (just a house, not the land the house is standing on) aside every year into a long-term repair fund and invest it into stocks. I would recommend a low-cost index fund or passive ETF instead of manually picking stocks. When you have a long-term repair that requires large amounts of money but will be good for decades to come, you will take some money out of the long-term repair fund. Where I live, houses cost about 4000 EUR per square meter, but most of that is the land and building permit cost. The actual construction cost is about 2500 EUR per square meter. So, I would put away 50 EUR per square meter every year. So, for example, for a relatively small 50 square meter apartment, that would mean 2500 EUR per year. There are quite many repairs that are long-term repairs. For example, in apartment buildings, plumbing needs to be redone every 40 years or so. Given such a long time period, it makes sense to invest the money into stocks. So, my recommendation would be to have two repair funds: short-term repairs and long-term repairs. Only the long-term repair fund should be invested into stocks."
},
{
"docid": "175226",
"title": "",
"text": "\"As JoeTaxpayer notes in his comment, \"\"answers\"\" to this are really just opinions, so here's mine, for what it's worth. If your risk tolerance is 5 out of 5, you shouldn't have anything in Treasuries. Those are basically the most conservative of all investments. This would probably mean no TIPS as well. If you're more like 4.5 out of 5, you could have some, but just a little; a 30% allocation to government securities is quite conservative. If you want to diversify across different asset classes, you could consider a bond fund like (for instance VBMFX, the Vanguard total bond market index fund). Your portfolio doesn't currently contain any (non-government) bonds, which is something to consider. 20% seems like quite a large allocation to REITs. Most sample portfolios I've seen allocate no more than 10% to REITs, often no more than 5%. There are some that have more like the 20% you're envisioning, but you might want to ponder that a bit more especially in light of your concerns about REITs being at an all-time high. As for your question about all-time highs, it's reasonable to think about, but I think waiting for 30-50% off all-time highs is unrealistic. Looking at a chart of VFINX (essentially the S&P 500), I see that at the nadir of the recent downturn, in early 2009, the market was at about 50% of its pre-crash all-time high. At the nadir of the dot-com bust, the market was about 45% off its pre-crash high. If you're waiting for it to be 50% off it's all-time high, you're not just waiting for \"\"a good time to invest\"\", you're waiting for a major crash. It could certainly make sense not to immediately put everything into US stocks, but that doesn't mean you should put nothing in. As Trevor Wilson commented, you could put some of the money in and then gradually add the rest over time, reducing the risk of unluckily buying at the peak. (This can also reduce the psychological angst of worrying about whether you're doing the right thing, which is worth taking into account.) Also note that if you get rid of the treasuries, you eliminate a good chunk of the stuff that you thought was too close to the peak anyway. Your two basic points (asset allocation and low-cost funds) have a strong Boglehead flavor. You may already have looked at the Bogleheads wiki; if not you should take a look. If you are comfortable with that philosophy (and I think it's a sound one), you should remember that part of that philosophy is not worrying about \"\"timing the market\"\". You pursue a buy-and-hold strategy if you believe the market will go up in the long term and don't care much about what it does in the short term. That said, as mentioned above, you might want to ease in your investment over time, rather than buying all at once, if only to avoid tearing your hair out if the market goes down in the short term. Incidentally, your proposed portfolio is similar to this one that they mention, although as I said above I think this is too conservative if you are 30 years old and consider yourself a \"\"5 out of 5\"\" in terms of risk tolerance. I'm not sure if you already saw that in your research, but since that portfolio apparently has a name and is known, you might be able to find information about its risks and benefits by searching for discussion of it by name.\""
},
{
"docid": "10476",
"title": "",
"text": "As a 22 year old planning for your financial life, it is obvious to say that saving as much as you can to invest for the long run is the smartest thing to do from a financial point of view. In general, at this point, aged 22, you can take as much risk as you'll ever will. You're investing for the very long term (+30/+40 years). The downside of risk, the level of uncertainty on returns (positive or negative), is most significant on the short term (<5years). While the upside of risk, assuming you can expect higher returns the more risk you take, are most significant on the long term. In short: for you're financial life, it's smart to save as much as you can and invest these savings with a lot of risk. So, what is smart to invest in? The most important rule is to keep your investment costs as low as possible. Risk and returns are strongly related, however investment costs lower the returns, while you keep the risk. Be aware of the investment industry marketing fancy investment products. Most of them leave you with higher costs and lower returns. Research strongly suggests that an lowcost etf portfolio is our best choice. Personally, i disregard this new smart beta hype as a marketing effort from the financial industry. They charge more investment costs (that's a certain) and promise better returns because they are geniuses (hmmm...). No thanks. As suggested in other comments, I would go for an low cost (you shouldn't pay more than 0.2% per year) etf portfolio with a global diversification, with at least 90% in stocks. Actually that is what I've been doing for three years now (I'm 27 years old)."
},
{
"docid": "409959",
"title": "",
"text": "\"RED FLAG. You should not be invested in 1 share. You should buy a diversified ETF which can have fees of 0.06% per year. This has SIGNIFICANTLY less volatility for the same statistical expectation. Left tail risk is MUCH lower (probability of gigantic losses) since losses will tend to cancel out gains in diversified portfolios. Moreover, your view that \"\"you believe these will continue\"\" is fallacious. Stocks of developed countries are efficient to the extent that retail investors cannot predict price evolution in the future. Countless academic studies show that individual investors forecast in the incorrect direction on average. I would be quite right to objectively classify you as a incorrect if you continued to hold the philosophy that owning 1 stock instead of the entire market is a superior stategy. ALL the evidence favours holding the market. In addition, do not invest in active managers. Academic evidence demonstrates that they perform worse than holding a passive market-tracking portfolio after fees, and on average (and plz don't try to select managers that you think can outperform -- you can't do this, even the best in the field can't do this). Direct answer: It depends on your investment horizon. If you do not need the money until you are 60 then you should invest in very aggressive assets with high expected return and high volatility. These assets SHOULD mainly be stocks (through ETFs or mutual funds) but could also include US-REIT or global-REIT ETFs, private equity and a handful of other asset classes (no gold, please.) ... or perhaps wealth management products which pool many retail investors' funds together and create a diversified portfolio (but I'm unconvinced that their fees are worth the added diversification). If you need the money in 2-3 years time then you should invest in safe assets -- fixed income and term deposits. Why is investment horizon so important? If you are holding to 60 years old then it doesn't matter if we have a massive financial crisis in 5 years time, since the stock market will rebound (unless it's a nuclear bomb in New York or something) and by the time you are 60 you will be laughing all the way to the bank. Gains on risky assets overtake losses in the long run such that over a 20-30 year horizon they WILL do much better than a deposit account. As you approach 45-50, you should slowly reduce your allocation to risky assets and put it in safe haven assets such as fixed income and cash. This is because your investment horizon is now SHORTER so you need a less risky portfolio so you don't have to keep working until 65/70 if the market tanks just before retirement. VERY IMPORTANT. If you may need the savings to avoid defaulting on your home loan if you lose your job or something, then the above does not apply. Decisions in these context are more vague and ambiguous.\""
},
{
"docid": "54827",
"title": "",
"text": "You are correct that 20% has an impact on your interest rate, although it is not always hugely significant. You would have to do your own shopping around to find that information out. However 20% has an impact that I consider to be far more important than your monthly payment, and that is in your equity. If the DC market tanks, which I know it has not really done like much of the country but none of us have crystal balls to know if it will or not, then you will be more easily underwater the less you put down. Conversely putting 20% or more down makes you an easy sell to lenders [i]and[/i] means that you don't have to worry nearly so much about having to do a short sale in the future. I would never buy a house with less than 20% down personally and have lived well below my means to get there, but I am not you. With regards to mortgages, the cheapskate way that I found information that I needed was to get books from the library that explained the mortgage process to me. When it came time to select an actual broker I used my realtor's recommendation (because I trusted my realtor to actually have my interests at heart because he was an old family friend - you can't usually do that so I don't recommend it) and that of others I knew who had bought recently. I compared four lenders and competed them against each other to get the best terms. They will give you estimate sheets that help you weigh not only rates but costs of different fees such as the origination fee and discount points. Make sure to know what fees the lender controls and what fees (s)he doesn't so that you know which lines to actually compare. Beyond a lender make sure that before closing you have found a title company that you think is a good choice (your realtor or lender will try to pick one for you because that's the way the business is played but it is a racket - pick one who will give you the best deal on title), a settlment company (may be title company, lender, or other) that won't charge you an excessive amount, a survey company that you like if required in DC for your title insurance, and homeowner's insurance coverage that you think is a good deal. The time between contract and closing is short and nobody tells you to research all the closing costs that on a $500,000 place run to in excess of $10,000, but you should. Also know that your closing costs will be about 2% of the purchase price and plan accordingly. In general take some time to educate yourself on homebuying as well as neighborhoods and price ranges. Don't rush into this process or you will lose a lot of money fast."
},
{
"docid": "92403",
"title": "",
"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."
},
{
"docid": "475632",
"title": "",
"text": "In the US you can get a home warranty when you buy a house that will cover major repairs for the first few years of owning a home. The costs vary based on age and the results of the home inspection. Ours cost ~$250 a year. This was put into our closing costs. Unfortunately this market does have some disreputable companies that come im with prices that seem too good to be true. As is usually the case they are. Do research on the company you are getting the home warrenty from to make sure you are dealing with a reputable company that will honor its commitments. By having 20% down you will avoid needing Mortgage insurance which will save you a considerable amout. My PMI cost me about $70 a month. However once you get to 20% equity in your home the pmi drops off. So if you can put down 15% you should be able to get out from under your pmi in a few years if you want to keep that 5% cushion while making extra payments. The question is how much do you feel you need. So far owning a 70 year old home my extra maintence costs have been around 2500 a year. But they seem to be in 1k chunks every 4 or 5 months."
},
{
"docid": "559529",
"title": "",
"text": "Prior to having children we did exactly what you describe. We would visit my mother in law about four to six times a year, a 350-mile-each-way trip for a weekend. We'd simply rent a car, drive down, drive back, return it, out $150 or so for the weekend, a total of under $1000 a year; far cheaper than owning. You should factor in whether you will save money, though, on things you might not immediately consider. Will you spend less on groceries, in particular, if you can drive to Costco or Sam's Club (or even just to a regular grocery store)? I doubt you'll save the cost of the car ($2000/year as you say), but it's possible it will factor into the mix. I definitely would discourage purchasing a new car, if you're considering the financial side primarily. I suspect you can get a used car - maybe the $10k car you would've sold - and spend more like $1000 a year on it, or less. I don't know if I'd go to the $5000 level as those in comments suggested, as if you're doing long trips you want something with higher than average reliability; but even a car like a 5 year old mid-level sedan, easily costing you less than $10k, would be fine and likely sell in 5 years for $5k itself while hopefully not having too much maintenance (especially if you choose something with lower mileage; shop around!). But even with those assumptions, 20 days a year of rental which you can probably get less than $50 rates on (particularly if you look at some of the car sharing options, Zipcar and Enterprise both allow you to do longer term rentals for reasonable prices) seems like a fine deal compared to the hassle of owning."
},
{
"docid": "160105",
"title": "",
"text": "\"I was going to ask, \"\"Do you feel lucky, punk?\"\" but then it occurred to me that the film this quote came from, Dirty Harry, starring Clint Eastwood, is 43 years old. And yet, the question remains. The stock market, as measured by the S&P has returned 9.67% compounded over the last 100 years. But with a standard deviation just under 20%, there are years when you'll do better and years you'll lose. And I'd not ignore the last decade which was pretty bad, a loss for the decade. There are clearly two schools of thought. One says that no one ever lost sleep over not having a mortgage payment. The other school states that at the very beginning, you have a long investing horizon, and the chances are very good that the 30 years to come will bring a return north of 6%. The two decades prior to the last were so good that these past 30 years were still pretty good, 11.39% compounded. There is no right or wrong here. My gut says fund your retirement accounts to the maximum. Build your emergency fund. You see, if you pay down your mortgage, but lose your job, you'll still need to make those payments. Once you build your security, think of the mortgage as the cash side of your investing, i.e. focus less on the relatively low rate of return (4.3%) and more on the eventual result, once paid, your cash flow goes up nicely. Edit - in light of the extra information you provided, your profile reads that you have a high risk tolerance. Low overhead, no dependents, and secure employment combine to lead me to this conclusion. At 23, I'd not be investing at 4.3%. I'd learn how to invest in a way I was comfortable with, and take it from there. Disclosure (Updated) - I am older, and am semi-retired. I still have some time left on the mortgage, but it doesn't bother me, not at 3.5%. I also have a 16 year old to put through college but her college account i fully funded.\""
},
{
"docid": "202987",
"title": "",
"text": "If you're truly ready to pay an extra $1000 every month, and are confident you'll likely always be able to, you should refinance to a 15 year mortgage. 15 year mortgages are typically sold at around a half a point lower interest rates, meaning that instead of your 4.375% APR, you'll get something like 3.875% APR. That's a lot of money over the course of the mortgage. You'll end up paying around a thousand a month more - so, exactly what you're thinking of doing - and not only save money from that earlier payment, but also have a lower interest rate. That 0.5% means something like $25k less over the life of the mortgage. It's also the difference in about $130 or so a month in your required payment. Now of course you'll be locked into making that larger payment - so the difference between what you're suggesting and this is that you're paying an extra $25k in exchange for the ability to pay it off more slowly (in which case you'd also pay more interest, obviously, but in the best case scenario). In the 15 year scenario you must make those ~$4000 payments. In the 30 year scenario you can pay ~$2900 for a while if you lose your job or want to go on vacation or ... whatever. Of course, the reverse is also true: you'll have to make the payments, so you will. Many people find enforced savings to be a good strategy (myself among them); I have a 15 year mortgage and am happy that I have to make the higher payment, because it means I can't spend that extra money frivolously. So what I'd do if I were you is shop around for a 15 year refi. It'll cost a few grand, so don't take one unless you can save at least half a point, but if you can, do."
},
{
"docid": "474173",
"title": "",
"text": "In USA, if you take a personal loan, you will probably get rates between 8-19%. It is better that you take a loan in India, as home loan rates are about 10.25%(10.15% is the lowest offered by SBI). This might not be part of the answer, but it is safer to hold USD than Indian rupees as India is inflating so much that the value of the rupee is always going lower(See 1970 when you could buy 1 dollar for 7 rupees). There might be price fluctuations where the rupee gains against the dollar, but in the long run, I think the dollar has much more value(Just a personal opinion). And since you are taking a home loan, I am assuming it will be somewhere between 10-20 years. So, you would actually save a lot more on the depreciating rupee, than you would pay interest. Yes, if you can get a home loan in USA at around 4%, it would definitely be worth considering, but I doubt they will do that since they would not know the actual value of the property. Coming to answer your question, getting a personal loan for 75k without keeping any security is highly unlikely. What you can do since you have a good credit score, is get a line of credit for 20-25k as a backup, and use that money to pay your EMI only when absolutely required. That way, you build your credit in the United States, and have a backup for around 2 years in India in case you fail to pay up. Moreover, Line of credits charge you interest only on the amount, you use. Cheers!"
},
{
"docid": "458943",
"title": "",
"text": "\"Compared to a lot of other parts of the country it most certainly is, specially near the coast. My old neighbors in NH just sold their 2200 sqft 20 year-old home on about an acre for $420k. 4 bed, 3 bath, pool, 2 car garage, nice driveway on a quiet cul-de-sac, updated inside, excellent school district and all that crap. Listed for $405k and sold in less than 2 days. That home is 15 mins from the MA state line and 30 mins West of Hampton Beach. Now I'm in San Diego and $420k would buy me a 1100 sqft 60 year-old home on maybe a 7-10k sqft lot out in East County (mountains and desert, not the CA most people think of). Still only 30 mins from the beach, which is nice, but if it was anything close to my neighbor's old house it would be $800k-$1M, so yeah, while maybe not \"\"cheap\"\", Southern NH is pretty affordable for what you get.\""
},
{
"docid": "72578",
"title": "",
"text": "\"You are in your mid 30's and have 250,000 to put aside for investments- that is a fantastic position to be in. First, let's evaluate all the options you listed. Option 1 I could buy two studio apartments in the center of a European capital city and rent out one apartment on short-term rental and live in the other. Occasionally I could Airbnb the apartment I live in to allow me to travel more (one of my life goals). To say \"\"European capital city\"\" is such a massive generalization, I would disregard this point based on that alone. Athens is a European capital city and so is Berlin but they have very different economies at this point. Let's put that aside for now. You have to beware of the following costs when using property as an investment (this list is non-exhaustive): The positive: you have someone paying the mortgage or allowing you to recoup what you paid for the apartment. But can you guarantee an ROI of 10-15% ? Far from it. If investing in real estate yielded guaranteed results, everyone would do it. This is where we go back to my initial point about \"\"European capital city\"\" being a massive generalization. Option 2 Take a loan at very low interest rate (probably 2-2.5% fixed for 15 years) and buy something a little nicer and bigger. This would be incase I decide to have a family in say, 5 years time. I would need to service the loan at up to EUR 800 / USD 1100 per month. If your life plan is taking you down the path of having a family and needed the larger space for your family, then you need the space to live in and you shouldn't be looking at it as an investment that will give you at least 10% returns. Buying property you intend to live in is as much a life choice as it is an investment. You will treat the property much different from the way something you rent out gets treated. It means you'll be in a better position when you decide to sell but don't go in to this because you think a return is guaranteed. Do it if you think it is what you need to achieve your life goals. Option 3 Buy bonds and shares. But I haven't the faintest idea about how to do that and/or manage a portfolio. If I was to go down that route how do I proceed with some confidence I won't lose all the money? Let's say you are 35 years old. The general rule is that 100 minus your age is what you should put in to equities and the rest in something more conservative. Consider this: This strategy is long term and the finer details are beyond the scope of an answer like this. You have quite some money to invest so you would get preferential treatment at many financial institutions. I want to address your point of having a goal of 10-15% return. Since you mentioned Europe, take a look at this chart for FTSE 100 (one of the more prominent indexes in Europe). You can do the math- the return is no where close to your goals. My objective in mentioning this: your goals might warrant going to much riskier markets (emerging markets). Again, it is beyond the scope of this answer.\""
},
{
"docid": "404278",
"title": "",
"text": "\"Let me paint you a picture to show you why this does not make sense. It is never fair to ask a business to pay a \"\"living wage\"\". It is always fair to ask a worker to chose their jobs based on their needs. Here's why. I ran a business when I was a teenager, doing web development. I did not make very good money but it pushed me to learn and to teach myself to meet the needs of the few clients that I did manage to find. Over the course of the business the thought had crossed my mind to maybe get help from my peers, maybe talk to classmates and see if any of them might have wanted to go into business with me, help me drum up more work, or help me do design or development. As soon as the thought crossed my mind I realized right away that I would never be able to do it, because the regulation was just way too big for little old sole-proprietorship me to deal with. Not only was it confusing, but it was dangerous to me, if I did it wrong I knew I could be sued and lose more than my tiny little business made. On top of the regs involved, I personally was not making minimum wage! What I was making though, was experience. This was more valuable than all the money I made combined, because I worked this way by myself for three years, learning more about my craft all the while. I have parlayed that experience into a ten year long career that currently supports my family, working for someone else. Now imagine if I could pay anyone whatever we both agreed on. Imagine if I could talk to a classmate in highschool and say \"\"hey, im not making much, but I can pay you x to start with and I will certainly teach you what I know\"\". it always struck me as selfish, unearned moral superiority to sit here and mandate a minimum wage, you price teenagers and entry-level workers out of the market because people can't afford an army of $20 per hour workers. Its so ignorant of the narrow margins that these business have to face. It is also really short-sighted and money-obsessed to boil a job down to it's wages alone. Minimum wage destroys an ancient method of generating skilled workers: the apprentice system. Also, there is a really ugly moral side to this. Person A offers person B X amount to do Y... Why does the government have the right to say \"\"No! you can't pay them X because it is not X enough!\"\". Our economy and work is far more complex than minimum wage. it is an old idea that is nothing but a drain on our economy. TL;DR - I would have added three or more skilled workers to our economy in high school if I did not have to pay them minimum wage. I personally was priced out of hiring people because of it, so I hate it. Millennials need not wonder why no one can find a job.\""
},
{
"docid": "469731",
"title": "",
"text": "\"This is unfortunately the truth, and I spend a lot of time with my clients trying to help them through this process. One of the key metrics that banks judge themselves on is \"\"products per household.\"\" The more things you have attached to them, the less likely you are to leave, and they deliberately tie you in with more and more services, e.g. direct deposit, billpay, debit cards, credit cards, etc. If you want to switch but are held back by the daunting task of all the stuff you need to do, it's easier than most people think, and bankers at those smaller banks who are getting your accounts should be more than happy to do about 80% of the work for you. *The other 20% can only be done by you personally due to privacy laws, but your banker can guide you through that too. A prime example: A customer of mine wanted to switch, but he didn't want to go to the old bank to actually wait in line and go through with the nonsense of actually closing the account. I see that anxiety over confrontation a lot, by the way. So I have saved on my desktop a form letter is a simple request by the customer to close their account at 2B2F bank. They sign it, I notarize it, and send it off to the branch. The branch of receipt has to close the account per the request. Before we send that letter, we get everything set up with the new bank, draw the old one down to $10 or so, and give instructions to the old bank to remit a check payable to the customer and mail it to me. Then the old account is closed, and I just deposit that nominal amount into the customer's account. The customer literally never has to set foot in the old bank again. The unfortunate thing is that not everyone knows that these kinds of things are even possible: that your banker should help you with this stuff, or that you can do pretty much everything remotely. Plus, if you look at the smaller banks and CUs these days, they have eliminated the need or ubiquity (i.e. \"\"but their ATMs are everywhere!\"\") because a good bank or CU will never allow you to get charged to get your money, they will give you the direct line and email address of your branch manager, and a lot of places have mobile apps that allow you to deposit checks remotely.\""
},
{
"docid": "390582",
"title": "",
"text": "\"Oh look, exactly what technology folks have been saying for a while now! \"\"They're just asking for the moon, and not expecting to pay very much for it,\"\" Cappelli says. \"\"And as a result they [can't] find those people. Now that [doesn't] mean there was nobody to do the job; it just [means] that there was nobody at the price they were willing to pay.\"\" Wanted, graybeard with 20 years programming experience in obscure languages on expensive and rare systems. Starting pay $25k, expected to work 60 hours a week and be oncall all the time.\""
},
{
"docid": "522723",
"title": "",
"text": "\"My recommendation is to pay off your student loans as quickly as possible. It sounds like you're already doing this but don't incur any other large debts until you have this taken care of. I'd also recommend not buying a car, especially an expensive one, on credit or lease either. Back during the dotcom boom I and many friends bought or leased expensive cars only to lose them or struggle paying for them when the bottom dropped out. A car instantly depreciates and it's quite rare for them to ever gain value again. Stick with reliable, older, used cars that you can purchase for cash. If you do borrow for a car, shop around for the best deal and avoid 3+ year terms if at all possible. Don't lease unless you have a business structure where this might create a clear financial advantage. Avoid credit cards as much as possible although if you do plan to buy a house with a mortgage you'll need to maintain some credit history. If you have the discipline to keep your balance small and paid down you can use a credit card to build credit history. However, these things can quickly get out of hand and you'll wonder why you suddenly owe $10K, $20K or even more on them so be very careful with them. As for the house (speaking of US markets here), save up for at least a 20% down payment if you can. Based on what you said, this would be about $20-25K. This will give you a lot more flexibility to take advantage of deals that might come your way, even if you don't put it all into the house. \"\"Stretching\"\" to buy a house that's too expensive can quickly lead to financial ruin. As for house size, I recommend purchasing a 4 bedroom house even if you aren't planning on kids right away. It will resell better and you'll appreciate having the extra space for storage, home office, hobbies, etc. Also, life has a way of changing your plans for having kids and such.\""
}
] |
4523 | What should I do with my $25k to invest as a 20 years old? | [
{
"docid": "66626",
"title": "",
"text": "\"I recommend a Roth IRA. At your age you could turn 25K into a million and never pay taxes on these earnings. Of course there are yearly limits (5.5k) on the amount your can contribute to a Roth IRA account. If you haven't filed your taxes this year yet ... you can contribute 5.5K for last year and 5.5K for this year. Open two accounts at a discount brokerage firm. Trades should be about $10 or less per. Account one ... Roth IRA. Account two a brokerage account for the excess funds that can't be placed in the Roth IRA. Each year it will be easy transfer money into the Roth from this account. Be aware that you can't transfer stocks from brokerage acct to Roth IRA ... only cash. You can sell some stocks in brokerage and turn that into cash to transfer. This means settling up with the IRS on any gains/losses on that sale. Given your situation you'd likely have new cash to bring to table for the Roth IRA anyway. Invest in stocks and hold them for the long term. Do a google search for \"\"motley fool stock advisor\"\" and join. This is a premium service that picks two stocks to invest in each month. Invest small amounts (say $750) in each stock that they say you should buy. They will also tell you when to sell. They also give insights into why they selected the stock and why they are selling (aka learning experience). They pick quality companies. So if the economy is down you will still own a quality company that will make it through the storm. Avoid the temptation to load up on one stock. Follow the small amount rule mentioned above per stock. Good luck, and get in the market.\""
}
] | [
{
"docid": "147245",
"title": "",
"text": "\"I don't have a lot of time to keep going back and forth. It seems like we differ on a bunch of things. But I do want to respect your final question when you ask me what I thought was wrong in that post. You mention things like the government regulating things like water and air. Those are common goods. These cannot be in the hands of a corporation. Man did not put those things there. So, man cannot take ownership of these things. Bottled water, running water, oxygen tanks, etc, those things are man-made products or services for a market. I can go to a public body of water and swim in it because no one owns it. I can go to the shore in my favorite bathing suit and swim in the beautiful ocean water if I so please without needing to pay or trade with anyone for access to the ocean. But I cannot start pumping water out of the ocean and into a big tank for me to haul away. The government needs to step in and put an end to anyone that does that sort of thing. Same goes for anyone trying to tamper with the water or doing something that is harmful to people or the life living in the water. Government needs to stop all of that. Also, yes the \"\"municipality then cleans and purifies the water and pumps it to your house in public facilities and treats the resultant sewage\"\". But are you also claiming that it was the government that created the solution to clean and purify our water supplies? Because they sure didn't. As for electricity, the way it is delivered and made available to our homes is a commodity. Electricity is natural, but just like how water when bottled becomes a consumer product, the generation and delivery of electricity to our homes is a product and service. If a company delivering electricity to customers in a city is using public infrastructure, then of course they have to share it. That makes sense as the electric company does not own the utility poles, streets, etc. The government should regulate that. The government handling trade agreements is a job of the government. We need them to do that. I believe in an open, free, and consumer-driven market. I don't want a lot of regulation on this - such as tariffs that Trump has talked about - because history shows that could lead to the costs inflating with quality not following suit. His rants on jobs fleeing offshores followed by his talks of tariffs on foreign imports would be a terrible idea. I want the government to negotiate trade deals as long as it is in the best interest for this country. This is what grows an economy. Imagine if Apple couldn't import iPhones unless they paid a 30% tax since it was assembled in China. That would kill sales of iPhones because Apple would have to pass most - if not all - of that cost on to the consumer. Samsung phones (for argument's sake, let's say these aren't made in China. I don't think they are anyway, but just saying) would begin to take a larger share of the consumer market because prices would be lower since Samsung didn't have to pay a 30% tax. As for the coffee pot from china starting a fire in my house. No one would by a coffee pot if there was a known fire-starting issue with those coffee pots. The government telling china that coffee pots need to be a certain specification is really irrelevant. The issue would resolve itself because no one would by the coffee pots. Once this became a known problem, stores would take it off the shelves and no longer sell it. We have cars that are recalled left and right. Car seats for infants and toddlers that are recalled every year. So on and so forth. I know the federal government has a recall process, but usually its the manufacturer that will announce the recall first. If there is a bad product out there, it will die out and no longer be made available for purchase. I don't see the the federal government slapping regulations on car manufacturers that mandate \"\"all tires must not fall off of the car while in motion\"\". No. Instead, the manufacturer, who is in the business of making money, which they need to sell cars to make money, would create a car where the tires are not likely to ever fall off while a car is in motion (or even when idle). The last thing I want to touch on is the Obamacare mandate. If I don't want something, why am I being forced to pay for it? Why do you agree with this? I am already paying into social security and I wish I wasn't. I will make my own investments with my income to prepare for retirement. Why should I pay for health insurance if I don't want it. The government should not be making my life choices for me. I have one responsibility on this earth as it pertains to my behavior. That is to respect others inalienable rights such as the right to life, liberty, property, and the pursuit of happiness. As long as I do not harm someone in an immoral way (e.g. steal, kill, physical harm, property damage, disclose personally identifiable information, etc), I should be free to live my life without government interference. I am fine with paying into a system for true welfare cases. Some people fall into bad situations that they could not help. Some people are born into a terrible situation. Those people need help. But I don't want to pay for stupid ass things like Chuck Schumer's idiotic idea of Medicare for people over 55. He wants to lower the medicare age by 10 years. This is the insane progressive ideas that literally just worsen societies. [\"\"In 2016, Medicare benefit payments totaled $675 billion, up from $375 billion in 2006.](http://www.kff.org/medicare/issue-brief/the-facts-on-medicare-spending-and-financing/) A $300 billion increase in just 10 years and that schmuck wants to lower eligibility by 10 years. If this were ever signed into law, I am (plus other American workers) going to be forced to pay into this. That means less money for me to save and invest for retire or an emergency. Less for my daughter. Less for my mortgage. Less for me to continue my education. Less on whatever I choose to do with my money that I spend 40 hours/week in an office for. My time is spent doing something asked of me by a corporation. That corporation pays me for my time. It's a mutual agreement resulting in a trade of money for my services. I do it because I want to do things and provide for my family. I don't do it because someone decided to spend 4 years for a degree in graphic design and can't get a job. I also don't do it for people that have a cash only income (both illegal immigrants and legal citizens do this) and don't declare all of their income making them eligible for Obamacare. And, lastly, I do not do it for people that decide to live off of the system and are physically and mentally fit to work in some capacity. I should not be forced to pay a mandate just because I'm here breathing. Obama - just like all progressives - normalized this \"\"breathing\"\" tax. It isn't right. Of course, Obamacare falls apart if there aren't enough healthy people to subsidize the sick people. That's why the mandate was obviously put in place. But just because the mandate is needed to make it work, doesn't make it right to force on people. My mortgage needs to get paid. If all my neighbors chipped in $75/month, I could make it work. Well, is it right to force my neighbors to pay my mortgage? Nope. I made the decision to buy my house. They did not. Not to mention, with socialized health care, services are rationed and that is just sickening. Big Gov: \"\"Oh, you're 80 years old and you need a knew knee? Well, you did live for 80 years, so we're going to deny that request.\"\" In a system where I pay for my own health care and insurance, I can get a new hip and a new knew if I needed it and it would all be done within a week or 2 most likely. You have 51 week-old Charlie Gard who Britain and the wonderful EU (sarcasm) ordered to die. He did so just last week even though his parents had the money to fly him here and have a doctor perform a potentially life-saving surgery. Yep. When the government owns healthcare, they own your health. That's my other big reason for hating Obamacare. It truly is a bad thing. We have world history that can easily show anyone what it looks like if we keep going down this path. I am done for now. I am not trying to convince you of anything. That usually doesn't happen as people are set in their ways. If anything, this exchange of messages is for the person(s) out there that want to learn what is right and what is wrong. What liberty is and what it isn't. Taxing people as a way to redistribute wealth is wrong. Imposing mandates so people buy a product/service is just straight up wrong. Our income is a representation of our time spent fulfilling the responsibilities of an agreement that we voluntarily made with an employer. Our money is our time. Our time is our liberty. And if we aren't infringing on the rights of others during our time, then the government needs to stay out. Catch you later.\""
},
{
"docid": "62882",
"title": "",
"text": "It's difficult to quantify the intangible benefits, so I would recommend that you begin by quantifying the financials and then determine whether the difference between the pay of the two jobs justifies the value of the intangible benefits to you. Some Explainations You are making $55,000 per year, but your employer is also paying for a number of benefits that do not come free as a contractor. Begin by writing down everything they are providing you that you would like to continue to have. This may include: You also need to account for the FICA tax that you need to pay completely as a part time employee (normally a company pays half of it for you). This usually amounts to 7.8% of your income. Quantification Start by researching the cost for providing each item in the list above to yourself. For health insurance get quotes from providers. For bonuses average your yearly bonuses for your work history with the company. Items like stock options you need to make your best guess on. Calculations Now lets call your original salary S. Add up all of the costs of the list items mentioned above and call them B. This formula will tell you your real current annual compensation (RAC): Now you want to break your part time job into hours per year, not hours per month, as months have differing numbers of working days. Assuming no vacations that is 52 weeks per year multiplied by 20 hours, or 1040 hours (780 if working 15 hours per week). So to earn the same at the new job as the old you would need to earn an hourly wage of: The full equation for 20 hours per week works out to be: Assumptions DO NOT TAKE THIS SECTION AS REPRESENTATIVE OF YOUR SITUATION; ONLY A BALLPARK ESTIMATE You must do the math yourself. I recommend a little spreadsheet to simplify things and play what-if scenarios. However, we can ballpark your situation and show how the math works with a few assumptions. When I got quoted for health insurance for myself and my partner it was $700 per month, or $8400 per year. If we assume the same for you, then add 3% 401k matching that we'll assume you're taking advantage of ($1650), the equation becomes: Other Considerations Keep in mind that there are other considerations that could offset these calculations. Variable hours are a big risk, as is your status as a 'temporary' employee. Though on the flip side you don't need to pay taxes out of each check, allowing you to invest that money throughout the year until taxes are due. Also, if you are considered a private contractor you can write off many expenses that you cannot as a full time employee."
},
{
"docid": "393337",
"title": "",
"text": "\"I realize I'm drudging up a somewhat old post here (apologies), but I've found myself in a similar situation recently and thought I would chime in. I was considering buying a car where the loan amount would be right around 25k. I tried justifying this by saying it's ridiculously fast (I'm young and stupid, this is appealing), has AWD (nice for Colorado), and a hatchback with plenty of room for snowboards and whatnot in back. This is in comparison to my Civic which has high mileage, can hardly make it up hills due to the high altitude, sucks in snow, and has little room for anything. You have your reasons, I have mine. The thing is, our reasons are just us trying to rationalize an unwise purchase - just admit it, you know it's true. Just so you can see I'm in a similar financial situation, I'm 22, just graduated, and started a job making well over 80k with salary and signing bonus, plus 20k in RSUs on the side. After budgeting I can still put away over 2k/month after I've factored in a car payment, insurance, rent, etc etc. Yes, I could \"\"afford\"\" this car... it's just dumb though dude. Don't do it. There are better things we can do with our money. And guess what, I've been drooling over this car since middle school too.\""
},
{
"docid": "230261",
"title": "",
"text": "When buying investment properties there are different levels of passive investment involved. At one end you have those that will buy an investment property and give it to a real estate agent to manage and don't want to think of it again (apart from watching the rent come in every week). At the other end there are those that will do everything themselves including knocking on the door to collect the rent. Where is the best place to be - well somewhere in the middle. The most successful property investors treat their investment properties like a business. They handle the overall management of the properties and then have a team taking care of the day-to-day nitty gritty of the properties. Regarding the brand new or 5 to 10 year old property, you are going to pay a premium for the brand new. A property that is 5 years old will be like new but without the premium. I once bought a unit which was 2 to 3 years old for less than the original buyer bought it at brand new. Also you will still get the majority of the depreciation benefits on a 5 year old property. You also should not expect too much maintenance on a 5 to 10 year old property. Another option you may want to look at is Defence Housing. They are managed by the Department of Defence and you can be guaranteed rent for 10 years or more, whether they have a tenant in the property or not. They also carry out all the maintenance on the property and restore it to original condition once their contract is over. The pitfall is that you will pay a lot more for the management of these properties (up to 15% or more). Personally, I would not go for a Defence Housing property as I consider the fees too high and would not agree with some of their terms and conditions. However, considering your emphasis on a passive investment, this may be an option for you."
},
{
"docid": "168983",
"title": "",
"text": "\"The statement \"\"Finance is something all adults need to deal with but almost nobody learns in school.\"\" hurts me. However I have to disagree, as a finance student, I feel like everyone around me is sound in finance and competition in the finance market is so stiff that I have a hard time even finding a paid internship right now. I think its all about perspective from your circumstances, but back to the question. Personally, I feel that there is no one-size-fits-all financial planning rules. It is very subjective and is absolutely up to an individual regarding his financial goals. The number 1 rule I have of my own is - Do not ever spend what I do not have. Your reflected point is \"\"Always pay off your credit card at the end of each month.\"\", to which I ask, why not spend out of your savings? plan your grocery monies, necessary monthly expenditures, before spending on your \"\"wants\"\" should you have any leftovers. That way, you would not even have to pay credit every month because you don't owe any. Secondly, when you can get the above in check, then you start thinking about saving for the rainy days (i.e. Emergency fund). This is absolutely according to each individual's circumstance and could be regarded as say - 6 months * monthly income. Start saving a portion of your monthly income until you have set up a strong emergency fund you think you will require. After you have done than, and only after, should you start thinking about investments. Personally, health > wealth any time you ask. I always advise my friends/family to secure a minimum health insurance before venturing into investments for returns. You can choose not to and start investing straight away, but should any adverse health conditions hit you, all your returns would be wiped out into paying for treatments unless you are earning disgusting amounts in investment returns. This risk increases when you are handling the bills of your family. When you stick your money into an index ETF, the most powerful tool as a retail investor would be dollar-cost-averaging and I strongly recommend you read up on it. Also, because I am not from the western part of the world, I do not have the cultural mindset that I have to move out and get into a world of debt to live on my own when I reached 18. I have to say I could not be more glad that the culture does not exist in Asian countries. I find that there is absolutely nothing wrong with living with your parents and I still am at age 24. The pressure that culture puts on teenagers is uncalled for and there are no obvious benefits to it, only unmanageable mortgage/rent payments arise from it with the entry level pay that a normal 18 year old could get.\""
},
{
"docid": "453963",
"title": "",
"text": "I place 90% of the blame on Carly, and then the board: that bitch was primed by her contract to gut and fillet the company. When a board links a CEOs remuneration to annual profit, it makes unscrupulous individuals do things which have clear and obvious negative long term impacts, but which will hike the annual profit for THIS year and another YEAR or so, but then turn badly negative. Because Carly is a little bitch, and wanted to extract as much money as was humanly possible from her position at HP, she embarked on the most disastrous set of actions possible. The direct result is what we see now. CEO compensation should NEVER be linked to profitability for an individual year, but to their performance throughout their tenure, and then beyond. It's my belief a CEO should take a base salary of no more than 50 times the MEAN worker's salary is. NOT the average. Because that simply encourages the board to enrich the management team, rather than the workers. If the company is profitable for a single year, CEOs should receive a large bonus - say no more than 20 times the MEAN salary at the company. AND 3 years AFTER the CEO leaves, he'd be entitled to another round of payments base on long term performance of the company. This means CEOs have a duty and a very large responsibility to ensure that their replacement is actually a better CEO than they are! When board members leave, there's no incentive to them personally, to ensure their replacement is even capable, let alone excellent. The other issue I have with CEOs is their stock options, or stock grants. I believe all companies should have strict rules about stock ownership by the board. They must own a certain number of shares, and those shares must be purchased before they join the board, and demonstrably NOT by any mechanism which the company pays for. Directors and officers with no personal investment interest in the performance of the company are a concern."
},
{
"docid": "273761",
"title": "",
"text": "\"As you note, your question is inherently opinion-based. That said, if I were in your situation I would sell the stock all at once and buy whatever it is you want to buy (hopefully some index ETF or mutual fund). According to what I see, the current value of the HD stock is about $8500 and the JNJ stock is worth less than $500. With a total investment of less than $10,000, any gain you are likely to miss by liquidating now is not going to be huge in absolute terms. This is doubly true since you were given the stock, so you have no specific reason to believe it will do well at all. If you had picked it yourself based on careful analysis, it could be worth keeping if you \"\"believed in yourself\"\" (or even if you just wanted to test your acumen), but as it is the stock is essentially random. Even if you want to pursue an aggressive allocation, it doesn't make sense to allocate everything to one stock for no reason. If you were going to put everything in one stock, you'd want it to be a stock you had analyzed and picked. (I still think it would be a bad idea, but at least it would be a more defensible idea.) So I would say the risk of your lopsided allocation (just two companies, with more than 90% of the value in just one) outweighs any risk of missing out on a gain. If news breaks tomorrow that the CEO of Home Depot has been embezzling (or if Trump decides to go on the Twitter warpath for some reason), your investment could disappear. Another common way to think about it is: if you had $9000 today to buy stocks with, would you buy $8500 worth of HD and $500 worth of JNJ? If not, it probably doesn't make sense to hold them just because you happen to have them. The only potential exception to my advice above would be tax considerations. You didn't mention what your basis in the stock is. Looking at historical prices, it looks like if all the stock was 20 years old you'd have a gain of about $8000, and if all of it was 10 years old you'd have a gain of about $6000. If your tax situation is such that selling all the stock at once would push you into a higher tax bracket, it might make sense to sell only enough to fit into your current bracket, and sell the rest next year. However, I think this situation is unlikely because: A) since the stock has been held for a long time, most of the gains will be at the lower long-term rate; B) if you have solid income, you can probably afford the tax; and C) if you don't have solid income, your long-term capital gains rate will likely be zero.\""
},
{
"docid": "488820",
"title": "",
"text": "As far as I can tell, it works like this: (Note, I am assuming you were 18 on Jan 1 2009) Contribution limits: So by the end of 2012, you will have been allowed to contribute $20,000 of new money. You say you've contributed $10,000, so you still can contribute another $10,000 of new money this year (But let's assume you do not...). Now, your original $10,000 has grown to $25,000. You can withdraw this without penalty. Next year, you will be given an allotment of another $5000 of new money (bringing your total lifetime limit to $25,000 - $10,000 = $15,000 new money) PLUS, you will be allowed to re-contribute up to $25,000 of OLD money. Of course, the government doesn't make a distinction between old and new money, so the net effect is (assuming a 25k withdrawal): 2012 limit: $10 000 2013 limit: $40 000 less 2012 contributions. From http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/cntrbtn-eng.html: The TFSA contribution room is made up of: From this wording, it means the 25 k you withdraw will go to the 2013 contribution room (bullet 3). If you don't re-contribute, it will roll over into the 2014 contribution room (Under bullet 2) For correctness, I must add that I did not include any indexing of the annual amount."
},
{
"docid": "409402",
"title": "",
"text": "\"Your dec ision is actually rather more complex than it first appears. The problem is that the limits on what you can pay into the HTB ISA might make it less attractive - it will all depend. Currently, you can put £15k/year into a normal ISA (Either Cash, or Stocks and Share or a combination). The HTB ISA only allows £200/month = £2,400/year. Since you can only pay into one Cash ISA in any one year you are going to lose out on the other £12,600 that you could save and grow tax free. Having said that, the 25% contribution by the govt. is extremely attractive and probably outweighs any tax saving. It is not so clear whether you can contribute to a HTB ISA (cash) and put the rest of your allowance into a Stocks and Shares ISA - if you can, you should seriously consider doing so. Yes this exposes you to a riskier investment (shares can go down as well as up etc.) but the benefits can be significant (and the gains are tax free). As said above, the rules are that money you have paid into an ISA in earlier years is separate - you can't pay any more into the \"\"old\"\" one whilst paying into a \"\"new\"\" one but you don't have to do anything with the \"\"old\"\" ISA. But you might WANT to do something since institutions are amazingly mean (underhand) in their treatment of customers. You may well find that the interest rate you get on your \"\"old\"\" ISA becomes less competitive over time. You should (Must) check every year what rate you are getting and whether you can get a better rate in a different ISA - if there is a better rate ISA and if it allows transfers IN, you should arrange to make the trasnfer - you ABSOLUTELY MUST TRANSFER between ISAs - never even think of taking the money out and then trying to pay it in to another ISA, it must be transferred directly between ISAs. So overall, yes, stop paying into the \"\"old\"\" ISA, open a new HTB ISA next year and if you can pay in the maximum do so. But if you can afford to save more, you might be able to open a Stocks and Shares ISA as well and pay into that too (max £15k into the pair in one year). And then do not \"\"forget\"\" about the \"\"old\"\" ISA(s) you will probably need to move all the money you have in the \"\"old\"\" one(s) regualrly into new ISAs to obtain a sensible rate. You might do well to read up on all this a lot more - I strongly recommend the site http://www.moneysavingexpert.com/ which gives a lot of helpful advice about everything to do with money (no I don't have any association with them).\""
},
{
"docid": "180686",
"title": "",
"text": "If he can't manage, best is he sells it off. Its easier to manage cash. Not sure what tax you are talking about. He should have already paid tax on fair market value of the 20 flats. If the intention of Mr X is to gift to son by way of death, then yes the tax will be less. Else whenever Mr X sells there will be tax. how to manage these 20 apartments? Hire a broker. He may front run quite a few things like showing the place etc. There is a risk if he is given a free hand, he may not get good quality tenant. There are quite a few shark brokers [its unregulated] who may arm twist seeing the opportunity of an old man with 20 flats. See if you can do long term lease with companies looking for guest house etc, or certain companies who run guest house. They would like the scale, generally 3-5 years contracts are done. The rent is good and overall less hassle. The risk is most would ask to invest more in furnishing and contracts can be terminated in months notice. If the property is in large metro [Delhi/Bangalore/Chennai/etc] These places have good property management companies. Ensure that you have independent lawyer; there are certain aspects of law that may need to be studied."
},
{
"docid": "390582",
"title": "",
"text": "\"Oh look, exactly what technology folks have been saying for a while now! \"\"They're just asking for the moon, and not expecting to pay very much for it,\"\" Cappelli says. \"\"And as a result they [can't] find those people. Now that [doesn't] mean there was nobody to do the job; it just [means] that there was nobody at the price they were willing to pay.\"\" Wanted, graybeard with 20 years programming experience in obscure languages on expensive and rare systems. Starting pay $25k, expected to work 60 hours a week and be oncall all the time.\""
},
{
"docid": "293897",
"title": "",
"text": "\"Let me run some simplistic numbers, ignoring inflation. You have the opportunity to borrow up to 51K. What matters (and varies) is your postgraduation salary. Case 1 - you make 22K after graduation. You pay back 90 a year for 30 years, paying off at most 2700 of the loan. In this case, whether you borrow 2,800 or 28,000 makes no difference to the paying-off. You would do best to borrow as much as you possibly can, treating it as a grant. Case 2 - you make 100K after graduation. You pay back over 7K a year. If you borrowed the full 51, after 7 or 8 years it would be paid off (yeah, yeah, inflation, interest, but maybe that might make it 9 years.) In this case, the more you borrow the more you have to pay back, but you can easily pay it back, so you don't care. Invest your sponsorships and savings into something long term since you know you won't be needing to draw on them. Case 3 - you make 30K after graduation. Here, the payments you have to make actually impact how much disposable income you have. You pay back 810 a year, and over 30 years that's about 25K of principal. It will be less if you account for some (even most) of the payment going to interest, not principal. Anything you borrow above 25K (or the lower, more accurate amount) is \"\"free\"\". If you borrow substantially less than that (by using your sponsorship, savings, and summer job) you may be able to stop paying sooner than 30 years. But even if you borrow only 12K (or half the more accurate number), it will still be 15 years of payments. Running slightly more realistic versions of these calculations where your salary goes up, and you take interest into account, I think you will discover, for each possible salary path, a number that represents how much of your loan is really loan: everything above that is actually a grant you do not pay back. The less you are likely to make, the more of it is really grant. On top of that, it seems to me that no matter the loan/grant ratio, \"\"borrow as much as you can from this rather bizarre source\"\" appears to be the correct answer. In the cases where it's all loan, you have a lot of income and don't care much about this loan payment. Borrowing the whole 51K lets you invest all the money you get while you're a student, and you can use the returns on those investments to make the loan payments.\""
},
{
"docid": "252653",
"title": "",
"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.\""
},
{
"docid": "336550",
"title": "",
"text": "\"I don't think this is a good model to sell cloths - very costly, slow and a lot of returns. Clothing and fashion stores could easily fight this and sell more than they do now. I say \"\"could\"\" because they should have done it many many years ago. To stuck in their old-fashioned way. I would prefer to go to a Showroom (not a store) that has huge selection on display, possibly fashion expert who can help select/suggest for me, try/touch the cloths there, and what I like will be ordered and shipped to my house exactly to my size. (the old Service Merchandise mode of selling, but for clothing and fashion).\""
},
{
"docid": "203683",
"title": "",
"text": "\"I agree with all that was said here, but I have to add something. Another point I will add is \"\"stimulus: while you still can.\"\" At some point you can no longer take on more debt even if you wanted to. If global and domestic investors think you are going to be a risky investment then they cut you off. The people who argue that Greece shouldn't be implementing austerity don't seem to understand the situation they are in. Far fewer wanted to lend money to them even before they started their \"\"haircut\"\" shanigans. People think the government should spend more, but how are they supposed to do that if no one wants to lend more money? They also criticize Germany and co. for insisting on austerity. What they sometimes seem to forget is that Germany doesn't have an infinite supply of money to bail out Greece. They have their own bills to pay and any politician who was dumping ever larger amounts of money into Greece would be looking at being voted out or even assassinated if they let things get too bad for the German people (I am being a little hyperbole here to make a point, but I honestly feel it is a very real possibility in this kind of economic climate). At this point there is no reason to discuss whether Greece should choose to spend more money, because that choice is no longer even available to them. We are not as bad off as Greece right now. We should spend more money but we need results. We need to identify the structural problems ailing our economy and get them fixed with the money we have. Direct spending isn't always a great idea if it is done in a nonsensical way. People defending the bike paths and other shit argue that all spending is good in a depression. I am not against bike paths and roads, because they can certainly create jobs and generate value to the economy. But every dollar you spend on them is one dollar that can't be spent on the biggest problems (assuming of course that kind of infrastructure isn't one of those). After spending trillions of dollars on spending, our GDP is still growing at only 2%. It was increasing about 3.5% every year from 1947-2012. Our jobs creation rate is still less than half the 250,000 jobs a month we created in the last 10-20 years (can't remember the exact number). We definitely need to spend differently to address the problems and get people back to work. As curtiscarlson said, we need middle class jobs. We particularly need those among America's youth so they can move out of their parents' houses and buy their own, which could really help the housing economy and create jobs for the lower class in turn and get us out of this depression. My thoughts are that we should use stimulus in new new industries such as those in high tech. I intentionally stated that very broadly, because we have many millenials who need to get to work. Investing in different high growth industries could create jobs for people in any number of occupations. But if we don't do that while people still want to lend us money then we are going to be fucked in a few years when we are out of options and land in the same position as Greece. edit:let me clarify the infrastructure thing. There was a town that spent millions rebuilding a sidewalk that was five years old that no one in the community wanted. Everyone there thought it was a nonsensical way of spending tax dollars and would have thought that money could have been better spent in another community that really needed problems resolved. Wouldn't it have made more sense to spend money somewhere where it was needed? then you could have created jobs AND created lasting value to an economy by fixing a structural problem that was holding the economy back. Why don't our politicians realize this?\""
},
{
"docid": "156253",
"title": "",
"text": "At 19 years old you can and should be investing to see your money grow over the years. Reinvesting the dividends does get to be pretty significant because they compound over many years. Historically this dividend compounding accounts for about half of the total gains from stocks. At 70 years old I am not investing to see my money grow, although that's nice. I am investing to eat. I live on the dividends, and they tend to come in fairly reliably even as the market bounces up and down. For stocks selected with this in mind I get about 4% per year from the dividends."
},
{
"docid": "233100",
"title": "",
"text": "\"Goodness, I wish I could put away half my paycheck. Not to rain on your parade, but a 6-month emergency fund is not quite \"\"very good.\"\" It is the typical starting time frame. Personally, I would feel more comfortable with a 2+ year fund. That is a bit extreme, but only because many of us can barely seem to make it around to a 6-month fund. So, we focus on the more attainable goal. I say you do all three. Make saving money your priority, but do enjoy some of it; in moderation. Do not plan on making any big purchases with it, but know that you will eventually be able able to do so. Money not spent is worthless Idle money is worthless. Make some -- hopefully -- prudent investments with some of your money. A small portion of that investment portfolio can/should be in speculative investments. Maybe even as much as 20% of your investment portfolio, since you are young. Consider that money gone and you will hopefully be surprised by one of those speculative investments. That is the crucial point: earmark a small portion of your investment portfolio which you are willing to lose. However, do not gamble with it. Research the hot emerging technologies, for example, and find a way to make an investment. So, in summary: You may have more money that you know what do with, right now. However, that does not mean you need to go out and spend it all. Trust me, as you get older you will think of plenty of good uses for that money.\""
},
{
"docid": "469731",
"title": "",
"text": "\"This is unfortunately the truth, and I spend a lot of time with my clients trying to help them through this process. One of the key metrics that banks judge themselves on is \"\"products per household.\"\" The more things you have attached to them, the less likely you are to leave, and they deliberately tie you in with more and more services, e.g. direct deposit, billpay, debit cards, credit cards, etc. If you want to switch but are held back by the daunting task of all the stuff you need to do, it's easier than most people think, and bankers at those smaller banks who are getting your accounts should be more than happy to do about 80% of the work for you. *The other 20% can only be done by you personally due to privacy laws, but your banker can guide you through that too. A prime example: A customer of mine wanted to switch, but he didn't want to go to the old bank to actually wait in line and go through with the nonsense of actually closing the account. I see that anxiety over confrontation a lot, by the way. So I have saved on my desktop a form letter is a simple request by the customer to close their account at 2B2F bank. They sign it, I notarize it, and send it off to the branch. The branch of receipt has to close the account per the request. Before we send that letter, we get everything set up with the new bank, draw the old one down to $10 or so, and give instructions to the old bank to remit a check payable to the customer and mail it to me. Then the old account is closed, and I just deposit that nominal amount into the customer's account. The customer literally never has to set foot in the old bank again. The unfortunate thing is that not everyone knows that these kinds of things are even possible: that your banker should help you with this stuff, or that you can do pretty much everything remotely. Plus, if you look at the smaller banks and CUs these days, they have eliminated the need or ubiquity (i.e. \"\"but their ATMs are everywhere!\"\") because a good bank or CU will never allow you to get charged to get your money, they will give you the direct line and email address of your branch manager, and a lot of places have mobile apps that allow you to deposit checks remotely.\""
},
{
"docid": "17731",
"title": "",
"text": "\"I'm not downvoting you because I can relate, in a way, to your post and I think this is a good topic to have on this site. We had a question a couple weeks ago where someone, like you, took some friend's money to trade with but didn't know how to give the money back or calculate the net-return. It is not smart to take and invest other people's money when you have zero industry experience and when you do not understand the legal requirements of handling someone else's money. Within the first 12 months of my brokerage account I had returned something like 150%, I doubled my money plus a bit. The next year was something like -20%; if I remember correctly the next year was worse, then up again for year four. Year 1 I thought I was a genius and had figured this whole thing out, year 2 put me in my place and year 3 kicked me while I was down. You have 6 months of pretty solid returns, good for you. I don't think that means it's time to set up shop. Really, I think you need to sit down and think long and hard about the implications, legal and otherwise, of holding other people's money. Running a fund is significantly different than trading your own money. Retail investors don't, typically, have a good memory. Great, you made me 17% last year, and 25% the year before but right now I'm down 10%, so give me my money back because I would have been better off in an savings account this year. This is why index funds are in vogue right now. Lots of people have had money in active funds that have trailed or matched the \"\"safe and passive\"\" index funds, so they're angry. Retail folks get jittery the instant they lose money, no matter how much. You need to be ready to contend with \"\"What have you done for me lately?\"\" the instant something turns negative, no matter how positive your returns have been. At your stage in the game you should get a job and continue putting your own money in to your own system and be ready to lose some of it. I doubt there is anyone outside your immediate family who will hand a random 18 year-old kid any significant amount of money to trade their system based on 6 months of success; certainly not more than you have in there currently.\""
}
] |
4539 | How should I save money if the real interest rate (after inflation) is negative? | [
{
"docid": "370879",
"title": "",
"text": "Inflation protected securities (i-bonds or TIPS). TIPS stands for Treasury Inflation Protected Securities. By very definition, they tend to protect your savings against inflation. They won't beat inflation, but will keep up with it. TIPS or iBonds have two parts. A fixed interest part and a variable interest portion which varies depending upon the current rates. The combined rate would match the inflation rate. They can be bought directly from the treasury (or from a broker or bank who might charge a commission)"
}
] | [
{
"docid": "60088",
"title": "",
"text": "When evaluating a refinance, it all comes down to the payback. Refinancing costs money in closing costs. There are different reasons for refinancing, and they all have different methods for calculating payback. One reason to finance is to get a lower interest rate. When determining the payback time, you calculate how long it would take to recover your closing costs with the amount you save in interest. For example, if the closing costs are $2,000, your payback time is 2 years if it takes 2 years to save that amount in interest with the new interest rate vs. the old one. The longer you hold the mortgage after you refinance, the more money you save in interest with the new rate. Generally, it doesn't pay to refinance to a lower rate right before you sell, because you aren't holding the mortgage long enough to see the interest savings. You seem to be 3 years away from selling, so you might be able to see some savings here in the next three years. A second reason people refinance is to lower their monthly payment if they are having trouble paying it. I see you are considering switching from a 15 year to a 30 year; is one of your goals to reduce your monthly payment? By refinancing to a 30 year, you'll be paying a lot of interest in your first few years of payments, extending the payback time of your lower interest rate. A third reason people refinance is to pull cash out of their equity. This applies to you as well. Since you are planning on using it to remodel the home you are trying to sell, you have to ask yourself if the renovations you are planning will payoff in the increased sale price of your home. Often, renovations don't increase the value of their home as much as they cost. You do renovations because you will enjoy living in the renovated home, and you get some of your money back when you sell. But sometimes you can increase the value of your home by enough to cover the cost of the renovation. Talk to a real estate agent in your area to get their advice on how much the renovations you are talking about will increase the value of your home."
},
{
"docid": "553718",
"title": "",
"text": "Your wealth will go up if your effective rate after taxes is less than the inflation rate. That is, if your interest rate is R and marginal tax rate is T, then you need R*(1-T) to be less than inflation to make a loan worth it. Lately inflation has been bouncing around between 1% and 1.8%. Let's assume a 25% tax rate. Is your interest rate lower than between 1.3% and 2.4%? If not, don't take out a loan. Another thing to consider: when you take out a loan you have to do a ton of extra stuff to make the lender happy (inspections, appraisals, origination charges, etc.). These really add up and are part of the closing costs as well as the time/trouble of buying a house. I recently bought my house using 100% cash. It was 2 weeks between when I agreed to a price to when the deal was sealed and my realtor said I probably saved about $10,000 in closing costs. I think she was exaggerating, but it was a lot of time and money I saved. My final closing costs were only a few hundred, not thousands, of dollars. TL;DR: Loans are for suckers. Avoid if possible."
},
{
"docid": "111580",
"title": "",
"text": "\"The simplest argument for overpayment is this: Let's suppose your fixed rate mortgage has an interest rate of 4.00%. Every £1 you can afford to overpay gives you a guaranteed effective return of 4.00% gross. Yes your monthly mortgage payment will stay the same; however, the proportion of it that's paying off interest every month will be less, and the amount that's actually going into acquiring the bricks and mortar of your home will be greater. So in a sense your returns are \"\"inverted\"\" i.e. because every £1 you overpay is £1 you don't need to keep paying 4% a year to continue borrowing. In your case this return will be locked away for a few more years, until you can remortgage the property. However, compared to some other things you could do with your excess £1s, this is a very generous and safe return that is well above the average rate of UK inflation for the past ten years. Let's compare that to some other options for your extra £1s: Cash savings: The most competitive rate I can currently find for instant access is 1.63% from ICICI. If you are prepared to lock your money away until March 2020, Melton Mowbray Building Society has a fixed rate bond that will pay you 2.60% gross. On these accounts you pay income tax at your marginal rate on any interest received. For a basic rate taxpayer that's 20%. If you're a higher rate taxpayer that means 40% of this interest is deducted as tax. In other words: assuming you pay income tax at one of these rates, to get an effective return of 4.00% on cash savings you'd have to find an account paying: Cash ISAs: these accounts are tax sheltered, so the income tax equation isn't an issue. However, the best rate I can find on a 4 year fixed rate cash ISA is 2.35% from Leeds Building Society. As you can see, it's a long way below the returns you can get from overpaying. To find returns such as that you would have to take a lot more risk with your money – for example: Stock market investments: For example, an index fund tracking the FTSE 100 (UK-listed blue chip companies) could have given you a total return of 3.62% over the last 3 years (past performance does not equal future returns). Over a longer time period this return should be better – historical performance suggests somewhere between 5 to 6% is the norm. But take a closer look and you'll see that over the last six months of 2015 this fund had a negative return of 6.11%, i.e. for a time you'd have been losing money. How would you feel about that kind of volatility? In conclusion: I understand your frustration at having locked in to a long term fixed rate (effectively insuring against rates going up), then seeing rates stay low for longer than most commentators thought. However, overpaying your mortgage is one way you can turn this situation into a pretty good deal for yourself – a 4% guaranteed return is one that most cash savers would envy. In response to comments, I've uploaded a spreadsheet that I hope will make the numbers clearer. I've used an example of owing £100k over 25 years at an unvarying 4% interest, and shown the scenarios with and without making a £100/month voluntary overpayment, assuming your lender allows this. Here's the sheet: https://www.scribd.com/doc/294640994/Mortgage-Amortization-Sheet-Mortgage-Overpayment-Comparison After one year you have made £1,200 in overpayments. You now owe £1,222.25 less than if you hadn't overpaid. After five years you owe £6,629 less on your mortgage, having overpaid in £6,000 so far. Should you remortgage at this point that £629 is your return so far, and you also have £6k more equity in the property. If you keep going: After 65 months you are paying more capital than interest out of your monthly payment. This takes until 93 months without overpayments. In total, if you keep up £100/month overpayment, you pay £15,533 less interest overall, and end your mortgage six years early. You can play with the spreadsheet inputs to see the effect of different overpayment amounts. Hope this helps.\""
},
{
"docid": "105781",
"title": "",
"text": "\"A dividend is a cash disbursement from the company. The value of the company goes down the same amount of the dividend, so it is analogous to having money in a savings account and taking a withdrawal every month. Obviously you are going to have less in the end than if you just kept the money in the account. suppose that I own 10 different stocks, and don't reinvest dividends, but keep them on account, and each month or two, as I add more money to invest, either in one of my existing stocks, or perhaps something new, I add whichever dividend amount is currently available in cash to my new purchase, would this strategy provide the same results? Roughly, yes. Reinvesting dividends is essentially buying more stock at the lower price, which is a net zero effect in total balance. So if you invested in the same stocks, yes you'd be in the same place. If you invested in different stocks, then you would have a performance difference depending on what you invested in. The risk is the temptation to take the cash dividend and not reinvest it, but take it in cash, thereby reducing your earning power. That is, is there some particular reason that the brokers are recommending automatically reinvesting dividends as opposed to reinvesting them manually, perhaps not always in the same item? I'd like to think that they're looking after your best interest (and they might be), but the cynical part of me thinks that they're either trying to keep your business by increasing your returns, or there's some UK regulation I'm not aware of that requires them to disclose the effect of reinvesting dividends. £100 invested in the UK stock market since 1899 would have grown into just £177 after adjusting for inflation. This figure seems ludicrous to me. I haven't actually measured what the historical returns on the \"\"UK market\"\" are, but that would mean an annualized return (adjusted for inflation) of just 0.5%. Either UK stocks pay a ridiculous amount of dividends or there's something wrong with the math. EDIT I still have not found a definitive source for the real UK market return, but according to this inflation calculator, £100 in 1899 would equate to almost £12,000 today, for an average inflation rate of 4.14 percent, which would put the CAGR of the UK market at about 4.9%, which seems reasonable. The CAGR with dividend reinvestment would then be about 9.1%, making dividend reinvestment a no-brainer in the UK market at least.\""
},
{
"docid": "190225",
"title": "",
"text": "If you have no credit history but you have a job, buying an inexpensive used car should still be doable with only a marginally higher interest rate on the car. This can be offset with a cosigner, but it probably isn't that big of a deal if you purchase a car that you can pay off in under a year. The cost of insurance for a car is affected by your credit score in many locations, so regardless you should also consider selling your other car rather than maintaining and insuring it while it's not your primary mode of transportation. The main thing to consider is that the terms of the credit will not be advantageous, so you should pay the full balance on any credit cards each month to not incur high interest expenses. A credit card through a credit union is advantageous because you can often negotiate a lower rate after you've established the credit with them for a while (instead of closing the card and opening a new credit card account with a lower rate--this impacts your credit score negatively because the average age of open accounts is a significant part of the score. This advice is about the same except that it will take longer for negative marks like missed payments to be removed from your report, so expect 7 years to fully recover from the bad credit. Again, minimizing how long you have money borrowed for will be the biggest benefit. A note about cosigners: we discourage people from cosigning on other people's loans. It can turn out badly and hurt a relationship. If someone takes that risk and cosigns for you, make every payment on time and show them you appreciate what they have done for you."
},
{
"docid": "583678",
"title": "",
"text": "The relation between inflation and stock (or economic) performance is not well-understood. Decades ago, economists thought inflation corresponded with periods of high growth and good real returns, but since then we have had periods of low inflation and high growth and high inflation with low growth. It is generally understood among current economists that inflation levels (especially expected inflation) are neither indicative nor causative of real stock returns. Many things can affect inflation, and economic performance is only a minor one. Many things can cause economic performance, and inflation is only a minor one. It's not clear whether the overall relation between inflation and real stock returns is positive or negative. Notice, however, that in principle stock returns are real. That is, the money companies make is in inflated dollars so profit and dividends for a company whose prospects have not changed should go up and down at the same rate as inflation. This would mean if inflation goes up by 5% and nothing else changes, you would expect stock prices to go up by the same proportion so you wouldn't have strong feelings about inflation one way or the other. In real life stock prices will go up by either more or less than 5% but I'm not comfortable saying which, on average. Bottom line: current levels of inflation can't really be used to predict real stock returns, so you shouldn't let current inflation guide your decision about whether to buy stock."
},
{
"docid": "82627",
"title": "",
"text": "To get rich in a short time, it's more likely what you want to do is go into business. You could go into a non-investment business such as opening a restaurant or starting a tech company, of course. Warren Buffett was working in investing, which is quite a bit different than just buying stocks: The three ways to get rich investing I can think of are: I think the maximum real (after-inflation) return you can really count on over a lot of years is in the 5-6% range at most, maybe less. Here's a post where David Merkel argues 3-4% (assuming cash interest is close to zero real return): http://alephblog.com/2009/07/15/the-equity-premium-is-no-longer-a-puzzle/ At that rate you can double every 10-15 years. Any higher rate is probably risking much lower returns. I often post this argument against that on investment questions: http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/ Agree with you that lots of people seem to think they can make up for not saving money by picking a winning investment. Lots of people also use the lottery as a retirement strategy. I'm not sure this is totally irrational, if for some reason someone just can't save. But I'm sure it will fail for almost all the people who try it."
},
{
"docid": "229572",
"title": "",
"text": "The only real consideration I would give to paying off the debt as slowly as possible is if inflation were much higher than it is now. If you had a nice medium to low interest (fixed rate) loan, like yours, and then inflation spiked to 7-8%, for example, then you're better off not paying it now because it's effectively making you money (and then when inflation calms back down, you pay it off with your gains). However, with a fairly successful and active Federal Reserve being careful to avoid inflation spikes, it seems unlikely that will occur during your time owing this debt - and certainly isn't anywhere near that point now. Make sure you're saving some money not for the return but for the safety net (put it in something very safe), and otherwise pay off your debt."
},
{
"docid": "72237",
"title": "",
"text": "No that is your implicit return if you hold it to maturity per year. That yield is quoted per annum. You will receive semi-annual payments base on the coupon of whatever off the run 10yr you buy. If your coupon is 2% then you will receive $10 bi-yearly. Mind you, buying a 10 year in this environment will yield a negative real return, meaning after inflation over 10 years you will have your entire principal back, but inflation adjusted it will have less purchasing power than today, meaning there isn't enough yield to make the purchase worth it. Also about your upward slope question, yes the 30 will yield more than the 2,5,7,10. This is because longer time means more risk. Will in the future the USA be perceived as near riskless? There is also interest rate risk, and liquidity risk."
},
{
"docid": "116700",
"title": "",
"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.\""
},
{
"docid": "133486",
"title": "",
"text": "\"Keep in mind that the Federal Reserve Chairman needs to be very careful with his use of words. Here's what he said: It is arguable that interest rates are too high, that they are being constrained by the fact that interest rates can't go below zero. We have an economy where demand falls far short of the capacity of the economy to produce. We have an economy where the amount of investment in durable goods spending is far less than the capacity of the economy to produce. That suggests that interest rates in some sense should be lower rather than higher. We can't make interest rates lower, of course. (They) only can go down to zero. And again I would argue that a healthy economy with good returns is the best way to get returns to savers. So what does that mean? When he says that \"\"we can't make interest rates lower\"\", that doesn't mean that it isn't possible. He's saying that our demand for goods is lower than our ability to produce them. Negative interest would actually make that problem worse -- if I know that things will cost less in a month, I'm not going to buy anything. The Fed is incentivizing spending by lowering the cost of capital to zero. By continuing this policy, they are eventually going to bring on inflation, which will reduce the value of the currency -- which gives people and companies that are sitting on money an dis-incentive to continue hoarding it.\""
},
{
"docid": "134764",
"title": "",
"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.\""
},
{
"docid": "107152",
"title": "",
"text": "From my experience and friends' experiences, I can say that there are advantages and disadvantages for paying off your mortgage quickly. Basically, it depends on these factors: the type of the mortgage, its interest rate, your financial stability, your skills in making investments and other outside factors, such as inflation, liquidity, oppurtunity cost, etc. Paying it off means you save on interest ratings, you decrease investment risks and your investment rates are taxable. Disadvantages are that you cannot use this money for investing, you cannot use this money for tax deductions and that in a state of inflation, not paying it off in advance could save you a lot of money. However, I always recommend to read some more on websites that deal with mortgages, and speak with the mortgage expert in your bank.Just acquire enough information to make a good assessment. An interesting article on this topic - The Advantages and Disadvantages of Paying Off Your Mortgage"
},
{
"docid": "445887",
"title": "",
"text": "\"I'm a little confused on the use of the property today. Is this place going to be a personal residence for you for now and become a rental later (after the mortgage is paid off)? It does make a difference. If you can buy the house and a 100% LTV loan would cost less than 125% of comparable rent ... then buy the house, put as little of your own cash into it as possible and stretch the terms as long as possible. Scott W is correct on a number of counts. The \"\"cost\"\" of the mortgage is the after tax cost of the payments and when that money is put to work in a well-managed portfolio, it should do better over the long haul. Don't try for big gains because doing so adds to the risk that you'll end up worse off. If you borrow money at an after-tax cost of 4% and make 6% after taxes ... you end up ahead and build wealth. A vast majority of the wealthiest people use this arbitrage to continue to build wealth. They have plenty of money to pay off mortgages, but choose not to. $200,000 at 2% is an extra $4000 per year. Compounded at a 7% rate ... it adds up to $180k after 20 years ... not exactly chump change. Money in an investment account is accessible when you need it. Money in home equity is not, has a zero rate of return (before inflation) and is not accessible except through another loan at the bank's whim. If you lose your job and your home is close to paid off but isn't yet, you could have a serious liquidity issue. NOW ... if a 100% mortgage would cost MORE than 125% of comparable rent, then there should be no deal. You are looking at a crappy investment. It is cheaper and better just to rent. I don't care if prices are going up right now. Prices move around. Just because Canada hasn't seen the value drops like in the US so far doesn't mean it can't happen in the future. If comparable rents don't validate the price with a good margin for profit for an investor, then prices are frothy and cannot be trusted and you should lower your monthly costs by renting rather than buying. That $350 per month you could save in \"\"rent\"\" adds up just as much as the $4000 per year in arbitrage. For rentals, you should only pull the trigger when you can do the purchase without leverage and STILL get a 10% CAP rate or higher (rate of return after taxes, insurance and other fixed costs). That way if the rental rates drop (and again that is quite possible), you would lose some of your profit but not all of it. If you leverage the property, there is a high probability that you could wind up losing money as rents fall and you have to cover the mortgage out of nonexistent cash flow. I know somebody is going to say, \"\"But John, 10% CAP on rental real estate? That's just not possible around here.\"\" That may be the case. It IS possible somewhere. I have clients buying property in Arizona, New Mexico, Alberta, Michigan and even California who are finding 10% CAP rate properties. They do exist. They just aren't everywhere. If you want to add leverage to the rental picture to improve the return, then do so understanding the risks. He who lives by the leverage sword, dies by the leverage sword. Down here in the US, the real estate market is littered with corpses of people who thought they could handle that leverage sword. It is a gory, ugly mess.\""
},
{
"docid": "471472",
"title": "",
"text": "A 401(k) is just a container. Like real-world containers (those that are usually made out of metal), you can put (almost) anything you want in it. Signing up for your employer's match is a great thing to do. Getting into the habit of saving a significant portion of your take-home pay early in your career is even better; doing so will put you lightyears ahead of lots of people by the time you approach retirement age. Even if you love your job, that will give you options you otherwise wouldn't have. There is no real reason why you can't start out by putting your retirement money in a short-term money-market fund within that 401(k). By doing so you will only earn a pittance, probably not even enough to keep up with inflation in today's economic environment, but at this point in your (savings and investment) career, that doesn't really matter much. What really matters is getting into the habit of setting that money aside every single time you get paid and not thinking much of it. And that's a lot easier if you start out early, especially at a time when you likely have received a significant net pay increase (salaried job vs college student). I know, everyone says to get the best return you can. But if you are just starting out, and feel the need to be conservative, then don't be afraid to at least start out that way. You can always rebalance into investment classes that have the potential for higher return -- and correspondingly higher volatility -- in a few years. In the meantime, you will have built a pretty nice capital that you can move into the stock market eventually. The exact rate of return you get in the first decade matters a lot less than how much money you set aside regularly and that you keep contributing. See for example Your Investment Plan Means Nothing If You Don’t Do This by Matt Becker (no affiliation), which illustrates how it takes 14 years for saving 5% at a consistent 10% return to beat saving 10% at a consistent 0% return. So look through what's being offered in terms of low-risk investments within that 401(k). Go ahead and pick a money-market fund or a bond fund if you want to start out easy. If it gets you into the habit of saving and sticking with it, then the overall return will beat the daylights out of the return you would get from a good stock market fund if you stop contributing after a year or two. Especially (but not only) if you do pick an interest-bearing investment, do make sure to pick one that has as low fees as you can possibly find for what you want, because otherwise the fees are going to eat a lot into your potential returns, benefiting the bank or investment house rather than yourself. Just keep an open mind, and very strongly consider shifting at least some of your investments into the stock market as you grow more comfortable over the next several years. You can always keep a portion of your money in various interest-bearing investments to act as a cushion in case the market slumps."
},
{
"docid": "257413",
"title": "",
"text": "Large companies whose shares I was looking at had dividends of the order of ~1-2%, such as 0.65%, or 1.2% or some such. My savings account provides me with an annual return of 4% as interest. Firstly inflation, interest increases the numeric value of your bank balance but inflation reduces what that means in real terms. From a quick google it looks like inflation in india is currently arround 6% so your savings account is losing 2% in real terms. On the other hand you would expect a stable company to maintain a similar value in real terms. So the dividend can be seen as real terms income. Secondly investors generally hope that their companies will not merely be stable but grow in value over time. Whether that hope is rational is another question. Why not just invest in options instead for higher potential profits? It's possible to make a lot of money this way. It's also possible to lose a lot of money this way. If your knowlage of money is so poor you don't even understand why people buy stocks there is no way you should be going near the more complicated financial products."
},
{
"docid": "451501",
"title": "",
"text": "Is my financial status OK? If not, how can I improve it? I'm going to concentrate on this question, particularly the first half. Net income $4500 per month (I'm taking this to be after taxes; correct me if wrong). Rent is $1600 and other expenses are up to $800. So let's call that $2500. That leaves you $2000 a month, which is $24,000 a year. You can contribute up to $18,000 a year to a 401k and if you want to maintain your income in retirement, you probably should. The average social security payment now is under $1200. You have an above average income but not a maximum income. So let's set that at $1500. You need an additional income stream of $900 a month in retirement plus enough to cover taxes. Another $5500 for an IRA (probably a Roth). That's $23,500. That leaves you $500 a year of reliable savings for other purposes. Another $5500 for an IRA (probably a Roth). That's $23,500. That leaves you $500 a year of reliable savings for other purposes. You are basically even. Your income is just about what you need to cover expenses and retirement. You could cover a monthly mortgage payment of $1600 and have a $100,000 down payment. That probably gets you around a $350,000 house, although check property taxes. They have to come out of the $1600 a month. That doesn't seem like a lot for a Bay area house even if it would buy a mansion in rural Mississippi. Perhaps think condo instead. Try to keep at least $15,000 to $27,000 as emergency savings. If you lose your job or get stuck with a required expense (e.g. a major house repair), you'll need that money. You don't have enough income to support a car unless it saves you money somewhere. $500 a year is probably not going to cover insurance, parking, gas, and maintenance. It's possible that you could tighten up your expenses, but in my experience, people are more likely to underestimate their expenses than overestimate. That's why I'm saying $2500 (a little above the high end) rather than $2000 (your low end estimate). If things are stable, wait a year and evaluate. Track your actual spending. Ask yourself if you made any large purchases. Your budget should include an appliance (TV, refrigerator, washer/dryer, etc.) a year. If you're not paying for that now (included in rent?), then you need to allow for it in your ownership budget. I do not consider an ESPP to be a reliable investment vehicle. Consider the Enron possibility. You wake up one day and find out that there is no actual money. Your stock is now worthless. A diversified portfolio can survive this. If you lose your job and your investment, you'll be stuck with just your savings. Hopefully you didn't just tie them up in a house that you might have to sell to take your next job in a different location. An ESPP might work as savings for the house. If something goes wrong, don't buy the house. But it's not retirement or emergency savings. I would say that you are OK but could be better. Get your retirement savings started. That does two things. One, it gives you money for retirement. Two, it keeps you from having extra money now when it is easy to develop expensive habits. An abrupt drop from $4500 in spending to $1200 will hurt. A smooth transition from $2500 to $2500 is what you would like to see. You are behind now, but you have the opportunity to catch up for a few years. Work out how much you'll get from Social Security and how much you need to cover your typical expenses with the occasional emergency. Expect high health care costs in retirement. Medicare covers a lot but not everything, and health care is only getting more expensive. Don't forget to assume higher taxes in the future to help cover that expense and the existing debt. After a few years of catch up contributions, work out your long term plan assuming a reasonable real (after inflation) rate of return. If you can reduce the $23,500 in retirement contributions then, that's OK. But be pessimistic. Most people overestimate good things and underestimate bad things. It's much better to have extra than not enough. A 401k comes with an administrator and your choice of mutual funds. Try for diversification. Some money in bonds (25% to 30%). The remainder in stocks. Look for index funds. Try for a mix of value and growth, as they'll do better at different times. As you approach retirement, you can convert some of that into shorter term, lower yield investments. The rough rule of thumb is to have two to five years of withdrawals in short term investments like money market funds. But that's more than twenty years off. You have more choices with an IRA. In particular, you can choose your own administrator. But I'd keep the same stock/bond mix and stick to index funds if you're not interested in researching the more complex options. You may want to invest your IRA in a growth fund and your 401k in value funds and bonds. Then balance the stock/bond mix across both. When you invest each year, look at the underrepresented funds and add the most to them. So if bonds had a bad year and didn't keep pace, invest in bonds. They're probably cheap. You don't want to rebalance frequently, but once a year might be a good pace. That's about how often you should invest in an IRA, so that can be a good time. I'll let the others answer on the financial advisor part."
},
{
"docid": "277548",
"title": "",
"text": "\"Personally I would have a hard time \"\"locking up\"\" the money for that very little return. I would probably rather earn no interest in favor of the liquidity. However, you should find out what the early removal penalties are. If those are minimal and you are very confident that you will not need the money over the term period then its definitely better to earn something rather than nothing. If inflation is negative you aren't out as much not getting any interest as you would be normally. Consider that in 2014 US inflation was 0.8%. Online liquid savings accounts pay about 1%. so that's only .2% positive. In comparison at -.4% you are better off with no interest than a US person putting their money in a paying savings account. Keep in mind though that inflation can change month to month so just because June was negative doesn't mean the year will be that way. Not sure your ability to invest in the US market or what stable dividend payers may exist in Sweden.... You said you are risk averse, but it may be worth it to find a stable dividend paying fund. I like one called PFF, it pays a monthly dividend of 6% and over 5 years stock price is very stable. Of course this is quite a significant jump in risk because you can lose money if markets tank (PFF is down over 10 years quite a bit). Maybe splitting up the money and diversifying?\""
},
{
"docid": "470587",
"title": "",
"text": "\"The optimal down payment is 100%. The only way you would do anything else when you have the cash to buy it outright is to invest the remaining money to get a better return. When you compare investments, you need to take risk into account as well. When you make loan payments, you are getting a risk free return. You can't find a risk-free investment that pays as much as your car loan will be. If you think you can \"\"game the system\"\" by taking a 0% loan, then you will end up paying more for the car, since the financing is baked into the sales [price in those cases (there is no such thing as free money). If you pay cash, you have much more bargaining power. Buy the car outright (negotiating as hard as you can), start saving what you would have been making as a car payment as an emergency fund, and you'll be ahead of the game. For the inflation hedge - you need to find investments that act as an inflation hedge - taking a loan does not \"\"hedge\"\" against inflation since you'll still be paying interest regardless of the inflation rate. The fact that you'll be paying slightly less interest (in \"\"real\"\" terms) does not make it a hedge. To answer the actual question, if your \"\"reinvestment rate\"\" (the return you can get from investing the \"\"borrowed\"\" cash) is less than the interest rate, then the more you put down, the greater your present value (PV). If your reinvestment rate is less than the interest rate, then the less you put down the better (not including risk). When you incorporate risk, though, the additional return is probably not worth the risk. So there is no \"\"optimal\"\" down payment in between those mathematically - it will depend on how much liquid cash you need (knowing that every dollar that you borrow is costing you interest).\""
}
] |
4539 | How should I save money if the real interest rate (after inflation) is negative? | [
{
"docid": "275925",
"title": "",
"text": "\"(Real) interest rates are so low because governments want people to use their money to improve the economy by spending or investing rather than saving. Their idea is that by consuming or investing you will help to create jobs that will employ people who will spend or invest their pay, and so on. If you want to keep this money for the future you don't want to spend it and interest rates make saving unrewarding therefore you ought to invest. That was the why, now the how. Inflation protected securities, mentioned in another answer, are the least risk way to do this. These are government guaranteed and very unlikely to default. On the other hand deflation will cause bigger problems for you and the returns will be pitiful compared with historical interest rates. So what else can be done? Investing in companies is one way of improving returns but risk starts to increase so you need to decide what risk profile is right for you. Investing in companies does not mean having to put money into the stock market either directly or indirectly (through funds) although index tracker funds have good returns and low risk. The corporate bond market is lower risk for a lesser reward than the stock market but with better returns than current interest rates. Investment grade bonds are very low risk, especially in the current economic climate and there are exchange traded funds (ETFs) to diversify more risk away. Since you don't mention willingness to take risk or the kind of amounts that you have to save I've tried to give some low risk options beyond \"\"buy something inflation linked\"\" but you need to take care to understand the risks of any product you buy or use, be they a bank account, TIPS, bond investments or whatever. Avoid anything that you don't fully understand.\""
}
] | [
{
"docid": "152603",
"title": "",
"text": "Don't forget inflation. With a Roth 401k (or IRA), you don't pay any taxes on inflationary or real gains. You pay taxes at the beginning and then no more taxes (unless you invest money after you distributed from it). With a regular, taxable investment account (not a 401k or IRA), you pay taxes on the initial amount. And then you pay taxes on the gains, both inflationary and real. So you effectively pay taxes on the inflated principal twice. Once at initial earning and once when it shows up as inflationary gains. I'll give an example later. With a traditional 401k (or IRA), you pay no taxes on the initial amount. You pay taxes on the distributed amount. That includes taxes on gains, but it only taxes them once, not twice. All the taxes are paid at distribution time. Here's a semirealistic example. This is not a real example with real numbers, but the numbers shouldn't be ridiculously off. They could happen. I'm going to ignore variation and pretend that all the numbers will be the same each year so as to simplify the math. So you pay a 25% marginal tax rate and want to invest $12,000 plus any tax savings. Roth: $12,000 principal Traditional IRA (Trad): $16,000 principal with $4000 in tax savings Taxable Investment Account (TIA): $12,000 principal Let's assume that you make an 8% rate of return and inflation is 3%. Both numbers are possible, although higher and lower numbers have occurred in the past. That gives you returns of $960 for the Roth and TIA cases and a return of $1280 for the Trad case. Pay no annual taxes on the Roth or Trad cases. Pay 25% marginal tax on the TIA case, that's $240. Balances after one year: Roth: $12,960 Trad: $17,280 TIA: $12,720 Inflation decreases the value of the Roth and TIA cases by $360 in the Roth and TIA cases. And by $480 in the Trad case. Ten years of inflationary gains (cumulative): Roth: $5354 Trad: $7138 TIA: $4872 Net buildup (including inflationary gains): Roth: $25,907 Trad: $34,543 TIA: $23,168 Real value (minus inflation to maintain spending power): Roth: $20,554 Trad: $27,405 TIA: $18,109 Now take out $3000 per year, after taxes. That's $3000 in the the Roth and TIA cases, as you already paid the taxes. In the Trad case, that's $4000 because you have to pay 25% tax which will cost $1000. Do that for five years and the new balances are Roth: $9931 Trad: $13,241 TIA: $5973 The TIA will run out in the 8th year. The Roth and Trad will both run out in the 9th year. So to summarize. The Traditional IRA initially grows the most. The TIA grows the least. The TIA is tax-advantaged over the Traditional IRA at that point, but it still runs out first. The Roth IRA grows about the same as the Traditional after taxes are included. Note that I left out the matching contribution from a 401k. That would help both those options. I assumed that the marginal tax rate would be 25% on the Traditional IRA distributions. It might be only 15%, which would increase the advantage of the Traditional IRA. I assumed that the 15% rate on capital returns would still be true for the entire period. If that is increased, the TIA option gets a lot worse. Inflation could be higher or lower. As stated earlier, the TIA account is hit the worst by inflation."
},
{
"docid": "169004",
"title": "",
"text": "Basically there are 2 ways you can make money from an investment, through income (eg: rent or dividends) and through the price of the investment going up (capital growth or gains). Most people associate negative gearing with investment properties but it can be done with shares and other investments where you borrow money to buy the investment and it produces an income of some sort. If the investment does not produce an income then you cannot negative gear it. Using a property as an example (in Australia), if all your expenses each month (loan interest payments, council and water rates, insurance and/or strata, advertising and management fees, depreciation, and maintenance expense) are greater than your income (rent), then you are negative gearing the investment property. This is a monthly loss on your investment which can be used to offset and reduce the amount of tax you pay during the year. So most people negative gearing an investment property will get a nice sum back when they do their tax returns. The problem with negative gearing is that you have to lose money in order to save some tax. So as an example, if you are on a marginal tax rate of 30%, for every $1 you lose from the investment property you will save 30c in tax. If your marginal tax rate is 45% then will save 45c in tax for every $1 lost on the investment property. Thus negative gearing becomes more tax effective the higher your income (and tax bracket). But you are still losing money overall. The problem is that most novice investors buy an investment property for the main purpose of reducing their taxes. This can be dangerous because the main reason to buy any investment should be that you consider it to be a good investment, not to save you tax. Because if the investment is not a good one, then you will not only lose money on the income side but also on the capital side. Negative gearing should be looked at as a bonus or additional benefit when chosing a good investment to buy, not as the reason to buy the investment."
},
{
"docid": "390556",
"title": "",
"text": "\"From what you say, a savings account sounds like the most appropriate option. (Of course you should keep your checking account too to use for day-to-day expenses, but put money that you want to sock away into the savings account.) The only way to guarantee you won't lose money and also guarantee that you can take the money out whenever you want is to put your money in a checking or savings account. If you put it in a savings account you will at least earn some paltry amount of interest, whereas with a checking account you wont. The amount of interest you earn with only a few hundred (or even a few thousand) dollars will be miniscule, but you know that the nominal value of your money won't go down. The real value of your money will go down, because the interest you're earning will be less than inflation. (That is, if you put $1000 in, you know there will be at least $1000 in there until you take some out. But because of inflation, that $1000 won't buy as much in the future as it does today, so the effective buying power of your money will go down.) However, there's no way to avoid this while keeping your money absolutely safe from loss and maintaining absolute freedom to take it out whenever you want. To address a couple of the alternatives you mentioned: It's good that you're thinking about this now. However, you shouldn't worry unduly about \"\"getting the most out of your money\"\" at this stage. As you said, you have $400 and will soon be making $200/week. In other words, two weeks after your job starts, you'll have earned as much as your entire savings before you started the job. Even if all your cash \"\"went down the drain\"\", you'd make it up in two weeks. Of course, you don't want to throw your money away for nothing. But when your savings are small relative to your income, it's not really worth it to agonize over investment choices to try to get the maximum possible return on your investment. Instead, you should do just what you seem to be doing: prioritize safety, both in terms of keeping your money in a safe account, and try to save rather than spending frivolously. In your current situation, you can double your savings in one month, by working at your part-time job. There's no investment anywhere there that can even come close to that. So don't worry about missing out on some secret opportunity. At this stage, you can earn far more by working than you can by investing, so you should try to build up your savings. When you have enough that you are comfortable with more risk, then you will be in a position to consider other kinds of investments (like stock market index funds), which are riskier but will earn you better returns in the long run.\""
},
{
"docid": "277548",
"title": "",
"text": "\"Personally I would have a hard time \"\"locking up\"\" the money for that very little return. I would probably rather earn no interest in favor of the liquidity. However, you should find out what the early removal penalties are. If those are minimal and you are very confident that you will not need the money over the term period then its definitely better to earn something rather than nothing. If inflation is negative you aren't out as much not getting any interest as you would be normally. Consider that in 2014 US inflation was 0.8%. Online liquid savings accounts pay about 1%. so that's only .2% positive. In comparison at -.4% you are better off with no interest than a US person putting their money in a paying savings account. Keep in mind though that inflation can change month to month so just because June was negative doesn't mean the year will be that way. Not sure your ability to invest in the US market or what stable dividend payers may exist in Sweden.... You said you are risk averse, but it may be worth it to find a stable dividend paying fund. I like one called PFF, it pays a monthly dividend of 6% and over 5 years stock price is very stable. Of course this is quite a significant jump in risk because you can lose money if markets tank (PFF is down over 10 years quite a bit). Maybe splitting up the money and diversifying?\""
},
{
"docid": "234286",
"title": "",
"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.\""
},
{
"docid": "64456",
"title": "",
"text": "1) How does owning a home fit into my financial portfolio? Most seem to agree that at best it is a hedge against rent or dollar inflation, and at worst it should be viewed as a liability, and has no place alongside other real investments. Periods of high inflation are generally accompanied with high(er) interest rates. Any home is a liability, as has been pointed out in other answers; it costs money to live in, it costs money to keep in good shape, and it offers you no return unless you sell it for more than you have paid for it in total (in fact, as long as you have an outstanding mortgage, it actually costs you money to own, even when not considering things like property taxes, utilities etc.). The only way to make a home an investment is to rent it out for more than it costs you in total to own, but then you can't live in it instead. 2) How should one view payments on a home mortgage? How are they similar or different to investing in low-risk low-reward investments? Like JoeTaxpayer said in a comment, paying off your mortgage should be considered the same as putting money into a certificate of deposit with a term and return equivalent to your mortgage interest cost (adjusting for tax effects). What is important to remember about paying off a mortgage, besides the simple and not so unimportant fact that it lowers your financial risk over time, is that over time it improves your cash flow. If interest rates don't change (unlikely), then as long as you keep paying the interest vigilantly but don't pay down the principal (assuming that the bank is happy with such an arrangement), your monthly cost remains the same and will do so in perpetuity. You currently have a cash flow that enables you to pay down the principal on the loan, and are putting some fairly significant amount of money towards that end. Now, suppose that you were to lose your job, which means a significant cut in the household income. If this cut means that you can't afford paying down the mortgage at the same rate as before, you can always call the bank and tell them to stop the extra payments until you get your ducks back in the proverbial row. It's also possible, with a long history of paying on time and a loan significantly smaller than what the house would bring in in a sale, that you could renegotiate the loan with an extended term, which depending on the exact terms may lower your monthly cost further. If the size of the loan is largely the same as or perhaps even exceeds the market value of the house, the bank would be a lot more unlikely to cooperate in such a scenario. It's also a good idea to at the very least aim to be free of debt by the time you retire. Even if one assumes that the pension systems will be the same by then as they are now (some don't, but that's a completely different question), you are likely to see a significant cut in cash flow on retirement day. Any fixed expenses which cannot easily be cut if needed are going to become a lot more of a liability when you are actually at least in part living off your savings rather than contributing to them. The earlier you get the mortgage paid off, the earlier you will have the freedom to put into other forms of savings the money which is now going not just to principal but to interest as well. What is important to consider is that paying off a mortgage is a very illiquid form of savings; on the other hand, money in stocks, bonds, various mutual funds, and savings accounts, tends to be highly liquid. It is always a good idea to have some savings in easily accessible form, some of it in very low-risk investments such as a simple interest-bearing savings account or government bonds (despite their low rate of return) before you start to aggressively pay down loans, because (particularly when you own a home) you never know when something might come up that ends up costing a fair chunk of money."
},
{
"docid": "571218",
"title": "",
"text": "Congratulations! You're making enough money to invest. There are two easy places to start: I recommend against savings accounts because they will quite safely lose your money: the inflation rate is usually higher than the interest rate on a savings account. You may have twice as much money after 50 years, but if everything costs four times as much, then you've lost buying power. If, in the course of learning about investing, you'd like to try buying individual stocks, do it only with money you wouldn't mind losing. Index funds will go down slightly if one of the companies in that index fails entirely, but the stock of a failed company is worthless."
},
{
"docid": "118104",
"title": "",
"text": "\"Of course CDs are worth it compared to the stock market. In fact, most institutional investors are envious of the CDs you have access to as an individual investor that are unavailable to them. You just need to be competent enough to shop around for the best rates and understand your time horizon. There are several concepts to understand here: Banks give out CDs with competitive rates projecting future interest rates. So while the Federal funds rate is currently extremely low, banks know that in order to get any takers on their CDs they have to factor in the public expectation that rates will rise, so if you lock in a longer term CD you get a competitive rate. Institutional investors do not have access to FDIC insured CDs and the closest analog they participate in are the auctions and secondary markets of US Treasuries. These two types of assets have equivalent default (non-)risk if held to maturity: backed by the full faith and credit of the U.S. Here are the current rates (as of question's date) taken from Vanguard that I can get on CDs versus Treasuries (as an individual investor). Notice that CDs outperform Treasuries across any maturity timescale! For fixed-income and bond allocations, institutional investors are lining up for buying treasuries. And yet here you are saying \"\"CDs are not worth it.\"\" Might want to rethink that. Now going into the stock market as an investor with expectations of those high returns you quote, means you're willing to stay there for the long-term (at least a decade) and stay the course during volatility to actually have any hope of coming up with the average rate of return. Even then, there's the potential downside of risk that you still lose principal after that duration. So given that assumption, it's only fair to compare against >= 10 year CDs which are currently rated at 2 percent APY. In addition, CDs can be laddered -- allowing you to lock-in newer (and potentially higher) rates as they become available. You essentially stagger your buyin into these investments, and either reinvest upon the stilted maturity dates or use as income. Also keep in mind that while personal emergencies requiring quick access to cash can happen at any time, the most common scenario is during the sudden change from a bull market into a recession -- the time when stocks plummet. If you need money right away, selling your stocks at these times would lock in severe losses, whereas with CDs you still won't lose principal with an early exit and the only penalty is usually a sacrifice of a few months of potential interest. It's easy to think of the high yields during a protracted bull market (such as now), but personal finance has a huge behavioral component to it that is largely ignored until it's too late. One risk that isn't taken care of by either CDs or Treasuries is inflation risk. All the rates here and in the original question are nominal rates, and the real return will depend on inflation (or deflation). There are other options here besides CDs, Treasuries, and the stock market to outpace inflation if you'd like to hedge that risk with inflation protection: Series I Savings Bonds and TIPS.\""
},
{
"docid": "421736",
"title": "",
"text": "At this time there is one advantage of having a 30 year loan right now over a 15 year loan. The down side is you will be paying 1% higher interest rate. So the question is can you beat 1% on the money you save every month. So Lets say instead of going with 15 year mortgage I get a 30 and put the $200 monthly difference in lets say the DIA fund. Will I make more on that money than the interest I am losing? My answer is probably yes. Plus lets factor in inflation. If we have any high inflation for a few years in the middle of that 30 not only with the true value of what you owe go down but the interest you can make in the bank could be higher than the 4% you are paying for your 30 year loan. Just a risk reward thing I think more people should consider."
},
{
"docid": "416188",
"title": "",
"text": "\"True, absolutely safe are only death and taxes. Apparently [US treasuries](https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield) yield far less than 3,5-4%, but I guess that's as \"\"100% safe\"\" as it gets. However, best I could find while talking to various banks was a reverse convertible bond that yields 3,5% per year, tax excluded. Worst case scenario: 1) I got all my money back and gained 3,5% for one year. 2) after a few years, I find myself with pretty valuable shares and still cashed in the yearly 3,5%. I was wondering if I got lucky with that, or if there are better things out there and if yes, where I should look. Honestly, in the age of negative interests, I'm more than happy to get enough interest to counter inflation.\""
},
{
"docid": "531698",
"title": "",
"text": "Fantastic question to be asking at the age of 22! A very wise man suggested to me the following with regard to your net income I've purposely not included saving a sum of money for a house deposit, as this is very much cultural and lots of EU countries have a low rate of home ownership. On the education versus entrepreneur question. I don't think these are mutually exclusive. I am a big advocate of education (I have a B.Eng) but have following working in the real world for a number of years have started an IT business in data analytics. My business partner and I saw a gap in the market and have exploited it. I continue to educate myself now in short courses on running business, data analytics and investment. My business partner did things the otherway around, starting the company first, then getting an M.Sc. Other posters have suggested that investing your money personally is a bad idea. I think it is a very good idea to take control of your own destiny and choose how you will invest your money. I would say similarly that giving your money to someone else who will sometimes lose you money and will charge you for the privilege is a bad idea. Also putting your money in a box under your bed or in the bank and receive interest that is less than inflation are bad ideas. You need to choose where to invest your money otherwise you will gain no advantage from the savings and inflation will erode your buying power. I would suggest that you educate yourself in the investment options that are available to you and those that suit you personality and life circumstances. Here are some notes on learning about stock market trading/investing if you choose to take that direction along with some books for self learning."
},
{
"docid": "190225",
"title": "",
"text": "If you have no credit history but you have a job, buying an inexpensive used car should still be doable with only a marginally higher interest rate on the car. This can be offset with a cosigner, but it probably isn't that big of a deal if you purchase a car that you can pay off in under a year. The cost of insurance for a car is affected by your credit score in many locations, so regardless you should also consider selling your other car rather than maintaining and insuring it while it's not your primary mode of transportation. The main thing to consider is that the terms of the credit will not be advantageous, so you should pay the full balance on any credit cards each month to not incur high interest expenses. A credit card through a credit union is advantageous because you can often negotiate a lower rate after you've established the credit with them for a while (instead of closing the card and opening a new credit card account with a lower rate--this impacts your credit score negatively because the average age of open accounts is a significant part of the score. This advice is about the same except that it will take longer for negative marks like missed payments to be removed from your report, so expect 7 years to fully recover from the bad credit. Again, minimizing how long you have money borrowed for will be the biggest benefit. A note about cosigners: we discourage people from cosigning on other people's loans. It can turn out badly and hurt a relationship. If someone takes that risk and cosigns for you, make every payment on time and show them you appreciate what they have done for you."
},
{
"docid": "59965",
"title": "",
"text": "The stock market at large has about a 4.5% long-term real-real (inflation-fees-etc-adjusted) rate of return. Yes: even in light of the recent crashes. That means your money invested in stocks doubles every 16 years. So savings when you're 25 and right out of college are worth double what savings are worth when you're 41, and four times what they're worth when you're 57. You're probably going to be making more money when you're 41, but are you really going to be making two times as much? (In real terms?) And at 57, will you be making four times as much? And if you haven't been saving at all in your life, do you think you're going to be able to start, and make the sacrifices in your lifestyle that you may need? And will you save enough in 10 years to live for another 20-30 years after retirement? And what if the economy tanks (again) and your company goes under and you're out of a job when you turn 58? Having tons of money at retirement isn't the only worthy goal you can pursue with your money (ask anyone who saves money to send kids to college), but having some money at retirement is a rather important goal, and you're much more at risk of saving too little than you are of saving too much. In the US, most retirement planners suggest 10-15% as a good savings rate. Coincidentally, the standard US 401(k) plan provides a tax-deferred vehicle for you to put away up to 15% of your income for retirement. If you can save 15% from the age of 20-something onward, you probably will be at least as well-off when you retire as you are during the rest of your life. That means you can spend the rest on things which are meaningful to you. (Well, you should also keep around some cash in case of emergencies or sudden unemployment, and it's never a good idea to waste money, but your responsibilities to your future have at least been satisfied.) And in the UK you get tax relief on your pension contribution at your income tax rate and most employers will match your contributions."
},
{
"docid": "462267",
"title": "",
"text": ">First of all QE is an increase of money supply but using non conventional measures(there might be exceptions) some examples of this measures are changing interest rates or TLTRO. Ok, but how is this different from printing money? I mean the money supply goes up in both cases, right? Shouldn´t this cause massive inflation? >As to why this hasnt transitioned into more inflation, which in the end has but years after, has been a question that people have asked a lot. One of the reasons for this is the transmission mechanism not working properly, which implies that despite the fact banks have received money, they havent been able to move it to the real economy hence not increasing prices. I have read that all QE has done is basically make the prices of assets such as housing, stocks, art and whatnot skyrocket. As if all the extra money has gone to a very few, specific areas while not touching the rest of the economy. Is this something you agree with? Thanks for your reply, btw!"
},
{
"docid": "585269",
"title": "",
"text": "\"(Since you used the dollar sign without any qualification, I assume you're in the United States and talking about US dollars.) You have a few options here. I won't make a specific recommendation, but will present some options and hopefully useful information. Here's the short story: To buy individual stocks, you need to go through a broker. These brokers charge a fee for every transaction, usually in the neighborhood of $7. Since you probably won't want to just buy and hold a single stock for 15 years, the fees are probably unreasonable for you. If you want the educational experience of picking stocks and managing a portfolio, I suggest not using real money. Most mutual funds have minimum investments on the order of a few thousand dollars. If you shop around, there are mutual funds that may work for you. In general, look for a fund that: An example of a fund that meets these requirements is SWPPX from Charles Schwabb, which tracks the S&P 500. Buy the product directly from the mutual fund company: if you go through a broker or financial manager they'll try to rip you off. The main advantage of such a mutual fund is that it will probably make your daughter significantly more money over the next 15 years than the safer options. The tradeoff is that you have to be prepared to accept the volatility of the stock market and the possibility that your daughter might lose money. Your daughter can buy savings bonds through the US Treasury's TreasuryDirect website. There are two relevant varieties: You and your daughter seem to be the intended customers of these products: they are available in low denominations and they guarantee a rate for up to 30 years. The Series I bonds are the only product I know of that's guaranteed to keep pace with inflation until redeemed at an unknown time many years in the future. It is probably not a big concern for your daughter in these amounts, but the interest on these bonds is exempt from state taxes in all cases, and is exempt from Federal taxes if you use them for education expenses. The main weakness of these bonds is probably that they're too safe. You can get better returns by taking some risk, and some risk is probably acceptable in your situation. Savings accounts, including so-called \"\"money market accounts\"\" from banks are a possibility. They are very convenient, but you might have to shop around for one that: I don't have any particular insight into whether these are likely to outperform or be outperformed by treasury bonds. Remember, however, that the interest rates are not guaranteed over the long run, and that money lost to inflation is significant over 15 years. Certificates of deposit are what a bank wants you to do in your situation: you hand your money to the bank, and they guarantee a rate for some number of months or years. You pay a penalty if you want the money sooner. The longest terms I've typically seen are 5 years, but there may be longer terms available if you shop around. You can probably get better rates on CDs than you can through a savings account. The rates are not guaranteed in the long run, since the terms won't last 15 years and you'll have to get new CDs as your old ones mature. Again, I don't have any particular insight on whether these are likely to keep up with inflation or how performance will compare to treasury bonds. Watch out for the same things that affect savings accounts, in particular fees and reduced rates for balances of your size.\""
},
{
"docid": "61586",
"title": "",
"text": "This does not really fit your liquidity requirement but consider buying a one or two room apartment to rent out with part of your savings. You will get income from it and small apartments sell quickly if you do need the money. This will help offset the negative interest from the rest. One downside is that other people have the same idea at the moment and the real estate prices are inflated somewhat."
},
{
"docid": "133486",
"title": "",
"text": "\"Keep in mind that the Federal Reserve Chairman needs to be very careful with his use of words. Here's what he said: It is arguable that interest rates are too high, that they are being constrained by the fact that interest rates can't go below zero. We have an economy where demand falls far short of the capacity of the economy to produce. We have an economy where the amount of investment in durable goods spending is far less than the capacity of the economy to produce. That suggests that interest rates in some sense should be lower rather than higher. We can't make interest rates lower, of course. (They) only can go down to zero. And again I would argue that a healthy economy with good returns is the best way to get returns to savers. So what does that mean? When he says that \"\"we can't make interest rates lower\"\", that doesn't mean that it isn't possible. He's saying that our demand for goods is lower than our ability to produce them. Negative interest would actually make that problem worse -- if I know that things will cost less in a month, I'm not going to buy anything. The Fed is incentivizing spending by lowering the cost of capital to zero. By continuing this policy, they are eventually going to bring on inflation, which will reduce the value of the currency -- which gives people and companies that are sitting on money an dis-incentive to continue hoarding it.\""
},
{
"docid": "322049",
"title": "",
"text": "I think this question is very nearly off-topic for this site, but I also believe that a basic understanding of the why the tax structure is what it is can help someone new to investing to understand their actual tax liability. The attempt at an answer I provide below is from a Canadian & US context, but should be similar to how this is viewed elsewhere in the world. First note that capital gains today are much more fluid in concept than even 100 years ago. When the personal income tax was first introduced [to pay for WWI], a capital gain was viewed as a very deliberate action; the permanent sale of property. Capital gains were not taxed at all initially [in Canada until 1971], under the view that income taxes would have been paid on income-earning assets all along [through interest, dividends, and rent], and therefore taxing capital gains would be a form of 'double-taxation'. This active, permanent sale was also viewed as an action that an investor would need to work for. Therefore it was seen as foolish to prevent investors from taking positive economic action [redistributing their capital in the most effective way], simply to avoid the tax. However today, because of favourable taxation on capital gains, many financial products attempt to package and sell capital gains to investors. For example, many Canadian mutual funds buy and sell investments to earn capital gains, and distribute those capital gains to the owners of the mutual fund. This is no longer an active action taken by the investor, it is simply a function of passive investing. The line between what is a dividend and what is a capital gain has been blurred by these and similar advanced financial products. To the casual investor, there is no practical difference between receiving dividends or capital gain distributions, except for the tax impact. The notional gain realized on the sale of property includes inflation. Consider a rental property bought in 1930 for $100,000, and sold in 1960 for $180,000, assuming inflation between 1930 and 1960 was 70%. In 1960 dollars, the property was effectively bought for 170k. This means the true gain after accounting for inflation is only $10k. But, the notional gain is $80k, meaning a tax on that capital gain would be almost entirely a tax on inflation. This is viewed by many as being unfair, as it does not actually represent true income. I will pause to note that any tax on any investment at all, taxes inflation; interest, for example, is taxed in full even though it can be almost entirely inflationary, depending on economic conditions. A tax on capital gains may restrict market liquidity. A key difference between capital gains and interest/rent/dividends, is that other forms of investment income are taxed annually. If you hold a bond, you get taxed on interest from that bond. You cannot gain value from a bond, deferring tax until the date it matures [at least in Canada, you are deemed to accrue bond interest annually, even if it is a 0 coupon bond]. However, what if interest rates have gone down, increasing the value of your bond, and you want to sell it to invest in a business? You may choose not to do this, to avoid tax on that capital gain. If it were taxed as much as regular income, you might be even more inclined to never sell any asset until you absolutely have to, thus restricting the flow of capital in the market. I will pause here again, to note that laws could be enacted to minimize capital gains tax, as long as the money is reinvested immediately, thus reducing this impact. Political inertia / lobbying from key interests has a significant impact on the tax structure for investments. The fact remains that the capital gains tax is most significantly an impact on those with accrued wealth. It would take significant public support to increase capital gain tax rates, for any political party to enact such laws. When you get right down to it, tax laws are complex, and hard to push in the public eye. The general public barely understands that their effective tax rate is far lower than their top marginal tax rate. Any tax increases at all are often viewed negatively, even by those who would never personally pay any of that tax due to lack of investment income. Therefore such changes are typically made quietly, and with some level of bi-partisan support. If you feel the capital gains tax rules are illogical, just add it to the pile of such tax laws that exist today."
},
{
"docid": "321619",
"title": "",
"text": "This is assuming that you are now making some amount X per month which is more than the income you used to have as a student. (Otherwise, the question seems rather moot.) All figures should be net amounts (after taxes). First, figure out what the difference in your cost of living is. That is, housing, electricity, utilities, the basics that you need to have to have a place in which to live. I'm not considering food costs here unless they were subsidized while you were studying. Basically, you want to figure out how much you now have to spend extra per month for basic sustenance. Then, figure out how much more you are now making, compared to when you were a student. Subtract the sustenance extra from this to get your net pay increase. After that is when it gets trickier. Basically, you want to set aside or invest as much of the pay increase as possible, but you probably have other expenses now that you didn't before and which you cannot really do that much about. This mights be particular types of clothes, commute fares (car keepup, gas, bus pass, ...), or something entirely different. Anyway, decide on a savings goal, as a percentage of your net pay increase compared to when you were a student. This might be 5%, 10% or (if you are really ambitious) 50% or more. Whichever number you pick, make sure it's reasonable giving your living expenses, and keep in mind that anything is better than nothing. Find a financial institution that offers a high-interest savings account, preferably one with free withdrawals, and sign up for one. Each and every time you get paid, figure out how much to save based on the percentage you determined (if your regular case is that you get the same payment each time, you can simply set up an automated bank transfer), put that in the savings account and, for the moment, forget about that money. Try your best to live only on the remainder, but if you realize that you set aside too much, don't be afraid to tap into the savings account. Adjust your future deposits accordingly and try to find a good balance. At the end of each month, deposit whatever remains in your regular account into your savings account, and if that is a sizable amount of money, consider raising your savings goal a little. The ultimate goal should be that you don't need to tap into your savings except for truly exceptional situations, but still keep enough money outside of the savings account to cater to some of your wants. Yes, bank interest rates these days are often pretty dismal, and you will probably be lucky to find a savings account that (especially after taxes) will even keep up with inflation. But to start with, what you should be focusing on is not to make money in terms of real value appreciation, but simply figuring out how much money you really need to sustain a working life for yourself and then walking that walk. Eventually (this may take anywhere from a couple of months to a year or more), you should have settled pretty well on an amount that you feel comfortable with setting aside each month and just letting be. By that time, you should have a decently sized nest egg already, which will help you get over rough spots, and can start thinking about other forms of investing some of what you are setting aside. Whenever you get a net pay raise of any kind (gross pay raise, lower taxes, bonus, whichever), increase your savings goal by a portion of that raise. Maybe give yourself 60% of the raise and bank the remaining 40%. That way, you are (hopefully!) always increasing the amount of money that you are setting aside, while also reaping some benefits right away. One major upside of this approach is that, if you lose your job, not only will you have that nest egg, you will also be used to living on less. So you will have more money in the bank and less monthly expenses, which puts you in a significantly better position than if you had only one of those, let alone neither."
}
] |
4571 | HSBC Hong Kong's “Deposit Plus” Product: What is it, and what strategies to employ? | [
{
"docid": "496857",
"title": "",
"text": "\"HSBC, Hang Seng, and other HK banks had a series of special savings account offers when I lived in HK a few years ago. Some could be linked to the performance of your favorite stock or country's stock index. Interest rates were higher back then, around 6% one year. What they were effectively doing is taking the interest you would have earned and used it to place a bet on the stock or index in question. Technically, one way this can be done, for instance, is with call options and zero coupon bonds or notes. But there was nothing to strategize with once the account was set up, so the investor did not need to know how it worked behind the scenes... Looking at the deposit plus offering in particular, this one looks a little more dangerous than what I describe. See, now we are in an economy of low almost zero interest rates. So to boost the offered rate the bank is offering you an account where you guarantee the AUD/HKD rate for the bank in exchange for some extra interest. Effectively they sell AUD options (or want to cover their own AUD exposures) and you get some of that as extra interest. Problem is, if the AUD declines, then you lose money because the savings and interest will be converted to AUD at a contractual rate that you are agreeing to now when you take the deposit plus account. This risk of loss is also mentioned in the fine print. I wouldn't recommend this especially if the risks are not clear. If you read the fine print, you may determine you are better off with a multicurrency account, where you can change your HK$ into any currency you like and earn interest in that currency. None of these were \"\"leveraged\"\" forex accounts where you can bet on tiny fluctuations in currencies. Tiny being like 1% or 2% moves. Generally you should beware anything offering 50:1 or more leverage as a way to possibly lose all of your money quickly. Since you mentioned being a US citizen, you should learn about IRS form TD F 90-22.1 (which must be filed yearly if you have over $10,000 in foreign accounts) and google a little about the \"\"foreign account tax compliance act\"\", which shows a shift of the government towards more strict oversight of foreign accounts.\""
}
] | [
{
"docid": "418893",
"title": "",
"text": "Think of it. How does an insurance company make money? Well essentially, it tries to have more knowledge about risk than those insuring themselves. It also attempts to manage its investments better. Well to this requires a lot of knowledge of statistics and this is primarily what you will be doing over your career. One friend got into it because he liked to gamble and win (he lost about $2k as a young teenager in Hong Kong). He spent a lot of time studying probability and statistics and then became fascinated by it. So fascinated that he became a full actuary, which means a long time studying. He was willing to put the time in."
},
{
"docid": "275249",
"title": "",
"text": "\"There are three (or four) ways that a company can grow: (Crowdfunding is a relatively new (in mainstream businesses) alternative financing method where people will finance a company with the expectation that they will benefit from the product or service that they provide.) Obviously a startup has no prior income to use, so it must either raise money through equity or debt. People say that one must borrow contingent on their salary. Banks lend money based on the ability to pay the loan back plus interest. For individuals, their income is their primary source of cash flow, so, yes, it is usually the determining factor in getting a loan. For a business the key factor is future cash flows. So a business will borrow money, say, to buy a new asset (like a factory) that will be used to generate cash flows in the future so that they can pay down the debt. If the bank believes that the use of the money is going to be profitable enough that they will get their money back with interest, they'll loan the money. Equity investors are essentially the same, but since they don't get a guaranteed payback (they only get paid through non-guaranteed dividends or liquidation), their risk is higher and they are looking for higher expected returns. So the question I'd have as a bank or equity investor is \"\"what are you going to do with the money?\"\" What is your business strategy? What are you going to do that will make profits in the future? Do you have a special idea or skill that you can turn into a profitable business? (Crowdfunding would be similar - people are willing to give you money based on either the social or personal benefit of some product or service.) So any business either starts small and grows over time (which is how the vast majority of businesses grow), or has some special idea, asset, skill, or something that would make a bank willing to take a risk on a huge loan. I know, again, that people here tend to turn blind eyes on unfortunate realities, but people do make giant businesses without having giant incomes. The \"\"unfortunate reality\"\" is that most startups fail. Which may sound bad, but also keep in mind that most startups are created by people that are OK with failing. They are people that are willing to fail 9 times with the thought that the 10th one will take off and make up for the losses of the first 9. So I would say - if you have some great idea or skill and a viable strategy and plan to take it to market, then GO FOR IT. You don't need a huge salary to start off. You need something that you can take to market and make money. Most people (myself included) either do not have that idea or skill to go out on their own, or don't have the courage to take that kind of risk. But don't go in assuming all you need is a loan and you'll be an instant millionaire. You might, but the odds are very long.\""
},
{
"docid": "365465",
"title": "",
"text": "\"Very simple. You open an account with a broker who will do the trades for you. Then you give the broker orders to buy and sell (and the money to pay for the purchases). That's it. In the old days, you would call on the phone (remember, in all the movies, \"\"Sell, sell!!!!\"\"? That's how), now every decent broker has an online trading platform. If you don't want to have \"\"additional value\"\" and just trade - there are many online discount brokers (ETrade, ScotTrade, TD Ameritrade, and others) who offer pretty cheap trades and provide decent services and access to information. For more fees, you can also get advices and professional management where an investment manager will make the decisions for you (if you have several millions to invest, that is). After you open an account and login, you'll find a big green (usually) button which says \"\"BUY\"\". Stocks are traded on exchanges. For example the NYSE and the NASDAQ are the most common US exchanges (there's another one called \"\"pink sheets\"\", but its a different kind of animal), there are also stock exchanges in Europe (notably London, Frankfurt, Paris, Moscow) and Asia (notably Hong Kong, Shanghai, Tokyo). Many trading platforms (ETrade, that I use, for example) allow investing on some of those as well.\""
},
{
"docid": "446340",
"title": "",
"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."
},
{
"docid": "330665",
"title": "",
"text": "Government subsidies could be provided if we could all agree what activities are of higher social worth, this is not an insurmountable obstacle. For example, in Hong Kong and Singapore civil servants are paid vastly more than in the US. The reasons are that society wants to attract some of its best people to serve in these positions, and they want to insulate them from the temptation of corruption. In effect, these positions are considered to be of high social worth and society rewards them accordingly. Also note that HK and Singapore have even freer capitalist market societies than the US (speaking of economic freedom here)..."
},
{
"docid": "137353",
"title": "",
"text": "\"My question boiled down: Do stock mutual funds behave more like treasury bonds or commodities? When I think about it, it seems that they should respond the devaluation like a commodity. I own a quantity of company shares (not tied to a currency), and let's assume that the company only holds immune assets. Does the real value of my stock ownership go down? Why? On December 20, 1994, newly inaugurated President Ernesto Zedillo announced the Mexican central bank's devaluation of the peso between 13% and 15%. Devaluing the peso after previous promises not to do so led investors to be skeptical of policymakers and fearful of additional devaluations. Investors flocked to foreign investments and placed even higher risk premia on domestic assets. This increase in risk premia placed additional upward market pressure on Mexican interest rates as well as downward market pressure on the Mexican peso. Foreign investors anticipating further currency devaluations began rapidly withdrawing capital from Mexican investments and selling off shares of stock as the Mexican Stock Exchange plummeted. To discourage such capital flight, particularly from debt instruments, the Mexican central bank raised interest rates, but higher borrowing costs ultimately hindered economic growth prospects. The question is how would they pull this off if it's a floatable currency. For instance, the US government devalued the US Dollar against gold in the 30s, moving one ounce of gold from $20 to $35. The Gold Reserve Act outlawed most private possession of gold, forcing individuals to sell it to the Treasury, after which it was stored in United States Bullion Depository at Fort Knox and other locations. The act also changed the nominal price of gold from $20.67 per troy ounce to $35. But now, the US Dollar is not backed by anything, so how do they devalue it now (outside of intentionally inflating it)? The Hong Kong Dollar, since it is fixed to the US Dollar, could be devalued relative to the Dollar, going from 7.75 to 9.75 or something similar, so it depends on the currency. As for the final part, \"\"does the real value of my stock ownership go down\"\" the answer is yes if the stock ownership is in the currency devalued, though it may rise over the longer term if investors think that the value of the company will rise relative to devaluation and if they trust the market (remember a devaluation can scare investors, even if a company has value). Sorry that there's too much \"\"it depends\"\" in the answer; there are many variables at stake for this. The best answer is to say, \"\"Look at history and what happened\"\" and you might see a pattern emerge; what I see is a lot of uncertainty in past devaluations that cause panics.\""
},
{
"docid": "535822",
"title": "",
"text": "The Federal Central Tax Office says you may not have to pay taxes in germany for capital gains. You may have to apply for a tax relief to prevent the tax from being collected. You very likely will have to pay whatever taxes there are in Hong Kong on capital gains. Since you use an US broker withholding tax may apply to you but this is a different question that has nothing to do with Germany or german stocks. To be sure you should contact a local expert on this topic. EDIT: I missed some informations that I found on the english site of the german Federal Central Tax Office homepage."
},
{
"docid": "154485",
"title": "",
"text": "I was having issues with transferring money from my UK bank (HSBC) to my paypal... HSBC was asking for an IBAN code to complete the transaction. I couldn't find an IBAN code listed anywhere on my Paypal acct. What finally solved it for me was when I entered the last 4 digits of the Paypal account number, HSBC then threw up a message saying that payee was listed in my payees and to do a search for payees. (I had never manually entered my Paypal as a payee, but it was there in a huge list of companies already known and listed by HSBC.) Then all I had to do was put in the reference number Paypal had given and the amount. It was in my paypal account within minutes. Hope this helps :)"
},
{
"docid": "144070",
"title": "",
"text": "\"Do you have any idea what a product manager does? It's a pretty accurate description of the job. The PM is responsible for strategy, direction, product/market fit, features, roadmap, and pretty much everything associated with that product. You own the P&L. The buck stops with you when it comes to the product. The \"\"CEO of your product\"\" description is the classical description of what a PM is, because you're running an entire line of business that can be worth hundreds of millions of dollars.\""
},
{
"docid": "172306",
"title": "",
"text": "\"Clearing means processing unsettled transactions. Specifically - all the money transfers between the banks, in this case. Clearing Bank for RMB business means that all RMB transactions will be cleared through that specific bank. If bank A in Hong Kong gets a check drawn on Bank B in Hong Kong, and the check is in RMB - A will go to the BoC with the check and will get the money, and BoC will take the money from B. That obviously requires both A and B have accounts with BoC. \"\"Sole\"\" clearing house means there's only one. I.e.: in our example, A and B cannot settle the check through C where they both happen to have accounts, or directly with each other. They MUST utilize the services of BoC.\""
},
{
"docid": "6426",
"title": "",
"text": "With reference to the UK: Structured deposits should not be confused with structured products. Structured deposits are often, quite simple deposit accounts. You place your money into what is essentially a deposit account, and are therefore guaranteed not to lose your capital as with any other deposit account. The attraction is that you could earn more than you would in a normal deposit account, often around double, due to indirect exposure to the markets. Another benefit is that structured deposits can form part of your annual cash ISA allowance, so the returns can be tax free. These products are popular with those who have savings which they are happy to deposit away for between 3 and 6 years, and are looking for better rates of return than standard cash ISAs or savings accounts. The main drawback is that you may not receive anything other than your original deposit. That poses a minimal risk if your savings are earning less than 1% currently. See my article at financialandrew.blogspot.co.uk/2013/03/fed-up-with-low-returns-from-cash-isas.html for a more rounded overview of the structured deposits."
},
{
"docid": "276831",
"title": "",
"text": "\"Instead of getting into complex economic theories, here are the few places I can tell you where the cash has disappeared to: 1. Apple - holding over 100b cash in their vault more than any banks have in their reserves in the world and more than enough to pay off all of the debts of the U.S. 2. Real Estates.........in developing countries, that is :p. You may keep hearing how real estates are de-valuing in the U.S., but in developing countries like the BRICs, they are going higher. Think Hong Kong, Tokyo, Beijing, Shanghai, etc. Yes, it's a proven bubble there. If you have access to their regional news, just listen to how many people in Asia have to borrow from loan sharks to keep their finances afloat. 3. Gold - go see for yourself on goldprice.org, that's where the wealthy individuals put their cash in the so-called \"\"safe haven\"\" next to shotguns. Yes, it's ridiculous and is totally out of anyone's league beyond basic things like air, water, and food. 4. Commodities (gas, food, basic materials) - enough said, check out your local gas pumps and grocery stores.\""
},
{
"docid": "513052",
"title": "",
"text": "> People like Faber are white fear defined. He lives in Thailand. He has also lived in Singapore & Hong Kong, having moved to the East in 1973. For someone with so much 'fear', he surrounds himself with a hell of a lot of non-whites on purpose."
},
{
"docid": "536194",
"title": "",
"text": "Check out WorldCap.org. They provide fundamental data for Hong Kong stocks in combination with an iPad app. Disclosure: I am affiliated with WorldCap."
},
{
"docid": "124298",
"title": "",
"text": "\"I use Google Finance too. The only thing I have problem with is dividend info which it wouldn't automatically add to my portfolio. At the same time, I think that's a lot to ask for a free web site tool. So when dividend comes, I manually \"\"deposit\"\" the dividend payment by updating the cash amount. If the dividend comes in share form, I do a BUY at price 0 for that particular stock. If you only have 5 stocks, this additional effort is not bad at all. I also use the Hong Kong version of it so perhaps there maybe an implementation difference across country versions. Hope this helps. CF\""
},
{
"docid": "349602",
"title": "",
"text": "Holding Companies: Bank of America Corporation Long-term senior unsecured debt to Baa2 from Baa1, outlook negative; Short-term P-2 affirmed Barclays plc Long-term issuer rating to A3 from A1, outlook negative; Short-term to P-2 from P-1 Citigroup Inc. Long-term senior debt to Baa2 from A3, outlook negative; short-term P-2 affirmed Credit Suisse Group AG Provisional senior debt to (P)A2 from (P)Aa2, outlook stable; Provisional Short-term (P)P-1 affirmed The Goldman Sachs Group, Inc. Long-term senior unsecured debt to A3 from A1, outlook negative; Short-term to P-2 from P-1 HSBC Holdings plc Long-term senior debt to Aa3 from Aa2, outlook negative; Provisional Short-term (P)P-1 affirmed JPMorgan Chase & Co. Long-term senior debt to A2 from Aa3, outlook negative; Short-term P-1 affirmed Morgan Stanley Long-term senior unsecured debt to Baa1 from A2; outlook negative; Short-term to P-2 from P-1 Royal Bank of Scotland Group plc Long-term senior debt to Baa1 from A3, outlook negative; Short-term P-2 affirmed ------------- Operating Companies: Bank of America, N.A. Long-term deposit rating to A3 from A2, outlook stable; Short-term to P-2 from P-1 Barclays Bank plc Long-term issuer rating to A2 from Aa3, outlook negative; Short-term P-1 affirmed BNP Paribas Long-term debt and deposit rating to A2 from Aa3; outlook stable; Short-term P-1 affirmed Citibank, N.A. Long-term deposit rating to A3 from A1, outlook stable; Short-term to P-2 from P-1 Credit Agricole S.A. Long-term debt and deposit rating to A2 from Aa3, outlook negative; Short-term P-1 affirmed Credit Suisse AG Long-term deposit and senior debt rating to A1 from Aa1, outlook stable; Short-term P-1 affirmed Deutsche Bank AG Long-term deposit rating to A2 from Aa3, outlook stable; Short-term P-1 affirmed Goldman Sachs Bank USA Long-term deposit rating to A2 from Aa3, outlook stable; Short-term P-1 affirmed HSBC Bank plc Long-term deposit rating to Aa3 from Aa2, outlook negative; Short-term P-1 affirmed JPMorgan Chase Bank, N.A. Long-term deposit rating to Aa3 from Aa1, outlook stable; Short-term P-1 affirmed Morgan Stanley Bank, N.A. Long-term deposit rating to A3 from A1, outlook stable; Short-term to P-2 from P-1 Royal Bank of Canada Long-term deposit rating to Aa3 from Aa1, outlook stable; Short-term P-1 affirmed Royal Bank of Scotland plc Long-term deposit rating to A3 from A2; outlook negative; Short-term to P-2 from P-1 Societe Generale Long-term debt and deposit to A2 from A1; outlook stable; Short-term P-1 affirmed UBS AG Long-term debt and deposit to A2 from Aa3, outlook stable; Short-term P-1 confirmed."
},
{
"docid": "30351",
"title": "",
"text": "I think the primary reason you're being down voted is because of the way you address people who align themselves with left wing ideology. Let's either call them all foolish, or none of them. I prefer calling them all foolish, one stream lined school of thought is rather repugnant. Anyway, Your points on equality are spot on (theoretically), handicapping applicants based on values that should already be overlooked is introducing a bias to correct another bias, it's a short term strategy and for what it's worth I agree with you. That is, I would if racism/classism/genderism didn't exist in practice. The problem is what is actually observed in the real world, all too often better candidates for a job are excluded in favor for those who are of similar religion or race as the employer, when the cast offs would perform better at the job. It is virtually never the other way around, where someone of a weaker skill set is forced on the job to fill a government implemented quota, and if it is the case, it is also usually done deliberately, choosing a very weak candidate to appeal to the government in attempts to exonerate themselves from those particular laws. My focus point: And sure it's your choice as an employer to bring on whoever you want, that's piece of mind for you, the employer, you've created the company that you wanted, but it's not the BEST IT COULD BE in terms of production purposes for society because the employer hasn't assembled the best possible work force with it's available applicants. It is here that we see there are negative externalities on the public, as inefficiency rises due to class/race/gender favoritism being chosen over ability. Employing people to help create your master vision fundamentally incorporates compromise, for the betterment of society."
},
{
"docid": "251649",
"title": "",
"text": "\"The Form 1040 (U.S. tax return form) Instructions has a section called \"\"Do You Have To File?\"\". Below a certain income, you are not required to file a tax return and pay any tax. This amount of income at which you are required to file depends on several things, including your dependency status (you are a dependent of your parents), your marital status, and other factors. The instructions have charts that show what these numbers are. You would fall under Chart B. Assuming that you are under age 65, unmarried, and not blind, you only have to file when you reach the following conditions: Your unearned income was over $1,050. Your earned income was over $6,300. Your gross income was more than the larger of— $1,050, or Your earned income (up to $5,950) plus $350. (Note: Income from YouTube would count as \"\"earned income\"\" for the purposes above.) However, if you are producing your own videos and receiving revenue from them, you are technically self-employed. This means that the conditions from Chart C also apply, which state: You must file a return if any of the five conditions below apply for 2015. As a self-employed person, you can deduct business expenses (expenses that you incur in producing your product, which is this case is your videos). Once your revenue minus your expenses reach $400, you will need to file an income tax return.\""
},
{
"docid": "242654",
"title": "",
"text": "Note: I am in the UK. I don't know specifically about australia but I expect the general principles will be much the same everywhere. What banks want is to be reasonablly confident that you have a steady income stream that will continue to pay the mortgate until it completes. In general employed are fairly easy to assess. Most employed people will have a steady basic pay that increases through their career. Payslips will usually seperate-out basic pay, overtime and bonuses. There is little opertunity to cook the books. The self-employed are harder to assess. Income can be bursty and there are far more opertunities for cooking the books to make it look like you are earning more than you really are. So banks are likely to be far more careful about lending to the self-employed, they will likely want to see multiple years of buisness records so that any bursts, whether natural due to the ebbs and flows of buisness or deliberatly created to cook the books average out and they can see the overall pattern. A large deposit will help because it reduces the risk to the bank in the event of a default. Similarly not being anywhere near your limit of affordability will help."
}
] |
4571 | HSBC Hong Kong's “Deposit Plus” Product: What is it, and what strategies to employ? | [
{
"docid": "282392",
"title": "",
"text": "15-19% gains also includes 15-19% and greater losses. They may not be required to disclose that to you in Hong Kong. If it isn't a leveraged account then that isn't too bad. Hong Kong is a nice jurisdiction, The US Federal Government is the only person you don't hide your assets from - but they dont want anything - so just report the accounts as commanded and you'll be A-Okay."
}
] | [
{
"docid": "513052",
"title": "",
"text": "> People like Faber are white fear defined. He lives in Thailand. He has also lived in Singapore & Hong Kong, having moved to the East in 1973. For someone with so much 'fear', he surrounds himself with a hell of a lot of non-whites on purpose."
},
{
"docid": "154485",
"title": "",
"text": "I was having issues with transferring money from my UK bank (HSBC) to my paypal... HSBC was asking for an IBAN code to complete the transaction. I couldn't find an IBAN code listed anywhere on my Paypal acct. What finally solved it for me was when I entered the last 4 digits of the Paypal account number, HSBC then threw up a message saying that payee was listed in my payees and to do a search for payees. (I had never manually entered my Paypal as a payee, but it was there in a huge list of companies already known and listed by HSBC.) Then all I had to do was put in the reference number Paypal had given and the amount. It was in my paypal account within minutes. Hope this helps :)"
},
{
"docid": "172306",
"title": "",
"text": "\"Clearing means processing unsettled transactions. Specifically - all the money transfers between the banks, in this case. Clearing Bank for RMB business means that all RMB transactions will be cleared through that specific bank. If bank A in Hong Kong gets a check drawn on Bank B in Hong Kong, and the check is in RMB - A will go to the BoC with the check and will get the money, and BoC will take the money from B. That obviously requires both A and B have accounts with BoC. \"\"Sole\"\" clearing house means there's only one. I.e.: in our example, A and B cannot settle the check through C where they both happen to have accounts, or directly with each other. They MUST utilize the services of BoC.\""
},
{
"docid": "340329",
"title": "",
"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.\""
},
{
"docid": "10247",
"title": "",
"text": "\"Going through the list of economies that currently use the dollar, all of them list cents as a fractional unit. In Hong Kong and Taiwan, the 1/100 fractional unit is still called a cent, but it's no longer in circulation in coin form and only finds use in financial markets or electronic payments. In countries like Malaysia, the word \"\"sen\"\" is used as the translation of the word \"\"cent\"\", even though the word for the actual currency, \"\"ringgit\"\", isn't a translation of the word \"\"dollar\"\". A similar situation occurs in Panama. The local currency is called the balboa, and it's priced on par (1:1) with the US dollar. US banknotes are also accepted as legal tender, and Panamanians sometimes use the terms balboa/dollar interchangeably. The 1/100 subdivision of the balboa is the centésimo, which is merely a translation of cent. Like Malaysia, the fractional unit is called \"\"cent\"\" (or a translation) but the main unit isn't merely a translation of the word \"\"dollar.\"\" On a historical note, the Spanish Dollar was subdivided into 8 reales in order to match the German thaler (the word that forms the basis for the English word \"\"dollar\"\").\""
},
{
"docid": "538950",
"title": "",
"text": "FTA: Here's where Apple would fall: 1. Japan: $1.1113 trillion 1. China: $1.1022 trillion 1. Ireland: $295.8 billion 1. Brazil: $269.7 billion 1. Cayman Islands: $266.1 billion 1. Switzerland: $239.5 billion 1. United Kingdom: $234.4 billion 1. Luxembourg: $207.7 billion 1. Hong Kong: $196.3 billion 1. Taiwan: $181.2 billion 1. Saudi Arabia: $134.0 billion 1. India: $127.3 billion 1. Russia: $108.7 billion 1. Singapore: $107.9 billion 1. Korea: $100.1 billion 1. Belgium: $98.7 billion 1. Canada: $80.2 billion 1. France: $74.4 billion 1. Germany: $68.3 billion 1. Thailand: $66.5 billion 1. Bermuda: $60.9 billion 1. United Arab Emirates: $60.5 billion 1. **Apple: $52.6 billion** 1. Netherlands: $52.2 billion 1. Turkey: $49.5 billion 1. Norway: $48.3 billion 1. Sweden: $40.8 billion 1. Mexico: $38.9 billion 1. Philippines: $38.2 billion 1. Spain: $38.2 billion 1. Australia: $37.0 billion 1. Italy: $35.6 billion 1. Poland: $35.0 billion 1. Kuwait: $31.6 billion 1. Israel: $30.9 billion All other: $455.7 billion"
},
{
"docid": "556373",
"title": "",
"text": "I understand how it works very well - as Europes financial centre. I understand that without UKs EU membership those days are gone. I understand that rents in Frankfurt are skyrocketing because banks are fleeing a sinking ship. Without financial passporting rights to the worlds second largest economy London as a financial centre is finished. New York does well because it's part of Americas economy, Hong Kong does well because it's part of China's economy."
},
{
"docid": "309134",
"title": "",
"text": ">Entire families living in a 2 bedroom apartment, for example. That's due to the fact that there isn't much land, same problem in hong kong. However, at the very least 80% of them live in public housing so at least they're not getting gouged on rentals."
},
{
"docid": "208051",
"title": "",
"text": "Shanghai can not be the international financial center of China, or China's inbound/outbound trade, as long as it does not have rule of law. Even Chinese corporates go to Hong Kong to sign contracts because the commercial legal system is efficient, fair, and predictable. Shanghai is a city (and a great one, no doubt!) doing business in a restricted, capital-controlled currency, under a legal system which is corrupt and arbitrary. You wouldn't want to get into a dispute there with, say, Bank of China. When there is a trusted legal system in China then finance will follow. Meanwhile, show me anyone who wants to sign an ISDA agreement under Chinese law, subject an international bond indenture to Chinese law (rather than New York or English law), or do a securitization using Chinese law or counterparties. HK's biggest problem may be that the Mainland is imperiling rule of law in the SAR. If that is lost, the city has no reason to exist."
},
{
"docid": "19502",
"title": "",
"text": "\">There was a good quote in the article about how Google, Apple and Amazon combined employ fewer than 1/3 the people that GM did in 1980. Yeah, that was from [the Economist](http://www.economist.com/blogs/freeexchange/2011/10/death-steve-jobs?page=1) First, that is only a total of their DIRECT employees (numbers from Wikipedia on each company): * Amazon = 33,700 * Apple = 60,400 * Facebook = 3,000 * Google = 31,353 So, that is NOT including *indirect* employees, including any and all subcontractors... to wit: * Amazon -- sells lots of stuff, but lets just think of the BOOKS alone: there are LOTS of authors, publishers, printing industry people, etc -- who are NOT direct employees of Amazon, nor even indirect \"\"contract\"\" employees; but whom Amazon's business model has doubtless helped to increase TOTAL sales of their products. (And then of course, there are all of the Amazon \"\"affiliates\"\".) * Apple -- sells stuff, but basically no longer manufactures anything at all (so comparing it to GM would only be valid if one looked ONLY at GM's engineering and sales personnel, and ignored it's manufacturing people, or if GM had likewise \"\"subcontracted\"\" all of its manufacturing to say Toyota); just about everything that Apple sells is made by subcontract overseas manufacturers -- like FoxConn (which employed over 900,000 people in China in 2010); and of course that is NOT including the component manufacturers. And of course, this is also ignoring the entire software industry that has built up around Apple's products (Mac and iApp developers). * Facebook & Google -- likewise, there are a lot of \"\"indirect\"\" non-employees who nonetheless are in many senses laboring for these companies AND be compensated by them (whether App developers, affiliates, etc). **I find it VERY notable that *theEconomist* entirely ignored firms like MicroSoft (92,000+ direct employees) and dozens & even hundreds of others software companies like Adobe Systems (9,000+), etc -- not to mention countless thousands of consulting companies.** At it's absolute PEAK employment in 1970, GM had a little under 400,000 employees. If you add in Microsoft, Adobe, and a handful of CAD software companies, then \"\"high tech\"\" employs at least that number. Add in the (domestic) sub-contract employees, the consultants, affiliates, and on... and they employ far MORE people (even domestically) than not only GM, but GM + Ford + Chrysler combined. Add in the worldwide employment, and there is no comparison at all.\\* And even then, all of it is beside the point. Yes, you cannot \"\"eat\"\" software or an iPod... but likewise you cannot \"\"eat\"\" a car. What is chiefly critical is whether a nation can FEED itself, and the US production of foodstuffs has never been higher, nor -- on a long term comparison basis -- have food or energy costs ever been lower (even with all of the disastrous effects of monetary inflation). \\*What the US's current problem is, is DOMESTIC employment -- and that is mainly a result of various TRADE, MONETARY and TAXATION policies -- it certainly isn't the direct fault of private industry (and definitely not the fault of \"\"technology\"\"). I mean good god, how many times does the Luddite meme need to be proven false.\""
},
{
"docid": "44609",
"title": "",
"text": "But not until we have shipped the last manufacturing job left in America there and then wondered why we did all that packing up and shipping over and training and learning new language and moving the family to Hong Kong and hating it there...only to make themselves look like heros by coming back from whence they never should have left."
},
{
"docid": "446340",
"title": "",
"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."
},
{
"docid": "243576",
"title": "",
"text": "As you haven't specified country, will try and answer more in general ... Whole Life Insurance but it seems to be the first thing any financial adviser is trained to sell ... The commission structure is such that it makes more attractive for a financial adviser to sell Whole Life. Plus for most buyers its easier to sell Whole Life compared to Term. The way Guarantees are worded differ from Policy to Policy, most of them DO NOT give any Guarantee, its the Adviser misquoting. Where there is Guarantee, it would be similar to a Interest on Bank Deposit / Debt fund. Plus there are various terms used in the Policy, the Guarantee may not be on Sum Assured, but on the Policy Value that would be low. In essence, you are right on investing the difference into any save instruments like Bank Deposits, Certain Debit Funds, Government Bonds, Retirement funds etc that would essentially give you more returns than whats promised in the Whole Life Policy."
},
{
"docid": "544553",
"title": "",
"text": "My simplest approach is to suggest that people go Roth when in the 15% bracket, and use pre-tax to avoid 25%. I outlined that strategy in my article The 15% solution. The monkey wrench that gets thrown in to this is the distortion of the other smooth marginal tax curve caused by the taxation of social security. For those who can afford to, it makes the case to lean toward Roth as much as possible. I'd suggest always depositing pretax, and using conversions to better control the process. Two major benefits to this. It's less a question of too late than of what strategy to use."
},
{
"docid": "124298",
"title": "",
"text": "\"I use Google Finance too. The only thing I have problem with is dividend info which it wouldn't automatically add to my portfolio. At the same time, I think that's a lot to ask for a free web site tool. So when dividend comes, I manually \"\"deposit\"\" the dividend payment by updating the cash amount. If the dividend comes in share form, I do a BUY at price 0 for that particular stock. If you only have 5 stocks, this additional effort is not bad at all. I also use the Hong Kong version of it so perhaps there maybe an implementation difference across country versions. Hope this helps. CF\""
},
{
"docid": "105290",
"title": "",
"text": "I have a company in China, so I have to regularly come back for work. If the Chinese were to revolt, there would be thousands on the streets causing chaos. That was why instagram was banned, there was a revolt in Hong Kong or shanghai and people used insta to spread the news."
},
{
"docid": "535822",
"title": "",
"text": "The Federal Central Tax Office says you may not have to pay taxes in germany for capital gains. You may have to apply for a tax relief to prevent the tax from being collected. You very likely will have to pay whatever taxes there are in Hong Kong on capital gains. Since you use an US broker withholding tax may apply to you but this is a different question that has nothing to do with Germany or german stocks. To be sure you should contact a local expert on this topic. EDIT: I missed some informations that I found on the english site of the german Federal Central Tax Office homepage."
},
{
"docid": "106817",
"title": "",
"text": "1. It is difficult. There is no formal process outside of undergrad and MBA programs to easily gain access to interviews. At your level, its mostly about connections. If willing to start near bottom, go to your business school and start applying to bank associate programs. Sounds like you would like sales and trading more than M&A, so focus there. 2. If you got in at associate level, you would do 1-3 months of training and then get assigned a desk. Finance going through a tough time right now, so trajectory isn't what it used to be. Expect to be a VP after 2-4 years, then its all dependent on luck and skill. 3. If you land a job at a top 15 bank, you should be making total comp of 150k or more after the first year. Salaries not quite at 150k, but most VPS make over 150k salary, not to mention bigger bonus's. 4. If you did M&A you would be working very serious hours. If you go into Sales and Trading your hours will be anywhere from 40 to 60 hours a week depending on the desk. Trading hours tend to be the shortest. 5. Boston isn't a hot bed for i-banking finance. NYC, London, Sing, Hong Kong tend to be the places to be. I know nobody in Boston that could help."
},
{
"docid": "535688",
"title": "",
"text": "\"One of the best answers to this question that I've ever read is in a paper published by Robert Lucas in the Journal of Economic Perspectives. That journal is meant to a be a place for experts to write about their area of expertise (in economics) for a general but still technically-minded audience. They recently opened up the journal as free to the public, which is a fantastic resource -- you no longer need a subscription to JSTOR (or whatever) to read it. You can read the abstract to the paper, and find a link to it, here. One of the things that I like a lot about this paper is that it strips out absolutely everything even slightly unnecessary to thinking about a macroeconomy, and just discusses what one can arrive at with a very very simple model. Of course, with great simplicity come sacrifice about details. However, it does a great job of answering your question, \"\"why do people care about growth?\"\" A quick note: the key to understanding the answer to your question is to think about things in terms of \"\"the long term\"\" -- not even looking forward to the future, because we'll be dead by then, but looking back to the past. The key to the importance of growth is that, for the last ~200 years, the US has, on average, had maybe 2-3% \"\"real growth\"\" per year (I'm pulling these numbers out of my head; I think much better numbers are in that paper somewhere). On average, over that period of time, this growth has meant that the quality of life that one has, if one lives in a country experiencing this growth, is enormous compared to countries that do not experience this average growth over that period. Statistically speaking, growth is also somewhat auto-correlated. Roughly speaking, if it was low the last few periods, you can expect it to be low the next period. Same thing if it's high. Then, the reason we care about growth right now: if you have too many periods of low growth, pretty soon the average \"\"over the long term\"\" growth will be pulled down -- and then quality of life can't be higher in the future (which quickly becomes someone's \"\"present\"\"). The paper above makes this point with a very simple model. Of course, none of this touches on distributional issues, which are another issue entirely. With respect to, \"\"The economy needs to grow to just keep up with its debt repayments,\"\" I think the answer is along the lines of, \"\"sometimes countries get into debt expecting that growth will increase their resources in the future, and thus they can pay back their debt.\"\" That strategy is, of course, the strategy that anyone borrowing (\"\"taking out a loan\"\") should be employing -- you should expect that your future income will be enough to pay back your interest+principle on a loan you took. Otherwise you're irresponsible. At the aggregate level, production is the nation's \"\"income\"\" -- it is what you have, all that you have (as a nation) to pay back any debt you've incurred at the national level.\""
}
] |
4571 | HSBC Hong Kong's “Deposit Plus” Product: What is it, and what strategies to employ? | [
{
"docid": "213824",
"title": "",
"text": "\"HSBC Hong Kong's “Deposit Plus” Product\"\" the same as \"\"Dual Currency Product\"\" . it's Currency link Sell base Currency Call / Alternative Currency Put FX Option It's not protected by the Deposit Insurance System in HK You can search Key Word \"\"Dual Currency Product\"\" & \"\"Dual Currency Investment\"\" & \"\"Dual Currency Deposit\"\" The only one of the world's foreign exchange structured product book 『雙元貨幣產品 Dual Currency Product』 ISBN 9789574181506\""
}
] | [
{
"docid": "365465",
"title": "",
"text": "\"Very simple. You open an account with a broker who will do the trades for you. Then you give the broker orders to buy and sell (and the money to pay for the purchases). That's it. In the old days, you would call on the phone (remember, in all the movies, \"\"Sell, sell!!!!\"\"? That's how), now every decent broker has an online trading platform. If you don't want to have \"\"additional value\"\" and just trade - there are many online discount brokers (ETrade, ScotTrade, TD Ameritrade, and others) who offer pretty cheap trades and provide decent services and access to information. For more fees, you can also get advices and professional management where an investment manager will make the decisions for you (if you have several millions to invest, that is). After you open an account and login, you'll find a big green (usually) button which says \"\"BUY\"\". Stocks are traded on exchanges. For example the NYSE and the NASDAQ are the most common US exchanges (there's another one called \"\"pink sheets\"\", but its a different kind of animal), there are also stock exchanges in Europe (notably London, Frankfurt, Paris, Moscow) and Asia (notably Hong Kong, Shanghai, Tokyo). Many trading platforms (ETrade, that I use, for example) allow investing on some of those as well.\""
},
{
"docid": "340791",
"title": "",
"text": "\"It appears that the company in question is raising money to invest in expanding its operations (specifically lithium production but that is off topic for here). The stock price was rising on the back of (perceived) increases in demand for the company's products but in order to fulfil demand they need to either invest in higher production or increase prices. They chose to increase production by investing. To invest they needed to raise capital and so are going through the motions to do that. The key question as to what will happen with their stock price after this is broken down into two parts: short term and long term: In the short term the price is driven by the expectation of future profits (see below) and the behavioural expectations from an increase in interest in the stock caused by the fact that it is in the news. People who had never heard of the stock or thought of investing in the company have suddenly discovered it and been told that it is doing well and so \"\"want a piece of it\"\". This will exacerbate the effect of the news (broadly positive or negative) and will drive the price in the short run. The effect of extra leverage (assuming that they raise capital by writing bonds) also immediately increases the total value of the company so will increase the price somewhat. The short term price changes usually pare back after a few months as the shine goes off and people take profits. For investing in the long run you need to consider how the increase in capital will be used and how demand and supply will change. Since the company is using the money to invest in factors of production (i.e. making more product) it is the return on capital (or investment) employed (ROCE) that will inform the fundamentals underlying the stock price. The higher the ROCE, the more valuable the capital raised is in the future and the more profits and the company as a whole will grow. A questing to ask yourself is whether they can employ the extra capital at the same ROCE as they currently produce. It is possible that by investing in new, more productive equipment they can raise their ROCE but also possible that, because the lithium mines (or whatever) can only get so big and can only get so much access to the seams extra capital will not be as productive as existing capital so ROCE will fall for the new capital.\""
},
{
"docid": "330665",
"title": "",
"text": "Government subsidies could be provided if we could all agree what activities are of higher social worth, this is not an insurmountable obstacle. For example, in Hong Kong and Singapore civil servants are paid vastly more than in the US. The reasons are that society wants to attract some of its best people to serve in these positions, and they want to insulate them from the temptation of corruption. In effect, these positions are considered to be of high social worth and society rewards them accordingly. Also note that HK and Singapore have even freer capitalist market societies than the US (speaking of economic freedom here)..."
},
{
"docid": "144070",
"title": "",
"text": "\"Do you have any idea what a product manager does? It's a pretty accurate description of the job. The PM is responsible for strategy, direction, product/market fit, features, roadmap, and pretty much everything associated with that product. You own the P&L. The buck stops with you when it comes to the product. The \"\"CEO of your product\"\" description is the classical description of what a PM is, because you're running an entire line of business that can be worth hundreds of millions of dollars.\""
},
{
"docid": "127578",
"title": "",
"text": "Technically, of course. Almost any company can go bankrupt. One small note: a company goes bankrupt, not its stock. Its stock may become worthless in bankruptcy, but a stock disappearing or being delisted doesn't necessarily mean the company went bankrupt. Bankruptcy has implications for a company's debt as well, so it applies to more than just its stock. I don't know of any historical instances where this has happened, but presumably, the warning signs of bankruptcy would be evident enough that a few things could happen. Another company, e.g. another exchange, holding firm, etc. could buy out the exchange that's facing financial difficulty, and the companies traded on it would transfer to the new company that's formed. If another exchange bought out the struggling exchange, the shares of the latter could transfer to the former. This is an attractive option because exchanges possess a great deal of infrastructure already in place. Depending on the country, this could face regulatory scrutiny however. Other firms or governments could bail out the exchange if no one presented a buyout offer. The likelihood of this occurring depends on several factors, e.g. political will, the government(s) in question, etc. For a smaller exchange, the exchange could close all open positions at a set price. This is exactly what happened with the Hong Kong Mercantile Exchange (HKMex) that MSalters mentioned. When the exchange collapsed in May 2013, it closed all open positions for their price on the Thursday before the shutdown date. I don't know if a stock exchange would simply close all open positions at a set price, since equity technically exists in perpetuity regardless of the shutdown of an exchange, while many derivatives have an expiration date. Furthermore, this might not be a feasible option for a large exchange. For example, the Chicago Mercantile Exchange lists thousands of products and manages hundreds of millions of transactions, so closing all open positions could be a significant undertaking. If none of the above options were available, I presume companies listed on the exchange would actively move to other, more financially stable exchanges. These companies wouldn't simply go bankrupt. Contracts can always be listed on other exchanges as well. Considering the high level of mergers and acquisitions, both unsuccessful and successful, in the market for exchanges in recent years, I would assume that option 1 would be the most likely (see the NYSE Euronext/Deutsche Börse merger talks and the NYSE Euronext/ICE merger that's currently in progress), but for smaller exchanges, there is the recent historical precedent of the HKMex that speaks to #3. Also, the above answer really only applies to publicly traded stock exchanges, and not all stock exchanges are publicly-held entities. For example, the Shanghai Stock Exchange is a quasi-governmental organization, so I presume option 2 would apply because it already receives government backing. Its bankruptcy would mean something occurred for the government to withdraw its backing or that it became public, and a discussion of those events occurring in the future is pure speculation."
},
{
"docid": "316",
"title": "",
"text": "Yeah, I instinctively knew that the Middle East probably wouldn't be it, even without knowing jack about finance. So, Europe-wise, we're looking at Frankfurt and London, then? As for Asia, what about Hong Kong? Given that it is already becoming a center for instrumentation between different financial systems and its close proximity to Southeast Asia (also, it is part of the PRC allowing for direct access to China, yet doesn't operate according to the same restrictions that Shanghai would under the Two Countries, One System deal), do you see that as a future major hub for Islamic finance? Or will it all be crowded into Singapore?"
},
{
"docid": "137353",
"title": "",
"text": "\"My question boiled down: Do stock mutual funds behave more like treasury bonds or commodities? When I think about it, it seems that they should respond the devaluation like a commodity. I own a quantity of company shares (not tied to a currency), and let's assume that the company only holds immune assets. Does the real value of my stock ownership go down? Why? On December 20, 1994, newly inaugurated President Ernesto Zedillo announced the Mexican central bank's devaluation of the peso between 13% and 15%. Devaluing the peso after previous promises not to do so led investors to be skeptical of policymakers and fearful of additional devaluations. Investors flocked to foreign investments and placed even higher risk premia on domestic assets. This increase in risk premia placed additional upward market pressure on Mexican interest rates as well as downward market pressure on the Mexican peso. Foreign investors anticipating further currency devaluations began rapidly withdrawing capital from Mexican investments and selling off shares of stock as the Mexican Stock Exchange plummeted. To discourage such capital flight, particularly from debt instruments, the Mexican central bank raised interest rates, but higher borrowing costs ultimately hindered economic growth prospects. The question is how would they pull this off if it's a floatable currency. For instance, the US government devalued the US Dollar against gold in the 30s, moving one ounce of gold from $20 to $35. The Gold Reserve Act outlawed most private possession of gold, forcing individuals to sell it to the Treasury, after which it was stored in United States Bullion Depository at Fort Knox and other locations. The act also changed the nominal price of gold from $20.67 per troy ounce to $35. But now, the US Dollar is not backed by anything, so how do they devalue it now (outside of intentionally inflating it)? The Hong Kong Dollar, since it is fixed to the US Dollar, could be devalued relative to the Dollar, going from 7.75 to 9.75 or something similar, so it depends on the currency. As for the final part, \"\"does the real value of my stock ownership go down\"\" the answer is yes if the stock ownership is in the currency devalued, though it may rise over the longer term if investors think that the value of the company will rise relative to devaluation and if they trust the market (remember a devaluation can scare investors, even if a company has value). Sorry that there's too much \"\"it depends\"\" in the answer; there are many variables at stake for this. The best answer is to say, \"\"Look at history and what happened\"\" and you might see a pattern emerge; what I see is a lot of uncertainty in past devaluations that cause panics.\""
},
{
"docid": "349602",
"title": "",
"text": "Holding Companies: Bank of America Corporation Long-term senior unsecured debt to Baa2 from Baa1, outlook negative; Short-term P-2 affirmed Barclays plc Long-term issuer rating to A3 from A1, outlook negative; Short-term to P-2 from P-1 Citigroup Inc. Long-term senior debt to Baa2 from A3, outlook negative; short-term P-2 affirmed Credit Suisse Group AG Provisional senior debt to (P)A2 from (P)Aa2, outlook stable; Provisional Short-term (P)P-1 affirmed The Goldman Sachs Group, Inc. Long-term senior unsecured debt to A3 from A1, outlook negative; Short-term to P-2 from P-1 HSBC Holdings plc Long-term senior debt to Aa3 from Aa2, outlook negative; Provisional Short-term (P)P-1 affirmed JPMorgan Chase & Co. Long-term senior debt to A2 from Aa3, outlook negative; Short-term P-1 affirmed Morgan Stanley Long-term senior unsecured debt to Baa1 from A2; outlook negative; Short-term to P-2 from P-1 Royal Bank of Scotland Group plc Long-term senior debt to Baa1 from A3, outlook negative; Short-term P-2 affirmed ------------- Operating Companies: Bank of America, N.A. Long-term deposit rating to A3 from A2, outlook stable; Short-term to P-2 from P-1 Barclays Bank plc Long-term issuer rating to A2 from Aa3, outlook negative; Short-term P-1 affirmed BNP Paribas Long-term debt and deposit rating to A2 from Aa3; outlook stable; Short-term P-1 affirmed Citibank, N.A. Long-term deposit rating to A3 from A1, outlook stable; Short-term to P-2 from P-1 Credit Agricole S.A. Long-term debt and deposit rating to A2 from Aa3, outlook negative; Short-term P-1 affirmed Credit Suisse AG Long-term deposit and senior debt rating to A1 from Aa1, outlook stable; Short-term P-1 affirmed Deutsche Bank AG Long-term deposit rating to A2 from Aa3, outlook stable; Short-term P-1 affirmed Goldman Sachs Bank USA Long-term deposit rating to A2 from Aa3, outlook stable; Short-term P-1 affirmed HSBC Bank plc Long-term deposit rating to Aa3 from Aa2, outlook negative; Short-term P-1 affirmed JPMorgan Chase Bank, N.A. Long-term deposit rating to Aa3 from Aa1, outlook stable; Short-term P-1 affirmed Morgan Stanley Bank, N.A. Long-term deposit rating to A3 from A1, outlook stable; Short-term to P-2 from P-1 Royal Bank of Canada Long-term deposit rating to Aa3 from Aa1, outlook stable; Short-term P-1 affirmed Royal Bank of Scotland plc Long-term deposit rating to A3 from A2; outlook negative; Short-term to P-2 from P-1 Societe Generale Long-term debt and deposit to A2 from A1; outlook stable; Short-term P-1 affirmed UBS AG Long-term debt and deposit to A2 from Aa3, outlook stable; Short-term P-1 confirmed."
},
{
"docid": "106817",
"title": "",
"text": "1. It is difficult. There is no formal process outside of undergrad and MBA programs to easily gain access to interviews. At your level, its mostly about connections. If willing to start near bottom, go to your business school and start applying to bank associate programs. Sounds like you would like sales and trading more than M&A, so focus there. 2. If you got in at associate level, you would do 1-3 months of training and then get assigned a desk. Finance going through a tough time right now, so trajectory isn't what it used to be. Expect to be a VP after 2-4 years, then its all dependent on luck and skill. 3. If you land a job at a top 15 bank, you should be making total comp of 150k or more after the first year. Salaries not quite at 150k, but most VPS make over 150k salary, not to mention bigger bonus's. 4. If you did M&A you would be working very serious hours. If you go into Sales and Trading your hours will be anywhere from 40 to 60 hours a week depending on the desk. Trading hours tend to be the shortest. 5. Boston isn't a hot bed for i-banking finance. NYC, London, Sing, Hong Kong tend to be the places to be. I know nobody in Boston that could help."
},
{
"docid": "384084",
"title": "",
"text": "\"just curious what qualifies this as a \"\"hedge fund\"\". is it structured as an LLC? are they charging Apple 2%/20% fees? are they shorting or using derivatives or leverage to manage risk or amplify returns? are they employing sophisticated investment strategies? are they managing funds for outside investors? sounds to me like a standard cash management and tax avoidance operation of a (very large) corporation that somebody is calling a \"\"hedge fund\"\" to claim it is the world's largest. I'm sure most major corporations are running something similar to this and nobody calls them hedge funds.\""
},
{
"docid": "19502",
"title": "",
"text": "\">There was a good quote in the article about how Google, Apple and Amazon combined employ fewer than 1/3 the people that GM did in 1980. Yeah, that was from [the Economist](http://www.economist.com/blogs/freeexchange/2011/10/death-steve-jobs?page=1) First, that is only a total of their DIRECT employees (numbers from Wikipedia on each company): * Amazon = 33,700 * Apple = 60,400 * Facebook = 3,000 * Google = 31,353 So, that is NOT including *indirect* employees, including any and all subcontractors... to wit: * Amazon -- sells lots of stuff, but lets just think of the BOOKS alone: there are LOTS of authors, publishers, printing industry people, etc -- who are NOT direct employees of Amazon, nor even indirect \"\"contract\"\" employees; but whom Amazon's business model has doubtless helped to increase TOTAL sales of their products. (And then of course, there are all of the Amazon \"\"affiliates\"\".) * Apple -- sells stuff, but basically no longer manufactures anything at all (so comparing it to GM would only be valid if one looked ONLY at GM's engineering and sales personnel, and ignored it's manufacturing people, or if GM had likewise \"\"subcontracted\"\" all of its manufacturing to say Toyota); just about everything that Apple sells is made by subcontract overseas manufacturers -- like FoxConn (which employed over 900,000 people in China in 2010); and of course that is NOT including the component manufacturers. And of course, this is also ignoring the entire software industry that has built up around Apple's products (Mac and iApp developers). * Facebook & Google -- likewise, there are a lot of \"\"indirect\"\" non-employees who nonetheless are in many senses laboring for these companies AND be compensated by them (whether App developers, affiliates, etc). **I find it VERY notable that *theEconomist* entirely ignored firms like MicroSoft (92,000+ direct employees) and dozens & even hundreds of others software companies like Adobe Systems (9,000+), etc -- not to mention countless thousands of consulting companies.** At it's absolute PEAK employment in 1970, GM had a little under 400,000 employees. If you add in Microsoft, Adobe, and a handful of CAD software companies, then \"\"high tech\"\" employs at least that number. Add in the (domestic) sub-contract employees, the consultants, affiliates, and on... and they employ far MORE people (even domestically) than not only GM, but GM + Ford + Chrysler combined. Add in the worldwide employment, and there is no comparison at all.\\* And even then, all of it is beside the point. Yes, you cannot \"\"eat\"\" software or an iPod... but likewise you cannot \"\"eat\"\" a car. What is chiefly critical is whether a nation can FEED itself, and the US production of foodstuffs has never been higher, nor -- on a long term comparison basis -- have food or energy costs ever been lower (even with all of the disastrous effects of monetary inflation). \\*What the US's current problem is, is DOMESTIC employment -- and that is mainly a result of various TRADE, MONETARY and TAXATION policies -- it certainly isn't the direct fault of private industry (and definitely not the fault of \"\"technology\"\"). I mean good god, how many times does the Luddite meme need to be proven false.\""
},
{
"docid": "535688",
"title": "",
"text": "\"One of the best answers to this question that I've ever read is in a paper published by Robert Lucas in the Journal of Economic Perspectives. That journal is meant to a be a place for experts to write about their area of expertise (in economics) for a general but still technically-minded audience. They recently opened up the journal as free to the public, which is a fantastic resource -- you no longer need a subscription to JSTOR (or whatever) to read it. You can read the abstract to the paper, and find a link to it, here. One of the things that I like a lot about this paper is that it strips out absolutely everything even slightly unnecessary to thinking about a macroeconomy, and just discusses what one can arrive at with a very very simple model. Of course, with great simplicity come sacrifice about details. However, it does a great job of answering your question, \"\"why do people care about growth?\"\" A quick note: the key to understanding the answer to your question is to think about things in terms of \"\"the long term\"\" -- not even looking forward to the future, because we'll be dead by then, but looking back to the past. The key to the importance of growth is that, for the last ~200 years, the US has, on average, had maybe 2-3% \"\"real growth\"\" per year (I'm pulling these numbers out of my head; I think much better numbers are in that paper somewhere). On average, over that period of time, this growth has meant that the quality of life that one has, if one lives in a country experiencing this growth, is enormous compared to countries that do not experience this average growth over that period. Statistically speaking, growth is also somewhat auto-correlated. Roughly speaking, if it was low the last few periods, you can expect it to be low the next period. Same thing if it's high. Then, the reason we care about growth right now: if you have too many periods of low growth, pretty soon the average \"\"over the long term\"\" growth will be pulled down -- and then quality of life can't be higher in the future (which quickly becomes someone's \"\"present\"\"). The paper above makes this point with a very simple model. Of course, none of this touches on distributional issues, which are another issue entirely. With respect to, \"\"The economy needs to grow to just keep up with its debt repayments,\"\" I think the answer is along the lines of, \"\"sometimes countries get into debt expecting that growth will increase their resources in the future, and thus they can pay back their debt.\"\" That strategy is, of course, the strategy that anyone borrowing (\"\"taking out a loan\"\") should be employing -- you should expect that your future income will be enough to pay back your interest+principle on a loan you took. Otherwise you're irresponsible. At the aggregate level, production is the nation's \"\"income\"\" -- it is what you have, all that you have (as a nation) to pay back any debt you've incurred at the national level.\""
},
{
"docid": "402332",
"title": "",
"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."
},
{
"docid": "329771",
"title": "",
"text": ">London Black Cabs are acknowledged globally as the best on earth. Other than the huge cost, I have always had a very positive experience in them. So you are correct, it is not in every city on earth. London Black Cabs are still pretty awful, they are expensive and not particularly innovative. Minicabs throughout the UK are far better in my view, you can book them in advance, pay online, use an app to see where they are and who is coming, or get a call/text etc.. In short, minicabs tend to be cheaper and generally offer more efficient service. They are also regulated far less strictly, I could go and start driving a minicab fairly easily, no so much for black cabs. >I have been to 40% of countries in the world, and travel extensively for business and vacations. Taxis are almost universally awful. I have had negative experiences on every continent. Compare them to the uber equivalent though, taxis in Hong Kong are ubiquitous and cheap, but they aren't particularly pleasant, Uber somehow manages to be worse. Uber in Berlin was at best on a par with a normal Cab, in Glasgow it was more expensive.. In short uber feels like another minicab firm, the local standard seems more relevant because there isn't a consistent 'Uber' standard.. >As a man, I have felt threatened on occasions and realized that no one knows I am in this taxi, I can only imagine what women go through. I haven't (possibly the Philippines once or twice..) but I don't really feel significantly safer in an Uber.. >I am no fan of how Uber is run, but the concept is here to stay. Taxis will never be able to compete with the traceability and accountability. Whether it is Uber or a competitor, that is what the world will use. But cab companies already do, I can see who my driver is, what the registration is with my local cab company, moreover I can call the cab company, schedule a pick up for two weeks time for a trip to the airport and know what I'm paying. In short, there is nothing that makes uber particularly special, they are essentially a minicab company with a technological edge that has already been, or is being eroded. >The hijacked the term ride sharing, however the generally accepted definition today is an Uber type service. Uber is trying to hijack it because it suits them to try and distance themselves from the vehicle for hire definition that means they have to comply with licensing, vehicle and employment regulation. Moreover, it's a real shame shame because there is value, both economic, social and environmental in actual ride sharing, it's part of the 'sharing economy' that is actually realisable. >Typically the only people who defend taxis, either very rarely take them, or are drivers themselves. Well, I don't drive a taxi and use them regularly enough, but I'll happily defend some of my local firms because they are pretty decent. I do however understand why people in areas with poorly regulated taxi services might see uber as a positive in that it will disrupt an unnatural and often inefficient monopoly."
},
{
"docid": "243576",
"title": "",
"text": "As you haven't specified country, will try and answer more in general ... Whole Life Insurance but it seems to be the first thing any financial adviser is trained to sell ... The commission structure is such that it makes more attractive for a financial adviser to sell Whole Life. Plus for most buyers its easier to sell Whole Life compared to Term. The way Guarantees are worded differ from Policy to Policy, most of them DO NOT give any Guarantee, its the Adviser misquoting. Where there is Guarantee, it would be similar to a Interest on Bank Deposit / Debt fund. Plus there are various terms used in the Policy, the Guarantee may not be on Sum Assured, but on the Policy Value that would be low. In essence, you are right on investing the difference into any save instruments like Bank Deposits, Certain Debit Funds, Government Bonds, Retirement funds etc that would essentially give you more returns than whats promised in the Whole Life Policy."
},
{
"docid": "569645",
"title": "",
"text": "I agree with your strategy of using a conservative estimate to overpay taxes and get a refund next year. As a self-employed individual you are responsible for paying self-employment tax (which means paying Social Security and Medicare tax for yourself as both: employee and an employer.) Current Social Security Rate is 6.2% and Medicare is 1.45%, so your Self-employment tax is 15.3% (7.65%X2) Assuming you are single, your effective tax rate will be over 10% (portion of your income under $ 9,075), but less than 15% ($9,075-$36,900), so to adopt a conservative approach, let's use the 15% number. Given Self-employment and Federal Income tax rate estimates, very conservative approach, your estimated tax can be 30% (Self-employment tax plus income tax) Should you expect much higher compensation, you might move to the 25% tax bracket and adjust this amount to 40%."
},
{
"docid": "47946",
"title": "",
"text": "I think the main question is whether the 1.5% quarterly fee is so bad that it warrants losing $60,000 immediately. Suppose they pull it out now, so they have 220000 - 60000 = $160,000. They then invest this in a low-cost index fund, earning say 6% per year on average over 10 years. The result: Alternatively, they leave the $220,000 in but tell the manager to invest it in the same index fund now. They earn nothing because the manager's rapacious fees eat up all the gains (4*1.5% = 6%, not perfectly accurate due to compounding but close enough since 6% is only an estimate anyway). The result: the same $220,000 they started with. This back-of-the-envelope calculation suggests they will actually come out ahead by biting the bullet and taking the money out. However, I would definitely not advise them to take this major step just based on this simple calculation. Many other factors are relevant (e.g., taxes when selling the existing investment to buy the index fund, how much of their savings was this $300,000). Also, I don't know anything about how investment works in Hong Kong, so there could be some wrinkles that modify or invalidate this simple calculation. But it is a starting point. Based on what you say here, I'd say they should take the earliest opportunity to tell everyone they know never to work with this investment manager. I would go so far as to say they should look at his credentials (e.g., see what kind of financial advisor certification he has, if any), look up the ethical standards of their issuers, and consider filing a complaint. This is not because of the performance of the investments -- losing 25% of your money due to market swings is a risk you have to accept -- but because of the exorbitant fees. Unless Hong Kong has got some crazy kind of investment management market, charging 1.5% quarterly is highway robbery; charging a 25%+ for withdrawal is pillage. Personally, I would seriously consider withdrawing the money even if the manager's investments had outperformed the market."
},
{
"docid": "175889",
"title": "",
"text": "They are already indirectly paying these expenses. They should be built into your rates. The amount per job or per hour needs to cover what would have been your salary, plus the what would have been sick, vacation, holidays, health insurance, life insurance, disability, education, overhead for office expenses, cost of accountants...and all taxes. In many companies the general rule of thumb is that they need to charge a customer 2x the employees salary to cover all this plus make a profit. If this is a side job some of these benefits will come from your main job. Some self employed get some of these benefits from their spouse. The company has said we give you money for the work you perform, but you need to cover everything else including paying all taxes. Depending on where you live you might have to send money in more often then once a year. They are also telling you that they will be reporting the money they give you to the government so they can claim it as a business expense. So you better make sure you report it as income."
},
{
"docid": "207882",
"title": "",
"text": "Actually What you Can do here, Deposit the money to someones account who has an Account in abroad and Linked to Master Card. Or Another option is You can take help from two banks Standard Chartard or HSBC, they provide RFCD Account, which is a Dollar Account and International Cards which you can use in abroad."
}
] |
4600 | Why government bonds fluctuate so much, even though interest rates don't change that often? | [
{
"docid": "482415",
"title": "",
"text": "Long term gov't bonds fluctuate in price with a seemingly small interest rate fluctuation because many years of cash inflows are discounted at low rates. This phenomenon is dulled in a high interest rate environment. For example, just the principal repayment is worth ~1/3, P * 1/(1+4%)^30, what it will be in 30 years at 4% while an overnight loan paying an unrealistic 4% is worth essentially the same as the principal, P * 1/(1+4%)^(1/365). This is more profound in low interest rate economies because, taking the countries undergoing the present misfortune, one can see that their overnight interest rates are double US long term rates while their long term rates are nearly 10x as large as US long term rates. If there were much supply at the longer maturities which have been restrained by interest rates only manageable by the highly skilled or highly risky, a 4% increase on a 30% bond is only about a 20% decline in bond price while a 4% increase on a 4% bond is a 50% decrease. The easiest long term bond to manipulate quantitatively is the perpetuity where p is the price of the bond, i is the interest payment per some arbitrary period usually 1 year, and r is the interest rate paid per some arbitrary period usually 1 year. Since they are expressly linked, a price can be implied for a given interest rate and vice versa if the interest payment is known or assumed. At a 4% interest rate, the price is At 4.04%, the price is , a 1% increase in interest rates and a 0.8% decrease in price . Longer term bonds such as a 30 year or 20 year bond will not see as extreme price movements. The constant maturity 30 year treasury has fluctuated between 5% and 2.5% to ~3.75% now from before the Great Recession til now, so prices will have more or less doubled and then reduced because bond prices are inversely proportional to interest rates as generally shown above. At shorter maturities, this phenomenon is negligible because future cash inflows are being discounted by such a low amount. The one month bill rarely moves in price beyond the bid/ask spread during expansion but can be expected to collapse before a recession and rebound during."
}
] | [
{
"docid": "537603",
"title": "",
"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."
},
{
"docid": "182249",
"title": "",
"text": "No, the interest payments you receive do not change. To help avoid confusion, it is better to call those payments the coupons of the bond. Each treasury note or bond is issued with a certain coupon that remains fixed throughout its whole life. However, as the general level of bank interest rates change maybe because the FED is moving its deposit rate for banks, the value of the treasury bond will change. At maturity it will always be worth its face value, but at any time before that its price will depend on the general level of interest rates in the country. Because of the way a bond is structured, it is usually possible to convert the bond's price into a yield, which is usually a percentage like 3% or sometwhere near the current level of general interest rates. But don't be confused, this yield is just an alternative way of stating the current price of the treasury bond, and it changes as the prices of the bond changes. It is not the coupon that is changing, but the yield."
},
{
"docid": "401952",
"title": "",
"text": "\"In general, yes. If interest rates go higher, then any existing fixed-rate bonds - and hence ETFs holding those bonds - become less valuable. The further each bond is from maturity, the larger the impact. As you suggest, once the bonds do mature, the fund can replace them at a market price, so the effect tails off. The bond market has a concept known as \"\"duration\"\" that helps reason about this effect. Roughly, it measures the average time from now to each payout of the bond, weighted by the payout. The longer the duration, the more the price will change for a given change in interest rates. The concept is just an approximation, and there are various slightly different ways of calculating it; but very roughly the price of a bond will reduce by a percentage equal to the duration times the increase in interest rates. So a bond with a duration of 5 years will lose 5% of its value for a 1% rise in interest rates (and of course vice-versa). For your second question, it really depends on what you're trying to achieve by diversifying - this might be best as a different question that gives more detail, as it's not very related to your first question. Short-term bonds are less risky. But both will lose value if the underlying company is in trouble. Gilts (government bonds) are less risky than corporate bonds.\""
},
{
"docid": "275925",
"title": "",
"text": "\"(Real) interest rates are so low because governments want people to use their money to improve the economy by spending or investing rather than saving. Their idea is that by consuming or investing you will help to create jobs that will employ people who will spend or invest their pay, and so on. If you want to keep this money for the future you don't want to spend it and interest rates make saving unrewarding therefore you ought to invest. That was the why, now the how. Inflation protected securities, mentioned in another answer, are the least risk way to do this. These are government guaranteed and very unlikely to default. On the other hand deflation will cause bigger problems for you and the returns will be pitiful compared with historical interest rates. So what else can be done? Investing in companies is one way of improving returns but risk starts to increase so you need to decide what risk profile is right for you. Investing in companies does not mean having to put money into the stock market either directly or indirectly (through funds) although index tracker funds have good returns and low risk. The corporate bond market is lower risk for a lesser reward than the stock market but with better returns than current interest rates. Investment grade bonds are very low risk, especially in the current economic climate and there are exchange traded funds (ETFs) to diversify more risk away. Since you don't mention willingness to take risk or the kind of amounts that you have to save I've tried to give some low risk options beyond \"\"buy something inflation linked\"\" but you need to take care to understand the risks of any product you buy or use, be they a bank account, TIPS, bond investments or whatever. Avoid anything that you don't fully understand.\""
},
{
"docid": "481312",
"title": "",
"text": "\"A bond fund will typically own a range of bonds of various durations, in your specific fund: The fund holds high-quality long-term New York municipal bonds with an average duration of approximately 6–10 years So through this fund you get to own a range of bonds and the fund price will behave similar to you owning the bonds directly. The fund gives you a little diversification in terms of durations and typically a bit more liquidity. It also may continuously buy bonds over time so you get some averaging vs. just buying a bond at a given time and holding it to maturity. This last bit is important, over long durations the bond fund may perform quite differently than owning a bond to maturity due to this ongoing refresh. Another thing to remember is that you're paying management fees for the fund's management. As with any bond investment, the longer the duration the more sensitive the price is to change in interest rates because when interest rates change the price will track it. (i.e. compare a change of 1% for a one year duration vs. 1% yearly over 10 years) If I'm correct, why would anyone in the U.S. buy a long-term bond fund in a market like this one, where interest rates are practically bottomed out? That is the multi-trillion dollar question. Bond prices today reflect what \"\"people\"\" are willing to pay for them. Those \"\"people\"\" include the Federal Reserve which through various programs (QE, Operate Twist etc.) has been forcing the interest rates to where they want to see them. If no one believed the Fed would be able to keep interest rates where they want them then the prices would be different but given that investors know the Fed has access to an infinite supply of money it becomes a more difficult decision to bet against that. (aka \"\"Don't fight the Fed\"\"). My personal belief is that rates will come up but I haven't been able to translate that belief into making money ;-) This question is very complex and has to do not only with US policies and economy but with the status of the US currency in the world and the world economy in general. The other saying that comes to mind in this context is that the market can remain irrational (and it certainly seems to be that) longer than you can remain solvent.\""
},
{
"docid": "231268",
"title": "",
"text": "Companies do not support their stock. Once the security is out on the wild (market), its price fluctuates according to what investors think they are worth. Support is a whole different concept, financially speaking: Support or support level refers to the price level below which, historically, a stock has had difficulty falling. It is the level at which buyers tend to enter the stock. So it is the lowest assumed price for that stock. Once it reaches its price, buyers will rush to the stock, raising its price. The company wants to keep the stock price at acceptable levels, as it can be seen as the general view of the company's health. Also several employees/executives in the company have stock or stock options, so it is in their interest to keep their stock price up. A bond that goes down in value may indicate a believe the bond issuer (government in this case) won't honor the bond when it matures. As for bonds, there is a wealth of reading in this site: Can someone explain how government bonds work? Who sets the prices on government bonds? Basic understanding of bonds, values, rates and yields"
},
{
"docid": "342485",
"title": "",
"text": "just pick a good bond and invest all your money there (since they're fairly low risk) No. That is basically throwing away your money and why would you do that. And who told you they are low risk. That is a very wrong premise. What factors should I consider in picking a bond and how would they weigh against each other? Quite a number of them to say, assuming these aren't government bonds(US, UK etc) How safe is the institution issuing the bond. Their income, business they are in, their past performance business wise and the bonds issued by them, if any. Check for the bond ratings issued by the rating agencies. Read the prospectus and check for any specific conditions i.e. bonds are callable, bonds can be retired under certain conditions, what happens if they default and what order will you be reimbursed(senior debt take priority). Where are interest rates heading, which will decide the price you are paying for the bond. And also the yield you will derive from the bond. How do you intend to invest the income, coupon, you will derive from the bonds. What is your time horizon to invest in bonds and similarly the bond's life. I have invested in stocks previously but realized that it isn't for me Bonds are much more difficult than equities. Stick to government bonds if you can, but they don't generate much income, considering the low interest rates environment. Now that QE is over you might expect interest rates to rise, but you can only wait. Or go for bonds from stable companies i.e. GE, Walmart. And no I am not saying you buy their bonds in any imaginable way."
},
{
"docid": "257633",
"title": "",
"text": "This is just a guess but I would imagine that it has to do with risk. The deposits in Banks are usually as safe as government bonds (broad oversimplification) as: The US government is considered the most trustworthy - even in unlikely event of being close to default it would be rescued by FED (so it can just print the money). So the banks at the same time have very low competition regarding government bonds and the investments they can do have relatively low ROI so they cannot offer much more competitive rates. On the other hand Ukrainian bonds have current rating Caa3/CCC-/CCC - i.e. the Goverment is judged to be likely to default (as you pointed out there is war going on) and in result the government bonds are considered highly speculative. Therefore to attract foreign investors they need to have high interest rating. Similarly the CDs at the banks can be considered at the risk of being lost so to prevent flight of capital overseas (or people keeping USD in cash form at home) they need to offer rates that reflect the risk."
},
{
"docid": "487616",
"title": "",
"text": "Maximizing income could mean a lot of things. What you really want is to maximize wealth. Doesn't matter if it comes from your bond appreciating in value or as dividends. In order to maximize your wealth (that's today's wealth), you need to make decisions based on the net present value of these bonds. The market is fairly priced, especially for a tight market like government bonds. That means if your bond falls in price, it has fallen by precisely the amount necessary so that an investor would be indifferent between purchasing it now, at its current price, and purchasing a new bond with a higher dividend. The bonds with higher dividends will simply have a higher price, so more of the money comes as dividends than as price appreciation (at maturity it will sell for face value). In other words, the animals are out of the barn and you have lost (or made) money already. Changing from one bond to another will not change your wealth one way or the other. The only potential effect of changing bonds will be changing the risk of your portfolio. If you buy a bond that matures later or has a lower dividend than your current bond, you will be adding additional interest rate risk to your portfolio. That risk should be compensated, so you will have a higher expected return as well. But regardless of your choice you will not be made wealthier or less wealthy by changing from one bond to another. Should you buy bonds that will earn you the most possible? Sure, if you are below your risk tolerance. Even among default free bonds, the longer the maturity and the lower the dividend, the greater the effect of future changes in interest rates on your bond. That makes them riskier, but also makes them earn more money on average. TL;DR: In terms of your wealth, which is what matters, it doesn't matter whether you hold your bond or buy a new one."
},
{
"docid": "93518",
"title": "",
"text": "\"It may seem weird but interest rates are set by a market. Risk is a very large component of the price that a saver will accept to deposit their money in a bank but not the only one. Essentially you are \"\"lending\"\" deposited cash to the bank that you put it in and they will lend it out at a certain risk to themselves and a certain risk to you. By diversifying who they lend to (corporations, home-buyers each other etc.) the banks mitigate a lot of the risk but lending to the bank is still a risky endeavour for the \"\"saver\"\" and the saver accepts a given interest rate for the amount of risk there is in having the money in that particular bank. The bank is also unable to diversify away all possible risk, but tries to do the best job it can. If a bank is seen to take bigger risks and therefore be in greater risk of failing (having a run on deposits) it must have a requisitely higher interest rates on deposits compared to a lower risk bank. \"\"Savers\"\" therefore \"\"shop around\"\" for the best interest rate for a given level of risk which sets the viable interest rate for that bank; any higher and the bank would not make a profit on the money that it lends out and so would not be viable as a business, any lower and savers would not deposit their money as the risk would be too high for the reward. Hence competition (or lack of it) will set the rate as a trade off between risk and return. Note that governments are also customers of the banking industry when they are issuing fixed income securities (bonds) and a good deal of the lending done by any bank is to various governments so the price that they borrow money at is a key determinant of what interest rate the bank can afford to give and are part of the competitive banking industry whether they want to be or not. Since governments in most (westernised) countries provide insurance for deposits the basic level of (perceived) risk for all of the banks in any given country is about the same. That these banks lend to each other on an incredibly regular basis (look into the overnight or repo money market if you want to see exactly how much, the rates that these banks pay to and receive from each other are governed by interbank lending rates called Libor and Euribor and are even more complicated than this answer) simply compounds this effect because it makes all of the banks reliant on each other and therefore they help each other to stay liquid (to some extent). Note that I haven't mentioned currency at all so far but this market in every country applies over a number of currencies. The way that this occurs is due to arbitrage; if I can put foreign money into a bank in a country at a rate that is higher than the rate in its native country after exchange costs and exchange rate risk I will convert all of my money to that currency and take the higher interest rate. For an ordinary individual's savings that is not really possible but remember that the large multinational banks can do exactly the same thing with billions of dollars of deposits and effectively get free money. This means that either the bank's interest rate will fall to a risk adjusted level or the exchange rate will move. Either of those moves will remove the potential for making money for nothing. In this case, therefore it is both the exchange rate risk (and costs) as well as the loan market in that country that set the interest rate in foreign currencies. Demand for loans in the foreign currency is not a major mover for the same reason. Companies importing from foreign entities need cash in foreign currencies to pay their bills and so will borrow money in other currencies to fulfil these operations which could come from deposits in the foreign currency if they were available at a lower interest rate than a loan in local currency plus the costs of exchange but the banks will be unwilling to loan to them for less than the highest return that they can get so will push up interest rates to their risk level in the same way that they did in the market before currencies were taken into account. Freedom of movement of foreign currencies, however, does move interest rates in foreign currencies as the banks want to be able to lend as much of currencies that are not freely deliverable as they can so will pay a premium for these currencies. Other political moves such as the government wanting to borrow large amounts of foreign currency etc. will also move the interest rate given for foreign currencies not just because loaning to the government is less risky but also because they sometimes pay a premium (in interest) for being able to borrow foreign currency which may balance this out. Speculation that a country may change its base interest rate will move short term rates, and can move long term rates if it is seen to be a part of a country's economic strategy. The theory behind this is deep and involved but the tl;dr answer would be the standard \"\"invisible hand\"\" response when anything market or arbitrage related is involved. references: I work in credit risk and got a colleague who is also a credit risk consultant and economist to look over it. Arbitrage theory and the repo markets are both fascinating so worth reading about!\""
},
{
"docid": "574011",
"title": "",
"text": "\"Negative Yields on Bonds is opposite of Getting profit on your investment. This is some kind of new practice from world wide financial institute. the interest rate is -0.05% for ten years. So a $100,000 bond under those terms would be \"\"discounted\"\" to $100,501, give or take. No, actually what you are going to get out from this investment is after 10 years when this investment is mature for liquidation, you will get return not even your principle $100,000 , but ( (Principle $100,000) minus (Negative Yields @ -0.05) Times ( 10 Years ) ) assume the rates are on simple annual rate. Now anyone may wander why should someone going to buy this kind of investment where I am actually giving away not only possible profit also losing some of principle amount! This might looks real odd, but there is other valid reason for issuing / investing on such kind of bond. From investor prospective: Every asset has its own 'expense' for keeping ownership of it. This is also true for money/currency depending on its size. And other investment possibility and risk factor. The same way people maintain checking account with virtually no visible income vs. Savings account where bank issue some positive rate of interest with various time factor like annually/half-yearly/monthly. People with lower level of income but steady on flow choose savings where business personals go for checking one. Think of Millions of Ideal money with no secure investment opportunity have to option in real. Option one to keeping this large amount of money in hand, arranging all kind of security which involve extra expense, risk and headache where Option two is invest on bond issued by Government of country. Owner of that amount will go for second one even with negative yields on bonds where he is paying in return of security and risk free grantee of getting it back on time. On Issuing Government prospective: Here government actually want people not to keep money idle investing bonds, but find any possible sector to invest which might profitable for both Investor + Grater Community ultimately country. This is a basic understanding on issue/buy/selling of Negative interest bearing bond on market. Hope I could explain it here. Not to mention, English is not my 1st language at all. So ignore my typo, grammatical error and welcome to fix it. Cheers!\""
},
{
"docid": "330890",
"title": "",
"text": "\"who computes the S&P 500? Standard and Poor's. Why are they sharing this information and Because that's what they do. This is a financial research company. how do they recuperate the costs inherent in computing the S&P 500? By charging clients for other information. The computing of the index itself is not all that complicated, its coming up with the index that's a problem. Once they've come up with the formula, and it became widely accepted, the computation itself is not an issue. But the fact that its so popular leads to the S&P brand recognition, and people come and pay good money for their other services (ratings and financial analysis of securities). They do more work for free. For example, the ratings of various government debts are being done by S&P for free (governments don't pay for that), while private bonds are rated for a fee (corporations pay to have their bonds rated). Also, as noted by JBKing, there are probably some licensing fees for using the index name in the fund name (and other users are probably paying the licensing fee, like the news agencies and the exchanges). S&P500 is a registered trademark, and as such cannot be used without the owner's permission. Why is then \"\"active management\"\" not required for indexed funds Because no research and stock picking is required. In fact, these funds don't really require a manager, they can be managed by a simple script. and how does it lower taxes? (perhaps this could be a different question if this has become too broad) Actively managed funds perform a lot more buy/sell operations, each leading to tax consequences to the fund (which rolls them over to the investors). Index funds only buy and sell to re-balance back to the index (or when the makeup of the index changes, usually once a year or half a year), leading to much lesser realized capital gains to the fund, thus much lesser tax consequences.\""
},
{
"docid": "309913",
"title": "",
"text": "As others have pointed out your bond funds should have short durations, preferably not more than about 2 years. If you are in a bond fund for the long haul meaning you do not have to draw on your bond fund a short time after interest rates have gone up, it is not a big issue. The fund's holdings will eventually turn over into higher interest bearing paper. If bonds do go down, you might want to add more to the fund(s) (see my comment on age-specific asset allocation below). Keep in mind that some stocks are interest sensitive, for example utility stocks which are used as an income source and their dividends compete with rates on CDs which are much safer. Right now CD rates are very low. This could change. It's possible that we may be in an unusually sensitive interest rate period that might have large effects on the stock market, yet to be determined. The reason is that rates have been so low for such a long time that folks that normally would have obtained income streams from bonds have turned to dividend bearing stocks. Some believe that recent market rises are due to such people seeking dividends to enhance cash inflows. If, and emphasis on if, this is true, we could see a sharp drop in the market as sell offs occur as those who want cash streams move from stocks to ultra safe, government insured CDs. Only time will tell if this is going to play out. If retirement for you is 15+ years in the future and the market goes down (bonds or equities), good stuff - it's a buying opportunity in whatever category has dropped. Most important is to keep an eye on your asset allocation and make sure it is appropriate to your age. You did not state the percentages in each category, so further discussion is impossible on that topic. With more than 15 years to go, I personally would be heavily weighted on the equity side, mostly mid-cap and some small equity funds or ETFs in both domestic and international markets. As you age, shuffle some equities into fixed income (bonds, CDs and the like). Work up an asset allocation plan - start thinking about it now. Don't wait."
},
{
"docid": "585494",
"title": "",
"text": "\"Pay off the credit cards. From now on, pay off the credit cards monthly. Under no circumstances should you borrow money. You have net worth but no external income. Borrowing is useless to you. $200,000 in two bank accounts, because if one bank collapses, you want to have a spare while you wait for the government to pay off the guarantee. Keep $50,000 in checking and another $50k in savings. The remainder put into CDs. Don't expect interest income beyond inflation. Real interest rates (after inflation) are often slightly negative. People ask why you might keep money in the bank rather than stocks/bonds. The problem is that stocks/bonds don't always maintain their value, much less go up. The bank money won't gain, but it won't suddenly lose half its value either. It can easily take five years after a stock market crash for the market to recover. You don't want to be withdrawing from losses. Some people have suggested more bonds and fewer stocks. But putting some of the money in the bank is better than bonds. Bonds sometimes lose money, like stocks. Instead, park some of the money in the bank and pick a more aggressive stock/bond mixture. That way you're never desperate for money, and you can survive market dips. And the stock/bond part of the investment will return more at 70/30 than 60/40. $700,000 in stock mutual funds. $300,000 in bond mutual funds. Look for broad indexes rather than high returns. You need this to grow by the inflation rate just to keep even. That's $20,000 to $30,000 a year. Keep the balance between 70/30 and 75/25. You can move half the excess beyond inflation to your bank accounts. That's the money you have to spend each year. Don't withdraw money if you aren't keeping up with inflation. Don't try to time the market. Much better informed people with better resources will be trying to do that and failing. Play the odds instead. Keep to a consistent strategy and let the market come back to you. If you chase it, you are likely to lose money. If you don't spend money this year, you can save it for next year. Anything beyond $200,000 in the bank accounts is available for spending. In an emergency you may have to draw down the $200,000. Be careful. It's not as big a cushion as it seems, because you don't have an external income to replace it. I live in southern California but would like to move overseas after establishing stable investments. I am not the type of person that would invest in McDonald's, but would consider other less evil franchises (maybe?). These are contradictory goals, as stated. A franchise (meaning a local business of a national brand) is not a \"\"stable investment\"\". A franchise is something that you actively manage. At minimum, you have to hire someone to run the franchise. And as a general rule, they aren't as turnkey as they promise. How do you pick a good manager? How will you tell if they know how the business works? Particularly if you don't know. How will you tell that they are honest and won't just embezzle your money? Or more honestly, give you too much of the business revenues such that the business is not sustainable? Or spend so much on the business that you can't recover it as revenue? Some have suggested that you meant brand or stock rather than franchise. If so, you can ignore the last few paragraphs. I would be careful about making moral judgments about companies. McDonald's pays its workers too little. Google invades privacy. Exxon is bad for the environment. Chase collects fees from people desperate for money. Tesla relies on government subsidies. Every successful company has some way in which it can be considered \"\"evil\"\". And unsuccessful companies are evil in that they go out of business, leaving workers, customers, and investors (i.e. you!) in the lurch. Regardless, you should invest in broad index funds rather than individual stocks. If college is out of the question, then so should be stock investing. It's at least as much work and needs to be maintained. In terms of living overseas, dip your toe in first. Rent a small place for a few months. Find out how much it costs to live there. Remember to leave money for bigger expenses. You should be able to live on $20,000 or $25,000 a year now. Then you can plan on spending $35,000 a year to do it for real (including odd expenses that don't happen every month). Make sure that you have health insurance arranged. Eventually you may buy a place. If you can find one that you can afford for something like $100,000. Note that $100,000 would be low in California but sufficient even in many places in the US. Think rural, like the South or Midwest. And of course that would be more money in many countries in South America, Africa, or southern Asia. Even southern and eastern Europe might be possible. You might even pay a bit more and rent part of the property. In the US, this would be a duplex or a bed and breakfast. They may use different terms elsewhere. Given your health, do you need a maid/cook? That would lean towards something like a bed and breakfast, where the same person can clean for both you and the guests. Same with cooking, although that might be a second person (or more). Hire a bookkeeper/accountant first, as you'll want help evaluating potential purchases. Keep the business small enough that you can actively monitor it. Part of the problem here is that a million dollars sounds like a lot of money but isn't. You aren't rich. This is about bare minimum for surviving with a middle class lifestyle in the United States and other first world countries. You can't live like a tourist. It's true that many places overseas are cheaper. But many aren't (including much of Europe, Japan, Australia, New Zealand, etc.). And the ones that aren't may surprise you. And you also may find that some of the things that you personally want or need to buy are expensive elsewhere. Dabble first and commit slowly; be sure first. Include rarer things like travel in your expenses. Long term, there will be currency rate worries overseas. If you move permanently, you should certainly move your bank accounts there relatively soon (perhaps keep part of one in the US for emergencies that may bring you back). And move your investments as well. Your return may actually improve, although some of that is likely to be eaten up by inflation. A 10% return in a country with 12% inflation is a negative real return. Try to balance your investments by where your money gets spent. If you are eating imported food, put some of the investment in the place from which you are importing. That way, if exchange rates push your food costs up, they will likely increase your investments at the same time. If you are buying stuff online from US vendors and having it shipped to you, keep some of your investments in the US for the same reason. Make currency fluctuations work with you rather than against you. I don't know what your circumstances are in terms of health. If you can work, you probably should. Given twenty years, your million could grow to enough to live off securely. As is, you would be in trouble with another stock market crash. You'd have to live off the bank account money while you waited for your stocks and bonds to recover.\""
},
{
"docid": "266323",
"title": "",
"text": "The main advantage of commodities to a largely stock and bond portfolio is diversification and the main disadvantages are investment complexity and low long-term returns. Let's start with the advantage. Major commodities indices and the single commodities tend to be uncorrelated to stocks and bonds and will in general be diversifying especially over short periods. This relationship can be complex though as Supply can be even more complicated (think weather) so diversification may or may not work in your favor over long periods. However, trading in commodities can be very complex and expensive. Futures need to be rolled forward to keep an investment going. You really, really don't want to accidentally take delivery of 40000 pounds of cattle. Also, you need to properly take into account roll premiums (carry) when choosing the closing date for a future. This can be made easier by using commodities index ETFs but they can also have issues with rolling and generally have higher fees than stock index ETFs. Most importantly, it is worth understanding that the long-term return from commodities should be by definition (roughly) the inflation rate. With stocks and bonds you expect to make more than inflation over the long term. This is why many large institutions talk about commodities in their portfolio they often actually mean either short term tactical/algorithmic trading or long term investments in stocks closely tied to commodities production or processing. The two disadvantages above are why commodities are not recommended for most individual investors."
},
{
"docid": "573239",
"title": "",
"text": "The SEC 30-Day Yield you're seeing is a standardized yield calculation set out by the Securities & Exchange Commission. It can be useful for comparing bond funds, but it doesn't guarantee what you'll actually earn from a fund. IMPORTANT: The SEC 30-day yield represents a bond fund's returns from the previous 30 days expressed as an annual percentage of the current fund price — yes, an annual percentage. In other words, don't expect 1.81% return on your money every 30 days! Such a return is too-good-to-be-true return in today's low rate environment. 1.81% per year? More reasonable. Even then, the 1.81% you see is merely an estimate, one based on assumptions, of what you might expect to earn if you keep your money in place for the next year. The estimate is based on the assumptions that: These aren't reliable assumptions. BIV's price does fluctuate. You are not promised to get your principal back with a bond fund. Only an individual bond promises your principal back, and only at maturity. So, earning $181 on $10,000 invested for a full year while taking on interest-rate and other risks might not be worth the trouble of putting your money in a brokerage account. You'll need to transfer the money in and out, and there are potential trading fees to take into account. (How much to buy/sell units?) An FDIC-insured high interest savings account makes more sense."
},
{
"docid": "14035",
"title": "",
"text": "\"For political reasons, almost all governments (including the US) spend more money than they get from taxes etc. There are a number of things a government can do to cover the difference: Most governments opt for selling bonds. The \"\"National Debt\"\" of a country can be thought of as being the sum of all the \"\"Bonds\"\" that are still paying interest, and that the Government hasn't Redeemed. It can all go horribly wrong. If the Government gets into a situation where it cannot pay the interest, or it cannot Redeem the Bonds it has promised to, then it may have to break its promise (\"\"Default\"\" on its payments). This makes the owners of the Bonds unhappy and means potential buyers of future Bond sales are less likely to want to buy the Governments new Bonds - effectively meaning the Government has to promise to pay more interest in the future. Recent examples of this include Argentina; and may include Greece soon. The US is in the fortunate position that not many people believe it will Default. Therefore the new Bonds it sells (which it does on a regular basis) are still in demand, even though its interest payments, and promises to Redeem Bonds are huge.\""
},
{
"docid": "66495",
"title": "",
"text": "\"(I'm expanding on what @BrenBarn had added to his answer.) The assumption of \"\"same tax bracket in retirement\"\" is convenient, but simplistic. If you are in, for instance, the second-lowest bracket now, and happen to remain in the second-lowest bracket for retirement, then Roth and traditional account options may seem equal — and your math backs that up, on the surface — but that's making an implicit assumption that tax rates will be constant. Yet, tax brackets and rates can change. And they do. The proof. i.e. Your \"\"15% bracket\"\" could become, say, the \"\"17% bracket\"\" (or, perhaps, the \"\"13% bracket\"\") All the while you might remain in the second-lowest bracket. So, given the potential for fluctuating tax rates, it's easy to see that there can be a case where a traditional tax-deferred account can yield more after-tax income than a Roth post-tax account, even if you remain in the same bracket: When your tax bracket's tax rate declines. So, don't just consider what bracket you expect to be in. Consider also whether you expect tax rates to go up, down, or remain the same. For twenty-something young folk, retirement is a long way away (~40 years) and I think in that time frame it is far more likely that the tax brackets won't have the same underlying tax rates that they have now. Of course, we can't know for sure which direction tax rates will head in, but an educated guess can help. Is your government deep in debt, or flush with extra cash? On the other hand, if you don't feel comfortable making predictions, much better than simply assuming \"\"brackets and rates will stay the same as now, so it doesn't matter\"\" is to instead hedge your bets: save some of your retirement money in a Roth-style account, and some in a traditional pre-tax account. Consider it tax diversification. See also my answer at this older but related question:\""
},
{
"docid": "394702",
"title": "",
"text": "Duration is the weighted average time until all the cash flows of a fixed income security are received. There are a few different measures of duration but generally, duration measures the sensitivity of the price of a fixed income asset to a change in the yield of that asset. If you're familiar with calculus, duration is the first derivative of price with respect to yield. Convexity is the sensitivity of the duration of bond with respect to changes in yield, or the second derivative. The first chart [here](http://www.investopedia.com/terms/c/convexity.asp#axzz1x4F075zM) will help. Convexity measures the curvature of the blue or pink line, the steeper the curve the higher the convexity. The more cash flows there are in a bond (higher or more frequent coupon) the lower the duration, because you are receiving more of your investment earlier as opposed to later (think time value of money). If a bond has one cash flow, meaning you get paid back only at maturity (zero coupon) then any changes in interest rates will have a greater impact on the price of the bond since you are discounting only one cash flow in the future. Think of buying a bond with no coupons and a 5% yield that matures in 5 years, or a bond with similar yield and maturity buy pays a coupon. If interest rates rise, the zero coupon bond's price will fall more than the bond with coupons. Why? Because if you own the zero coupon bond you have to wait 5 years to get your money back and reinvest it at the higher rate, while if you have the bond that pays coupons you can reinvest those incremental cash flows at the higher rate, even though at purchase they had the same yield and maturity. These are both tough concepts that took me a fair amount of time to really understand. If you're investing in bonds or any fixed income asset, these topics are crucial to understanding interest rate risk."
}
] |
4605 | If the U.S. defaults on its debt, what will happen to my bank money? | [
{
"docid": "41312",
"title": "",
"text": "You must mean the current debt ceiling debacle. The meaning of it is: US government is constantly borrowing money (by issuing treasury bonds) and constantly repaying some of the bonds that come to maturity, and also has other obligations it has to meet by law all the time - such as Social Security checks, bonds interest, federal employees' salaries and pensions, etc. By law, total amount of money that can be borrowed at the same time is capped. That means, there can be situation where the government needs to borrow money to pay, say, interest on existing bonds, but can not, since the limit is reached. Such situation is called a default, since the government promised to pay the interest, but is unable to do so. That does not mean the government has no money at all and will completely collapse or couldn't raise money on the market if it were permitted by law to do so (currently, the market is completely willing to buy the debt issued by US government, and with interest that is not very high, though of course that may change). It also does not mean the economy ceases to function, dollars cease to have value or banks instantly go bankrupt. But if the government breaks its promises to investors, it has various consequences such as raising the costs of borrowing in the future. Breaking promises to other people - like Social Security recipients - would also look bad and probably hurt many of them. Going back to your bank account, most probably nothing would happen to the money you store there. Even if the bank had invested 100% of the money in US treasury bonds (which doesn't really happen) they still can be sold on the open market, even if with some discount in the event of credit rating downgrade, so most probably your account would not be affected. As stated in another answer, even if the fallout of all these calamities causes a bank to fail, there's FDIC and if your money is under insured maximums you'll be getting your money back. But if your bank is one of the big ones, nothing of the sort would happen anyway - as we have seen in the past years, government would do practically anything to not allow any big bank failures."
}
] | [
{
"docid": "22807",
"title": "",
"text": "Genius answer: Don't spend more than you make. Pay off your outstanding debts. Put plenty away towards savings so that you don't need to rely on credit more than necessary. Guaranteed to work every time. Answer more tailored to your question: What you're asking for is not realistic, practical, logical, or reasonable. You're asking banks to take a risk on you, knowing based on your credit history that you're bad at managing debt and funds, solely based on how much cash you happen to have on hand at the moment you ask for credit or a loan or based on your salary which isn't guaranteed (except in cases like professional athletes where long-term contracts are in play). You can qualify for lower rates for mortgages with a larger down-payment, but you're still going to get higher rate offers than someone with good credit. If you plan on having enough cash around that you think banks would consider making you credit worthy, why bother using credit at all and not just pay for things with cash? The reason banks offer credit or low interest on loans is because people have proven themselves to be trustworthy of repaying that debt. Based on the information you have provided, the bank wouldn't consider you trustworthy yet. Even if you have $100,000 in cash, they don't know that you're not just going to spend it tomorrow and not have the ability to repay a long-term loan. You could use that $100,000 to buy something and then use that as collateral, but the banks will still consider you a default risk until you've established a credit history to prove them otherwise."
},
{
"docid": "144059",
"title": "",
"text": "\"http://www.businessinsider.com/who-owns-us-debt-2011-7?op=1 Foreign governments own about 32% of U.S. debt. It's not a majority, but it's still nothing to sneeze at. Social Security owns 19% \"\"The Fed\"\" owns 11+% U.S. Households (including hedge funds) own 6+% Private Pensions 3+% Money Market Mutual Funds 2+% State, Local, and Federal Retirement Funds 2+% Commercial Banks 2% Mutual Funds 2% Oil Exporting Countries 1.6% Caribbean Banking Centers 1%\""
},
{
"docid": "501376",
"title": "",
"text": "\"Can't declare bankruptcy isn't the same as \"\"can't default\"\". Bankruptcy is a specific legal process for discharging or restructuring debts. If Illinois can't declare bankruptcy, that means it will still owe you the money for the bonds no matter what, but it doesn't guarantee that it will actually pay you what it owes. If Illinois should run out of money to pay what's due on its bonds, then it will default. Unlike the federal government, Illinois can't print money to make the payments.\""
},
{
"docid": "165415",
"title": "",
"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.\""
},
{
"docid": "58466",
"title": "",
"text": "My grace period is up in a few months, and I am not looking forward to it. I got the minimum federal aid possible for all 4 years, so I had to turn to private loans and whatever I could make over summers and what my parents could help me with. Ended up with $50k in debt, about 20k of it being with Sallie Mae. I can confirm they are bad on the collection side already. Just happened to miss a payment during school (paid off interest every month for the last 4 years), and they called me 3 times during class, sent an email, letter, and called my bilogical dad who cosigned for the loan. I can only imagine what they are like for people defaulting. All comes down to it though, have a plan when borrowing money for school. I knew my parents would only be able to help me out a little bit, and I got minimum federal aid (as in just loans) because my step father had assets that counted against me (and he told me I was on my own). So I had to figure out how to not be screwed from the beginning. I paid off my interest every month while working during school, and made sure to work hard to graduate with a good job. I can't imagine how some students feel when they graduate with nothing."
},
{
"docid": "374309",
"title": "",
"text": "If you've got shares in a company that's filed for U.S. Chapter 11 bankruptcy, that sucks, it really does. I've been there before and you may lose your entire investment. If there's still a market for your shares and you can sell them, you may want to just accept the loss and get out with what you can. However, shares of bankrupt companies are often delisted once bankrupt, since the company no longer meets minimum exchange listing requirements. If you're stuck holding shares with no market, you could lose everything – but that's not always the case: Chapter 11 isn't total and final bankruptcy where the company ceases to exist after liquidation of its assets to pay off its debts. Rather, Chapter 11 is a section of the U.S. Bankruptcy Code that permits a company to attempt to reorganize (or renegotiate) its debt obligations. During Chapter 11 reorganization, a company can negotiate with its creditors for a better arrangement. They typically need to demonstrate to creditors that without the burden of the heavy debt, they could achieve profitability. Such reorganization often involves creditors taking complete or majority ownership of the company when it emerges from Chapter 11 through a debt-for-equity swap. That's why you, as an investor before the bankruptcy, are very likely to get nothing or just pennies on the dollar. Any equity you may be left holding will be considerably diluted in value. It's rare that shareholders before a Chapter 11 bankruptcy still retain any equity after the company emerges from Chapter 11, but it is possible. But it varies from bankruptcy to bankruptcy and it can be complex as montyloree pointed out. Investopedia has a great article: An Overview of Corporate Bankruptcy. Here's an excerpt: If a company you've got a stake in files for bankruptcy, chances are you'll get back pennies to the dollar. Different bankruptcy proceedings or filings generally give some idea as to whether the average investor will get back all or a portion of his investment, but even that is determined on a case-by-case basis. There is also a pecking order of creditors and investors of who get paid back first, second and last. In this article, we'll explain what happens when a public company files for protection under U.S. bankruptcy laws and how it affects investors. [...] How It Affects Investors [...] When your company goes bankrupt, there is a very good chance you will not get back the full value of your investment. In fact, there is a chance you won't get anything back. [...] Wikipedia has a good article on Chapter 11 bankruptcy at Chapter 11, Title 11, United States Code."
},
{
"docid": "304179",
"title": "",
"text": "You signed a contract to pay the loan. You owe the money. Stories of people being arrested over defaulted student loans are usually based in contempt of court warrants when the person failed to appear in court when the collection agency filed suit against them. Explore student loan forgiveness program. Research collections and bankruptcy and how to deal with collection agencies. There are pitfalls in communicating with them which restart the clock on bad debt aging off the credit report, and which can be used to say that you agreed to pay a debt. For instance, if you make any sort of payment on any debt, a case can be made that you have assumed the debt. Once you are aware of the pitfalls, contact the collection agency (in writing) and dispute the debt. Force them to prove that it is your debt. Force them to prove that they have the right to collect it. Force them to prove the amount. Dispute the fairness of the amount. Doubling your principal in 6 years is a bit flagrant. So, work with the collectors, establish that the debt is valid and negotiate a settlement. Or let it stay in default. Your credit report in the US is shot. It will be a long time before the default ages off your report. This is important if you try to open a bank account, rent an apartment, or get a job in the US. These activities do not always require a credit report, but they often do. You will not be able to borrow money or establish a credit card in the US. Here's a decent informational site regarding what they can do to collect the loan. Pay special attention to Administrative Wage Garnishment. They can likely hit you with that one. You might be unreachable for a court summons, but AWG only requires that the collectors be able to confirm that you work for a company that is subject to US laws. Update: I am informed that federally funded student loans are not available to international students. AWG is only possible for debts to the federal government. Private companies must go through the courts to force settlement of debt. OP is safe from AWG."
},
{
"docid": "44360",
"title": "",
"text": "Government purchases of mortgages simply transfers the debt burden from households to the sovereign. Taxes pay sovereign debt (65% of whom are homeowners anyway). No debt has been restructured -- it's now paid via taxes instead of monthly mortgage payments -- and those paying include persons who responsibly avoided housing speculation. The U.S. has a debt-to-GDP ratio just shy of the critical point of 90%. Purchasing $10 trillion in mortgage debt (about a year of GDP) would put the U.S. on an inexorable path towards insolvency and inflation. There are all sorts of other risks (loss of a risk-free asset, moral hazard, nationalization of the housing industry, etc.) but this should make the point clear that it's not a good idea. There are only three ways to reduce debt: 1) default, 2) restructure, or 3) lower the real debt burden by de-valuing currency in which the debt is denominated."
},
{
"docid": "104857",
"title": "",
"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.\""
},
{
"docid": "479527",
"title": "",
"text": "\"Sovereigns cannot go bankrupt. Basically, when a sovereign government (this includes nations and US States, probably political subdivisions in other countries as well) becomes insolvent, they default. Sovereigns with the ability to issue new currency have the option to do so because it is politically expedient. Sovereigns in default will negotiate with creditor committees to reduce payments. Creditors with debt backed by the \"\"full faith and credit\"\" of the sovereign are generally first in line. Creditors with debt secured by revenue may be entitled to the underlying assets that provide the revenue. The value of your money in the bank in a deposit account may be at risk due to currency devaluation or bank failure. A default by a major country would likely lock up the credit markets, and you may see yourself in a situation where money market accounts actually fall in value.\""
},
{
"docid": "105889",
"title": "",
"text": "\"PMI IS Mortgage insurance. It stands for \"\"Private Mortgage Insurance\"\". This guy is just trying to get you to buy it from him instead of whoever you have it with now. Your lender would always be on the policy since it is an insurance policy they hold (and you pay for) that protects them from you defaulting on the loan. Don't think of it as insurance for you in case you can't pay. If that should happen, your credit would still be trashed, the bank just wouldn't be out the money. You don't really get any benefit at all from it. It is just the way a bank can mitigate the risk of giving out large loans. This is why people are keen to drop it as soon as possible. The whole thing about keeping the house in your estate after you die makes me think he is trying to sell you a different type of insurance called Mortgage Life Insurance. PMI isn't typically about that type of situation. Your estate will go into probate to work out your debts if you die and my understanding is that PMI doesn't usually pay out in that situation. If this is what he is selling, buying such a policy would be on top of your PMI insurance payment, not instead of it. Be forewarned, personal finance experts usually consider mortgage life insurance to be a ripoff. If you want to protect against the risk of your heirs losing the house because they can't make the payments, you are better off with Term Life Insurance. However, don't worry that they will inherit your debt on the house unless they are on the loan. If they don't want the house, they won't be obliged to make payments on it (unless they want to keep it). It won't affect their credit if they just walk away and let the bank have the house after you die unless they are on the note. Here is an article (in two parts) with a pretty good treatment of the issue of choosing your own PMI policy: \"\"Give Buyers Freedom to Choose Mortgage Insurance\"\" Part 1 Part 2\""
},
{
"docid": "322582",
"title": "",
"text": "I'm not saying that they shouldn't be allowed to default. What I'm saying is that if they can't pay back their debts then they should default. The article makes it sound like Argentina deserves to be let off the hook and pay back only a portion of its debt. In the short term this seems appealing because the investors get back some of the money as opposed to none and Argentina gets to keep it's economy intact. However this sets a dangerous precedent in the long run because countries know they have this out and may issue bonds expecting not to pay the full amount. I think it is good that Argentina is being made an example of, this way countries will think twice before borrowing money they may not be able to pay back and will lead to more stability in the long run."
},
{
"docid": "63848",
"title": "",
"text": "The only way for a mutual fund to default is if it inflated the NAV. I.e.: it reports that its investments worth more than they really are. Then, in case of a run on the fund, it may end up defaulting since it won't have the money to redeem shares at the NAV it published. When does it happen? When the fund is mismanaged or is a scam. This happened, for example, to the fund Madoff was managing. This is generally a sign of a Ponzi scheme or embezzlement. How can you ensure the funds you invest in are not affected by this? You'll have to read the fund reports, check the independent auditors' reports and check for clues. Generally, this is the job of the SEC - that's what they do as regulators. But for smaller funds, and private (i.e.: not public) investment companies, SEC may not be posing too much regulations."
},
{
"docid": "87436",
"title": "",
"text": "Every year stories like this come out. Every year the US does not default on its debt. We all should know by now that the US, as a financially sovereign nation that issues its own currency, cannot default on its debt. This fearmongering is just a click-baity waste of time, and yes, a waste of money."
},
{
"docid": "76776",
"title": "",
"text": "\"A junk bond is, broadly, a bond with a non-negligible risk of default. (\"\"Bond\"\" ought to be defined elsewhere, but broadly it's a financial instrument you buy from a company or government, where they promise to pay you back the principal and some interest over time, on a particular schedule.) The name \"\"junk\"\" is a bit exaggerated: many of them are issued by respectable and reasonably stable businesses. junk bonds were required to do large leveraged buyouts. This means: the company issued fairly risky, fairly high-yield debt, to buy out equity holders. They have to pay a high rate on the debt because the company's now fairly highly geared (ie has a lot of debt relative to its value) and it may have to pay out a large fraction of its earnings as interest. What is a junk bond and how does it differ from a regular bond? It's only a matter of degree and nomenclature. A bond that has a credit rating below a particular level (eg S&P BBB-) is called junk, or more politely \"\"non-investment grade\"\" or \"\"speculative\"\". It's possible for an existing bond to be reclassified from one side to another, or for a single issuer to have different series some of which are more risky than others. The higher the perceived risk, the more interest the bond must pay offer in order to attract lenders. Why is there higher risk/chance of default? Well, why would a company be considered at higher risk of failing to repay its debt? Basically it comes down to doubt about the company's future earnings being sufficient to repay its debt, which could be for example:\""
},
{
"docid": "458427",
"title": "",
"text": "\"My answer is that when confronted with the obvious, the most common human reaction is to seek reasons for it, because things have to be right. They have to have a reason. We don't like it when things suck. So when finding out that you are being ripped off every day of your life, your reaction is \"\"There must be a logical reason that perfectly explain why this is. After all, the world is fair, governments are working in our best interest and if they do it this way, they must have a very good reason for it.\"\" Sorry, but that not the case. You have the facts. You are just not looking at them. Economics, as a subject, is the proper management of resources and production. Now, forget the fancy theories, the elaborate nonsense about stocks and bonds and currencies and pay attention to the actual situation. On our planet, most people earn $2,000 per year. Clean water is not available for a very sizable percent of the world's population. Admittedly, 90% of the world's wealth is concentrated in the hands of the most wealthy 10%. A Chinese engineer earns a fraction of what a similarly qualified engineer earns in the States. Most people, even in rich countries, have a negative net value. They have mortgages that run for a third of their lifetimes, credit card debts, loans... do the balance. Most people are broke. Does this strike you as the logical result of a fair and balanced economic system? Does this look like a random happenstance? The dominant theory is \"\"It just happened, it's nobody's fault and nobody designed it that way and to think otherwise is very bad because it makes you a conspiracy theorist, and conspiracy theorists are nuts. You are not nuts are you?\"\" Look at the facts already in your possession. It didn't just happen. The system is rigged. When a suit typing a few numbers in a computer can make more money in 5 minutes than an average Joe can make in 100 lifetimes of honest, productive work, you don't have a fair economic system, you have a scam machine. When you look at a system as broken as the one we have, you shouldn't be asking yourself \"\"what makes this system right?\"\" What you should be asking yourself is more along the lines of \"\"Why is it broken? Who benefits? Why did congress turn its monetary policy over to the Federal reserve (a group of unelected and unaccountable individuals with strong ties in the banking industry) and does not even bother to conduct audits to know how your money is actually managed? This brilliant movie, Money as debt, points to a number of outrageous bugs in our economic system. Now, you can dream up reasons why the system should be the way it is and why it is an acceptable system. Or you can look at the fact and realize that there is NO JUSTIFICATION for an economic system that perform as badly as it does. Back to basics. Money is supposed to represent production. It's in every basic textbook on the subject of economics. So, what should money creation be based on? Debt? No. Gold? No. Randomly printed by the government when they feel like it? No (although this could actually be better than the 2 previous suggestions) Money is supposed to represent production. Index money on production and you have a sound system. Why isn't it done that way? Why do you think that is?\""
},
{
"docid": "150543",
"title": "",
"text": "\"I think you can do it as long as those money don't come from illegal activities (money laundering, etc). The only taxes you should pay are on the interest generated by those money while sitting in the UK bank account. Since I suppose you already paid taxes on those money in Greece while you were earning those money. About being audited, in my own experience banks don't ask you much where your money are coming from when you bring money to them, they are very willing to help, and happy. (It's a differnte story when you ask to borrow money). When I opened a bank account in US I did not even have an SSN, but they didn't care much they just took my passport and used the passport number for registering the account. Obviously on the interest generated by the money in the US bank account I had to pay taxes, but it was easy because I simply let the IRS via the bank to withdarw the 27% on the interest generated (not on the capital deposited). I didn't put a huge amount of money there I had to live there for 1 year or some more. Maybe if i deposited a huge amount of money someone would have come to ask me how did I make all those money, but those money were legally generated by me working in Italy before so I didn't have anything to be afraid about. BTW: in Italy I was thinking to move money to a German bank in Germany. The risk of default is a nightmare, something of completly new now in UE compared to the past where each state had its own currency. According to Muro history says that in case of default it happened that some government prevented people from withdrawing money form bank accounts: \"\"Yes, historically governments have shut down banks to prevent people from withdrawing their money in times of crisis. See Argentina circa 2001 or US during Great Depression. The government prevented people from withdrawing their money and people could do nothing while their money rapidly lost value.\"\" but in case Greece prevents people from withdrwaing money, those money are still in EURO, so i'm wondering what would be the effect. I mean would it be fair that a Greek guy can not withdraw is EURO money whilest an Italian guy can withdraw the same currency money in Italy?!\""
},
{
"docid": "236581",
"title": "",
"text": "\">If mounting debt is such an issue, why do all the markets act as though the US is perfectly solvent? They don't. China, Russia and most emerging markets are selling U.S. treasuries faster and faster. They have started doing so a couple years ago and are doing so at a higher pace now. They sold record numbers of U.S. treasuries in June. Many countries are forging trade partnerships with each other to get away from U.S. debt and even the U.N. and IMF are calling for an end to the dollar as the global reserve currency because it no longer deserves that status, largely due to increasing debt. By the way, the Fed is owning a larger and larger portion of U.S. debt these days. >Why is our interest rate so low, and why do investors around the world continue buying Treasury bonds? The federal reserve keeps rates low. Investors speculate about the future of the market all the time, but they are starting to dump them now http://www.bloomberg.com/news/2014-08-15/u-s-investment-outflow-reaches-record-as-china-sells-treasuries.html http://www.reuters.com/article/2014/08/15/usa-economy-capital-idUSL2N0QL0T520140815 http://www.ft.com/intl/cms/s/0/eaccbe18-aea6-11e3-aaa6-00144feab7de.html >The total net outflow of long-term U.S. securities and short-term funds such as bank transfers was $153.5 billion, after an inflow of $33.1 billion the previous month, the Treasury Department said in a report today. The June figure, and $40.8 billion in net selling of Treasury bonds and notes by private investors in June, **were the largest on record, the Treasury said.** >\"\"This is a disappointment and is a negative for the dollar. Clearly, the United States is having a hard time attracting investments to offset its current account deficit,\"\" said Michael Woolfolk, global market strategist at BNY Mellon in New York. >Central banks sold US Treasury debt at the start of the year, according to the latest official data released on Tuesday, as stress among emerging market countries intensified. Declines in Treasury holdings were seen for Thailand, Turkey and the Philippines, which sold $3.9bn, $3.3bn and $1.5bn respectively during January. Wow look at that. Did you just dismiss all evidence that proves you wrong? I think so!\""
},
{
"docid": "454629",
"title": "",
"text": "\"Its fraudulent because it is feeds on new investment to pay the old investors, the EXACT definition of a Ponzi. And it now is contingent on the faith of the US, as with most other debts. There is no \"\"trust fund\"\" of this wealth sitting waiting for us if the USA fails. But do tell me, how is SS not a ponzi scheme? Does it not use new money to pay the old? If the new money ran out, would it not default on its debts (in the future)? And what part of the constitution says the US government should collect some of my wages and save it for me for later? You do know, some people have opted out of SS? Even the US government will not take the fight to court. They know its a sham.\""
}
] |
4605 | If the U.S. defaults on its debt, what will happen to my bank money? | [
{
"docid": "313306",
"title": "",
"text": "In principle, a default will have no effect on your bank account. But if the US's credit rating is downgraded, the knock-on effects might cause some more bank failures, and if the debt ceiling is still in place then the FDIC insurance might not be able to pay out immediately."
}
] | [
{
"docid": "514681",
"title": "",
"text": "Banks' savings interest is ridiculous, has always been, compared to other investment options. But there's a reason for that: its safe. You will get your money back, and the interest on it, as long as you're within the FDIC insurance limits. If you want to get more returns - you've got to take more risks. For example, that a locality you're borrowing money to will default. Has happened before, a whole county defaulted. But if you understand the risks - your calculations are correct."
},
{
"docid": "539381",
"title": "",
"text": "\"Usually the FED uses newly printed money to buy US treasuries from Goldman Sachs, JP Morgan, etc.. These banks then lend out the new cash which expands the money supply. During the height of the crisis the FED printed over $1.0 Trillion and bought....well...almost anything the banks couldn't offload elsewhere. Mortgage Backed Securities, Credit Default Swaps, you name it - they bought it. Must be nice to always have a customer to sell your junk investments to. They also bought these securities at face value - not at market value. Chart from here. The FED announced in early November, 2010 that they will print another $600 billion and buy US Treasuries. They will be buying ALL the debt that will be sold by the US government for the next 8 months. This was admitted by the Dallas FED chairman in this article: For the next eight months, the nation’s central bank will be monetizing the federal debt. \"\"Monetizing\"\" is a fancy word for printing money. I think this was done because the US government ran out of customers for its debt. China has reduced its purchases of US debt and the Social Security Trust Fund is no longer buying US debt since it is running a deficit.\""
},
{
"docid": "110628",
"title": "",
"text": "> Europe is a temporary problem. Lol.. The better question for this thread is how is the European economy not utterly doomed? I see no way at all of the Euro surviving. Greece has already technically defaulted by saying it's not going to pay back all of it's debt. They will officially default when Germany stops bailing them out. Spain is in the exact same situation, just about a year behind. They haven't technically defaulted yet, but they will. They're receiving bailout after bailout and the Greece situation only makes their interest rates worse. Italy is just barely behind Spain, the Greek default followed by the Spanish defualt will send Italian interest rates through the roof dooming them to the same fate. This will eventually effect the US, but our borrowing rates are held artificially low due to the Fed just printing up more fake money and letting the US borrow as much as it wants. If you don't see this scheme crumbling and collapsing, I'm just curious what you actually think *will* happen?"
},
{
"docid": "376579",
"title": "",
"text": "Such loans are of course possible. They exist because the lender gains something other than interest from them: What would happen to the economy if these were common? These are common, common as anything. In fact where it's not banks lending the money, these are the default. So, nothing would happen to the economy, this is one of the ways the economy works all over the world. If you're more interested in a loan from a bank or other financial institution, made to you for whatever purpose you want - here's $10,000, have fun, give it back ten years from now - ask yourself what the bank would get from that? Perhaps they could do it as a perk when you do something else with them like get a mortgage or keep $1000 in your chequing account all the time. But in the absence of any other relationship, what would be their reason for taking on the overhead and paperwork of approving you for a loan and keeping track of whether you're paying it back or not, for no return, whether financial or intangible? No return? It doesn't happen."
},
{
"docid": "87436",
"title": "",
"text": "Every year stories like this come out. Every year the US does not default on its debt. We all should know by now that the US, as a financially sovereign nation that issues its own currency, cannot default on its debt. This fearmongering is just a click-baity waste of time, and yes, a waste of money."
},
{
"docid": "329941",
"title": "",
"text": "Gwarsh goofy . .what are you talking about now, who is buying US treasuries or what is the National Debt, either way in your fucked up money printing economy where you cant even pay off your student loans or cover your insurance, what to talk of house loans and fancy financial instruments, that were based on those, which went into default and the Fed bought up, that required the Fed to give the banks an unlimited credit line as a back stop. You see shit head . .all those trillions and trillions of dollars of bad loans and bank bailouts now sits on the Feds balance sheet as $4.5 trillion, leveraged many many many many . . . many . many times so the banks look like they are capitally adequate on paper. Thats what it means when you nationalize public debt Understand shit wit? Incidentally thats what the Fed is trying to unwind and some fucking moron like you will buy and then go bankrupt and ask for a bailout and get more debt from the Fed. Its a good thing your generation grew up sucking Chinese toys, the lead in the paint did its job well, otherwise you might have actually learnt something . .. .Gwarsh!!!"
},
{
"docid": "487633",
"title": "",
"text": "\"While I would be very leery of making any Investments in Greece, and if I lived there might want to strongly consider a larger than average investment in 'international' funds (such as an index fund on the US, UK, or German exchanges) Having debt in Greece might not be such a bad thing... if only it was denominated in local currency. The big issue is that right now, you'd be taking out a loan on property in greece, that would be denominated in Euros. If worse comes to worse, and Greece is kicked out of the EU and forced to go back to the drachma, then you might be in a situation where the bank says \"\"this loan is in Euros, we want payment in the same\"\" and if the drachma is plummeting vs the Euro, you could find your earning power (presuming you were then paid in drachma) greatly diminished.. And since you'd be selling the house for drachma, you might be way under-water in terms of the value of the house (due to currency exchange) vs what you owed. Now, if Greece were currently on the drachma, and you were talking about a mortgage in the same, I'd say go for it. Since what tends to happen when a government has way overspent is they just print more money rather than default.. that tends to lead to inflation, and a falling currency value vs other countries. None of which is bad for someone with a debt which would be rapidly shrinking due to the effect of inflation. but right now, safer to rent.\""
},
{
"docid": "566458",
"title": "",
"text": "What is the best way that I can invest money so that I can always get returns? If you want something that doesn't require any work on your end, consider having a fee-only financial planner make a plan so that your investments can be automated to generate a cash flow for you or get an annuity as the other classic choices here as most other choices will require some time commitment in one form or other. Note that for stock investments there could be rare instances like what happened for a week in September in 2001 where the markets were closed for 5 days straight that can be the hiccup in having stocks. Bonds can carry a risk of default where there have been municipalities that defaulted on debt as well as federal governments like Russia in the 1990s. Real estate may be subject to natural disasters or other market forces that may prevent there always being a monthly payment coming as if you own a rental property then what happens if there aren't tenants because there was an evacuation of the area? There may be some insurance products to cover some of these cases though what if there are exceptionally high claims all at once that may have an insurance company go under? Would it be to set up an FD in a bank, to buy land, to buy a rental house, to buy a field, or maybe to purchase gold? What investment of your own time do you plan on making here? Both in terms of understanding what your long-term strategy is and then the maintenance of the plan. If you put the money in the bank, are you expecting that the interest rate will always be high enough to give you sufficient cash to live as well as having no financial crisis with the bank or currency you are using? Are there any better investments? You may want to reconsider what assumptions you want to make and what risks you want to accept as there isn't likely to be a single solution here that would be perfect."
},
{
"docid": "564983",
"title": "",
"text": "\"Several people here have highlighted the incentive/agency problems that tend to naturally arise when securitizing mortgages. However, the market for mortgage-backed securities has existed for decades, and during most of that time these agency problems were held in check. Moreover, academics knew about this problem even before the credit crisis and actually *recommended* the use of trenching in order to avoid the moral hazard problems associated with securitization (see DeMarzo 2005). So, to give a compelling historical explanation for why the crisis happened *when* it did, you need to explain what changed in the mortgage securitization market to enable these previously unproblematic agency relationships to breakdown. So what changed? In short, the growth of the market for CDOs (collateralized debt obligations) composed of mortgage-backed securities), and not the MBS market itself. This market grew so rapidly in the mid-2000s because the ratings agencies created an opportunity for banks to take low-rated MBS debt and give it a higher rating by merely repackaging it into a CDO. It was ratings arbitrage, through and through. Explanations that place the brunt of the blame on the GSAs (i.e. Fannie and Freddie) cannot adequately explain why the majority of mortgage-related losses during the credit crisis were concentrated in CDOs of MBSs, and not in the vanilla MBS market. Here's what happened. Back in the day -- say, pre-early 2000s -- the agency/incentive problems that naturally arise in mortgage securitization were held in check by careful institutional investors who would rigorously assess the default risk of the higher-risk MBS tranches. They had a deep knowledge of the mortgage business. Sometimes they would even go so far as manually examining the loan documentation, the profile of the borrowers, the quality of the collateral, and so on. There were a lot of indiscriminating buyers who were happy to purchase the AAA and AA tranches, but they could afford to be indiscriminating because the banks who were securitizing MBSs knew that without selling to the discriminating buyers of higher-risk debt, they wouldn't be able to break even. It worked a bit like a market for fine wines. I don't know much about wine, but when I walk into a shop that sells fine wines, I can be reasonably certain that there will be a reasonably strong relationship between price and the quality of the wine. Basically, I get to free-ride off the superior discrimination of the wine connoisseurs who regularly visit the shop. Once the ratings agencies created the now infamous \"\"ratings arbitrage\"\" between the MBS and CDO markets, the market for CDOs on MBSs expanded. As this market grew, these \"\"discriminating\"\" buyers became a proportionally smaller part of the MBS market. The folks building CDOs of MBSs didn't know very much about the mortgage business itself; instead, they tended to rely on statistical default models provided by the ratings agencies that predicted the probability of mortgage default based on quantitative variables such as borrowers' credit scores, loan-to-value ratios, etc. The problem is that these models used historical data that was collected back when the \"\"discriminating\"\" institutional investors kept the agency problems in the MBS market in check. The growth of the CDO market spurred even more mortgage securitization, which led lending standards to deteriorate because firms like Countrywide knew that the CDO buyers only cared about credit scores, LTV ratios, etc. However, undiscriminating buyers of MBS were unable to detect these changes in default risk because the models they were using to \"\"see\"\" those changes were becoming invalidated by the growth of the CDO market itself If you want to read more about this, I'd highly recommend MacKenzie's 2011 paper in the American Journal of Sociology [see here]( http://www.sps.ed.ac.uk/__data/assets/pdf_file/0019/36082/CrisisRevised.pdf). It's a detailed historical account of the changes in valuation practices/models used within the MBS and CDO markets, and how these practices became invalidated as the CDO market grew in size. **TL;DR: the credit ratings created a \"\"ratings arbitrage\"\" that the banks took advantage of. They are as much, if not more, at fault as the GSAs.** For more info on the deterioration in mortgage quality in the mid-2000s, check out: Keys, Benjamin, Tanmoy Mukherjee, Amit Seru, and Vikrant Vig. 2008. Did Securitization Lead to Lax Screening? Evidence from Subprime Loans. Rajan, Uday, Amit Seru, and Vikrant Vig. 2008. “The Failure of Models That Predict Failure: Distance, Incentives and Defaults.” SSRN eLibrary (December). http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1296982. Also, the citation I mentioned above: DeMarzo, P. (2005) \"\"The pooling and tranching of securities: a model of informed intermediation\"\" Review of Economic Studies, 18(1):1-35, 2005\""
},
{
"docid": "240848",
"title": "",
"text": "\"Why will they find financing when they leave the Euro? Why would their currencies not simply hyperinflate due to excessive issuance in an attempt to devalue? Which is worse for unemployment, austerity or hyperinflation? >they'd be expelled by Germany This is a union correct? Why do you assume Germany holds all the cards? I've read that Gonzalo Lira essay and have read Mish about everyday since 2009, yet still do not think it is so obvious that the Euro will collapse. I gained quite a bit of skepticism from Barry Eichengreen's paper on the [Breakup of the Euro Area.](http://www.nber.org/papers/c11654.pdf?new_window=1) What I see right now is that so far the ECB has only acted in such a way as to prevent outright deflation and meet its 2% inflation target, but not to continuously outright fund the profligate governments. They let the bond markets force those governments into contraction or into default whereas the fed, with its dual mandate, will always buy the US bonds and eventually will inflate the currency as opposed to having a sovereign default. So I think we will see the ECB continue to print as much is needed to meet its mandate but at the same time there will be defaults, bank nationalizations and failures, and a continued lack of growth in the Euro area until eventually the austerity measures bring revenue and spending in line at which point the countries under heavy debt would be stupid not to default because they can self finance. Whereas in the US we are so dependent on deficit financing that as foreigners move further away from holding treasuries we become more susceptible to bond vigilantes taking the reigns which will force the feds hand into outright monetization. Then I think we will see our own government exacerbate inflation by bidding on the same goods that those dollars which no longer are going into treasuries are bidding on. Then I think we'll finally see bad inflation in the US. Of course as long as there is hoards of money fleeing Europe for the US \"\"safe haven,\"\" the lack of foreign treasury investment is pretty moot. *spelling\""
},
{
"docid": "269064",
"title": "",
"text": "\"That depends on how you're investing in them. Trading bonds is (arguably) riskier than trading stocks (because it has a lot of the same risks associated with stocks plus interest rate and inflation risk). That's true whether it's a recession or not. Holding bonds to maturity may or may not be recession-proof (or, perhaps more accurately, \"\"low risk\"\" as argued by @DepressedDaniel), depending on what kind of bonds they are. If you own bonds in stable governments (e.g. U.S. or German bonds or bonds in certain states or municipalities) or highly stable corporations, there's a very low risk of default even in a recession. (You didn't see companies like Microsoft, Google, or Apple going under during the 2008 crash). That's absolutely not the case for all kinds of bonds, though, especially if you're concerned about systemic risk. Just because a bond looks risk-free doesn't mean that it actually is - look how many AAA-rated securities went under during the 2008 recession. And many companies (CIT, Lehman Brothers) went bankrupt outright. To assess your exposure to risk, you have to look at a lot of factors, such as the credit-worthiness of the business, how \"\"recession-proof\"\" their product is, what kind of security or insurance you're being offered, etc. You can't even assume that bond insurance is an absolute guarantee against systemic risk - that's what got AIG into trouble, in fact. They were writing Credit Default Swaps (CDS), which are analogous to insurance on loans - basically, the seller of the CDS \"\"insures\"\" the debt (promises some kind of payment if a particular borrower defaults). When the entire credit market seized up, people naturally started asking AIG to make good on their agreement and compensate them for the loans that went bad; unfortunately, AIG didn't have the money and couldn't borrow it themselves (hence the government bailout). To address the whole issue of a company going bankrupt: it's not necessarily the case that your bonds would be completely worthless (so I disagree with the people who implied that this would be the case). They'd probably be worth a lot less than you paid for them originally, though (possibly as bad as pennies on the dollar depending on how much under water the company was). Also, depending on how long it takes to work out a deal that everyone could agree to, my understanding is that it could take a long time before you see any of your money. I think it's also possible that you'll get some of the money as equity (rather than cash) - in fact, that's how the U.S. government ended up owning a lot of Chrysler (they were Chrysler's largest lender when they went bankrupt, so the government ended up getting a lot of equity in the business as part of the settlement). Incidentally, there is a market for securities in bankrupt companies for people that don't have time to wait for the bankruptcy settlement. Naturally, people who buy securities that are in that much trouble generally expect a steep discount. To summarize:\""
},
{
"docid": "301194",
"title": "",
"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.\""
},
{
"docid": "236581",
"title": "",
"text": "\">If mounting debt is such an issue, why do all the markets act as though the US is perfectly solvent? They don't. China, Russia and most emerging markets are selling U.S. treasuries faster and faster. They have started doing so a couple years ago and are doing so at a higher pace now. They sold record numbers of U.S. treasuries in June. Many countries are forging trade partnerships with each other to get away from U.S. debt and even the U.N. and IMF are calling for an end to the dollar as the global reserve currency because it no longer deserves that status, largely due to increasing debt. By the way, the Fed is owning a larger and larger portion of U.S. debt these days. >Why is our interest rate so low, and why do investors around the world continue buying Treasury bonds? The federal reserve keeps rates low. Investors speculate about the future of the market all the time, but they are starting to dump them now http://www.bloomberg.com/news/2014-08-15/u-s-investment-outflow-reaches-record-as-china-sells-treasuries.html http://www.reuters.com/article/2014/08/15/usa-economy-capital-idUSL2N0QL0T520140815 http://www.ft.com/intl/cms/s/0/eaccbe18-aea6-11e3-aaa6-00144feab7de.html >The total net outflow of long-term U.S. securities and short-term funds such as bank transfers was $153.5 billion, after an inflow of $33.1 billion the previous month, the Treasury Department said in a report today. The June figure, and $40.8 billion in net selling of Treasury bonds and notes by private investors in June, **were the largest on record, the Treasury said.** >\"\"This is a disappointment and is a negative for the dollar. Clearly, the United States is having a hard time attracting investments to offset its current account deficit,\"\" said Michael Woolfolk, global market strategist at BNY Mellon in New York. >Central banks sold US Treasury debt at the start of the year, according to the latest official data released on Tuesday, as stress among emerging market countries intensified. Declines in Treasury holdings were seen for Thailand, Turkey and the Philippines, which sold $3.9bn, $3.3bn and $1.5bn respectively during January. Wow look at that. Did you just dismiss all evidence that proves you wrong? I think so!\""
},
{
"docid": "395929",
"title": "",
"text": "\"Here's some way of thinking about it, and I'm not really sure if it's completely correct, but sometimes we oversimplify when trying to tell a five year old :) Say there are two people in the world. You and me. We both have $100. A total of $200 in the world. Suddenly, a wild bank appears. I deposit my $100 in the bank. I still have $100 and you still have $100. Now you want to buy something from me that costs $150. You go to the bank to loan money. The bank has $100 available so gives you $50. You give me $150. Now I have $250 and you are $50 in debt. I deposit the $150 in the bank. We do this again and again, until I have $1000 on my bank account, and you are $900 in debt. I want to buy a house of $500 and go to my bank, demanding to take out $500. But there is only $200 in the whole world so the bank can only give me $200. \"\"Money\"\" has been created out of thin air, but it's actually you who are in debt. If you go bankrupt, the bank has a big debt it won't get back, and is in deep shit when I come around to demand my money back. At that point governments step in to loan the bank money for cheap, because if the bank fails, I will lose all my pension savings I put into that bank, as well as my companies and a lot of my employees. And other banks loaned this bank money, so if this bank fails, the other banks will be in the exact same position and will also fail, because then they will also have debts that won't be paid back. There are regulations minimizing this - i.e. a bank is required to keep a percentage of the amount of money on its accounts, so there's a maximum limit of \"\"money created\"\".\""
},
{
"docid": "44360",
"title": "",
"text": "Government purchases of mortgages simply transfers the debt burden from households to the sovereign. Taxes pay sovereign debt (65% of whom are homeowners anyway). No debt has been restructured -- it's now paid via taxes instead of monthly mortgage payments -- and those paying include persons who responsibly avoided housing speculation. The U.S. has a debt-to-GDP ratio just shy of the critical point of 90%. Purchasing $10 trillion in mortgage debt (about a year of GDP) would put the U.S. on an inexorable path towards insolvency and inflation. There are all sorts of other risks (loss of a risk-free asset, moral hazard, nationalization of the housing industry, etc.) but this should make the point clear that it's not a good idea. There are only three ways to reduce debt: 1) default, 2) restructure, or 3) lower the real debt burden by de-valuing currency in which the debt is denominated."
},
{
"docid": "5602",
"title": "",
"text": "You're losing money. And a lot of it. Consider this: the inflation is 2-4% a year (officially, depending on your spending pattern your own rate might be quite higher). You earn about 1/2%. I.e.: You're losing 3% a year. Guaranteed. You can do much better without any additional risk. 0.1% on savings account? Why not 0.9%? On-line savings account (Ally, CapitalOne-360, American Express, E*Trade, etc) give much higher rates than what you have. Current Ally rates are 0.9% on a regular savings account. 9 times more than what you have, with no additional risk: its a FDIC insured deposit. You can get a slightly higher rate with CDs (0.97% at the same bank for 12 months deposit). IRA - why is it in CD's? Its the longest term investment you have, that's where you can and should take risks, to maximize your compounding returns. Not doing that is actually more risky to you because you're guaranteeing compounding loss, of the said 3% a year. On average, more volatile stock investments have shown to be not losing money over periods of decades, even if they do lose money over shorter periods. Rental - if you can buy a property that you would pay the same amount of money for as for a comparable rental - you should definitely buy. Your debt will be secured by the property, and since you're paying the same amount or less - you're earning the equity. There's no risk here, just benefits, which again you chose to forgo. In the worst case if you default and walk away from the property you lost exactly (or less) what you would have paid for a rental anyway. 14 years old car may be cheaper than 4 years old to buy, but consider the maintenance, licensing and repairs - will it not some up to more than the difference? In my experience - it is likely to. Bottom line - you think you're risk averse, but you're exactly the opposite of that."
},
{
"docid": "94279",
"title": "",
"text": "It certainly is possible for a run on the bank to drive it into insolvency. And yes, if the bank makes some bad loans, it can magnify the problem. Generally, this does not happen, though. Remember that banks usually have lots of customers, and people are depositing money and making mortgage payments every day, so there is usually enough on-hand to cover average banking withdrawl activity, regardless of any bad loans they have outstanding. Banks have lots of historical data to know what the average withdrawl demands are for a given day. They also have risk models to predict the likelihood of their loans going into default. A bank will generally use this information to strike a healthy balance between profit-making activity (e.g. issuing loans), and satisfying its account holders. In the event of a major withdrawl demand, there are some protections in place to guard against insolvency. There are regulations that specify a Reserve Requirement. The bank must keep a certain amount of money on hand, so they can't take huge risks by loaning out too much money all at once. Regulators can tweak this requirement over time to reflect the current economic situation. If a bank does run into trouble, it can take out a short-term loan. Either from another bank, or from the central bank (e.g. the US Federal Reserve). Banks don't want to pay interest on loans any more than you do, so if they are regularly borrowing money, they will adjust thier cash reserves accordingly. If all else fails and the bank can't meet its obligations (e.g. the Fed loan fell through), the bank has an insurance policy to make sure the account holders get paid. In the US, this is what the FDIC is for. Worst case, the bank goes under, but your money is safe. These protections have worked pretty well for many decades. However, during the recent financial crisis, all three of these protections were under heavy strain. So, one of the things banking regulators did was to put the major banks through stress tests to make sure they could handle several bad financial events without collapsing. These tests showed that some banks didn't have enough money in reserve. (Not long after, banks started to increase fees and credit card rates to raise this additional capital.) Keep in mind that if banks were unable to use the deposited money (loan it out, invest it, etc), the current financial landscape would change considerably."
},
{
"docid": "462668",
"title": "",
"text": "\"This is a hard question to answer. Government debt and mortgages are loosely related. Banks typically use yields on government bonds to determine mortgage interest rates. The banks must be able to get higher rates from the mortgage otherwise they would buy government bonds. Your question mentions default so I'm assuming a country has reneged on its promise to pay either the principal or interest on government bonds. The main thing to consider is \"\"Who does not get their money?\"\". In other words, who does the government decide not to pay. This is the important part. The government will have some money so they could pay some bond holders. They must decide who to shaft. For example, let's look at who holds Greek government debt. Around 70% of Greek government debt is held outside Greece. See table below. The Greek government could decide to default only on the debt to foreign holders. In that case the banks in France and Switzerland would take the loss on their bonds. This could cause severe problems in France and Switzerland depending on the percentage of Greek bonds that make up the banks' assets. Greek banks would still face losses, however, since the price of their Greek bond holdings would drop sharply when the government defaults. Interestingly, the losses for the Greek banks may be smaller than the losses faced by the French and Swiss banks. This is usually the favored option chosen by government since the French and Swiss don't vote in Greece. Yields on Greek government bonds would rise dramatically. If your Greek mortgage is an adjustable rate mortgage then you could see some big adjustments upward. If you live in France or Switzerland then the bank that owns your mortgage may go under if Greece defaults. During liquidation the bank will sell their assets which includes mortgages and you will probably not notice any difference in your mortgage. As I stated earlier: this is a hard question to answer since the two financial instruments involved (bonds and mortgages) are similar but may or may not be related.\""
},
{
"docid": "105889",
"title": "",
"text": "\"PMI IS Mortgage insurance. It stands for \"\"Private Mortgage Insurance\"\". This guy is just trying to get you to buy it from him instead of whoever you have it with now. Your lender would always be on the policy since it is an insurance policy they hold (and you pay for) that protects them from you defaulting on the loan. Don't think of it as insurance for you in case you can't pay. If that should happen, your credit would still be trashed, the bank just wouldn't be out the money. You don't really get any benefit at all from it. It is just the way a bank can mitigate the risk of giving out large loans. This is why people are keen to drop it as soon as possible. The whole thing about keeping the house in your estate after you die makes me think he is trying to sell you a different type of insurance called Mortgage Life Insurance. PMI isn't typically about that type of situation. Your estate will go into probate to work out your debts if you die and my understanding is that PMI doesn't usually pay out in that situation. If this is what he is selling, buying such a policy would be on top of your PMI insurance payment, not instead of it. Be forewarned, personal finance experts usually consider mortgage life insurance to be a ripoff. If you want to protect against the risk of your heirs losing the house because they can't make the payments, you are better off with Term Life Insurance. However, don't worry that they will inherit your debt on the house unless they are on the loan. If they don't want the house, they won't be obliged to make payments on it (unless they want to keep it). It won't affect their credit if they just walk away and let the bank have the house after you die unless they are on the note. Here is an article (in two parts) with a pretty good treatment of the issue of choosing your own PMI policy: \"\"Give Buyers Freedom to Choose Mortgage Insurance\"\" Part 1 Part 2\""
}
] |
4605 | If the U.S. defaults on its debt, what will happen to my bank money? | [
{
"docid": "453941",
"title": "",
"text": "I have been through default in Ukraine august 1998. That was a real nightmare. The financial system stopped working properly for 1 month, about 30% of businesses went bankrupt because of chain effect, significant inflation and devaluation of currency. So, it is better to be prepared, because this type of processes result in unpredictable situation."
}
] | [
{
"docid": "304007",
"title": "",
"text": "\"The danger to your savings depends on how much sovereign debt your bank is holding. If the government defaults then the bank - if it is holding a lot of sovereign debt - could be short funds and not able to meet its obligations. I believe default is the best option for the Euro long term but it will be painful in the short term. Yes, historically governments have shut down banks to prevent people from withdrawing their money in times of crisis. See Argentina circa 2001 or US during Great Depression. The government prevented people from withdrawing their money and people could do nothing while their money rapidly lost value. (See the emergency banking act where Title I, Section 4 authorizes the US president:\"\"To make it illegal for a bank to do business during a national emergency (per section 2) without the approval of the President.\"\" FDR declared a banking holiday four days before the act was approved by Congress. This documentary on the crisis in Argentina follows a woman as she tries to withdraw her savings from her bank but the government has prevented her from withdrawing her money.) If the printing press is chosen to avoid default then this will allow banks and governments to meet their obligations. This, however, comes at the cost of a seriously debased euro (i.e. higher prices). The euro could then soon become a hot potato as everyone tries to get rid of them before the ECB prints more. The US dollar could meet the same fate. What can you do to avert these risks? Yes, you could exchange into another currency. Unfortunately the printing presses of most of the major central banks today are in overdrive. This may preserve your savings temporarily. I would purchase some gold or silver coins and keep them in your possession. This isolates you from the banking system and gold and silver have value anywhere you go. The coins are also portable in case things really start to get interesting. Attempt to purchase the coins with cash so there is no record of the purchase. This may not be possible.\""
},
{
"docid": "333755",
"title": "",
"text": "\"There are many different methods for a corporation to get money, but they mostly fall into three categories: earnings, debt and equity. Earnings would be just the corporation's accumulation of cash due to the operation of its business. Perhaps if cash was needed for a particular reason immediately, a business may consider selling a division or group of assets to another party, and using the proceeds for a different part of the business. Debt is money that (to put it simply) the corporation legally must repay to the lender, likely with periodic interest payments. Apart from the interest payments (if any) and the principal (original amount leant), the lender has no additional rights to the value of the company. There are, basically, 2 types of corporate debt: bank debt, and bonds. Bank debt is just the corporation taking on a loan from a bank. Bonds are offered to the public - ie: you could potentially buy a \"\"Tesla Bond\"\", where you give Tesla $1k, and they give you a stated interest rate over time, and principal repayments according to a schedule. Which type of debt a corporation uses will depend mostly on the high cost of offering a public bond, the relationships with current banks, and the interest rates the corporation thinks it can get from either method. Equity [or, shares] is money that the corporation (to put it simply) likely does not have a legal obligation to repay, until the corporation is liquidated (sold at the end of its life) and all debt has already been repaid. But when the corporation is liquidated, the shareholders have a legal right to the entire value of the company, after those debts have been paid. So equity holders have higher risk than debt holders, but they also can share in higher reward. That is why stock prices are so volatile - the value of each share fluctuates based on the perceived value of the entire company. Some equity may be offered with specific rules about dividend payments - maybe they are required [a 'preferred' share likely has a stated dividend rate almost like a bond, but also likely has a limited value it can ever receive back from the corporation], maybe they are at the discretion of the board of directors, maybe they will never happen. There are 2 broad ways for a corporation to get money from equity: a private offering, or a public offering. A private offering could be a small mom and pop store asking their neighbors to invest 5k so they can repair their business's roof, or it could be an 'Angel Investor' [think Shark Tank] contributing significant value and maybe even taking control of the company. Perhaps shares would be offered to all current shareholders first. A public offering would be one where shares would be offered up to the public on the stock exchange, so that anyone could subscribe to them. Why a corporation would use any of these different methods depends on the price it feels it could get from them, and also perhaps whether there are benefits to having different shareholders involved in the business [ie: an Angel investor would likely be involved in the business to protect his/her investment, and that leadership may be what the corporation actually needs, as much or more than money]. Whether a corporation chooses to gain cash from earnings, debt, or equity depends on many factors, including but not limited to: (1) what assets / earnings potential it currently has; (2) the cost of acquiring the cash [ie: the high cost of undergoing a public offering vs the lower cost of increasing a bank loan]; and (3) the ongoing costs of that cash to both the corporation and ultimately the other shareholders - ie: a 3% interest rate on debt vs a 6% dividend rate on preferred shares vs a 5% dividend rate on common shares [which would also share in the net value of the company with the other current shareholders]. In summary: Earnings would be generally preferred, but if the company needs cash immediately, that may not be suitable. Debt is generally cheap to acquire and interest rates are generally lower than required dividend rates. Equity is often expensive to acquire and maintain [either through dividend payments or by reduction of net value attributable to other current shareholders], but may be required if a new venture is risky. ie: a bank/bondholder may not want to lend money for a new tech idea because it is too risky to just get interest from - they want access to the potential earnings as well, through equity.\""
},
{
"docid": "527953",
"title": "",
"text": "\"Excellent sagacious analysis, Whale. I agree with every single thing you have stated; however, I took great heed to one remark you made: Apple \"\"[is] a great company.\"\" Apple is NOT a great company. Apple may be worse than Amazon. The only difference between Apple and Amazon is that Apple knows its strength (technology) and does not veer away from it one iota. Apple has been vying for a stronghold on the technology industry since its inception. Oh yea, another thing that makes Apple a shitty company--keep in mind, I am typing all of this on an Apple phone (the irony)--is the fact that they store a majority of their revenue offshore--in countries that practically have a ZERO tax on money--which has allowed Apple to dodge taxes in the U.S. for years. It's sad that a multi-billion dollar company that operates in the U.S., with $250 billion in cash, dodges paying their fair share of taxes to the U.S. Treasury just because they'll be taxed at 35%. Could you imagine what would happen to average-Joe citizens like you or me if we avoided paying taxes? HINT: this isn't a trick question.\""
},
{
"docid": "344093",
"title": "",
"text": "> Neither the businesses that aren't paying taxes or the working poor who aren't paying taxes are bringing in revenue for Texas. Because Texas also receives many low skilled labor and immigrants. Furthermore Texas has one of the lowest State Debt per Capita which is $1,513 #46 of all US states in 2011. Factor in the state debt and people in Texas are much less in debt than other states. http://www.uschamberfoundation.org/sites/default/files/legacy/foundation/u94/Debt-Per-Capita-(large)_0.png > Neither the businesses that aren't paying taxes or the working poor who aren't paying taxes are bringing in revenue for Texas. Texas is the #1 trading state, it has enough revenue and still one of the lowest State debt per Capita.($1,513 #46 of all states). **Texas has accounted for half of the net new jobs added to the U.S. economy, according to the lead story in this morning’s USA Today. That’s quite a record for one lone state. We’ll leave it to others for now to argue over how much credit Gov. Perry can claim.** **Another reason for its relatively strong job growth is a friendly business climate, including no state income tax and relatively light regulations. And for those who scapegoat trade for the nation’s persistently high unemployment rate, consider that Texas is the nation’s number one trading state**"
},
{
"docid": "109227",
"title": "",
"text": "Here's the key: >If I buy back my own mortgage, I don’t have a mortgage. You don't have a mortgage, you probably ended up with another type of depth. This is what happens. The Bank of Japan is buying the debt. It didn't disappear. Why did it buy the debt? To be able to print more money. Why does it need more money? To create more inflation. 0.2% of inflation is bad. You need 2%. //edit:grammar."
},
{
"docid": "72457",
"title": "",
"text": "\"But I think another interesting postscript to this which is relevant at this time is that the orchard wildfire isn't the only thing that can make money \"\"disappear\"\". The use of a currency rather than a transferable note means that it can be an independent store of value, so there are perverse outcomes that can happen that can't happen with IOUs. So say some particularly wealthy person in the village starts to hoard his money and corners a large fraction of the money supply (say he's anticipating some horrible plague). The number of Loddars decreases, and the orchard owner starts paying his workers fewer Loddars as a result. But their debts are denominated in \"\"old\"\" Loddars which were easier to come by, and quickly the workers are unable to pay their debts, or have to spend all their money on their debts and have none for anything else. They default on those debts and the money \"\"disappears\"\"--but it doesn't disappear for any physical reason (the workers are doing the same amount of work), it disappears because of a shock to the monetary supply. This is a \"\"demand shock\"\" versus the \"\"supply shock\"\" of an orchard catching on fire.\""
},
{
"docid": "428941",
"title": "",
"text": "\"> 1). How is a loan an asset? I'm the bank and I have 100$. I loan Jimmy 20$. With interest I expect him to pay back 25$. My books sure as shit shouldn't say I'm worth 105$ or even 100$! If you *extend* a loan to someone, the loan is an asset to you and a liability to them. It's a liability to them because they *owe* you the loan + interest back. It's an *asset* to you because you expect to retrieve the full loan principal AND interest back. There is no difference, cash flow wise, between spending $100 on a machine that makes fidget spinners and earns you $110 back ($10 profit) and extending a loan to Billy at 10% interest (you'll get $110 back, $10 profit). > My books sure as shit shouldn't say I'm worth 105$ or even 100$! Why not? I have $100 cash. I loan it out to Billy at 10% interest. Billy is creditworthy and reliable, and certain collateral is in place. I'm worth, essentially, a discounted cash flow of $110 (which as long as my required return is less than 10%, means I'm worth *more* than $100). > I gave away 20$. I'm worth 80$ right? No. That assumes you spent $20 and won't get *any* of it back. It's the same as ordering a $20 pizza and eating it all. Now, the *cash* you have on your *balance sheet* would be $80, but you'd have a loan outstanding as an asset at $20, which is a net 0 movement in equity on the other side. > Sure I can put it on my books that Jimmy owes me 20$ but I cannot be acting like I HAVE that 20$ can I? Well, yes and no. On one hand, you are certainly *worth* more than $80 in your scenario. However, banks have some stringent regulations preventing banks from being overly risky. > Isn't that how the 08' crash happened? No. '08 happened from a culmination of many different events, including risky and predatory loan origination, conflicts of interest in credit rating agencies, and low Fed rates, among other issues, including several \"\"domino effect\"\" secondary issues. > Is the risk of default accounted for? Theoretically, the risk of default is accounted for in two areas: 1. The interest rate extended to the debtor. 2. A provision for loan losses. > \"\" because default risk is not transferred with the asset.\"\" In what context was this seen? No one would willingly sell an asset but hold on to the risk (or they'd charge a high price, at least, for that). Student loans are a special case. In the U.S., they are generally *non-cancellable.* They survive everything, including bankruptcy. They don't have collateral. Basically, they're going to follow the person around, regardless of situation, INCLUDING simply not paying. This makes default risk (or rather loss risk) lower. A large portion of loans come from the federal government, which means to a pretty high degree, they are guaranteed by the government. This also makes loss risk lower. The government can garnish wages and all sorts of unpleasant things to get the money back. Even if losses are realized, taxes can (and will) make up the difference. Private loans have a bit less leeway in these regards, but they still are immune to bankruptcy currently. As such, while they don't have all the tools of the government, they're still essentially invincible.\""
},
{
"docid": "514055",
"title": "",
"text": "\"Don't listen to the retarded \"\"do-gooder\"\" idiots on this site who think she shouldn't reneg because of some honor or morality bullshit. You have a contract between two people. It states what will happen when you pay (keep car) and what will happen when you don't (they take car). Defaulting isn't an inherent bad thing. There are consequences for it. If you decide to default or to not pay a loan and you're ok with the consequences then do it. The person writing the loan knows the risk they're getting into and they're ok with it. So do what is best for you. As for your original question, sorry I don't have an answer. I don't think anything will happen to her in the U.S. but she might have trouble later on if she decides to move back to Japan or even visit Japan. Or her family may be held accountable for it. No idea. I don't know how Japanese laws works. Hopefully someone here will help but the best thing would be to talk to a lawyer in both the U.S. and in Japan.\""
},
{
"docid": "329941",
"title": "",
"text": "Gwarsh goofy . .what are you talking about now, who is buying US treasuries or what is the National Debt, either way in your fucked up money printing economy where you cant even pay off your student loans or cover your insurance, what to talk of house loans and fancy financial instruments, that were based on those, which went into default and the Fed bought up, that required the Fed to give the banks an unlimited credit line as a back stop. You see shit head . .all those trillions and trillions of dollars of bad loans and bank bailouts now sits on the Feds balance sheet as $4.5 trillion, leveraged many many many many . . . many . many times so the banks look like they are capitally adequate on paper. Thats what it means when you nationalize public debt Understand shit wit? Incidentally thats what the Fed is trying to unwind and some fucking moron like you will buy and then go bankrupt and ask for a bailout and get more debt from the Fed. Its a good thing your generation grew up sucking Chinese toys, the lead in the paint did its job well, otherwise you might have actually learnt something . .. .Gwarsh!!!"
},
{
"docid": "594226",
"title": "",
"text": "Edit: This is paywalled so I pasted it here. LONDON—The synthetic CDO, a villain of the global financial crisis, is back. A decade ago, investors’ bad bets on collateralized debt obligations helped fuel the crisis. Billed as safe, they turned out to be anything but. Now, more investors are returning to CDOs—and so are concerns that excess is seeping into the aging bull market. In the U.S., the CDO market sunk steadily in the years after the financial crisis but has been fairly flat since 2014. In Europe, the total size of market is now rising again—up 5.6% annually in the first quarter of the year and 14.4% in the last quarter of 2016, according to the Securities Industry and Financial Markets Association. Collateralized debt obligations package a bunch of assets, such as mortgage or corporate loans, into a security that is chopped up into pieces and sold to investors. The assets inside a synthetic CDO aren’t physical debt securities but rather derivatives, which in turn reference other investments such as loans or corporate debt. During the financial crisis, synthetic CDOs became a symbol of the financial excesses of the era. Labelled an “atomic bomb” in the movie “The Big Short,” they ultimately were the vehicle that spread the risks from the mortgage market throughout the financial system. Synthetic CDOs crammed with exposure to subprime mortgages—or even other CDOs—are long gone. The ones that remain contain credit-default swaps referencing a range of European and U.S. companies, effectively allowing investors to bet whether corporate defaults will pick up. Desperate for something that pays better than basic government bonds, insurance companies, asset managers and high-net worth investors are scooping up investments like synthetic CDOs, bankers say, which had largely become the preserve of hedge funds after 2008. Investment banks, which create and sell CDOs, are happy to oblige. Placid markets have made trading revenue weak this year, and such structured products are an increasingly important business line. Synthetic CDOs got “bad press,” says Renaud Champion, head of credit strategies at Paris-based hedge fund La Française Investment Solutions. But “that market has never ceased to fully function,” he added. These days, Mr. Champion still trades synthetic CDOs, receiving a stream of income for effectively insuring against a sharp rise in European corporate defaults. Many investors, though, still view the products as unnecessarily complex and are concerned they may be hard to offload when markets get choppy—as they did in the last crisis. From the DepthsThe amount outstanding of European collateralized debt obligations has been growing again after years of shrinking. “We don’t see that demand from our clients and we wouldn’t recommend it,” said Markus Stadlmann, chief investment officer at Lloyds Private Banking, citing concerns over the products’ lack of transparency and lack of liquidity, meaning it could be hard to offload a position when needed. The return of synthetic CDOs could present other risks. Even if banks are currently less willing to loan money to help clients juice returns, credit default swaps can be very leveraged, potentially allowing investors to make outsize bets. Structured products accounted for nearly all the $2.6 billion year-on-year growth in trading-division revenue at the top 12 global investment banks in the first quarter, according to Amrit Shahani, research director at financial consultancy Coalition. “There has been an uptick in interest in any kind of yield-enhancement structure,” said Kokou Agbo-Bloua, a managing director in Société Générale SA’s investment bank. The fastest growth this year has come in credit—the epicenter of the 2007-08 crisis. The top global 12 investment banks had around $1.5 billion in revenue in structured credit in the first quarter, according to Coalition, more than doubling since the first quarter of 2016. Structured equities are largest overall, a business dominated by sales of derivatives linked to moves in stock prices, with revenue of $5 billion in the first quarter. “The low-yield environment hurts,” said Lionel Pernias, a credit-fund manager at AXA Investment Managers. “So there are a lot of asset owners looking at structured credit.” These days, the typical synthetic CDO involves a portfolio of credit-default swaps on a range of companies. The portfolio is sliced into tranches, and investors receive payouts based on the performance of the swaps. Those investors owning lower tranches tend to get paid more but are subject to higher losses if the swaps sour. Structured GrowthBank revenues from structured products such as collateralized debt obligations are rising faster than conventionaltrading of stocks, bonds and currencies. For instance, an investor can sell insurance against a pick-up in defaults in the lowest—or “equity”—tranche of the iTraxx Europe index, a widely traded CDS benchmark that tracks European investment-grade companies. In return, the investor will receive regular payments, but those will shrink with every company default and stop altogether once 3% of the portfolio has been wiped out through defaults. During the financial crisis, synthetic CDOs based on standardized indexes like iTraxx Europe suffered losses as traders expected defaults to pick up. Investors who held on, though, have since done “great,” says Mr. Champion. Investors who agreed to insure against a rise in defaults for 10 years on the equity tranche of the iTraxx Europe index in March 2008 have made roughly 10% a year, according to an analysis of data from IHS Markit . That’s despite defaults from two companies in the index: Italian lender Monte dei Paschi di Siena and Portugal Telecom International Finance BV. In contrast, investors who sold insurance on tailored CDOs packed with riskier credits—such as Icelandic banks or monoline insurers—would have been on the hook for losses. Synthetic CDOs have evolved since the crisis, bankers say. For instance, most are shorter-dated, running up to around two to three years rather than seven to 10 years. Some banks will only slice and dice standardized CDS indexes that trade frequently in the market rather than craft tailored baskets of credits. There are also fewer banks involved in arranging these trades. Those active include BNP Paribas SA, Citigroup Inc., Goldman Sachs Group Inc., J.P. Morgan Chase & Co. and Société Générale. Postcrisis regulations have forced banks to set aside more capital against these transactions and use less leverage. That has encouraged banks to parcel out the risk to clients rather than keeping it on their own books. “There is a lot more regulation and scrutiny and a lot less leverage,” said Mr. Agbo-Bloua. Mr. Champion says he only trades tranches based on standardized CDS indexes, which he says are easier to buy and sell than more tailored products. Currently, he sees value in selling default protection on super-senior tranches. Mr. Champion said he has to lay down only around $1 million in upfront margin costs on a $100 million trade of this kind. “The cost of leverage in the derivatives space is very low,” he said. Any expectations of default rates picking up could inflict losses on synthetic CDOs, though at the moment analysts forecast they should decline. Still, the memory of how the market behaved in the immediate aftermath of the financial crisis is likely to keep many investors on the sidelines. “If you’re the person responsible for buying the synthetic CDO that suddenly goes wrong, your career risk is bigger than if you’d bought a plain vanilla bond that goes wrong. It has a bad name,” said Ulf Erlandsson, a portfolio manager at start-up hedge fund Glacier Impact, who until recently oversaw credit for one of Sweden’s public pension funds."
},
{
"docid": "454629",
"title": "",
"text": "\"Its fraudulent because it is feeds on new investment to pay the old investors, the EXACT definition of a Ponzi. And it now is contingent on the faith of the US, as with most other debts. There is no \"\"trust fund\"\" of this wealth sitting waiting for us if the USA fails. But do tell me, how is SS not a ponzi scheme? Does it not use new money to pay the old? If the new money ran out, would it not default on its debts (in the future)? And what part of the constitution says the US government should collect some of my wages and save it for me for later? You do know, some people have opted out of SS? Even the US government will not take the fight to court. They know its a sham.\""
},
{
"docid": "530998",
"title": "",
"text": "''just how much of the troubled southern EU nations' debt is due to the rescuing of private banks? thanks'' My answer rambled onto related topics. In short, not much. While the actual sums involved in bank bailouts are considerable, relative to sovereign debts run up by having structural/trade deficits for ~10 years, they aren't the problem in Europe at the moment...but they ARE the tip of an Iceberg that could sink parts of the EU and leave the rest struggling to stay above water. An interesting question to ponder, with deceptively simple answers, is: If the % of sovereign debt resulting from bank bailouts is so small, why does the media and general public throw a fit every time a major EU bank gets into trouble? People are worried about losing their savings that they have with that bank. Its a visceral fear that is easy to personally relate to. But scratch below the surface and there is a whole buffet of terror for you to feast on. Assuming leverage of ~26* on assets held by banks and that true liabilities aren't completely opaque to average Joe retail investor, the collapse of the right bank could fire the starting gun on a vicious recession, trigger bailouts of other institutions exposed to the original and all sorts of nasty events. These bank assets include the mess created by rehypothecation, securitization of shitty credit/assets and CDS, commercial paper that relies on never having to be realized as a loss and interference in the money markets and currencys by states. Its damn hard to work out what assets and liabilities a bank has these days, let alone what any debt they have taken on is worth. Euro Crisis Best Crisis. *Pulled from memory, I'm not sure if this is accurate for Europe."
},
{
"docid": "122182",
"title": "",
"text": "\"To answer length validity and security implications of draft checks issued and negotiated within the United States, I am heavily addressing the common erroneous assumptions of where the funds sit while they're \"\"in\"\" a draft check and how to get them out. Tl;Dr The existing answers are incomplete and in some ways dangerously misleading. Jerry can still be potentially defrauded by Tom, and even if the check is legitimately drawn and negotiable, Jerry may still experience delayed access to the funds. The funds sit in an account held by the issuing bank. As long as the bank has sufficient funds, the check does. However, there are significantly more factors that go into whether a check will be returned unpaid (\"\"bounce\"\"). If I hand you $5000 in cash, will you give me $5000 in cash? Probably, and you'd probably be pretty safe. How about I give you a $5000 draft check, will you give me $5000 in cash without doing anything except looking at it to verify the check? I hope not (Cash America sure wouldn't) but people sell expensive goods with the \"\"same as cash\"\" attitude. Remember: The only non-cash form of payment which cannot somehow be held, reversed or returned unpaid in the U.S. without consent of the receiving party is a payment order (a.k.a wire transfer)! The draft check is \"\"as good as cash\"\" in the sense that the money for a draft check is withdrawn from your account before the check is negotiated (deposited). This does NOT mean that a draft check will not bounce, so Jerry is NOT as secure in handing the goods to Tom as if Tom had handed him cash, as it is still a check. Jerry's bank will not receive the funds for Tom's draft check for an average 3 to 5 business days, same as a personal check. Jerry will probably have access to the first $5000 within two business days... provided that he deposits the draft check in person at his bank's branch or in a bank-owned ATM. In the United States, Regulation CC governs funds availability. Regarding official, draft, or tellers checks: \"\"If the customer desires next-day availability of funds from these checks, [your bank] may require use of a special deposit slip.\"\" Mobile deposit availability in the U.S. is NOT regulated in this way and will likely be subject to a longer hold on more, if not all, of the check! Draft checks, don't, as a habit, \"\"bounce\"\" in the colloquial sense of \"\"returned for insufficient funds.\"\" This is because they are prepaid and drawn upon a financial institution's account. Banks are insolvent far less frequently than other businesses or individuals. Draft checks, tellers checks, official checks, bank checks, etc CAN, however, be returned unpaid if one of the following is true: As an aside: an institution is not obligated to honor a stale dated check, but may do so at its discretion. If you have a personal check outstanding for over 6 months, it may still clear and potentially overdraw your account. In this case, contact your bank ASAP to process a reversal. The depositing bank mis-scans the check and the issuing bank refuses the resulting data. I have seen systems mis-read which data field is which, or its contents. Also, there is the possibility the image if the check will be illegible to the issuing bank. The draft check has been cancelled (stop paid). This can happen if: a) The check was fraudulently bought from the issuing bank using Tom's account b) Tom has completed an indemnification agreement that the check was lost or otherwise not used for its intended purpose, without fraud having occurred against Tom c) The draft check is escheated (paid to the state as unclaimed property). This case is a subset of case 1, but will lead to a different return reason stamped on the (image replacement document of) the check. The draft check was never any good in the first place. Because of the perception that draft checks are as good as cash (they're not but are a lot better than personal checks), forgery and attempted fraud is shockingly common. These aren't actually underwritten by a real bank, even if they appear to be. The only money \"\"in\"\" them is what the fraudster can get out of you. Jerry did not properly endorse the check before presenting it for deposit or otherwise negotiating it. In my time in banking, I most commonly saw cases 3 and 4. Unlike most counterfeit cash, case 3 will fool Jerry and Jerry's teller. Tom gets an immediate payout (a car, a wire transfer, a payday loan, etc) and Jerry's bank doesn't know the check isn't valid until they call the alleged issuing bank to verify its negotiability, or in the case of smaller checks into lower-risk accounts, it is simply returned unpaid as fraudulently drawn. To conclude: Call the alleged issuing bank's verification line before handing over the goods, always properly endorse your deposits, and address what happens if one does not receive or collect on prompt payment in your contracts.\""
},
{
"docid": "122491",
"title": "",
"text": "\"Great question. There are several reasons; I'm going to list the few that I can think of off the top of my head right now. First, even if institutional bank holdings in such a term account are covered by deposit insurance (this, as well as the amount covered, varies geographically), the amount covered is generally trivial when seen in the context of bank holdings. An individual might have on the order of $1,000 - $10,000 in such an account; for a bank, that's basically chump change, and you are looking more at numbers in the millions of dollars range. Sometimes a lot more than that. For a large bank, even hundreds of millions of dollars might be a relatively small portion of their holdings. The 2011 Goldman Sachs annual report (I just pulled a big bank out of thin air, here; no affiliation with them that I know of) states that as of December 2011, their excess liquidity was 171,581 million US dollars (over 170 billion dollars), with a bottom line total assets of $923,225 million (a shade under a trillion dollars) book value. Good luck finding a bank that will pay you 4% interest on even a fraction of such an amount. GS' income before tax in 2011 was a shade under 6.2 billion dollars; 4% on 170 billion dollars is 6.8 billion dollars. That is, the interest payments at such a rate on their excess liquidity alone would have cost more than they themselves made in the entire year, which is completely unsustainable. Government bonds are as guaranteed as deposit-insurance-covered bank accounts (it'll be the government that steps in and pays the guaranteed amount, quite possibly issuing bonds to cover the cost), but (assuming the country does not default on its debt, which happens from time to time) you will get back the entire amount plus interest. For a deposit-insured bank account of any kind, you are only guaranteed (to the extent that one can guarantee anything) the maximum amount in the country's bank deposit insurance; I believe in most countries, this is at best on the order of $100,000. If the bank where the money is kept goes bankrupt, for holdings on the order of what banks deal with, you would be extremely lucky to recover even a few percent of the principal. Government bonds are also generally accepted as collateral for the bank's own loans, which can make a difference when you need to raise more money in short order because a large customer decided to withdraw a big pile of cash from their account, maybe to buy stocks or bonds themselves. Government bonds are generally liquid. That is, they aren't just issued by the government, held to maturity while paying interest, and then returned (electronically, these days) in return for their face value in cash. Government bonds are bought and sold on the \"\"secondary market\"\" as well, where they are traded in very much the same way as public company stocks. If banks started simply depositing money with each other, all else aside, then what would happen? Keep in mind that the interest rate is basically the price of money. Supply-and-demand would dictate that if you get a huge inflow of capital, you can lower the interest rate paid on that capital. Banks don't pay high interest (and certainly wouldn't do so to each other) because of their intristic good will; they pay high interest because they cannot secure capital funding at lower rates. This is a large reason why the large banks will generally pay much lower interest rates than smaller niche banks; the larger banks are seen as more reliable in the bond market, so are able to get funding more cheaply by issuing bonds. Individuals will often buy bonds for the perceived safety. Depending on how much money you are dealing with (sold a large house recently?) it is quite possible even for individuals to hit the ceiling on deposit insurance, and for any of a number of reasons they might not feel comfortable putting the money in the stock market. Buying government bonds then becomes a relatively attractive option -- you get a slightly lower return than you might be able to get in a high-interest savings account, but you are virtually guaranteed return of the entire principal if the bond is held to maturity. On the other hand, it might not be the case that you will get the entire principal back if the bank paying the high interest gets into financial trouble or even bankruptcy. Some people have personal or systemic objections toward banks, limiting their willingness to deposit large amounts of money with them. And of course in some cases, such as for example retirement savings, it might not even be possible to simply stash the money in a savings account, in which case bonds of some kind is your only option if you want a purely interest-bearing investment.\""
},
{
"docid": "422218",
"title": "",
"text": "\"value slip below vs \"\"equal a bank savings account’s safety\"\" There is no conflict. The first author states that money market funds may lose value, precisely due to duration risk. The second author states that money market funds is as safe as a bank account. Safety (in the sense of a bond/loan/credit) mostly about default risk. For example, people can say that \"\"a 30-year U.S. Treasury Bond is safe\"\" because the United States \"\"cannot default\"\" (as said in the Constitution/Amendments) and the S&P/Moody's credit rating is the top/special. Safety is about whether it can default, ex. experience a -100% return. Safety does not directly imply Riskiness. In the example of T-Bond, it is ultra safe, but it is also ultra risky. The volatility of 30-year T-Bond could be higher than S&P 500. Back to Money Market Funds. A Money Market Fund could hold deposits with a dozen of banks, or hold short term investment grade debt. Those instruments are safe as in there is minimal risk of default. But they do carry duration risk, because the average duration of the instrument the fund holds is not 0. A money market fund must maintain a weighted average maturity (WAM) of 60 days or less and not invest more than 5% in any one issuer, except for government securities and repurchase agreements. If you have $10,000,000, a Money Market Fund is definitely safer than a savings account. 1 Savings Account at one institution with amount exceeding CDIC/FDIC terms is less safe than a Money Market Fund (which holds instruments issued by 20 different Banks). Duration Risk Your Savings account doesn't lose money as a result of interest rate change because the rate is set by the bank daily and accumulated daily (though paid monthly). The pricing of short term bond is based on market expectation of the interest rates in the future. The most likely cause of Money Market Funds losing money is unexpected change in expectation of future interest rates. The drawdown (max loss) is usually limited in terms of percentage and time through examining historical returns. The rule of thumb is that if your hold a fund for 6 months, and that fund has a weighted average time to maturity of 6 months, you might lose money during the 6 months, but you are unlikely to lose money at the end of 6 months. This is not a definitive fact. Using GSY, MINT, and SHV as an example or short duration funds, the maximum loss in the past 3 years is 0.4%, and they always recover to the previous peak within 3 months. GSY had 1.3% per year return, somewhat similar to Savings accounts in the US.\""
},
{
"docid": "479351",
"title": "",
"text": ">[While Argentina has the money to pay the interest it owes, a U.S. judge’s ruling bars it from passing the funds to holders before settling with the so-called holdout creditors that won an order for full repayment on defaulted debt from 2001. Argentine officials say the plaintiffs have rebuffed all offers for a deal.](http://www.bloomberg.com/news/2014-08-04/argentine-default-sours-outlook-for-peso-as-talks-ordered.html)"
},
{
"docid": "577772",
"title": "",
"text": "\"A coworker put the idea in my head \"\"what if one day we wake up and thousands of pissed off young people are defaulting on their student loans\"\"? It's Crazy I know but out of curiosity I started doing homework on this and within one paragraph of Investopedia reading, I had questions. 1). How is a loan an asset? I'm the bank and I have 100$. I loan Jimmy 20$. With interest I expect him to pay back 25$. My books sure as shit shouldn't say I'm worth 105$ or even 100$! I gave away 20$. I'm worth 80$ right? Sure I can put it on my books that Jimmy owes me 20$ but I cannot be acting like I HAVE that 20$ can I? Isn't that how the 08' crash happened? Explain why it makes sense to consider a loan an asset. Is the risk of default accounted for? Which leads me to question 2. 2). I came across this phrase: \"\" because default risk is not transferred with the asset.\"\" Does that mean that when these institutions pass around the loan, the risk doesn't go with it? How is it possible? Assuming loan has the risk of default priced in (which I still don't fully get See #1), how can it possibly be sold in such a way that the risk of default is detached? I am guess I am trying to dig around and learn as much as I can about student loans because the initial theory is not far-fetched to me.\""
},
{
"docid": "287458",
"title": "",
"text": "What do you see as the advantage of doing this? When you buy a house with a mortgage, the bank gets a lien on the house you are buying, i.e. the house you are buying is the collateral. Why would you need additional or different collateral? As to using the house for your down payment, that would require giving the house to the seller, or selling the house and giving the money to the seller. If the house was 100% yours and you don't have any use for it once you buy the second house, that would be a sensible plan. Indeed that's what most people do when they buy a new house: sell the old one and use the money as down payment on the new one. But in this case, what would happen to the co-owner? Are they going to move to the new house with you? The only viable scenario I see here is that you could get a home equity loan on the first house, and then use that money as the down payment on the second house, and thus perhaps avoid having to pay for mortgage insurance. As DanielAnderson says, the bank would probably require the signature of the co-owner in such a case. If you defaulted on the loan, the bank could then seize the house, sell it, and give the co-owner some share of the money. I sincerely doubt the bank would be interested in an arrangement where if you default, they get half interest in the house but are not allowed to sell it without the co-owner's consent. What would a bank do with half a house? Maybe, possibly they could rent it out, but most banks are not in the rental business. So if you defaulted, the co-owner would get kicked out of the house. I don't know who this co-owner is. Sounds like you'd be putting them in a very awkward position."
},
{
"docid": "165415",
"title": "",
"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.\""
}
] |
4605 | If the U.S. defaults on its debt, what will happen to my bank money? | [
{
"docid": "504661",
"title": "",
"text": "If you are actually referring to all the political rhetoric and posturing over the debt ceiling issue. That's a long ways from the US actually defaulting on paying debts. A lot of government offices might shut down, but I expect anyone holding US debt to be paid off. (they have the printing presses after all) If that's what you are referring to, based on the LAST time that the governement had to shut down because they didn't raise the debt ceiling, it won't be a big deal. Last time, no debt was defaulted on, a bunch of the less essential government offices shut down for a few days, and the stock market did a collective 'meh' over the whole thing. It was basically a non event. I've no reason to expect it will be different this time. (btw, where were all these republican budget cutters hiding when 10 years ago they started with a nearly balanced budget, and ended up blowing up the national debt by about 80% in 8 years time? (from roughly $6B to $11B) I wish they'd been screaming about the debt as much then as they are now. Not that there isn't ample blame to go around, and both sides have not been spending in ways that make a drunken sailor look like the paragon of a fiscal conservative, but to hear nearly any of them tell it, their party had nothing to do with taking us from a balanced budget to the highest burn rate ever while they were in control (with a giant financial crisis through in as pure 'bonus')"
}
] | [
{
"docid": "393925",
"title": "",
"text": "Many of the major indices retreated today because of this news. Why? How do the rising budget deficits and debt relate to the stock markets? It does seem strange that there is a correlation between government debt and the stock market. But I could see many reasons for the reaction. The downgrade by S&P may make it more expensive for the government to borrow money (i.e. higher interest rates). This means it becomes more expensive for the government to borrow money and the government will probably need to raise taxes to cover the cost of borrowing. Rising taxes are not good for business. Also, many banks in the US hold US government debt. Rising yields will push down the value of their holdings which in turn will reduce the value of US debt on the businesses' balance sheets. This weakens the banks' balance sheets. They may even start to unload US bonds. Why is there such a large emphasis on the S&P rating? I don't know. I think they have proven they are practically useless. That's just my opinion. Many, though, still think they are a credible ratings agency. What happens when the debt ceiling is reached? Theoretically the government has to stop borrowing money once the debt ceiling is reached. If this occurs and the government does not raise the debt ceiling then the government faces three choices:"
},
{
"docid": "530998",
"title": "",
"text": "''just how much of the troubled southern EU nations' debt is due to the rescuing of private banks? thanks'' My answer rambled onto related topics. In short, not much. While the actual sums involved in bank bailouts are considerable, relative to sovereign debts run up by having structural/trade deficits for ~10 years, they aren't the problem in Europe at the moment...but they ARE the tip of an Iceberg that could sink parts of the EU and leave the rest struggling to stay above water. An interesting question to ponder, with deceptively simple answers, is: If the % of sovereign debt resulting from bank bailouts is so small, why does the media and general public throw a fit every time a major EU bank gets into trouble? People are worried about losing their savings that they have with that bank. Its a visceral fear that is easy to personally relate to. But scratch below the surface and there is a whole buffet of terror for you to feast on. Assuming leverage of ~26* on assets held by banks and that true liabilities aren't completely opaque to average Joe retail investor, the collapse of the right bank could fire the starting gun on a vicious recession, trigger bailouts of other institutions exposed to the original and all sorts of nasty events. These bank assets include the mess created by rehypothecation, securitization of shitty credit/assets and CDS, commercial paper that relies on never having to be realized as a loss and interference in the money markets and currencys by states. Its damn hard to work out what assets and liabilities a bank has these days, let alone what any debt they have taken on is worth. Euro Crisis Best Crisis. *Pulled from memory, I'm not sure if this is accurate for Europe."
},
{
"docid": "5602",
"title": "",
"text": "You're losing money. And a lot of it. Consider this: the inflation is 2-4% a year (officially, depending on your spending pattern your own rate might be quite higher). You earn about 1/2%. I.e.: You're losing 3% a year. Guaranteed. You can do much better without any additional risk. 0.1% on savings account? Why not 0.9%? On-line savings account (Ally, CapitalOne-360, American Express, E*Trade, etc) give much higher rates than what you have. Current Ally rates are 0.9% on a regular savings account. 9 times more than what you have, with no additional risk: its a FDIC insured deposit. You can get a slightly higher rate with CDs (0.97% at the same bank for 12 months deposit). IRA - why is it in CD's? Its the longest term investment you have, that's where you can and should take risks, to maximize your compounding returns. Not doing that is actually more risky to you because you're guaranteeing compounding loss, of the said 3% a year. On average, more volatile stock investments have shown to be not losing money over periods of decades, even if they do lose money over shorter periods. Rental - if you can buy a property that you would pay the same amount of money for as for a comparable rental - you should definitely buy. Your debt will be secured by the property, and since you're paying the same amount or less - you're earning the equity. There's no risk here, just benefits, which again you chose to forgo. In the worst case if you default and walk away from the property you lost exactly (or less) what you would have paid for a rental anyway. 14 years old car may be cheaper than 4 years old to buy, but consider the maintenance, licensing and repairs - will it not some up to more than the difference? In my experience - it is likely to. Bottom line - you think you're risk averse, but you're exactly the opposite of that."
},
{
"docid": "298847",
"title": "",
"text": "\"But do you know about a US state risking to go default now or in the past? In 1847 four states - Mississippi, Arkansas, Michigan, and Florida - failed to pay all or some of their debts. All of these states had issued debt to invest in banks. From the detailed source listed below: \"\"...it should be remembered that all cases of state debt repudiation, as contrasted with mere default, involved banks.\"\" Jackson had killed the federal central bank 10 years earlier and the states were trying to create their own inflationary central banks. Six other states delayed debt payments from three to six years (source, page 103, this source has more details). This is the only case I know of where US states defaulted. US cities default more frequently. I'm very confused do US single states like IOWA have debt and emits obligations on their own like Italy does in EU? Yes. Individual states can issue their own bonds. Oh, and just another little thing I would like to know, is Dollar a fiat currency too like the Euro? Yes, the US dollar is a fiat currency. I think the better question is: \"\"Is there any currency that is not a fiat currency?\"\"\""
},
{
"docid": "94279",
"title": "",
"text": "It certainly is possible for a run on the bank to drive it into insolvency. And yes, if the bank makes some bad loans, it can magnify the problem. Generally, this does not happen, though. Remember that banks usually have lots of customers, and people are depositing money and making mortgage payments every day, so there is usually enough on-hand to cover average banking withdrawl activity, regardless of any bad loans they have outstanding. Banks have lots of historical data to know what the average withdrawl demands are for a given day. They also have risk models to predict the likelihood of their loans going into default. A bank will generally use this information to strike a healthy balance between profit-making activity (e.g. issuing loans), and satisfying its account holders. In the event of a major withdrawl demand, there are some protections in place to guard against insolvency. There are regulations that specify a Reserve Requirement. The bank must keep a certain amount of money on hand, so they can't take huge risks by loaning out too much money all at once. Regulators can tweak this requirement over time to reflect the current economic situation. If a bank does run into trouble, it can take out a short-term loan. Either from another bank, or from the central bank (e.g. the US Federal Reserve). Banks don't want to pay interest on loans any more than you do, so if they are regularly borrowing money, they will adjust thier cash reserves accordingly. If all else fails and the bank can't meet its obligations (e.g. the Fed loan fell through), the bank has an insurance policy to make sure the account holders get paid. In the US, this is what the FDIC is for. Worst case, the bank goes under, but your money is safe. These protections have worked pretty well for many decades. However, during the recent financial crisis, all three of these protections were under heavy strain. So, one of the things banking regulators did was to put the major banks through stress tests to make sure they could handle several bad financial events without collapsing. These tests showed that some banks didn't have enough money in reserve. (Not long after, banks started to increase fees and credit card rates to raise this additional capital.) Keep in mind that if banks were unable to use the deposited money (loan it out, invest it, etc), the current financial landscape would change considerably."
},
{
"docid": "298794",
"title": "",
"text": "It's more complicated than that. Governments raise money in a number of ways. First, they tax economic activity within their borders and for connected companies and individuals. Then, some governments have actual revenues from state-owned enterprises (licences, patents, courts, business revenues, and so on). Whatever shortage arises between state expenditure and this income is the deficit which is usually financed through debt. Government usually issues a bond (Wikipedia for a list of government bonds) of various types, some with extremely lengthy maturation dates. These bonds can be purchased both locally and by foreign investment funds. The nature of who buys is important. From the Wikipedia link you'll see that most government debt is very highly rated based on the ability of the state to simply raise taxes in order to fund redemption. Pension funds are legally bound to only invest in highly-rated investment classes and the bulk of bonds may be purchased to support local pensioners. A state that defaults on debt will first hit its own most vulnerable citizens. In addition, the fall-out will result in a savage cut in ratings. Countries like Argentina and Zimbabwe, which have both refused to repay their debts even to the IMF, are currently unable to raise investment at all. This has a tremendous impact on local economic development. So, default is out of the question without severe penalties. The second part of your question is about paying down the debt. As debts increase, more and more of the revenue that a country does earn is spent on servicing debt repayments. Sometimes bonds are issued merely to refinance old debt. A country that spends too much on refinancing debt is no different from an individual. Less and less money is available to do other things. In conclusion: governments can neither default nor binge-borrow unless they wish to severely limit economic opportunities for their citizens."
},
{
"docid": "144059",
"title": "",
"text": "\"http://www.businessinsider.com/who-owns-us-debt-2011-7?op=1 Foreign governments own about 32% of U.S. debt. It's not a majority, but it's still nothing to sneeze at. Social Security owns 19% \"\"The Fed\"\" owns 11+% U.S. Households (including hedge funds) own 6+% Private Pensions 3+% Money Market Mutual Funds 2+% State, Local, and Federal Retirement Funds 2+% Commercial Banks 2% Mutual Funds 2% Oil Exporting Countries 1.6% Caribbean Banking Centers 1%\""
},
{
"docid": "580259",
"title": "",
"text": "\"Is there more on where Dalio gets his definitions for the short-term debt cycle (5-8 years or so) and \"\"deleveraging\"\" and the long-term debt cycle (75-100 years)? (or his evidence that separates the two)? At one point 18:10, he says the difference is that in a deleveraging, interest rates hit 0 and can no longer go lower, but I don't know if that works as a definition per se. There are other things that central banks do when interest rates hit 0, like buy up assets (which he does mention and include in the \"\"print money\"\" category of things that can be done during a deleveraging). And one of the deleveragings he cites, England in the 1950s, according to Wikipedia was due to difficulty in transitioning out from war production, and according to [this excel file](http://www.bankofengland.co.uk/statistics/Documents/rates/baserate.xls) from the Bank of England on historical rates, it doesn't say interest rates went to 0 at that time (unless Dalio is referring to another point in history when he cites 1950s England). 20:30 His definition of a depression is when debt restructuring or defaults happen. Interesting. What I learned was that there isn't really a hard and fast definition for recessions and depressions (e.g. a recession is two quarters of negative growth in a row and a depression is just a reeeaallly bad/long recession). And I don't think I recall encountering in the past an attempt to define what a \"\"deleveraging\"\" event of an economy is. 24:30 Is debt reduction and redistribution of wealth deflationary? I think it depends on how much the debt reduction or redistribution hurts the spending of the lender or wealthy versus how much it helps the spending of the borrower or the poor. Both are actually similarly \"\"giving some from the haves to the have nots,\"\" and especially redistribution of wealth is similar to fiscal spending, which is mentioned 25:30 as a valid inflationary way to try to help the economy. 26:00 Are deflationary methods (say, austerity) needed to balance out the inflationary methods (central bank buying assets and fiscal spending)? Aren't central bank (interest rates, quantitative easing) and the government (fiscal policy) still the main things that move inflation or deflation? I would think that debt reduction and redistribution of wealth are good when needed, but I wouldn't think you would do those things *mainly* for their (supposed, see above for my doubts) deflationary effects. Still, a very interesting video and one of the best presented videos on a difficult subject.\""
},
{
"docid": "63848",
"title": "",
"text": "The only way for a mutual fund to default is if it inflated the NAV. I.e.: it reports that its investments worth more than they really are. Then, in case of a run on the fund, it may end up defaulting since it won't have the money to redeem shares at the NAV it published. When does it happen? When the fund is mismanaged or is a scam. This happened, for example, to the fund Madoff was managing. This is generally a sign of a Ponzi scheme or embezzlement. How can you ensure the funds you invest in are not affected by this? You'll have to read the fund reports, check the independent auditors' reports and check for clues. Generally, this is the job of the SEC - that's what they do as regulators. But for smaller funds, and private (i.e.: not public) investment companies, SEC may not be posing too much regulations."
},
{
"docid": "566458",
"title": "",
"text": "What is the best way that I can invest money so that I can always get returns? If you want something that doesn't require any work on your end, consider having a fee-only financial planner make a plan so that your investments can be automated to generate a cash flow for you or get an annuity as the other classic choices here as most other choices will require some time commitment in one form or other. Note that for stock investments there could be rare instances like what happened for a week in September in 2001 where the markets were closed for 5 days straight that can be the hiccup in having stocks. Bonds can carry a risk of default where there have been municipalities that defaulted on debt as well as federal governments like Russia in the 1990s. Real estate may be subject to natural disasters or other market forces that may prevent there always being a monthly payment coming as if you own a rental property then what happens if there aren't tenants because there was an evacuation of the area? There may be some insurance products to cover some of these cases though what if there are exceptionally high claims all at once that may have an insurance company go under? Would it be to set up an FD in a bank, to buy land, to buy a rental house, to buy a field, or maybe to purchase gold? What investment of your own time do you plan on making here? Both in terms of understanding what your long-term strategy is and then the maintenance of the plan. If you put the money in the bank, are you expecting that the interest rate will always be high enough to give you sufficient cash to live as well as having no financial crisis with the bank or currency you are using? Are there any better investments? You may want to reconsider what assumptions you want to make and what risks you want to accept as there isn't likely to be a single solution here that would be perfect."
},
{
"docid": "344093",
"title": "",
"text": "> Neither the businesses that aren't paying taxes or the working poor who aren't paying taxes are bringing in revenue for Texas. Because Texas also receives many low skilled labor and immigrants. Furthermore Texas has one of the lowest State Debt per Capita which is $1,513 #46 of all US states in 2011. Factor in the state debt and people in Texas are much less in debt than other states. http://www.uschamberfoundation.org/sites/default/files/legacy/foundation/u94/Debt-Per-Capita-(large)_0.png > Neither the businesses that aren't paying taxes or the working poor who aren't paying taxes are bringing in revenue for Texas. Texas is the #1 trading state, it has enough revenue and still one of the lowest State debt per Capita.($1,513 #46 of all states). **Texas has accounted for half of the net new jobs added to the U.S. economy, according to the lead story in this morning’s USA Today. That’s quite a record for one lone state. We’ll leave it to others for now to argue over how much credit Gov. Perry can claim.** **Another reason for its relatively strong job growth is a friendly business climate, including no state income tax and relatively light regulations. And for those who scapegoat trade for the nation’s persistently high unemployment rate, consider that Texas is the nation’s number one trading state**"
},
{
"docid": "376579",
"title": "",
"text": "Such loans are of course possible. They exist because the lender gains something other than interest from them: What would happen to the economy if these were common? These are common, common as anything. In fact where it's not banks lending the money, these are the default. So, nothing would happen to the economy, this is one of the ways the economy works all over the world. If you're more interested in a loan from a bank or other financial institution, made to you for whatever purpose you want - here's $10,000, have fun, give it back ten years from now - ask yourself what the bank would get from that? Perhaps they could do it as a perk when you do something else with them like get a mortgage or keep $1000 in your chequing account all the time. But in the absence of any other relationship, what would be their reason for taking on the overhead and paperwork of approving you for a loan and keeping track of whether you're paying it back or not, for no return, whether financial or intangible? No return? It doesn't happen."
},
{
"docid": "105889",
"title": "",
"text": "\"PMI IS Mortgage insurance. It stands for \"\"Private Mortgage Insurance\"\". This guy is just trying to get you to buy it from him instead of whoever you have it with now. Your lender would always be on the policy since it is an insurance policy they hold (and you pay for) that protects them from you defaulting on the loan. Don't think of it as insurance for you in case you can't pay. If that should happen, your credit would still be trashed, the bank just wouldn't be out the money. You don't really get any benefit at all from it. It is just the way a bank can mitigate the risk of giving out large loans. This is why people are keen to drop it as soon as possible. The whole thing about keeping the house in your estate after you die makes me think he is trying to sell you a different type of insurance called Mortgage Life Insurance. PMI isn't typically about that type of situation. Your estate will go into probate to work out your debts if you die and my understanding is that PMI doesn't usually pay out in that situation. If this is what he is selling, buying such a policy would be on top of your PMI insurance payment, not instead of it. Be forewarned, personal finance experts usually consider mortgage life insurance to be a ripoff. If you want to protect against the risk of your heirs losing the house because they can't make the payments, you are better off with Term Life Insurance. However, don't worry that they will inherit your debt on the house unless they are on the loan. If they don't want the house, they won't be obliged to make payments on it (unless they want to keep it). It won't affect their credit if they just walk away and let the bank have the house after you die unless they are on the note. Here is an article (in two parts) with a pretty good treatment of the issue of choosing your own PMI policy: \"\"Give Buyers Freedom to Choose Mortgage Insurance\"\" Part 1 Part 2\""
},
{
"docid": "409573",
"title": "",
"text": "A financial institution is not obligated to offer you a loan. They will only offer you a loan if they believe that they will make money off you. They use all the info available in order to determine if offering you a loan is profitable. In short, whether they offer you a loan, and the interest rate they charge for that loan, is based on a few things: How much does it cost the bank to borrow money? [aka: how much does the bank need to pay people who have savings accounts with them?]; How much does the bank need to spend in order to administer the loan? [ie: the loan officer's time, a little time for the IT guy who helps around the office, office space they are renting in order to allow the transaction to take place]; and How many people will 'default' and never be able to repay their loan? [ex: if 1 out of 100 people default on their loans, then every one of those 100 loans needs to be charged an extra 1% in order to recover the money the bank will lose on the person who defaults]. What we are mostly interested in here is #3: how likely are you to default? The bank determines that by determining your income, your assets, your current debts outstanding, your past history with payments (also called a credit score), and specifically to mortgages, how much the house is worth. If you don't have a long credit history, and because you don't have a long income history, and because you are putting <10% down on the condo [20% is often a good % to strive for, and paying less than that can often imply you will need mandatory mortgage insurance, depending on jurisdiction] the bank is a little more uncertain about your likelihood to pay. Banks don't like uncertainty, and they can deal with that uncertainty in two ways: (1) They can charge you a higher interest rate; OR (2) They can refuse you the loan. Now just because one bank refuses you a loan, doesn't mean all will - but being refused by one bank is probably a good indication that many / most institutions would refuse you, because they all use very similar analytical tools to determine your 'risk level'. If you are refused a loan, you can try again at another institution, or you can wait, save a larger down payment, and build your credit history by faithfully paying your credit card every month, paying your utilities, and making your car and rent payments on time. This will give the banks more comfort that you will have the ability to pay your mortgage every month, and a larger down payment will give them comfort that if the housing market dips, you won't owe more than the house is worth. My parting shot is this: If you are new in your career with no income history, be very careful about buying a property immediately, even if you get approved. A good rule of thumb is to only buy a property when you plan on living there for at least 5 years, or else you are likely to lose money overall, after factoring closing costs and maintenance fees. If you are refused a loan, that's probably a good sign that you aren't financially ready yet, but even if a bank approves you for a loan, you might not be ready yet either."
},
{
"docid": "454629",
"title": "",
"text": "\"Its fraudulent because it is feeds on new investment to pay the old investors, the EXACT definition of a Ponzi. And it now is contingent on the faith of the US, as with most other debts. There is no \"\"trust fund\"\" of this wealth sitting waiting for us if the USA fails. But do tell me, how is SS not a ponzi scheme? Does it not use new money to pay the old? If the new money ran out, would it not default on its debts (in the future)? And what part of the constitution says the US government should collect some of my wages and save it for me for later? You do know, some people have opted out of SS? Even the US government will not take the fight to court. They know its a sham.\""
},
{
"docid": "409562",
"title": "",
"text": "\"In 2001, Argentina defaulted on it's debt, and started negotiating a \"\"haircut\"\" with it's debtors. As a result, a lot of the debtors sold the bonds they had a fire-sale prices, thinking better get some back than nothing. One of the guys that bought those cheap bonds was Paul Singer AKA \"\"Mr. Vulture Hedge-fund\"\". I'll speculate here saying that Mr. Singer saw that the bond conditions gave him a way to force Argentina to pay the full value of the bonds notwithstanding it's default or negotiated haircut. Argentina did negotiate a haircut with about 97% of it's bond-holders. This meant that although they would lose out on some of the money, they would still get some back, and Argentina could work its way back to its feet eventually. Mr. Singer and friends were the 3% that did not accept the haircut, and took the country to court to get 100% of the bond value back. Now, the plot thickens. I don't understand if Mr. Singer knew this or not, but the bonds also had a post-2001 condition that said that no bond-holder would be worst-off than the highest bond deal Argentina offered anyone. Which basically means, if they pay Mr. Singer 100%, they have to pay everybody else 100%. Now, it was well established that Argentina could not pay 100%, and is not able to pay 100% of the debt, hence the 2001 default. Meanwhile, Argentina was paying out the hair-cut bonds, but holding out on Mr. Singer and friends as they still didn't agree to pay 100%. The courts ruled that they could not do this, and had to pay everybody. Since Argentina cannot pay everybody 100%, it is defaulting on the debt.\""
},
{
"docid": "87436",
"title": "",
"text": "Every year stories like this come out. Every year the US does not default on its debt. We all should know by now that the US, as a financially sovereign nation that issues its own currency, cannot default on its debt. This fearmongering is just a click-baity waste of time, and yes, a waste of money."
},
{
"docid": "333755",
"title": "",
"text": "\"There are many different methods for a corporation to get money, but they mostly fall into three categories: earnings, debt and equity. Earnings would be just the corporation's accumulation of cash due to the operation of its business. Perhaps if cash was needed for a particular reason immediately, a business may consider selling a division or group of assets to another party, and using the proceeds for a different part of the business. Debt is money that (to put it simply) the corporation legally must repay to the lender, likely with periodic interest payments. Apart from the interest payments (if any) and the principal (original amount leant), the lender has no additional rights to the value of the company. There are, basically, 2 types of corporate debt: bank debt, and bonds. Bank debt is just the corporation taking on a loan from a bank. Bonds are offered to the public - ie: you could potentially buy a \"\"Tesla Bond\"\", where you give Tesla $1k, and they give you a stated interest rate over time, and principal repayments according to a schedule. Which type of debt a corporation uses will depend mostly on the high cost of offering a public bond, the relationships with current banks, and the interest rates the corporation thinks it can get from either method. Equity [or, shares] is money that the corporation (to put it simply) likely does not have a legal obligation to repay, until the corporation is liquidated (sold at the end of its life) and all debt has already been repaid. But when the corporation is liquidated, the shareholders have a legal right to the entire value of the company, after those debts have been paid. So equity holders have higher risk than debt holders, but they also can share in higher reward. That is why stock prices are so volatile - the value of each share fluctuates based on the perceived value of the entire company. Some equity may be offered with specific rules about dividend payments - maybe they are required [a 'preferred' share likely has a stated dividend rate almost like a bond, but also likely has a limited value it can ever receive back from the corporation], maybe they are at the discretion of the board of directors, maybe they will never happen. There are 2 broad ways for a corporation to get money from equity: a private offering, or a public offering. A private offering could be a small mom and pop store asking their neighbors to invest 5k so they can repair their business's roof, or it could be an 'Angel Investor' [think Shark Tank] contributing significant value and maybe even taking control of the company. Perhaps shares would be offered to all current shareholders first. A public offering would be one where shares would be offered up to the public on the stock exchange, so that anyone could subscribe to them. Why a corporation would use any of these different methods depends on the price it feels it could get from them, and also perhaps whether there are benefits to having different shareholders involved in the business [ie: an Angel investor would likely be involved in the business to protect his/her investment, and that leadership may be what the corporation actually needs, as much or more than money]. Whether a corporation chooses to gain cash from earnings, debt, or equity depends on many factors, including but not limited to: (1) what assets / earnings potential it currently has; (2) the cost of acquiring the cash [ie: the high cost of undergoing a public offering vs the lower cost of increasing a bank loan]; and (3) the ongoing costs of that cash to both the corporation and ultimately the other shareholders - ie: a 3% interest rate on debt vs a 6% dividend rate on preferred shares vs a 5% dividend rate on common shares [which would also share in the net value of the company with the other current shareholders]. In summary: Earnings would be generally preferred, but if the company needs cash immediately, that may not be suitable. Debt is generally cheap to acquire and interest rates are generally lower than required dividend rates. Equity is often expensive to acquire and maintain [either through dividend payments or by reduction of net value attributable to other current shareholders], but may be required if a new venture is risky. ie: a bank/bondholder may not want to lend money for a new tech idea because it is too risky to just get interest from - they want access to the potential earnings as well, through equity.\""
},
{
"docid": "598030",
"title": "",
"text": "In theory, anything can happen, and the world could end tomorrow. However, with a reasonably sane financial plan you should be able to ride this out. If the government cannot or won't immediately pay its debt in full, the most immediate consequence is that people are going to be unwilling to lend any more money in future, except at very high rates to reflect the high risk of future default. Presumably the government has got into this state by running a deficit (spending more than they collect in tax) and that is going to have to come to an abrupt end. That means: higher taxes, public service retrenchments and restrictions of service, perhaps cuts to social benefits, etc. Countries that get into this state typically also have banks that have lent too much money to risky customers. So you should also expect to see some banks get into trouble, which may mean customers who have money on deposit will have trouble getting it back. In many cases governments will guarantee deposits, but perhaps only up to a particular ceiling like $100k. It would be very possible to lose everything if you have speculative investments geared by substantial loans. If you have zero or moderate debt, your net wealth may decrease substantially (50%?) but there should be little prospect of it going to zero. It is possible governments will simply confiscate your property, but I think in a first-world EU country this is fairly unlikely to happen to bank accounts, houses, shares, etc. Typically, a default has led to a fall in the value of the country's currency. In the eurozone that is more complex because the same currency is used by countries that are doing fairly well, and because there is also turbulence in other major currency regions (JPY, USD and GBP). In some ways this makes the adjustment harder, because debts can't be inflated down. All of this obviously causes a lot of economic turbulence so you can expect house prices to fall, share prices to gyrate, unemployment to rise. If you can afford it and come stomach the risk, it may turn out to be a good time to buy assets for the long term. If you're reasonably young the largest impact on you won't be losing your current savings, but rather the impact on your future job prospects from this adjustment period. You never know, but I don't think the Weimar Republic wheelbarrows-of-banknotes situation is likely to recur; people are at least a bit smarter now and there is an inflation-targeting independent central bank. I think gold can have some room in a portfolio, but now is not the time to make a sudden drastic move into it. Most middle class people cannot afford to have enough gold to support them for the rest of their life, though they may have enough for a rainy day or to act as a balancing component. So what I would do to cope with this is: be well diversified, be sufficiently conservatively positioned that I would sleep at night, and beyond that just ride it out and try not to worry too much."
}
] |
4605 | If the U.S. defaults on its debt, what will happen to my bank money? | [
{
"docid": "229310",
"title": "",
"text": "Government default doesn't mean that all US money is immediately worthless. First, the bondholders will get stiffed. Following that, interest rates will shoot up (because the US is a bad credit risk at this point) and the government will monetize its ongoing expenses -- i.e., fire up the printing presses. If you're concerned about not having access to your money, start pulling out a little extra when you get cash at an ATM. Build it up over time until you have enough currency to weather through whatever emergency you envision with your bank account."
}
] | [
{
"docid": "5602",
"title": "",
"text": "You're losing money. And a lot of it. Consider this: the inflation is 2-4% a year (officially, depending on your spending pattern your own rate might be quite higher). You earn about 1/2%. I.e.: You're losing 3% a year. Guaranteed. You can do much better without any additional risk. 0.1% on savings account? Why not 0.9%? On-line savings account (Ally, CapitalOne-360, American Express, E*Trade, etc) give much higher rates than what you have. Current Ally rates are 0.9% on a regular savings account. 9 times more than what you have, with no additional risk: its a FDIC insured deposit. You can get a slightly higher rate with CDs (0.97% at the same bank for 12 months deposit). IRA - why is it in CD's? Its the longest term investment you have, that's where you can and should take risks, to maximize your compounding returns. Not doing that is actually more risky to you because you're guaranteeing compounding loss, of the said 3% a year. On average, more volatile stock investments have shown to be not losing money over periods of decades, even if they do lose money over shorter periods. Rental - if you can buy a property that you would pay the same amount of money for as for a comparable rental - you should definitely buy. Your debt will be secured by the property, and since you're paying the same amount or less - you're earning the equity. There's no risk here, just benefits, which again you chose to forgo. In the worst case if you default and walk away from the property you lost exactly (or less) what you would have paid for a rental anyway. 14 years old car may be cheaper than 4 years old to buy, but consider the maintenance, licensing and repairs - will it not some up to more than the difference? In my experience - it is likely to. Bottom line - you think you're risk averse, but you're exactly the opposite of that."
},
{
"docid": "479351",
"title": "",
"text": ">[While Argentina has the money to pay the interest it owes, a U.S. judge’s ruling bars it from passing the funds to holders before settling with the so-called holdout creditors that won an order for full repayment on defaulted debt from 2001. Argentine officials say the plaintiffs have rebuffed all offers for a deal.](http://www.bloomberg.com/news/2014-08-04/argentine-default-sours-outlook-for-peso-as-talks-ordered.html)"
},
{
"docid": "466310",
"title": "",
"text": ">The US government debt is how much USD the government has paid the US non-government in excess of what it's taxed them. Correct? Incorrect. The US debt/savings is the balance of credit the US government maintains with US banks, and foreign sovereigns/banks. Why do you need to say it another way? WTF is 'non-government' savings? Other than an academically retarded way of saying 'debt' of course? Its not a bad thing... unless interest rates rise. But this time is different, so that'll never happen. I'm sticking to my initial assessment. Fairyland."
},
{
"docid": "298847",
"title": "",
"text": "\"But do you know about a US state risking to go default now or in the past? In 1847 four states - Mississippi, Arkansas, Michigan, and Florida - failed to pay all or some of their debts. All of these states had issued debt to invest in banks. From the detailed source listed below: \"\"...it should be remembered that all cases of state debt repudiation, as contrasted with mere default, involved banks.\"\" Jackson had killed the federal central bank 10 years earlier and the states were trying to create their own inflationary central banks. Six other states delayed debt payments from three to six years (source, page 103, this source has more details). This is the only case I know of where US states defaulted. US cities default more frequently. I'm very confused do US single states like IOWA have debt and emits obligations on their own like Italy does in EU? Yes. Individual states can issue their own bonds. Oh, and just another little thing I would like to know, is Dollar a fiat currency too like the Euro? Yes, the US dollar is a fiat currency. I think the better question is: \"\"Is there any currency that is not a fiat currency?\"\"\""
},
{
"docid": "374309",
"title": "",
"text": "If you've got shares in a company that's filed for U.S. Chapter 11 bankruptcy, that sucks, it really does. I've been there before and you may lose your entire investment. If there's still a market for your shares and you can sell them, you may want to just accept the loss and get out with what you can. However, shares of bankrupt companies are often delisted once bankrupt, since the company no longer meets minimum exchange listing requirements. If you're stuck holding shares with no market, you could lose everything – but that's not always the case: Chapter 11 isn't total and final bankruptcy where the company ceases to exist after liquidation of its assets to pay off its debts. Rather, Chapter 11 is a section of the U.S. Bankruptcy Code that permits a company to attempt to reorganize (or renegotiate) its debt obligations. During Chapter 11 reorganization, a company can negotiate with its creditors for a better arrangement. They typically need to demonstrate to creditors that without the burden of the heavy debt, they could achieve profitability. Such reorganization often involves creditors taking complete or majority ownership of the company when it emerges from Chapter 11 through a debt-for-equity swap. That's why you, as an investor before the bankruptcy, are very likely to get nothing or just pennies on the dollar. Any equity you may be left holding will be considerably diluted in value. It's rare that shareholders before a Chapter 11 bankruptcy still retain any equity after the company emerges from Chapter 11, but it is possible. But it varies from bankruptcy to bankruptcy and it can be complex as montyloree pointed out. Investopedia has a great article: An Overview of Corporate Bankruptcy. Here's an excerpt: If a company you've got a stake in files for bankruptcy, chances are you'll get back pennies to the dollar. Different bankruptcy proceedings or filings generally give some idea as to whether the average investor will get back all or a portion of his investment, but even that is determined on a case-by-case basis. There is also a pecking order of creditors and investors of who get paid back first, second and last. In this article, we'll explain what happens when a public company files for protection under U.S. bankruptcy laws and how it affects investors. [...] How It Affects Investors [...] When your company goes bankrupt, there is a very good chance you will not get back the full value of your investment. In fact, there is a chance you won't get anything back. [...] Wikipedia has a good article on Chapter 11 bankruptcy at Chapter 11, Title 11, United States Code."
},
{
"docid": "44360",
"title": "",
"text": "Government purchases of mortgages simply transfers the debt burden from households to the sovereign. Taxes pay sovereign debt (65% of whom are homeowners anyway). No debt has been restructured -- it's now paid via taxes instead of monthly mortgage payments -- and those paying include persons who responsibly avoided housing speculation. The U.S. has a debt-to-GDP ratio just shy of the critical point of 90%. Purchasing $10 trillion in mortgage debt (about a year of GDP) would put the U.S. on an inexorable path towards insolvency and inflation. There are all sorts of other risks (loss of a risk-free asset, moral hazard, nationalization of the housing industry, etc.) but this should make the point clear that it's not a good idea. There are only three ways to reduce debt: 1) default, 2) restructure, or 3) lower the real debt burden by de-valuing currency in which the debt is denominated."
},
{
"docid": "566458",
"title": "",
"text": "What is the best way that I can invest money so that I can always get returns? If you want something that doesn't require any work on your end, consider having a fee-only financial planner make a plan so that your investments can be automated to generate a cash flow for you or get an annuity as the other classic choices here as most other choices will require some time commitment in one form or other. Note that for stock investments there could be rare instances like what happened for a week in September in 2001 where the markets were closed for 5 days straight that can be the hiccup in having stocks. Bonds can carry a risk of default where there have been municipalities that defaulted on debt as well as federal governments like Russia in the 1990s. Real estate may be subject to natural disasters or other market forces that may prevent there always being a monthly payment coming as if you own a rental property then what happens if there aren't tenants because there was an evacuation of the area? There may be some insurance products to cover some of these cases though what if there are exceptionally high claims all at once that may have an insurance company go under? Would it be to set up an FD in a bank, to buy land, to buy a rental house, to buy a field, or maybe to purchase gold? What investment of your own time do you plan on making here? Both in terms of understanding what your long-term strategy is and then the maintenance of the plan. If you put the money in the bank, are you expecting that the interest rate will always be high enough to give you sufficient cash to live as well as having no financial crisis with the bank or currency you are using? Are there any better investments? You may want to reconsider what assumptions you want to make and what risks you want to accept as there isn't likely to be a single solution here that would be perfect."
},
{
"docid": "530998",
"title": "",
"text": "''just how much of the troubled southern EU nations' debt is due to the rescuing of private banks? thanks'' My answer rambled onto related topics. In short, not much. While the actual sums involved in bank bailouts are considerable, relative to sovereign debts run up by having structural/trade deficits for ~10 years, they aren't the problem in Europe at the moment...but they ARE the tip of an Iceberg that could sink parts of the EU and leave the rest struggling to stay above water. An interesting question to ponder, with deceptively simple answers, is: If the % of sovereign debt resulting from bank bailouts is so small, why does the media and general public throw a fit every time a major EU bank gets into trouble? People are worried about losing their savings that they have with that bank. Its a visceral fear that is easy to personally relate to. But scratch below the surface and there is a whole buffet of terror for you to feast on. Assuming leverage of ~26* on assets held by banks and that true liabilities aren't completely opaque to average Joe retail investor, the collapse of the right bank could fire the starting gun on a vicious recession, trigger bailouts of other institutions exposed to the original and all sorts of nasty events. These bank assets include the mess created by rehypothecation, securitization of shitty credit/assets and CDS, commercial paper that relies on never having to be realized as a loss and interference in the money markets and currencys by states. Its damn hard to work out what assets and liabilities a bank has these days, let alone what any debt they have taken on is worth. Euro Crisis Best Crisis. *Pulled from memory, I'm not sure if this is accurate for Europe."
},
{
"docid": "375537",
"title": "",
"text": "\"Your post has some assumptions that are not, or may not be true. For one the assumption is that you have to wait 7 years after you settle your debts to buy a home. That is not the case. For some people (me included) settling an charged off debt was part of my mortgage application process. It was a small debt that a doctor's office claimed I owed, but I didn't. The mortgage company told me, settling the debt was \"\"the cost of doing business\"\". Settling your debts can be looked as favorable. Option 1, in my opinion is akin to stealing. You borrowed the money and you are seeking to game the system by not paying your debts. Would you want someone to do that to you? IIRC the debt can be sold to another company, and the time period is refreshed and can stay on your credit report for beyond the 7 years. I could be wrong, but I feel like there is a way for potential lenders to see unresolved accounts well beyond specified time periods. After all, the lenders are the credit reporting agencies customers and they seek to provide the most accurate view of a potential lender. With 20K of unresolved CC debt they should point that out to their customers. Option 2: Do you have 20K? I'd still seek to settle, you do not have to wait 7 years. Your home may not appreciate in 2 years. In my own case my home has appricated very little in the 11 years that I have owned it. Many people have learned the hard way that homes do not necessarily increase in value. It is very possible that you may have a net loss in equity in two years. Repairs or improvements can evaporate the small amount of equity that is achieved over two years with a 30 year mortgage. I would hope that you pause a bit at the fact that you defaulted on 20K in debt. That is a lot of money. Although it is a lot, it is a small amount in comparison to the cost and maintenance of a home. Are you prepared to handle such a responsibility? What has changed in your personality since the 20K default? The tone of your posts suggests you are headed for the same sort of calamity. This is far more than a numbers game it is behavioral.\""
},
{
"docid": "329941",
"title": "",
"text": "Gwarsh goofy . .what are you talking about now, who is buying US treasuries or what is the National Debt, either way in your fucked up money printing economy where you cant even pay off your student loans or cover your insurance, what to talk of house loans and fancy financial instruments, that were based on those, which went into default and the Fed bought up, that required the Fed to give the banks an unlimited credit line as a back stop. You see shit head . .all those trillions and trillions of dollars of bad loans and bank bailouts now sits on the Feds balance sheet as $4.5 trillion, leveraged many many many many . . . many . many times so the banks look like they are capitally adequate on paper. Thats what it means when you nationalize public debt Understand shit wit? Incidentally thats what the Fed is trying to unwind and some fucking moron like you will buy and then go bankrupt and ask for a bailout and get more debt from the Fed. Its a good thing your generation grew up sucking Chinese toys, the lead in the paint did its job well, otherwise you might have actually learnt something . .. .Gwarsh!!!"
},
{
"docid": "104857",
"title": "",
"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.\""
},
{
"docid": "536009",
"title": "",
"text": "\"Haha now there's two of you. I have two twits parrot squawking in my ears in stereo. Okay, so maybe you aren't from the US, in which case I can forgive your confusion and completely circular logic. You must have gone back to Wikipedia or something, because the IS and LM curves are not, in your words, operating without \"\"control by powerful offices in government.\"\" The IS and LM curve indeed cross at a level that is consistent with an equilibrium between income and expenditure's equilibirium with the money market. But that's just the label slapped on it, it's not determinative as some sort of naturally occurring law of economics in our society. No, these things don't just happen on their own. If what you're inartfully implying were true, then there would be no such thing as an expansionary or contractionary monetary policy. Manipulating and controlling the money supply is the entire reason for the existence of the Federal Reserve! What is wrong with you? Go read a book or something on it, fuck me. The Federal Reserve, by setting interest rates mainly, and by open market operations, and by less frequently changing the reserve requirements which directly controls the MONEY MULTIPLIER (you know, that thing that creates money out of thin air you seem to not be able to understand exists?) is constantly changing AGGREGATE DEMAND in the economy. Aggregate demand is what the ISLM curve is about. It's about the equilibrium between price levels and the level of economic OUTPUT DEMANDED. But not supplied. That's aggregate supply, and the Federal Reserve effects that less. But yes, you've simply expanded the scope of things I could talk about that are fucked up about banks and the Fed in particular, because the Federal Reserve, in manipulating aggregate demand for money, actually is destroying money and the efficient use of money at the same time, because the LM curve in particular really represents the relationship between REAL income and the REAL money supply. Real means not nominal, but in actual purchasing terms. The Fed is manipulating an LM curve that at its base is a piece of logic built on the assumption that what's going into it are real numbers, and yet by definition, the Fed acting to manipulate it makes those numbers not determined by purely market forces, but also by the Fed. That makes them less than real. Basically the Federal Reserve pumps up artificial levels of demand in the economy, which lasts for a bit to generate growth numbers, but in the long term it simply results in inflation and a continually delayed (at least for now) reckoning where the artificial demand (i.e. the government's ability to borrow) cannot be further expanded, and something has to give. This down the road would be a monetary crisis involving the US dollar being knocked off its perch as the world's primary reserve currency, and the yields on Treasuries skyrocketing to the point that the government is either forced to behave or else print so much money to actually cover interest payments on the debt that the flood of money into the economy causes catastrophic inflation. But anyway, my point is that you're making a circular argument, because you're saying that the Fed doesn't interfere in or exert tremendous control over the economy, because there's something that we know shows the given price level of money in an economy called the ISLM curve, falsely implying that everything's fine with money because it's determined by mechanical, natural laws, almost like gravity, when in fact the Federal Reserve's whole purpose is to manipulate the inputs that go into that curve. It reduces interest rates which artificially increases income. It also increases the velocity of money, an input for the LM curve, by increasing nominal economic output, etc. etc. The IS and LM curves are not these things that just sort of happen on their own. This may come as a shock, but the US has a central bank which has as its sole purpose the manipulation of these curves. Its central mandate is control of price levels. Its unspoken mandate is to preserve the status of the big banks on the top of society, which is why the big banks created it in the first place, and why they own all the branches (this is the root fact behind why some people say that the Federal Reserve is in fact not federal and is instead privately owned, which isn't completely literally true, but true enough in the sense that it has a clear conflict of interest between the public good it's supposed to be upholding and the private interests of the banks that own its branches and exert control over the financial system, mainly through the New York branch). But that's not the whole story about the total money supply. There's also the pyramiding effect of the money multiplier. It's as if you're just pretending these things don't exist. It's real, I assure you. Banks create money out of thin air when they extend credit to you. To pay the obligation to them, you use the real money you in fact earned through your own labor, or from some real asset you might have. They get the better end of the deal, and almost all the money in the economy is spawned by this process, this insanely exorbitant privilege they have. And yes, I have a problem with it.\""
},
{
"docid": "298794",
"title": "",
"text": "It's more complicated than that. Governments raise money in a number of ways. First, they tax economic activity within their borders and for connected companies and individuals. Then, some governments have actual revenues from state-owned enterprises (licences, patents, courts, business revenues, and so on). Whatever shortage arises between state expenditure and this income is the deficit which is usually financed through debt. Government usually issues a bond (Wikipedia for a list of government bonds) of various types, some with extremely lengthy maturation dates. These bonds can be purchased both locally and by foreign investment funds. The nature of who buys is important. From the Wikipedia link you'll see that most government debt is very highly rated based on the ability of the state to simply raise taxes in order to fund redemption. Pension funds are legally bound to only invest in highly-rated investment classes and the bulk of bonds may be purchased to support local pensioners. A state that defaults on debt will first hit its own most vulnerable citizens. In addition, the fall-out will result in a savage cut in ratings. Countries like Argentina and Zimbabwe, which have both refused to repay their debts even to the IMF, are currently unable to raise investment at all. This has a tremendous impact on local economic development. So, default is out of the question without severe penalties. The second part of your question is about paying down the debt. As debts increase, more and more of the revenue that a country does earn is spent on servicing debt repayments. Sometimes bonds are issued merely to refinance old debt. A country that spends too much on refinancing debt is no different from an individual. Less and less money is available to do other things. In conclusion: governments can neither default nor binge-borrow unless they wish to severely limit economic opportunities for their citizens."
},
{
"docid": "150543",
"title": "",
"text": "\"I think you can do it as long as those money don't come from illegal activities (money laundering, etc). The only taxes you should pay are on the interest generated by those money while sitting in the UK bank account. Since I suppose you already paid taxes on those money in Greece while you were earning those money. About being audited, in my own experience banks don't ask you much where your money are coming from when you bring money to them, they are very willing to help, and happy. (It's a differnte story when you ask to borrow money). When I opened a bank account in US I did not even have an SSN, but they didn't care much they just took my passport and used the passport number for registering the account. Obviously on the interest generated by the money in the US bank account I had to pay taxes, but it was easy because I simply let the IRS via the bank to withdarw the 27% on the interest generated (not on the capital deposited). I didn't put a huge amount of money there I had to live there for 1 year or some more. Maybe if i deposited a huge amount of money someone would have come to ask me how did I make all those money, but those money were legally generated by me working in Italy before so I didn't have anything to be afraid about. BTW: in Italy I was thinking to move money to a German bank in Germany. The risk of default is a nightmare, something of completly new now in UE compared to the past where each state had its own currency. According to Muro history says that in case of default it happened that some government prevented people from withdrawing money form bank accounts: \"\"Yes, historically governments have shut down banks to prevent people from withdrawing their money in times of crisis. See Argentina circa 2001 or US during Great Depression. The government prevented people from withdrawing their money and people could do nothing while their money rapidly lost value.\"\" but in case Greece prevents people from withdrwaing money, those money are still in EURO, so i'm wondering what would be the effect. I mean would it be fair that a Greek guy can not withdraw is EURO money whilest an Italian guy can withdraw the same currency money in Italy?!\""
},
{
"docid": "514055",
"title": "",
"text": "\"Don't listen to the retarded \"\"do-gooder\"\" idiots on this site who think she shouldn't reneg because of some honor or morality bullshit. You have a contract between two people. It states what will happen when you pay (keep car) and what will happen when you don't (they take car). Defaulting isn't an inherent bad thing. There are consequences for it. If you decide to default or to not pay a loan and you're ok with the consequences then do it. The person writing the loan knows the risk they're getting into and they're ok with it. So do what is best for you. As for your original question, sorry I don't have an answer. I don't think anything will happen to her in the U.S. but she might have trouble later on if she decides to move back to Japan or even visit Japan. Or her family may be held accountable for it. No idea. I don't know how Japanese laws works. Hopefully someone here will help but the best thing would be to talk to a lawyer in both the U.S. and in Japan.\""
},
{
"docid": "63848",
"title": "",
"text": "The only way for a mutual fund to default is if it inflated the NAV. I.e.: it reports that its investments worth more than they really are. Then, in case of a run on the fund, it may end up defaulting since it won't have the money to redeem shares at the NAV it published. When does it happen? When the fund is mismanaged or is a scam. This happened, for example, to the fund Madoff was managing. This is generally a sign of a Ponzi scheme or embezzlement. How can you ensure the funds you invest in are not affected by this? You'll have to read the fund reports, check the independent auditors' reports and check for clues. Generally, this is the job of the SEC - that's what they do as regulators. But for smaller funds, and private (i.e.: not public) investment companies, SEC may not be posing too much regulations."
},
{
"docid": "428941",
"title": "",
"text": "\"> 1). How is a loan an asset? I'm the bank and I have 100$. I loan Jimmy 20$. With interest I expect him to pay back 25$. My books sure as shit shouldn't say I'm worth 105$ or even 100$! If you *extend* a loan to someone, the loan is an asset to you and a liability to them. It's a liability to them because they *owe* you the loan + interest back. It's an *asset* to you because you expect to retrieve the full loan principal AND interest back. There is no difference, cash flow wise, between spending $100 on a machine that makes fidget spinners and earns you $110 back ($10 profit) and extending a loan to Billy at 10% interest (you'll get $110 back, $10 profit). > My books sure as shit shouldn't say I'm worth 105$ or even 100$! Why not? I have $100 cash. I loan it out to Billy at 10% interest. Billy is creditworthy and reliable, and certain collateral is in place. I'm worth, essentially, a discounted cash flow of $110 (which as long as my required return is less than 10%, means I'm worth *more* than $100). > I gave away 20$. I'm worth 80$ right? No. That assumes you spent $20 and won't get *any* of it back. It's the same as ordering a $20 pizza and eating it all. Now, the *cash* you have on your *balance sheet* would be $80, but you'd have a loan outstanding as an asset at $20, which is a net 0 movement in equity on the other side. > Sure I can put it on my books that Jimmy owes me 20$ but I cannot be acting like I HAVE that 20$ can I? Well, yes and no. On one hand, you are certainly *worth* more than $80 in your scenario. However, banks have some stringent regulations preventing banks from being overly risky. > Isn't that how the 08' crash happened? No. '08 happened from a culmination of many different events, including risky and predatory loan origination, conflicts of interest in credit rating agencies, and low Fed rates, among other issues, including several \"\"domino effect\"\" secondary issues. > Is the risk of default accounted for? Theoretically, the risk of default is accounted for in two areas: 1. The interest rate extended to the debtor. 2. A provision for loan losses. > \"\" because default risk is not transferred with the asset.\"\" In what context was this seen? No one would willingly sell an asset but hold on to the risk (or they'd charge a high price, at least, for that). Student loans are a special case. In the U.S., they are generally *non-cancellable.* They survive everything, including bankruptcy. They don't have collateral. Basically, they're going to follow the person around, regardless of situation, INCLUDING simply not paying. This makes default risk (or rather loss risk) lower. A large portion of loans come from the federal government, which means to a pretty high degree, they are guaranteed by the government. This also makes loss risk lower. The government can garnish wages and all sorts of unpleasant things to get the money back. Even if losses are realized, taxes can (and will) make up the difference. Private loans have a bit less leeway in these regards, but they still are immune to bankruptcy currently. As such, while they don't have all the tools of the government, they're still essentially invincible.\""
},
{
"docid": "269064",
"title": "",
"text": "\"That depends on how you're investing in them. Trading bonds is (arguably) riskier than trading stocks (because it has a lot of the same risks associated with stocks plus interest rate and inflation risk). That's true whether it's a recession or not. Holding bonds to maturity may or may not be recession-proof (or, perhaps more accurately, \"\"low risk\"\" as argued by @DepressedDaniel), depending on what kind of bonds they are. If you own bonds in stable governments (e.g. U.S. or German bonds or bonds in certain states or municipalities) or highly stable corporations, there's a very low risk of default even in a recession. (You didn't see companies like Microsoft, Google, or Apple going under during the 2008 crash). That's absolutely not the case for all kinds of bonds, though, especially if you're concerned about systemic risk. Just because a bond looks risk-free doesn't mean that it actually is - look how many AAA-rated securities went under during the 2008 recession. And many companies (CIT, Lehman Brothers) went bankrupt outright. To assess your exposure to risk, you have to look at a lot of factors, such as the credit-worthiness of the business, how \"\"recession-proof\"\" their product is, what kind of security or insurance you're being offered, etc. You can't even assume that bond insurance is an absolute guarantee against systemic risk - that's what got AIG into trouble, in fact. They were writing Credit Default Swaps (CDS), which are analogous to insurance on loans - basically, the seller of the CDS \"\"insures\"\" the debt (promises some kind of payment if a particular borrower defaults). When the entire credit market seized up, people naturally started asking AIG to make good on their agreement and compensate them for the loans that went bad; unfortunately, AIG didn't have the money and couldn't borrow it themselves (hence the government bailout). To address the whole issue of a company going bankrupt: it's not necessarily the case that your bonds would be completely worthless (so I disagree with the people who implied that this would be the case). They'd probably be worth a lot less than you paid for them originally, though (possibly as bad as pennies on the dollar depending on how much under water the company was). Also, depending on how long it takes to work out a deal that everyone could agree to, my understanding is that it could take a long time before you see any of your money. I think it's also possible that you'll get some of the money as equity (rather than cash) - in fact, that's how the U.S. government ended up owning a lot of Chrysler (they were Chrysler's largest lender when they went bankrupt, so the government ended up getting a lot of equity in the business as part of the settlement). Incidentally, there is a market for securities in bankrupt companies for people that don't have time to wait for the bankruptcy settlement. Naturally, people who buy securities that are in that much trouble generally expect a steep discount. To summarize:\""
},
{
"docid": "577772",
"title": "",
"text": "\"A coworker put the idea in my head \"\"what if one day we wake up and thousands of pissed off young people are defaulting on their student loans\"\"? It's Crazy I know but out of curiosity I started doing homework on this and within one paragraph of Investopedia reading, I had questions. 1). How is a loan an asset? I'm the bank and I have 100$. I loan Jimmy 20$. With interest I expect him to pay back 25$. My books sure as shit shouldn't say I'm worth 105$ or even 100$! I gave away 20$. I'm worth 80$ right? Sure I can put it on my books that Jimmy owes me 20$ but I cannot be acting like I HAVE that 20$ can I? Isn't that how the 08' crash happened? Explain why it makes sense to consider a loan an asset. Is the risk of default accounted for? Which leads me to question 2. 2). I came across this phrase: \"\" because default risk is not transferred with the asset.\"\" Does that mean that when these institutions pass around the loan, the risk doesn't go with it? How is it possible? Assuming loan has the risk of default priced in (which I still don't fully get See #1), how can it possibly be sold in such a way that the risk of default is detached? I am guess I am trying to dig around and learn as much as I can about student loans because the initial theory is not far-fetched to me.\""
}
] |
4605 | If the U.S. defaults on its debt, what will happen to my bank money? | [
{
"docid": "210759",
"title": "",
"text": "\"FDIC is backed by the \"\"full faith and credit of the USA.\"\" Well, if the USA defaults, the full faith and credit of the USA would in my mind be worthless, thus, so would FDIC.\""
}
] | [
{
"docid": "72457",
"title": "",
"text": "\"But I think another interesting postscript to this which is relevant at this time is that the orchard wildfire isn't the only thing that can make money \"\"disappear\"\". The use of a currency rather than a transferable note means that it can be an independent store of value, so there are perverse outcomes that can happen that can't happen with IOUs. So say some particularly wealthy person in the village starts to hoard his money and corners a large fraction of the money supply (say he's anticipating some horrible plague). The number of Loddars decreases, and the orchard owner starts paying his workers fewer Loddars as a result. But their debts are denominated in \"\"old\"\" Loddars which were easier to come by, and quickly the workers are unable to pay their debts, or have to spend all their money on their debts and have none for anything else. They default on those debts and the money \"\"disappears\"\"--but it doesn't disappear for any physical reason (the workers are doing the same amount of work), it disappears because of a shock to the monetary supply. This is a \"\"demand shock\"\" versus the \"\"supply shock\"\" of an orchard catching on fire.\""
},
{
"docid": "76776",
"title": "",
"text": "\"A junk bond is, broadly, a bond with a non-negligible risk of default. (\"\"Bond\"\" ought to be defined elsewhere, but broadly it's a financial instrument you buy from a company or government, where they promise to pay you back the principal and some interest over time, on a particular schedule.) The name \"\"junk\"\" is a bit exaggerated: many of them are issued by respectable and reasonably stable businesses. junk bonds were required to do large leveraged buyouts. This means: the company issued fairly risky, fairly high-yield debt, to buy out equity holders. They have to pay a high rate on the debt because the company's now fairly highly geared (ie has a lot of debt relative to its value) and it may have to pay out a large fraction of its earnings as interest. What is a junk bond and how does it differ from a regular bond? It's only a matter of degree and nomenclature. A bond that has a credit rating below a particular level (eg S&P BBB-) is called junk, or more politely \"\"non-investment grade\"\" or \"\"speculative\"\". It's possible for an existing bond to be reclassified from one side to another, or for a single issuer to have different series some of which are more risky than others. The higher the perceived risk, the more interest the bond must pay offer in order to attract lenders. Why is there higher risk/chance of default? Well, why would a company be considered at higher risk of failing to repay its debt? Basically it comes down to doubt about the company's future earnings being sufficient to repay its debt, which could be for example:\""
},
{
"docid": "580259",
"title": "",
"text": "\"Is there more on where Dalio gets his definitions for the short-term debt cycle (5-8 years or so) and \"\"deleveraging\"\" and the long-term debt cycle (75-100 years)? (or his evidence that separates the two)? At one point 18:10, he says the difference is that in a deleveraging, interest rates hit 0 and can no longer go lower, but I don't know if that works as a definition per se. There are other things that central banks do when interest rates hit 0, like buy up assets (which he does mention and include in the \"\"print money\"\" category of things that can be done during a deleveraging). And one of the deleveragings he cites, England in the 1950s, according to Wikipedia was due to difficulty in transitioning out from war production, and according to [this excel file](http://www.bankofengland.co.uk/statistics/Documents/rates/baserate.xls) from the Bank of England on historical rates, it doesn't say interest rates went to 0 at that time (unless Dalio is referring to another point in history when he cites 1950s England). 20:30 His definition of a depression is when debt restructuring or defaults happen. Interesting. What I learned was that there isn't really a hard and fast definition for recessions and depressions (e.g. a recession is two quarters of negative growth in a row and a depression is just a reeeaallly bad/long recession). And I don't think I recall encountering in the past an attempt to define what a \"\"deleveraging\"\" event of an economy is. 24:30 Is debt reduction and redistribution of wealth deflationary? I think it depends on how much the debt reduction or redistribution hurts the spending of the lender or wealthy versus how much it helps the spending of the borrower or the poor. Both are actually similarly \"\"giving some from the haves to the have nots,\"\" and especially redistribution of wealth is similar to fiscal spending, which is mentioned 25:30 as a valid inflationary way to try to help the economy. 26:00 Are deflationary methods (say, austerity) needed to balance out the inflationary methods (central bank buying assets and fiscal spending)? Aren't central bank (interest rates, quantitative easing) and the government (fiscal policy) still the main things that move inflation or deflation? I would think that debt reduction and redistribution of wealth are good when needed, but I wouldn't think you would do those things *mainly* for their (supposed, see above for my doubts) deflationary effects. Still, a very interesting video and one of the best presented videos on a difficult subject.\""
},
{
"docid": "301194",
"title": "",
"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.\""
},
{
"docid": "122491",
"title": "",
"text": "\"Great question. There are several reasons; I'm going to list the few that I can think of off the top of my head right now. First, even if institutional bank holdings in such a term account are covered by deposit insurance (this, as well as the amount covered, varies geographically), the amount covered is generally trivial when seen in the context of bank holdings. An individual might have on the order of $1,000 - $10,000 in such an account; for a bank, that's basically chump change, and you are looking more at numbers in the millions of dollars range. Sometimes a lot more than that. For a large bank, even hundreds of millions of dollars might be a relatively small portion of their holdings. The 2011 Goldman Sachs annual report (I just pulled a big bank out of thin air, here; no affiliation with them that I know of) states that as of December 2011, their excess liquidity was 171,581 million US dollars (over 170 billion dollars), with a bottom line total assets of $923,225 million (a shade under a trillion dollars) book value. Good luck finding a bank that will pay you 4% interest on even a fraction of such an amount. GS' income before tax in 2011 was a shade under 6.2 billion dollars; 4% on 170 billion dollars is 6.8 billion dollars. That is, the interest payments at such a rate on their excess liquidity alone would have cost more than they themselves made in the entire year, which is completely unsustainable. Government bonds are as guaranteed as deposit-insurance-covered bank accounts (it'll be the government that steps in and pays the guaranteed amount, quite possibly issuing bonds to cover the cost), but (assuming the country does not default on its debt, which happens from time to time) you will get back the entire amount plus interest. For a deposit-insured bank account of any kind, you are only guaranteed (to the extent that one can guarantee anything) the maximum amount in the country's bank deposit insurance; I believe in most countries, this is at best on the order of $100,000. If the bank where the money is kept goes bankrupt, for holdings on the order of what banks deal with, you would be extremely lucky to recover even a few percent of the principal. Government bonds are also generally accepted as collateral for the bank's own loans, which can make a difference when you need to raise more money in short order because a large customer decided to withdraw a big pile of cash from their account, maybe to buy stocks or bonds themselves. Government bonds are generally liquid. That is, they aren't just issued by the government, held to maturity while paying interest, and then returned (electronically, these days) in return for their face value in cash. Government bonds are bought and sold on the \"\"secondary market\"\" as well, where they are traded in very much the same way as public company stocks. If banks started simply depositing money with each other, all else aside, then what would happen? Keep in mind that the interest rate is basically the price of money. Supply-and-demand would dictate that if you get a huge inflow of capital, you can lower the interest rate paid on that capital. Banks don't pay high interest (and certainly wouldn't do so to each other) because of their intristic good will; they pay high interest because they cannot secure capital funding at lower rates. This is a large reason why the large banks will generally pay much lower interest rates than smaller niche banks; the larger banks are seen as more reliable in the bond market, so are able to get funding more cheaply by issuing bonds. Individuals will often buy bonds for the perceived safety. Depending on how much money you are dealing with (sold a large house recently?) it is quite possible even for individuals to hit the ceiling on deposit insurance, and for any of a number of reasons they might not feel comfortable putting the money in the stock market. Buying government bonds then becomes a relatively attractive option -- you get a slightly lower return than you might be able to get in a high-interest savings account, but you are virtually guaranteed return of the entire principal if the bond is held to maturity. On the other hand, it might not be the case that you will get the entire principal back if the bank paying the high interest gets into financial trouble or even bankruptcy. Some people have personal or systemic objections toward banks, limiting their willingness to deposit large amounts of money with them. And of course in some cases, such as for example retirement savings, it might not even be possible to simply stash the money in a savings account, in which case bonds of some kind is your only option if you want a purely interest-bearing investment.\""
},
{
"docid": "58466",
"title": "",
"text": "My grace period is up in a few months, and I am not looking forward to it. I got the minimum federal aid possible for all 4 years, so I had to turn to private loans and whatever I could make over summers and what my parents could help me with. Ended up with $50k in debt, about 20k of it being with Sallie Mae. I can confirm they are bad on the collection side already. Just happened to miss a payment during school (paid off interest every month for the last 4 years), and they called me 3 times during class, sent an email, letter, and called my bilogical dad who cosigned for the loan. I can only imagine what they are like for people defaulting. All comes down to it though, have a plan when borrowing money for school. I knew my parents would only be able to help me out a little bit, and I got minimum federal aid (as in just loans) because my step father had assets that counted against me (and he told me I was on my own). So I had to figure out how to not be screwed from the beginning. I paid off my interest every month while working during school, and made sure to work hard to graduate with a good job. I can't imagine how some students feel when they graduate with nothing."
},
{
"docid": "393925",
"title": "",
"text": "Many of the major indices retreated today because of this news. Why? How do the rising budget deficits and debt relate to the stock markets? It does seem strange that there is a correlation between government debt and the stock market. But I could see many reasons for the reaction. The downgrade by S&P may make it more expensive for the government to borrow money (i.e. higher interest rates). This means it becomes more expensive for the government to borrow money and the government will probably need to raise taxes to cover the cost of borrowing. Rising taxes are not good for business. Also, many banks in the US hold US government debt. Rising yields will push down the value of their holdings which in turn will reduce the value of US debt on the businesses' balance sheets. This weakens the banks' balance sheets. They may even start to unload US bonds. Why is there such a large emphasis on the S&P rating? I don't know. I think they have proven they are practically useless. That's just my opinion. Many, though, still think they are a credible ratings agency. What happens when the debt ceiling is reached? Theoretically the government has to stop borrowing money once the debt ceiling is reached. If this occurs and the government does not raise the debt ceiling then the government faces three choices:"
},
{
"docid": "329941",
"title": "",
"text": "Gwarsh goofy . .what are you talking about now, who is buying US treasuries or what is the National Debt, either way in your fucked up money printing economy where you cant even pay off your student loans or cover your insurance, what to talk of house loans and fancy financial instruments, that were based on those, which went into default and the Fed bought up, that required the Fed to give the banks an unlimited credit line as a back stop. You see shit head . .all those trillions and trillions of dollars of bad loans and bank bailouts now sits on the Feds balance sheet as $4.5 trillion, leveraged many many many many . . . many . many times so the banks look like they are capitally adequate on paper. Thats what it means when you nationalize public debt Understand shit wit? Incidentally thats what the Fed is trying to unwind and some fucking moron like you will buy and then go bankrupt and ask for a bailout and get more debt from the Fed. Its a good thing your generation grew up sucking Chinese toys, the lead in the paint did its job well, otherwise you might have actually learnt something . .. .Gwarsh!!!"
},
{
"docid": "333755",
"title": "",
"text": "\"There are many different methods for a corporation to get money, but they mostly fall into three categories: earnings, debt and equity. Earnings would be just the corporation's accumulation of cash due to the operation of its business. Perhaps if cash was needed for a particular reason immediately, a business may consider selling a division or group of assets to another party, and using the proceeds for a different part of the business. Debt is money that (to put it simply) the corporation legally must repay to the lender, likely with periodic interest payments. Apart from the interest payments (if any) and the principal (original amount leant), the lender has no additional rights to the value of the company. There are, basically, 2 types of corporate debt: bank debt, and bonds. Bank debt is just the corporation taking on a loan from a bank. Bonds are offered to the public - ie: you could potentially buy a \"\"Tesla Bond\"\", where you give Tesla $1k, and they give you a stated interest rate over time, and principal repayments according to a schedule. Which type of debt a corporation uses will depend mostly on the high cost of offering a public bond, the relationships with current banks, and the interest rates the corporation thinks it can get from either method. Equity [or, shares] is money that the corporation (to put it simply) likely does not have a legal obligation to repay, until the corporation is liquidated (sold at the end of its life) and all debt has already been repaid. But when the corporation is liquidated, the shareholders have a legal right to the entire value of the company, after those debts have been paid. So equity holders have higher risk than debt holders, but they also can share in higher reward. That is why stock prices are so volatile - the value of each share fluctuates based on the perceived value of the entire company. Some equity may be offered with specific rules about dividend payments - maybe they are required [a 'preferred' share likely has a stated dividend rate almost like a bond, but also likely has a limited value it can ever receive back from the corporation], maybe they are at the discretion of the board of directors, maybe they will never happen. There are 2 broad ways for a corporation to get money from equity: a private offering, or a public offering. A private offering could be a small mom and pop store asking their neighbors to invest 5k so they can repair their business's roof, or it could be an 'Angel Investor' [think Shark Tank] contributing significant value and maybe even taking control of the company. Perhaps shares would be offered to all current shareholders first. A public offering would be one where shares would be offered up to the public on the stock exchange, so that anyone could subscribe to them. Why a corporation would use any of these different methods depends on the price it feels it could get from them, and also perhaps whether there are benefits to having different shareholders involved in the business [ie: an Angel investor would likely be involved in the business to protect his/her investment, and that leadership may be what the corporation actually needs, as much or more than money]. Whether a corporation chooses to gain cash from earnings, debt, or equity depends on many factors, including but not limited to: (1) what assets / earnings potential it currently has; (2) the cost of acquiring the cash [ie: the high cost of undergoing a public offering vs the lower cost of increasing a bank loan]; and (3) the ongoing costs of that cash to both the corporation and ultimately the other shareholders - ie: a 3% interest rate on debt vs a 6% dividend rate on preferred shares vs a 5% dividend rate on common shares [which would also share in the net value of the company with the other current shareholders]. In summary: Earnings would be generally preferred, but if the company needs cash immediately, that may not be suitable. Debt is generally cheap to acquire and interest rates are generally lower than required dividend rates. Equity is often expensive to acquire and maintain [either through dividend payments or by reduction of net value attributable to other current shareholders], but may be required if a new venture is risky. ie: a bank/bondholder may not want to lend money for a new tech idea because it is too risky to just get interest from - they want access to the potential earnings as well, through equity.\""
},
{
"docid": "229285",
"title": "",
"text": ">“Growing debt . . . would increase the probability of a sudden fiscal crisis, during which investors would lose confidence in the government’s ability to manage its budget and the government would thereby lose its ability to borrow at affordable rates.” I suppose it's too much to ask that the CBO understands how our monetary system works. Do they honestly believe that we rely on investors to loan us a currency we can make in unlimited quantities? The only way the U.S. could default is if congress decides to stop paying off our debts."
},
{
"docid": "466310",
"title": "",
"text": ">The US government debt is how much USD the government has paid the US non-government in excess of what it's taxed them. Correct? Incorrect. The US debt/savings is the balance of credit the US government maintains with US banks, and foreign sovereigns/banks. Why do you need to say it another way? WTF is 'non-government' savings? Other than an academically retarded way of saying 'debt' of course? Its not a bad thing... unless interest rates rise. But this time is different, so that'll never happen. I'm sticking to my initial assessment. Fairyland."
},
{
"docid": "309358",
"title": "",
"text": "\"The biggest risk you have when a country defaults on its currency is a major devaluation of the currency. Since the EURO is a fiat currency, like almost all developed nations, its \"\"promise\"\" comes from the expectation that its union and system will endure. The EURO is a basket of countries and as such could probably handle bailing out countries or possibly letting some default on their sovereign debt without killing the EURO itself. A similar reality happens in the United States with some level of regularity with state and municipal debt being considered riskier than Federal debt (it isn't uncommon for cities to default). The biggest reason the EURO will probably lose a LOT of value initially is if any nation defaults there isn't a track record as to how the EU member body will respond. Will some countries attempt to break out of the EU? If the member countries fracture then the EURO collapses rendering any and all EURO notes useless. It is that political stability that underlies the value of the EURO. If you are seriously concerned about the risk of a falling EURO and its long term stability then you'd do best buying a hedge currency or devising a basket of hedge currencies to diversify risk. Many will recommend you buy Gold or other precious metals, but I think the idea is silly at best. It is not only hard to buy precious metals at a \"\"fair\"\" value it is even harder to sell them at a fair value. Whatever currency you hold needs to be able to be used in transactions with ease. Doesn't do you any good having $20K in gold coins and no one willing to buy them (as the seller at the store will usually want currency and not gold coins). If you want to go the easy route you can follow the same line of reasoning Central Banks do. Buy USD and hold it. It is probably the world's safest currency to hold over a long period of time. Current US policy is inflationary so that won't help you gain value, but that depends on how the EU responds to a sovereign debt crisis; if one matures.\""
},
{
"docid": "420978",
"title": "",
"text": "Without providing direct investment advice, I can tell you that bond most assuredly are not recession-proof. All investments have risk, and each recession will impact asset-classes slightly differently. Before getting started, BONDS are LOANS. You are loaning money. Don't ever think of them as anything but that. Bonds/Loans have two chief risks: default risk and inflation risk. Default risk is the most obvious risk. This is when the person to whom you are loaning, does not pay back. In a recession, this can easily happen if the debtor is a company, and the company goes bankrupt in the recessionary environment. Inflation risk is a more subtle risk, and occurs when the (fixed) interest rate on your loan yields less than the inflation rate. This causes the 'real' value of your investment to depreciate over time. The second risk is most pronounced when the bonds that you own are government bonds, and the recession causes the government to be unable to pay back its debts. In these circumstances, the government may print more money to pay back its creditors, generating inflation."
},
{
"docid": "147163",
"title": "",
"text": "Personal finances are not intuitive for everyone, and it can be a challenge to know what to do when you haven't been taught. Congratulations on recognizing that you need to make a change. The first step that I would recommend is what you've already done: Assemble your bank statements so you can get an accurate picture of what money you currently have. Keep organized folders so you can find your bank statements when you need them. In addition to the bank statements for your checking and savings accounts, you also need to assess any debt that you have. Have you taken out any loans that need to be paid back? Do you have any credit card debt? Make a list of all your debts, and make sure that you have folders for these statements as well. Hopefully, you don't have any debts. But if you are like most people, you owe money to someone, and you may even owe more money than you currently have in your bank accounts. If you have debts, fixing this problem will be one of your goals. No matter what your debt is, you need to make sure that from now on, you don't spend more money than you take in as income. To do this, you need to make a budget. A budget is a plan for spending your money. To get started with a budget, make a list of all the income you will receive this month. Add it up, and write that amount at the top of a page. Next, you want to make a list of all the expenses you will have this month. Some of these expenses are more or less fixed: rent, utility bills, etc. Write those down first. Some of the expenses you have more control over, such as food and entertainment. Give yourself some money to spend on each of these. You may also have some larger expenses that will happen in the future, such as a tuition or insurance payment. Allocate some money to those, so that by the time that payment comes around, you will have saved enough to pay for those expenses. If you find that you don't have enough income to cover all of your expenses in a month, you need to either reduce your expenses somewhere or increase your income until your budget is at a point where you have money left over at the end of each month. After you've gotten to this point, the next step is figuring out what to do with that extra money left over. This is where your goals come into play. If you have debt, I recommend that one of your first goals is to eliminate that debt as fast as possible. If you have no money saved, you should make one of your goals saving some money as an emergency fund. See the question Oversimplify it for me: the correct order of investing for some ideas on what order you should place your goals. Doing the budget and tracking all of your spending on paper is possible, but many people find that using the right software to help you do this is much easier. I have written before on choosing budgeting software. All of the budgeting software packages I mentioned in that post are from the U.S., but many of them can successfully be used in Europe. YNAB, the program I use, even has an unofficial German users community that you might find useful. One of the things that budgeting software will help you with is the process of reconciling your bank statements. This is where you go through the bank statement each month and compare it to your own record of spending transactions in your budget. If there are any transactions that appear in the statement that you don't have recorded, you need to figure out why. Either it is an expense that you forgot to record, or it is a charge that you did not make. Record it if it is legitimate, or dispute the expense if it is fraudulent. For more information, look around at some of the questions tagged budget. I also recommend the book The Total Money Makeover by Dave Ramsey, which will provide more help in making a budget and getting out of debt."
},
{
"docid": "539381",
"title": "",
"text": "\"Usually the FED uses newly printed money to buy US treasuries from Goldman Sachs, JP Morgan, etc.. These banks then lend out the new cash which expands the money supply. During the height of the crisis the FED printed over $1.0 Trillion and bought....well...almost anything the banks couldn't offload elsewhere. Mortgage Backed Securities, Credit Default Swaps, you name it - they bought it. Must be nice to always have a customer to sell your junk investments to. They also bought these securities at face value - not at market value. Chart from here. The FED announced in early November, 2010 that they will print another $600 billion and buy US Treasuries. They will be buying ALL the debt that will be sold by the US government for the next 8 months. This was admitted by the Dallas FED chairman in this article: For the next eight months, the nation’s central bank will be monetizing the federal debt. \"\"Monetizing\"\" is a fancy word for printing money. I think this was done because the US government ran out of customers for its debt. China has reduced its purchases of US debt and the Social Security Trust Fund is no longer buying US debt since it is running a deficit.\""
},
{
"docid": "536009",
"title": "",
"text": "\"Haha now there's two of you. I have two twits parrot squawking in my ears in stereo. Okay, so maybe you aren't from the US, in which case I can forgive your confusion and completely circular logic. You must have gone back to Wikipedia or something, because the IS and LM curves are not, in your words, operating without \"\"control by powerful offices in government.\"\" The IS and LM curve indeed cross at a level that is consistent with an equilibrium between income and expenditure's equilibirium with the money market. But that's just the label slapped on it, it's not determinative as some sort of naturally occurring law of economics in our society. No, these things don't just happen on their own. If what you're inartfully implying were true, then there would be no such thing as an expansionary or contractionary monetary policy. Manipulating and controlling the money supply is the entire reason for the existence of the Federal Reserve! What is wrong with you? Go read a book or something on it, fuck me. The Federal Reserve, by setting interest rates mainly, and by open market operations, and by less frequently changing the reserve requirements which directly controls the MONEY MULTIPLIER (you know, that thing that creates money out of thin air you seem to not be able to understand exists?) is constantly changing AGGREGATE DEMAND in the economy. Aggregate demand is what the ISLM curve is about. It's about the equilibrium between price levels and the level of economic OUTPUT DEMANDED. But not supplied. That's aggregate supply, and the Federal Reserve effects that less. But yes, you've simply expanded the scope of things I could talk about that are fucked up about banks and the Fed in particular, because the Federal Reserve, in manipulating aggregate demand for money, actually is destroying money and the efficient use of money at the same time, because the LM curve in particular really represents the relationship between REAL income and the REAL money supply. Real means not nominal, but in actual purchasing terms. The Fed is manipulating an LM curve that at its base is a piece of logic built on the assumption that what's going into it are real numbers, and yet by definition, the Fed acting to manipulate it makes those numbers not determined by purely market forces, but also by the Fed. That makes them less than real. Basically the Federal Reserve pumps up artificial levels of demand in the economy, which lasts for a bit to generate growth numbers, but in the long term it simply results in inflation and a continually delayed (at least for now) reckoning where the artificial demand (i.e. the government's ability to borrow) cannot be further expanded, and something has to give. This down the road would be a monetary crisis involving the US dollar being knocked off its perch as the world's primary reserve currency, and the yields on Treasuries skyrocketing to the point that the government is either forced to behave or else print so much money to actually cover interest payments on the debt that the flood of money into the economy causes catastrophic inflation. But anyway, my point is that you're making a circular argument, because you're saying that the Fed doesn't interfere in or exert tremendous control over the economy, because there's something that we know shows the given price level of money in an economy called the ISLM curve, falsely implying that everything's fine with money because it's determined by mechanical, natural laws, almost like gravity, when in fact the Federal Reserve's whole purpose is to manipulate the inputs that go into that curve. It reduces interest rates which artificially increases income. It also increases the velocity of money, an input for the LM curve, by increasing nominal economic output, etc. etc. The IS and LM curves are not these things that just sort of happen on their own. This may come as a shock, but the US has a central bank which has as its sole purpose the manipulation of these curves. Its central mandate is control of price levels. Its unspoken mandate is to preserve the status of the big banks on the top of society, which is why the big banks created it in the first place, and why they own all the branches (this is the root fact behind why some people say that the Federal Reserve is in fact not federal and is instead privately owned, which isn't completely literally true, but true enough in the sense that it has a clear conflict of interest between the public good it's supposed to be upholding and the private interests of the banks that own its branches and exert control over the financial system, mainly through the New York branch). But that's not the whole story about the total money supply. There's also the pyramiding effect of the money multiplier. It's as if you're just pretending these things don't exist. It's real, I assure you. Banks create money out of thin air when they extend credit to you. To pay the obligation to them, you use the real money you in fact earned through your own labor, or from some real asset you might have. They get the better end of the deal, and almost all the money in the economy is spawned by this process, this insanely exorbitant privilege they have. And yes, I have a problem with it.\""
},
{
"docid": "22807",
"title": "",
"text": "Genius answer: Don't spend more than you make. Pay off your outstanding debts. Put plenty away towards savings so that you don't need to rely on credit more than necessary. Guaranteed to work every time. Answer more tailored to your question: What you're asking for is not realistic, practical, logical, or reasonable. You're asking banks to take a risk on you, knowing based on your credit history that you're bad at managing debt and funds, solely based on how much cash you happen to have on hand at the moment you ask for credit or a loan or based on your salary which isn't guaranteed (except in cases like professional athletes where long-term contracts are in play). You can qualify for lower rates for mortgages with a larger down-payment, but you're still going to get higher rate offers than someone with good credit. If you plan on having enough cash around that you think banks would consider making you credit worthy, why bother using credit at all and not just pay for things with cash? The reason banks offer credit or low interest on loans is because people have proven themselves to be trustworthy of repaying that debt. Based on the information you have provided, the bank wouldn't consider you trustworthy yet. Even if you have $100,000 in cash, they don't know that you're not just going to spend it tomorrow and not have the ability to repay a long-term loan. You could use that $100,000 to buy something and then use that as collateral, but the banks will still consider you a default risk until you've established a credit history to prove them otherwise."
},
{
"docid": "409562",
"title": "",
"text": "\"In 2001, Argentina defaulted on it's debt, and started negotiating a \"\"haircut\"\" with it's debtors. As a result, a lot of the debtors sold the bonds they had a fire-sale prices, thinking better get some back than nothing. One of the guys that bought those cheap bonds was Paul Singer AKA \"\"Mr. Vulture Hedge-fund\"\". I'll speculate here saying that Mr. Singer saw that the bond conditions gave him a way to force Argentina to pay the full value of the bonds notwithstanding it's default or negotiated haircut. Argentina did negotiate a haircut with about 97% of it's bond-holders. This meant that although they would lose out on some of the money, they would still get some back, and Argentina could work its way back to its feet eventually. Mr. Singer and friends were the 3% that did not accept the haircut, and took the country to court to get 100% of the bond value back. Now, the plot thickens. I don't understand if Mr. Singer knew this or not, but the bonds also had a post-2001 condition that said that no bond-holder would be worst-off than the highest bond deal Argentina offered anyone. Which basically means, if they pay Mr. Singer 100%, they have to pay everybody else 100%. Now, it was well established that Argentina could not pay 100%, and is not able to pay 100% of the debt, hence the 2001 default. Meanwhile, Argentina was paying out the hair-cut bonds, but holding out on Mr. Singer and friends as they still didn't agree to pay 100%. The courts ruled that they could not do this, and had to pay everybody. Since Argentina cannot pay everybody 100%, it is defaulting on the debt.\""
},
{
"docid": "514681",
"title": "",
"text": "Banks' savings interest is ridiculous, has always been, compared to other investment options. But there's a reason for that: its safe. You will get your money back, and the interest on it, as long as you're within the FDIC insurance limits. If you want to get more returns - you've got to take more risks. For example, that a locality you're borrowing money to will default. Has happened before, a whole county defaulted. But if you understand the risks - your calculations are correct."
}
] |
4605 | If the U.S. defaults on its debt, what will happen to my bank money? | [
{
"docid": "400826",
"title": "",
"text": "There are many different things that can happen, all or some. Taking Russia and Argentina as precedence - you may not be able to withdraw funds from your bank for some period of time. Not because your accounts will be drained, but because the cash supply will be restricted. Similar thing has also happened recently in Cyprus. However, the fact that the governments of Russia and Argentina limited the use of cash for a period of time doesn't mean that the US government will have to do the same, it my choose some other means of restraint. What's for sure is that nothing good will happen. Nothing will probably happen to your balance in the bank (Although Cyprus has shown that that is not a given either). But I'm not so sure about FDIC maintaining it's insurance if the bank fails (meaning if the bank defaults as a result of the chain effect - you may lose your money). If the government is defaulting, it might not have enough cash to take over the bank deposits. After the default the currency value will probably drop sharply (devaluation) which will lead to inflation. Meaning your same balance will be worth much less than it is now. So there's something to worry about for everyone."
}
] | [
{
"docid": "87436",
"title": "",
"text": "Every year stories like this come out. Every year the US does not default on its debt. We all should know by now that the US, as a financially sovereign nation that issues its own currency, cannot default on its debt. This fearmongering is just a click-baity waste of time, and yes, a waste of money."
},
{
"docid": "428941",
"title": "",
"text": "\"> 1). How is a loan an asset? I'm the bank and I have 100$. I loan Jimmy 20$. With interest I expect him to pay back 25$. My books sure as shit shouldn't say I'm worth 105$ or even 100$! If you *extend* a loan to someone, the loan is an asset to you and a liability to them. It's a liability to them because they *owe* you the loan + interest back. It's an *asset* to you because you expect to retrieve the full loan principal AND interest back. There is no difference, cash flow wise, between spending $100 on a machine that makes fidget spinners and earns you $110 back ($10 profit) and extending a loan to Billy at 10% interest (you'll get $110 back, $10 profit). > My books sure as shit shouldn't say I'm worth 105$ or even 100$! Why not? I have $100 cash. I loan it out to Billy at 10% interest. Billy is creditworthy and reliable, and certain collateral is in place. I'm worth, essentially, a discounted cash flow of $110 (which as long as my required return is less than 10%, means I'm worth *more* than $100). > I gave away 20$. I'm worth 80$ right? No. That assumes you spent $20 and won't get *any* of it back. It's the same as ordering a $20 pizza and eating it all. Now, the *cash* you have on your *balance sheet* would be $80, but you'd have a loan outstanding as an asset at $20, which is a net 0 movement in equity on the other side. > Sure I can put it on my books that Jimmy owes me 20$ but I cannot be acting like I HAVE that 20$ can I? Well, yes and no. On one hand, you are certainly *worth* more than $80 in your scenario. However, banks have some stringent regulations preventing banks from being overly risky. > Isn't that how the 08' crash happened? No. '08 happened from a culmination of many different events, including risky and predatory loan origination, conflicts of interest in credit rating agencies, and low Fed rates, among other issues, including several \"\"domino effect\"\" secondary issues. > Is the risk of default accounted for? Theoretically, the risk of default is accounted for in two areas: 1. The interest rate extended to the debtor. 2. A provision for loan losses. > \"\" because default risk is not transferred with the asset.\"\" In what context was this seen? No one would willingly sell an asset but hold on to the risk (or they'd charge a high price, at least, for that). Student loans are a special case. In the U.S., they are generally *non-cancellable.* They survive everything, including bankruptcy. They don't have collateral. Basically, they're going to follow the person around, regardless of situation, INCLUDING simply not paying. This makes default risk (or rather loss risk) lower. A large portion of loans come from the federal government, which means to a pretty high degree, they are guaranteed by the government. This also makes loss risk lower. The government can garnish wages and all sorts of unpleasant things to get the money back. Even if losses are realized, taxes can (and will) make up the difference. Private loans have a bit less leeway in these regards, but they still are immune to bankruptcy currently. As such, while they don't have all the tools of the government, they're still essentially invincible.\""
},
{
"docid": "298847",
"title": "",
"text": "\"But do you know about a US state risking to go default now or in the past? In 1847 four states - Mississippi, Arkansas, Michigan, and Florida - failed to pay all or some of their debts. All of these states had issued debt to invest in banks. From the detailed source listed below: \"\"...it should be remembered that all cases of state debt repudiation, as contrasted with mere default, involved banks.\"\" Jackson had killed the federal central bank 10 years earlier and the states were trying to create their own inflationary central banks. Six other states delayed debt payments from three to six years (source, page 103, this source has more details). This is the only case I know of where US states defaulted. US cities default more frequently. I'm very confused do US single states like IOWA have debt and emits obligations on their own like Italy does in EU? Yes. Individual states can issue their own bonds. Oh, and just another little thing I would like to know, is Dollar a fiat currency too like the Euro? Yes, the US dollar is a fiat currency. I think the better question is: \"\"Is there any currency that is not a fiat currency?\"\"\""
},
{
"docid": "110628",
"title": "",
"text": "> Europe is a temporary problem. Lol.. The better question for this thread is how is the European economy not utterly doomed? I see no way at all of the Euro surviving. Greece has already technically defaulted by saying it's not going to pay back all of it's debt. They will officially default when Germany stops bailing them out. Spain is in the exact same situation, just about a year behind. They haven't technically defaulted yet, but they will. They're receiving bailout after bailout and the Greece situation only makes their interest rates worse. Italy is just barely behind Spain, the Greek default followed by the Spanish defualt will send Italian interest rates through the roof dooming them to the same fate. This will eventually effect the US, but our borrowing rates are held artificially low due to the Fed just printing up more fake money and letting the US borrow as much as it wants. If you don't see this scheme crumbling and collapsing, I'm just curious what you actually think *will* happen?"
},
{
"docid": "530998",
"title": "",
"text": "''just how much of the troubled southern EU nations' debt is due to the rescuing of private banks? thanks'' My answer rambled onto related topics. In short, not much. While the actual sums involved in bank bailouts are considerable, relative to sovereign debts run up by having structural/trade deficits for ~10 years, they aren't the problem in Europe at the moment...but they ARE the tip of an Iceberg that could sink parts of the EU and leave the rest struggling to stay above water. An interesting question to ponder, with deceptively simple answers, is: If the % of sovereign debt resulting from bank bailouts is so small, why does the media and general public throw a fit every time a major EU bank gets into trouble? People are worried about losing their savings that they have with that bank. Its a visceral fear that is easy to personally relate to. But scratch below the surface and there is a whole buffet of terror for you to feast on. Assuming leverage of ~26* on assets held by banks and that true liabilities aren't completely opaque to average Joe retail investor, the collapse of the right bank could fire the starting gun on a vicious recession, trigger bailouts of other institutions exposed to the original and all sorts of nasty events. These bank assets include the mess created by rehypothecation, securitization of shitty credit/assets and CDS, commercial paper that relies on never having to be realized as a loss and interference in the money markets and currencys by states. Its damn hard to work out what assets and liabilities a bank has these days, let alone what any debt they have taken on is worth. Euro Crisis Best Crisis. *Pulled from memory, I'm not sure if this is accurate for Europe."
},
{
"docid": "539381",
"title": "",
"text": "\"Usually the FED uses newly printed money to buy US treasuries from Goldman Sachs, JP Morgan, etc.. These banks then lend out the new cash which expands the money supply. During the height of the crisis the FED printed over $1.0 Trillion and bought....well...almost anything the banks couldn't offload elsewhere. Mortgage Backed Securities, Credit Default Swaps, you name it - they bought it. Must be nice to always have a customer to sell your junk investments to. They also bought these securities at face value - not at market value. Chart from here. The FED announced in early November, 2010 that they will print another $600 billion and buy US Treasuries. They will be buying ALL the debt that will be sold by the US government for the next 8 months. This was admitted by the Dallas FED chairman in this article: For the next eight months, the nation’s central bank will be monetizing the federal debt. \"\"Monetizing\"\" is a fancy word for printing money. I think this was done because the US government ran out of customers for its debt. China has reduced its purchases of US debt and the Social Security Trust Fund is no longer buying US debt since it is running a deficit.\""
},
{
"docid": "303367",
"title": "",
"text": "\"There are three possibilities. This is a scam, as others have pointed out, it works by you sending money, then them stopping the original transfer, meaning you sent them your money and not theirs. They make money cause a stop payment only costs $50 (or around there) but you sent $1,000. So they profit $950. You lose $1,000 and maybe some processing fees. This is money hiding, or money laundering. They send you $1,000 in drug money, you send them $1,000 in \"\"clean\"\" money. You don't lose any money. But they gain a clear paper trail. With large sums of money (in the U.S. anything over $5k) you have to prove a paper trail. They just did. You gifted it to them. On your end, it looks like you just profited from illegal activity, which in the worst case ends in confiscation of ALL your assets and jail time. It might not come to that, but it could. This was an honest mistake, by an idiot. It is possible to wire a complete stranger money. If you make a mistake on the wire transfer forms, and the account number exists, it will go through. Now what makes the sender an idiot is not the mistake. We all do that. It's the fact that banks have a built in system for handling these mistakes. Simply put, you can make a stop payment. It's around $50 (varies by bank and sometimes amount transferred), it's easy to do, and almost automatic. If you tell a bank rep that you made a mistake they will likely have you fill out a paper, and in many cases will \"\"just take care of it\"\". If \"\"the idiot\"\" didn't want to tell the bank of the mistake, or didn't ask for help, or didn't want to pay the fee. Then maybe they would contact the receiving party. But that's pretty dumb. Resolution The resolution in all cases is the same. Visit your local branch, or send in writing, an explanation: \"\"I found $1,000 in my bank account that I didn't put there, and got this email (see attached print out). Please advise.\"\" They will \"\"freeze\"\" the $1,000 (or maybe the account but I have never seen that) while they investigate. You won't be able to spend it, they might even remove it pending the investigation. They will contact the bank that issued the transfer and attempt to sort things out. You shouldn't be charged anything. You also won't get to keep the money. Eventually the bank will send you a letter stating what happened with the investigation. And the money will vanish from your account. Specific questions I wanted to state the information above even though it doesn't address your concerns directly because it is important. To address your specific questions: Question 1) Surely bank account numbers have a checksum, which make it relatively difficult for a typo to result in a payment going to the wrong person? Nope, that's up to each bank. Usually the account numbers are not sequential, but there is no \"\"checksum\"\" either. Just like credit cards, there are rules, but once you know those rules you can generate fake ones all day long. In some cases, account numbers 5487-8954-7854 and 5487-8945-7854 are both valid. It happens. Question 2) What are likely sources of them being able to find my phone number to call me? Phone numbers are not private. Not even close. Phone books, Google, Websites, etc etc. if you think your phone number is in any way a secret then your totally misinformed. Account numbers are not a secret either. Especially bank account numbers. You could totally just call a bank, and say \"\"What is the name on account 12345?\"\" and they would tell you. Checks have your name and account number on them, as do MANY documents from a bank. So anything from asking the bank, to finding a copy of a check or document in the trash are valid ways to make the link. Question 3) How were they expecting to benefit? See options 1 and 2 above. If is is really option 3, then your bank should have directed the money back. But if the person was so messed up as you say, the account may have been closed and \"\"written off\"\". When that happens a lot of weird stuff can happen. Essentially the bank is \"\"taking a loss\"\" of money and doesn't want the money back even if the account was closed with a negative balance. Usually though contract with debt collectors, they may have already been \"\"paid\"\" for that debt, and are not allowed to take the money back. These things happen, but it seems like a pretty odd set of things that need to line up for #3 to be valid. About your Length of time Usually these things resolve in less then 90 days. Usually far less. At the 90 day mark, it gets really hard to reverse a transaction. It's possible that it was a scam and so many people fell for it that the scammers just let you keep the money instead of \"\"highlighting\"\" their scam. The fact that your using a \"\"net bank\"\" means that your can't go in person, but you should get details in writing. State the transaction number (it should be in your account records) and ask them for a \"\"letter of resolution\"\" or some form of official document stating the outcome of their investigation. I suspect that no one every really investigated the issue and the rep you spoke to never did anything then ask you to ask them to fill out a stop payment. You need a record of trying to sort this out. You don't want to up for some legal battle 10 years from now because someone found out that the money was part of a pool that was used to fund some terrorist group or some such. So get a paper trail, then go with what the bank says.\""
},
{
"docid": "72457",
"title": "",
"text": "\"But I think another interesting postscript to this which is relevant at this time is that the orchard wildfire isn't the only thing that can make money \"\"disappear\"\". The use of a currency rather than a transferable note means that it can be an independent store of value, so there are perverse outcomes that can happen that can't happen with IOUs. So say some particularly wealthy person in the village starts to hoard his money and corners a large fraction of the money supply (say he's anticipating some horrible plague). The number of Loddars decreases, and the orchard owner starts paying his workers fewer Loddars as a result. But their debts are denominated in \"\"old\"\" Loddars which were easier to come by, and quickly the workers are unable to pay their debts, or have to spend all their money on their debts and have none for anything else. They default on those debts and the money \"\"disappears\"\"--but it doesn't disappear for any physical reason (the workers are doing the same amount of work), it disappears because of a shock to the monetary supply. This is a \"\"demand shock\"\" versus the \"\"supply shock\"\" of an orchard catching on fire.\""
},
{
"docid": "333755",
"title": "",
"text": "\"There are many different methods for a corporation to get money, but they mostly fall into three categories: earnings, debt and equity. Earnings would be just the corporation's accumulation of cash due to the operation of its business. Perhaps if cash was needed for a particular reason immediately, a business may consider selling a division or group of assets to another party, and using the proceeds for a different part of the business. Debt is money that (to put it simply) the corporation legally must repay to the lender, likely with periodic interest payments. Apart from the interest payments (if any) and the principal (original amount leant), the lender has no additional rights to the value of the company. There are, basically, 2 types of corporate debt: bank debt, and bonds. Bank debt is just the corporation taking on a loan from a bank. Bonds are offered to the public - ie: you could potentially buy a \"\"Tesla Bond\"\", where you give Tesla $1k, and they give you a stated interest rate over time, and principal repayments according to a schedule. Which type of debt a corporation uses will depend mostly on the high cost of offering a public bond, the relationships with current banks, and the interest rates the corporation thinks it can get from either method. Equity [or, shares] is money that the corporation (to put it simply) likely does not have a legal obligation to repay, until the corporation is liquidated (sold at the end of its life) and all debt has already been repaid. But when the corporation is liquidated, the shareholders have a legal right to the entire value of the company, after those debts have been paid. So equity holders have higher risk than debt holders, but they also can share in higher reward. That is why stock prices are so volatile - the value of each share fluctuates based on the perceived value of the entire company. Some equity may be offered with specific rules about dividend payments - maybe they are required [a 'preferred' share likely has a stated dividend rate almost like a bond, but also likely has a limited value it can ever receive back from the corporation], maybe they are at the discretion of the board of directors, maybe they will never happen. There are 2 broad ways for a corporation to get money from equity: a private offering, or a public offering. A private offering could be a small mom and pop store asking their neighbors to invest 5k so they can repair their business's roof, or it could be an 'Angel Investor' [think Shark Tank] contributing significant value and maybe even taking control of the company. Perhaps shares would be offered to all current shareholders first. A public offering would be one where shares would be offered up to the public on the stock exchange, so that anyone could subscribe to them. Why a corporation would use any of these different methods depends on the price it feels it could get from them, and also perhaps whether there are benefits to having different shareholders involved in the business [ie: an Angel investor would likely be involved in the business to protect his/her investment, and that leadership may be what the corporation actually needs, as much or more than money]. Whether a corporation chooses to gain cash from earnings, debt, or equity depends on many factors, including but not limited to: (1) what assets / earnings potential it currently has; (2) the cost of acquiring the cash [ie: the high cost of undergoing a public offering vs the lower cost of increasing a bank loan]; and (3) the ongoing costs of that cash to both the corporation and ultimately the other shareholders - ie: a 3% interest rate on debt vs a 6% dividend rate on preferred shares vs a 5% dividend rate on common shares [which would also share in the net value of the company with the other current shareholders]. In summary: Earnings would be generally preferred, but if the company needs cash immediately, that may not be suitable. Debt is generally cheap to acquire and interest rates are generally lower than required dividend rates. Equity is often expensive to acquire and maintain [either through dividend payments or by reduction of net value attributable to other current shareholders], but may be required if a new venture is risky. ie: a bank/bondholder may not want to lend money for a new tech idea because it is too risky to just get interest from - they want access to the potential earnings as well, through equity.\""
},
{
"docid": "213331",
"title": "",
"text": "\"Your friend probably cannot deposit the check to your U.S. bank account. U.S. banks that I've worked with will not accept a deposit from someone who is not an owner of the account. I don't know why not. If some stranger wants to make unauthorized deposits to my account, why should I object? But that's the common rule. You could endorse the check, your friend could then deposit it to his own account or cash it, and then transfer the money to you in a variety of ways. But I think it would be easier to just deposit the check in your account wherever it is you live. Most banks have no problem with depositing a foreign check. There may be a fairly long delay before you can get access to the money while the check clears through the system. I don't know exactly what you mean by a \"\"prize check\"\", but assuming that this is taxable income, yes, I assume the U.S. government would want their hard-earned share of your money. These days you can pay U.S. taxes on-line if you have a credit card. If you have not already paid U.S. taxes for the year, you should make an \"\"estimated payment\"\". i.e. you can't wait until April 15 of the next year, you have to pay most or all of the taxes you will owe in the calendar year you earned it.\""
},
{
"docid": "229285",
"title": "",
"text": ">“Growing debt . . . would increase the probability of a sudden fiscal crisis, during which investors would lose confidence in the government’s ability to manage its budget and the government would thereby lose its ability to borrow at affordable rates.” I suppose it's too much to ask that the CBO understands how our monetary system works. Do they honestly believe that we rely on investors to loan us a currency we can make in unlimited quantities? The only way the U.S. could default is if congress decides to stop paying off our debts."
},
{
"docid": "150543",
"title": "",
"text": "\"I think you can do it as long as those money don't come from illegal activities (money laundering, etc). The only taxes you should pay are on the interest generated by those money while sitting in the UK bank account. Since I suppose you already paid taxes on those money in Greece while you were earning those money. About being audited, in my own experience banks don't ask you much where your money are coming from when you bring money to them, they are very willing to help, and happy. (It's a differnte story when you ask to borrow money). When I opened a bank account in US I did not even have an SSN, but they didn't care much they just took my passport and used the passport number for registering the account. Obviously on the interest generated by the money in the US bank account I had to pay taxes, but it was easy because I simply let the IRS via the bank to withdarw the 27% on the interest generated (not on the capital deposited). I didn't put a huge amount of money there I had to live there for 1 year or some more. Maybe if i deposited a huge amount of money someone would have come to ask me how did I make all those money, but those money were legally generated by me working in Italy before so I didn't have anything to be afraid about. BTW: in Italy I was thinking to move money to a German bank in Germany. The risk of default is a nightmare, something of completly new now in UE compared to the past where each state had its own currency. According to Muro history says that in case of default it happened that some government prevented people from withdrawing money form bank accounts: \"\"Yes, historically governments have shut down banks to prevent people from withdrawing their money in times of crisis. See Argentina circa 2001 or US during Great Depression. The government prevented people from withdrawing their money and people could do nothing while their money rapidly lost value.\"\" but in case Greece prevents people from withdrwaing money, those money are still in EURO, so i'm wondering what would be the effect. I mean would it be fair that a Greek guy can not withdraw is EURO money whilest an Italian guy can withdraw the same currency money in Italy?!\""
},
{
"docid": "58466",
"title": "",
"text": "My grace period is up in a few months, and I am not looking forward to it. I got the minimum federal aid possible for all 4 years, so I had to turn to private loans and whatever I could make over summers and what my parents could help me with. Ended up with $50k in debt, about 20k of it being with Sallie Mae. I can confirm they are bad on the collection side already. Just happened to miss a payment during school (paid off interest every month for the last 4 years), and they called me 3 times during class, sent an email, letter, and called my bilogical dad who cosigned for the loan. I can only imagine what they are like for people defaulting. All comes down to it though, have a plan when borrowing money for school. I knew my parents would only be able to help me out a little bit, and I got minimum federal aid (as in just loans) because my step father had assets that counted against me (and he told me I was on my own). So I had to figure out how to not be screwed from the beginning. I paid off my interest every month while working during school, and made sure to work hard to graduate with a good job. I can't imagine how some students feel when they graduate with nothing."
},
{
"docid": "304179",
"title": "",
"text": "You signed a contract to pay the loan. You owe the money. Stories of people being arrested over defaulted student loans are usually based in contempt of court warrants when the person failed to appear in court when the collection agency filed suit against them. Explore student loan forgiveness program. Research collections and bankruptcy and how to deal with collection agencies. There are pitfalls in communicating with them which restart the clock on bad debt aging off the credit report, and which can be used to say that you agreed to pay a debt. For instance, if you make any sort of payment on any debt, a case can be made that you have assumed the debt. Once you are aware of the pitfalls, contact the collection agency (in writing) and dispute the debt. Force them to prove that it is your debt. Force them to prove that they have the right to collect it. Force them to prove the amount. Dispute the fairness of the amount. Doubling your principal in 6 years is a bit flagrant. So, work with the collectors, establish that the debt is valid and negotiate a settlement. Or let it stay in default. Your credit report in the US is shot. It will be a long time before the default ages off your report. This is important if you try to open a bank account, rent an apartment, or get a job in the US. These activities do not always require a credit report, but they often do. You will not be able to borrow money or establish a credit card in the US. Here's a decent informational site regarding what they can do to collect the loan. Pay special attention to Administrative Wage Garnishment. They can likely hit you with that one. You might be unreachable for a court summons, but AWG only requires that the collectors be able to confirm that you work for a company that is subject to US laws. Update: I am informed that federally funded student loans are not available to international students. AWG is only possible for debts to the federal government. Private companies must go through the courts to force settlement of debt. OP is safe from AWG."
},
{
"docid": "301194",
"title": "",
"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.\""
},
{
"docid": "5602",
"title": "",
"text": "You're losing money. And a lot of it. Consider this: the inflation is 2-4% a year (officially, depending on your spending pattern your own rate might be quite higher). You earn about 1/2%. I.e.: You're losing 3% a year. Guaranteed. You can do much better without any additional risk. 0.1% on savings account? Why not 0.9%? On-line savings account (Ally, CapitalOne-360, American Express, E*Trade, etc) give much higher rates than what you have. Current Ally rates are 0.9% on a regular savings account. 9 times more than what you have, with no additional risk: its a FDIC insured deposit. You can get a slightly higher rate with CDs (0.97% at the same bank for 12 months deposit). IRA - why is it in CD's? Its the longest term investment you have, that's where you can and should take risks, to maximize your compounding returns. Not doing that is actually more risky to you because you're guaranteeing compounding loss, of the said 3% a year. On average, more volatile stock investments have shown to be not losing money over periods of decades, even if they do lose money over shorter periods. Rental - if you can buy a property that you would pay the same amount of money for as for a comparable rental - you should definitely buy. Your debt will be secured by the property, and since you're paying the same amount or less - you're earning the equity. There's no risk here, just benefits, which again you chose to forgo. In the worst case if you default and walk away from the property you lost exactly (or less) what you would have paid for a rental anyway. 14 years old car may be cheaper than 4 years old to buy, but consider the maintenance, licensing and repairs - will it not some up to more than the difference? In my experience - it is likely to. Bottom line - you think you're risk averse, but you're exactly the opposite of that."
},
{
"docid": "516964",
"title": "",
"text": "What is best for everyone is maximizing the effectiveness of the resources at hand. We are most certainly not doing that, as there is just so much capacity sitting idle right now. Demand is what we are lacking. Stimulus creates demand. Demand puts people to work, it builds companies, it brings ideas to fruition. Effective limiters can be used to avoid consequences of an overheating economy when that time comes, but we are far away from that point. Imposing these silly superstitions that somehow someday the U.S. is going to get to a point where we can't pay back our debt is making us lose focus on the fact that real people are suffering today, and that we can do something about it. Without artificial constraints like congress putting a limit on the debt, **it is impossible for the U.S. government to default.**"
},
{
"docid": "420978",
"title": "",
"text": "Without providing direct investment advice, I can tell you that bond most assuredly are not recession-proof. All investments have risk, and each recession will impact asset-classes slightly differently. Before getting started, BONDS are LOANS. You are loaning money. Don't ever think of them as anything but that. Bonds/Loans have two chief risks: default risk and inflation risk. Default risk is the most obvious risk. This is when the person to whom you are loaning, does not pay back. In a recession, this can easily happen if the debtor is a company, and the company goes bankrupt in the recessionary environment. Inflation risk is a more subtle risk, and occurs when the (fixed) interest rate on your loan yields less than the inflation rate. This causes the 'real' value of your investment to depreciate over time. The second risk is most pronounced when the bonds that you own are government bonds, and the recession causes the government to be unable to pay back its debts. In these circumstances, the government may print more money to pay back its creditors, generating inflation."
},
{
"docid": "479527",
"title": "",
"text": "\"Sovereigns cannot go bankrupt. Basically, when a sovereign government (this includes nations and US States, probably political subdivisions in other countries as well) becomes insolvent, they default. Sovereigns with the ability to issue new currency have the option to do so because it is politically expedient. Sovereigns in default will negotiate with creditor committees to reduce payments. Creditors with debt backed by the \"\"full faith and credit\"\" of the sovereign are generally first in line. Creditors with debt secured by revenue may be entitled to the underlying assets that provide the revenue. The value of your money in the bank in a deposit account may be at risk due to currency devaluation or bank failure. A default by a major country would likely lock up the credit markets, and you may see yourself in a situation where money market accounts actually fall in value.\""
}
] |
4615 | Are solar cell panels and wind mills worth the money? | [
{
"docid": "496427",
"title": "",
"text": "These are two rather distinct questions; only one of which is relevant to a Money web site. In general, the investment is questionable. Leaving aside the green feel-good factor, you need to look at a total cost of ownership (TCO) and payback on the asset. Neither is cheap as such. There are DIY windmill plans, but you likely still need a commercial battery charger/inverter/controller setup. Government incentives, depending on where you live, may change the story considerably. Many jurisdictions around the globe have both incentives to install and then power-feed-in tariffs if you sell back excess power. Your latitude also has an impact on your total available solar energy, along with regular weather patterns for both cloud cover and wind. One of the cheapest solar projects can be hot-water. Particularly if you have a pool, or even for domestic use, if you use a lot. All that said, given the green feel-good factor, if you want a small set of solar panels and have the space/budget, go ahead! You can add more later. For the second question: it is indeed possible to live off grid. Some remote houses do just this, and the methods to accomplish it vary. The number one thing you need to do is work on a power budget; and be both ruthless as well as realistic. Fridge, freezer, AC, furnace, plasma TV, etc. Depending on your climate and preferences, these may not all be possible for an off-grid lifestyle. (Of course, if you get a propane fridge and have a truck come by once a month, does that count as off-grid?)"
}
] | [
{
"docid": "138437",
"title": "",
"text": "\"Perhaps the real question you are asking is \"\"How can the tax code be fixed to make it simple for everyone (including me), and what would it take to effect those changes\"\"? There are really two causes for the complexity of the tax code. Many of those who enter Government hold a desire for power, and Government uses the tax code as one lever of power to distribute largess to their supporters, and to nudge everyone to behaviors which they favor. The current system enables incumbents to spend taxpayer money to reward those they favor, and thus they accumulate power and security. Those who enter Government also love to spend money (especially other people's money), and their rapacious behavior recognizes no boundaries. They will spend money without control until the taxpayers yank them to a brutal stop. They enact complex rules which are used to ease the (tax) burden for some, which buys their support (with taxpayer money), and they spend money to benefit those which they favor. The system of lobbyists and contributors exists to entice Government to treat them and the causes they support favorably. This system enables incumbents to spend taxed money to reward those they favor, and to tax those they disfavor. Thus their greed is satisfied, and their power is increased. The freedom you seek is not available, although you can minimize the effort required for compliance. You can take the standard deduction, and use nothing but the W-2 provided by your employer, and unless you are subject to the Alternative Minimum Tax, you will find that the tax software will do most of the work for you. Do you want to approach the Nirvana of minimal effort to appease your tax collectors? Avoid starting your own business, charitable donations, investment income, 1099 income, and you will need minimal paperwork. Avoid earning enough to risk the AMT (Alternative Minimum Tax). Refuse to take the mortgage interest deduction, tax credits for electric vehicles, tax credits for high-efficiency appliances and air conditioners, tax credits for residential solar panel installations. Do not own investments which pay interest, or own stocks where you need to track the \"\"basis\"\" (purchase price) of the stocks, nor buy and then sell valuable items that might gain value (where you would need to track the purchase price, the \"\"basis\"\"). Avoid owning and leasing a rental home for income, deducting businesses expenses and mileage for business purposes, contributions to a retirement plan (outside an employer plan) -- all complicate your tax filing. The solution you truly desire is either a \"\"Flat Tax\"\" or the \"\"Fair Tax\"\". These solutions would effect either a single tax rate (with no deductions or adjustments to income, yeah right), or a national retail sales tax, which would tax the money spent in the economy regardless of the source of the money (legal, gifts, crime) and there would be no need to report income, or classify it. The largest objection to either is that the tax code might become less \"\"progressive\"\" (increasing tax rate with increasing income). Good Luck!\""
},
{
"docid": "568574",
"title": "",
"text": "You did read the massive disclaimer about how not all subsidies are included it the report right? When you cherry pick only the categories you want it makes up whatever argument you want. Try including everything else like grants, foreign tax credits for example and the numbers are staggering. And that not even broaching the money we've spend on attempt to procure and stabilize middle east oil sources. I don't need an army to protect my roof solar panels from ISIS. http://www.energyandcapital.com/report/the-real-truth-about-energy-subsidies/491 Edit: I don't know why I bothered. You post in t_d, conspiracy and cap it all off with libertarian. Class act you are!"
},
{
"docid": "219110",
"title": "",
"text": "I never said they're not going to change. I'm saying it will take far more than a year or two. The article say that a $10/barrel can happen in 2 years. I'm saying no. And it's not inefficiency that's causing expensive electricity. Philippines does not have the basic requirements to create cheap and renewable energy to supply what it needs. Nowhere to build a dam for hydro power. And too many strong typhoons/earthquakes for building wind. Solar power would not necessarily work either. The nation is one of the most biodiverse areas in the world. By blocking large chunks of the islands and depriving the land of sunlight, you are causing massive environmental destruction. Palm and agriculture has already devastated many parts of Philippines, what it needs is more vegetation. Tidal power isn't nearly as developed as the other forms of new energy. And it may also disrupt a very busy marine trade route."
},
{
"docid": "262196",
"title": "",
"text": "\"You want to \"\"begin building a nice portfolio\"\" comprised of \"\"real estate\"\" and \"\"solar and wind\"\". There are ways to do that without starting your own solar power farm or buying giant wind turbines, or whole apartment complexes. They're called ETFs. They're diversified and it's unlikely that you'll use the entirety of your initial investment.\""
},
{
"docid": "484141",
"title": "",
"text": "\"[Link 1] (https://www.bloomberg.com/news/articles/2017-06-12/two-chinese-provinces-falsified-economic-data-inspectors-say) [Link 2] (https://www.ft.com/content/a5bf42e2-03cf-11e7-ace0-1ce02ef0def9) [Link 3] (https://www.ft.com/content/0361c1a4-bcfe-11e6-8b45-b8b81dd5d080) China has been cooking their books, just like the U.S. has been doing it the past few years. Just google \"\"U.S. Central banks buying stocks and bonds\"\", then connect the numbers. **Insider Information:** At my previous company we sold solar manufacturing equipment. I went to said Chinese city that bought our equipment. They were producing ton loads of solar panels, I asked one of the manager's where all of the panels were being sold (domestic, or international?). To my surprise, he said they warehoused the panels they produced; because, there weren't enough customers. And, why were they warehousing the panels? Because, the Chinese government needed to show numbers that jobs were plenty, and manufacturing was still strong.\""
},
{
"docid": "88770",
"title": "",
"text": "The exact answers depend on what you're going to do and what you started with and what your local market is like ... But a bit of websearching (and/or asking a good general contractor) will yield a table of typical improvement in sale price from various renovations. One thing you'll discover is that unless you are staring with something almost unsellable, few if any if thgem return more than you paid for them; getting back 85% is exceptionally good. A possible exception is energy-saving measures; basic air-seaking and attic insulation improvements pay back their cost relatively quickly, and solar can do so if you have a decent site for that -- and these are often subsidized in one way or another by government or utilities. For most things, thoiugh, the real answer is to ask yourself what would make the house better for you and your family, and what that would be worth to you. If you can get it done for less than that, go for it. It's a good idea to put together as complete a list vas possible before starting, since some will be considerably less expensive if done in the right order or at the same time. (Redo your roofing before installing rooftop solar panels, if possible; as one example.) Then prioritize thiose by what will improve your enjoyment of the house most. You'll probably get better specific advice over in the Home Improvement area of Stack Exchange."
},
{
"docid": "573025",
"title": "",
"text": "It is considered a powerful antioxidant that prevents damage to the DNA of cells, always exposed to free radicals and solar radiation. Another function of vitamin c benefits against skin aging is the ability to increase the synthesis of collagen, a very abundant protein in the skin that decreases over the years. It is also non-irritating bleach that at the same time reduces fine lines and wrinkles, minimizes redness and restores flexibility."
},
{
"docid": "108090",
"title": "",
"text": "He's comfortably middle class, but not wealthy. The Tesla was purchased in a multi-owner shared arrangement, and the solar panels were installed by a company that supplies the capital for the panels with a long-term agreement to supply power to the homeowner and takes care of the more complex business agreements to feed back power to the grid. The situation on paper looks like a long term break even - but we'll have to see. Overall, even if he's paying a bit more in electric cost, the arrangement gives a lot of stability in exchange. To me it's clear that going electric car + renewable electric is a long-term good on the principle of becoming nationally independent from geopolitical enganglements, but also more towards becoming individually independent in terms of being isolated from instability in gas prices, utility prices, and even in times of natural disaster."
},
{
"docid": "512104",
"title": "",
"text": "It's an early adoption situation, Tesla's approach is pretty brilliant. Serve the high-end niche markets with a design and performance at the high-end and work your way down in affordability over the long term. Many products have followed this overarching strategy. BTW that includes the early combustion cars which were playthings for the wealthy, and pretty unreliable at the time compared to horse and buggy. As an aside, all those batteries are recyclable into new batteries. Solar panel costs are dropping rapidly and if we can get to the point that investment in industry R&D is self sustainable we will continue get price drops similar to Moore's law in computer speeds."
},
{
"docid": "449189",
"title": "",
"text": "Correct. What exactly is Uber spending its money on? Their platform service has no inherent capital costs. They're not renting a fleet. Amazon is creating distribution centers and cutting prices in order to undercut existing distributors. Tesla is creating gigafactories and supercharging stations, as well as reinvesting in innovation for solar panel tiles and electric 18 wheelers. Uber beat taxis a long time ago. Their prices were good since at least 2014. What are they spending money on? Software dev?"
},
{
"docid": "447066",
"title": "",
"text": "\"The problem above is actually a pretty good list of the concerns around life insurance. While there is no correct answer to the question as posed, this will vary among different WSCs, there is a simpler way to think about insurance in general that may make finding what is right answer for you easier. Buying life insurance, like almost all insurance, is on average a money losing purchase. This is simply because the companies selling wouldn't offer it if they couldn't expect to make money on it. Think about buying insurance (a warranty) on a new cell phone, maybe if you are particularly prone to damaging cell phones it can be in your favor, but for most of the people that buy it will lose money on average. People, of course, still buy insurance anyway to protect themselves from unlikely but very bad consequences. The big reason to make this trade off is if the loss will have big lasting consequences. To stay with our cell phone example having to replace a cell phone, at least for me, would be annoying but not a catastrophic event. For myself, the protection is not worth the warranty cost, but that is not true for everyone. Life insurance is a pretty extreme case of this, but I find the best question to ask is \"\"if you (you and your spouse) were to die will your dependents lives become so much worse that you really dislike the idea of not being insured?\"\" For some working seniors, they already have enough saved to bridge their kids/spouse to adulthood/old-age that insurance makes no sense. For some, their children/husband/wife would be destitute and insurance is an obvious choice and an easy price to pay even if it is very high. The example you suggest seems on the border and good questions to ask are: Thinking about those questions may help you understand if the protection offers is worth the cost.\""
},
{
"docid": "226060",
"title": "",
"text": "> Why do you say such stupid things? I'm just going by the wikipedia link that you just gave. Very first paragraph: > Although the company was once touted for its unusual technology, plummeting silicon prices led to the company's being unable to compete with conventional solar panels made of crystalline silicon."
},
{
"docid": "397564",
"title": "",
"text": ">total destruction Seems a bit harsh given that we don't have a real comparison here. With their new system, you can use solar panels on your roof that last longer than normal roofing tiles and charge your car/power your home. All in all it seems like a great way to go green."
},
{
"docid": "26846",
"title": "",
"text": "\"By the sounds of things, you're not asking for a single formula but how to do the analysis... And for the record you're focusing on the wrong thing. You should be focusing on how much it costs to own your car during that time period, not your total equity. Formulas: I'm not sure how well you understand the nuts and bolts of the finance behind your question, (you may just be a pro and really want a consolidated equation to do this in one go.) So at the risk of over-specifying, I'll err on the side of starting at the very beginning. Any financial loan analysis is built on 5 items: (1) # of periods, (2) Present Value, (3) Future Value, (4) Payments, and (5) interest rate. These are usually referred to in spreadsheet software as NPER, PV, FV, PMT, and Rate. Each one has its own Excel/google docs function where you can calculate one as a function of the other 4. I'll use those going forward and spare you the 'real math' equations. Layout: If I were trying to solve your problem I would start by setting up the spreadsheet up with column A as \"\"Period\"\". I would put this label in cell A2 and then starting from cell A3 as \"\"0\"\" and going to \"\"N\"\". 5 year loans will give you the highest purchase value w lowest payments, so n=60 months... but you also said 48 months so do whatever you want. Then I would set up two tables side-by-side with 7 columns each. (Yes, seven.) Starting in C2, label the cells/columns as: \"\"Rate\"\", \"\"Car Value\"\", \"\"Loan Balance\"\", \"\"Payment\"\", \"\"Paid to Interest\"\", \"\"Principal\"\", and \"\"Accumulated Equity\"\". Then select and copy cells C2:I2 as the next set of column headers beginning in K2. (I usually skip a column to leave space because I'm OCD like that :) ) Numbers: Now you need to set up your initial set of numbers for each table. We'll do the older car in the left hand table and the newer one on the right. Let's say your rate is 5% APR. Put that in cell C1 (not C3). Then in cell C3 type =C$1/12. Car Value $12,000 in Cell D3. Then type \"\"Down Payment\"\" in cell E1 and put 10% in cell D1. And last, in cell E3 put the formula =D3*(1-D$1). This should leave you with a value for the first month in the Rate, Car Value, and Loan Balance columns. Now select C1:E3 and paste those to the right hand table. The only thing you will need to change is the \"\"Car Value\"\" to $20,000. As a check, you should have .0042 / 12,000 / 10,800 on the left and then .0042 / 20,000 / 18,000 on the right. Formulas again: This is where spreadsheets become amazing. If we set up the right formulas, you can copy and paste them and do this very complicated analysis very quickly. Payment The excel formula for Payment is =PMT(Rate, NPER, PV, FV). FV is usually zero. So in cell F3, type the formula =PMT(C3, 60, E3, 0). Obviously if you're really doing a 48 month (4 year) loan then you'll need to change the 60 to 48. You should be able to copy the result from cell F3 to N3 and the formula will update itself. For the 60 months, I'm showing the 12K car/10.8K loan has a pmt of $203.81. The 20K/18K loan has a pmt of 339.68. Interest The easiest way to calculate the interest is as =E3*C3. That's (Outstanding Loan Balance) x (Periodic Interest Rate). Put this in cell G4, since you don't actually owe any interest at Period 0. Principal If you pay PMT each month and X goes to interest, then the amount to principal is \"\"PMT - X\"\". So in H4 type =-F3 - G3. The 'minus' in front of F3 is because excel's PMT function returns a negative amount. If you want to, feel free to type \"\"=-PMT(...)\"\" for the formula that's actually in F3. It's your call. I get 159 for the amount to principal in period 1. Accumulated Equity As I mentioned in the comment, your \"\"Equity\"\" comes from your initial Loan-to-Value and the accumulated principal payments. So the formula in this cell should reflect that. There are a variety of ways to do this... the easiest is just to compare your car's expected value to your loan balance every time. In cell I3, type =(D3-E3). That's your initial equity in the car before making any payments. Copy that cell and paste it to I4. You'll see it updates to =(D4-E3) automatically. (Right now that is zero... those cells are empty, but we're getting there) The important thing is that as JB King pointed out, your equity is a function of accumulated principal AND equity, which depreciates. This approach handles those both. Finishing up the copy-and-paste formulas I know this is long, but we're almost done. Rate // Period 1 In cell C4 type =C3. Payment // Period 1 In cell F4 type =F3. Loan Balance // Period 1 In cell E4 type =E3-H4. Your loan balance at the end of period is reduced by the principal you paid. I get 10,641. Car Value // Period 1 This will vary depending on how you want to handle depreciation. If you ignore it, you're making a major error and it's not worth doing this entire analysis... just buy the prettiest car and move on with life. But you also don't have to get it scientifically accurate. Go to someplace like edmunds.com and look up a ballpark. I'm using 4% depreciation per year for the old (12K) car and 7% for the newer car. However, I pulled those out of my ass so figure out what's a better ballpark. In G1 type \"\"Depreciation\"\" and then put 4% in H1. In O1 type \"\"Depreciation\"\" and then 7% in P1. Now, in cell D4, put the formula =D3 * (1-(H$1/12)). Paste formulas to flesh out table As a check, your row 4 should read 1 / .0042 / 11,960 / 10,641 / 203.81 / 45 / 159 / 1,319. If so, you're great. Copy cells C4:I4 and paste them into K4:Q4. These will update to be .0042 / 19,883 / 17,735 / 339.68 / 75 / 265 / 2,148. If you've got that, then copy C4:Q4 and paste it to C5:C63. You've built a full amortization table for your two hypothetical loans. Congratulations. Making your decision I'm not going to tell you what to decide, but I'll give you a better idea of what to look at. I would personally make the decision based on total cost to own during that time period, plus a bit of \"\"x-factor\"\" for which car I really liked. Look at Period 24, in columns I and Q. These are your 'equities' in each car. If you built the sheet using my made-up numbers, then you get \"\"Old Car Equity\"\" as 4,276. \"\"New Car Equity\"\" is 6,046. If you're only looking at most equity, you might make a poor financial decision. The real value you should consider is the cost to own the car (not necessarily operate it) during that time... Total Cost = (Ending Equity) - (Payment x 24) - (Upfront Cash). For your 'old' car, that's (4,276) - (203.81 * 24) - (1,200) = -1,815.75 For the 'new' car, that's (6,046) - (339.68 * 24) - (2,000) = -4,106.07. Is one good or bad? Up to you to decide. There are excel formulas like \"\"CUMPRINC\"\" that can consolidate some of the table mechanics, but I assumed that if you're here asking you would have gotten stuck running some of those. Here's the spreadsheet: https://docs.google.com/spreadsheet/ccc?key=0Ah0weE0QX65vdHpCNVpwUzlfYjlTY2VrNllXOS1CWUE#gid=1\""
},
{
"docid": "198953",
"title": "",
"text": "No argument there. A few months prior it was a jewelry store, but November it was a place to sell off your gold. It looked the same, but the business model shifted dramatically. Yes, it's just an anecdote. But there were tens of thousands of dollars worth of orders by many people in the days after. I had just been hired to design and learn wax milling. This trickled down very quickly to me just doing photography and ad design part time instead of a full time position at a liveable wage. I got out of there as quickly as possible."
},
{
"docid": "376430",
"title": "",
"text": "I imagine we disagree on the following, but digging something from the ground or destroying mountain tops to obtain a product that destroys the health of its extractors, puts mercury in rivers, adds to climate change, and causes acid rain is not worth a few towns. Of course I don't live in those towns... I would say they should be re-trained to install solar panels, but they will still have to move out of their small dying towns. Coal is going to die either way. The cost benifits compared to renewables just aren't there anymore. That is why that sector is already so small."
},
{
"docid": "376198",
"title": "",
"text": "\"Dutch company Mars One says it wants to send people to the Red Planet after running them through the reality TV wringer - but appears to be ill-prepared for actual spaceflight. Mars One says it wants to start selecting astronauts in 2013 and training them on a replica of the settlement out in the desert. The company says it will launch supplies in 2016, followed by the first four astronauts in 2022. The volunteer extraterrestrial settlers would all be traveling on a one-way ticket. Several questions spring up almost immediately: how wise is it to select astronauts 10 years before a mission starts through reality show casting? Is any of this technologically feasible at this point in time? Is Mars One a hoax, a media stunt capitalizing on the fact that private spaceflights are in the headlines now thanks to SpaceX, or an overreaching pipe dream? The company lists only one engineer amongst its four-person team on its website, and trumpets the endorsements of \"\"Big Brother\"\" co-creator Paul Romer as well as Nobel Prizewinner and physicist Gerard 't Hooft - though 't Hooft's expertise lies in quantum mechanics, not astronomy. A man claiming to be Mars One founder Bas Landsdorp appeared Friday on the popular website Redditto take questions on the project, and was quickly met with a storm of skepticism. Reddit users knocked Landsdorp, saying Mars One has not yet put out any concrete technical explanations of how they will get to Mars and support the proposed habitats. Some pointed out that NASA has had issues with solar panels on its Mars rovers because of dust storms that erode the panels' surfaces and block the sunlight for long periods of time, making Mars One's plans to use solar panels for energy generation unsustainable for supporting human life. But the man claiming to be Landsdorp mostly steered clear of the more scientific questions and directed users to the company's website. One user going by the handle arcanosis commented: \"\"This is almost certainly a publicity stunt. Your answers are nontechnical, imprecise, absurdly optimistic, even quixotic.\"\" If Mars One turns out to be a hoax, it wouldn't be the first such stunt originating from the Netherlands in recent months. Dutch artist Floris Kaayk hoodwinked much of the media with his \"\"Human Birdwings\"\" project in March, in which he posted YouTube videos purportedly showing a human-powered pair of mechanical wings.\""
},
{
"docid": "215196",
"title": "",
"text": "\"I am opposed to fracking it is a horrible idea. But as long as they only ruin thier piece of land I don't care. There are far better choices. But we subsidize and choose favorites with stolen \"\"tax\"\" money. If the govenment wasn't subsidizing it we would be leaving oil and gas behind to favor better products, like nuclear, solar and wind and whatever we havent thought of yet. But like I have been saying governments love to force people to do stupid shit. You like that about govenment though because you want them to force the stupid things you like instead of some other stupid idea.\""
},
{
"docid": "14488",
"title": "",
"text": "Depending on the improvement, you have to amortize or depreciate it over time, which effectively allows you to write off the value over a period of years, even if you pay for it all up front. This messes with cash flow, which is different than profitability, but when you span the write off over five or ten years, the distinction between cash flow and profitability for a private, self funded company is irrelevant. If the money ain't there, the money ain't there. Operating capital is life blood. Taxes also alter the ROI equation of the investment, since you don't keep all the money you put in. Way over simplified example: Lets say I close out the year with some arbitrary profit - ten million bucks - in my war chest. 3.5 could go to taxes. I also know that my supplier can't handle my volume for next year while the season is hot, so I'd like to buy inventory in the off season. Last year I sold 6.5 mill worth of stuff from this supplier, but I estimate I could sell 9-10 mill if I didn't have availability problems. If I buy 9-10 mill in inventory, I can't pay taxes. If I pay taxes, I can't buy enough to grow next year. Sure, COGS is a deductible expense, but the expense isn't realized until the inventory is sold, which won't be until long after these taxes are due. I now have taxes interfering with my expansion, even though eventually I can write that off. Now lets look at the manufacturer - sure he could expand his capacity and make more money, but he has to deduct the 5 mill machine he needs over twenty years (or ten or whatever) while the purchase price needs to be made today. This year he's gonna pay tax on 90 or 95% of the money he used to buy that machine, which would eat into the money he needs to buy raw materials to fill orders he already has. Of course, the real world is much more complicated, and you can leverage leasing agreements and purchasing terms to alleviate this to some extent, but I wanted to illustrate a point. I hope my extremely simplified example communicated what I mean. Does that make sense?"
}
] |
4615 | Are solar cell panels and wind mills worth the money? | [
{
"docid": "261900",
"title": "",
"text": "\"To answer the investment aspect takes a bit of math. First, solar insolation numbers: This represents the average sun-hours per day for a given area. You can see the range from 4 to 6, or 1460 hrs to about 2190 hrs of sun per year depending on location. I believe electricity also has a range of cost, but 15 cents per KWH is a good average. So, a 1KW panel will produce as much as $328 per year of electricity in a high sun-hrs area, but only $219 in a lower sun-hrs area. If we agree to ignore the government subsidies and look for the stable price unaffected by outside influence, an installed price of even $2500 would produce a return of 13% and a reasonable full payback over an 8 year period. I call this installed price a tipping point, the price where this purchase provides a decent return. Some would accept a lower return, and therefore a higher price. As duff points out, this should be treated as the post rebate/tax credit price. Those help to push the price below this point. At the price point where the energy cost per panel is below, the government intervention may be unnecessary. The power companies may find consumer owned panels are the cheapest way to clip the peak consumption which tends to be the most expensive power demand.) One can take the insolation numbers and cost of local power to produce a grid showing the return for a 1KW panel in $$/year. (At this point the cost of money kick in. The present value of $100/yr is far higher today than if short term rates were say, 8%) Once panels drop to where they are compelling for the higher return areas, I'd expect volume to drive continued improvements in cost and better economies of scale. Initially, the need for storage isn't there, as the infrastructure is in place to drive your meter backwards if you produce more than you use. The peek sun coincides with peek demand and the electric companies are happy to have your demand go negative during those times. Update - the conversation with Duff led me to research 'demand charge' a bit more. You see, the utility company has to have equipment to generate the peak demand, usually occurring in the early afternoon, say 12N-2PM as the sun is brightest and AC use in particular, highest. I found that Austin energy has a PDF describing the fee for this. Simply put, the last kW of demand will cost you $14.03 in summer months and $12.65 in winter. This adds to $160/yr that a 1kW panel might save the owner. Even if one does capture the full power at peak every month, $100 is still non-trivial. This factor alone justifies $1000 worth of panel cost, and as Duff points out, the government may find it cheaper to use this method to clip peak demand than by funding bigger power generators. To summarize, the question isn't so much \"\"are they worth it\"\" as \"\"what is a xKW panel worth?\"\" (A function of annual savings and time value of money.) The ever decreasing installed cost for a given system makes solar an inevitable part of the future power technology. I am not a green tree hugging guy, but I do like to breathe fresh air as much as anyone. I'm happy with whatever role solar plays in cutting down pollution.\""
}
] | [
{
"docid": "187774",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/view/articles/2017-07-12/rooftop-solar-is-no-match-for-crony-capitalism) reduced by 93%. (I'm a bot) ***** > It therefore makes economic sense to charge rooftop solar owners extra to maintain the electrical grid - without the grid, after all, a person using only rooftop solar wouldn&#039;t have any electricity at night. > Measures to ban third-party ownership of rooftop solar are crony capitalism, plain and simple. > Eventually, solar power will be so cheap that it makes sense to install rooftop panels even without net metering, and utilities will start switching from power plants to solar farms. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6nhc7p/rooftop_solar_is_no_match_for_crony_capitalism/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~167580 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*: **solar**^#1 **utility**^#2 **power**^#3 **company**^#4 **rooftop**^#5\""
},
{
"docid": "41020",
"title": "",
"text": "You don't understand how global warming works and where most emissions sources come from (hint: transportation is a huge one). Never mind local air quality. Neither of these things mean we must live devoid of petroleum products. Just that we don't need to burn it and live with the exhaust it creates and the consequences that arise from it. But yes, wind and solar are already becoming the cheapest forms of electricity available. The price point for renewables no longer requires heavy subsidies and is now becoming cost competitive."
},
{
"docid": "272797",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-06-15/solar-power-will-kill-coal-sooner-than-you-think) reduced by 86%. (I'm a bot) ***** > Natural gas will reap $804 billion, bringing 16 percent more generation capacity and making the fuel central to balancing a grid that&#039;s increasingly dependent on power flowing from intermittent sources, like wind and solar. > Onshore wind, which has dropped 30 percent in price in the past eight years, will fall another 47 percent by the end of BNEF&#039;s forecast horizon. > By 2040, wind and solar will make up almost half of the world&#039;s installed generation capacity, up from just 12 percent now, and account for 34 percent of all the power generated, compared with 5 percent at the moment, BNEF concluded. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6hwl1b/solar_power_will_kill_coal_faster_than_you_think/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~146897 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*: **percent**^#1 **Energy**^#2 **capacity**^#3 **fuel**^#4 **BNEF**^#5\""
},
{
"docid": "435763",
"title": "",
"text": "\">> Ok!!!! Please find me something significant that Trump did that you don't like. > All right, another one of my pet issues is global warming. Wow! I asked you twice for significant issues that Trump did, and you don't like. First, you give this gray topic of Medicare Part-D where Trump promised to act upon, but has yet do anything. Am I right? Did Trump do anything against or for drug prices? Isn't trump trying to replace the healthcare act? Yes or no? **And now, given a second chance, you come up with \"\"Global Warming\"\"?** Are you serious? Global Warming? It's Trump fault? Is Trump against solar panels and wind power? Do you have any idea why Trump called it Chinese Hoax? Because the Paris Accords, like the TPP, and like NAFTA, and the Iran Deal, etc, etc, etc, are scams to hurt the USA and make the USA pay more. Nothing else. Who has bigger air pollution, coal power plants, cutting trees, environmental disasters, etc? The USA or China? USA or 3rd world? So why does the USA has to do most of the cuts and costs? Global Warming is another form of tribalism and \"\"religion\"\" used to manipulate people. Since you are an expert with Global Warming, is it true that deserts are now becoming green? Most trees in the world, which are in Russia and not the Amazon, are green longer? Global warming happened before, many times in earth history before the industrial revolution? Also ice ages? Oceans did not rise? I am not worried about Global Warming. It has negative things, and positive things. My nieces is working on growing meat in labs for consumption by humans. It will be safer, cheaper, better, and more tasty. **Do you have any idea what will happen in the world, 20-30 years from now, when we stop raising cows, pigs, goats and sheep? Any idea how damaging is current agriculture to the climate? What would happen in the world in 20-30 years from now when robots plant trees everywhere?** No need for the hysterical and paranoia about \"\"Global Warming\"\" and the USA. You should be more worried about China and what this country and all its people do the earth.\""
},
{
"docid": "535408",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/view/articles/2017-07-12/rooftop-solar-is-no-match-for-crony-capitalism) reduced by 93%. (I'm a bot) ***** > It therefore makes economic sense to charge rooftop solar owners extra to maintain the electrical grid - without the grid, after all, a person using only rooftop solar wouldn&#039;t have any electricity at night. > Measures to ban third-party ownership of rooftop solar are crony capitalism, plain and simple. > Eventually, solar power will be so cheap that it makes sense to install rooftop panels even without net metering, and utilities will start switching from power plants to solar farms. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6n512e/rooftop_solar_is_no_match_for_crony_capitalism/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~166235 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*: **solar**^#1 **utility**^#2 **power**^#3 **company**^#4 **rooftop**^#5\""
},
{
"docid": "421365",
"title": "",
"text": "Solar water heaters are definitely worth the money (if you live in sunny states like South-South-West or Hawaii, at least). In some countries (like Greece, Cyprus and Israel, to name a few) most people use hot water from the solar heaters almost exclusively. I pay $30-$40 a month to PG&E for the privilege. Unfortunately, in the US these heaters are much more expensive than they are in the more advanced European countries, so all the savings go to drain because of the vast price difference ($300 for a gas heater vs $2000 for a solar heater)."
},
{
"docid": "19179",
"title": "",
"text": "\"Yeah, I guess the entire report is probably false because of that. What you're saying is applicable to the renewable industry too. There's all kinds of other investments made on behalf of renewables that aren't calculated into dollar amounts. Most obviously is the money that never even hits the books by subsidizing through consumer/corporate tax breaks. For example: the company you work for more than likely has a recycling program. It doesn't make money because it's not profitable to recycle anything but aluminum, but if they didn't have the program they would get penalized (not directly necessarily but would lose out on \"\"green\"\" initiative funding). The rest of what you are saying is as intangible as the first thing. If you think solar panels on your roof is going to keep the military out of other countries, you're clinical. And if you can't notice a correlation between the total lack of production coupled with the massive amounts of money being wasted then there's no discussion to be had. By the by, that article has no citations and the link to any additional sourcing is broken.\""
},
{
"docid": "26846",
"title": "",
"text": "\"By the sounds of things, you're not asking for a single formula but how to do the analysis... And for the record you're focusing on the wrong thing. You should be focusing on how much it costs to own your car during that time period, not your total equity. Formulas: I'm not sure how well you understand the nuts and bolts of the finance behind your question, (you may just be a pro and really want a consolidated equation to do this in one go.) So at the risk of over-specifying, I'll err on the side of starting at the very beginning. Any financial loan analysis is built on 5 items: (1) # of periods, (2) Present Value, (3) Future Value, (4) Payments, and (5) interest rate. These are usually referred to in spreadsheet software as NPER, PV, FV, PMT, and Rate. Each one has its own Excel/google docs function where you can calculate one as a function of the other 4. I'll use those going forward and spare you the 'real math' equations. Layout: If I were trying to solve your problem I would start by setting up the spreadsheet up with column A as \"\"Period\"\". I would put this label in cell A2 and then starting from cell A3 as \"\"0\"\" and going to \"\"N\"\". 5 year loans will give you the highest purchase value w lowest payments, so n=60 months... but you also said 48 months so do whatever you want. Then I would set up two tables side-by-side with 7 columns each. (Yes, seven.) Starting in C2, label the cells/columns as: \"\"Rate\"\", \"\"Car Value\"\", \"\"Loan Balance\"\", \"\"Payment\"\", \"\"Paid to Interest\"\", \"\"Principal\"\", and \"\"Accumulated Equity\"\". Then select and copy cells C2:I2 as the next set of column headers beginning in K2. (I usually skip a column to leave space because I'm OCD like that :) ) Numbers: Now you need to set up your initial set of numbers for each table. We'll do the older car in the left hand table and the newer one on the right. Let's say your rate is 5% APR. Put that in cell C1 (not C3). Then in cell C3 type =C$1/12. Car Value $12,000 in Cell D3. Then type \"\"Down Payment\"\" in cell E1 and put 10% in cell D1. And last, in cell E3 put the formula =D3*(1-D$1). This should leave you with a value for the first month in the Rate, Car Value, and Loan Balance columns. Now select C1:E3 and paste those to the right hand table. The only thing you will need to change is the \"\"Car Value\"\" to $20,000. As a check, you should have .0042 / 12,000 / 10,800 on the left and then .0042 / 20,000 / 18,000 on the right. Formulas again: This is where spreadsheets become amazing. If we set up the right formulas, you can copy and paste them and do this very complicated analysis very quickly. Payment The excel formula for Payment is =PMT(Rate, NPER, PV, FV). FV is usually zero. So in cell F3, type the formula =PMT(C3, 60, E3, 0). Obviously if you're really doing a 48 month (4 year) loan then you'll need to change the 60 to 48. You should be able to copy the result from cell F3 to N3 and the formula will update itself. For the 60 months, I'm showing the 12K car/10.8K loan has a pmt of $203.81. The 20K/18K loan has a pmt of 339.68. Interest The easiest way to calculate the interest is as =E3*C3. That's (Outstanding Loan Balance) x (Periodic Interest Rate). Put this in cell G4, since you don't actually owe any interest at Period 0. Principal If you pay PMT each month and X goes to interest, then the amount to principal is \"\"PMT - X\"\". So in H4 type =-F3 - G3. The 'minus' in front of F3 is because excel's PMT function returns a negative amount. If you want to, feel free to type \"\"=-PMT(...)\"\" for the formula that's actually in F3. It's your call. I get 159 for the amount to principal in period 1. Accumulated Equity As I mentioned in the comment, your \"\"Equity\"\" comes from your initial Loan-to-Value and the accumulated principal payments. So the formula in this cell should reflect that. There are a variety of ways to do this... the easiest is just to compare your car's expected value to your loan balance every time. In cell I3, type =(D3-E3). That's your initial equity in the car before making any payments. Copy that cell and paste it to I4. You'll see it updates to =(D4-E3) automatically. (Right now that is zero... those cells are empty, but we're getting there) The important thing is that as JB King pointed out, your equity is a function of accumulated principal AND equity, which depreciates. This approach handles those both. Finishing up the copy-and-paste formulas I know this is long, but we're almost done. Rate // Period 1 In cell C4 type =C3. Payment // Period 1 In cell F4 type =F3. Loan Balance // Period 1 In cell E4 type =E3-H4. Your loan balance at the end of period is reduced by the principal you paid. I get 10,641. Car Value // Period 1 This will vary depending on how you want to handle depreciation. If you ignore it, you're making a major error and it's not worth doing this entire analysis... just buy the prettiest car and move on with life. But you also don't have to get it scientifically accurate. Go to someplace like edmunds.com and look up a ballpark. I'm using 4% depreciation per year for the old (12K) car and 7% for the newer car. However, I pulled those out of my ass so figure out what's a better ballpark. In G1 type \"\"Depreciation\"\" and then put 4% in H1. In O1 type \"\"Depreciation\"\" and then 7% in P1. Now, in cell D4, put the formula =D3 * (1-(H$1/12)). Paste formulas to flesh out table As a check, your row 4 should read 1 / .0042 / 11,960 / 10,641 / 203.81 / 45 / 159 / 1,319. If so, you're great. Copy cells C4:I4 and paste them into K4:Q4. These will update to be .0042 / 19,883 / 17,735 / 339.68 / 75 / 265 / 2,148. If you've got that, then copy C4:Q4 and paste it to C5:C63. You've built a full amortization table for your two hypothetical loans. Congratulations. Making your decision I'm not going to tell you what to decide, but I'll give you a better idea of what to look at. I would personally make the decision based on total cost to own during that time period, plus a bit of \"\"x-factor\"\" for which car I really liked. Look at Period 24, in columns I and Q. These are your 'equities' in each car. If you built the sheet using my made-up numbers, then you get \"\"Old Car Equity\"\" as 4,276. \"\"New Car Equity\"\" is 6,046. If you're only looking at most equity, you might make a poor financial decision. The real value you should consider is the cost to own the car (not necessarily operate it) during that time... Total Cost = (Ending Equity) - (Payment x 24) - (Upfront Cash). For your 'old' car, that's (4,276) - (203.81 * 24) - (1,200) = -1,815.75 For the 'new' car, that's (6,046) - (339.68 * 24) - (2,000) = -4,106.07. Is one good or bad? Up to you to decide. There are excel formulas like \"\"CUMPRINC\"\" that can consolidate some of the table mechanics, but I assumed that if you're here asking you would have gotten stuck running some of those. Here's the spreadsheet: https://docs.google.com/spreadsheet/ccc?key=0Ah0weE0QX65vdHpCNVpwUzlfYjlTY2VrNllXOS1CWUE#gid=1\""
},
{
"docid": "456960",
"title": "",
"text": "The only reason the word Paris is stuck in this article is to get those manic clicks. It is completely irrelevant. Social media tears did not close these plants. Chanting did not close these plants. Drum circles did not close these plants. The market closed them. They closed because they are no longer economically viable. They closed because their competition was simply better. Natural gas will be what kills the coal plants in America. Not wind, not solar, not Paris, not dreadlocked rebels. Natural gas. Edit: Aww, you guys seem upset. I'm sorry I refuse to accept your fantasy land. Hopefully you'll learn to be objective when you're older."
},
{
"docid": "484141",
"title": "",
"text": "\"[Link 1] (https://www.bloomberg.com/news/articles/2017-06-12/two-chinese-provinces-falsified-economic-data-inspectors-say) [Link 2] (https://www.ft.com/content/a5bf42e2-03cf-11e7-ace0-1ce02ef0def9) [Link 3] (https://www.ft.com/content/0361c1a4-bcfe-11e6-8b45-b8b81dd5d080) China has been cooking their books, just like the U.S. has been doing it the past few years. Just google \"\"U.S. Central banks buying stocks and bonds\"\", then connect the numbers. **Insider Information:** At my previous company we sold solar manufacturing equipment. I went to said Chinese city that bought our equipment. They were producing ton loads of solar panels, I asked one of the manager's where all of the panels were being sold (domestic, or international?). To my surprise, he said they warehoused the panels they produced; because, there weren't enough customers. And, why were they warehousing the panels? Because, the Chinese government needed to show numbers that jobs were plenty, and manufacturing was still strong.\""
},
{
"docid": "14488",
"title": "",
"text": "Depending on the improvement, you have to amortize or depreciate it over time, which effectively allows you to write off the value over a period of years, even if you pay for it all up front. This messes with cash flow, which is different than profitability, but when you span the write off over five or ten years, the distinction between cash flow and profitability for a private, self funded company is irrelevant. If the money ain't there, the money ain't there. Operating capital is life blood. Taxes also alter the ROI equation of the investment, since you don't keep all the money you put in. Way over simplified example: Lets say I close out the year with some arbitrary profit - ten million bucks - in my war chest. 3.5 could go to taxes. I also know that my supplier can't handle my volume for next year while the season is hot, so I'd like to buy inventory in the off season. Last year I sold 6.5 mill worth of stuff from this supplier, but I estimate I could sell 9-10 mill if I didn't have availability problems. If I buy 9-10 mill in inventory, I can't pay taxes. If I pay taxes, I can't buy enough to grow next year. Sure, COGS is a deductible expense, but the expense isn't realized until the inventory is sold, which won't be until long after these taxes are due. I now have taxes interfering with my expansion, even though eventually I can write that off. Now lets look at the manufacturer - sure he could expand his capacity and make more money, but he has to deduct the 5 mill machine he needs over twenty years (or ten or whatever) while the purchase price needs to be made today. This year he's gonna pay tax on 90 or 95% of the money he used to buy that machine, which would eat into the money he needs to buy raw materials to fill orders he already has. Of course, the real world is much more complicated, and you can leverage leasing agreements and purchasing terms to alleviate this to some extent, but I wanted to illustrate a point. I hope my extremely simplified example communicated what I mean. Does that make sense?"
},
{
"docid": "147182",
"title": "",
"text": "\"the education bubble is similar to the mortgage bubble...you have people with no stake in the game, making huge financial decisions the customers aren't the ones paying, so it makes perfect sense for them to charge through the ass for an \"\"education\"\". What needs to happen is that college loans should be suspended for subpar colleges...we as tax payers, shouldn't be on the hook for $100,000 for a worthless degree.(and it does add up to $25K/yr for most of these shitty schools) Simply create grading tiers. Something like Harvard gets an A, something like Rutgers gets a B, something like a county community college gets a C, and University of Phoenix etc get an F. Then simply withdraw public loans from any school graded an F. If someone wants to go to a shitty school, make them make the decision where it's their money that's at stake. When you do that, you'll suddenly notice people skipping the degree mills and just going to small local schools that actually give a degree worth something\""
},
{
"docid": "220216",
"title": "",
"text": "Can no one read? I never said anything about equivalence, it was an example of an off the books subsidy. And I'll pose the same question to you as the other commenter, do you think that having solar panels on your roof will keep the government from sending our military to other countries? Because if you do, that's truly laughable. Apparently that author is clairvoyant enough to announce a 2016 report in an article dated July, 9th 2014. But I'll just assume you didn't actually read any of it. I did, and I'm not saying those figures are wrong, but that report has a clear stated agenda that is anti-oil/coal. The report I linked was to a US agency that was only making the information available. It may also have inaccuracies, but I'm going to assume that data for identical years in these reports being interpreted wildly differently indicates one is manipulating the information. I'd assume that someone with an agenda would be more likely to manipulate the data than an agency just seeking to publish data. Regardless, those inconsistencies should have some explanation."
},
{
"docid": "447066",
"title": "",
"text": "\"The problem above is actually a pretty good list of the concerns around life insurance. While there is no correct answer to the question as posed, this will vary among different WSCs, there is a simpler way to think about insurance in general that may make finding what is right answer for you easier. Buying life insurance, like almost all insurance, is on average a money losing purchase. This is simply because the companies selling wouldn't offer it if they couldn't expect to make money on it. Think about buying insurance (a warranty) on a new cell phone, maybe if you are particularly prone to damaging cell phones it can be in your favor, but for most of the people that buy it will lose money on average. People, of course, still buy insurance anyway to protect themselves from unlikely but very bad consequences. The big reason to make this trade off is if the loss will have big lasting consequences. To stay with our cell phone example having to replace a cell phone, at least for me, would be annoying but not a catastrophic event. For myself, the protection is not worth the warranty cost, but that is not true for everyone. Life insurance is a pretty extreme case of this, but I find the best question to ask is \"\"if you (you and your spouse) were to die will your dependents lives become so much worse that you really dislike the idea of not being insured?\"\" For some working seniors, they already have enough saved to bridge their kids/spouse to adulthood/old-age that insurance makes no sense. For some, their children/husband/wife would be destitute and insurance is an obvious choice and an easy price to pay even if it is very high. The example you suggest seems on the border and good questions to ask are: Thinking about those questions may help you understand if the protection offers is worth the cost.\""
},
{
"docid": "38152",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-07-27/libor-to-end-in-2021-as-fca-says-bank-benchmark-is-untenable-j5m5fepe) reduced by 90%. (I'm a bot) ***** > The 58-year-old Bailey said the market supporting Libor - where banks provide each other with unsecured lending - was no longer &quot;Sufficiently active&quot; to determine a reliable rate and alternatives must be found. > The FCA has spoken to the panel banks over recent months about ending the use of Libor and how much time it would take to wind-down, Bailey said. > The central bank said in April that a swaps-industry working group had proposed replacing Libor in contracts with the Sterling Overnight Index Average, or Sonia, a near risk-free alternative derivatives reference rate that reflects bank and building societies&#039; overnight funding rates in the sterling unsecured market. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6q00cb/libor_funeral_set_for_2021_as_fca_abandons/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~177344 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*: **bank**^#1 **rate**^#2 **Libor**^#3 **Bailey**^#4 **benchmark**^#5\""
},
{
"docid": "405382",
"title": "",
"text": "First, your references are only tangentially related to your claim. > If you have twice the generation capacity in renewables (wind/solar) and can store 20% of your yearly consumption, then you are fine. Right. If you do that, you're fine to run your hospital off-grid with no backup generators without significant risk of the life support systems going offline. The requirements for a grid-connected single family home are much lower. Generating 100% of your power needs and having one powerwall (for half a day of storage) will drastically reduce your electricity demand. Home solar doesn't need to completely replace grid power - a 70% reduction in demand would be sufficient to reduce generation requirements to only existing hydro / wind / nuclear plants."
},
{
"docid": "530253",
"title": "",
"text": "A lot of people who own Teslas also own solar panels and can charge their car from solar power. For now, our power grid still relies on archaic technologies for energy creation, but Tesla and other auto makers are pushing towards more renewable energy sources being added to our homes and the grid."
},
{
"docid": "77304",
"title": "",
"text": "In general, for a home you live in, there's maintenance, which is just that, you pay to keep your house in good repair. There's also real improvements. I spend $xxx to turn my poured cement basement into living space. Here, I keep my receipts and the cost (although not my labor) is added to the basis of my home when I sell. The couple things that may offer a deduction have to do with energy. When I insulated my basement, there was a state tax credit which I got back when I filed taxes. There are also credits for installing solar panels. What you've described in your question just sounds like one of the small joys of home ownership."
},
{
"docid": "376430",
"title": "",
"text": "I imagine we disagree on the following, but digging something from the ground or destroying mountain tops to obtain a product that destroys the health of its extractors, puts mercury in rivers, adds to climate change, and causes acid rain is not worth a few towns. Of course I don't live in those towns... I would say they should be re-trained to install solar panels, but they will still have to move out of their small dying towns. Coal is going to die either way. The cost benifits compared to renewables just aren't there anymore. That is why that sector is already so small."
}
] |
4615 | Are solar cell panels and wind mills worth the money? | [
{
"docid": "262934",
"title": "",
"text": "\"I have personally known a family in the hills of Southern Oregon, US who lived off the electricity grid. As far as being \"\"possible\"\" yes, but easy is a certain no. This family was very dedicated to the point of living without grid electricity. A special built home of native field stones, careful alignment with the sun, location within the valley. I would assume that making a normal home be off the electric grid is much more difficult. Not impossible, but pretty darn hard.\""
}
] | [
{
"docid": "19179",
"title": "",
"text": "\"Yeah, I guess the entire report is probably false because of that. What you're saying is applicable to the renewable industry too. There's all kinds of other investments made on behalf of renewables that aren't calculated into dollar amounts. Most obviously is the money that never even hits the books by subsidizing through consumer/corporate tax breaks. For example: the company you work for more than likely has a recycling program. It doesn't make money because it's not profitable to recycle anything but aluminum, but if they didn't have the program they would get penalized (not directly necessarily but would lose out on \"\"green\"\" initiative funding). The rest of what you are saying is as intangible as the first thing. If you think solar panels on your roof is going to keep the military out of other countries, you're clinical. And if you can't notice a correlation between the total lack of production coupled with the massive amounts of money being wasted then there's no discussion to be had. By the by, that article has no citations and the link to any additional sourcing is broken.\""
},
{
"docid": "176557",
"title": "",
"text": "\"Not \"\"these\"\" batteries, they will still be using a mixture of solar, wind, gas and oil, nuclear and coal. Maybe a generation or two, but definitely not these batteries. I honestly don't care how cheap these things get, until we have an infrastructure to support it, we will be struggling.\""
},
{
"docid": "530253",
"title": "",
"text": "A lot of people who own Teslas also own solar panels and can charge their car from solar power. For now, our power grid still relies on archaic technologies for energy creation, but Tesla and other auto makers are pushing towards more renewable energy sources being added to our homes and the grid."
},
{
"docid": "183861",
"title": "",
"text": "\"That's actually a great question. I'm not really sure how much they're pumping into that sector yet, but I know Exxon and a few others are very interested in what renewable energy avenues they can take advantage of. This article is a little old, but gives a good overview (there are many others like it). I think a lot is still in the \"\"testing\"\" phase right now though. https://www.theguardian.com/business/2016/may/21/oil-majors-investments-renewable-energy-solar-wind\""
},
{
"docid": "138437",
"title": "",
"text": "\"Perhaps the real question you are asking is \"\"How can the tax code be fixed to make it simple for everyone (including me), and what would it take to effect those changes\"\"? There are really two causes for the complexity of the tax code. Many of those who enter Government hold a desire for power, and Government uses the tax code as one lever of power to distribute largess to their supporters, and to nudge everyone to behaviors which they favor. The current system enables incumbents to spend taxpayer money to reward those they favor, and thus they accumulate power and security. Those who enter Government also love to spend money (especially other people's money), and their rapacious behavior recognizes no boundaries. They will spend money without control until the taxpayers yank them to a brutal stop. They enact complex rules which are used to ease the (tax) burden for some, which buys their support (with taxpayer money), and they spend money to benefit those which they favor. The system of lobbyists and contributors exists to entice Government to treat them and the causes they support favorably. This system enables incumbents to spend taxed money to reward those they favor, and to tax those they disfavor. Thus their greed is satisfied, and their power is increased. The freedom you seek is not available, although you can minimize the effort required for compliance. You can take the standard deduction, and use nothing but the W-2 provided by your employer, and unless you are subject to the Alternative Minimum Tax, you will find that the tax software will do most of the work for you. Do you want to approach the Nirvana of minimal effort to appease your tax collectors? Avoid starting your own business, charitable donations, investment income, 1099 income, and you will need minimal paperwork. Avoid earning enough to risk the AMT (Alternative Minimum Tax). Refuse to take the mortgage interest deduction, tax credits for electric vehicles, tax credits for high-efficiency appliances and air conditioners, tax credits for residential solar panel installations. Do not own investments which pay interest, or own stocks where you need to track the \"\"basis\"\" (purchase price) of the stocks, nor buy and then sell valuable items that might gain value (where you would need to track the purchase price, the \"\"basis\"\"). Avoid owning and leasing a rental home for income, deducting businesses expenses and mileage for business purposes, contributions to a retirement plan (outside an employer plan) -- all complicate your tax filing. The solution you truly desire is either a \"\"Flat Tax\"\" or the \"\"Fair Tax\"\". These solutions would effect either a single tax rate (with no deductions or adjustments to income, yeah right), or a national retail sales tax, which would tax the money spent in the economy regardless of the source of the money (legal, gifts, crime) and there would be no need to report income, or classify it. The largest objection to either is that the tax code might become less \"\"progressive\"\" (increasing tax rate with increasing income). Good Luck!\""
},
{
"docid": "535408",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/view/articles/2017-07-12/rooftop-solar-is-no-match-for-crony-capitalism) reduced by 93%. (I'm a bot) ***** > It therefore makes economic sense to charge rooftop solar owners extra to maintain the electrical grid - without the grid, after all, a person using only rooftop solar wouldn&#039;t have any electricity at night. > Measures to ban third-party ownership of rooftop solar are crony capitalism, plain and simple. > Eventually, solar power will be so cheap that it makes sense to install rooftop panels even without net metering, and utilities will start switching from power plants to solar farms. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6n512e/rooftop_solar_is_no_match_for_crony_capitalism/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~166235 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*: **solar**^#1 **utility**^#2 **power**^#3 **company**^#4 **rooftop**^#5\""
},
{
"docid": "77304",
"title": "",
"text": "In general, for a home you live in, there's maintenance, which is just that, you pay to keep your house in good repair. There's also real improvements. I spend $xxx to turn my poured cement basement into living space. Here, I keep my receipts and the cost (although not my labor) is added to the basis of my home when I sell. The couple things that may offer a deduction have to do with energy. When I insulated my basement, there was a state tax credit which I got back when I filed taxes. There are also credits for installing solar panels. What you've described in your question just sounds like one of the small joys of home ownership."
},
{
"docid": "573025",
"title": "",
"text": "It is considered a powerful antioxidant that prevents damage to the DNA of cells, always exposed to free radicals and solar radiation. Another function of vitamin c benefits against skin aging is the ability to increase the synthesis of collagen, a very abundant protein in the skin that decreases over the years. It is also non-irritating bleach that at the same time reduces fine lines and wrinkles, minimizes redness and restores flexibility."
},
{
"docid": "449189",
"title": "",
"text": "Correct. What exactly is Uber spending its money on? Their platform service has no inherent capital costs. They're not renting a fleet. Amazon is creating distribution centers and cutting prices in order to undercut existing distributors. Tesla is creating gigafactories and supercharging stations, as well as reinvesting in innovation for solar panel tiles and electric 18 wheelers. Uber beat taxis a long time ago. Their prices were good since at least 2014. What are they spending money on? Software dev?"
},
{
"docid": "303659",
"title": "",
"text": "The short answer is yes, electrical vehicles make logistical sense. The batteries aren't quite where they should be to really push the market, but the lifecycles are high enough, and the batteries themselves can be recycled. There are two major advantages that electric has over oil. The first is that electricity is abundant and can come from many sources. This means that a car can be running on power from coal, wind, solar, hydro-electric, or any other source of electricity. This also means that the cost per mile driven is generally lower than the cost of a gas driven car. Another big advantage is the national security it offers. If electric were to really enter the consumer market in a big way, the dependency on countries in the Middle East and Africa would be lessened. It would also ease some of the competition between nations like China and the United States over natural resources. Of course their are problems with electric cars as well, and they aren't even close to replacing gas for use in heavy machinery."
},
{
"docid": "449218",
"title": "",
"text": "Don't misunderstand man, I'm all about alternative energy. I bought a Japanese Delica because they have the room I need and they're stupidly good on diesel. (sadly, I blew the head at Christmas, now I need to get a new one, and until then I'm in an 07 Caravan). I'd like to add solar panels to the farmhouse once all the other expenses are taken care of, and over the winter we only burn wood for heat in a high-efficiency triple-burn woodstove."
},
{
"docid": "220216",
"title": "",
"text": "Can no one read? I never said anything about equivalence, it was an example of an off the books subsidy. And I'll pose the same question to you as the other commenter, do you think that having solar panels on your roof will keep the government from sending our military to other countries? Because if you do, that's truly laughable. Apparently that author is clairvoyant enough to announce a 2016 report in an article dated July, 9th 2014. But I'll just assume you didn't actually read any of it. I did, and I'm not saying those figures are wrong, but that report has a clear stated agenda that is anti-oil/coal. The report I linked was to a US agency that was only making the information available. It may also have inaccuracies, but I'm going to assume that data for identical years in these reports being interpreted wildly differently indicates one is manipulating the information. I'd assume that someone with an agenda would be more likely to manipulate the data than an agency just seeking to publish data. Regardless, those inconsistencies should have some explanation."
},
{
"docid": "285660",
"title": "",
"text": "There are different types of the renewable energy available such as solar energy, wind energy, geothermal energy, bioenergy, and others. Our experts provide the best solution and quality craftsmanship. Most of the renewable energy comes with directly and indirectly from sunlight. The sunlight is used for heating and then lighting the home, office and other buildings to generate the electricity. Tomorrow 2009 Brazil renewable energy company has qualified the energy professionals who have the scope of ability and information in services. They provide the services regarding the solar energy and maintainability services."
},
{
"docid": "222798",
"title": "",
"text": "\"Not to mention that many oil fields don't make a profit below $40/barrel. The Saudis over-produced on purpose based on that premise, betting that they could drive much of the growing North American production out of business by keeping the price below the point where tar sands and hydraulic fracking could be profitable. If oil dropped to $10/barrel, few countries would bother pumping it. While Saudi Arabia and some of the UAE could make a profit at that point (for now), even Iraq would be losing money. https://www.fool.com/investing/2017/03/19/you-wont-believe-what-saudi-arabias-oil-production.aspx That reduced production would drive the price right back up, since oil is still used in plastics, shipping, road construction, etc. Even if every car being sold becomes electric overnight, *and* all the electric power plants become wind, nuclear or solar based tomorrow, we'd still have a decade or more of existing ICE cars on the road. It's not the world would stop using oil in the next 6-8 years just because \"\"investment pours into electric cars\"\". If anything, a drop to $10/barrel would slow the move away from oil significantly; what incentive would people have to buy a more expensive electric car when gas at the pump is suddenly is $1 again?\""
},
{
"docid": "221285",
"title": "",
"text": "No. I have partaken of but not lately. It's only become non-taboo here in the last 10 years and I was raised to think it was bad and people who do it are slackers or lazy and the like. I've thankfully grown out of that old way of thinking and now know how profitable it is and feel this is a good venture to begin building a nice portfolio. I'd also like to get into real estate and solar and wind as well"
},
{
"docid": "172241",
"title": "",
"text": "Public infrastructure poisons people. Nestle never sold a bottle of water tainted with lead. People are buying solar panels privately to get away from public utilities. Privatized roads are safer and less congested. Private companies are leading the charge on renewable energy and infrastructure. We became the fattest country in the world by privatizing our food supply, not nationalizing it. When you provide something with public funds, you get less of it and pay a higher price. Give the consumers choice in how their money is spent, don't force it on them like a fucking racket. Abolish all taxes."
},
{
"docid": "568390",
"title": "",
"text": "Not a problem. Politicians who take money from the oil industry can make more efforts to extend a regulatory environment where oil companies can continue to profit. Solar and wind power can be taxed and research that supports alternative energy can be unfunded."
},
{
"docid": "465732",
"title": "",
"text": "\"Home Improvements that improve the home's Energy Efficiency are currently eligible for federal tax credits. This includes renewable energy equipment (solar panels, etc.) and Nonbusiness Energy Property Tax Credit. The credit is 30% of the cost. From Intuit Turbo Tax: Energy Tax Credit: Equipment and materials can qualify for the Nonbusiness Energy Property Credit only if they meet technical efficiency standards set by the Department of Energy. The manufacturer can tell you whether a particular item meets those standards. For this credit, the IRS distinguishes between two kinds of upgrades. The first is \"\"qualified energy efficiency improvements,\"\" and it includes the following: •Home insulation •Exterior doors •Exterior windows and skylights •Certain roofing materials The second category is \"\"residential energy property costs.\"\" It includes: •Electric heat pumps •Electric heat pump water heaters •Central air conditioning systems •Natural gas, propane or oil waterheaters •Stoves that use biomass fuel •Natural gas, propane or oil furnaces •Natural gas, propane or oil hot water boilers •Advanced circulating fans for natural gas, propane or oil furnaces\""
},
{
"docid": "219110",
"title": "",
"text": "I never said they're not going to change. I'm saying it will take far more than a year or two. The article say that a $10/barrel can happen in 2 years. I'm saying no. And it's not inefficiency that's causing expensive electricity. Philippines does not have the basic requirements to create cheap and renewable energy to supply what it needs. Nowhere to build a dam for hydro power. And too many strong typhoons/earthquakes for building wind. Solar power would not necessarily work either. The nation is one of the most biodiverse areas in the world. By blocking large chunks of the islands and depriving the land of sunlight, you are causing massive environmental destruction. Palm and agriculture has already devastated many parts of Philippines, what it needs is more vegetation. Tidal power isn't nearly as developed as the other forms of new energy. And it may also disrupt a very busy marine trade route."
}
] |
4615 | Are solar cell panels and wind mills worth the money? | [
{
"docid": "69523",
"title": "",
"text": "\"Although this isn't related to homes directly, as an IT professional I know that wind power tends to be cost effective to the point that many data centers (the massive buildings holding the servers that are the backbone of the internet) actually invest in their own wind turbines to slash costs since servers tend to be power hogs. As far as going \"\"off the grid\"\" that ultimately depends on how much wind/sun you're getting at your residence, but if you look at places like Dallas, PA, CA, and other areas where the major hosts place centers, they're typically in areas where there's plenty of sunlight or wind. Going back to small scale thinking however, one of my contacts actually leases a colocation building in PA where he has a few server racks, and while he currently has electric there, he also owns a couple of turbines which have been powering <60% of the demand, and he's actually planning to add solar and also feed that back to the grid at a profit. So overall wind/solar definitely has the potential for a decent ROI, at both large and small levels, but performance will vary greatly from area to area. I know that Lowes actually started advertising about carrying solar panels, so going in and asking about the performance and if you can arrange an audit of your home might be a good place to start. If you Google \"\"green audits\"\" I'm sure you can find a trillion companies \"\"specializing\"\" in green power, but as with any sales rep (including at Lowe's) I'd do some due-diligence so you don't get taken for a ride, and also to check references because I don't think \"\"green audit\"\" companies have any official certifications/standards.\""
}
] | [
{
"docid": "287837",
"title": "",
"text": "\">If you know that a company called Toyota with no access to any retained earnings... Okay, we are talking at cross-purposes here. I take it as axiomatic that speculative ventures by private actors is mostly a net good thing (e.g., grocery stores buying produce before the customer has handed over the gold, car-makers designing and building cars before they have been paid for end-to-end, etc...). Even if a lot of them fail, I take it as axiomatic that we would not have things like laptop computers and fresh oranges year-round and non-iron shirts without that kind of speculative investment. I also take it as axiomatic that such speculative investment could not/would not exist without privately- or publicly-issued promissory notes. E.g., I do not think anyone would ever have made the first laptop computer, if doing so required directly handing previously-acquired gold coins to everyone involved in the design and construction. A caveman with no money but infinite time could have built his own Macbook Pro with retina display: like everything else we have, it was dug up out of the ground by people no stronger than you or I. All the functionality is just ingenuity and machining, it's just stuff dug up and re-combined by people, not necessarily smarter than anyone else. The fact that it *has* been done by human beings, means, by definition, that it *can* be done by human beings. Ergo, a caveman could have done it. Could have placed a man on the moon, or built himself a 60\"\" 1080p TV, or an iPod, or a nuclear bomb, or a Ferrari, or sent a satellite past the solar-system, anything at all. We don't have anything that he didn't have: just ingenuity, and whatever we dig up out of the ground. But more realistically, the difference between us and cavemen is twofold: - We have a historical record, and the accumulated ingenuity of millions of individual insights; and, - We have an economy, based on credibility and promises, that allows things to be invented, tested, and made, before they are paid for. I suggest that it is axiomatic that, for example, iPads would not exist if physical gold had to change hands at every step of development and manufacturing before it could occur, or at the instance of occurance. There is just no sane scenario where a product like that comes into existence without promises and speculative investment and loan-guarantees. Same with fresh lettuce in winter, or plumbing or electricity or cable-TV. You can't just trade a grain of gold for every gallon of water that comes out of your shower in real-time to a wet bill-collector, or stick some gold in the cable-jack for every minute of internet. Someone is promising something, without having produced it yet. Whether you paid in advance, or they bill your the service later, value has changed hands on credit and promises. It's not a sane proposition that every transaction be a closed-loop, pay-as-you-go thing. Especially when you get into commercial transactions. The modern world would not exist without credit markets, and credit markets cannot exist without something like fractional reserve banking. Demanding that everyone instantly reconcile every value-exchange with a physical transfer of gold or some such is not a sane proposition. Would your cell-phone company pay someone to follow you around and collect grains of gold for every call? If so, would that person in turn be followed by the cell-tower owner, and so on? Offering to \"\"pay in advance\"\" doesn't negate the conundrum: they still have to provide service, which may or may not be covered by your gram of gold. It's still a credit market, no matter which way the faucet runs. And a credit market means, ipso-facto, that more money is in circulation than has been printed.\""
},
{
"docid": "140672",
"title": "",
"text": "So what exactly is the difference between an ITT mill and a shitty public school? Because I am not really seeing one. How does one prove that a school is a mill? And why are only private colleges considered? I know of several public schools that may as well be called diploma mills."
},
{
"docid": "222798",
"title": "",
"text": "\"Not to mention that many oil fields don't make a profit below $40/barrel. The Saudis over-produced on purpose based on that premise, betting that they could drive much of the growing North American production out of business by keeping the price below the point where tar sands and hydraulic fracking could be profitable. If oil dropped to $10/barrel, few countries would bother pumping it. While Saudi Arabia and some of the UAE could make a profit at that point (for now), even Iraq would be losing money. https://www.fool.com/investing/2017/03/19/you-wont-believe-what-saudi-arabias-oil-production.aspx That reduced production would drive the price right back up, since oil is still used in plastics, shipping, road construction, etc. Even if every car being sold becomes electric overnight, *and* all the electric power plants become wind, nuclear or solar based tomorrow, we'd still have a decade or more of existing ICE cars on the road. It's not the world would stop using oil in the next 6-8 years just because \"\"investment pours into electric cars\"\". If anything, a drop to $10/barrel would slow the move away from oil significantly; what incentive would people have to buy a more expensive electric car when gas at the pump is suddenly is $1 again?\""
},
{
"docid": "431898",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-07-11/electricity-overtook-fossil-fuels-in-push-for-investment-in-2016) reduced by 84%. (I'm a bot) ***** > Electricity drew in more investment than fossil fuel supply for the first time last year as the energy industry prepared for electrification of everything from cars to buildings and industrial processes. > &quot;With robust investment in renewable energy, increased investment into electricity networks, electricity is now the biggest area of capital investment.\"\" > The shift of capital flows away from fossil fuels and towards electricity, particularly clean sources such as solar and wind, shows that the trend spurred by the Paris climate accord is seeping into the business of energy. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6mlp52/electricity_overtook_fossil_fuels_in_push_for/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~164435 tl;drs so far.\"\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **energy**^#1 **percent**^#2 **investment**^#3 **Electricity**^#4 **billion**^#5\""
},
{
"docid": "154611",
"title": "",
"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.\""
},
{
"docid": "405382",
"title": "",
"text": "First, your references are only tangentially related to your claim. > If you have twice the generation capacity in renewables (wind/solar) and can store 20% of your yearly consumption, then you are fine. Right. If you do that, you're fine to run your hospital off-grid with no backup generators without significant risk of the life support systems going offline. The requirements for a grid-connected single family home are much lower. Generating 100% of your power needs and having one powerwall (for half a day of storage) will drastically reduce your electricity demand. Home solar doesn't need to completely replace grid power - a 70% reduction in demand would be sufficient to reduce generation requirements to only existing hydro / wind / nuclear plants."
},
{
"docid": "47528",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://qz.com/1017457/there-is-a-point-at-which-it-will-make-economic-sense-to-defect-from-the-electrical-grid/) reduced by 79%. (I'm a bot) ***** > A new study by the consulting firm McKinsey modeled two scenarios: one in which homeowners leave the electrical grid entirely, and one in which they obtain most of their power through solar and battery storage but keep a backup connection to the grid. > As daily needs for many are supplied instead by solar and batteries, McKinsey predicts the electrical grid will be repurposed as an enormous, sophisticated backup. > Solar panels and battery prices are dropping fast-lithium-ion batteries have fallen from $1,000 to $230 per kilowatt-hour since 2010-as massive new solar and battery factories come online in China and the US. By 2020, Greentech Media projects, homes and businesses will have more battery storage for energy than utilities themselves. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6kchib/there_is_a_point_at_which_it_will_make_economic/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~155595 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*: **grid**^#1 **battery**^#2 **utility**^#3 **solar**^#4 **McKinsey**^#5\""
},
{
"docid": "550238",
"title": "",
"text": "The tried-and-true policy would be government spending (and not just any government spending, but one with positive feedback on the whole economy) such as specific subsidized industry or high-tech projects (most likely wind/solar, high-efficiency and hybrid cars, etc.). And this includes something like addition education in fields that are needed. Instead we give money to banks, tax breaks for the already wealthy, and then deregulate finance when the problem seemed to stem from deregulation and non-enforcement. If we don't hit a bigger bottom in 1-5 years - I'd eat my shorts."
},
{
"docid": "176557",
"title": "",
"text": "\"Not \"\"these\"\" batteries, they will still be using a mixture of solar, wind, gas and oil, nuclear and coal. Maybe a generation or two, but definitely not these batteries. I honestly don't care how cheap these things get, until we have an infrastructure to support it, we will be struggling.\""
},
{
"docid": "539570",
"title": "",
"text": "On a personal income tax return home improvements are generally not deductible on a federal level. There might be some exceptions made for special tax programs, such as solar panels, but they tend to be the exception rather than the rule."
},
{
"docid": "257122",
"title": "",
"text": "\"I think that all else being equal, if more people have solar panels on our roof, we keep our military in FEWER countries, instead of planning on RAMPING up the number (see: Nigeria). Furthermore, the initial question wasn't whether installing solar panels is going to stop the action. **The conversation started by being about whether solar is actually cheaper when you factor in the amount used to subsidize both sources of energy. Not whether switching to solar would stop subsidies to oil.** What you did is called \"\"moving the goalposts\"\". The word 2016 doesn't show up in the article or in the study it cites. That was a typo. I understand it was about 2013, I was trying to saying that it was about the same year as yours. That was my bad. I read the whole thing originally, and I even read the study. I accept responsibility for the typo though. ANYWAYS, neither set of data is manipulated, my study just includes more things, like foreign tax credits, cleanup subsidies for both coal and oil, tar sands exemption from cleanup funds, Power Africa (a five year, 7 billion dollar program that was only ANNOUNCED in 2013). That overseas stuff that goes on is a HUGE part of the equation. And okay, so they aren't equivalent. Then your point is moot. Yes, both sides have off the book subsidies, but one side's off the book subsidies are so unfathomably bigger that it's laughable to even put them in the same category. Not to mention the costs of war in the middle east stretch beyond money (think lives), and recycling programs actually come with benefits (think smaller landfills).\""
},
{
"docid": "147182",
"title": "",
"text": "\"the education bubble is similar to the mortgage bubble...you have people with no stake in the game, making huge financial decisions the customers aren't the ones paying, so it makes perfect sense for them to charge through the ass for an \"\"education\"\". What needs to happen is that college loans should be suspended for subpar colleges...we as tax payers, shouldn't be on the hook for $100,000 for a worthless degree.(and it does add up to $25K/yr for most of these shitty schools) Simply create grading tiers. Something like Harvard gets an A, something like Rutgers gets a B, something like a county community college gets a C, and University of Phoenix etc get an F. Then simply withdraw public loans from any school graded an F. If someone wants to go to a shitty school, make them make the decision where it's their money that's at stake. When you do that, you'll suddenly notice people skipping the degree mills and just going to small local schools that actually give a degree worth something\""
},
{
"docid": "465732",
"title": "",
"text": "\"Home Improvements that improve the home's Energy Efficiency are currently eligible for federal tax credits. This includes renewable energy equipment (solar panels, etc.) and Nonbusiness Energy Property Tax Credit. The credit is 30% of the cost. From Intuit Turbo Tax: Energy Tax Credit: Equipment and materials can qualify for the Nonbusiness Energy Property Credit only if they meet technical efficiency standards set by the Department of Energy. The manufacturer can tell you whether a particular item meets those standards. For this credit, the IRS distinguishes between two kinds of upgrades. The first is \"\"qualified energy efficiency improvements,\"\" and it includes the following: •Home insulation •Exterior doors •Exterior windows and skylights •Certain roofing materials The second category is \"\"residential energy property costs.\"\" It includes: •Electric heat pumps •Electric heat pump water heaters •Central air conditioning systems •Natural gas, propane or oil waterheaters •Stoves that use biomass fuel •Natural gas, propane or oil furnaces •Natural gas, propane or oil hot water boilers •Advanced circulating fans for natural gas, propane or oil furnaces\""
},
{
"docid": "270660",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://www.fool.com/investing/2017/09/17/why-china-is-crushing-the-us-in-solar-energy.aspx) reduced by 85%. (I'm a bot) ***** > By any objective measure, China is crushing the U.S. in the business of solar energy. > Canadian Solar, JinkoSolar, JA Solar, and Hanwha Q-Cells are among the largest solar module suppliers in the world and are publicly traded in the U.S. Trina Solar, LONGi, and GCL-Poly are also major manufacturers with operations in China, but they&#039;re private or not traded in the U.S. The public companies give an illustration of how they fund expansion. > China has made the solar industry a priority and is giving government support to develop manufacturing and push for solar power plant installations. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/70u3x3/why_china_is_crushing_the_us_in_solar_energy/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~211963 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*: **solar**^#1 **China**^#2 **U.S.**^#3 **plant**^#4 **manufacturing**^#5\""
},
{
"docid": "219110",
"title": "",
"text": "I never said they're not going to change. I'm saying it will take far more than a year or two. The article say that a $10/barrel can happen in 2 years. I'm saying no. And it's not inefficiency that's causing expensive electricity. Philippines does not have the basic requirements to create cheap and renewable energy to supply what it needs. Nowhere to build a dam for hydro power. And too many strong typhoons/earthquakes for building wind. Solar power would not necessarily work either. The nation is one of the most biodiverse areas in the world. By blocking large chunks of the islands and depriving the land of sunlight, you are causing massive environmental destruction. Palm and agriculture has already devastated many parts of Philippines, what it needs is more vegetation. Tidal power isn't nearly as developed as the other forms of new energy. And it may also disrupt a very busy marine trade route."
},
{
"docid": "187774",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/view/articles/2017-07-12/rooftop-solar-is-no-match-for-crony-capitalism) reduced by 93%. (I'm a bot) ***** > It therefore makes economic sense to charge rooftop solar owners extra to maintain the electrical grid - without the grid, after all, a person using only rooftop solar wouldn&#039;t have any electricity at night. > Measures to ban third-party ownership of rooftop solar are crony capitalism, plain and simple. > Eventually, solar power will be so cheap that it makes sense to install rooftop panels even without net metering, and utilities will start switching from power plants to solar farms. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6nhc7p/rooftop_solar_is_no_match_for_crony_capitalism/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~167580 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*: **solar**^#1 **utility**^#2 **power**^#3 **company**^#4 **rooftop**^#5\""
},
{
"docid": "267727",
"title": "",
"text": "\"For some situations, an MBA can be overrated in the sense that given the cost of time and money, it isn't going to be a great return in some cases. There can be tens of thousands of dollars and a couple of years to get an MBA that some people believes should automatically make them worth $x more in their salary and life should be simple. I'd likely inquire as to what expectations do you have for what an MBA will do for you. Are you expecting to make connections in getting the degree? Are you expecting to learn about how to run a business from the coursework? Are you expecting something else? Depending on what you are expecting, I could see MBA as being anything from a great choice to a lousy choice for people. As noted by Pete Belford's comment, an MBA from a \"\"degree mill\"\" would be all but worthless. Where you go can reflect the value of the education as some universities are known for their program about this such as Ivy League schools.\""
},
{
"docid": "449218",
"title": "",
"text": "Don't misunderstand man, I'm all about alternative energy. I bought a Japanese Delica because they have the room I need and they're stupidly good on diesel. (sadly, I blew the head at Christmas, now I need to get a new one, and until then I'm in an 07 Caravan). I'd like to add solar panels to the farmhouse once all the other expenses are taken care of, and over the winter we only burn wood for heat in a high-efficiency triple-burn woodstove."
},
{
"docid": "581618",
"title": "",
"text": "\"nuclear plants + nuclear fuel rod storage facilities together take up a lot of space. also to go back to one of your earlier points, I tried looking up the comparison in mining between nuclear and solar panels, but couldn't find anything. however I think they are similar, not one being more or less than the other. the processes are not too dissimilar, you have to get what you're mining for then wash it down and purify it with chemicals. But if you saw the amount of land that was displaced to get one piece of uranium that wouldn't even make up an entire fuel rod you might not think solar had the heavier mining load. besides, solar generates electricity while the fuel rods have a set amount of energy, so solar will end up paying for itself rather than having to mine for more of a radioactive element once your fuel rods are spent. not sure I explained that last part too well but solar starts at 0 and goes to \"\"infinity\"\" in terms of how much electricity is generated while nuclear fuel rods start at 100 and go down to 0. so I think solar is the better bet edit: I also agree that energy is really hard to solve. every source has their drawbacks unfortunately. except cold fusion lol\""
}
] |
4615 | Are solar cell panels and wind mills worth the money? | [
{
"docid": "421365",
"title": "",
"text": "Solar water heaters are definitely worth the money (if you live in sunny states like South-South-West or Hawaii, at least). In some countries (like Greece, Cyprus and Israel, to name a few) most people use hot water from the solar heaters almost exclusively. I pay $30-$40 a month to PG&E for the privilege. Unfortunately, in the US these heaters are much more expensive than they are in the more advanced European countries, so all the savings go to drain because of the vast price difference ($300 for a gas heater vs $2000 for a solar heater)."
}
] | [
{
"docid": "426476",
"title": "",
"text": "Yeah, even then. Maybe a bit more, depending on travel. I'd have a fully-paid for house. If taxes are absurd on the property I might need to bump up the number. Vehicles, fully paid for. Machine tools, heavy-duty sewing gear, firearms & hunting/camping gear, most of the tooling needed to produce anything I need, a well-equipped kitchen, and land with some livestock, woodlot, farm, and orchard. Power from wind/solar with a backup genset & link to the grid as a last resort, wells for water. As I said: Initial cost would be high, but after that my cost of living would be damned low. Hell, I'd probably spend more on books than food."
},
{
"docid": "198953",
"title": "",
"text": "No argument there. A few months prior it was a jewelry store, but November it was a place to sell off your gold. It looked the same, but the business model shifted dramatically. Yes, it's just an anecdote. But there were tens of thousands of dollars worth of orders by many people in the days after. I had just been hired to design and learn wax milling. This trickled down very quickly to me just doing photography and ad design part time instead of a full time position at a liveable wage. I got out of there as quickly as possible."
},
{
"docid": "484141",
"title": "",
"text": "\"[Link 1] (https://www.bloomberg.com/news/articles/2017-06-12/two-chinese-provinces-falsified-economic-data-inspectors-say) [Link 2] (https://www.ft.com/content/a5bf42e2-03cf-11e7-ace0-1ce02ef0def9) [Link 3] (https://www.ft.com/content/0361c1a4-bcfe-11e6-8b45-b8b81dd5d080) China has been cooking their books, just like the U.S. has been doing it the past few years. Just google \"\"U.S. Central banks buying stocks and bonds\"\", then connect the numbers. **Insider Information:** At my previous company we sold solar manufacturing equipment. I went to said Chinese city that bought our equipment. They were producing ton loads of solar panels, I asked one of the manager's where all of the panels were being sold (domestic, or international?). To my surprise, he said they warehoused the panels they produced; because, there weren't enough customers. And, why were they warehousing the panels? Because, the Chinese government needed to show numbers that jobs were plenty, and manufacturing was still strong.\""
},
{
"docid": "26846",
"title": "",
"text": "\"By the sounds of things, you're not asking for a single formula but how to do the analysis... And for the record you're focusing on the wrong thing. You should be focusing on how much it costs to own your car during that time period, not your total equity. Formulas: I'm not sure how well you understand the nuts and bolts of the finance behind your question, (you may just be a pro and really want a consolidated equation to do this in one go.) So at the risk of over-specifying, I'll err on the side of starting at the very beginning. Any financial loan analysis is built on 5 items: (1) # of periods, (2) Present Value, (3) Future Value, (4) Payments, and (5) interest rate. These are usually referred to in spreadsheet software as NPER, PV, FV, PMT, and Rate. Each one has its own Excel/google docs function where you can calculate one as a function of the other 4. I'll use those going forward and spare you the 'real math' equations. Layout: If I were trying to solve your problem I would start by setting up the spreadsheet up with column A as \"\"Period\"\". I would put this label in cell A2 and then starting from cell A3 as \"\"0\"\" and going to \"\"N\"\". 5 year loans will give you the highest purchase value w lowest payments, so n=60 months... but you also said 48 months so do whatever you want. Then I would set up two tables side-by-side with 7 columns each. (Yes, seven.) Starting in C2, label the cells/columns as: \"\"Rate\"\", \"\"Car Value\"\", \"\"Loan Balance\"\", \"\"Payment\"\", \"\"Paid to Interest\"\", \"\"Principal\"\", and \"\"Accumulated Equity\"\". Then select and copy cells C2:I2 as the next set of column headers beginning in K2. (I usually skip a column to leave space because I'm OCD like that :) ) Numbers: Now you need to set up your initial set of numbers for each table. We'll do the older car in the left hand table and the newer one on the right. Let's say your rate is 5% APR. Put that in cell C1 (not C3). Then in cell C3 type =C$1/12. Car Value $12,000 in Cell D3. Then type \"\"Down Payment\"\" in cell E1 and put 10% in cell D1. And last, in cell E3 put the formula =D3*(1-D$1). This should leave you with a value for the first month in the Rate, Car Value, and Loan Balance columns. Now select C1:E3 and paste those to the right hand table. The only thing you will need to change is the \"\"Car Value\"\" to $20,000. As a check, you should have .0042 / 12,000 / 10,800 on the left and then .0042 / 20,000 / 18,000 on the right. Formulas again: This is where spreadsheets become amazing. If we set up the right formulas, you can copy and paste them and do this very complicated analysis very quickly. Payment The excel formula for Payment is =PMT(Rate, NPER, PV, FV). FV is usually zero. So in cell F3, type the formula =PMT(C3, 60, E3, 0). Obviously if you're really doing a 48 month (4 year) loan then you'll need to change the 60 to 48. You should be able to copy the result from cell F3 to N3 and the formula will update itself. For the 60 months, I'm showing the 12K car/10.8K loan has a pmt of $203.81. The 20K/18K loan has a pmt of 339.68. Interest The easiest way to calculate the interest is as =E3*C3. That's (Outstanding Loan Balance) x (Periodic Interest Rate). Put this in cell G4, since you don't actually owe any interest at Period 0. Principal If you pay PMT each month and X goes to interest, then the amount to principal is \"\"PMT - X\"\". So in H4 type =-F3 - G3. The 'minus' in front of F3 is because excel's PMT function returns a negative amount. If you want to, feel free to type \"\"=-PMT(...)\"\" for the formula that's actually in F3. It's your call. I get 159 for the amount to principal in period 1. Accumulated Equity As I mentioned in the comment, your \"\"Equity\"\" comes from your initial Loan-to-Value and the accumulated principal payments. So the formula in this cell should reflect that. There are a variety of ways to do this... the easiest is just to compare your car's expected value to your loan balance every time. In cell I3, type =(D3-E3). That's your initial equity in the car before making any payments. Copy that cell and paste it to I4. You'll see it updates to =(D4-E3) automatically. (Right now that is zero... those cells are empty, but we're getting there) The important thing is that as JB King pointed out, your equity is a function of accumulated principal AND equity, which depreciates. This approach handles those both. Finishing up the copy-and-paste formulas I know this is long, but we're almost done. Rate // Period 1 In cell C4 type =C3. Payment // Period 1 In cell F4 type =F3. Loan Balance // Period 1 In cell E4 type =E3-H4. Your loan balance at the end of period is reduced by the principal you paid. I get 10,641. Car Value // Period 1 This will vary depending on how you want to handle depreciation. If you ignore it, you're making a major error and it's not worth doing this entire analysis... just buy the prettiest car and move on with life. But you also don't have to get it scientifically accurate. Go to someplace like edmunds.com and look up a ballpark. I'm using 4% depreciation per year for the old (12K) car and 7% for the newer car. However, I pulled those out of my ass so figure out what's a better ballpark. In G1 type \"\"Depreciation\"\" and then put 4% in H1. In O1 type \"\"Depreciation\"\" and then 7% in P1. Now, in cell D4, put the formula =D3 * (1-(H$1/12)). Paste formulas to flesh out table As a check, your row 4 should read 1 / .0042 / 11,960 / 10,641 / 203.81 / 45 / 159 / 1,319. If so, you're great. Copy cells C4:I4 and paste them into K4:Q4. These will update to be .0042 / 19,883 / 17,735 / 339.68 / 75 / 265 / 2,148. If you've got that, then copy C4:Q4 and paste it to C5:C63. You've built a full amortization table for your two hypothetical loans. Congratulations. Making your decision I'm not going to tell you what to decide, but I'll give you a better idea of what to look at. I would personally make the decision based on total cost to own during that time period, plus a bit of \"\"x-factor\"\" for which car I really liked. Look at Period 24, in columns I and Q. These are your 'equities' in each car. If you built the sheet using my made-up numbers, then you get \"\"Old Car Equity\"\" as 4,276. \"\"New Car Equity\"\" is 6,046. If you're only looking at most equity, you might make a poor financial decision. The real value you should consider is the cost to own the car (not necessarily operate it) during that time... Total Cost = (Ending Equity) - (Payment x 24) - (Upfront Cash). For your 'old' car, that's (4,276) - (203.81 * 24) - (1,200) = -1,815.75 For the 'new' car, that's (6,046) - (339.68 * 24) - (2,000) = -4,106.07. Is one good or bad? Up to you to decide. There are excel formulas like \"\"CUMPRINC\"\" that can consolidate some of the table mechanics, but I assumed that if you're here asking you would have gotten stuck running some of those. Here's the spreadsheet: https://docs.google.com/spreadsheet/ccc?key=0Ah0weE0QX65vdHpCNVpwUzlfYjlTY2VrNllXOS1CWUE#gid=1\""
},
{
"docid": "561982",
"title": "",
"text": "I have been a long time supporter of this viewpoint, but price drops of solar and battery over the last few years are starting to make it look like nothing will be able to beat the economics of solar. Nuclear is quite expensive and has a long payoff period and I don't think people will choose it over solar and wind much any more. Though I do think we need to update our existing reactors to new technology to solve some of the waste issues if this is possible (though I'm not sure it is)"
},
{
"docid": "568390",
"title": "",
"text": "Not a problem. Politicians who take money from the oil industry can make more efforts to extend a regulatory environment where oil companies can continue to profit. Solar and wind power can be taxed and research that supports alternative energy can be unfunded."
},
{
"docid": "220216",
"title": "",
"text": "Can no one read? I never said anything about equivalence, it was an example of an off the books subsidy. And I'll pose the same question to you as the other commenter, do you think that having solar panels on your roof will keep the government from sending our military to other countries? Because if you do, that's truly laughable. Apparently that author is clairvoyant enough to announce a 2016 report in an article dated July, 9th 2014. But I'll just assume you didn't actually read any of it. I did, and I'm not saying those figures are wrong, but that report has a clear stated agenda that is anti-oil/coal. The report I linked was to a US agency that was only making the information available. It may also have inaccuracies, but I'm going to assume that data for identical years in these reports being interpreted wildly differently indicates one is manipulating the information. I'd assume that someone with an agenda would be more likely to manipulate the data than an agency just seeking to publish data. Regardless, those inconsistencies should have some explanation."
},
{
"docid": "220176",
"title": "",
"text": "The periodic rate (here, the interest charged per month), as you would enter into a finance calculator is 9.05%. Multiply by 12 to get 108.6% or calculate APR at 182.8%. Either way it's far more than 68%. If the $1680 were paid after 365 days, it would be simple interest of 68%. For the fact that payment are made along the way, the numbers change. Edit - A finance calculator has 5 buttons to cover the calculations: N = number of periods or payments %i = the interest per period PV = present value PMT = Payment per period FV= Future value In your example, you've given us the number of periods, 12, present value, $1000, future value, 0, and payment, $140. The calculator tells me this is a monthly rate of 9%. As Dilip noted, you can compound as you wish, depending on what you are looking for, but the 9% isn't an opinion, it's the math. TI BA-35 Solar. Discontinued, but available on eBay. Worth every cent. Per mhoran's comment, I'll add the spreadsheet version. I literally copied and pasted his text into a open cell, and after entering the cell shows, which I rounded to 9.05%. Note, the $1000 is negative, it starts as an amount owed. And for Dilip - 1.0905^12 = 2.8281 or 182.8% effective rate. If I am the loanshark lending this money, charging 9% per month, my $1000 investment returns $2828 by the end of the year, assuming, of course, that the payment is reinvested immediately. The 108 >> 182 seems disturbing, but for lower numbers, even 12% per year, the monthly compounding only results in 12.68%"
},
{
"docid": "435763",
"title": "",
"text": "\">> Ok!!!! Please find me something significant that Trump did that you don't like. > All right, another one of my pet issues is global warming. Wow! I asked you twice for significant issues that Trump did, and you don't like. First, you give this gray topic of Medicare Part-D where Trump promised to act upon, but has yet do anything. Am I right? Did Trump do anything against or for drug prices? Isn't trump trying to replace the healthcare act? Yes or no? **And now, given a second chance, you come up with \"\"Global Warming\"\"?** Are you serious? Global Warming? It's Trump fault? Is Trump against solar panels and wind power? Do you have any idea why Trump called it Chinese Hoax? Because the Paris Accords, like the TPP, and like NAFTA, and the Iran Deal, etc, etc, etc, are scams to hurt the USA and make the USA pay more. Nothing else. Who has bigger air pollution, coal power plants, cutting trees, environmental disasters, etc? The USA or China? USA or 3rd world? So why does the USA has to do most of the cuts and costs? Global Warming is another form of tribalism and \"\"religion\"\" used to manipulate people. Since you are an expert with Global Warming, is it true that deserts are now becoming green? Most trees in the world, which are in Russia and not the Amazon, are green longer? Global warming happened before, many times in earth history before the industrial revolution? Also ice ages? Oceans did not rise? I am not worried about Global Warming. It has negative things, and positive things. My nieces is working on growing meat in labs for consumption by humans. It will be safer, cheaper, better, and more tasty. **Do you have any idea what will happen in the world, 20-30 years from now, when we stop raising cows, pigs, goats and sheep? Any idea how damaging is current agriculture to the climate? What would happen in the world in 20-30 years from now when robots plant trees everywhere?** No need for the hysterical and paranoia about \"\"Global Warming\"\" and the USA. You should be more worried about China and what this country and all its people do the earth.\""
},
{
"docid": "267727",
"title": "",
"text": "\"For some situations, an MBA can be overrated in the sense that given the cost of time and money, it isn't going to be a great return in some cases. There can be tens of thousands of dollars and a couple of years to get an MBA that some people believes should automatically make them worth $x more in their salary and life should be simple. I'd likely inquire as to what expectations do you have for what an MBA will do for you. Are you expecting to make connections in getting the degree? Are you expecting to learn about how to run a business from the coursework? Are you expecting something else? Depending on what you are expecting, I could see MBA as being anything from a great choice to a lousy choice for people. As noted by Pete Belford's comment, an MBA from a \"\"degree mill\"\" would be all but worthless. Where you go can reflect the value of the education as some universities are known for their program about this such as Ivy League schools.\""
},
{
"docid": "376430",
"title": "",
"text": "I imagine we disagree on the following, but digging something from the ground or destroying mountain tops to obtain a product that destroys the health of its extractors, puts mercury in rivers, adds to climate change, and causes acid rain is not worth a few towns. Of course I don't live in those towns... I would say they should be re-trained to install solar panels, but they will still have to move out of their small dying towns. Coal is going to die either way. The cost benifits compared to renewables just aren't there anymore. That is why that sector is already so small."
},
{
"docid": "19179",
"title": "",
"text": "\"Yeah, I guess the entire report is probably false because of that. What you're saying is applicable to the renewable industry too. There's all kinds of other investments made on behalf of renewables that aren't calculated into dollar amounts. Most obviously is the money that never even hits the books by subsidizing through consumer/corporate tax breaks. For example: the company you work for more than likely has a recycling program. It doesn't make money because it's not profitable to recycle anything but aluminum, but if they didn't have the program they would get penalized (not directly necessarily but would lose out on \"\"green\"\" initiative funding). The rest of what you are saying is as intangible as the first thing. If you think solar panels on your roof is going to keep the military out of other countries, you're clinical. And if you can't notice a correlation between the total lack of production coupled with the massive amounts of money being wasted then there's no discussion to be had. By the by, that article has no citations and the link to any additional sourcing is broken.\""
},
{
"docid": "376198",
"title": "",
"text": "\"Dutch company Mars One says it wants to send people to the Red Planet after running them through the reality TV wringer - but appears to be ill-prepared for actual spaceflight. Mars One says it wants to start selecting astronauts in 2013 and training them on a replica of the settlement out in the desert. The company says it will launch supplies in 2016, followed by the first four astronauts in 2022. The volunteer extraterrestrial settlers would all be traveling on a one-way ticket. Several questions spring up almost immediately: how wise is it to select astronauts 10 years before a mission starts through reality show casting? Is any of this technologically feasible at this point in time? Is Mars One a hoax, a media stunt capitalizing on the fact that private spaceflights are in the headlines now thanks to SpaceX, or an overreaching pipe dream? The company lists only one engineer amongst its four-person team on its website, and trumpets the endorsements of \"\"Big Brother\"\" co-creator Paul Romer as well as Nobel Prizewinner and physicist Gerard 't Hooft - though 't Hooft's expertise lies in quantum mechanics, not astronomy. A man claiming to be Mars One founder Bas Landsdorp appeared Friday on the popular website Redditto take questions on the project, and was quickly met with a storm of skepticism. Reddit users knocked Landsdorp, saying Mars One has not yet put out any concrete technical explanations of how they will get to Mars and support the proposed habitats. Some pointed out that NASA has had issues with solar panels on its Mars rovers because of dust storms that erode the panels' surfaces and block the sunlight for long periods of time, making Mars One's plans to use solar panels for energy generation unsustainable for supporting human life. But the man claiming to be Landsdorp mostly steered clear of the more scientific questions and directed users to the company's website. One user going by the handle arcanosis commented: \"\"This is almost certainly a publicity stunt. Your answers are nontechnical, imprecise, absurdly optimistic, even quixotic.\"\" If Mars One turns out to be a hoax, it wouldn't be the first such stunt originating from the Netherlands in recent months. Dutch artist Floris Kaayk hoodwinked much of the media with his \"\"Human Birdwings\"\" project in March, in which he posted YouTube videos purportedly showing a human-powered pair of mechanical wings.\""
},
{
"docid": "465732",
"title": "",
"text": "\"Home Improvements that improve the home's Energy Efficiency are currently eligible for federal tax credits. This includes renewable energy equipment (solar panels, etc.) and Nonbusiness Energy Property Tax Credit. The credit is 30% of the cost. From Intuit Turbo Tax: Energy Tax Credit: Equipment and materials can qualify for the Nonbusiness Energy Property Credit only if they meet technical efficiency standards set by the Department of Energy. The manufacturer can tell you whether a particular item meets those standards. For this credit, the IRS distinguishes between two kinds of upgrades. The first is \"\"qualified energy efficiency improvements,\"\" and it includes the following: •Home insulation •Exterior doors •Exterior windows and skylights •Certain roofing materials The second category is \"\"residential energy property costs.\"\" It includes: •Electric heat pumps •Electric heat pump water heaters •Central air conditioning systems •Natural gas, propane or oil waterheaters •Stoves that use biomass fuel •Natural gas, propane or oil furnaces •Natural gas, propane or oil hot water boilers •Advanced circulating fans for natural gas, propane or oil furnaces\""
},
{
"docid": "272797",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-06-15/solar-power-will-kill-coal-sooner-than-you-think) reduced by 86%. (I'm a bot) ***** > Natural gas will reap $804 billion, bringing 16 percent more generation capacity and making the fuel central to balancing a grid that&#039;s increasingly dependent on power flowing from intermittent sources, like wind and solar. > Onshore wind, which has dropped 30 percent in price in the past eight years, will fall another 47 percent by the end of BNEF&#039;s forecast horizon. > By 2040, wind and solar will make up almost half of the world&#039;s installed generation capacity, up from just 12 percent now, and account for 34 percent of all the power generated, compared with 5 percent at the moment, BNEF concluded. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6hwl1b/solar_power_will_kill_coal_faster_than_you_think/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~146897 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*: **percent**^#1 **Energy**^#2 **capacity**^#3 **fuel**^#4 **BNEF**^#5\""
},
{
"docid": "191003",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](http://www.uslifeinsurance.ml/2017/07/chinese-solar-industry-making-25.html) reduced by 74%. (I'm a bot) ***** > China&#039;s solar industry is expected to produce 25 percent more panels in 2017 than last year, supported by domestic sales and demand from the United States and emerging markets, the head of a Chinese industry association said. > China was expected to produce solar panels with a combined capacity of 60 gigawatts this year, said Wang Bohua, secretary general of China&#039;s photovoltaic industry association. > Environment group Greenpeace said solar curtailment rates across China rose 50 percent in 2015 and 2016, with more than 30 percent of available power in northwestern province Gansu and Xinjiang failing to reach the grid. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6orer4/chinese_solar_industry_making_25_percent_more/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~172582 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*: **China**^#1 **industry**^#2 **solar**^#3 **produce**^#4 **Wang**^#5\""
},
{
"docid": "573025",
"title": "",
"text": "It is considered a powerful antioxidant that prevents damage to the DNA of cells, always exposed to free radicals and solar radiation. Another function of vitamin c benefits against skin aging is the ability to increase the synthesis of collagen, a very abundant protein in the skin that decreases over the years. It is also non-irritating bleach that at the same time reduces fine lines and wrinkles, minimizes redness and restores flexibility."
},
{
"docid": "405382",
"title": "",
"text": "First, your references are only tangentially related to your claim. > If you have twice the generation capacity in renewables (wind/solar) and can store 20% of your yearly consumption, then you are fine. Right. If you do that, you're fine to run your hospital off-grid with no backup generators without significant risk of the life support systems going offline. The requirements for a grid-connected single family home are much lower. Generating 100% of your power needs and having one powerwall (for half a day of storage) will drastically reduce your electricity demand. Home solar doesn't need to completely replace grid power - a 70% reduction in demand would be sufficient to reduce generation requirements to only existing hydro / wind / nuclear plants."
},
{
"docid": "431898",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-07-11/electricity-overtook-fossil-fuels-in-push-for-investment-in-2016) reduced by 84%. (I'm a bot) ***** > Electricity drew in more investment than fossil fuel supply for the first time last year as the energy industry prepared for electrification of everything from cars to buildings and industrial processes. > &quot;With robust investment in renewable energy, increased investment into electricity networks, electricity is now the biggest area of capital investment.\"\" > The shift of capital flows away from fossil fuels and towards electricity, particularly clean sources such as solar and wind, shows that the trend spurred by the Paris climate accord is seeping into the business of energy. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6mlp52/electricity_overtook_fossil_fuels_in_push_for/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~164435 tl;drs so far.\"\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **energy**^#1 **percent**^#2 **investment**^#3 **Electricity**^#4 **billion**^#5\""
}
] |
4615 | Are solar cell panels and wind mills worth the money? | [
{
"docid": "596196",
"title": "",
"text": "Solar water heaters are definitely questionable in the Northeast -- the season when you most need them is also the season when they are least effective. Solar electric isn't a huge moneymaker, but with rebates on installation and carbon-reduction credits (SRECs) -- and a group purchase discount if you can get one, either at a town level or through organizations like One Block Off The Grid -- it can definitely turn a profit. Early estimate was that my setup would pay its initial costs back in 4 years, and the panels are generally considered to be good for a decade before the cells have degraded enough that the panels should be replaced. I haven't had a negative electric bill yet, but I've gotten close, and my setup is a relatively small one (eight panels facing SSE on a 45-degree roof). Admittedly I've also been working to reduce electricity use; I don't think I have an incandescent bulb left in the house."
}
] | [
{
"docid": "172241",
"title": "",
"text": "Public infrastructure poisons people. Nestle never sold a bottle of water tainted with lead. People are buying solar panels privately to get away from public utilities. Privatized roads are safer and less congested. Private companies are leading the charge on renewable energy and infrastructure. We became the fattest country in the world by privatizing our food supply, not nationalizing it. When you provide something with public funds, you get less of it and pay a higher price. Give the consumers choice in how their money is spent, don't force it on them like a fucking racket. Abolish all taxes."
},
{
"docid": "388144",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](http://wvtf.org/post/first-time-history-solar-jobs-outnumber-coal-jobs-virginia#stream/0) reduced by 69%. (I'm a bot) ***** > Virginia now has more jobs in the solar industry than the coal industry. > &quot;Coal will produce more jobs I think in the long term. But we&#039;ve had to cut back because everyone feels like it&#039;s not worth it to use coal anymore. And I feel that there will be a time when we will have to turn back to coal to meet the demand.\"\" > Alexander Winn at the Solar Foundation says he&#039;s hopeful some of those jobs might move from coal to solar. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6hsj3r/for_first_time_in_history_solar_jobs_outnumber/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~146519 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*: **coal**^#1 **solar**^#2 **industry**^#3 **Virginia**^#4 **Energy**^#5\""
},
{
"docid": "581618",
"title": "",
"text": "\"nuclear plants + nuclear fuel rod storage facilities together take up a lot of space. also to go back to one of your earlier points, I tried looking up the comparison in mining between nuclear and solar panels, but couldn't find anything. however I think they are similar, not one being more or less than the other. the processes are not too dissimilar, you have to get what you're mining for then wash it down and purify it with chemicals. But if you saw the amount of land that was displaced to get one piece of uranium that wouldn't even make up an entire fuel rod you might not think solar had the heavier mining load. besides, solar generates electricity while the fuel rods have a set amount of energy, so solar will end up paying for itself rather than having to mine for more of a radioactive element once your fuel rods are spent. not sure I explained that last part too well but solar starts at 0 and goes to \"\"infinity\"\" in terms of how much electricity is generated while nuclear fuel rods start at 100 and go down to 0. so I think solar is the better bet edit: I also agree that energy is really hard to solve. every source has their drawbacks unfortunately. except cold fusion lol\""
},
{
"docid": "287837",
"title": "",
"text": "\">If you know that a company called Toyota with no access to any retained earnings... Okay, we are talking at cross-purposes here. I take it as axiomatic that speculative ventures by private actors is mostly a net good thing (e.g., grocery stores buying produce before the customer has handed over the gold, car-makers designing and building cars before they have been paid for end-to-end, etc...). Even if a lot of them fail, I take it as axiomatic that we would not have things like laptop computers and fresh oranges year-round and non-iron shirts without that kind of speculative investment. I also take it as axiomatic that such speculative investment could not/would not exist without privately- or publicly-issued promissory notes. E.g., I do not think anyone would ever have made the first laptop computer, if doing so required directly handing previously-acquired gold coins to everyone involved in the design and construction. A caveman with no money but infinite time could have built his own Macbook Pro with retina display: like everything else we have, it was dug up out of the ground by people no stronger than you or I. All the functionality is just ingenuity and machining, it's just stuff dug up and re-combined by people, not necessarily smarter than anyone else. The fact that it *has* been done by human beings, means, by definition, that it *can* be done by human beings. Ergo, a caveman could have done it. Could have placed a man on the moon, or built himself a 60\"\" 1080p TV, or an iPod, or a nuclear bomb, or a Ferrari, or sent a satellite past the solar-system, anything at all. We don't have anything that he didn't have: just ingenuity, and whatever we dig up out of the ground. But more realistically, the difference between us and cavemen is twofold: - We have a historical record, and the accumulated ingenuity of millions of individual insights; and, - We have an economy, based on credibility and promises, that allows things to be invented, tested, and made, before they are paid for. I suggest that it is axiomatic that, for example, iPads would not exist if physical gold had to change hands at every step of development and manufacturing before it could occur, or at the instance of occurance. There is just no sane scenario where a product like that comes into existence without promises and speculative investment and loan-guarantees. Same with fresh lettuce in winter, or plumbing or electricity or cable-TV. You can't just trade a grain of gold for every gallon of water that comes out of your shower in real-time to a wet bill-collector, or stick some gold in the cable-jack for every minute of internet. Someone is promising something, without having produced it yet. Whether you paid in advance, or they bill your the service later, value has changed hands on credit and promises. It's not a sane proposition that every transaction be a closed-loop, pay-as-you-go thing. Especially when you get into commercial transactions. The modern world would not exist without credit markets, and credit markets cannot exist without something like fractional reserve banking. Demanding that everyone instantly reconcile every value-exchange with a physical transfer of gold or some such is not a sane proposition. Would your cell-phone company pay someone to follow you around and collect grains of gold for every call? If so, would that person in turn be followed by the cell-tower owner, and so on? Offering to \"\"pay in advance\"\" doesn't negate the conundrum: they still have to provide service, which may or may not be covered by your gram of gold. It's still a credit market, no matter which way the faucet runs. And a credit market means, ipso-facto, that more money is in circulation than has been printed.\""
},
{
"docid": "187774",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/view/articles/2017-07-12/rooftop-solar-is-no-match-for-crony-capitalism) reduced by 93%. (I'm a bot) ***** > It therefore makes economic sense to charge rooftop solar owners extra to maintain the electrical grid - without the grid, after all, a person using only rooftop solar wouldn&#039;t have any electricity at night. > Measures to ban third-party ownership of rooftop solar are crony capitalism, plain and simple. > Eventually, solar power will be so cheap that it makes sense to install rooftop panels even without net metering, and utilities will start switching from power plants to solar farms. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6nhc7p/rooftop_solar_is_no_match_for_crony_capitalism/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~167580 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*: **solar**^#1 **utility**^#2 **power**^#3 **company**^#4 **rooftop**^#5\""
},
{
"docid": "530253",
"title": "",
"text": "A lot of people who own Teslas also own solar panels and can charge their car from solar power. For now, our power grid still relies on archaic technologies for energy creation, but Tesla and other auto makers are pushing towards more renewable energy sources being added to our homes and the grid."
},
{
"docid": "355212",
"title": "",
"text": "You can reprocess the spent fuel to extract unburned uranium fuel, as is done elsewhere in the world. Thorium based fuel produces less long lives actinide waste (high level nastiness) and in my opinion would be a key step toward making nuclear a viable option. Nuclear is very politically volatile so a decade long planning effort can be subjected to winds of change with respect to politics, licensing, funding, and public opinions which can make for enormous inefficiencies. Solar has public favor so there are plenty of incentives. Nuclear would have to receive a push like that. Done properly a nuclear power plant should not contaminate the land it sits on. Currently plants have extensive environmental monitoring required by regulation. Nuclear power plants don't have extensive storage ponds for spent fuel. Every plant has a storage pool to wait for decay heat to subside as part of the refueling cycle. An issue with nuclear is that mistakes don't just biodegrade on a human timescale as they do for chemical based mistakes. The nuclear industry is currently paying for the sins of its birth and formative years."
},
{
"docid": "535408",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/view/articles/2017-07-12/rooftop-solar-is-no-match-for-crony-capitalism) reduced by 93%. (I'm a bot) ***** > It therefore makes economic sense to charge rooftop solar owners extra to maintain the electrical grid - without the grid, after all, a person using only rooftop solar wouldn&#039;t have any electricity at night. > Measures to ban third-party ownership of rooftop solar are crony capitalism, plain and simple. > Eventually, solar power will be so cheap that it makes sense to install rooftop panels even without net metering, and utilities will start switching from power plants to solar farms. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6n512e/rooftop_solar_is_no_match_for_crony_capitalism/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~166235 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*: **solar**^#1 **utility**^#2 **power**^#3 **company**^#4 **rooftop**^#5\""
},
{
"docid": "227013",
"title": "",
"text": "which is why I said EVs aren't as clean as they're made out to be. however, you can use land that has solar panels on it and it doesn't become radioactive, thus you don't have to build big cooling storage facilities to store them, where they have no use. edit: to my knowledge you can recycle solar panels. can't recycle used fuel rods."
},
{
"docid": "226060",
"title": "",
"text": "> Why do you say such stupid things? I'm just going by the wikipedia link that you just gave. Very first paragraph: > Although the company was once touted for its unusual technology, plummeting silicon prices led to the company's being unable to compete with conventional solar panels made of crystalline silicon."
},
{
"docid": "397564",
"title": "",
"text": ">total destruction Seems a bit harsh given that we don't have a real comparison here. With their new system, you can use solar panels on your roof that last longer than normal roofing tiles and charge your car/power your home. All in all it seems like a great way to go green."
},
{
"docid": "108090",
"title": "",
"text": "He's comfortably middle class, but not wealthy. The Tesla was purchased in a multi-owner shared arrangement, and the solar panels were installed by a company that supplies the capital for the panels with a long-term agreement to supply power to the homeowner and takes care of the more complex business agreements to feed back power to the grid. The situation on paper looks like a long term break even - but we'll have to see. Overall, even if he's paying a bit more in electric cost, the arrangement gives a lot of stability in exchange. To me it's clear that going electric car + renewable electric is a long-term good on the principle of becoming nationally independent from geopolitical enganglements, but also more towards becoming individually independent in terms of being isolated from instability in gas prices, utility prices, and even in times of natural disaster."
},
{
"docid": "285660",
"title": "",
"text": "There are different types of the renewable energy available such as solar energy, wind energy, geothermal energy, bioenergy, and others. Our experts provide the best solution and quality craftsmanship. Most of the renewable energy comes with directly and indirectly from sunlight. The sunlight is used for heating and then lighting the home, office and other buildings to generate the electricity. Tomorrow 2009 Brazil renewable energy company has qualified the energy professionals who have the scope of ability and information in services. They provide the services regarding the solar energy and maintainability services."
},
{
"docid": "220176",
"title": "",
"text": "The periodic rate (here, the interest charged per month), as you would enter into a finance calculator is 9.05%. Multiply by 12 to get 108.6% or calculate APR at 182.8%. Either way it's far more than 68%. If the $1680 were paid after 365 days, it would be simple interest of 68%. For the fact that payment are made along the way, the numbers change. Edit - A finance calculator has 5 buttons to cover the calculations: N = number of periods or payments %i = the interest per period PV = present value PMT = Payment per period FV= Future value In your example, you've given us the number of periods, 12, present value, $1000, future value, 0, and payment, $140. The calculator tells me this is a monthly rate of 9%. As Dilip noted, you can compound as you wish, depending on what you are looking for, but the 9% isn't an opinion, it's the math. TI BA-35 Solar. Discontinued, but available on eBay. Worth every cent. Per mhoran's comment, I'll add the spreadsheet version. I literally copied and pasted his text into a open cell, and after entering the cell shows, which I rounded to 9.05%. Note, the $1000 is negative, it starts as an amount owed. And for Dilip - 1.0905^12 = 2.8281 or 182.8% effective rate. If I am the loanshark lending this money, charging 9% per month, my $1000 investment returns $2828 by the end of the year, assuming, of course, that the payment is reinvested immediately. The 108 >> 182 seems disturbing, but for lower numbers, even 12% per year, the monthly compounding only results in 12.68%"
},
{
"docid": "38152",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-07-27/libor-to-end-in-2021-as-fca-says-bank-benchmark-is-untenable-j5m5fepe) reduced by 90%. (I'm a bot) ***** > The 58-year-old Bailey said the market supporting Libor - where banks provide each other with unsecured lending - was no longer &quot;Sufficiently active&quot; to determine a reliable rate and alternatives must be found. > The FCA has spoken to the panel banks over recent months about ending the use of Libor and how much time it would take to wind-down, Bailey said. > The central bank said in April that a swaps-industry working group had proposed replacing Libor in contracts with the Sterling Overnight Index Average, or Sonia, a near risk-free alternative derivatives reference rate that reflects bank and building societies&#039; overnight funding rates in the sterling unsecured market. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6q00cb/libor_funeral_set_for_2021_as_fca_abandons/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~177344 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*: **bank**^#1 **rate**^#2 **Libor**^#3 **Bailey**^#4 **benchmark**^#5\""
},
{
"docid": "176557",
"title": "",
"text": "\"Not \"\"these\"\" batteries, they will still be using a mixture of solar, wind, gas and oil, nuclear and coal. Maybe a generation or two, but definitely not these batteries. I honestly don't care how cheap these things get, until we have an infrastructure to support it, we will be struggling.\""
},
{
"docid": "405382",
"title": "",
"text": "First, your references are only tangentially related to your claim. > If you have twice the generation capacity in renewables (wind/solar) and can store 20% of your yearly consumption, then you are fine. Right. If you do that, you're fine to run your hospital off-grid with no backup generators without significant risk of the life support systems going offline. The requirements for a grid-connected single family home are much lower. Generating 100% of your power needs and having one powerwall (for half a day of storage) will drastically reduce your electricity demand. Home solar doesn't need to completely replace grid power - a 70% reduction in demand would be sufficient to reduce generation requirements to only existing hydro / wind / nuclear plants."
},
{
"docid": "215362",
"title": "",
"text": "> Home solar doesn't need to completely replace grid power - a 70% reduction in demand would be sufficient to reduce generation requirements to only existing hydro / wind / nuclear plants. That is exactly where the problem is. When your home solar and battery is out of power, then your grid (without traditional backup) is out of power as well. So in the end you need your grid to supply power in the 30% of time when your renewable plus some storage has none. At the same time all household, equipped like yours are out of power as well. So either the grid/power company has conventional backup or huge storage. Of course, the cost of these must be levied over the 30% of time they are used, not economically attractive. So you expect as a household to be able to just get energy from the grid/power company when it is necessary for you as a backup. Are you ready to pay the triple rate during that time ?"
},
{
"docid": "154611",
"title": "",
"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.\""
}
] |
4640 | What can my relatives do to minimize their out of pocket expenses on their fathers estate | [
{
"docid": "322314",
"title": "",
"text": "\"Also the will stipulated that the house cannot be sold as long as one of my wife's aunts (not the same one who supposedly took the file cabinet) is alive. This is a turkey of a provision, particularly if she is not living in the house. It essentially renders the house, which is mortgaged, valueless. You'd have to put money into it to maintain the mortgage until she dies and you can sell it. The way that I see it, you have four options: Crack that provision in the will. You'd need to hire a lawyer for that. It may not be possible. Abandon the house. It's currently owned by the estate, so leave it in the estate. Distribute any goods and investments, but let the bank foreclose on the house. You don't get any value from the house, but you don't lose anything either. Your father's credit rating will take a posthumous hit that it can afford. You may need to talk to a lawyer here as well, but this is going to be a standard problem. Explore a reverse mortgage. They may be able to accommodate the weird provision with the aunt and manage the property while giving a payout. Or maybe not. It doesn't hurt to ask. Find a property manager in Philadelphia and have them rent out the house for you. Google gave some results on \"\"find property management company Philadelphia\"\" and you might be able to do better while in Philadelphia to get rid of his stuff. Again, I'd leave the house on the estate, as you are blocked from selling. A lawyer might need to put it in a trust or something to make that work (if the estate has to be closed in a certain time period). Pay the mortgage out of the rent. If there's extra left over, you can either pay down the mortgage faster or distribute it. Note that the rent may not support the mortgage. If not, then option four is not practical. However, in that case, the house is unlikely to be worth much net of the mortgage anyway. Let the bank have it (option two). If the aunt needs to move into the house, then you can give up the rental income. She can either pay the mortgage (possibly by renting rooms) or allow foreclosure. A reverse mortgage might also help in that situation. It's worth noting that three of the options involve a lawyer. Consulting one to help choose among the options might be constructive. You may be able to find a law firm with offices in both Florida and Pennsylvania. It's currently winter. Someone should check on the house to make sure that the heat is running and the pipes aren't freezing. If you can't do anything with it now, consider winterizing by turning off the water and draining the pipes. Turn the heat down to something reasonable and unplug the refrigerator (throw out the food first). Note that the kind of heat matters. You may need to buy oil or pay a gas bill in addition to electricity.\""
}
] | [
{
"docid": "323601",
"title": "",
"text": "\">My father and my grandfather and my great grandfather could all sustain their families on a single middle class income Well, depends on what you define as \"\"middle class income\"\". Some of it is a **rising expected standard of living**: What size house did they have? How many automobiles did they have? If you go back to your great grandfather's time, he probably had far fewer sets of clothing. They probably didn't have the television, telephone, and air conditioning services that I expect most middle-class people expect. My dad ate fruits and vegetables only in season; you didn't get to have strawberries in the middle of winter or avocadoes shipped in from Chile. I expect to be able to travel via air to visit relatives; go back to the 1960s or even into the 1970s, and it was considered something that only the well-to-do would expect to be doing. My father didn't have video game consoles available to him. Some of these are driven purely by technology, of course, and someone can manage to pay no larger a chunk of change than they did before. We eat more meat, if I remember a lecture on this correctly. My parents had a lot more casserole and spaghetti (inexpensive foods) than I do. But some of it is also adjusting norms. Reading about the sort of house that a farmer lived in a few hundred years back would make me think of horrible poverty by modern standards... Most women seem not to have wanted to remain housewives when women started going out and doing men's historical work. So if they go out into the workforce, then keeping up with the Joneses, doing what's considered middle-class requires doubling income, and downwards pressure on some fixed costs (like, say, utility costs or gas costs) is lessened; that makes things tough on the few holdout families who want to have a single-income standard. Sure, maybe a small percentage of people out there want less-expensive beef, but its the bulk of people who get catered to... **Automation** has greatly decreased demand for some types of jobs; performing a repetitive, pre-defined task on an assembly line has fallen dramatically in value as the need for more people to do this sort of work has fallen off. Wages for a particular job are a function of how many people are available to do them relative to how many are needed. Every ATM is one less bank teller, every e-commerce website fewer retail workers. That increases the productive capacity of society, but whereas before there might be tremendous demand for someone to perform a repeated task on an assembly line (which it was easy to train people to do), many of the types of labor that are currently under-supplied are things that take longer to train people to do and require more specialization. **Debt Service**. Any debt that someone has that doesn't have a positive return-on-investment (an engineering degree would probably have a positive ROI, a large television probably a negative) winds up making them poorer in the long run. Any debt at *all* (barring investors making bad pricing decisions and hitting default or unexpectedly low returns) means transfer of wealth from people without money to people with money. The more (non-defaulted-upon) debt, the more people with more wealth make more wealth from lending. People have vastly more *personal debt* than they once did. Compare the amount of debt that someone has today with the amount of debt that they typically had in your great-grandfather's time, in the 1930s. There's a constant *drain* of wealth towards the lenders. This is one of Elizabeth Warren's favorite grousing points — people take out a *lot* more debt, particularly on housing, than they ever did in the past, and so a lot of their income is eaten year-by-year on debt service. There are lots of factors that make it easier to take out more debt. The biggest source of personal debt is [by far mortgages](http://www.utahfoundation.org/img/pdfs/rr689summary.pdf), and this is where the largest increases have taken place; policies to try to encourage people to go into debt to take out larger and larger mortgages have been steadily ramped up over this time, with the government subsidizing and taking on risk for insurance liability on mortgages to keep encouraging ever-larger amounts of debt. Lenders have computers and much more information and sophisticated systems for evaluating risk of default, which permits lending out more wealth. So there are technological changes driving this. The government has more *public debt* which means more such payments, even if they don't show up on your personal checkbook and are only seen by an increasing disparity between what you pay in taxes and the services you get back. Here's a chart of [inflation-adjusted debt per capita](http://www.theatlantic.com/business/archive/2011/07/chart-of-the-day-americans-income-and-the-us-debt/241463/) in the United States. That means that there's a constant increasing in the siphoning off of taxes as well to pay for the government having purchased a good or service without having actually paid for it at the time it was ordered. That decreasing green line means not that personal debt is falling (well, most of the time) but that the government is taking out debt on your behalf even faster than private debt has been going up. **The rest of the world catching up and breaking a temporary limited monopoly on certain goods**. China and India were not industrialized (and the former stuck under Maoism and not trading much with the rest of the world), so there were fewer people available to do this sort of work. Europe rebuilt from World War II, so it didn't have to purchase from the overseas US manufacturing industry. What could change? Well, standard-of-living is a cultural thing; that seems hard to manipulate. I'm sure that it's possible to change that, but I have a hard time suggesting how. Automation would be an across-the-board good thing if workers could be efficiently shifted into fields which currently have more demand; it's only an issue for workers if they stay in a field that has falling demand. I'm sure that our mechanisms for re-educating workers are not terribly good. Today, our education system still involves having a person stand up in front of a lot of other people and talk at them, then have those other people go and repeat some rote tasks to try and hammer something into their brain; it's the same mechanism that the wealthy used hundreds of years ago to tutor their children, but ramped up on a larger scale. If it were cheaper and easier to learn a new trade, it'd be easier to enter lucrative fields. College costs in particular are ridiculous. When you take college classes, you're basically getting a reading list, a very few limited slots to ask questions, and a set of predefined tasks plus some grading. That can be done far less-expensively than it is provided today. I personally have high hopes for online courses as a start here, though I'm sure that there will be stumbling blocks. Ditto for things like Wikipedia; using hypertext means that I can skip over things I already know and focus on what I don't understand, and electronic, automatic distribution means that it can be done far less-expensively than having some guy with a PhD stand up in front of a room and read some lecture notes aloud. Instead of answering questions generation after generation, *those* people should be polishing databases of *answers* to questions so that every subsequent human being can quickly and easily refer to their answer, and so that we can direct people to the best explanation easily. It's possible to adopt some measures that would reduce debt service by reducing public debt, but the public debt has been growing for a long time, and it seems very clear that people are much more willing to take out debt than to cut into *their* favorite concern (low taxes or lots of services) in the immediate future. As for reducing debt service via reducing private debt, most of the policy and technological factors that drive private debt seem unlikely to change to me. Maybe if we see some sort of cultural change, an aversion to taking out debt with a negative ROI, but all of the information I'm giving here has been public for a long time and people haven't changed, so I doubt that we'll see any kind of a reversal or social movement against taking out lots of debt. You'd have to have the equivalent of a [Great Awakening](https://en.wikipedia.org/wiki/Great_awakening) with respect to debt...and given that attempts to excite interest in the matter have generally not gone anywhere thus far, I suspect that this is human nature and doubt that things will change. You can always change *your* personal debt decisions, but society as a whole? As for the temporary monopoly...well, I think that it's pretty much inevitable that the rest of the world catches up to a great degree. Asia will catch up, even Africa will eventually get there. I think that that would be a pretty difficult thing to stop, and I think that most of the world would object to someone attempting to stop it.\""
},
{
"docid": "439003",
"title": "",
"text": "If your parents can afford to shell out $1,250 a month for 5 years, they would pretty much have the debt paid off, provided the credit card companies don't start playing games with rates. If that payment is too high, maybe you could kick in $5k every few months to knock the principal down. If they think the business can keep puttering along without losing more money, that may be the way to go. Five years is long enough that the business or property may have recovered some value. Another option, depending on the value of the home, could be a reverse mortgage. I don't know how the economy has affected those programs, but that might be a good option to get the debt cleared away. My grandfather was in a similar position back in the 70's. He owned taverns in NYC that catered to an industrial clientele... the place was booming in the 60s and my grandfather and his brother owned 4 locations at one point. But the death of his brother, post-Vietnam malaise, suburban exodus and shutting of industry really hurt the business, and he ended up selling out his last tavern in 1979 -- which was a dark hour in NYC history and real estate values. A few years later, that building sold for a tremendous amount of money... I believe 10x more. I don't know whether there was a way for his business to survive for another 5-7 years, as I was too young to remember. But I do remember my grandfather (and my father to this day) being melancholy about the whole affair. It's hard to have to work part-time in your 60's and be constantly reminded that your family business -- and to some degree a part of your life -- ended in failure. The stress of keeping things afloat when you're broke is tough. But there's also a mental reward from getting through a tough situation on your own. Good luck!"
},
{
"docid": "60562",
"title": "",
"text": "\"Here we go again! Why, oh why, would someone just open a bank account in your name with that much money for no good reason? Unless there's a very rich relative in your family tree, this can not come to a good ending. Besides, if this was money being left to you by someone as part of an inheritance, you'd hear from attorneys from the estate. Notwithstanding everything @NickR posted about the details of what makes it suspicious, ask yourself why a banker would contact you by email about an account with this much money in it. The bank would, at the very least, send you a registered/certified letter on official stationery. So what happens here is when you give them your banking information, whoever it is that's doing this will clean out your account, and that's for starters. They will ask for enough information to steal your identity too, and if you have good credit, that'll be gone in a heartbeat. The best scams (meaning the most successful ones) always appeal to peoples' greed, using large amounts of money that just miraculously belong to the victim, if only they'd give a little information to \"\"transfer\"\" the money. Worse yet, most of these scams will come up with some kind of \"\"fee\"\", \"\"tax\"\" or other expense that you have to pre-pay in order to make the transfer happen, so this just adds insult to injury when you find out (the hard way!) you've been scammed. DO NOT reply to the email you received or, if you already have, don't send any more responses. If they think they may have you on the hook then they won't stop trying, and it will become very messy very quickly. THIS IS NOT REAL MONEY! It isn't yours, it doesn't really exist, and all it will do is come to no good end if you go any further with it. Stay safe, my friend.\""
},
{
"docid": "215740",
"title": "",
"text": "\"*Selfish capitalists....sigh Look. We both agree that large concentrations of wealth should be redistributed. I personally believe in a heavy Estate Tax, the rich are limited on what you can pass on to kids & spouses. I think that would solve a lot of problems honestly but that's just me. We both agree on taxes, I am more than happy to pay my 30% & understand the benefits of it. I would argue I, and many other high income earners, can do more good with compounding my money and giving all of it away upon my death and living off of the interest but I doubt I would be able to convince you of that. What we disagree on is the definition of hard work. If 1 man make 10 spoons an hour and works really hard and another figures out a way to work smarter and can make 100 and work less...... Every economic theory agrees you should pay the man who made 100 spoons more even though the man who made 10 might have worked \"\"harder\"\". If my father choose to join the military and was very smart and able to lead well, you give him a stable career. If I was efficient at planning my college major, career, and investments, I get paid more, have less debt, and am able to save more and compound my savings into capital. *Results are more important than hard work, or to be frank, the effort you put into your work doesn't mean shit, it's all about productivity. That's why you hear the common \"\"participation trophy generation\"\" from older generations. So no it isn't luck, but I doubt I can change your mind. I used to think like you until one day I told myself, no more excuses, I am in charge of everything about my life. From that day I have been methodical and obsessive to make the smart choices in life that allow me to be happy. Just food for thought.\""
},
{
"docid": "366288",
"title": "",
"text": "From HSA Resources - I understand that I can reimburse myself from my HSA for qualified medical expenses that I pay out-of-pocket but is there a time limit? Do I need to reimburse myself in the same year? You have your entire lifetime to reimburse yourself. As long as you had your HSA established at the time the expense was incurred, you save the receipt and it was not otherwise reimbursed, you can reimburse yourself for the expense from your HSA even years later. The important thing not asked or mentioned above is that the HSA must be in place before the expense occurred. In your case, should the LASIK procedure be before the HSA is established, it's not an eligible expense."
},
{
"docid": "550992",
"title": "",
"text": "\"I can address what it means to \"\"pick off\"\" all those trades... As quantycuenta & littleadv have said, it is absolutely true that professionals \"\"prey\"\" on less-sophisticated market participants. They aren't in the market for charity's sake. If you're not familiar with the definition of the word \"\"arbitrage\"\", look it up. One possible strategy that can be employed with HFT machinery in order to arbitrage successfully in the stock market is to 'intercept' orders that are placed on various exchanges. In order to do this, an HFT organization watches all the transactions at once to find opportunities to buy low and sell high. A good explanation of it is described here in this NY Times article; I'll paraphrase what that article lays out. Stocks are traded through multiple exchanges The first key point to understand is that stocks listed on one exchange (i.e. the NYSE) can be sold on multiple exchanges. That's where the actual \"\"I would like to sell 100 shares of Ford stock\"\" is matched with \"\"I would like to buy 100 shares of Ford stock.\"\" There are multiple clearinghouses on the various exchanges. Your order gets presented to one exchange at a Time An ideal market maker would like to look at the order books for a given stock, say Ford, and see that in exchange A there's a sell order for 100 shares of F at $15.85, and in exchange B there's a buy order for 100 shares of F at $15.90. Arbitrage Market maker buys from A, sells in B, and pockets $0.05 * 100... $5. It's not much, but it was relatively risk free. Also, scale this up to the scale of the US' multiple stock exchanges, and there are lots of opportunities to make $5 every second. Computers are (of course) faster than people To tie it in completely with your question about 'picking off trades', HFT rigs can be set up and programmed to go faster than an average retail investor's order. Let's say you execute the trade to buy 100 shares @ $15.85 as a retail investor. The HFT rigs see your order starting to make the rounds of the different exchanges that your brokerage works through, and go out in front in a matter of milliseconds, finding the orders that are less than $15.85 and less than or equal to 100 shares. They execute a transaction, buy them up, sell to you, and pocket the difference. You have been \"\"picked off\"\". It's admittedly not the only way to use HFT equipment to make money, but it's definitely one way to do it.\""
},
{
"docid": "540539",
"title": "",
"text": "\"Sure, it's irresponsible for an executor to take actions which endanger the estate. But what about passivity or inaction? Put it another way. Is it the obligation of the executor to avoid making revenue for the estate? Think about it - what a silly idea! Consider a 12-unit apartment building full of rent paying tenants. A tenant gives notice and leaves. So do 4 more. With only 7/12 tenants, the building stops being a revenue center and becomes a massive money pit. Is that acceptable? Heck no! Realistically this will be managed by a property management company, and of course they'll seek new tenants, not stopping merely because the owner died. This situation is not different; the same fiscal logic applies. The counter-argument is usually along the lines of \"\"stuff might happen if you rent it out\"\"... true. But the stuff that happens to abandoned houses is much worse, and much more likely: squatters, teen \"\"urban explorers\"\", pot growers, copper thieves, winter pipe freeze flooding and wrecking interiors, etc. Don't take my word on it -- ask your insurer for the cost of insuring an abandoned house vs. a rented one. Renting brings a chunk of cash that comes in from tenants - $12,000/year on a $1000/mo. rental. And that will barely pay the bills if you have a young mortgage on a freshly purchased house at recent market rates. But on an old mortgage, renting is like printing money. That money propagates first to the estate (presumably it is holding back a \"\"fix the roof\"\" emergency fund), and then to the beneficiaries. It means getting annual checks from the estate, instead of constantly being dunned for another repair. But I don't care about making revenue (outside of putting back a kitty to replace the roof). Even if it was net zero, it means the maintenance is being done. This being the point. It is keeping the house in good repair, occupied, insured, and professionally managed -- fit and ready for the bequest's purpose: occupancy of an aunt. What's the alternative? Move an aunt into a house that's been 10 years abandoned? Realistically the heirs are going to get tired/bored of maintaining the place at a total cash loss, maintenance will slip, and you'll be moving them into a neglected house with some serious issues. That betrays the bequest, and it's not fair to the aunts. Rental is a very responsible thing to do. The executor shouldn't fail to do it merely out of passivity. If you decide not to do it, there needs to be a viable alternative to funding the home's decent upkeep. (I don't think there is one). Excluding a revenue-producing asset from the economy is an expensive thing to do.\""
},
{
"docid": "129364",
"title": "",
"text": "\"So my read on the question is \"\"How do I invest 300k such that it earns me a 'living wage' without the ongoing grind inherent in most formal employment?\"\" Reading the other answers to date it looks like most of them are thinking in terms of investment accounts and trying to live off of the earnings from such. I wanted to throw out a couple of alternative choices that may be worth considering... The first is real-estate investing. $300k should allow you to pick up 2 or 3 single family dwellings with little or no mortgage. Turning them into rentals placed with a good property management company should easily pay their expenses and provide a consistent income with minimal effort/attention from you. Similar story with buying into multifamily housing or commercial real-estate. Your key concern here is picking the right market in which to buy and finding a reputable manager to handle the day to day issues on your behalf. Note that you are not overly concerned with the potential resale value of the property(s), but the probable rental income they can generate, these are separate concerns that may not align with each other. Second is buying/founding a business that has a general manager other than yourself. Franchise ownership may be a potential option for you under the circumstances. The key concern here is picking the business, location, and manager that make you comfortable in terms of the risk involved. You need the place to make enough money to pay for itself and the salary of everyone working there, with enough left over for you to live on. Sounds easy enough, but not so much in practice. Generally you can expect at least a few years of being hands on and watching things very closely to make sure it is going the way you want it to. Finding a mentor who has done this type of transition before to walk you through it would be strongly advised. So would preparing yourself for a failure or two before you work out the exact combination of factors that work for you.\""
},
{
"docid": "232329",
"title": "",
"text": "If your sister paid rent, she was a tenant. There are laws to protect tenants, but those depend on what country, state, and city you live in. In most places in the US (maybe all), she was owed more than 2 days notice. Normally, the local housing authority could help her figure out what her rights are, but since this already happened, they may not be able to do much (depends on the local laws). It's worth asking them anyway. I don't know how partial ownership of the property would affect things if your sister was a partial owner. If the 30 year old will was the most recent document, then that's how the estate will be distributed. There are no laws in the US requiring a will to be fair. An executor's role is to carry out the will. Being an executor does not mean one can choose to unilaterally sell the property in the estate without permission of other heirs. You'll need to speak with a lawyer if you think they're breaking the will by selling property that you have partial ownership of. But since the sale is already done, reversing it would be slow and probably very expensive in legal fees. If it's a small estate, you'll have to judge whether a lawyer is worth the money and the family's animosity. Also, if the estate had debt, debt must be paid before property is distributed to the heirs, so that could also change what your sisters had to do. I'd suggest first asking your sisters to tell you about what they've done to execute the will, and what they do in the future."
},
{
"docid": "253373",
"title": "",
"text": "What is my best course of action, trying to minimize future debt? Minimizing expenses is the best thing you can do. The first step to financial independence is making do with less. Assuming I receive this $3500, am I better off using the bulk to pay off my credit cards, or should I keep as much cash available as I can? This would depend on the interest rate that is associated with the credit cards and the $3500. If the $3500 has a higher interest rate than your credit cards, then do not use any of it to pay your credit cards. Paying back the money you borrow hurts but it's the interest rate that does you in. If the interest rate for the $3500 is lower than the credit card interest, then placing some of it on the credit cards may be a wise course of action. But this depends on how long you are out of work. If you could be out of work for an extended period of time, I would recommend holding on to all of the funds. Note on saving I know this goes against the grain, but I would actually not recommend saving several months worth of funds (maybe one month though). Most employers offer some type of retirement savings account (401(k), Thrift Savings Plan, etc.). I contribute 5% to this fund instead of putting the money in savings. This is an especially effective strategy if your employer offers matching contributions such as mine. Because the divedends for a savings account are so low, it is not a wise place to store your money in the long run. If I had placed my Thrift Savings Plan contributions in a standard savings account, I would now be $12,000 poorer. In addition to this, most long term investment accounts allow you to withdraw the money early in case of emergency, such as being without work. (I also find it too temping to have huge amounts of funds on hand)."
},
{
"docid": "199789",
"title": "",
"text": "The money was sent from my US bank to my father in India Your father can receive unlimited amount of money as GIFT from you. There is no tax implication on this transaction. Related question After 3 years, my father received a note from the income tax dept. asking him to pay income taxes. Possibly because the income does not match and there maybe high value transactions. This should be replied preferably with the help of CA. Now, the CA is asking him to pay tax in the money I transferred. Is that correct? This is incorrect. Please change the CA and get someone competent. If not, what should I or he do in this case? Get guidance from another CA. Your father can establish that this was convenience and show evidence of transfer from you [need bank statements from your bank and Indian bank]. Property registration payments receipts, etc. Or he can also show this as Gift. If required get a gift deed created."
},
{
"docid": "320362",
"title": "",
"text": "\"You'd need to talk with an attorney familiar with Social Security, or an appropriately qualified SSA representative to be sure - but all signs point to the idea that unfortunately Social Security does not work the way your father was told it would. And if he doesn't file to receive benefits the reality is actually much worse than \"\"throwing away free money\"\"! However, this is not due to a complete misunderstanding of the system! Social Security does work the way he thinks in some instances, just that the rules don't apply to his exact situation! First of all, retroactive benefits come in a few forms: File and suspend to get a lump only if you really need it - BEFORE the age of 70 only! In this method you apply for retirement, but you tell the SSA to suspend/delay your benefits. You are entitled to full lump sum of the payments you deferred...but at a cost of getting lower monthly benefits permanently (and that also lowers spousal and dependent children's benefits, too - if those could apply to your dad). But note that at the age of 70, Social Security will stop deferring the payments and start paying you the full maximum retirement benefit monthly, with no lump sum. This is a kind of emergency insurance policy for those who want to try to defer retirement benefits, but who want the opportunity to cash out and get the money they would have been getting \"\"just in case\"\". You can get up to 6 months of retroactive benefits, such as if you wait past your exact retirement age to apply for benefits. But no more: \"\"we cannot pay retroactive benefits for any month before you reached full retirement age or more than 6 months in the past\"\". As for after-death benefits, an estate can only get benefits that were already due to be paid, which generally means a person died and did not get their benefits for that month, so SSA can re-issue a check to the estate following these rules. But as a person cannot be due a lump sum payment after age 70 (for more than 6 months at most), the estate will only be able to get at most 1-6 months of payments (and 6 months is doubtful - you'll need to ask a lawyer if that much would even be possible). If your father was below 70 and wanted to file-and-suspend, the question of lump on death would be more complex and I don't know that answer - but once you are past 70 this doesn't matter any more as you aren't due a lump anymore. Given the above, we've established pretty clearly that if you don't claim your benefits within 6 months after age 70, any months of payment you would have gotten are just forfeited to the system. But if you claim the benefits and stick them in the bank, can they be taken? Well, if a lawsuit is really a worry, then yes these accumulated funds can required to pay a debt - but this potential for loss can be protected against without forfeiting the benefits entirely! This is not very common, but if your father doesn't need the money now he may be able to deposit some of the money into a special partially-lawsuit protected format of the Roth IRA (which has no age limits) as detailed here. If he never gets sued, that's OK - it's still his money! If he passes away, the value goes to his estate and does not disappear. And he doesn't forfeit any of his earned retirement benefits. Finally, I would like to share one last thing with you and your father. These benefits aren't free - he has been paying a portion of his paycheck for decades into Social Security, and now he is eligible for the maximum amount of benefits per month that he will qualify for - and if he wants to keep working he loses no benefit and the amount could potentially even go up. That's up to him. But not filing for benefits now will mean that all this money he's been paying in for decades will just be lost - they'll basically just be a tax he's paid out to other retirees. His estate (which means you kids) won't get any of it, either. That'd just be a waste for everyone involved. If you have continued doubts or questions, I wouldn't hesitate to consult a specialist lawyer or talk with the SSA directly to make sure this is all correct. It's his money, and he has earned his benefits for many years. I very much hope he gets to enjoy as much of them as he can!\""
},
{
"docid": "17633",
"title": "",
"text": "There can be Federal estate tax as well as State estate tax due on an estate, but it is not of direct concern to you. Estate taxes are paid by the estate of the decedent, not by the beneficiaries, and so you do not owe any estate tax. As a matter of fact, most estates in the US do not pay Federal estate tax at all because only the amount that exceeds the Federal exemption ($5.5M) is taxable, and most estates are smaller. State estate taxes might be a different matter because while many states exempt exactly what the Federal Government does, others exempt different (usually smaller) amounts. But in any case, estate taxes are not of concern to you except insofar as what you inherit is reduced because the estate had to pay estate tax before distributing the inheritances. As JoeTaxpayer's answer says more succinctly, what you inherit is net of estate tax, if any. What you receive as an inheritance is not taxable income to you either. If you receive stock shares or other property, your basis is the value of the property when you inherit it. Thus, if you sell at a later time, you will have to pay taxes only on the increase in the value of the property from the time you inherit it. The increase in value from the time the decedent acquired the property till the date of death is not taxable income to you. Exceptions to all these favorable rules to you is the treatment of Traditional IRAs, 401ks, pension plans etc that you inherit that contain money on which the decedent never paid income tax. Distributions from such inherited accounts are (mostly) taxable income to you; any part of post-tax money such as nondeductible contributions to Traditional IRAs that is included in the distribution is tax-free. Annuities present another source of complications. For annuities within IRAs, even the IRS throws up its hands at explaining things to mere mortals who are foolhardy enough to delve into Pub 950, saying in effect, talk to your tax advisor. For other annuities, questions arise such as is this a tax-deferred annuity and whether it was purchased with pre-tax money or with post-tax money, etc. One thing that you should check out is whether it is beneficial to take a lump sum distribution or just collect the money as it is distributed in monthly, quarterly, semi-annual, or annual payments. Annuities in particular have heavy surrender charges if they are terminated early and the money taken as a lump sum instead of over time as the insurance company issuing the annuity had planned on happening. So, taking a lump sum would mean more income tax immediately due not just on the lump sum but because the increase in AGI might reduce deductions for medical expenses as well as reduce the overall amount of itemized deductions that can be claimed, increase taxability of social security benefits, etc. You say that you have these angles sussed out, and so I will merely re-iterate Beware the surrender charges."
},
{
"docid": "497596",
"title": "",
"text": "It's not so much the rate of the debt as it is the total cost of the debt relative to the gain you expect to see from using it to purchase something of value. I've known people who were quite happy to pay 12% on personal loans used to buy investment properties for flipping. They're happy to pay that because conventional loans from banks require too much documentation and out-of-pocket expense. For some investors, 12% without all of the documentation burden is money well spent. So if I'm the investor, and the interest on this 12% loan is $5,000 and I can flip a property for $20,000 after all of the other expenses, then the 12% loan was an enabler to netting $15,000 profit."
},
{
"docid": "275543",
"title": "",
"text": "This doesn't sound very legal to me. Real estate losses cannot generally be deducted unless you have other real estate income. So the only case when this would work is when that person has bunch of other buildings that do produce income, and he reduces that income, for tax purposes, by deducting the expenses/depreciation/taxes for the buildings that do not. However, depreciation doesn't really reduce taxes, only defers them to the sale. As mhoran_psprep said - all the rest of the expenses will be minimal."
},
{
"docid": "210829",
"title": "",
"text": "And this tells me you have little to no understanding. I have LIVED this life, I am black, from an inner city, my father is a deadbeat and my mother was diagnosed with MS, leaving her disabled until she died before I graduated from high school. My grandmother raised me while trying to care for a daughter that couldn't walk and another daughter struck blind by disease. Without public assistance, I wouldn't have been healthy enough to get a scholarship to a very expensive boarding high school, and really isolate myself from the shit around me. i have cousins who died living the gangster bullshit life, I know this world from seeing it. I make a fairly decent amount of money now, why, because when I couldn't find a job, I could still eat on food stamps and go to a free program to qualify for the government to pay for my IT certification. So, seeing as I KNOW how the system can be used to get to a better place, make a goddamn argument that your idea works better, not how you feel things should be. I make me decisions based on what I've seen, I have known women shafted by circumstance struggling to be able to work because they need a specific number of hours to ensure they can have child care so they can work at all. I have tutored adults that never graduated high school because they had to drop out and work years ago to help their families afford to live. I have used medicaid to help with my horrible episodes of depression, gotten treatment my family alone could not afford. I have watched my aunt recover from drug addiction using treatment my family could not afford. My grandmother is alive and still helping the down and out in our family due to medical equipment the family could not afford on its own. I do base my decisions on evidence, I have lived the fucking evidence."
},
{
"docid": "181600",
"title": "",
"text": "You know, it's always been a thing that in important pieces of journalism, you start towards the end (that's where the goodies are)... So, the way Forbes.com is, I went ahead and assumed that you were right, so skipped to 2nd page (didn't read 1st page, and probably you're right & it was fluff, so thanks for taking one for the team on that). ...Anyway, here's the key sections from 2nd page: > **Alsin: Can you talk a little about the scope of the problem? ** > [Nick Hanauer] The nation now spends on the order of twice as much on stock buybacks as it does on all R&D. > You can not build the kind of high-growth economy that we deserve, if you're pissing away 4%... You're basically burning 4% of GDP on stock buybacks, in this giant shell game. This sort of financial merry-go-round benefiting a few owners, a few corporate executives, and Wall Street. > It's among the most corrosive and corrupt practices in an already pretty corrosive and corrupt economy. ... (con't) > You're not going to get there by asking people nicely. The nation now spends on the order of twice as much on stock buybacks as it does on all R&D. > Look, one of the reasons that productivity is low, and business cycles are relatively anemic is that we went from a regime where it was very, very difficult and expensive to take money out of companies to reward shareholders and executives, to a world where it's incredibly easy. > So just by way of anecdote -- when I grew up in my family business, we had this fantastic tax-evasion strategy that my dad employed, which was we invested everything back in the business. > We kept profits to a minimum, because if we had high profits, we would have to pay high taxes. So at every opportunity, we bought another machine or we opened another plant or we hired more people, to try to build long term value through expansion because that was the way you avoided tax. > Dividends were impossibly expensive. Buybacks -- you couldn't do that. Corporate tax rates were very, very high. All of that's gone away, and now you've basically given corporate executives and owners incentives to just suck all the money out of businesses and into their own pockets, and stock buybacks are a really big component of that. > Corporate executives are always complaining about -- well we have to do something with the cash, because there's no place to invest the cash. Well, one of the reasons there's no place to invest the cash is that wages as a percentage of GDP have fallen by so much that workers can't afford to buy anything any more. If instead of doing stock buybacks with that 700 billion dollars, that corporations use that 700 billion dollars to raise wages for workers, those workers would then buy a ton more, which would require capital to go out and expand to meet that demand."
},
{
"docid": "367785",
"title": "",
"text": "Term life insurance makes sense if you will have a need for money if someone dies. If you (and your brothers) do not have enough money currently for a proper burial for your father, then you might consider term insurance to cover this. If you already have the money to cover this (or can save for it in a short amount of time), then you are better off financially to not purchase the insurance. Estimate what you think it will cost for a burial, then determine if you have this money available to you. If you already do, then don't purchase the insurance. If you do not have this money available to you, then you can look into a term life insurance policy on your father. You definitely do not want a whole life insurance policy. This will cost many more times what a term policy costs. A term policy is a policy with an expiration date. For example, let's say that you determine that you will need $10,000 when your father dies for the funeral and burial. You could get a 10-year policy on your father for $10,000. Over the next 10 years, besides paying your premiums, save up $10,000 ($1,000 each year) in some type of savings/investing account. Hopefully, your father will still be around 10 years from now, and you won't need the insurance policy anymore, because you will have saved enough to cover the costs when the time comes. Doing this will almost always cost you less than getting a whole life policy, which never expires, but has much higher premiums. There are also 20-year term policies, which will cost more, but will give you more time to save up your fund. The costs for these policies depend on your father's age, so get a quote for both and decide what will work for you."
},
{
"docid": "501395",
"title": "",
"text": "\"Those who say a person should invest in riskier assets when young are those who equate higher returns with higher risk. I would argue that any investment you do not understand is risky and allows you to lose money at a more rapid rate than someone who understands the investment. The way to reduce risk is to learn about what you want to invest in before you invest in it. Learning afterward can be a very expensive proposition, possibly costing you your retirement. Warren Buffet told the story on Bloomberg Radio in late 2013 of how he read everything in his local library on investing as a teenager and when his family moved to Washington he realized he had the entire Library of Congress at his disposal. One of Mr. Buffett's famous quotes when asked why he doesn't invest in the tech sector was: \"\"I don't invest in what I do not understand.\"\". There are several major asset classes: Paper (stocks, bonds, mutual funds, currency), Commodities (silver, gold, oil), Businesses (creation, purchase or partnership as opposed to common stock ownership) and Real Estate (rental properties, flips, land development). Pick one that interests you and learn everything about it that you can before investing. This will allow you to minimize and mitigate risks while increasing the rewards.\""
}
] |
4640 | What can my relatives do to minimize their out of pocket expenses on their fathers estate | [
{
"docid": "101369",
"title": "",
"text": "Consider contracting with a property management company to lease and maintain the house until it can be sold. Rent on the property should cover the mortgage, property taxes, etc. The property management company can handle maintenance and the tenant would be responsible for utilities."
}
] | [
{
"docid": "471501",
"title": "",
"text": "\"The new information helps a little, but you're still stuck as far as doing exactly what you asked. The question that you really should be asking is \"\"How do I deposit money into my BofA checking account from Italy?\"\" If you can figure that out, then the whole part about your father's AmEx card really becomes irrelevant. He might get that money from a cash advance on his AmEx card or he might get it from somewhere else. I think there's some small chance that if you call BofA and ask the right question, they may give you an answer that will let you make this deposit. I tend to doubt it, but this would at least give you a chance. Other than that, you should probably look into some options based in Italy. For example, get the cash from your father and open a bank account in Italy. Maybe you can buy a pre-paid Visa card with the cash to use while you're there. Maybe use traveler's checks for the rest of your trip. Etc. What is available and what makes sense will still depend on a lot of details that we don't have (like how long you're staying and what type of entry visa you got when you entered Italy).\""
},
{
"docid": "120312",
"title": "",
"text": "Like for example I use transferwise to send $x to my dad's account in India, would it show my name as the depositor ? That would depend from bank to bank, it may or may not show your name. Would it be considered as income for my dad ? Assuming your parents are Indian Residents for tax purposes. No. It would be considered as Gift. Gifts between father and son are tax free in India and there is no limit. Any special care/precaution to take before using such services ? Not really. Just to be safe, keep a copy of the transfer instruction / details of debit to you account etc, so that if there is enquiry you have all the data handy. Edit: Clarifying the comment, if you are Resident Alien in US for tax purposes, you would be liable to Gift Tax [Not your parents as they are Indian Residents and would follow Indian tax rules]. As per IRS the liability of Gift tax is on Donor subject to limit of $14000 per year per Donee. So you and your wife can gift your father and mother $14000 each. i.e. $56000 each year. Anything more will be taxable or can be reduced from the overall estate limit."
},
{
"docid": "187448",
"title": "",
"text": "\"The HSA tax deduction comes when you contribute money to the HSA, not when you take money out. So you can contribute up to the max and take your maximum deduction each year, regardless of what medical expenses you have. If you have medical expenses, but no money left in your HSA, you will just have to pay for them out-of-pocket. However, in the future when your HSA has money in it again, you can reimburse yourself for medical expenses you have now. As long as you have an HSA in place (even if there is no money in it currently), there is no time limit to reimburse yourself for those medical expenses. Reimburse yourself for what you can, and keep track of whatever expenses you are unable to reimburse at this time. Hopefully, in a future year your health will improve (or your medical coverage will improve), and you can \"\"catch up\"\" reimbursing yourself for these old expenses. Regarding your question about tax benefit: The HSA acts similar to a traditional IRA when invested, growing tax-deferred. So if you contribute, and choose not to withdraw but instead invest, there are tax advantages, similar to an IRA. However, if you are already investing a sufficient amount in retirement accounts, there is nothing wrong with reimbursing yourself now for the expenses if you need the money. You get the primary tax deduction either way.\""
},
{
"docid": "174784",
"title": "",
"text": "CrimsonX did a great job highlighting the primary pros and cons of HSAs, so I won't go into detail there. However, I did want to point out another pro - HSAs are (or can be) easy to manage. You said: Is this a better way to approach health care costs instead of itemizing health care expenses on yearly federal taxes? I'm not sure which company you are looking at establishing your HSA with, but with mine I have a debit card that I use when paying for medical care and then at the end of the year I get a 1099-SA that provides the amount of money spent on qualified purchases that calendar year. Yes, there are a few extra boxes I need to fill in for my 1040 come tax time, but I don't need to itemize my healthcare costs over the year. It really is pretty simple and straightforward. Also, one con that is worth noting is that you become much more sensitive to healthcare costs due to the high deductible healthcare plan an HSA requires. For example, in all the years we've had an HSA we've not yet met our deductible, which means we pay out of pocket for any non-routine doctor visits. (The health insurer pays 100% of routine visits, like my wife's annual, well-baby check ups for the little one, and so on.) So, when you're feeling really sick and think a doctor's visit would be warranted, you have to make a decision: After being faced with this decision a time or two you will start to envy those who have just a $20 copay! Of course, that's just an emotional con. Each year I run the numbers on how much we spent per year on out of pocket plus premiums and compare it to what it would cost in premiums for an HMO-type plan, and the HSA plan always comes ahead. (In part because we are a pretty healthy family and I work for myself so do not get to enjoy group discount rates.) But I thought it worth mentioning because there are certainly times when I know I need to see a doctor or specialist and I cringe because I know I am going to be slapped with a big bill in the not too distant future!"
},
{
"docid": "522671",
"title": "",
"text": "When you pay interest on a loan used to fund a legitimate investment or business activity, that interest becomes an expense that you can deduct against related income. For example, if you borrowed $10k to buy stocks, you could deduct the interest on that $10k loan from investment gains. In your case, you are borrowing money to invest in the stock of your company. You would be able to deduct the interest expense against investment gain (like selling stock or receiving dividends), but not from any income from the business. (See this link for more information.) You do not have to pay taxes on the interest paid to your father; that is an expense, not income. However, your father has to pay taxes on that interest, because that is income for him."
},
{
"docid": "125482",
"title": "",
"text": "\"There is a term for this. If you google \"\"House Hacking\"\" you will get lots of articles and advice. Some of it will pertain to multifamily properties but a good amount should be owner occupied and renting bedrooms. I would play with a mortgage calculator like Whats My Payment. Include Principle, interest, taxes and insurance see how much it will cost. At 110k your monthly fixed payments will depend on a number of factors (down payment, interest, real estate tax rate and insurance cost) but $700-$1000 would be a decent guess in my area. Going off that with two roommates willing to pay $500 a month you would have no living expenses except any maintenance or utilities. With your income I would expect you could make the payment alone if needed (and it may be needed) so it seems fairly low risk from my perspective. You need somewhere to live you are used to roommates and you can pay the entire cost yourself in a worst case. Some more things to consider.. Insurance will be more expensive, you want to ensure you as the landlord you are covered if anything happens. If a tenant burns down your house or trips and falls and decides to sue you insurance will protect you. Capital Expenses (CapEx) replacing things as they wear out. On a home the roof, siding, flooring and all mechanicals(furnace, water heater, etc.) have a lifespan and will need to be replaced. On rental properties a portion of rent should be set aside to replace these things in the future. If a roof lasts 20yrs,costs $8,000 and your roof is 10years old you should be setting aside $70 a month so in the future when this know expense comes up it is not a hardship. Taxes Yes there is a special way to report income from an arrangement like this. You will fill out a Schedule E form in addition to your regular tax documents. You will also be able to write off a percent of housing expenses and depreciation on the home. I have been told it is not a simple tax situation and to consult a CPA that specializes in real estate.\""
},
{
"docid": "60562",
"title": "",
"text": "\"Here we go again! Why, oh why, would someone just open a bank account in your name with that much money for no good reason? Unless there's a very rich relative in your family tree, this can not come to a good ending. Besides, if this was money being left to you by someone as part of an inheritance, you'd hear from attorneys from the estate. Notwithstanding everything @NickR posted about the details of what makes it suspicious, ask yourself why a banker would contact you by email about an account with this much money in it. The bank would, at the very least, send you a registered/certified letter on official stationery. So what happens here is when you give them your banking information, whoever it is that's doing this will clean out your account, and that's for starters. They will ask for enough information to steal your identity too, and if you have good credit, that'll be gone in a heartbeat. The best scams (meaning the most successful ones) always appeal to peoples' greed, using large amounts of money that just miraculously belong to the victim, if only they'd give a little information to \"\"transfer\"\" the money. Worse yet, most of these scams will come up with some kind of \"\"fee\"\", \"\"tax\"\" or other expense that you have to pre-pay in order to make the transfer happen, so this just adds insult to injury when you find out (the hard way!) you've been scammed. DO NOT reply to the email you received or, if you already have, don't send any more responses. If they think they may have you on the hook then they won't stop trying, and it will become very messy very quickly. THIS IS NOT REAL MONEY! It isn't yours, it doesn't really exist, and all it will do is come to no good end if you go any further with it. Stay safe, my friend.\""
},
{
"docid": "511193",
"title": "",
"text": ">Because something is legal doesn't make it the ethical choice. You fail to demonstrate what is unethical about minimizing tax burdens. >corporations making huge profits using the infrastructure of the region Did the corporations have an option to refuse using that infrastructure, and instead provide their own or work with others to develop a competing infrastructure? >Keep in mind that these favorable tax laws were lobbied by corporations with the intent to avoid taxes in mind. You have failed to support any argument that there is anything wrong with minimizing tax burden. >If I'm walking behind someone and they happen to drop a $100 bill without noticing, I can certainly pick it up and put it in my pocket legally, but its hardly the moral thing to do. A more relevant example is if I order a pizza, have it sent to your house, then show up later with a bill for the pizza and my costs to send it to you, demanding you pay it. You never asked for the pizza, maybe you didn't want the pizza, maybe you didn't eat the pizza, maybe you don't like pizza, or don't like that kind of pizza. That I choose to send you a pizza does not obligate you to pay for that pizza."
},
{
"docid": "398823",
"title": "",
"text": "\"> Because something is legal doesn't make it the ethical choice. > > You fail to demonstrate what is unethical about minimizing tax burdens. Operating in a country that allows you to make profit, in my opinion, establishes a duty to pay one's fair share of taxes. Paying legislators to make laws enabling tax avoidance is, in my mind, unethical. Clearly we have a different idea of what is ethical and not. > corporations making huge profits using the infrastructure of the region > >Did the corporations have an option to refuse using that infrastructure, and instead provide their own or work with others to develop a competing infrastructure? Yes. > Keep in mind that these favorable tax laws were lobbied by corporations with the intent to avoid taxes in mind. >>You have failed to support any argument that there is anything wrong with minimizing tax burden. That's like your opinion man. I don't think minimizing taxes by paying off legislators is equitable...call me crazy. >If I'm walking behind someone and they happen to drop a $100 bill without noticing, I can certainly pick it up and put it in my pocket legally, but its hardly the moral thing to do. >>A more relevant example is if I order a pizza, have it sent to your house, then show up later with a bill for the pizza and my costs to send it to you, demanding you pay it. You never asked for the pizza, maybe you didn't want the pizza, maybe you didn't eat the pizza, maybe you don't like pizza, or don't like that kind of pizza. That I choose to send you a pizza does not obligate you to pay for that pizza. Lost me on this one bro...I thought we were talking ethics...not surprise pizzas. How about this one: I go to your house, use your kitchen and ingredients to make a pizza, sell the pizza for a profit and give you nothing even though we had an agreement that if I could make a profit I would give you some. However, I decide to talk to your roommate and give him a measly dollar to say \"\"forget about it bro...I said it's cool\"\".\""
},
{
"docid": "11979",
"title": "",
"text": "Here's how I think about money. There are only 3 categories / contexts (buckets) that my earned money falls into. Savings is my emergency fund. I keep 6 months of total expenses (expenses are anything in the consumption bucket). You can be as detailed as you want with this area but I tend to leave a fudge factor. In other words, if I estimate that I spend approximately $3,000 a month in consumption dollars then I'll save $3,500 times 6 in the bank. This money needs to be liquid. Some people use a HELOC, other people use their ROTH contributions. In any case, you need to put this money some place you can get access to it in case you go from accumulation (income exceed expenses) to decumulation mode (expenses exceed income). This money is distinct from consumption which I will cover in paragraph three. Investments are stocks, bonds, income producing real estate, small businesses, etc. These dollars require a strategy. The strategy can include some form of asset allocation but more importantly a timeline. These are the dollars that are working for you. Each dollar placed here will multiply over time. Once you put a dollar here it shouldn't be taken out unless there is some sort of catastrophe that your savings can't handle or your timeline has been achieved. Notice that rental real estate is included so liquidating stocks to purchase rental real estate is NOT considered removing investment dollars. Just reallocating based on your asset allocation. This bucket includes 401k's, IRAs, all tax-sheltered accounts, non-sheltered brokerage accounts, and rental real estate. In general your primary residence is not included in this bucket. Some people include the equity of their primary residence in the investment column but it can complicate the equation and I prefer to leave it out. The consumption bucket is the most important bucket and the one you spend the most time with. It requires a budget. This includes your $5 magazine and your $200 bottle of wine. Anything in this bucket is gone. You can recover a portion of it by selling it on ebay for $3 (these are earned dollars) but the original $5 is still considered spent. The reason your thought process in this area is distinct from the other two, the decisions made in this area will have the biggest impact on your personal finances. Warren Buffett was famous for skimping on haircuts because they are worth thousands of dollars down the road if they are invested instead. Remember this is a zero-sum game so every $1 not consumed is placed in one of the other buckets. Once your savings bucket is full every dollar not consumed is sent to investments. Remember to include everything that does not fit in the other two buckets. Most people forget their car insurance, life insurance, tax bill at the end of the year, accountant bill, etc. In conclusion, there are three buckets. Savings, which serve as your emergency bucket. This money should not be touched unless you switch from accumulation to decumulation. Investments, which are your dollars that are working for you over time. They require a strategy and a timeline. Consumption, which are your monthly expenses. These dollars keep you alive and contribute to your enjoyment. This is a short explanation of my use of money. It can get as complicated and detailed as you want it to be but as long as you tag your dollars correctly you'll be okay IMHO. HTH."
},
{
"docid": "178303",
"title": "",
"text": "\"Some thoughts: 1) Do you have a significant emergency fund (3-6 months of after-tax living expenses)? If not, you stand to take a significant loss if you have an unexpected need for cash that is tied up in investments. What if you lose/hate your job or your car breaks down? What if a you want to spend some time with a relative or significant other who learns they only have a few months to live? Having a dedicated emergency fund is an important way to avoid downside risk. 2) Lagerbaer has a good suggestion. Given that if you'd reinvested your dividends, the S&P 500 has returned about 3.5% over the last 5 years, you may be able to get a very nice risk-free return. 3) Do you have access to employer matching funds, such as in a 401(k) at work? If you get a dollar-for-dollar match, that is a risk-free pre-tax 100% return and should be a high priority. 4) What do you mean by \"\"medium\"\" volatility? Given that you are considering a 2/3 equity allocation, it would not be at all out of the realm of possibility that your balance could fall by 15% or more in any given year and take several years to recover. If that would spook you, you may want to consider lowering your equity weights. A high quality bond fund may be a good fit. 5) Personally, I would avoid putting money into stocks that I didn't need back for 10 years. If you only want to tie your money up for 2-5 years, you are taking a significant risk that if prices fall, you won't have time to recover before you need your money back. The portfolio you described would be appropriate for someone with a long-term investment horizon and significant risk tolerance, which is usually the case for young people saving for retirement. However, if your goals are to invest for 2-5 years only, your situation would be significantly different. 6) You can often borrow from an investment account to purchase a primary residence, but you must pay that amount back in order to avoid significant taxes and fees, unless you plan to liquidate assets. If you plan to buy a house, saving enough to avoid PMI is a good risk-free return on your money. 7) In general, and ETF or index fund is a good idea, the key being to minimize the compound effect of expenses over the long term. There are many good choices a la Vanguard here to choose from. 8) Don't worry about \"\"Buy low, sell high\"\". Don't be a speculator, be an investor (that's my version of Anthony Bourdain's, \"\"don't be a tourist, be a traveler\"\"). A speculator wants to sell shares at a higher price than they were purchased at. An investor wants to share in the profits of a company as a part-owner. If you can consistently beat the market by trying to time your transactions, good for you - you can move to Wall Street and make millions. However, almost no one can do this consistently, and it doesn't seem worth it to me to try. I don't mean to discourage you from investing, just make sure you have your bases covered so that you don't have to cash out at a bad time. Best of luck! Edit Response to additional questions below. 1) Emergency fund. I would recommend not investing in anything other than cash equivalents (money market, short-term CDs, etc.) until you've built up an emergency fund. It makes sense to want to make the \"\"best\"\" use of your money, but you also have to account for risk. My concern is that if you were to experience one or more adverse life events, that you could lose a lot of money, or need to pay a lot in interest on credit card debt, and it would be prudent to self-insure against some of those risks. I would also recommend against using an investment account as an emergency fund account. Taking money out of investment accounts is inefficient because the commissions/taxes/fees can easily eat up a significant portion of your returns. Ideally, you would want to put money in and not touch it for a long time in order to take advantage of compounding returns. There are also high penalties for early disbursements from retirement funds. Just like you need enough money in your checking account to buy food and pay the rent every month, you need enough money in an emergency fund to pay for things that are a real possibility, even if they are less common. Using a credit card or an investment account is a relatively expensive way to do this. 2) Invest at all? I would recommend starting an emergency fund, and then beginning to invest for retirement. Once your retirement savings are on track, you can begin saving for whatever other goals you may have\""
},
{
"docid": "487179",
"title": "",
"text": "\"You are asking about a common, simple practice of holding the mortgage when selling a house you own outright. Typically called seller financing. Say I am 70 and wish to downsize. The money I sell my house for will likely be in the bank at today's awful rates. Now, a buyer likes my house, and has 20% down, but due to some medical bills for his deceased wife, he and his new wife are struggling to get financing. I offer to let them pay me as if I were the bank. We agree on the rate, I have a lien on the house just as a bank would, and my mortgage with them requires the usual fire, theft, vandalism insurance. When I die, my heirs will get the income, or the buyer can pay in full after I'm gone. In response to comment \"\"how do you do that? What's the paperwork?\"\" Fellow member @littleadv has often posted \"\"You need to hire a professional.\"\" Not because the top members here can't offer great, accurate advice. But because a small mistake on the part of the DIY attempt can be far more costly than the relative cost of a pro. In real estate (where I am an agent) you can skip the agent to hook up buyer/seller, but always use the pro for legal work, in this case a real estate attorney. I'd personally avoid the general family lawyer, going with the specialist here.\""
},
{
"docid": "96725",
"title": "",
"text": "If you can afford to max out an HSA and cover out of pocket expenses without withdrawing from it, it makes sense to do so. It might sound initially risky to tie too much money to healthcare expenses, perhaps you'll enjoy exceptional health and not need those funds. However, the annual contribution limit ($3,350/year for an individual) is low enough that it's unlikely you'd overfund your HSA, but even if you didn't need it all for healthcare, after 65 you can withdraw HSA funds without the 20% withdrawal penalty that you're hit with if under 65, so best case it's tax-free, worst-case it's like an IRA. From a tax perspective, your contributions are a tax-deduction like a traditional IRA, there's no tax on the gains, and you withdraw it tax-free as well, so long as you have healthcare expenses. The tricky bit is you can get reimbursed for your expenses at any time. If you pay out of pocket now, in 20 years you can get a reimbursement from your HSA: From HSA Bank's FAQ Can I use my tax-free HSA savings to pay for — or reimburse myself for — IRS-qualified medical expenses from a previous year? Yes, as long as the IRS-qualified medical expenses were incurred after your HSA was established, you can pay them or reimburse yourself with HSA funds at any time. Just be sure to keep sufficient records to show that these expenses were not previously paid for by another source or taken as an itemized deduction in any prior tax year."
},
{
"docid": "323145",
"title": "",
"text": "\"I have personally invested $5,000 in a YieldStreet offering (a loan being used by a company looking to expand a ridesharing fleet), and would certainly recommend taking a closer look if they fit your investment goals and risk profile. (Here's a more detailed review I wrote on my website.) YieldStreet is among a growing crop of companies launched as a result of legislative and regulatory changes that began with the JOBS Act in 2012 (that's a summary from my website that I wrote after my own efforts to parse the new rules) but didn't fully go into effect until last year. Most of them are in Real Estate or Angel/Venture, so YieldStreet is clearly looking to carve out a niche by assembling a rather diverse collection of offerings (including Real Estate, but also other many other categories). Unlike angel/venture platforms (and more like the Real Estate platforms), YieldStreet only offers secured (asset-backed) investments, so in theory there's less risk of loss of principal (though in practice, these platforms haven't been through a serious stress test). So far I've stuck with relatively short-term investments on the debt crowdfunding platforms (including YieldStreet), and at least for the one I chose, it includes monthly payments of both principal and interest, so you're \"\"taking money off the table\"\" right away (though presumably then are faced with how to redeploy, which is another matter altogether!) My advice is to start small while you acclimate to the various platforms and investment options. I know I was overwhelmed when I first decided to try one out, and the way I got over that was to decide on the maximum I was willing to lose entirely, and then focus on finding the first opportunity that looked reasonable and would maximize what I could learn (in my case it was a $1,000 in a fix-and-flip loan deal via PeerStreet).\""
},
{
"docid": "100764",
"title": "",
"text": "\"You don't specify which country you are in, so my answers are more from a best practice view than a legal view.. I don't intend on using it for personal use, but I mean it's just as possible. This is a dangerous proposition.. You shouldn't co-mingle business expenses with personal expenses. If there is a chance this will happen, then stop, make it so that it won't happen. The big danger is in being able to have traceability between what you are doing for the business, and what you are doing for yourself. If you are using this as a \"\"staging\"\" account for investments, etc., are those investments for yourself? Or for the business? Is tax treatment on capital gains and/or dividends the same for personal and business in your jurisdiction? If you buy a widget, is the widget an expense against business income? Or is it an out of pocket expense for personal consumption? The former reduces your taxable income, the latter does not. I don't see the benefit of a real business account because those have features specific to maybe corporations, LLC, and etc. -- nothing beneficial to a sole proprietor who has no reports/employees. The real benefit is that there is a clear delineation between business income/expenses and personal income/expenses. This account can also accept money and hold it from business transactions/sales, and possibly transfer some to the personal account if there's no need for reinvesting said amount/percentage. What you are looking for is a commonly called a current account, because it is used for current expenses. If you are moving money out of the account to your personal account, that speaks to paying yourself, which has other implications as well. The safest/cleanest way to do this is to: While this may sound like overkill, it is the only way to guarantee that income/expenses are allocated to the correct entity (i.e. you, or your business). From a Canadian standpoint:\""
},
{
"docid": "439003",
"title": "",
"text": "If your parents can afford to shell out $1,250 a month for 5 years, they would pretty much have the debt paid off, provided the credit card companies don't start playing games with rates. If that payment is too high, maybe you could kick in $5k every few months to knock the principal down. If they think the business can keep puttering along without losing more money, that may be the way to go. Five years is long enough that the business or property may have recovered some value. Another option, depending on the value of the home, could be a reverse mortgage. I don't know how the economy has affected those programs, but that might be a good option to get the debt cleared away. My grandfather was in a similar position back in the 70's. He owned taverns in NYC that catered to an industrial clientele... the place was booming in the 60s and my grandfather and his brother owned 4 locations at one point. But the death of his brother, post-Vietnam malaise, suburban exodus and shutting of industry really hurt the business, and he ended up selling out his last tavern in 1979 -- which was a dark hour in NYC history and real estate values. A few years later, that building sold for a tremendous amount of money... I believe 10x more. I don't know whether there was a way for his business to survive for another 5-7 years, as I was too young to remember. But I do remember my grandfather (and my father to this day) being melancholy about the whole affair. It's hard to have to work part-time in your 60's and be constantly reminded that your family business -- and to some degree a part of your life -- ended in failure. The stress of keeping things afloat when you're broke is tough. But there's also a mental reward from getting through a tough situation on your own. Good luck!"
},
{
"docid": "292748",
"title": "",
"text": "\"I really have to use the business card for personal expenses, please assume that in your answer. This is very hard to believe. You must do that? Why not just have the company pay you $1600 each month? Then you can use that money for whatever you want. Why can't you do this? (I cannot think of a legitimate reason...) How to integrate the personal expenses in company? Anyway, to answer your question, what I've done when I accidentally used my corporate card for a personal expense is to code the expense as a payment to me similar to if a check had been written to me. If you aren't ever paying yourself, then you should just pay the company back the $1600 every month. As a side note, I highly recommend you don't do this. By doing this on a regular basis you are opening the door for piercing the corporate veil. This means that the financial protections provided by the LLC could potentially be stripped away since personal and corporate funds are being mixed. The unfortunate end result is that personal assets could end up being fair game too in a judgement against the company. Even if you aren't an owner, your relative could be considered to be \"\"using business money for personal expenses\"\", namely, letting a relative spend business funds for personal use. How to show more expenses and lessen the profit? If you're referring to the personal expenses, then you absolutely do not want to do this! That's illegal and worthy of stiff penalties, which possibly include jail time for tax evasion. Better to just have the company pay you and then the entire payment is deductible and reduces the profit of the company.\""
},
{
"docid": "441518",
"title": "",
"text": "\"A good question -- there are many good tactical points in other answers but I wanted to emphasize two strategic points to think about in your \"\"5-year plan\"\", both of which involve around diversification: Expense allocation: You have several potential expenses. Actually, expenses isn't the right word, it's more like \"\"applications\"\". Think of the money you have as a resource that you can \"\"pour\"\" (because money has liquidity!) into multiple \"\"buckets\"\" depending on time horizon and risk tolerance. An ultra-short-term cushion for extreme emergencies -- e.g. things go really wrong -- this should be something you can access at a moment's notice from a bank account. For example, your car has been towed and they need cash. A short-term cushion for emergencies -- something bad happens and you need the money in a few days or weeks. (A CD ladder is good for this -- it pays better interest and you can get the money out quick with a minimal penalty.) A long-term savings cushion -- you might want to make a down payment on a house or a car, but you know it's some years off. For this, an investment account is good; there are quite a few index funds out there which have very low expenses and will get you a better return than CDs / savings account, with some risk tolerance. Retirement savings -- $1 now can be worth a huge amount of money to you in 40 years if you invest it wisely. Here's where the IRA (or 401K if you get a job) comes in. You need to put these in this order of priority. Put enough money in your short-term cushions to be 99% confident you have enough. Then with the remainder, put most of it in an investment account but some of it in a retirement account. The thing to realize is that you need to make the retirement account off-limits, so you don't want to put too much money there, but the earlier you can get started in a retirement account, the better. I'm 38, and I started both an investment and a retirement account at age 24. They're now to the point where I save more income, on average, from the returns in my investments, than I can save from my salary. But I wish I had started a few years earlier. Income: You need to come up with some idea of what your range of net income (after living expenses) is likely to be over the next five years, so that you can make decisions about your savings allocation. Are you in good health or bad? Are you single or do you have a family? Are you working towards law school or medical school, and need to borrow money? Are you planning on getting a job with a dependable salary, or do you plan on being self-employed, where there is more uncertainty in your income? These are all factors that will help you decide how important short-term and long term savings are to your 5-year plan. In short, there is no one place you should put your money. But be smart about it and you'll give yourself a good head start in your personal finances. Good luck!\""
},
{
"docid": "180146",
"title": "",
"text": "As long as the relative in the UK is not a US citizen and isn't considered domiciled in the US, there will be no estate taxes imposed by the US. You can see a much lengthier explanation on this subject here. The summary is that as a US citizen or resident, you can't circumvent estate taxes by moving yourself or your money abroad, but a relative who genuinely doesn't have US ties (other than inheritors located in the US) will be covered through applicable tax treaties (the UK does have an applicable tax treaty and applicable estate taxes as Ganesh points out)."
}
] |
4640 | What can my relatives do to minimize their out of pocket expenses on their fathers estate | [
{
"docid": "540539",
"title": "",
"text": "\"Sure, it's irresponsible for an executor to take actions which endanger the estate. But what about passivity or inaction? Put it another way. Is it the obligation of the executor to avoid making revenue for the estate? Think about it - what a silly idea! Consider a 12-unit apartment building full of rent paying tenants. A tenant gives notice and leaves. So do 4 more. With only 7/12 tenants, the building stops being a revenue center and becomes a massive money pit. Is that acceptable? Heck no! Realistically this will be managed by a property management company, and of course they'll seek new tenants, not stopping merely because the owner died. This situation is not different; the same fiscal logic applies. The counter-argument is usually along the lines of \"\"stuff might happen if you rent it out\"\"... true. But the stuff that happens to abandoned houses is much worse, and much more likely: squatters, teen \"\"urban explorers\"\", pot growers, copper thieves, winter pipe freeze flooding and wrecking interiors, etc. Don't take my word on it -- ask your insurer for the cost of insuring an abandoned house vs. a rented one. Renting brings a chunk of cash that comes in from tenants - $12,000/year on a $1000/mo. rental. And that will barely pay the bills if you have a young mortgage on a freshly purchased house at recent market rates. But on an old mortgage, renting is like printing money. That money propagates first to the estate (presumably it is holding back a \"\"fix the roof\"\" emergency fund), and then to the beneficiaries. It means getting annual checks from the estate, instead of constantly being dunned for another repair. But I don't care about making revenue (outside of putting back a kitty to replace the roof). Even if it was net zero, it means the maintenance is being done. This being the point. It is keeping the house in good repair, occupied, insured, and professionally managed -- fit and ready for the bequest's purpose: occupancy of an aunt. What's the alternative? Move an aunt into a house that's been 10 years abandoned? Realistically the heirs are going to get tired/bored of maintaining the place at a total cash loss, maintenance will slip, and you'll be moving them into a neglected house with some serious issues. That betrays the bequest, and it's not fair to the aunts. Rental is a very responsible thing to do. The executor shouldn't fail to do it merely out of passivity. If you decide not to do it, there needs to be a viable alternative to funding the home's decent upkeep. (I don't think there is one). Excluding a revenue-producing asset from the economy is an expensive thing to do.\""
}
] | [
{
"docid": "17633",
"title": "",
"text": "There can be Federal estate tax as well as State estate tax due on an estate, but it is not of direct concern to you. Estate taxes are paid by the estate of the decedent, not by the beneficiaries, and so you do not owe any estate tax. As a matter of fact, most estates in the US do not pay Federal estate tax at all because only the amount that exceeds the Federal exemption ($5.5M) is taxable, and most estates are smaller. State estate taxes might be a different matter because while many states exempt exactly what the Federal Government does, others exempt different (usually smaller) amounts. But in any case, estate taxes are not of concern to you except insofar as what you inherit is reduced because the estate had to pay estate tax before distributing the inheritances. As JoeTaxpayer's answer says more succinctly, what you inherit is net of estate tax, if any. What you receive as an inheritance is not taxable income to you either. If you receive stock shares or other property, your basis is the value of the property when you inherit it. Thus, if you sell at a later time, you will have to pay taxes only on the increase in the value of the property from the time you inherit it. The increase in value from the time the decedent acquired the property till the date of death is not taxable income to you. Exceptions to all these favorable rules to you is the treatment of Traditional IRAs, 401ks, pension plans etc that you inherit that contain money on which the decedent never paid income tax. Distributions from such inherited accounts are (mostly) taxable income to you; any part of post-tax money such as nondeductible contributions to Traditional IRAs that is included in the distribution is tax-free. Annuities present another source of complications. For annuities within IRAs, even the IRS throws up its hands at explaining things to mere mortals who are foolhardy enough to delve into Pub 950, saying in effect, talk to your tax advisor. For other annuities, questions arise such as is this a tax-deferred annuity and whether it was purchased with pre-tax money or with post-tax money, etc. One thing that you should check out is whether it is beneficial to take a lump sum distribution or just collect the money as it is distributed in monthly, quarterly, semi-annual, or annual payments. Annuities in particular have heavy surrender charges if they are terminated early and the money taken as a lump sum instead of over time as the insurance company issuing the annuity had planned on happening. So, taking a lump sum would mean more income tax immediately due not just on the lump sum but because the increase in AGI might reduce deductions for medical expenses as well as reduce the overall amount of itemized deductions that can be claimed, increase taxability of social security benefits, etc. You say that you have these angles sussed out, and so I will merely re-iterate Beware the surrender charges."
},
{
"docid": "367785",
"title": "",
"text": "Term life insurance makes sense if you will have a need for money if someone dies. If you (and your brothers) do not have enough money currently for a proper burial for your father, then you might consider term insurance to cover this. If you already have the money to cover this (or can save for it in a short amount of time), then you are better off financially to not purchase the insurance. Estimate what you think it will cost for a burial, then determine if you have this money available to you. If you already do, then don't purchase the insurance. If you do not have this money available to you, then you can look into a term life insurance policy on your father. You definitely do not want a whole life insurance policy. This will cost many more times what a term policy costs. A term policy is a policy with an expiration date. For example, let's say that you determine that you will need $10,000 when your father dies for the funeral and burial. You could get a 10-year policy on your father for $10,000. Over the next 10 years, besides paying your premiums, save up $10,000 ($1,000 each year) in some type of savings/investing account. Hopefully, your father will still be around 10 years from now, and you won't need the insurance policy anymore, because you will have saved enough to cover the costs when the time comes. Doing this will almost always cost you less than getting a whole life policy, which never expires, but has much higher premiums. There are also 20-year term policies, which will cost more, but will give you more time to save up your fund. The costs for these policies depend on your father's age, so get a quote for both and decide what will work for you."
},
{
"docid": "67253",
"title": "",
"text": "\"is it worth it? You state the average yield on a stock as 2-3%, but seem to have come up with this by looking at the yield of an S&P500 index. Not every stock in that index is paying a dividend and many of them that are paying have such a low yield that a dividend investor would not even consider them. Unless you plan to buy the index itself, you are distorting the possible income by averaging in all these \"\"duds\"\". You are also assuming your income is directly proportional to the amount of yield you could buy right now. But that's a false measure because you are talking about building up your investment by contributing $2k-$3k/month. No matter what asset you choose to invest in, it's going to take some time to build up to asset(s) producing $20k/year income at that rate. Investments today will have time in market to grow in multiple ways. Given you have some time, immediate yield is not what you should be measuring dividends, or other investments, on in my opinion. Income investors usually focus on YOC (Yield On Cost), a measure of income to be received this year based on the purchase price of the asset producing that income. If you do go with dividend investing AND your investments grow the dividends themselves on a regular basis, it's not unheard of for YOC to be north of 6% in 10 years. The same can be true of rental property given that rents can rise. Achieving that with dividends has alot to do with picking the right companies, but you've said you are not opposed to working hard to invest correctly, so I assume researching and teaching yourself how to lower the risk of picking the wrong companies isn't something you'd be opposed to. I know more about dividend growth investing than I do property investing, so I can only provide an example of a dividend growth entry strategy: Many dividend growth investors have goals of not entering a new position unless the current yield is over 3%, and only then when the company has a long, consistent, track record of growing EPS and dividends at a good rate, a low debt/cashflow ratio to reduce risk of dividend cuts, and a good moat to preserve competitiveness of the company relative to its peers. (Amongst many other possible measures.) They then buy only on dips, or downtrends, where the price causes a higher yield and lower than normal P/E at the same time that they have faith that they've valued the company correctly for a 3+ year, or longer, hold time. There are those who self-report that they've managed to build up a $20k+ dividend payment portfolio in less than 10 years. Check out Dividend Growth Investor's blog for an example. There's a whole world of Dividend Growth Investing strategies and writings out there and the commenters on his blog will lead to links for many of them. I want to point out that income is not just for those who are old. Some people planned, and have achieved, the ability to retire young purely because they've built up an income portfolio that covers their expenses. Assuming you want that, the question is whether stock assets that pay dividends is the type of investment process that resonates with you, or if something else fits you better. I believe the OP says they'd prefer long hold times, with few activities once the investment decisions are made, and isn't dissuaded by significant work to identify his investments. Both real estate and stocks fit the latter, but the subtypes of dividend growth stocks and hands-off property investing (which I assume means paying for a property manager) are a better fit for the former. In my opinion, the biggest additional factor differentiating these two is liquidity concerns. Post-tax stock accounts are going to be much easier to turn into emergency cash than a real estate portfolio. Whether that's an important factor depends on personal situation though.\""
},
{
"docid": "308208",
"title": "",
"text": "So your accountant certainly knows much more than I do about Israeli tax law and its interactions with US tax law, which is zero. I'm going to look at this problem from the investment perspective which I hope to convince you is the most important place to start. Then you can adjust for interactions between the Isreali and US tax codes. Even if the tax breaks are exceptional, it would be hard to recommend buying real estate as an investment in the 7-10 year time frame. Especially if this real estate is in the US. Open/Closing fees, mortgage fees, risk of property devaluation, bad-renters, acts of god, insurance costs and tax complications make short to medium term investments in real estate a particularly risky way to invest. Buying a local apartment and renting is somewhat more reasonable as you don't have to worry about the currency conversion and you can do a lot more research in your local environment and keep a closer eye on the property, it is still this a pretty concentrated risk. Saving and investing using tax-advantaged accounts is generally considered a great way to build toward a down payment in the medium term. A mixture of mostly local bonds with some local and foreign stocks and more and more cash as it gets close to purchase time is generally what is recommended when saving for a home. This mixture is relatively safe and will tend to grow steadily without the concentrated risk of a real estate investment. PFIC rules are complicated and certainly worth taking some time to understand, but owning real estate especially in a foreign country seems much more complicated and certainly riskier. There may be some rule that makes investing in REITs much better than normal stocks in these particular accounts though I would be surprised if that were the case. It is generally not true for people under just he US tax code. So while option (1) may not be the absolute best from a tax perspective it would certainly be my guess as the most likely to succeed."
},
{
"docid": "322314",
"title": "",
"text": "\"Also the will stipulated that the house cannot be sold as long as one of my wife's aunts (not the same one who supposedly took the file cabinet) is alive. This is a turkey of a provision, particularly if she is not living in the house. It essentially renders the house, which is mortgaged, valueless. You'd have to put money into it to maintain the mortgage until she dies and you can sell it. The way that I see it, you have four options: Crack that provision in the will. You'd need to hire a lawyer for that. It may not be possible. Abandon the house. It's currently owned by the estate, so leave it in the estate. Distribute any goods and investments, but let the bank foreclose on the house. You don't get any value from the house, but you don't lose anything either. Your father's credit rating will take a posthumous hit that it can afford. You may need to talk to a lawyer here as well, but this is going to be a standard problem. Explore a reverse mortgage. They may be able to accommodate the weird provision with the aunt and manage the property while giving a payout. Or maybe not. It doesn't hurt to ask. Find a property manager in Philadelphia and have them rent out the house for you. Google gave some results on \"\"find property management company Philadelphia\"\" and you might be able to do better while in Philadelphia to get rid of his stuff. Again, I'd leave the house on the estate, as you are blocked from selling. A lawyer might need to put it in a trust or something to make that work (if the estate has to be closed in a certain time period). Pay the mortgage out of the rent. If there's extra left over, you can either pay down the mortgage faster or distribute it. Note that the rent may not support the mortgage. If not, then option four is not practical. However, in that case, the house is unlikely to be worth much net of the mortgage anyway. Let the bank have it (option two). If the aunt needs to move into the house, then you can give up the rental income. She can either pay the mortgage (possibly by renting rooms) or allow foreclosure. A reverse mortgage might also help in that situation. It's worth noting that three of the options involve a lawyer. Consulting one to help choose among the options might be constructive. You may be able to find a law firm with offices in both Florida and Pennsylvania. It's currently winter. Someone should check on the house to make sure that the heat is running and the pipes aren't freezing. If you can't do anything with it now, consider winterizing by turning off the water and draining the pipes. Turn the heat down to something reasonable and unplug the refrigerator (throw out the food first). Note that the kind of heat matters. You may need to buy oil or pay a gas bill in addition to electricity.\""
},
{
"docid": "441518",
"title": "",
"text": "\"A good question -- there are many good tactical points in other answers but I wanted to emphasize two strategic points to think about in your \"\"5-year plan\"\", both of which involve around diversification: Expense allocation: You have several potential expenses. Actually, expenses isn't the right word, it's more like \"\"applications\"\". Think of the money you have as a resource that you can \"\"pour\"\" (because money has liquidity!) into multiple \"\"buckets\"\" depending on time horizon and risk tolerance. An ultra-short-term cushion for extreme emergencies -- e.g. things go really wrong -- this should be something you can access at a moment's notice from a bank account. For example, your car has been towed and they need cash. A short-term cushion for emergencies -- something bad happens and you need the money in a few days or weeks. (A CD ladder is good for this -- it pays better interest and you can get the money out quick with a minimal penalty.) A long-term savings cushion -- you might want to make a down payment on a house or a car, but you know it's some years off. For this, an investment account is good; there are quite a few index funds out there which have very low expenses and will get you a better return than CDs / savings account, with some risk tolerance. Retirement savings -- $1 now can be worth a huge amount of money to you in 40 years if you invest it wisely. Here's where the IRA (or 401K if you get a job) comes in. You need to put these in this order of priority. Put enough money in your short-term cushions to be 99% confident you have enough. Then with the remainder, put most of it in an investment account but some of it in a retirement account. The thing to realize is that you need to make the retirement account off-limits, so you don't want to put too much money there, but the earlier you can get started in a retirement account, the better. I'm 38, and I started both an investment and a retirement account at age 24. They're now to the point where I save more income, on average, from the returns in my investments, than I can save from my salary. But I wish I had started a few years earlier. Income: You need to come up with some idea of what your range of net income (after living expenses) is likely to be over the next five years, so that you can make decisions about your savings allocation. Are you in good health or bad? Are you single or do you have a family? Are you working towards law school or medical school, and need to borrow money? Are you planning on getting a job with a dependable salary, or do you plan on being self-employed, where there is more uncertainty in your income? These are all factors that will help you decide how important short-term and long term savings are to your 5-year plan. In short, there is no one place you should put your money. But be smart about it and you'll give yourself a good head start in your personal finances. Good luck!\""
},
{
"docid": "438874",
"title": "",
"text": "A more recent article on inheritance taxes than the one cited by @JohnBensin says that Maryland does not charge inheritance tax on inheritances received from parents (and other close relatives as well). Thus, there is no inheritance tax due to Maryland on your inheritance, and of course, estate tax (both Federal and State) is imposed on the estate and payable by the estate, and thus should have been taken into account by the executor before determining the amount to be divided among the children. If the executor screwed up on this point, some of the inheritance may have to be returned to the estate so that the estate can pay the taxes due, or be paid directly to the Federal Government and/or the State of Maryland on behalf of the estate. Some part of the inheritance might be taxable income to you if it came in the form of an Inherited IRA on which Federal (and possibly State) taxes have to paid on the (taxable part of) any distribution from the IRA including the Required Minimum Distribution that must be made from the IRA each year. (There is also a 50% penalty for not taking at least the RMD each year). Note that the value of the IRA is not taxable income in the year of inheritance, just the money taken as a distribution. Some people liquidate the IRA within 5 years, as used to be required for non-spouse inheritors under earlier tax law, and thus end up paying a lot more income tax than they would have to pay if they went the RMD route. If your uncle took the help of a lawyer in winding up your father's estate, you are probably OK in that all the rules were likely followed, but if it was a do-it-yourself job (or you don't trust your uncle not to screw it up anyway!), then, as John Bensin has already told you, you should certainly consult a tax professional in Maryland to make sure you don't run afoul of tax authorities."
},
{
"docid": "522122",
"title": "",
"text": "It did help her though, she divorced her abusive husband and raised 7 children as a maid. Her eldest daughter, My mother, graduated college, got married, and worked for NIH. Two of her sons went into the Army, another daughter went into the Navy. My parents got divorced due to my fathers alcoholism, i ended up being raised by my grandmother purely due to my mother's illness, an autoimmune illness with no defined cause. My grandmother will be passing along a very expensive house she bought that would likely have been sold years before the gentrification of the area had she not had medicaid to assist with the bills for caring for my mother. Or the monumental amount spent caring for my aunt who went blind and died from cancer. None of this process is possible without the outside help. If there are no programs for people in these situations to take advantage of, then even fewer make it out. This is my point, there are a ton of forces that act upon you and your life, and I see others not be able to scrounge the assistance needed to deal with their situations. I spent some time going to a SOME clinic for my dentist, seeing men and women who had much worse mental disabilities than my depression, and mine was crippling and caused me to never finish college. I have known people trying their hardest to deal with situations as bad or worse than mine, that don't get the right break. I can sympathize with those who wont take their meds, because I've felt what just some antidepressants do to you, numbing you to the point that nothing matters, a cure as bad as the problem, its just other people think it looks better. I want programs to continue to exist, to be the rungs of the ladder for those trying their best to get out, no not all will, but what's the other option right now? Leave them in it? I have yet to see another path that isn't just leaving people in the shit hole that isn't always entirely their fault. It's a big ugly problem that you can only solve piecemeal, and may never be fully solved. Some may fail by circumstance, some may fail by personal failing, but removing the ladders, removing the help wont solve anything."
},
{
"docid": "522671",
"title": "",
"text": "When you pay interest on a loan used to fund a legitimate investment or business activity, that interest becomes an expense that you can deduct against related income. For example, if you borrowed $10k to buy stocks, you could deduct the interest on that $10k loan from investment gains. In your case, you are borrowing money to invest in the stock of your company. You would be able to deduct the interest expense against investment gain (like selling stock or receiving dividends), but not from any income from the business. (See this link for more information.) You do not have to pay taxes on the interest paid to your father; that is an expense, not income. However, your father has to pay taxes on that interest, because that is income for him."
},
{
"docid": "303082",
"title": "",
"text": "\"I suppose I should update this with what I ended up using some of my HSA funds for... dental work! I'm in my mid-20's and it came time for my wisdom teeth to be removed. While my dental insurance covered the procedure, I had to pay out of pocket for the fancy \"\"conscious sedation\"\" ($325 to make me nice and relaxed, versus plain Novocaine and nervously holding my mouth open, while I get my teeth ripped out). Luckily, I had my HSA to cover it. Also, I may need braces... :\\ Most dental insurance won't cover the cost of orthodontics 100%, so that's another costly, common, and easily-overlooked expense a younger person may have that spare HSA funds can cover.\""
},
{
"docid": "320362",
"title": "",
"text": "\"You'd need to talk with an attorney familiar with Social Security, or an appropriately qualified SSA representative to be sure - but all signs point to the idea that unfortunately Social Security does not work the way your father was told it would. And if he doesn't file to receive benefits the reality is actually much worse than \"\"throwing away free money\"\"! However, this is not due to a complete misunderstanding of the system! Social Security does work the way he thinks in some instances, just that the rules don't apply to his exact situation! First of all, retroactive benefits come in a few forms: File and suspend to get a lump only if you really need it - BEFORE the age of 70 only! In this method you apply for retirement, but you tell the SSA to suspend/delay your benefits. You are entitled to full lump sum of the payments you deferred...but at a cost of getting lower monthly benefits permanently (and that also lowers spousal and dependent children's benefits, too - if those could apply to your dad). But note that at the age of 70, Social Security will stop deferring the payments and start paying you the full maximum retirement benefit monthly, with no lump sum. This is a kind of emergency insurance policy for those who want to try to defer retirement benefits, but who want the opportunity to cash out and get the money they would have been getting \"\"just in case\"\". You can get up to 6 months of retroactive benefits, such as if you wait past your exact retirement age to apply for benefits. But no more: \"\"we cannot pay retroactive benefits for any month before you reached full retirement age or more than 6 months in the past\"\". As for after-death benefits, an estate can only get benefits that were already due to be paid, which generally means a person died and did not get their benefits for that month, so SSA can re-issue a check to the estate following these rules. But as a person cannot be due a lump sum payment after age 70 (for more than 6 months at most), the estate will only be able to get at most 1-6 months of payments (and 6 months is doubtful - you'll need to ask a lawyer if that much would even be possible). If your father was below 70 and wanted to file-and-suspend, the question of lump on death would be more complex and I don't know that answer - but once you are past 70 this doesn't matter any more as you aren't due a lump anymore. Given the above, we've established pretty clearly that if you don't claim your benefits within 6 months after age 70, any months of payment you would have gotten are just forfeited to the system. But if you claim the benefits and stick them in the bank, can they be taken? Well, if a lawsuit is really a worry, then yes these accumulated funds can required to pay a debt - but this potential for loss can be protected against without forfeiting the benefits entirely! This is not very common, but if your father doesn't need the money now he may be able to deposit some of the money into a special partially-lawsuit protected format of the Roth IRA (which has no age limits) as detailed here. If he never gets sued, that's OK - it's still his money! If he passes away, the value goes to his estate and does not disappear. And he doesn't forfeit any of his earned retirement benefits. Finally, I would like to share one last thing with you and your father. These benefits aren't free - he has been paying a portion of his paycheck for decades into Social Security, and now he is eligible for the maximum amount of benefits per month that he will qualify for - and if he wants to keep working he loses no benefit and the amount could potentially even go up. That's up to him. But not filing for benefits now will mean that all this money he's been paying in for decades will just be lost - they'll basically just be a tax he's paid out to other retirees. His estate (which means you kids) won't get any of it, either. That'd just be a waste for everyone involved. If you have continued doubts or questions, I wouldn't hesitate to consult a specialist lawyer or talk with the SSA directly to make sure this is all correct. It's his money, and he has earned his benefits for many years. I very much hope he gets to enjoy as much of them as he can!\""
},
{
"docid": "187448",
"title": "",
"text": "\"The HSA tax deduction comes when you contribute money to the HSA, not when you take money out. So you can contribute up to the max and take your maximum deduction each year, regardless of what medical expenses you have. If you have medical expenses, but no money left in your HSA, you will just have to pay for them out-of-pocket. However, in the future when your HSA has money in it again, you can reimburse yourself for medical expenses you have now. As long as you have an HSA in place (even if there is no money in it currently), there is no time limit to reimburse yourself for those medical expenses. Reimburse yourself for what you can, and keep track of whatever expenses you are unable to reimburse at this time. Hopefully, in a future year your health will improve (or your medical coverage will improve), and you can \"\"catch up\"\" reimbursing yourself for these old expenses. Regarding your question about tax benefit: The HSA acts similar to a traditional IRA when invested, growing tax-deferred. So if you contribute, and choose not to withdraw but instead invest, there are tax advantages, similar to an IRA. However, if you are already investing a sufficient amount in retirement accounts, there is nothing wrong with reimbursing yourself now for the expenses if you need the money. You get the primary tax deduction either way.\""
},
{
"docid": "526664",
"title": "",
"text": "\"For starting with zero knowledge you certainly did a great job on research as you hit on most of the important points with your question. It seems like you have already saved up around six months of expenses in savings so it is a great time to look into investing. The hardest part of your question is actually one of the most important details. Investing in a way that minimizes your taxes is generally more important, in the end, than what assets you actually invest in (as long as you invest even semi-reasonably). The problem is that the interaction between your home country's tax system and the U.S. tax system can be complex. It's probably (likely?) still worth maxing out your 401(k) (IRA, SEP, 529 accounts if you qualify) to avoid taxes, but like this question from an Indian investor it may be worth seeing an investment professional about this. If you do, see a fee-based professional preferably one familiar with your country. If tax-advantaged accounts are not a good deal for you or if you max them out, a discount broker is probably a good second option for someone willing to do a bit of research like you. With this money investing in broadly-diversified, low fee, index mutual funds or exchange traded funds is generally recommended. Among other benefits, diversified funds make sure that if any particular company fails you don't feel too much pain. The advantages of low fees are fairly obvious and one very good reason why so many people recommend Vanguard on this site. A common mix for someone your age is mostly stocks (local and international) and some bonds. Though with how you talk about risk you may prefer more bonds. Some people recommend spicing this up a bit with a small amount of real estate (REITs), sometimes even other assets. The right portfolio of the above can change a lot given the person. The above mentioned adviser and/or more research can help here. If, in the future, you start to believe you will go back to your home country soon that may throw much of this advice out the window and you should definitely reevaluate then. Also, if you are interested in the math/stats behind the above advice \"\"A Random Walk Down Wall Street\"\" is a light read and a good place to start. Investing makes for a very interesting and reasonably profitable math/stats problem.\""
},
{
"docid": "51445",
"title": "",
"text": "There's no formula for how much is the ideal amount to spend on entertainment and fun. As JoeTaxpayer says, it's all about balance. Maybe relative costs are different in France than in the US where I live, but here, housing and the things that go with it -- electricity, heat, insurance, maybe a few other miscellaneous items -- are usually a huge portion of a young person's expenses. If you don't mind living with your parents -- and they don't mind having you -- you can save a lot of money. There are lots of things you can do for fun that don't cost a lot of money. If your idea of fun is collecting fancy cars and making round-the-world trips, yes, that can get expensive fast. When I was in my 20s, my entertainment mostly consisted of going to movies, amusement parks, and occasional concerts; and playing computer games. Those aren't super expensive as long as you don't do them every day. And keeping my car running, which saved money over buying a new car. These days I'm in a situation analogous to yours: I'm getting older, and so I'm trying to build up a retirement account so I can retire comfortably. So I have to balance how much I put away for retirement with spending on fun things now. I have certain targets, and so I budget that I will put this amount away for retirement every month, and my spending money is what I have left. I think that's better than, spend whatever I want on fun, and then put what's left toward retirement. The latter plan is probably a fast route to debt."
},
{
"docid": "292748",
"title": "",
"text": "\"I really have to use the business card for personal expenses, please assume that in your answer. This is very hard to believe. You must do that? Why not just have the company pay you $1600 each month? Then you can use that money for whatever you want. Why can't you do this? (I cannot think of a legitimate reason...) How to integrate the personal expenses in company? Anyway, to answer your question, what I've done when I accidentally used my corporate card for a personal expense is to code the expense as a payment to me similar to if a check had been written to me. If you aren't ever paying yourself, then you should just pay the company back the $1600 every month. As a side note, I highly recommend you don't do this. By doing this on a regular basis you are opening the door for piercing the corporate veil. This means that the financial protections provided by the LLC could potentially be stripped away since personal and corporate funds are being mixed. The unfortunate end result is that personal assets could end up being fair game too in a judgement against the company. Even if you aren't an owner, your relative could be considered to be \"\"using business money for personal expenses\"\", namely, letting a relative spend business funds for personal use. How to show more expenses and lessen the profit? If you're referring to the personal expenses, then you absolutely do not want to do this! That's illegal and worthy of stiff penalties, which possibly include jail time for tax evasion. Better to just have the company pay you and then the entire payment is deductible and reduces the profit of the company.\""
},
{
"docid": "578597",
"title": "",
"text": "You apparently assume that pouring money into a landlord's pocket is a bad thing. Not necessarily. Whether it makes sense to purchase your own home or to live in a rental property varies based on the market prices and rents of properties. In the long term, real estate prices closely follow inflation. However, in some areas it may be possible that real estate prices have increased by more than inflation in the past, say, 10 years. This may mean that some (stupid) people assume that real estate prices continue to appreciate at this rate in the future. The price of real estates when compared to rents may become unrealistically high so that the rental yield becomes low, and the only reasonable way of obtaining money from real estate investments is price appreciation continuing. No, it will not continue forever. Furthermore, an individual real estate is a very poorly diversified investment. And a very risky investment, too: a mold problem can destroy the entire value of your investment, if you invest in only one property. Real estates are commonly said to be less risky than stocks, but this applies only to large real estate portfolios when compared with large stock portfolios. It is easier to build a large stock portfolio with a small amount of money to invest when compared to building a large real estate portfolio. Thus, I would consider this: how much return are you going to get (by not needing to pay rent, but needing to pay some minor maintenance costs) when purchasing your own home? How much does the home cost? What is the annual return on the investment? Is it larger than smaller when compared to investing the same amount of money in the stock market? As I said, an individual house is a more risky investment than a well-diversified stock portfolio. Thus, if a well-diversified stock portfolio yields 8% annually, I would demand 10% return from an individual house before considering to move my money from stocks to a house."
},
{
"docid": "318201",
"title": "",
"text": "Can you deduct interest paid to your father on your personal income taxes? Interest paid on passive investments can be deducted from the amount earned by that investment as an investment expense as long as the amount earned is greater than the total paid for the interest expense. Also beware if the amount of interest paid is greater than the yearly gift tax exclusion, as the IRS might interpret this as a creative way of giving gifts to your father without paying gift tax. Do you pay taxes on the interest you pay? No, because is an expense, not income, you would not count interest paid to him as taxable income. Does your father owe taxes on the interest he collects from you? Yes, that is income to him. And the last question you didn't ask, but I expect it is implied: Do you owe taxes on the quarterly profits? Yes, that is income to you. The Forbes article How To Arrange A Loan Between Family Members is a bit dated, but still a good source of information. You really should write a formal note (signed by both you and your father) indicating the amount borrowed, the interest rate you are paying on that amount, and when the loan will be repaid. If your father has set the interest rate too low, this could also be considered a gift to you, though we would really be talking about large amounts of money to hit the gift tax limit on interest alone."
},
{
"docid": "178303",
"title": "",
"text": "\"Some thoughts: 1) Do you have a significant emergency fund (3-6 months of after-tax living expenses)? If not, you stand to take a significant loss if you have an unexpected need for cash that is tied up in investments. What if you lose/hate your job or your car breaks down? What if a you want to spend some time with a relative or significant other who learns they only have a few months to live? Having a dedicated emergency fund is an important way to avoid downside risk. 2) Lagerbaer has a good suggestion. Given that if you'd reinvested your dividends, the S&P 500 has returned about 3.5% over the last 5 years, you may be able to get a very nice risk-free return. 3) Do you have access to employer matching funds, such as in a 401(k) at work? If you get a dollar-for-dollar match, that is a risk-free pre-tax 100% return and should be a high priority. 4) What do you mean by \"\"medium\"\" volatility? Given that you are considering a 2/3 equity allocation, it would not be at all out of the realm of possibility that your balance could fall by 15% or more in any given year and take several years to recover. If that would spook you, you may want to consider lowering your equity weights. A high quality bond fund may be a good fit. 5) Personally, I would avoid putting money into stocks that I didn't need back for 10 years. If you only want to tie your money up for 2-5 years, you are taking a significant risk that if prices fall, you won't have time to recover before you need your money back. The portfolio you described would be appropriate for someone with a long-term investment horizon and significant risk tolerance, which is usually the case for young people saving for retirement. However, if your goals are to invest for 2-5 years only, your situation would be significantly different. 6) You can often borrow from an investment account to purchase a primary residence, but you must pay that amount back in order to avoid significant taxes and fees, unless you plan to liquidate assets. If you plan to buy a house, saving enough to avoid PMI is a good risk-free return on your money. 7) In general, and ETF or index fund is a good idea, the key being to minimize the compound effect of expenses over the long term. There are many good choices a la Vanguard here to choose from. 8) Don't worry about \"\"Buy low, sell high\"\". Don't be a speculator, be an investor (that's my version of Anthony Bourdain's, \"\"don't be a tourist, be a traveler\"\"). A speculator wants to sell shares at a higher price than they were purchased at. An investor wants to share in the profits of a company as a part-owner. If you can consistently beat the market by trying to time your transactions, good for you - you can move to Wall Street and make millions. However, almost no one can do this consistently, and it doesn't seem worth it to me to try. I don't mean to discourage you from investing, just make sure you have your bases covered so that you don't have to cash out at a bad time. Best of luck! Edit Response to additional questions below. 1) Emergency fund. I would recommend not investing in anything other than cash equivalents (money market, short-term CDs, etc.) until you've built up an emergency fund. It makes sense to want to make the \"\"best\"\" use of your money, but you also have to account for risk. My concern is that if you were to experience one or more adverse life events, that you could lose a lot of money, or need to pay a lot in interest on credit card debt, and it would be prudent to self-insure against some of those risks. I would also recommend against using an investment account as an emergency fund account. Taking money out of investment accounts is inefficient because the commissions/taxes/fees can easily eat up a significant portion of your returns. Ideally, you would want to put money in and not touch it for a long time in order to take advantage of compounding returns. There are also high penalties for early disbursements from retirement funds. Just like you need enough money in your checking account to buy food and pay the rent every month, you need enough money in an emergency fund to pay for things that are a real possibility, even if they are less common. Using a credit card or an investment account is a relatively expensive way to do this. 2) Invest at all? I would recommend starting an emergency fund, and then beginning to invest for retirement. Once your retirement savings are on track, you can begin saving for whatever other goals you may have\""
},
{
"docid": "595028",
"title": "",
"text": "\"To address the issue in the title of your question: Many expenses strike at what for all practical purposes are random intervals. Roof starts leaking, car needs repair, etc, don't have a fixed cost every month. Medical expenses can certainly be more extreme than many other expenses, but their nature is the same. And so the way to budget for them is the same: You figure out what your average expenses are over a long period of time. Then you start putting away a little more than this amount every month. Keep putting away until you have a reserve larger than any expense you are likely to get hit with all at once. I have no idea what your particular expenses are, so let me use myself for an example. My medical bills last year were unusually large: about $6,000. I have lousy insurance and a couple of chronic conditions, so my bills are usually maybe $1,000 to $2,000 per year. So I plan on about $150 per month for medical bills. Most insurance policies have an \"\"out of pocket maximum\"\". This should be the most you'd ever have to lay out in a year. Mine is $13,000. (I told you my insurance sucks.) So I have an account that I have now built up to $13,000. Worst case, I wipe out that account. In any case, if my bills are that large, the doctors or hospital will normally agree to a payment plan. (I still owe a few hundred on my bills from last year and the hospital is letting me pay it off at $120 per month.) Your question brings up a lot of issues about difficulties of working with insurance and the U.S. medical system in general. I'm not sure if your intent was to get advice on the rest of it all. Simple -- not pleasant, but simple -- answer: If you're insurance is provided by your employer, you're pretty much stuck with the policy that the employer negotiates. I don't know how much you're contributing to premiums, usually the company pays the bulk of it. You could investigate getting a policy on your own, but odds are that any policy you could get for what you're contributing now would be way worse than what you can get through the company. You could always investigate, but I doubt you'll do better. You can talk to HR. If it's a big company, they may have some muscle with the insurance company and could help you out. Failing that, it becomes a political question of how the laws affecting medical care and insurance in the U.S. are set up, and while I have many ideas for how it could be improved, sadly I'm not in a position to do much about it, and I doubt you are either. Unless you have the resources to run for president.\""
}
] |
4641 | Where should I park my rainy-day / emergency fund? | [
{
"docid": "44594",
"title": "",
"text": "\"First off, you generally want to park your emergency fund somewhere that is \"\"safe\"\", meaning something that is not subject to market fluctuations. Your emergency fund is something you need to be able to count on when times are tough! That rules out things like stock market investments. Secondly, you need to think about how quickly you will need access to the money. If you have an emergency, odds are you don't want to be waiting around for weeks/months/years for the money to become available. This rules out most fixed-term investments (Bonds, traditional CDs, etc). If you are concerned that you will need near-instant access to your emergency money, then you probably want to keep it in a Savings or Money Market Account at the same bank as your checking account. Most banks will let you transfer money between local accounts instantly. Unfortunately, your local bank probably has pitiful interest rates for the Savings/MMA, far below the inflation rate. This means your money will slowly lose value over time. Be prepared to keep contributing to it! For most people, being able to draw the cash from your fund within a few days (<1 week) is sufficient. Worst case, you charge something on your credit card, and then pay down the card when the emergency fund withdrawal arrives. If \"\"money within a few days\"\" is okay for you, there are a few options: Money Market (Mutual) Funds (not to be confused with a Money Market Account) - This is the traditional place to keep an emergency fund. These are investment funds you can buy with a brokerage account. An example of such a fund would be Fidelity Cash Reserves. MMFs are not FDIC insured, so they are not exactly zero risk. However, they are considered extremely safe. They almost never go down in value (only a few times in the past few decades), and when they have, the fund manager or the Federal Govt stepped in to restore the value. They usually offer slightly better return than a local savings account, and are available in taxable and non-taxable varieties. Online High-Yield Savings or Money Market Account - These are a relatively new invention. It's basically a the same thing as what your local bank offers, but it's online-only. No local branch means low overhead, so they offer higher interest rates (2.0% vs 0.5% for your local bank). Some of them used to be over 5% before the economy tanked. Like your local bank, it is FDIC insured. One bit of caution: Some of these accounts have become \"\"gimmicky\"\" lately. They have started to do things like promo rates for a few months, only offering the high interest rate on the first few $K deposited, limiting the amount that can be withdrawn, etc. Be sure to read the details before you open an account! No-Penalty CDs - Certificates of Deposit usually offer a better rate than a Savings Account, but your money is locked up until the CD term is up (e.g. 36 months). If you need to cash out before then, you pay a penalty. Some banks have begun to offer CDs that you can cash out with no penalty at all. These can offer better rates than the savings account. Make sure it really is no-penalty though. Also watch what your options are for slowly adding money over time. This can be an issue if you want to deposit $100 from every paycheck. Rewards Checking Accounts - These are checking accounts that will pay a relatively high interest rate (3% or more) provided you generate enough activity. Most of them will have requirements like you must have direct deposit setup with them, and you must do a minimum number of debit card transactions from the account per month. If you can stay on top of the requirements, these can be a great deal. If you don't stay on top of it, your interest rate usually drops back to something pitiful, though. Personally, we use the Online High-Yield Savings Account for our emergency fund. I'm not going to make a specific recommendation as to which bank to use. The best deal changes almost week to week. Instead, I will say to check out Bankrate.com for a list of savings accounts and CDs that you can sort. The Bank Deals blog is a good place to follow rate changes.\""
}
] | [
{
"docid": "589088",
"title": "",
"text": "\"Some of the other answers recommended peer-to-peer lending and property markets. I would not invest in either of these. Firstly, peer-to-peer lending is not a traditional investment and we may not have enough historical data for the risk-to-return ratio. Secondly, property investments have a great risk unless you diversify, which requires a huge portfolio. Crowd-funding for one property is not a traditional investment, and may have drawbacks. For example, what if you disagree with other crowd-funders about the required repairs for the property? If you invest in the property market, I recommend a well-diversified fund that owns many properties. Beware of high debt leverage used to enhance returns (and, at the same time, risk) and high fees when selecting a fund. However, traditionally it has been a better choice to invest in stocks than to invest in property market. Beware of anyone who says that the property market is \"\"too good to not get into\"\" without specifying which part of the world is meant. Note also that many companies invest in properties, so if you invest only in a well-diversified stock index fund, you may already have property investments in your portfolio! However, in your case I would keep the money in risk-free assets, i.e. bank savings or a genuine low-cost money market fund (i.e. one that doesn't invest in corporate debt or in variable-rate loans which have short duration but long maturity). The reason is that you're going to be unemployed soon, and thus, you may need the money soon. If you have an investment horizon of, say, 10 years, then I would throw stocks into the mix, and if you're saving for retirement, then I would go all in to stocks. In the part of the world where I live in, money market funds generally have better return than bank savings, and better diversification too. However, your 2.8% interest sounds rather high (the money market fund I have in the past invested in currently yields at 0.02%, but then again I live in the eurozone), so be sure to get estimates for the yields of different risk-free assets. So, my advice for investing is simple: risk-free assets for short time horizon, a mixture of stocks and risk-free assets for medium time horizon, and only stocks for long time horizon. In any case, you need a small emergency fund, too, which you should consider a thing separate from your investments. My emergency fund is 20 000 EUR. Your 50 000 AUD is bit more than 30 000 EUR, so you don't really have that much money to invest, only a bit more than a reasonably sized emergency fund. But then again, I live in rental property, so my expenses are probably higher than yours. If you can foresee a very long time horizon for part of your investment, you could perhaps invest 50% of your money to stocks (preference being a geographically diversified index fund or a number of index funds), but I wouldn't invest more because of the need for an emergency fund.\""
},
{
"docid": "21420",
"title": "",
"text": "There is no accounting reason that it should be different, there are likely psychological reasons that it should be, however. Assuming that you live in a western country with good banking regulation, you likely have deposit insurance or a similar scheme. Here in Canada we are covered up to $100,000 in a single account with various limitations. At least my rainy-day account plus savings is nowhere near that, so I'm good to go. That said, however, having a large lump of money in an account you regularly use may tempt you more than you can stand. That iPad, car, home improvement, etc., might be too easy to buy knowing you have relatively easy access to that money. So it really becomes a self-discipline question. Good Luck"
},
{
"docid": "481401",
"title": "",
"text": "Personal finance is a fairly broad area. Which part might you be starting with? From the very basics, make sure you understand your current cashflow: are you bank balances going up or down? Next, make a budget. There's plenty of information to get started here, and it doesn't require a fancy piece of software. This will make sure you have a deeper understanding of where your money is going, and what is it being saved for. Is it just piling up, or is it allocated for specific purchases (i.e. that new car, house, college tuition, retirement, or even a vacation or a rainy day)? As part of the budgeting/cashflow exercise, make sure you have any outstanding debts covered. Are your credit card balances under control? Do you have other outstanding loans (education, auto, mortgage, other)? Normally, you'd address these in order from highest to lowest interest rate. Your budget should address any immediate mandatory expenses (rent, utilities, food) and long term existing debts. Then comes discretionary spending and savings (especially until you have a decent emergency fund). How much can you afford to spend on discretionary purchases? How much do you want to be able to spend? If the want is greater than the can, what steps can you take to rememdy that? With savings you can have a whole new set of planning to consider. How much do you leave in the bank? Do you keep some amount in a CD ladder? How much goes into retirement savings accounts (401k, Roth vs. Traditional IRA), college savings accounts, or a plain brokerage account? How do you balance your overall portfolio (there is a wealth of information on portfolio management)? What level of risk are you comfortable with? What level of risk should you consider, given your age and goals? How involved do you want to be with your portfolio, or do you want someone else to manage it? Silver Dragon's answer contains some good starting points for portfolio management and investing. Definitely spend some time learning the basics of investing and portfolio management even if you decide to solicit professional expertise; understanding what they're doing can help to determine earlier whether your interests are being treated as a priority."
},
{
"docid": "254572",
"title": "",
"text": "From a budgeting perspective, the emergency fund is a category in which you've budgeted funds for the unexpected. These are things that weren't able to be predicted and budgeted for in advance, or things that exceeded the expected costs. For example you might budget $150 per month for car maintenance, and typically spend some of it while the rest builds up over time for unexpected repairs, so you have a few hundred available for that. But this month your transmission died and you have a $3,000 bill. You'll then fund most of this out of your emergency fund. This doesn't cover where to store that money though, which leads me to my next point. Emergencies are emergencies because they come without warning, without you having a chance to plan. Thefore the primary things you want in an emergency fund account are stability and quick access. You can structure investments to be whatever you think of as safe or stable but you don't want to be thinking about whether it's a good time to sell when you need the money right now. But the bigger problem is access. When you need the funds on a weekend, holiday, anytime outside of market hours, you're not going to be able to just sell some stocks and go to an ATM. This is the reason why it's recommended to have these funds in a checking or savings account usually. The reason I mentioned the budgeting side first is because I wanted to point out that if you're budgeting well, most of the unexpected expenses you have should have been expected in a sense; you can still plan for something without knowing when or if it will happen. So in the example of a car repair, ideally you're already budgeting for possible repairs, if you own a home you're budgeting for things that would go wrong, budgeting for speeding tickets, for surprise out of pocket medical costs, etc. These then become part of your normal budget: they aren't part of the emergency fund anymore. The bright side about budgeting for something unexpected is that you know what that money is for, and do you likely also know how quickly you'll need it. For example you know if you have unexpected medical costs that happen very quickly, you're not likely you need a bag of cash on a moment's notice. So those last two points lead to the fact that your actual emergency fund, the dollars that are for things you simply could not foresee, will be relatively small. A few thousand dollars or so in most cases. If you've got things structured like this, you'll be happy to have a few grand available at a moment's notice. The bulk of the money you would use for other surprise expenses (or things like 6 months of living expenses) is represented in other specific categories and you already know the timeframe in which you need it (probably enough time that it could be invested, risk to taste). In short: by expecting the unexpected, you can sidestep this issue and not worry so much about missed returns on the emergency fund."
},
{
"docid": "328556",
"title": "",
"text": "In the 2008 housing crash, cash was king. Cash can make your mortgage payment, buy groceries, utilities, etc. Great deals on bank owned properties were available for those with cash. Getting a mortgage in 2008-2011 was tough. If you are worried about stock market crashing, then diversification is key. Don't have all your investments in one mutual fund or sector. Gold and precious metals have a place in one's portfolio, say 5-10 percent as an insurance policy. The days of using a Gold Double Eagle to pay the property taxes are largely gone, although Utah does allow it. The biggest lesson I took from the crash is you cant have too much cash saved. Build up the rainy day fund."
},
{
"docid": "551099",
"title": "",
"text": "\"Welcome to Money.SE. I will say upfront, Personal Finance is just that, personal, and you are likely to get multiple, perhaps conflicting, answers. Are you sure the PMI will drop off after 2 years? The rules are specific, and for PMI, when prepayments put you at that 78/80% LTV, your bank can require an appraisal, not automatically drop it. Talk to the banks, get confirmation, and depending what they say, keep hacking away at the mortgage. After this, I suggest jumping on Roth IRAs. You are in the 15% bracket, and the Roth will let you deposit $5500 for each you and your wife. A great way to kickstart a higher level of retirement savings. After this, I'm not comfortable with the emergency savings level. If you lose your job tomorrow (Funny story, my wife and I lost our's on the same day 3 years ago) and don't have enough savings (Our retirement accounts were good to just retire that day) you can easily run out of money and be late on the mortgage. It's great to prepay the mortgage to get rid of that PMI, but once there, I'd do the Roth and then focus on savings. 6 months expenses minimum. We have a great Q&A here titled Oversimplify it for me: the correct order of investing in which I go in to more detail, as do 4 other members. I am not getting on the \"\"investments will return more than your mortgage cost\"\" soapbox. A well-funded emergency fund is a very conservative bit of advice. With no matched 401(k), I suggest a balance of the Roth savings and prepayments. From another great post, Ideal net worth by age X? Need comparison references you should have nearly 1 year's salary (90K) saved toward retirement. Any question on my advice, add a comment and I will edit in more details.\""
},
{
"docid": "457634",
"title": "",
"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."
},
{
"docid": "159235",
"title": "",
"text": "No cash is necessary for most people. In the modern day in the US there is no need to keep paper currency around for emergencies; any sort of emergency that knocked out all of the ability to use plastic (ATMs, credit cards, etc.) for an extended period of time AND knocked your bank out of service would be of the level that cash might not have any value either. Your $100 of cash for natural disasters is likely more than enough, and even that I wouldn't necessarily consider a vital thing in this day where even a major natural disaster probably isn't going to have too much impact on the financial sector outside of the immediate area (that you should be exiting quickly). Keep however much cash around that you need for day to day cash expenses, and that should be enough. The level of emergency that would suggest cash being needed would probably need more than you'd actually want to keep around, anyway - i.e., a complete collapse of the American or World financial system would imply you need months' worth of cash. That's just not feasible, nor is it practical financially. You should have your emergency fund making at least a bit of interest - 1% or so isn't hard to get right now, and in the near future that may increase substantially if interest rates go up. It also would make you a substantial theft target if it were known you had months' worth of cash around the house (i.e., thousands of dollars). Safes don't necessarily give you sufficient protection unless you've got a very good safe - commercial ones are only as safe as the ability to crack them and/or transport them is. Now, if you find yourself regularly out at 2am and run out of cash, and you live somewhere that ATMs don't exist, and you find yourself needing to pay cab drivers from time to time after a drunk bender... then I'd keep at least one cab's worth of cash at home."
},
{
"docid": "244692",
"title": "",
"text": "\"One can generalize on Traditional vs Roth flavors of accounts, I suggest Roth for 15% money and going pretax to avoid 25% tax. If the student loan is much over 4%, it may make sense to put it right after emergency fund. For emergency fund priority - I'm assuming EF really requires 2 phases, the $2500 broken transmission/root canal bill, and the lose your job, or need a new roof level bills. I'm in favor of doing what let's you sleep well. I'm also quick to point out that if you owe $2500 at 18%, yet have $2500 in your emergency fund, you're really throwing away $450 in interest each year. There's an ongoing debate of \"\"credit card as emergency fund.\"\" No, I don't claim that your cards should be considered an emergency fund, per se, but I would prioritize knocking off the 18% debt as a high priority. Once that crazy interest debt is gone, fund the ER, and find a balance for savings and the next level ER, the 6-9mo of expenses one. One can choose to fund a Roth IRA, but keep the asset out of retirement calculations. It's simply an emergency account returning tax free interest, and if never used, it eventually is retirement money. A Roth permits withdrawal of deposited funds with no tax or penalty, just tracking it each year. This actually rubs some people the wrong way as it sounds like tapping your retirement account for emergencies. For my purpose, it's a tax free emergency fund. Not retirement, unless and until you are saving so much in the 401(k) you need more tax favored retirement money. I wrote an article some time ago, the Roth Emergency Fund which went into a bit more detail. Last - keep in mind, this is my opinion. I can intelligently argue my case, but at some point, it's up to the individual to do what feels right. Paying 18% debt off a bit slower, say 4 years instead of 3, in favor of funding the matched 401(k), to me, you run the numbers, watch the 401(k) balance grow by 2X your pretax deposits, and see that in year 3, your retirement account is jump-started and far, far more than your remaining 18% cards. Those who feel the opposite and wish to be debt free first are going to do what they want. And the truth is, if this lets you sleep better at night, I'm in favor of it.\""
},
{
"docid": "108974",
"title": "",
"text": "I few years ago my company in the Washington DC area allowed employees to contribute their own pre-tax funds. The system at the time wasn't sophisticated enough to prevent what you are suggesting. The money each month was put on a special credit card that could only be used at certain types of locations. You could load it onto the Metro smart trip card, and use it for many months. Many people did this, even though the IRS says you shouldn't. But eventually the program for the federal employees changed, their employer provided funds were put directly onto their Smart Trip card. In fact there were two buckets on the card: one to pay for commuting, and the other to pay for parking. There was no way to transfer money between buckets. The first day of the new month all the excess funds were automatically removed from the card;and the new funds were put onto the card. If your employer has a similar program it may work the same way. HR will know."
},
{
"docid": "274948",
"title": "",
"text": "Try and save up for another month's expenses in your emergency fund, but while you are doing so begin building what is called a ladder of CDs. Tomorrow is April 1, so open a three-month CD (yes, the rates are abysmal but better than money-market fund rates) with one month's emergency fund. Repeat the process on May 1. So now you have two CDs maturing on July 1 and August 1. On June 1, take whatever of that extra month's expense you have saved up and open yet another three-month CD. On July 1, re-invest the proceeds of the first CD into a new three-month CD. Ditto on August 1. On September 1, add the additional savings towards the additional month that you managed to make to the smaller CD to bring it closer to one month's expenses. Lather, rinse, repeat. You will, I hope, soon be in a state where you will have four months of expenses in your emergency fund: one month on hand for immediate use if needed right away, and three months of additional expenses becoming available in 30 days or less, between 30 and 60 days, and between 60 and 90 days."
},
{
"docid": "433371",
"title": "",
"text": "BrenBarn did a great job explaining your options so I won't rehash any of that. I know you said that you don't want to save for retirement yet, but I'm going to risk answering that you should anyway. Specifically, I think you should consider a Roth IRA. When it comes to tax advantaged retirement accounts, once the contribution period for a tax year ends, there's no way to make up for it. For example in 2015 you may contribute up to $5,500 to your IRA. You can make those contributions up until tax day of the following year (April 15th, 2016). After that, you cannot contribute money towards 2015 again. So each year that goes by, you're losing out on some potential to contribute. As for why I think a Roth IRA specifically could work well for you: I'm advocating this because I think it's a good balance. You put away some money in a retirement account now, when it will have the most impact on your future retirement assets, taking advantage of a time you will never have again. At a low cost custodian like Vanguard, you can open an IRA with as little as $1,000 to start and choose from excellent fund options that meet your risk requirements. If you end up deciding that you really want that money for a car or a house or beer money, you can withdraw any of the contributions without fear of penalty or additional tax. But if you decide you don't really need to take that money back out, you've contributed to your retirement for a tax year you likely wouldn't have otherwise, and wouldn't be able to make up for later when you have more than enough to max out an IRA each year. I also want to stress that you should have a liquid emergency fund (in a savings or checking account) to deal with unexpected emergencies before funding something like this. But after that, if you have no specific goal for your savings and you don't know for sure you'll actually need to spend it in the near future, funding a Roth IRA is worth considering in my opinion."
},
{
"docid": "27671",
"title": "",
"text": "\"For an RRSP, you do not have to pay taxes on money or investments until you withdraw the money. If you do not reinvest the dividends but instead, take them out as cash, that would be withdrawing the money. For mutual funds, you would normally reinvest the dividends if holding the investment inside an RRSP. For stocks, I believe the dividends would end up sitting in the cash part of your RRSP account (and you'd probably use the money to buy more stocks, though would not be required to do so). Either way, you do not pay tax on this investment income unless you withdraw it from your RRSP. For example, you invest $10,000 inside your RRSP. You get the tax benefit from doing so. You get dividends of $1,000 (hey, it was a good year), and use these to buy more stock. As the money never left your RRSP account, you are considered to have invested only your initial $10,000. If instead, you withdraw the $1,000 in dividends, you are taxed on $1000 income. TFSA are slightly more complicated. You don't get a tax benefit from your initial contribution, but then do not pay tax when you withdraw from the TFSA. Your investment income is still tax-free, and you are (generally) much more limited in how much you can contribute. For example, you invest $10,000 inside your TFSA. You get dividends of $1,000, and use these to buy more stock. Your total contributions to your TFSA remains at $10,000 as the money never left your account. You could instead withdraw the $1000 from your TFSA and would not pay tax on it. In the next calendar year (or later) after the withdrawal, you could \"\"repay\"\" the $1000 you took out without suffering an overcontribution penalty. This makes TFSA an excellent place to park emergency funds, as you can withdraw and subsequently replace the investment while continuing to get the tax benefits on your investment income. RRSPs are better for retirement or for the home buyers plan. In general, you should not be withdrawing money from either your TFSA or RRSP, except in emergencies, when retiring, or when purchasing a home. I prefer indexed mutual funds or money market accounts for both my RRSP and TFSA rather than individual stocks, but that's up to you.\""
},
{
"docid": "213887",
"title": "",
"text": "I keep several savings accounts. I use an online-only bank that makes it very easy to open a new account in about 2 minutes. I keep the following accounts: Emergency Fund with 2 months of expenses. I pretend this money doesn't even exist. But if something happened that I needed money right away, I can get it. 6 6-month term CDs, with one maturing every month, each with 1 month's worth of expenses. This way, every month, I'll have a CD that matures with the money I would need that month if I lose my job or some other emergency that prevents me from working. You won't make as much interest on the 6-month term, but you'll have cash every month if you need it. Goal-specific accounts: I keep an account that I make a 'car payment' into every month so I'll have a down-payment saved when I'm ready to buy a car, and I'm used to making a payment, so it's not an additional expense if I need a loan. I also keep a vacation account so when it's time to take the family to Disneyland, I know how much I can budget for the trip. General savings: The 'everything else' account. When I just NEED to buy a new LCD TV on Black Friday, that's where I go without touching my emergency funds."
},
{
"docid": "350145",
"title": "",
"text": "First: it sounds like you are already making wise choices with your cash surplus. You've looked for ways to keep that growing ahead of inflation and you have made use of tax shelters. So for the rest of this answer I am going to assume you have between 3-6 months expenses already saved up as a “rainy day fund” and you're ready for more sophisticated approaches to growing your funds. To answer this part: Are there any other ways that I can save/ invest that I am not currently doing? Yes, you could look at, for example: 1. Peer to peer These services let you lend to a 'basket' of borrowers and receive a return on your money that is typically higher than what's offered in cash savings accounts. Examples of peer to peer networks are Zopa, Ratesetter and FundingCircle. This involves taking some risks with your money – Zopa's lending section explains the risks. 2. Structured deposits These are a type of cash deposit product where, in return for locking your money away for a time (typically 5 years), you get the opportunity for higher returns e.g. 5% + / year. Your deposit is usually guaranteed under the FSCS (Financial services compensation scheme), however, the returns are dependent on the performance of a stock market index such as the FTSE 100 being higher in x years from now. Also, structured deposits usually require a minimum £3,000 investment. 3. Index funds You mention watching the stock prices of a few companies. I agree with your conclusion – I wouldn't suggest trying to choose individual stocks at this stage. Price history is a poor predictor of future performance, and markets can be volatile. To decide if a stock is worth buying you need to understand the fundamentals, be able to assess the current stock price and future outlook, and be comfortable accepting a range of different risks (including currency and geographic risk). If you buy shares in a small number of companies, you are concentrating your risk (especially if they have things in common with each other). Index funds, while they do carry risks, let you pool your money with other investors to buy shares in a 'basket' of stocks to replicate the movement of an index such as the FTSE All Share. The basket-of-stocks approach at least gives you some built-in diversification against the risks of individual stocks. I suggest index funds (as opposed to actively managed funds, where you pay a management fee to have your investments chosen by a professional who tries to beat the market) because they are low cost and easier to understand. An example of a very low cost index fund is this FTSE All Share tracker from Aberdeen, on the Hargreaves Lansdown platform: http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/a/aberdeen-foundation-growth-accumulation General principle on investing in stock market based index funds: You should always invest with a 5+ year time horizon. This is because prices can move up and down for reasons beyond your anticipation or control (volatility). Time can smooth out volatility; generally, the longer the time period, the greater your likelihood of achieving a positive return. I hope this answer so far helps takes into account the excess funds. So… to answer the second part of your question: Or would it be best to start using any excess funds […] to pay off my student loan quicker? Your student loan is currently costing you 0.9% interest per annum. At this rate it's lower than the last 10 years average inflation. One argument: if you repay your student loan this is effectively a 0.9% guaranteed return on every pound repaid – This is the equivalent of 1.125% on a cash savings account if you're paying basic rate tax on the interest. An opposing argument: 0.9% is lower than the last 10 years' average inflation in the UK. There are so many advantages to making a start with growing your money for the long term, due to the effects of compound returns, that you might choose to defer your loan repayments for a while and focus on building up some investments that stand a chance to beat inflation in the long term."
},
{
"docid": "343457",
"title": "",
"text": "\"What could a small guy with $100 do to make himself not poor? The first priority is an emergency fund. One of the largest expenses of poor people are short-term loans for emergencies. Being able to avoid those will likely be more lucrative than an S&P investment. Remember, just like a loan, if you use your emergency fund, you'll need to refill it. Be smart, and pay yourself 10% interest when you do. It's still less than you'd pay for a payday loan, and yet it means that after every emergency you're better prepared for the next event. To get an idea for how much you'd need: you probably own a car. How much would you spend, if you suddenly had to replace it? That should be money you have available. If you think \"\"must\"\" buy a new car, better have that much available. If you can live with a clunker, you're still going to need a few K. Having said that, the next goal after the emergency fund should be savings for the infrequent large purchases. The emergency fund if for the case where your car unexpectedly gets totaled; the saving is for the regular replacement. Again, the point here is to avoid an expensive loan. Paying down a mortgage is not that important. Mortgage loans are cheaper than car loans, and much cheaper than payday loans. Still, it would be nice if your house is paid when you retire. But here chances are that stocks are a better investment than real estate, even if it's the real estate you live in.\""
},
{
"docid": "478413",
"title": "",
"text": "Personally, I'd use my emergency fund first. It is unlikely (though possible, of course) that I will entirely lose my income at the same time I need to replace my roof or my furnace. I'd rather pay my emergency fund back with installment payments than pay off a HELOC to my bank. The lost interest on my emergency fund, which, after all, should be in cash, is much less than the cost of the loan. I could even set up an amortization schedule in a spreadsheet and charge myself interest when paying back into the emergency fund. That said, if I didn't have the cash in my emergency fund, I'd rather borrow against the house than finance with a contractor. If they'd even do that, which is unlikely--I've never dealt with a roofer or heating contractor that required anything but full payment at time of service. Home equity borrowing is generally the cheapest kind. I'm firmly in the camp of those who look at home ownership as a consumption decision rather than an investment. If the value goes up, great, but I just build in about 1% of the cost of building a new house (excluding the land price) into the housing budget each year, right along with mortgage interest, property taxes and basic utilities. Usually, that's enough to cover the major wear-and-tear related repairs (averaged over 3-5 year periods, anyway)."
},
{
"docid": "588555",
"title": "",
"text": "\"First, you must prioritize what a \"\"need\"\" and what a \"\"want\"\" is. This is different for everyone but generally, I think most people will agree that impulse items are \"\"want\"\" items. Look at the item, hold it, put it back and wait 30 days. Put the money that the item costs $x into your savings account (transfer from checking, straight deposit, etc) Come back to the store and hold the item again and as \"\"did I miss the fact that I didnt get it 30 days ago?\"\". 95% of the time, the answer is no. You saved $x for 30-days, and received what is a tiny bit of interest for it. This is cause for celebration! If you repeat this for every item you THINK you \"\"need\"\" or \"\"want\"\" then you'll be amazed at what you saved. Dont waste this money on a vacation to the islands either! Keep saving. There will be plenty of rainy days when you'll have wanted to trade that island vacation (or the impulse items you bought that you used once or twice and are lost in your garage somewhere) to pay for some unexpected emergency. Trust me on this!\""
},
{
"docid": "225235",
"title": "",
"text": "If you place your emergency fund in your TFSA, you can withdraw it at any time (e.g. in an emergency), and then replace the withdrawn money in the next calendar year. Be careful there; you pay a hefty fine if you replace it in the current calendar year if this leads to an overcontribution. It's not an either-or thing, though. You could invest the money in a mutual fund inside your TFSA. I strongly recommend against this for your emergency fund, however. The whole point of an emergency fund is that you may need it immediately. So, keep it in an investment that you can liquidate quickly. Cash or very-near cash. While I obviously don't know your specific situation, I needed $10,000 within 24 hours and another $10,000 within two weeks during an emergency. In a world where you have large sums of money, you'd max out your RRSP and TFSA with investments and keep your emergency fund outside of both. But most of us aren't in that situation. In that case, it makes sense to use your TFSA for your emergency fund. I use some of my TFSA space for my emergency fund (savings account paying low interest, though people often like GICs) and some for investment (passive indexed stocks and bonds). Note that you need to pay taxes on your savings account interest, too, if held outside your TFSA and RRSP accounts."
}
] |
4641 | Where should I park my rainy-day / emergency fund? | [
{
"docid": "406219",
"title": "",
"text": "I would suggest your local credit union or local bank for security and liquidity. Liquidity is probably the most important issue for a emergency fund."
}
] | [
{
"docid": "441518",
"title": "",
"text": "\"A good question -- there are many good tactical points in other answers but I wanted to emphasize two strategic points to think about in your \"\"5-year plan\"\", both of which involve around diversification: Expense allocation: You have several potential expenses. Actually, expenses isn't the right word, it's more like \"\"applications\"\". Think of the money you have as a resource that you can \"\"pour\"\" (because money has liquidity!) into multiple \"\"buckets\"\" depending on time horizon and risk tolerance. An ultra-short-term cushion for extreme emergencies -- e.g. things go really wrong -- this should be something you can access at a moment's notice from a bank account. For example, your car has been towed and they need cash. A short-term cushion for emergencies -- something bad happens and you need the money in a few days or weeks. (A CD ladder is good for this -- it pays better interest and you can get the money out quick with a minimal penalty.) A long-term savings cushion -- you might want to make a down payment on a house or a car, but you know it's some years off. For this, an investment account is good; there are quite a few index funds out there which have very low expenses and will get you a better return than CDs / savings account, with some risk tolerance. Retirement savings -- $1 now can be worth a huge amount of money to you in 40 years if you invest it wisely. Here's where the IRA (or 401K if you get a job) comes in. You need to put these in this order of priority. Put enough money in your short-term cushions to be 99% confident you have enough. Then with the remainder, put most of it in an investment account but some of it in a retirement account. The thing to realize is that you need to make the retirement account off-limits, so you don't want to put too much money there, but the earlier you can get started in a retirement account, the better. I'm 38, and I started both an investment and a retirement account at age 24. They're now to the point where I save more income, on average, from the returns in my investments, than I can save from my salary. But I wish I had started a few years earlier. Income: You need to come up with some idea of what your range of net income (after living expenses) is likely to be over the next five years, so that you can make decisions about your savings allocation. Are you in good health or bad? Are you single or do you have a family? Are you working towards law school or medical school, and need to borrow money? Are you planning on getting a job with a dependable salary, or do you plan on being self-employed, where there is more uncertainty in your income? These are all factors that will help you decide how important short-term and long term savings are to your 5-year plan. In short, there is no one place you should put your money. But be smart about it and you'll give yourself a good head start in your personal finances. Good luck!\""
},
{
"docid": "244692",
"title": "",
"text": "\"One can generalize on Traditional vs Roth flavors of accounts, I suggest Roth for 15% money and going pretax to avoid 25% tax. If the student loan is much over 4%, it may make sense to put it right after emergency fund. For emergency fund priority - I'm assuming EF really requires 2 phases, the $2500 broken transmission/root canal bill, and the lose your job, or need a new roof level bills. I'm in favor of doing what let's you sleep well. I'm also quick to point out that if you owe $2500 at 18%, yet have $2500 in your emergency fund, you're really throwing away $450 in interest each year. There's an ongoing debate of \"\"credit card as emergency fund.\"\" No, I don't claim that your cards should be considered an emergency fund, per se, but I would prioritize knocking off the 18% debt as a high priority. Once that crazy interest debt is gone, fund the ER, and find a balance for savings and the next level ER, the 6-9mo of expenses one. One can choose to fund a Roth IRA, but keep the asset out of retirement calculations. It's simply an emergency account returning tax free interest, and if never used, it eventually is retirement money. A Roth permits withdrawal of deposited funds with no tax or penalty, just tracking it each year. This actually rubs some people the wrong way as it sounds like tapping your retirement account for emergencies. For my purpose, it's a tax free emergency fund. Not retirement, unless and until you are saving so much in the 401(k) you need more tax favored retirement money. I wrote an article some time ago, the Roth Emergency Fund which went into a bit more detail. Last - keep in mind, this is my opinion. I can intelligently argue my case, but at some point, it's up to the individual to do what feels right. Paying 18% debt off a bit slower, say 4 years instead of 3, in favor of funding the matched 401(k), to me, you run the numbers, watch the 401(k) balance grow by 2X your pretax deposits, and see that in year 3, your retirement account is jump-started and far, far more than your remaining 18% cards. Those who feel the opposite and wish to be debt free first are going to do what they want. And the truth is, if this lets you sleep better at night, I'm in favor of it.\""
},
{
"docid": "26538",
"title": "",
"text": "\"To the average consumer, the financial health of a bank is completely irrelevant. The FDIC's job is to make it that way. Even if a bank does go under, the FDIC is very good at making sure there is little/no interruption in service. Usually, another bank just takes over the asset of the failing bank, and you don't even notice the difference. You might have a ~24 hour window where your local ATM doesn't work. I also really question the \"\"FDIC is broke\"\" statement. The FDIC has access to additional funding beyond the Deposit Insurance Fund mentioned in your link. It also has the ability to borrow from the Treasury. If you look into the FDIC's report a bit closer, the amount in the \"\"Provision for Insurance Losses\"\" is not just money spent on failing banks. It also includes money that has been set aside to cover anticipated failures and litigation. Saying the FDIC is \"\"broke\"\" is like saying I am \"\"broke\"\" because my checking account balance went down after I moved some money into a rainy-day fund. Failure of the FDIC would signal a failure of our financial system and the government that backs it. If the FDIC fails, your petty checking account would be meaningless anyway. The important things would be non-perishable food, clean water, and guns/ammo. That said, it will be interesting to see the latest quarterly report for the FDIC when it is released next week. The article implies things will look a little better for the FDIC, but we'll see.\""
},
{
"docid": "247124",
"title": "",
"text": "\"In Michigan, Allen Park went for the dream. A movie studio! In 2009 [City officials authorized the sale of $31 million in general obligation bonds... including the building at 16630 Southfield Road and an empty building off Enterprise Drive — for $24.8 million. It’s the site of a much-anticipated movie studio complex.](http://www.thenewsherald.com/articles/2009/08/10/news/doc4a7dc8f05fb32855668898.txt) Oh joy! [\"\"The Allen Park Center Studios will be an epicenter for movie production and a full stop shop for entertainment, education and recreation.\"\"](http://michiganmoviemagazine.biz/news/146-the-bright-future-of-allen-park-center-studios.html) By October of 2009, there were rumors and denials [\"\"A $146 million film and television production studio in Allen Park remains on track despite a series of roadblocks and persistent rumors that the project will never materialize.\"\"](http://www.mlive.com/jobs/index.ssf/2009/10/exec_insists_allen_park_michigan_film_pr.html) Things were looking so good, in January 2010 [Allen Park was streamlining the process of getting film permits](http://www.cityofallenpark.org/news-film-industry.php) But by May, [the studio wasn't making the lease payments. ](http://www.mlive.com/entertainment/detroit/index.ssf/2010/05/unity_studios_fails_to_make_re.html) Come September, [the studio moved to Detroit](http://www.mlive.com/news/detroit/index.ssf/2010/09/suburban_movie_studio_relocati.html) By February 2011, [Allen Park sent payoff notices to its entire fire department](http://www.mlive.com/news/detroit/index.ssf/2011/02/if_the_city_of_allen_park_cant.html) Come May, [the Mayor resigned](http://www.mlive.com/news/detroit/index.ssf/2011/05/allen_park_mayor_resigns_citin.html) By May of this year, [Allen Park voters had twice rejected taxes to pay for the studio bonds. The city is facing state-appointed emergency manager](http://www.detroitnews.com/article/20120511/OPINION01/205110323) I think the ending of this story is not going to be the typical end-of-the-movie scene where suddenly everything is okay.\""
},
{
"docid": "424437",
"title": "",
"text": "Keeping your “big emergency” fund in stocks if you have 12 months income saved is OK. However you should keep your “small emergency” fund in cash. (However I find that even my stock broker accounts have some cash in them, as I like to let the dividends build up enough to make the dealing charges worthwhile. You don’t wish to be forced to sell at a bad time due to your boiler needing replacing or your car breaking down. However if you lost your job in the same week that your boiler broke down and your car needed replacing then being forced to sell stocks at a bad time is not much of an issue. Also if you are saving say 1/3 of your income each month and you have a credit card with large unused credit limit that is paid of each month, then most “small emergency” that are under 2/3 of your monthly income can be covered on the credit card with little or no interest charges. One option is to check you bank balance on the day after you are paid, and if it is more than 2x your monthly income, then move some of it to long term savings, but only if you tend to spend a lot less then you earn most months."
},
{
"docid": "470334",
"title": "",
"text": "\"Edited answer, given that I didn't address the emergency fund aspect originally: None. You've said you don't feel comfortable locking it away where you wouldn't be able to get to it in an emergency. If you don't like locking it away, the answer to \"\"How much money should I lock up in my savings account?\"\" is none. On a more personal note, the interest rates on bonds are just awful. Over five years, you can do better.\""
},
{
"docid": "37823",
"title": "",
"text": "What sort of emergency requires payment up front for which 2-3 days processing of a stock sale would pose a problem? In my case, the sudden and unexpected death of my wife. Back in 2011, my wife was struck and killed in a traffic incident. I had to immediately (not in 2 - 3 days) cover 50% of the entire costs of the funeral. The balance was due shortly after, though I now forget if the balance was due in 7 days or in 30. I suspect the latter. The life insurance paid out in approximately 4 months for this simple case. Even if your mortgage is insured, you still have to pay the entire balance, along with living expenses, until the paperwork is resolved. And, again in simple cases, assume this will take months rather than days or weeks. My point is, the funeral is only one of the expenses you'll have to cover in such a situation, though generally you'll have sufficient lead time for the other expenses, where your investments would likely be sufficiently liquid. Yes, a credit card would (and did) help in this situation, but if you have no credit card (as your question poses), you need ready access to thousands of dollars to cover this sort of eventuality. My bank told me that many people in such a situation have to take out an emergency loan the very day their spouse dies. Let me assure you this would be... emotionally difficult. Funerals vary widely in price. The Motley Fool indicates the median cost of a funeral with a vault was $8,343 in 2014. Crematory fees, a headstone, flowers, food, obituaries, all add to this cost. My total cost was closer to three times the median, though some of the expenses (headstone, primarily) came later. I'm sure I could have gone for a cheaper funeral, though it's hard to make rational economic decisions at that sort of time. I don't recall the exact amount I had to put down, but it was somewhere around $6000 - $8000. (No need to leave a comment expressing condolences; thanks, but I've already had plenty and now my goal is to help share knowledge. :) )"
},
{
"docid": "261619",
"title": "",
"text": "First you should maintain a monthly expense and find out the burn rate. There would be certain expenses that are annual but mandatory [School fees, Insurance Premium, Property Taxes, etc]. So the ideal emergency fund depending on your industry should be 3 month to 6 months plus your mandatory yearly payments, more so if they come together. For example Most of my annual payments come out in May and I bank on the Bonus payout in April to cater to this spike in expense. So if I were to lose a job in March, my emergency funds would be sufficient for routine expenses, if i don't provision for additional funds Second you need to also figure out the reduced rate of monthly burn and ideally the emergency funds should be for 3 months of normal burn and 6 months of reduced burn."
},
{
"docid": "589088",
"title": "",
"text": "\"Some of the other answers recommended peer-to-peer lending and property markets. I would not invest in either of these. Firstly, peer-to-peer lending is not a traditional investment and we may not have enough historical data for the risk-to-return ratio. Secondly, property investments have a great risk unless you diversify, which requires a huge portfolio. Crowd-funding for one property is not a traditional investment, and may have drawbacks. For example, what if you disagree with other crowd-funders about the required repairs for the property? If you invest in the property market, I recommend a well-diversified fund that owns many properties. Beware of high debt leverage used to enhance returns (and, at the same time, risk) and high fees when selecting a fund. However, traditionally it has been a better choice to invest in stocks than to invest in property market. Beware of anyone who says that the property market is \"\"too good to not get into\"\" without specifying which part of the world is meant. Note also that many companies invest in properties, so if you invest only in a well-diversified stock index fund, you may already have property investments in your portfolio! However, in your case I would keep the money in risk-free assets, i.e. bank savings or a genuine low-cost money market fund (i.e. one that doesn't invest in corporate debt or in variable-rate loans which have short duration but long maturity). The reason is that you're going to be unemployed soon, and thus, you may need the money soon. If you have an investment horizon of, say, 10 years, then I would throw stocks into the mix, and if you're saving for retirement, then I would go all in to stocks. In the part of the world where I live in, money market funds generally have better return than bank savings, and better diversification too. However, your 2.8% interest sounds rather high (the money market fund I have in the past invested in currently yields at 0.02%, but then again I live in the eurozone), so be sure to get estimates for the yields of different risk-free assets. So, my advice for investing is simple: risk-free assets for short time horizon, a mixture of stocks and risk-free assets for medium time horizon, and only stocks for long time horizon. In any case, you need a small emergency fund, too, which you should consider a thing separate from your investments. My emergency fund is 20 000 EUR. Your 50 000 AUD is bit more than 30 000 EUR, so you don't really have that much money to invest, only a bit more than a reasonably sized emergency fund. But then again, I live in rental property, so my expenses are probably higher than yours. If you can foresee a very long time horizon for part of your investment, you could perhaps invest 50% of your money to stocks (preference being a geographically diversified index fund or a number of index funds), but I wouldn't invest more because of the need for an emergency fund.\""
},
{
"docid": "213887",
"title": "",
"text": "I keep several savings accounts. I use an online-only bank that makes it very easy to open a new account in about 2 minutes. I keep the following accounts: Emergency Fund with 2 months of expenses. I pretend this money doesn't even exist. But if something happened that I needed money right away, I can get it. 6 6-month term CDs, with one maturing every month, each with 1 month's worth of expenses. This way, every month, I'll have a CD that matures with the money I would need that month if I lose my job or some other emergency that prevents me from working. You won't make as much interest on the 6-month term, but you'll have cash every month if you need it. Goal-specific accounts: I keep an account that I make a 'car payment' into every month so I'll have a down-payment saved when I'm ready to buy a car, and I'm used to making a payment, so it's not an additional expense if I need a loan. I also keep a vacation account so when it's time to take the family to Disneyland, I know how much I can budget for the trip. General savings: The 'everything else' account. When I just NEED to buy a new LCD TV on Black Friday, that's where I go without touching my emergency funds."
},
{
"docid": "58065",
"title": "",
"text": "\"This may sound very \"\"tongue in cheek\"\", but the best thing you can invest in is to raise your income in order to increase your retirement savings. How much are you able to contribute to retirement now? I think you would be lucky to do $150/month and most months probably less than that. However, if you were making like 60k/year, and allowed a little lifestyle bloat, you could probably easy put away 20k/year. Once you are able to do that the savings you can manage now will be quickly eclipsed. Often times when people consider \"\"having their money work for them\"\" they often neglect to factor risk. Prior to investing one should have a proper emergency fund in place. That is 6 months or so of living expenses in a nice safe savings account. Those earn about 1.25% these days, which is pretty meager, but it does earn something. Once the emergency fund is in place, one can invest with impunity. Without it, you will have to liquidate investments if economic calamity strikes you. This could be done at a loss furthering the harm done by the calamity. Increase your income and create an emergency fund. Do those things first.\""
},
{
"docid": "550581",
"title": "",
"text": "\"In addition to the two options in your question - pay off the entire loan, depleting your emergency fund; or continue as you are today - there is a third, middle-ground option that might be worth considering. Since you currently have an emergency fund, zero credit card debt, and you stated \"\"we can afford these expenses\"\", I think I'd be correct to assume that you're currently making regular contributions to either the emergency fund itself, or to another savings account, etc. Temporarily stop making those contributions, and divert those funds to make larger payments towards the upside-down loan. The additional amount will all be applied to the loan principal, reducing the interest you'll have to pay, but you'll avoid the risk of depleting the emergency fund. Additionally, the insurance premium may possibly be avoided, as in many places in the world it's possible to de-register the car (for example, in California, USA, you can submit an affidavit of Non-Use) then terminate the insurance on it. However, the car will likely have to be parked off-street (or in a location such as a private road governed by rules that do not include legal registration requirements).\""
},
{
"docid": "41271",
"title": "",
"text": "From mid 2007 to early 2009 the DJI went down about 50 %. This market setback won't happen on a single day or even a few weeks. Emergency funds should be in cash only. Markets could be closed for an unknown period of time. Markets where closed September 11 until September 17 in 2001."
},
{
"docid": "588555",
"title": "",
"text": "\"First, you must prioritize what a \"\"need\"\" and what a \"\"want\"\" is. This is different for everyone but generally, I think most people will agree that impulse items are \"\"want\"\" items. Look at the item, hold it, put it back and wait 30 days. Put the money that the item costs $x into your savings account (transfer from checking, straight deposit, etc) Come back to the store and hold the item again and as \"\"did I miss the fact that I didnt get it 30 days ago?\"\". 95% of the time, the answer is no. You saved $x for 30-days, and received what is a tiny bit of interest for it. This is cause for celebration! If you repeat this for every item you THINK you \"\"need\"\" or \"\"want\"\" then you'll be amazed at what you saved. Dont waste this money on a vacation to the islands either! Keep saving. There will be plenty of rainy days when you'll have wanted to trade that island vacation (or the impulse items you bought that you used once or twice and are lost in your garage somewhere) to pay for some unexpected emergency. Trust me on this!\""
},
{
"docid": "406286",
"title": "",
"text": "The rule that I know is six months of income, stored in readily accessible savings (e.g. a savings or money market account). Others have argued that it should be six months of expenses, which is of course easier to achieve. I would recommend against that, partially because it is easier to achieve. The other issue is that people are more prone to underestimate their expenses than their income. Finally, if you base it on your current expenses, then budget for savings and have money left over, you often increase your expenses. Sometimes obviously (e.g. a new car) and sometimes not (e.g. more restaurants or clubs). Income increases are rarer and easier to see. Either way, you can make that six months shorter or longer. Six months is both feasible and capable of handling difficult emergencies. Six years wouldn't be feasible. One month wouldn't get you through a major emergency. Examples of emergencies: Your savings can be in any of multiple forms. For example, someone was talking about buying real estate and renting it. That's a form of savings, but it can be difficult to do withdrawals. Stocks and bonds are better, but what if your emergency happens when the market is down? Part of how emergency funds operate is that they are readily accessible. Another issue is that a main goal of savings is to cover retirement. So people put them in tax privileged retirement accounts. The downside of that is that the money is not then available for emergencies without paying penalties. You get benefits from retirement accounts but that's in exchange for limitations. It's much easier to spend money than to save it. There are many options and the world makes it easy to do. Emergency funds make people really think about that portion of savings. And thinking about saving before spending helps avoid situations where you shortchange savings. Let's pretend that retirement accounts don't exist (perhaps they don't in your country). Your savings is some mix of stocks and bonds. You have a mortgaged house. You've budgeted enough into stocks and bonds to cover retirement. Now you have a major emergency. As I understand your proposal, you would then take that money out of the stocks and bonds for retirement. But then you no longer have enough for retirement. Going forward, you will have to scrimp to get back on track. An emergency fund says that you should do that scrimping early. Because if you're used to spending any level of money, cutting that is painful. But if you've only ever spent a certain level, not increasing it is much easier. The longer you delay optional expenses, the less important they seem. Scrimping beforehand also helps avoid the situation where the emergency happens at the end of your career. It's one thing to scrimp for fifteen years at fifty. What's your plan if you would have an emergency at sixty-five? Or later? Then you're reducing your living standard at retirement. Now, maybe you save more than necessary. It's not unknown. But it's not typical either. It is far more common to encounter someone who isn't saving enough than too much."
},
{
"docid": "496752",
"title": "",
"text": "As mentioned, the main advantage of a 15-year loan compared to a 30-year loan is that the 15-year loan should come at a discounted rate. All things equal, the main advantage of the 30-year loan is that the payment is lower. A completely different argument from what you are hearing is that if you can get a low interest rate, you should get the longest loan possible. It seem unlikely that interest rates are going to get much lower than they are and it's far more likely that they will get higher. In 15 years, if interest rates are back up around 6% or more (where they were when I bought my first home) and you are 15 years into a 30 year mortgage, you'll being enjoying an interest rate that no one can get. You need to keep in mind that as the loan is paid off, you will earn exactly 0% on the principal you've paid. If for some reason the value of the home drops, you lose that portion of the principal. The only way you can get access to that capital is to sell the house. You (generally) can't sell part of the house to send a kid to college. You can take out another mortgage but it is going to be at the current going rate which is likely higher than current rates. Another thing to consider that over the course of 30 years, inflation is going to make a fixed payment cheaper over time. Let's say you make $60K and you have a monthly payment of $1000 or 20% of your annual income. In 15 years at a 1% annualized wage growth rate, it will be 17% of your income. If you get a few raises or inflation jumps up, it will be a lot more than that. For example, at a 2% annualized growth rate, it's only 15% of your income after 15 years. In places where long-term fixed rates are not available, shorter mortgages are common because of the risk of higher rates later. It's also more common to pay them off early for the same reason. Taking on a higher payment to pay off the loan early only really only helps you if you can get through the entire payment and 15 years is still a long way off. Then if you lose your job then, you only have to worry about taxes and upkeep but that means you can still lose the home. If you instead take the extra money and keep a rainy day fund, you'll have access to that money if you hit a rough patch. If you put all of your extra cash in the house, you'll be forced to sell if you need that capital and it may not be at the best time. You might not even be able to pay off the loan at the current market value. My father took out a 30 year loan and followed the advice of an older coworker to 'buy as much house as possible because inflation will pay for it'. By the end of the loan, he was paying something like $250 a month and the house was worth upwards of $200K. That is, his mortgage payment was less than the payment on a cheap car. It was an insignificant cost compared to his income and he had been able to invest enough to retire in comfort. Of course when he bought it, inflation was above 10% so it's bit different today but the same concepts still apply, just different numbers. I personally would not take anything less than a 30 year loan at current rates unless I planned to retire in 15 years."
},
{
"docid": "525693",
"title": "",
"text": "I treat the concept of emergency funds as a series of financial buffers. One layer is that I have various credit cards with a small positive balance, that I can max out in an emergency should I go broke and not be in employment (those have saved me once or twice) My final level of emergency funds, is kept at home in the form of cash, I've never needed it, but it protects against getting locked out of the financial system (I lose my debit cards, banking system freezes all withdrawals, zombie invasion). It also doubles as my destitution fund, as if all else fails I still have raw cash to buy food and thus I won't starve (at least for a few months)."
},
{
"docid": "345428",
"title": "",
"text": "I think you've got competition on that list for where to put the money - I'd work out which option is costing me the most currently or will cost me the most in the future and take care of it. I'd be willing to bet that Eric is right, though, that it will need to be the roof. Not fixing it could cost you more in the long run than any of the other items on the list (assuming your circumstances remain roughly the same). General comments/other considerations: Any money that doesn't get spent on the roof (if any) - I would put in a rainy day fund."
},
{
"docid": "103475",
"title": "",
"text": "\"But on June 28, the 17,000-resident town authorized a declaration of fiscal emergency, a step California cities can take before bankruptcy. In this case, it gives officials in the affluent enclave the power to expedite a referendum on new fees to boost its revenue, which has been restrained by a lackluster retail base and property-tax limits the state enacted almost 40 years ago. “We just don’t have enough revenue to take us through the future for many more years before we would really be in some of the situations other cities are, where they’re laying off mass numbers of employees or declaring bankruptcy,” town manager Robert Priebe said in an interview. Get the latest on global politics in your inbox, every day. Get our newsletter daily. Enter your email Sign Up The community, where the median family income is $169,000 a year, illustrates an irony for some at the center of the California’s latest economic boom. While real estate prices have surged, the local tax collections haven’t necessarily followed the same trajectory because of Proposition 13, the 1978 ballot measure that keeps homeowners’ tax bills from rising by more than inflation or 2 percent a year. As a result, local government revenues are growing more slowly than the rest of the U.S., according to a state analysis, leaving some seeking other ways to raise money. In Moraga, where the council discussed establishing a poet laureate position before approving the fiscal distress declaration, lowering headcount isn’t the first priority. The town’s $8.5 million budget this year authorizes about 36 full-time workers. Members instead opted to reduce services such as park maintenance in the community about 20 miles east of San Francisco. “We’re not willing to hurt the public first,\"\" Priebe said. \"\"We’re not going to lay off half of our employees and have the quality of life of all of our citizens really be impacted.” Moraga’s declaration hasn’t affected its standing on Wall Street. Its $7.7 million in outstanding debt is rated AA+, second highest by S&P Global Ratings. One of its bonds due April 2029 was valued on July 5 at 0.85 percentage point more than benchmark debt, little changed from the 0.82 percentage point seen on the day of the fiscal emergency declaration. That spread stood at 1.16 percentage point at 2016 year-end, according to data compiled by Bloomberg. The squeeze on Moraga stems in part from two infrastructure failures: the damage to a bridge in April and a sinkhole that became such a civic event that residents threw it a sarcastic birthday celebration. Though officials are hoping for state and federal reimbursements, the cost to fix both depleted its savings, leaving the city vulnerable to another emergency. The general fund, boosted modestly with this year’s anticipated $46,217 surplus, has about $1.6 million in reserves. The fiscal emergency declaration allows Moraga to put any revenue-raising measure on the ballot when it wants instead of waiting for a regularly scheduled election. Options being mulled include proposing a flat fee on property or a utility tax, Priebe said. The town will poll residents by phone to see what’s preferable. Moraga should look to cut personnel expenses first, said Seth Freeman, an unsuccessful council candidate and the only resident to speak about the issue at the board meeting. He criticized the council’s decision to award raises to employees two weeks before issuing the emergency declaration. \"\"I’m concerned that the simple solution would be to raise taxes than to address some of the issues under the control of the town manager,\"\" Freeman said in an interview. \"\"The compensation for a small town is unaffordable.” Priebe said the town’s costs are low compared to others in the county and that it must remain competitive. \"\"If we offered no raises, we would lose people.\"\"\""
}
] |
4641 | Where should I park my rainy-day / emergency fund? | [
{
"docid": "319954",
"title": "",
"text": "I am using ING for my emergency savings, but sometime last year I discovered SmartyPig. As of 4/24/2010 they offer 2.1%, which is even better than the 1 year CDs at most banks. I've switched two small accounts to SmartyPig and plan to switch my emergency savings. Their accounts are geared around monthly contributions, but you don't have to use that feature."
}
] | [
{
"docid": "424437",
"title": "",
"text": "Keeping your “big emergency” fund in stocks if you have 12 months income saved is OK. However you should keep your “small emergency” fund in cash. (However I find that even my stock broker accounts have some cash in them, as I like to let the dividends build up enough to make the dealing charges worthwhile. You don’t wish to be forced to sell at a bad time due to your boiler needing replacing or your car breaking down. However if you lost your job in the same week that your boiler broke down and your car needed replacing then being forced to sell stocks at a bad time is not much of an issue. Also if you are saving say 1/3 of your income each month and you have a credit card with large unused credit limit that is paid of each month, then most “small emergency” that are under 2/3 of your monthly income can be covered on the credit card with little or no interest charges. One option is to check you bank balance on the day after you are paid, and if it is more than 2x your monthly income, then move some of it to long term savings, but only if you tend to spend a lot less then you earn most months."
},
{
"docid": "367103",
"title": "",
"text": "\"Depending on where you live in the UK, buying a house sooner might be a better option. I would echo the advice about putting some money away into a \"\"rainy day\"\" fund etc. above but I know that in my area house prices are going up by around 7% per year. I bought a house two years ago and I'm paying 4% interest on my mortgage so I'm effectively making money by owning my house. Given that you want to buy a house soonish, if your money sits in an account somewhere making no interest, you're effectively losing 7% of your cash each year by not keeping up with house prices, meaning you'll be able to afford a smaller house with the same money. Do bear in mind though that buying a house costs around £4k in lawyers fees, surveys, mortgage setup fees etc. and selling a house can be more since estate agents will take a % of the sale cost. If you live somewhere where house prices are not increasing as quickly then this will not be as good an option than if you live in e.g. London where house prices are currently skyrocketing. If you don't want to live in the house, you may be able to do a buy-to-let as an investment. Generally the rent will cover the mortgage payments and probably a letting agent/property management company's fees, so while you won't see any actual net income, the people renting will be paying the mortgage off and you'll be building equity on the home. It's not entirely without risk though as tenants can trash homes etc.\""
},
{
"docid": "77570",
"title": "",
"text": "First of all, a person that relies on their ability to tap a line of credit to cover an emergency isn't generally the kind of person that has investments they can cash out to cover the debt. That being said, my personal reasons for having a liquid emergency fund revolve around bank errors and identify theft. I used to work for a company that made bank software. Errors are a common occurrence. You'd be surprised how many transactions are still input by human hands despite our computerized world. All it takes is one typo to wipe out your ability to swipe plastic for a few days. This has actually happened to me. My utility company sent me a bill for $240 and wound up taking $2400 by accident, overdrawing my account and sending me into a fee spiral. They fixed their mistake... several days later. The snowball of fees from other transactions that bounced took another two months to correct. In the meantime, I also had my mortgage payment due. In the US, you can't pay your mortgage with credit, and for those who rent, many landlords won't let you pay with credit either. I have also seen this scenario play out twice with other people I've known who've had their ID stolen. Yes, the bank will cover the fraud after a lengthy process. But the disruption causes fees and overdrafts to quickly snowball out of control. I have a separate savings account at a different bank for this kind of thing, and I have a few hundred dollars cash in my house at all times. Having a liquid emergency fund allows you to quickly stabilize the situation and gives you walking around money for those times where the banking system becomes your enemy for a time."
},
{
"docid": "392137",
"title": "",
"text": "I wonder in this case if it might be easier to look for an emerging markets fund that excludes china, and just shift into that. In years past I know there were a variety of 'Asian tiger' funds that excluded Japan for much the same reason, so these days it would not surprise me if there were similar emerging markets funds that excluded China. I can find some inverse ETF's that basically short the emerging markets as a whole, but not one that does just china. (then again I only spent a little time looking)"
},
{
"docid": "577479",
"title": "",
"text": "\"I recently moved out from my parents place, after having built up sufficient funds, and gone through these questions myself. I live near Louisville, KY which has a significant effect on my income, cost of living, and cost of housing. Factor that into your decisions. To answer your questions in order: When do I know that I'm financially stable to move out? When you have enough money set aside for all projected expenses for 3-6 months and an emergency fund of 4-10K, depending on how large a safety net you want or need. Note that part of the reason for the emergency fund is as a buffer for the things you won't realize you need until you move out, such as pots or chairs. It also covers things being more expensive than anticipated. Should I wait until both my emergency fund is at least 6 months of pay and my loans in my parents' names is paid off (to free up money)? 6 months of pay is not a good measuring stick. Use months of expenses instead. In general, student loans are a small enough cost per month that you just need to factor them into your costs. When should I factor in the newer car investment? How much should I have set aside for the car? Do the car while you are living at home. This allows you to put more than the minimum payment down each month, and you can get ahead. That looks good on your credit, and allows refinancing later for a lower minimum payment when you move out. Finally, it gives you a \"\"sense\"\" of the monthly cost while you still have leeway to adjust things. Depending on new/used status of the car, set aside around 3-5K for a down payment. That gives you a decent rate, without too much haggling trouble. Should I get an apartment for a couple years before looking for my own house? Not unless you want the flexibility of an apartment. In general, living at home is cheaper. If you intend to eventually buy property in the same area, an apartment is throwing money away. If you want to move every few years, an apartment can, depending on the lease, give you that. How much should I set aside for either investment (apartment vs house)? 10-20K for a down payment, if you live around Louisville, KY. Be very choosy about the price of your house and this gives you the best of everything. The biggest mistake you can make is trying to get into a place too \"\"early\"\". Banks pay attention to the down payment for a good reason. It indicates commitment, care, and an ability to go the distance. In general, a mortgage is 30 years. You won't pay it off for a long time, so plan for that. Is there anything else I should be doing/taking advantage of with my money during this \"\"living at home\"\" period before I finally leave the nest? If there is something you want, now's the time to get it. You can make snap purchases on furniture/motorcycles/games and not hurt yourself. Take vacations, since there is room in the budget. If you've thought about moving to a different state for work, travel there for a weekend/week and see if you even like the place. Look for deals on things you'll need when you move out. Utensils, towels, brooms, furniture, and so forth can be bought cheaply, and you can get quality, but it takes time to find these deals. Pick up activities with monthly expenses. Boxing, dancing, gym memberships, hackerspaces and so forth become much more difficult to fit into the budget later. They also give you a better credit rating for a recurring expense, and allow you to get a \"\"feel\"\" for how things like a monthly utility bill will work. Finally, get involved in various investments. A 401k is only the start, so look at penny stocks, indexed funds, ETFs or other things to diversify with. Check out local businesses, or start something on the side. Experiment, and have fun.\""
},
{
"docid": "350145",
"title": "",
"text": "First: it sounds like you are already making wise choices with your cash surplus. You've looked for ways to keep that growing ahead of inflation and you have made use of tax shelters. So for the rest of this answer I am going to assume you have between 3-6 months expenses already saved up as a “rainy day fund” and you're ready for more sophisticated approaches to growing your funds. To answer this part: Are there any other ways that I can save/ invest that I am not currently doing? Yes, you could look at, for example: 1. Peer to peer These services let you lend to a 'basket' of borrowers and receive a return on your money that is typically higher than what's offered in cash savings accounts. Examples of peer to peer networks are Zopa, Ratesetter and FundingCircle. This involves taking some risks with your money – Zopa's lending section explains the risks. 2. Structured deposits These are a type of cash deposit product where, in return for locking your money away for a time (typically 5 years), you get the opportunity for higher returns e.g. 5% + / year. Your deposit is usually guaranteed under the FSCS (Financial services compensation scheme), however, the returns are dependent on the performance of a stock market index such as the FTSE 100 being higher in x years from now. Also, structured deposits usually require a minimum £3,000 investment. 3. Index funds You mention watching the stock prices of a few companies. I agree with your conclusion – I wouldn't suggest trying to choose individual stocks at this stage. Price history is a poor predictor of future performance, and markets can be volatile. To decide if a stock is worth buying you need to understand the fundamentals, be able to assess the current stock price and future outlook, and be comfortable accepting a range of different risks (including currency and geographic risk). If you buy shares in a small number of companies, you are concentrating your risk (especially if they have things in common with each other). Index funds, while they do carry risks, let you pool your money with other investors to buy shares in a 'basket' of stocks to replicate the movement of an index such as the FTSE All Share. The basket-of-stocks approach at least gives you some built-in diversification against the risks of individual stocks. I suggest index funds (as opposed to actively managed funds, where you pay a management fee to have your investments chosen by a professional who tries to beat the market) because they are low cost and easier to understand. An example of a very low cost index fund is this FTSE All Share tracker from Aberdeen, on the Hargreaves Lansdown platform: http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/a/aberdeen-foundation-growth-accumulation General principle on investing in stock market based index funds: You should always invest with a 5+ year time horizon. This is because prices can move up and down for reasons beyond your anticipation or control (volatility). Time can smooth out volatility; generally, the longer the time period, the greater your likelihood of achieving a positive return. I hope this answer so far helps takes into account the excess funds. So… to answer the second part of your question: Or would it be best to start using any excess funds […] to pay off my student loan quicker? Your student loan is currently costing you 0.9% interest per annum. At this rate it's lower than the last 10 years average inflation. One argument: if you repay your student loan this is effectively a 0.9% guaranteed return on every pound repaid – This is the equivalent of 1.125% on a cash savings account if you're paying basic rate tax on the interest. An opposing argument: 0.9% is lower than the last 10 years' average inflation in the UK. There are so many advantages to making a start with growing your money for the long term, due to the effects of compound returns, that you might choose to defer your loan repayments for a while and focus on building up some investments that stand a chance to beat inflation in the long term."
},
{
"docid": "41271",
"title": "",
"text": "From mid 2007 to early 2009 the DJI went down about 50 %. This market setback won't happen on a single day or even a few weeks. Emergency funds should be in cash only. Markets could be closed for an unknown period of time. Markets where closed September 11 until September 17 in 2001."
},
{
"docid": "345428",
"title": "",
"text": "I think you've got competition on that list for where to put the money - I'd work out which option is costing me the most currently or will cost me the most in the future and take care of it. I'd be willing to bet that Eric is right, though, that it will need to be the roof. Not fixing it could cost you more in the long run than any of the other items on the list (assuming your circumstances remain roughly the same). General comments/other considerations: Any money that doesn't get spent on the roof (if any) - I would put in a rainy day fund."
},
{
"docid": "111054",
"title": "",
"text": "\"Between 6 months and a year is normally regarded as the \"\"standard\"\". Plan out what your monthly expenses are and save that money away. One thing to consider is what extras can you give up. If you are currently eating steak and lobster every day can you live with switching to ramen noodles for a period of time? Can you switch from premium cable to basic cable (or cancel it altogether)? Questions like this can greatly impact the amount you have to set aside. I personally have my emergency fund in CDs that mature the first of every month. I know there is less liquidity in this approach but I'm ok with that. My emergency fund is a sum of cash I'll always have so I wanted to reap the benefits of a higher yield. If it comes down to it I can place an expense on a credit card and pay off the credit card when funds become available.\""
},
{
"docid": "319961",
"title": "",
"text": "\"These good rates all tend to be \"\"on up to $X\"\" where X is some low'ish number that could require multiple accounts. They often also come with other strings, like set up automatic deposits/withdrawals, and use debit card at least 15 times per month. The two you mention have these flaws, whether or not it's worth it depends on if you are happy to meet those requirements and how big your emergency fund is. Personally, I'd rather get rewards on a credit card than use a debit card, and I don't want to open a bunch of accounts, so I have a boring savings account with a pretty low interest rate for my emergency fund. It's liquid, earns some interest, and I don't have to think about it.\""
},
{
"docid": "209635",
"title": "",
"text": "\"If you were asking if you should buy silver for an emergency fund, I'd say no. But, you already have it... Note: I wrote most of the below under the assumption that this is silver bullion coins/bars; it didn't occur to me till the end that it could be jewelry. Both of you have good arguments for your points of view. Breaking it down: Her points 1. A very good point. And while she may not be irresponsible, maybe the invisibility of it is good for her psychology? It's her's, so her comfort is important here. 2. Good. Make sure it's explicitly listed on the policy. 3. Bad. I think it will as well, at least the long run. But, this is not a good reason for an emergency fund -- the whole point of which is to be stable in case of emergencies. 4. Good. Identity theft is a concern, though unless her info is already \"\"out there\"\", it's insufficient for the emergency fund. And besides, she could keep cash. Your points 1. Iffy. On the one hand, you're right. On the other hand, Cyprus. It is good to remember that money in accounts is in someone else's control, not yours, as the Cypriots found out to their chagrin. And of course, it can't happen here, but that's what they thought too. There is value in having some hard assets physically in your control. Think of it as an EMERGENCY emergency fund. Cash works too, but precious metals are better for these mega-upheaval scenarios. Again, find out how having such an EMERGENCY fund would make her feel. Does having that give her some comfort? A gift from a family member of this much silver leads me to assume that her family might have a little bit of a prepper culture. If so, then even if she is not a prepper herself, she may derive some comfort from having it, just in case -- it'll be baked into her background. Definitely a topic to discuss with her. 2. Excellent point. This is precisely why you want your emergency fund in some form of cash. 3. Bad. You can walk into any pawn shop and sell it in a heartbeat. Or you can send it in to a company and have cash in days. 4. Bad. If you know a savings account that pays 3%-4%, please, please, please tell me where it is so I can get one. Fact is, all cash instruments pay negligible interest now, and all such savings are being eroded by inflation. 5. Maybe. There is value to looking at your net worth this way, but my experience has been that those that do take it way too far. I think there's more value at looking at allocation within a few broad \"\"buckets\"\" -- emergency fund, savings (car, house, college, etc), and retirement fund. If this is to be an EMERGENCY fund, as per point #1, then you should look at it as its own bucket (and maybe add a little cash too). Another thought to add: This is a gift from a family member -- they gave her a lot of silver. Of course it's your SO's now, and she can do whatever she wants with it, but how would the family member react if she did liquidate it? If that family member is a prepper, and gave her this with the emotional desire to see her prepped, they may be upset if she sold it. It just occurred to me this may be jewelry. Your SO may not have sentimental attachment to it, but what about the family member's sentiments? They may not like to see family silver they loving maintained and passed on casually discarded for mere cash by your SO. Another thing to discuss with her. Wrap up Generally, you are right about not keeping a 6 month emergency fund in silver. But there are other factors to consider here. There's also the fact that it's already bought -- the cost of buying (paying over market) has already been taken. Edit -- so it's silverware Ah, so it's silverware. Well, scratch everything, except how the family member feels about, which now looms large. This doesn't have much value as an emergency fund. Nor really as an investment. If you did keep it as an investment, think of it as an investment in collectibles/art, less so in precious metals. If no one will get upset, I'd say pick out the nicest set to keep for special occasions, and sell the rest. Find out first if it has collectible or historical value. It may be worth far more than the pure weight in silver. Ebay might be the way to go to sell it.\""
},
{
"docid": "218845",
"title": "",
"text": "\"Personally, I would: a) consider selling the car and replacing it with a 'cheaper' one. If you only drive it once a month, you are probably not getting much 'value' from owning a nice car. b) move the car (either current or replacement) out to your parent's place. The cost of a plane ticket is about the same as the cost of the garage, and your parents would likely hold on to it for free (assuming they live in the suburbs, and parking is not an issue) option b should lower your insurance costs (very low annual mileage) and at least you'll get some frequent flier miles out of your $350 a month. That being said: this is a \"\"quality of life\"\" issue, which means that there isn't going to be a firm answer. If you are 25, have little debt, which you are paying off on time, have an emergency fund, and you are making regular contributions to your 401k, you are certainly NOT \"\"being seriously irresponsible\"\" by owning a nice car. But you may decide that the $1000 a month could be better spent somewhere else.\""
},
{
"docid": "26538",
"title": "",
"text": "\"To the average consumer, the financial health of a bank is completely irrelevant. The FDIC's job is to make it that way. Even if a bank does go under, the FDIC is very good at making sure there is little/no interruption in service. Usually, another bank just takes over the asset of the failing bank, and you don't even notice the difference. You might have a ~24 hour window where your local ATM doesn't work. I also really question the \"\"FDIC is broke\"\" statement. The FDIC has access to additional funding beyond the Deposit Insurance Fund mentioned in your link. It also has the ability to borrow from the Treasury. If you look into the FDIC's report a bit closer, the amount in the \"\"Provision for Insurance Losses\"\" is not just money spent on failing banks. It also includes money that has been set aside to cover anticipated failures and litigation. Saying the FDIC is \"\"broke\"\" is like saying I am \"\"broke\"\" because my checking account balance went down after I moved some money into a rainy-day fund. Failure of the FDIC would signal a failure of our financial system and the government that backs it. If the FDIC fails, your petty checking account would be meaningless anyway. The important things would be non-perishable food, clean water, and guns/ammo. That said, it will be interesting to see the latest quarterly report for the FDIC when it is released next week. The article implies things will look a little better for the FDIC, but we'll see.\""
},
{
"docid": "225235",
"title": "",
"text": "If you place your emergency fund in your TFSA, you can withdraw it at any time (e.g. in an emergency), and then replace the withdrawn money in the next calendar year. Be careful there; you pay a hefty fine if you replace it in the current calendar year if this leads to an overcontribution. It's not an either-or thing, though. You could invest the money in a mutual fund inside your TFSA. I strongly recommend against this for your emergency fund, however. The whole point of an emergency fund is that you may need it immediately. So, keep it in an investment that you can liquidate quickly. Cash or very-near cash. While I obviously don't know your specific situation, I needed $10,000 within 24 hours and another $10,000 within two weeks during an emergency. In a world where you have large sums of money, you'd max out your RRSP and TFSA with investments and keep your emergency fund outside of both. But most of us aren't in that situation. In that case, it makes sense to use your TFSA for your emergency fund. I use some of my TFSA space for my emergency fund (savings account paying low interest, though people often like GICs) and some for investment (passive indexed stocks and bonds). Note that you need to pay taxes on your savings account interest, too, if held outside your TFSA and RRSP accounts."
},
{
"docid": "457634",
"title": "",
"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."
},
{
"docid": "430034",
"title": "",
"text": "Yes, there are some real dangers in having your money locked into an investment. Those dangers are well worth thinking about and planning for. Where you are going off the rails is acting like those are the only dangers to your money, and perhaps having an exaggerated idea of the size of the dangers. It is an excellent idea to keep an emergency fund with a few months living expenses in a readily accessible savings or checking account. However, a standard retail savings account is always going to pay less in interest then you are loosing through inflation. We're living in a low-inflation period, but it's still continuously eating away at the value of your savings. It makes sense to accept the danger of inflation for your emergency fund, but probably not for your retirement savings. To reduce the hazards of inflation, you need to find an investment that has some chance of paying more than the inflation rate. This is inevitably going to mean locking up your money for some period of time or accepting some other type of risk. There is no guaranteed safe path in the world. You can only do your best to understand the risks you are running. As an example, you could put your savings in a CD rather than a vanilla savings account. A CD these days won't pay much in interest, but it will be more than a savings account. However, you have to commit to a term for the CD. If you take your money out early you will have to pay a penalty. How much of a penalty? In the worse case it could be in the neighborhood of 4% of the amount you withdraw. So, yeah if you deposit $10,000 in a 5-year CD and end up needing it all back the very next day, you could end up paying the bank $400. If you withdraw money from a 401k before you are 59 1/2, you will pay a 10% penalty, and you will have to have income tax withheld on the amount you withdraw. On the other hand, if your employer matches 100% of your 401k contributions, you could be throwing away 50% of your possible retirement savings because of your fear of the possibility of a 10% loss! In addition 401k plans do have some exceptions to the early withdrawal penalty. There are provisions for medical emergencies and home purchases for example. However, the qualifications are not entirely straight-forward, and you should read up on them before enrolling. The real answer to your fears is planning. Figure out your living expenses. Figure out how much you want in an emergency fund. Figure out when you will be wanting to buy a house, have a child, or go back to school. Set aside the savings you'll need for all those, and then for the remainder of your money you can consider long term investments with some confidence that you probably won't need to face the early withdrawal penalties."
},
{
"docid": "37823",
"title": "",
"text": "What sort of emergency requires payment up front for which 2-3 days processing of a stock sale would pose a problem? In my case, the sudden and unexpected death of my wife. Back in 2011, my wife was struck and killed in a traffic incident. I had to immediately (not in 2 - 3 days) cover 50% of the entire costs of the funeral. The balance was due shortly after, though I now forget if the balance was due in 7 days or in 30. I suspect the latter. The life insurance paid out in approximately 4 months for this simple case. Even if your mortgage is insured, you still have to pay the entire balance, along with living expenses, until the paperwork is resolved. And, again in simple cases, assume this will take months rather than days or weeks. My point is, the funeral is only one of the expenses you'll have to cover in such a situation, though generally you'll have sufficient lead time for the other expenses, where your investments would likely be sufficiently liquid. Yes, a credit card would (and did) help in this situation, but if you have no credit card (as your question poses), you need ready access to thousands of dollars to cover this sort of eventuality. My bank told me that many people in such a situation have to take out an emergency loan the very day their spouse dies. Let me assure you this would be... emotionally difficult. Funerals vary widely in price. The Motley Fool indicates the median cost of a funeral with a vault was $8,343 in 2014. Crematory fees, a headstone, flowers, food, obituaries, all add to this cost. My total cost was closer to three times the median, though some of the expenses (headstone, primarily) came later. I'm sure I could have gone for a cheaper funeral, though it's hard to make rational economic decisions at that sort of time. I don't recall the exact amount I had to put down, but it was somewhere around $6000 - $8000. (No need to leave a comment expressing condolences; thanks, but I've already had plenty and now my goal is to help share knowledge. :) )"
},
{
"docid": "77939",
"title": "",
"text": "Two adages come to mind. Never finance a depreciating asset. If you can't pay cash for a car, you can't afford it. If you decide you can finance at a low rate and invest at a higher one, you're leveraging your capital. The risk here is that your investment drops in value, or your cash flow stops and you are unable to continue payments and have to sell the car, or surrender it. There are fewer risks if you buy the car outright. There is one cost that is not considered though. Opportunity cost. Since you've declared transportation necessary, I'd say that opportunity cost is worth the lower risk, assuming you have enough cash left after buying a car to fund your emergency fund. Which brings me to my final point. Be sure to buy a quality used car, not a new one. Your emergency fund should be able to replace the car completely, in the case of a total loss where you are at fault and the loss is not covered by insurance. TLDR: My opinion is that it would be better to pay for a quality, efficient, basic transportation car up front than to take on a debt."
},
{
"docid": "550581",
"title": "",
"text": "\"In addition to the two options in your question - pay off the entire loan, depleting your emergency fund; or continue as you are today - there is a third, middle-ground option that might be worth considering. Since you currently have an emergency fund, zero credit card debt, and you stated \"\"we can afford these expenses\"\", I think I'd be correct to assume that you're currently making regular contributions to either the emergency fund itself, or to another savings account, etc. Temporarily stop making those contributions, and divert those funds to make larger payments towards the upside-down loan. The additional amount will all be applied to the loan principal, reducing the interest you'll have to pay, but you'll avoid the risk of depleting the emergency fund. Additionally, the insurance premium may possibly be avoided, as in many places in the world it's possible to de-register the car (for example, in California, USA, you can submit an affidavit of Non-Use) then terminate the insurance on it. However, the car will likely have to be parked off-street (or in a location such as a private road governed by rules that do not include legal registration requirements).\""
}
] |
4641 | Where should I park my rainy-day / emergency fund? | [
{
"docid": "397358",
"title": "",
"text": "This is probably a good time to note that credit is not a liquid asset, and not an emergency fund. Credit can be revoked or denied at any time, and Murphy's law states that you may have issues with credit when everything else goes wrong too."
}
] | [
{
"docid": "37823",
"title": "",
"text": "What sort of emergency requires payment up front for which 2-3 days processing of a stock sale would pose a problem? In my case, the sudden and unexpected death of my wife. Back in 2011, my wife was struck and killed in a traffic incident. I had to immediately (not in 2 - 3 days) cover 50% of the entire costs of the funeral. The balance was due shortly after, though I now forget if the balance was due in 7 days or in 30. I suspect the latter. The life insurance paid out in approximately 4 months for this simple case. Even if your mortgage is insured, you still have to pay the entire balance, along with living expenses, until the paperwork is resolved. And, again in simple cases, assume this will take months rather than days or weeks. My point is, the funeral is only one of the expenses you'll have to cover in such a situation, though generally you'll have sufficient lead time for the other expenses, where your investments would likely be sufficiently liquid. Yes, a credit card would (and did) help in this situation, but if you have no credit card (as your question poses), you need ready access to thousands of dollars to cover this sort of eventuality. My bank told me that many people in such a situation have to take out an emergency loan the very day their spouse dies. Let me assure you this would be... emotionally difficult. Funerals vary widely in price. The Motley Fool indicates the median cost of a funeral with a vault was $8,343 in 2014. Crematory fees, a headstone, flowers, food, obituaries, all add to this cost. My total cost was closer to three times the median, though some of the expenses (headstone, primarily) came later. I'm sure I could have gone for a cheaper funeral, though it's hard to make rational economic decisions at that sort of time. I don't recall the exact amount I had to put down, but it was somewhere around $6000 - $8000. (No need to leave a comment expressing condolences; thanks, but I've already had plenty and now my goal is to help share knowledge. :) )"
},
{
"docid": "345428",
"title": "",
"text": "I think you've got competition on that list for where to put the money - I'd work out which option is costing me the most currently or will cost me the most in the future and take care of it. I'd be willing to bet that Eric is right, though, that it will need to be the roof. Not fixing it could cost you more in the long run than any of the other items on the list (assuming your circumstances remain roughly the same). General comments/other considerations: Any money that doesn't get spent on the roof (if any) - I would put in a rainy day fund."
},
{
"docid": "493578",
"title": "",
"text": "\"If you're willing to do a little more work and bookkeeping than just putting money into the 401(k) I would recommend the following. I note that you said you chose some funds based on performance since the expense ratios are all high. I would recommend against chasing performance because active funds will almost always falter; honor the old saw: \"\"past performance is no guarantee of future returns\"\". Assuming the cash in your Ally account is an emergency fund, I would use it to pay off your credit card debt to avoid the interest payments. Use free cash flow in the coming months to bring the emergency fund balance back up to an acceptable level. If the Ally account is not an emergency fund, I would make it one! With no debt and an emergency fund for 3-12 months of living expenses (pick your risk tolerance), then you can concentrate on investing. Your 401(k) options are unfortunately pretty poor. With those choices I would invest this way: Once you fill up your choice of IRA, then you have the tougher decision of where to put any extra money you have to invest (if any). A brokerage account gives you the freedom of investment choices and the ability to easily pull out money in the case of a dire emergency. The 401(k) will give you tax benefits, but high fund expenses. The tax benefits are considerable, so if I were at a job where I plan on moving on in a few years, I'd fund the 401(k) up to the max with the knowledge that I'd roll the 401(k) into a rollover IRA in the (relatively) short term. If I saw myself staying at the employer for a long time (5+ years), I'd probably take the taxable account route since those high fund fees will add up over time. One you start building up a solid base, then I might look into having a small allocation in one of my accounts for \"\"play money\"\" to pick individual stocks, or start making sector bets.\""
},
{
"docid": "183883",
"title": "",
"text": "First, of course, I agree with the comments about paying down debt. Then reserve some of those savings as an emergency fund. After that, the default answer is to invest in an index fund as Mr Belford suggested, such as Vanguard's total stock market index fund, and leave it there forever. Even when the market tanks -- especially don't sell it when the market tanks! I might leave some cash in reserve so I can buy when the market corrects/tanks and stocks go on sale, but I'm paranoid that way. (Pick 5 random people and you'll hear 6 contradictory opinions on where the market will move soon.) I personally would just park it in the index fund. You just graduated; you have so many things you could spend your time on (building career, socializing, learning kickboxing and sailing and rock climbing and woodworking and intramural soccer and.....), and landlording has the potential to become a time sink. On the other hand, if you're really into landlording, why not. Just be aware it's a lot more complex than pay $50k down and collect $500 in easy profit each month. There's a lot of learning to do before jumping in."
},
{
"docid": "254572",
"title": "",
"text": "From a budgeting perspective, the emergency fund is a category in which you've budgeted funds for the unexpected. These are things that weren't able to be predicted and budgeted for in advance, or things that exceeded the expected costs. For example you might budget $150 per month for car maintenance, and typically spend some of it while the rest builds up over time for unexpected repairs, so you have a few hundred available for that. But this month your transmission died and you have a $3,000 bill. You'll then fund most of this out of your emergency fund. This doesn't cover where to store that money though, which leads me to my next point. Emergencies are emergencies because they come without warning, without you having a chance to plan. Thefore the primary things you want in an emergency fund account are stability and quick access. You can structure investments to be whatever you think of as safe or stable but you don't want to be thinking about whether it's a good time to sell when you need the money right now. But the bigger problem is access. When you need the funds on a weekend, holiday, anytime outside of market hours, you're not going to be able to just sell some stocks and go to an ATM. This is the reason why it's recommended to have these funds in a checking or savings account usually. The reason I mentioned the budgeting side first is because I wanted to point out that if you're budgeting well, most of the unexpected expenses you have should have been expected in a sense; you can still plan for something without knowing when or if it will happen. So in the example of a car repair, ideally you're already budgeting for possible repairs, if you own a home you're budgeting for things that would go wrong, budgeting for speeding tickets, for surprise out of pocket medical costs, etc. These then become part of your normal budget: they aren't part of the emergency fund anymore. The bright side about budgeting for something unexpected is that you know what that money is for, and do you likely also know how quickly you'll need it. For example you know if you have unexpected medical costs that happen very quickly, you're not likely you need a bag of cash on a moment's notice. So those last two points lead to the fact that your actual emergency fund, the dollars that are for things you simply could not foresee, will be relatively small. A few thousand dollars or so in most cases. If you've got things structured like this, you'll be happy to have a few grand available at a moment's notice. The bulk of the money you would use for other surprise expenses (or things like 6 months of living expenses) is represented in other specific categories and you already know the timeframe in which you need it (probably enough time that it could be invested, risk to taste). In short: by expecting the unexpected, you can sidestep this issue and not worry so much about missed returns on the emergency fund."
},
{
"docid": "470334",
"title": "",
"text": "\"Edited answer, given that I didn't address the emergency fund aspect originally: None. You've said you don't feel comfortable locking it away where you wouldn't be able to get to it in an emergency. If you don't like locking it away, the answer to \"\"How much money should I lock up in my savings account?\"\" is none. On a more personal note, the interest rates on bonds are just awful. Over five years, you can do better.\""
},
{
"docid": "551099",
"title": "",
"text": "\"Welcome to Money.SE. I will say upfront, Personal Finance is just that, personal, and you are likely to get multiple, perhaps conflicting, answers. Are you sure the PMI will drop off after 2 years? The rules are specific, and for PMI, when prepayments put you at that 78/80% LTV, your bank can require an appraisal, not automatically drop it. Talk to the banks, get confirmation, and depending what they say, keep hacking away at the mortgage. After this, I suggest jumping on Roth IRAs. You are in the 15% bracket, and the Roth will let you deposit $5500 for each you and your wife. A great way to kickstart a higher level of retirement savings. After this, I'm not comfortable with the emergency savings level. If you lose your job tomorrow (Funny story, my wife and I lost our's on the same day 3 years ago) and don't have enough savings (Our retirement accounts were good to just retire that day) you can easily run out of money and be late on the mortgage. It's great to prepay the mortgage to get rid of that PMI, but once there, I'd do the Roth and then focus on savings. 6 months expenses minimum. We have a great Q&A here titled Oversimplify it for me: the correct order of investing in which I go in to more detail, as do 4 other members. I am not getting on the \"\"investments will return more than your mortgage cost\"\" soapbox. A well-funded emergency fund is a very conservative bit of advice. With no matched 401(k), I suggest a balance of the Roth savings and prepayments. From another great post, Ideal net worth by age X? Need comparison references you should have nearly 1 year's salary (90K) saved toward retirement. Any question on my advice, add a comment and I will edit in more details.\""
},
{
"docid": "21420",
"title": "",
"text": "There is no accounting reason that it should be different, there are likely psychological reasons that it should be, however. Assuming that you live in a western country with good banking regulation, you likely have deposit insurance or a similar scheme. Here in Canada we are covered up to $100,000 in a single account with various limitations. At least my rainy-day account plus savings is nowhere near that, so I'm good to go. That said, however, having a large lump of money in an account you regularly use may tempt you more than you can stand. That iPad, car, home improvement, etc., might be too easy to buy knowing you have relatively easy access to that money. So it really becomes a self-discipline question. Good Luck"
},
{
"docid": "146547",
"title": "",
"text": "I think rather than take a percentage out, I focus on getting a total amount I consider appropriate for my emergency fund. Then as for retirement, I do at least what my employer matches, up to the contribution limit. For example my personal retirement plan in the US has an annual max contribution of $5000. Once I have my 6 to 12 month emergency fund (in a pretty liquid form) and a fully funded retirement, I want to concentrate on building wealth via investments or increasing the quality of my life by spending. Summary answer is: no percentage for emergency, just get to a total amount you feel comfortable. Then whatever percentage will allow you to make the most of employer matching and make your retirement fully funded."
},
{
"docid": "108974",
"title": "",
"text": "I few years ago my company in the Washington DC area allowed employees to contribute their own pre-tax funds. The system at the time wasn't sophisticated enough to prevent what you are suggesting. The money each month was put on a special credit card that could only be used at certain types of locations. You could load it onto the Metro smart trip card, and use it for many months. Many people did this, even though the IRS says you shouldn't. But eventually the program for the federal employees changed, their employer provided funds were put directly onto their Smart Trip card. In fact there were two buckets on the card: one to pay for commuting, and the other to pay for parking. There was no way to transfer money between buckets. The first day of the new month all the excess funds were automatically removed from the card;and the new funds were put onto the card. If your employer has a similar program it may work the same way. HR will know."
},
{
"docid": "577479",
"title": "",
"text": "\"I recently moved out from my parents place, after having built up sufficient funds, and gone through these questions myself. I live near Louisville, KY which has a significant effect on my income, cost of living, and cost of housing. Factor that into your decisions. To answer your questions in order: When do I know that I'm financially stable to move out? When you have enough money set aside for all projected expenses for 3-6 months and an emergency fund of 4-10K, depending on how large a safety net you want or need. Note that part of the reason for the emergency fund is as a buffer for the things you won't realize you need until you move out, such as pots or chairs. It also covers things being more expensive than anticipated. Should I wait until both my emergency fund is at least 6 months of pay and my loans in my parents' names is paid off (to free up money)? 6 months of pay is not a good measuring stick. Use months of expenses instead. In general, student loans are a small enough cost per month that you just need to factor them into your costs. When should I factor in the newer car investment? How much should I have set aside for the car? Do the car while you are living at home. This allows you to put more than the minimum payment down each month, and you can get ahead. That looks good on your credit, and allows refinancing later for a lower minimum payment when you move out. Finally, it gives you a \"\"sense\"\" of the monthly cost while you still have leeway to adjust things. Depending on new/used status of the car, set aside around 3-5K for a down payment. That gives you a decent rate, without too much haggling trouble. Should I get an apartment for a couple years before looking for my own house? Not unless you want the flexibility of an apartment. In general, living at home is cheaper. If you intend to eventually buy property in the same area, an apartment is throwing money away. If you want to move every few years, an apartment can, depending on the lease, give you that. How much should I set aside for either investment (apartment vs house)? 10-20K for a down payment, if you live around Louisville, KY. Be very choosy about the price of your house and this gives you the best of everything. The biggest mistake you can make is trying to get into a place too \"\"early\"\". Banks pay attention to the down payment for a good reason. It indicates commitment, care, and an ability to go the distance. In general, a mortgage is 30 years. You won't pay it off for a long time, so plan for that. Is there anything else I should be doing/taking advantage of with my money during this \"\"living at home\"\" period before I finally leave the nest? If there is something you want, now's the time to get it. You can make snap purchases on furniture/motorcycles/games and not hurt yourself. Take vacations, since there is room in the budget. If you've thought about moving to a different state for work, travel there for a weekend/week and see if you even like the place. Look for deals on things you'll need when you move out. Utensils, towels, brooms, furniture, and so forth can be bought cheaply, and you can get quality, but it takes time to find these deals. Pick up activities with monthly expenses. Boxing, dancing, gym memberships, hackerspaces and so forth become much more difficult to fit into the budget later. They also give you a better credit rating for a recurring expense, and allow you to get a \"\"feel\"\" for how things like a monthly utility bill will work. Finally, get involved in various investments. A 401k is only the start, so look at penny stocks, indexed funds, ETFs or other things to diversify with. Check out local businesses, or start something on the side. Experiment, and have fun.\""
},
{
"docid": "407547",
"title": "",
"text": "\"I'm the contrarian on this forum. Since you asked a \"\"should I ...\"\" question, I'm free to answer \"\"No, you shouldn't increase your limit. Instead, you should close it out\"\". A credit card is a money pump - it pumps money from your account to the bank's profit margins. When I look at my furniture and the bank's furniture, I know exactly who needs my money more (hint: it's not the bank). Credit cards change people's spending patterns. In my first day of training as a Sears salesman, the use of the card was drummed into our heads. People purchase on average 25% more when they use a card than when they pay cash. That's good if you're a retailer or the lender (at that time Sears was both), but no good if you're a consumer. Build up a $1,000 emergency fund (for emergencies only, not \"\"I need a quick latte because I stayed up too late last night\"\"), then savings for 6 to 12 months living expenses. Close and cut up the credit card. Save up and pay cash for everything except possibly your house mortgage. If you have that much cash in the bank, the bankers will be as willing to talk to you as if you had an 800+ score. I have lived both with and without debt. Life without debt is well worth the short term sacrifice early on.\""
},
{
"docid": "14989",
"title": "",
"text": "I know this is heresy but if you have funds for significantly more than 6 months of expenses (let's say 12 months), how risky would it be to put it all into stock index funds? Quite risky as if you do need to dip into it, how fast could you get the cash? Also, do you realize the tax implications when you do sell the shares should you have an emergency? In the worst-case scenario, let's say you have a financial emergency at the same time the stock market crashes and loses half its value. You could still liquidate the rest and have sufficient funds for 6 months. Am I underestimating the risks of this strategy? That's not worst case scenario though. Worst case scenario would be another 9/11 where the markets are closed for nearly a week and you need the money but can't get the funds converted to cash in the bank that you can use. This is in addition to the potential wait for a settlement in the case of using ETFs if you choose to go that way. In the case of money market funds, CDs and other near cash equivalents these can be accessed relatively easily which is part of the point. A staggered approach where some cash is kept in house, some in accounts that can easily accessed and some in other investments may make sense though the breakdown would differ depending on how much risk people are willing to take. If it truly is an emergency fund then the odds of needing it should be very slim, so why live with near zero return on that money? Something to consider is what is called an emergency here? For some people a sudden $1,000 bill to fix their car that just broke down is an emergency. For others, there could be emergency trips to visit family that may have gotten into accidents or gotten a diagnosis that they may pass away soon. Consider what do you want to call an emergency here as chances are you may not be considering all that people would think is an emergency. There is the question of what other sources of money do you have to cover should issues arise."
},
{
"docid": "44594",
"title": "",
"text": "\"First off, you generally want to park your emergency fund somewhere that is \"\"safe\"\", meaning something that is not subject to market fluctuations. Your emergency fund is something you need to be able to count on when times are tough! That rules out things like stock market investments. Secondly, you need to think about how quickly you will need access to the money. If you have an emergency, odds are you don't want to be waiting around for weeks/months/years for the money to become available. This rules out most fixed-term investments (Bonds, traditional CDs, etc). If you are concerned that you will need near-instant access to your emergency money, then you probably want to keep it in a Savings or Money Market Account at the same bank as your checking account. Most banks will let you transfer money between local accounts instantly. Unfortunately, your local bank probably has pitiful interest rates for the Savings/MMA, far below the inflation rate. This means your money will slowly lose value over time. Be prepared to keep contributing to it! For most people, being able to draw the cash from your fund within a few days (<1 week) is sufficient. Worst case, you charge something on your credit card, and then pay down the card when the emergency fund withdrawal arrives. If \"\"money within a few days\"\" is okay for you, there are a few options: Money Market (Mutual) Funds (not to be confused with a Money Market Account) - This is the traditional place to keep an emergency fund. These are investment funds you can buy with a brokerage account. An example of such a fund would be Fidelity Cash Reserves. MMFs are not FDIC insured, so they are not exactly zero risk. However, they are considered extremely safe. They almost never go down in value (only a few times in the past few decades), and when they have, the fund manager or the Federal Govt stepped in to restore the value. They usually offer slightly better return than a local savings account, and are available in taxable and non-taxable varieties. Online High-Yield Savings or Money Market Account - These are a relatively new invention. It's basically a the same thing as what your local bank offers, but it's online-only. No local branch means low overhead, so they offer higher interest rates (2.0% vs 0.5% for your local bank). Some of them used to be over 5% before the economy tanked. Like your local bank, it is FDIC insured. One bit of caution: Some of these accounts have become \"\"gimmicky\"\" lately. They have started to do things like promo rates for a few months, only offering the high interest rate on the first few $K deposited, limiting the amount that can be withdrawn, etc. Be sure to read the details before you open an account! No-Penalty CDs - Certificates of Deposit usually offer a better rate than a Savings Account, but your money is locked up until the CD term is up (e.g. 36 months). If you need to cash out before then, you pay a penalty. Some banks have begun to offer CDs that you can cash out with no penalty at all. These can offer better rates than the savings account. Make sure it really is no-penalty though. Also watch what your options are for slowly adding money over time. This can be an issue if you want to deposit $100 from every paycheck. Rewards Checking Accounts - These are checking accounts that will pay a relatively high interest rate (3% or more) provided you generate enough activity. Most of them will have requirements like you must have direct deposit setup with them, and you must do a minimum number of debit card transactions from the account per month. If you can stay on top of the requirements, these can be a great deal. If you don't stay on top of it, your interest rate usually drops back to something pitiful, though. Personally, we use the Online High-Yield Savings Account for our emergency fund. I'm not going to make a specific recommendation as to which bank to use. The best deal changes almost week to week. Instead, I will say to check out Bankrate.com for a list of savings accounts and CDs that you can sort. The Bank Deals blog is a good place to follow rate changes.\""
},
{
"docid": "284318",
"title": "",
"text": "Excellent answers so far, so I will just add one additional consideration: liquidity. Money invested in a mutual fund (exclusive of retirement accounts with early withdrawal penalties) has a relatively high liquidity. Whereas excess equity in your home from paying down early has very low liquidity. To put it simply: If you get in a desperate situation (long term unemployment) it is better to have to cash in a mutual fund than try to sell your house on the quick and move in with your mother. Liquidity becomes less of an issue if you also manage to fund a decent sized rainy-day fund (6-9 months of living expenses)."
},
{
"docid": "26538",
"title": "",
"text": "\"To the average consumer, the financial health of a bank is completely irrelevant. The FDIC's job is to make it that way. Even if a bank does go under, the FDIC is very good at making sure there is little/no interruption in service. Usually, another bank just takes over the asset of the failing bank, and you don't even notice the difference. You might have a ~24 hour window where your local ATM doesn't work. I also really question the \"\"FDIC is broke\"\" statement. The FDIC has access to additional funding beyond the Deposit Insurance Fund mentioned in your link. It also has the ability to borrow from the Treasury. If you look into the FDIC's report a bit closer, the amount in the \"\"Provision for Insurance Losses\"\" is not just money spent on failing banks. It also includes money that has been set aside to cover anticipated failures and litigation. Saying the FDIC is \"\"broke\"\" is like saying I am \"\"broke\"\" because my checking account balance went down after I moved some money into a rainy-day fund. Failure of the FDIC would signal a failure of our financial system and the government that backs it. If the FDIC fails, your petty checking account would be meaningless anyway. The important things would be non-perishable food, clean water, and guns/ammo. That said, it will be interesting to see the latest quarterly report for the FDIC when it is released next week. The article implies things will look a little better for the FDIC, but we'll see.\""
},
{
"docid": "247124",
"title": "",
"text": "\"In Michigan, Allen Park went for the dream. A movie studio! In 2009 [City officials authorized the sale of $31 million in general obligation bonds... including the building at 16630 Southfield Road and an empty building off Enterprise Drive — for $24.8 million. It’s the site of a much-anticipated movie studio complex.](http://www.thenewsherald.com/articles/2009/08/10/news/doc4a7dc8f05fb32855668898.txt) Oh joy! [\"\"The Allen Park Center Studios will be an epicenter for movie production and a full stop shop for entertainment, education and recreation.\"\"](http://michiganmoviemagazine.biz/news/146-the-bright-future-of-allen-park-center-studios.html) By October of 2009, there were rumors and denials [\"\"A $146 million film and television production studio in Allen Park remains on track despite a series of roadblocks and persistent rumors that the project will never materialize.\"\"](http://www.mlive.com/jobs/index.ssf/2009/10/exec_insists_allen_park_michigan_film_pr.html) Things were looking so good, in January 2010 [Allen Park was streamlining the process of getting film permits](http://www.cityofallenpark.org/news-film-industry.php) But by May, [the studio wasn't making the lease payments. ](http://www.mlive.com/entertainment/detroit/index.ssf/2010/05/unity_studios_fails_to_make_re.html) Come September, [the studio moved to Detroit](http://www.mlive.com/news/detroit/index.ssf/2010/09/suburban_movie_studio_relocati.html) By February 2011, [Allen Park sent payoff notices to its entire fire department](http://www.mlive.com/news/detroit/index.ssf/2011/02/if_the_city_of_allen_park_cant.html) Come May, [the Mayor resigned](http://www.mlive.com/news/detroit/index.ssf/2011/05/allen_park_mayor_resigns_citin.html) By May of this year, [Allen Park voters had twice rejected taxes to pay for the studio bonds. The city is facing state-appointed emergency manager](http://www.detroitnews.com/article/20120511/OPINION01/205110323) I think the ending of this story is not going to be the typical end-of-the-movie scene where suddenly everything is okay.\""
},
{
"docid": "496752",
"title": "",
"text": "As mentioned, the main advantage of a 15-year loan compared to a 30-year loan is that the 15-year loan should come at a discounted rate. All things equal, the main advantage of the 30-year loan is that the payment is lower. A completely different argument from what you are hearing is that if you can get a low interest rate, you should get the longest loan possible. It seem unlikely that interest rates are going to get much lower than they are and it's far more likely that they will get higher. In 15 years, if interest rates are back up around 6% or more (where they were when I bought my first home) and you are 15 years into a 30 year mortgage, you'll being enjoying an interest rate that no one can get. You need to keep in mind that as the loan is paid off, you will earn exactly 0% on the principal you've paid. If for some reason the value of the home drops, you lose that portion of the principal. The only way you can get access to that capital is to sell the house. You (generally) can't sell part of the house to send a kid to college. You can take out another mortgage but it is going to be at the current going rate which is likely higher than current rates. Another thing to consider that over the course of 30 years, inflation is going to make a fixed payment cheaper over time. Let's say you make $60K and you have a monthly payment of $1000 or 20% of your annual income. In 15 years at a 1% annualized wage growth rate, it will be 17% of your income. If you get a few raises or inflation jumps up, it will be a lot more than that. For example, at a 2% annualized growth rate, it's only 15% of your income after 15 years. In places where long-term fixed rates are not available, shorter mortgages are common because of the risk of higher rates later. It's also more common to pay them off early for the same reason. Taking on a higher payment to pay off the loan early only really only helps you if you can get through the entire payment and 15 years is still a long way off. Then if you lose your job then, you only have to worry about taxes and upkeep but that means you can still lose the home. If you instead take the extra money and keep a rainy day fund, you'll have access to that money if you hit a rough patch. If you put all of your extra cash in the house, you'll be forced to sell if you need that capital and it may not be at the best time. You might not even be able to pay off the loan at the current market value. My father took out a 30 year loan and followed the advice of an older coworker to 'buy as much house as possible because inflation will pay for it'. By the end of the loan, he was paying something like $250 a month and the house was worth upwards of $200K. That is, his mortgage payment was less than the payment on a cheap car. It was an insignificant cost compared to his income and he had been able to invest enough to retire in comfort. Of course when he bought it, inflation was above 10% so it's bit different today but the same concepts still apply, just different numbers. I personally would not take anything less than a 30 year loan at current rates unless I planned to retire in 15 years."
},
{
"docid": "478413",
"title": "",
"text": "Personally, I'd use my emergency fund first. It is unlikely (though possible, of course) that I will entirely lose my income at the same time I need to replace my roof or my furnace. I'd rather pay my emergency fund back with installment payments than pay off a HELOC to my bank. The lost interest on my emergency fund, which, after all, should be in cash, is much less than the cost of the loan. I could even set up an amortization schedule in a spreadsheet and charge myself interest when paying back into the emergency fund. That said, if I didn't have the cash in my emergency fund, I'd rather borrow against the house than finance with a contractor. If they'd even do that, which is unlikely--I've never dealt with a roofer or heating contractor that required anything but full payment at time of service. Home equity borrowing is generally the cheapest kind. I'm firmly in the camp of those who look at home ownership as a consumption decision rather than an investment. If the value goes up, great, but I just build in about 1% of the cost of building a new house (excluding the land price) into the housing budget each year, right along with mortgage interest, property taxes and basic utilities. Usually, that's enough to cover the major wear-and-tear related repairs (averaged over 3-5 year periods, anyway)."
}
] |
4641 | Where should I park my rainy-day / emergency fund? | [
{
"docid": "88327",
"title": "",
"text": "Something with an FDIC guarentee, so a bank. With an emergency fund, I think the 'return of capital' is more important than the 'return on the capital', so I'm fine with putting it in a standard savings account in a local bank(not an internet account) even if it pays next to nothing. The beauty is that since the bank is local, you can walk in and withdraw it all during any weekday."
}
] | [
{
"docid": "41271",
"title": "",
"text": "From mid 2007 to early 2009 the DJI went down about 50 %. This market setback won't happen on a single day or even a few weeks. Emergency funds should be in cash only. Markets could be closed for an unknown period of time. Markets where closed September 11 until September 17 in 2001."
},
{
"docid": "588555",
"title": "",
"text": "\"First, you must prioritize what a \"\"need\"\" and what a \"\"want\"\" is. This is different for everyone but generally, I think most people will agree that impulse items are \"\"want\"\" items. Look at the item, hold it, put it back and wait 30 days. Put the money that the item costs $x into your savings account (transfer from checking, straight deposit, etc) Come back to the store and hold the item again and as \"\"did I miss the fact that I didnt get it 30 days ago?\"\". 95% of the time, the answer is no. You saved $x for 30-days, and received what is a tiny bit of interest for it. This is cause for celebration! If you repeat this for every item you THINK you \"\"need\"\" or \"\"want\"\" then you'll be amazed at what you saved. Dont waste this money on a vacation to the islands either! Keep saving. There will be plenty of rainy days when you'll have wanted to trade that island vacation (or the impulse items you bought that you used once or twice and are lost in your garage somewhere) to pay for some unexpected emergency. Trust me on this!\""
},
{
"docid": "433371",
"title": "",
"text": "BrenBarn did a great job explaining your options so I won't rehash any of that. I know you said that you don't want to save for retirement yet, but I'm going to risk answering that you should anyway. Specifically, I think you should consider a Roth IRA. When it comes to tax advantaged retirement accounts, once the contribution period for a tax year ends, there's no way to make up for it. For example in 2015 you may contribute up to $5,500 to your IRA. You can make those contributions up until tax day of the following year (April 15th, 2016). After that, you cannot contribute money towards 2015 again. So each year that goes by, you're losing out on some potential to contribute. As for why I think a Roth IRA specifically could work well for you: I'm advocating this because I think it's a good balance. You put away some money in a retirement account now, when it will have the most impact on your future retirement assets, taking advantage of a time you will never have again. At a low cost custodian like Vanguard, you can open an IRA with as little as $1,000 to start and choose from excellent fund options that meet your risk requirements. If you end up deciding that you really want that money for a car or a house or beer money, you can withdraw any of the contributions without fear of penalty or additional tax. But if you decide you don't really need to take that money back out, you've contributed to your retirement for a tax year you likely wouldn't have otherwise, and wouldn't be able to make up for later when you have more than enough to max out an IRA each year. I also want to stress that you should have a liquid emergency fund (in a savings or checking account) to deal with unexpected emergencies before funding something like this. But after that, if you have no specific goal for your savings and you don't know for sure you'll actually need to spend it in the near future, funding a Roth IRA is worth considering in my opinion."
},
{
"docid": "111054",
"title": "",
"text": "\"Between 6 months and a year is normally regarded as the \"\"standard\"\". Plan out what your monthly expenses are and save that money away. One thing to consider is what extras can you give up. If you are currently eating steak and lobster every day can you live with switching to ramen noodles for a period of time? Can you switch from premium cable to basic cable (or cancel it altogether)? Questions like this can greatly impact the amount you have to set aside. I personally have my emergency fund in CDs that mature the first of every month. I know there is less liquidity in this approach but I'm ok with that. My emergency fund is a sum of cash I'll always have so I wanted to reap the benefits of a higher yield. If it comes down to it I can place an expense on a credit card and pay off the credit card when funds become available.\""
},
{
"docid": "589088",
"title": "",
"text": "\"Some of the other answers recommended peer-to-peer lending and property markets. I would not invest in either of these. Firstly, peer-to-peer lending is not a traditional investment and we may not have enough historical data for the risk-to-return ratio. Secondly, property investments have a great risk unless you diversify, which requires a huge portfolio. Crowd-funding for one property is not a traditional investment, and may have drawbacks. For example, what if you disagree with other crowd-funders about the required repairs for the property? If you invest in the property market, I recommend a well-diversified fund that owns many properties. Beware of high debt leverage used to enhance returns (and, at the same time, risk) and high fees when selecting a fund. However, traditionally it has been a better choice to invest in stocks than to invest in property market. Beware of anyone who says that the property market is \"\"too good to not get into\"\" without specifying which part of the world is meant. Note also that many companies invest in properties, so if you invest only in a well-diversified stock index fund, you may already have property investments in your portfolio! However, in your case I would keep the money in risk-free assets, i.e. bank savings or a genuine low-cost money market fund (i.e. one that doesn't invest in corporate debt or in variable-rate loans which have short duration but long maturity). The reason is that you're going to be unemployed soon, and thus, you may need the money soon. If you have an investment horizon of, say, 10 years, then I would throw stocks into the mix, and if you're saving for retirement, then I would go all in to stocks. In the part of the world where I live in, money market funds generally have better return than bank savings, and better diversification too. However, your 2.8% interest sounds rather high (the money market fund I have in the past invested in currently yields at 0.02%, but then again I live in the eurozone), so be sure to get estimates for the yields of different risk-free assets. So, my advice for investing is simple: risk-free assets for short time horizon, a mixture of stocks and risk-free assets for medium time horizon, and only stocks for long time horizon. In any case, you need a small emergency fund, too, which you should consider a thing separate from your investments. My emergency fund is 20 000 EUR. Your 50 000 AUD is bit more than 30 000 EUR, so you don't really have that much money to invest, only a bit more than a reasonably sized emergency fund. But then again, I live in rental property, so my expenses are probably higher than yours. If you can foresee a very long time horizon for part of your investment, you could perhaps invest 50% of your money to stocks (preference being a geographically diversified index fund or a number of index funds), but I wouldn't invest more because of the need for an emergency fund.\""
},
{
"docid": "478413",
"title": "",
"text": "Personally, I'd use my emergency fund first. It is unlikely (though possible, of course) that I will entirely lose my income at the same time I need to replace my roof or my furnace. I'd rather pay my emergency fund back with installment payments than pay off a HELOC to my bank. The lost interest on my emergency fund, which, after all, should be in cash, is much less than the cost of the loan. I could even set up an amortization schedule in a spreadsheet and charge myself interest when paying back into the emergency fund. That said, if I didn't have the cash in my emergency fund, I'd rather borrow against the house than finance with a contractor. If they'd even do that, which is unlikely--I've never dealt with a roofer or heating contractor that required anything but full payment at time of service. Home equity borrowing is generally the cheapest kind. I'm firmly in the camp of those who look at home ownership as a consumption decision rather than an investment. If the value goes up, great, but I just build in about 1% of the cost of building a new house (excluding the land price) into the housing budget each year, right along with mortgage interest, property taxes and basic utilities. Usually, that's enough to cover the major wear-and-tear related repairs (averaged over 3-5 year periods, anyway)."
},
{
"docid": "451501",
"title": "",
"text": "Is my financial status OK? If not, how can I improve it? I'm going to concentrate on this question, particularly the first half. Net income $4500 per month (I'm taking this to be after taxes; correct me if wrong). Rent is $1600 and other expenses are up to $800. So let's call that $2500. That leaves you $2000 a month, which is $24,000 a year. You can contribute up to $18,000 a year to a 401k and if you want to maintain your income in retirement, you probably should. The average social security payment now is under $1200. You have an above average income but not a maximum income. So let's set that at $1500. You need an additional income stream of $900 a month in retirement plus enough to cover taxes. Another $5500 for an IRA (probably a Roth). That's $23,500. That leaves you $500 a year of reliable savings for other purposes. Another $5500 for an IRA (probably a Roth). That's $23,500. That leaves you $500 a year of reliable savings for other purposes. You are basically even. Your income is just about what you need to cover expenses and retirement. You could cover a monthly mortgage payment of $1600 and have a $100,000 down payment. That probably gets you around a $350,000 house, although check property taxes. They have to come out of the $1600 a month. That doesn't seem like a lot for a Bay area house even if it would buy a mansion in rural Mississippi. Perhaps think condo instead. Try to keep at least $15,000 to $27,000 as emergency savings. If you lose your job or get stuck with a required expense (e.g. a major house repair), you'll need that money. You don't have enough income to support a car unless it saves you money somewhere. $500 a year is probably not going to cover insurance, parking, gas, and maintenance. It's possible that you could tighten up your expenses, but in my experience, people are more likely to underestimate their expenses than overestimate. That's why I'm saying $2500 (a little above the high end) rather than $2000 (your low end estimate). If things are stable, wait a year and evaluate. Track your actual spending. Ask yourself if you made any large purchases. Your budget should include an appliance (TV, refrigerator, washer/dryer, etc.) a year. If you're not paying for that now (included in rent?), then you need to allow for it in your ownership budget. I do not consider an ESPP to be a reliable investment vehicle. Consider the Enron possibility. You wake up one day and find out that there is no actual money. Your stock is now worthless. A diversified portfolio can survive this. If you lose your job and your investment, you'll be stuck with just your savings. Hopefully you didn't just tie them up in a house that you might have to sell to take your next job in a different location. An ESPP might work as savings for the house. If something goes wrong, don't buy the house. But it's not retirement or emergency savings. I would say that you are OK but could be better. Get your retirement savings started. That does two things. One, it gives you money for retirement. Two, it keeps you from having extra money now when it is easy to develop expensive habits. An abrupt drop from $4500 in spending to $1200 will hurt. A smooth transition from $2500 to $2500 is what you would like to see. You are behind now, but you have the opportunity to catch up for a few years. Work out how much you'll get from Social Security and how much you need to cover your typical expenses with the occasional emergency. Expect high health care costs in retirement. Medicare covers a lot but not everything, and health care is only getting more expensive. Don't forget to assume higher taxes in the future to help cover that expense and the existing debt. After a few years of catch up contributions, work out your long term plan assuming a reasonable real (after inflation) rate of return. If you can reduce the $23,500 in retirement contributions then, that's OK. But be pessimistic. Most people overestimate good things and underestimate bad things. It's much better to have extra than not enough. A 401k comes with an administrator and your choice of mutual funds. Try for diversification. Some money in bonds (25% to 30%). The remainder in stocks. Look for index funds. Try for a mix of value and growth, as they'll do better at different times. As you approach retirement, you can convert some of that into shorter term, lower yield investments. The rough rule of thumb is to have two to five years of withdrawals in short term investments like money market funds. But that's more than twenty years off. You have more choices with an IRA. In particular, you can choose your own administrator. But I'd keep the same stock/bond mix and stick to index funds if you're not interested in researching the more complex options. You may want to invest your IRA in a growth fund and your 401k in value funds and bonds. Then balance the stock/bond mix across both. When you invest each year, look at the underrepresented funds and add the most to them. So if bonds had a bad year and didn't keep pace, invest in bonds. They're probably cheap. You don't want to rebalance frequently, but once a year might be a good pace. That's about how often you should invest in an IRA, so that can be a good time. I'll let the others answer on the financial advisor part."
},
{
"docid": "247124",
"title": "",
"text": "\"In Michigan, Allen Park went for the dream. A movie studio! In 2009 [City officials authorized the sale of $31 million in general obligation bonds... including the building at 16630 Southfield Road and an empty building off Enterprise Drive — for $24.8 million. It’s the site of a much-anticipated movie studio complex.](http://www.thenewsherald.com/articles/2009/08/10/news/doc4a7dc8f05fb32855668898.txt) Oh joy! [\"\"The Allen Park Center Studios will be an epicenter for movie production and a full stop shop for entertainment, education and recreation.\"\"](http://michiganmoviemagazine.biz/news/146-the-bright-future-of-allen-park-center-studios.html) By October of 2009, there were rumors and denials [\"\"A $146 million film and television production studio in Allen Park remains on track despite a series of roadblocks and persistent rumors that the project will never materialize.\"\"](http://www.mlive.com/jobs/index.ssf/2009/10/exec_insists_allen_park_michigan_film_pr.html) Things were looking so good, in January 2010 [Allen Park was streamlining the process of getting film permits](http://www.cityofallenpark.org/news-film-industry.php) But by May, [the studio wasn't making the lease payments. ](http://www.mlive.com/entertainment/detroit/index.ssf/2010/05/unity_studios_fails_to_make_re.html) Come September, [the studio moved to Detroit](http://www.mlive.com/news/detroit/index.ssf/2010/09/suburban_movie_studio_relocati.html) By February 2011, [Allen Park sent payoff notices to its entire fire department](http://www.mlive.com/news/detroit/index.ssf/2011/02/if_the_city_of_allen_park_cant.html) Come May, [the Mayor resigned](http://www.mlive.com/news/detroit/index.ssf/2011/05/allen_park_mayor_resigns_citin.html) By May of this year, [Allen Park voters had twice rejected taxes to pay for the studio bonds. The city is facing state-appointed emergency manager](http://www.detroitnews.com/article/20120511/OPINION01/205110323) I think the ending of this story is not going to be the typical end-of-the-movie scene where suddenly everything is okay.\""
},
{
"docid": "27671",
"title": "",
"text": "\"For an RRSP, you do not have to pay taxes on money or investments until you withdraw the money. If you do not reinvest the dividends but instead, take them out as cash, that would be withdrawing the money. For mutual funds, you would normally reinvest the dividends if holding the investment inside an RRSP. For stocks, I believe the dividends would end up sitting in the cash part of your RRSP account (and you'd probably use the money to buy more stocks, though would not be required to do so). Either way, you do not pay tax on this investment income unless you withdraw it from your RRSP. For example, you invest $10,000 inside your RRSP. You get the tax benefit from doing so. You get dividends of $1,000 (hey, it was a good year), and use these to buy more stock. As the money never left your RRSP account, you are considered to have invested only your initial $10,000. If instead, you withdraw the $1,000 in dividends, you are taxed on $1000 income. TFSA are slightly more complicated. You don't get a tax benefit from your initial contribution, but then do not pay tax when you withdraw from the TFSA. Your investment income is still tax-free, and you are (generally) much more limited in how much you can contribute. For example, you invest $10,000 inside your TFSA. You get dividends of $1,000, and use these to buy more stock. Your total contributions to your TFSA remains at $10,000 as the money never left your account. You could instead withdraw the $1000 from your TFSA and would not pay tax on it. In the next calendar year (or later) after the withdrawal, you could \"\"repay\"\" the $1000 you took out without suffering an overcontribution penalty. This makes TFSA an excellent place to park emergency funds, as you can withdraw and subsequently replace the investment while continuing to get the tax benefits on your investment income. RRSPs are better for retirement or for the home buyers plan. In general, you should not be withdrawing money from either your TFSA or RRSP, except in emergencies, when retiring, or when purchasing a home. I prefer indexed mutual funds or money market accounts for both my RRSP and TFSA rather than individual stocks, but that's up to you.\""
},
{
"docid": "406286",
"title": "",
"text": "The rule that I know is six months of income, stored in readily accessible savings (e.g. a savings or money market account). Others have argued that it should be six months of expenses, which is of course easier to achieve. I would recommend against that, partially because it is easier to achieve. The other issue is that people are more prone to underestimate their expenses than their income. Finally, if you base it on your current expenses, then budget for savings and have money left over, you often increase your expenses. Sometimes obviously (e.g. a new car) and sometimes not (e.g. more restaurants or clubs). Income increases are rarer and easier to see. Either way, you can make that six months shorter or longer. Six months is both feasible and capable of handling difficult emergencies. Six years wouldn't be feasible. One month wouldn't get you through a major emergency. Examples of emergencies: Your savings can be in any of multiple forms. For example, someone was talking about buying real estate and renting it. That's a form of savings, but it can be difficult to do withdrawals. Stocks and bonds are better, but what if your emergency happens when the market is down? Part of how emergency funds operate is that they are readily accessible. Another issue is that a main goal of savings is to cover retirement. So people put them in tax privileged retirement accounts. The downside of that is that the money is not then available for emergencies without paying penalties. You get benefits from retirement accounts but that's in exchange for limitations. It's much easier to spend money than to save it. There are many options and the world makes it easy to do. Emergency funds make people really think about that portion of savings. And thinking about saving before spending helps avoid situations where you shortchange savings. Let's pretend that retirement accounts don't exist (perhaps they don't in your country). Your savings is some mix of stocks and bonds. You have a mortgaged house. You've budgeted enough into stocks and bonds to cover retirement. Now you have a major emergency. As I understand your proposal, you would then take that money out of the stocks and bonds for retirement. But then you no longer have enough for retirement. Going forward, you will have to scrimp to get back on track. An emergency fund says that you should do that scrimping early. Because if you're used to spending any level of money, cutting that is painful. But if you've only ever spent a certain level, not increasing it is much easier. The longer you delay optional expenses, the less important they seem. Scrimping beforehand also helps avoid the situation where the emergency happens at the end of your career. It's one thing to scrimp for fifteen years at fifty. What's your plan if you would have an emergency at sixty-five? Or later? Then you're reducing your living standard at retirement. Now, maybe you save more than necessary. It's not unknown. But it's not typical either. It is far more common to encounter someone who isn't saving enough than too much."
},
{
"docid": "183883",
"title": "",
"text": "First, of course, I agree with the comments about paying down debt. Then reserve some of those savings as an emergency fund. After that, the default answer is to invest in an index fund as Mr Belford suggested, such as Vanguard's total stock market index fund, and leave it there forever. Even when the market tanks -- especially don't sell it when the market tanks! I might leave some cash in reserve so I can buy when the market corrects/tanks and stocks go on sale, but I'm paranoid that way. (Pick 5 random people and you'll hear 6 contradictory opinions on where the market will move soon.) I personally would just park it in the index fund. You just graduated; you have so many things you could spend your time on (building career, socializing, learning kickboxing and sailing and rock climbing and woodworking and intramural soccer and.....), and landlording has the potential to become a time sink. On the other hand, if you're really into landlording, why not. Just be aware it's a lot more complex than pay $50k down and collect $500 in easy profit each month. There's a lot of learning to do before jumping in."
},
{
"docid": "367103",
"title": "",
"text": "\"Depending on where you live in the UK, buying a house sooner might be a better option. I would echo the advice about putting some money away into a \"\"rainy day\"\" fund etc. above but I know that in my area house prices are going up by around 7% per year. I bought a house two years ago and I'm paying 4% interest on my mortgage so I'm effectively making money by owning my house. Given that you want to buy a house soonish, if your money sits in an account somewhere making no interest, you're effectively losing 7% of your cash each year by not keeping up with house prices, meaning you'll be able to afford a smaller house with the same money. Do bear in mind though that buying a house costs around £4k in lawyers fees, surveys, mortgage setup fees etc. and selling a house can be more since estate agents will take a % of the sale cost. If you live somewhere where house prices are not increasing as quickly then this will not be as good an option than if you live in e.g. London where house prices are currently skyrocketing. If you don't want to live in the house, you may be able to do a buy-to-let as an investment. Generally the rent will cover the mortgage payments and probably a letting agent/property management company's fees, so while you won't see any actual net income, the people renting will be paying the mortgage off and you'll be building equity on the home. It's not entirely without risk though as tenants can trash homes etc.\""
},
{
"docid": "328556",
"title": "",
"text": "In the 2008 housing crash, cash was king. Cash can make your mortgage payment, buy groceries, utilities, etc. Great deals on bank owned properties were available for those with cash. Getting a mortgage in 2008-2011 was tough. If you are worried about stock market crashing, then diversification is key. Don't have all your investments in one mutual fund or sector. Gold and precious metals have a place in one's portfolio, say 5-10 percent as an insurance policy. The days of using a Gold Double Eagle to pay the property taxes are largely gone, although Utah does allow it. The biggest lesson I took from the crash is you cant have too much cash saved. Build up the rainy day fund."
},
{
"docid": "208633",
"title": "",
"text": "\">That is absolutely not the point at all. It is a bridge to the next job. People should not have to sell their homes and move on, especially in this environment, simply because they went without a job for several months more than they expected. Isn't this what a savings account is for? Are you to tell me that these people don't have enough money built up in a \"\"rainy day\"\" fund? I am about 900k from making a million dollars a year however i still have enough saved up for 8 months of being laid off, so that i DON'T have to get on govt assistance right away. You can't honestly expect me to believe that someone who has this kind of wealth didn't properly plan for this.\""
},
{
"docid": "218845",
"title": "",
"text": "\"Personally, I would: a) consider selling the car and replacing it with a 'cheaper' one. If you only drive it once a month, you are probably not getting much 'value' from owning a nice car. b) move the car (either current or replacement) out to your parent's place. The cost of a plane ticket is about the same as the cost of the garage, and your parents would likely hold on to it for free (assuming they live in the suburbs, and parking is not an issue) option b should lower your insurance costs (very low annual mileage) and at least you'll get some frequent flier miles out of your $350 a month. That being said: this is a \"\"quality of life\"\" issue, which means that there isn't going to be a firm answer. If you are 25, have little debt, which you are paying off on time, have an emergency fund, and you are making regular contributions to your 401k, you are certainly NOT \"\"being seriously irresponsible\"\" by owning a nice car. But you may decide that the $1000 a month could be better spent somewhere else.\""
},
{
"docid": "551099",
"title": "",
"text": "\"Welcome to Money.SE. I will say upfront, Personal Finance is just that, personal, and you are likely to get multiple, perhaps conflicting, answers. Are you sure the PMI will drop off after 2 years? The rules are specific, and for PMI, when prepayments put you at that 78/80% LTV, your bank can require an appraisal, not automatically drop it. Talk to the banks, get confirmation, and depending what they say, keep hacking away at the mortgage. After this, I suggest jumping on Roth IRAs. You are in the 15% bracket, and the Roth will let you deposit $5500 for each you and your wife. A great way to kickstart a higher level of retirement savings. After this, I'm not comfortable with the emergency savings level. If you lose your job tomorrow (Funny story, my wife and I lost our's on the same day 3 years ago) and don't have enough savings (Our retirement accounts were good to just retire that day) you can easily run out of money and be late on the mortgage. It's great to prepay the mortgage to get rid of that PMI, but once there, I'd do the Roth and then focus on savings. 6 months expenses minimum. We have a great Q&A here titled Oversimplify it for me: the correct order of investing in which I go in to more detail, as do 4 other members. I am not getting on the \"\"investments will return more than your mortgage cost\"\" soapbox. A well-funded emergency fund is a very conservative bit of advice. With no matched 401(k), I suggest a balance of the Roth savings and prepayments. From another great post, Ideal net worth by age X? Need comparison references you should have nearly 1 year's salary (90K) saved toward retirement. Any question on my advice, add a comment and I will edit in more details.\""
},
{
"docid": "551719",
"title": "",
"text": "\"The standard low-risk/gain very-short-term parking spot these days tends to be a money market account. However, you have only mentioned stock. For good balance, your portfolio should consider the bond market too. Consider adding a bond index fund to diversify the basic mix, taking up much of that 40%. This will also help stabilize your risk since bonds tend to move opposite stocks (prperhaps just because everyone else is also using them as the main alternative, though there are theoretical arguments why this should be so.) Eventually you may want to add a small amount of REIT fund to be mix, but that's back on the higher risk side. (By the way: Trying to guess when the next correction will occur is usually not a winning strategy; guesses tend to go wrong as often as they go right, even for pros. Rather than attempting to \"\"time the market\"\", pick a strategic mix of investments and rebalance periodically to maintain those ratios. There has been debate here about \"\"dollar-cost averaging\"\" -- see other answers -- but that idea may argue for investing and rebalancing in more small chunks rather than a few large ones. I generally actively rebalance once a year or so, and between those times let maintainng the balance suggest which fund(s) new money should go into -- minimal effort and it has worked quite well enough.,)\""
},
{
"docid": "277529",
"title": "",
"text": "\"If you think about it, it's really all one big pot of money. The idea behind an \"\"emergency fund\"\" is that you want to make sure your financial life has stability: it's not going to be suddenly driven into the red, below $0. As long as that doesn't happen, you can figure out how to live your life as you want. The reason we separate out an \"\"emergency fund\"\" is to simplify decision making. In theory, every single purchase you make should include a consideration of how it destabilizes you. Every $100 you spend on groceries is $100 you won't be able to bring to bear if you get fired or have a major accident. In practice, this would be a crippling way of thinking about things. You don't know what emergencies can hit you, nor when they will hit. That's why they're \"\"emergencies.\"\" If you had to think about them all the time, it'd be horrible! You would end up simply not thinking about it (like most people), and then the emergency hits when you don't have enough cash to stay solvent. The purpose of an \"\"emergency fund\"\" is to help make these decisions easier. If you have money set aside for \"\"emergencies\"\" that you only have to think about every now and then, you can make the decisions in the rest of your financial life without too much concern for them. You don't have to worry about that $100 in groceries because you are confident that if an emergency hits, that $100 won't be the straw that broke the camel's back because you have reserves to draw on. So you should define an \"\"emergency fund\"\" in a way which is most helpful for you to remain stable and solvent without having to fret about it too much. For most people, the criteria for tapping that fund is very high, because the goal is to not have to think about it all that much. If you wanted to, you could feel free to lump those \"\"medium predictability\"\" items into the emergency fund, but it just means you have to spend more time and effort thinking about the state of the fund. Every medium predictability purchase has to come with the thought process \"\"what is the state of the emergency fund? Could this purchase meaningfully destabilize my ability to handle emergencies?\"\" Your emergency fund might yo-yo under these extra purchases, which could force you to think about the state of your emergency fund for normal purchases. That'd be bad. Different people might want to think about things different ways. I'm a big-picture guy, so I prefer to think about all of my assets as one big account when I make a lot of my decisions. My wife, on the other hand, prefers not to have to think that way when she makes her purchases. For her, having a very discrete \"\"emergency fund\"\" has great value. For me, it has less. So when I look at the finances, I choose to lump the emergency funds in with, say, the funds to re-do our backyard (something we are looking at doing over the next 2-5 years). For me, that is the most natural way to deal with analyzing the risks -- I just have to be aware of how backyard purchases interact with our safety net. My wife prefers to keep those funds separate in her head, so that she can look at how to spend money on the backyard without thinking about how it affects our emergency readiness. While complicated, it shows that even within a household, it's possible to think about emergency funding two different ways. (it causes minimal headaches, though a fair bit of book-keeping) So define \"\"emergency fund\"\" however suits you and your life best. However, practically speaking, most people find it desirable to not put those medium predictability purchases into the same bucket as emergencies. Those that do find it desirable to put them in the same bucket typically have a personal reason for why that suits their needs better.\""
},
{
"docid": "213887",
"title": "",
"text": "I keep several savings accounts. I use an online-only bank that makes it very easy to open a new account in about 2 minutes. I keep the following accounts: Emergency Fund with 2 months of expenses. I pretend this money doesn't even exist. But if something happened that I needed money right away, I can get it. 6 6-month term CDs, with one maturing every month, each with 1 month's worth of expenses. This way, every month, I'll have a CD that matures with the money I would need that month if I lose my job or some other emergency that prevents me from working. You won't make as much interest on the 6-month term, but you'll have cash every month if you need it. Goal-specific accounts: I keep an account that I make a 'car payment' into every month so I'll have a down-payment saved when I'm ready to buy a car, and I'm used to making a payment, so it's not an additional expense if I need a loan. I also keep a vacation account so when it's time to take the family to Disneyland, I know how much I can budget for the trip. General savings: The 'everything else' account. When I just NEED to buy a new LCD TV on Black Friday, that's where I go without touching my emergency funds."
}
] |
4678 | Finance, Cash or Lease? | [
{
"docid": "305153",
"title": "",
"text": "\"Now, to buy in full (and essentially have zero savings), buy in part (£10000 deposit, followed by a loan of £4000) or PCP/HP more of the value? So, you are assessing if the car is worth having with either none or only 4,000 in savings. This is the most critical information you have provided. My outright opinion is to always buy a mildly used car as I hate the idea of loans and interest. With the amount of money that you currently possess, I believe the \"\"Buy-in-part\"\" option is best as it reduces your interest liability; but, I don't believe you should do it currently. 4,000 is a rather small cash fund for if something were to go boom in the night. As for your question of interest: This is completely dependent on the amount you are able to pay per period and the total interest you are willing to spend, rows four and seven respectively. This is your money, and no one can tell you what's best to do with it than yourself. Keep looking for good leasing deals or if you think you can survive financial strife with 4,000 then follow your heart. \"\"Depreciation\"\" fluctuates to the buyer, so never assume what the car may lose in the next 2-3 years. Hope it all goes well my friend.\""
}
] | [
{
"docid": "327997",
"title": "",
"text": "\"The recommendation is not to make the investment. In general, a company does not have to sell their shares to you or allow you to become an investor, because, as you have stated, it is a private company not quoted on the stock market. If everyone were trustworthy, you could buy the tools for $11000 -- so that you own the tools -- and sign a lease of the tools to the company whereby they pay you $X/month. The lease should be reviewed by a lawyer before it is signed, and perhaps give the buyer the right to demand back the tools at any time. However, even this arrangement is very risky, because the \"\"company\"\" could simply steal or damage the tools and disappear. It is not an investment that I would make, because it sounds too good to be true. $2800/mo steady cash flow for $11,000 invested. No, I don't think so. The following information may also be useful, either to you, or future readers: If you still want to make this investment, then you should know that: The offering for sale of shares by companies located in the USA is subject to a wild array of complex laws. This is true in many other countries as well. These laws, called securities laws or regulations, can require certain disclosures, require that investors have a high net worth so that they can afford to lose the money or conduct their own investigations and legal actions, or require that the investors know the company founders personally, and can prohibit or limit resale by the buyer/investor. Promoters who say you can still invest and are ignoring or disobeying the securities laws are being at least negligent, but more likely are dishonest and probably criminal. Even if you trust in the investment, can you trust negligent managers to do a good job executing that investment? What about dishonest managers? What about criminals and thieves?\""
},
{
"docid": "205098",
"title": "",
"text": "\"You are still paying a heavy price for the 'instant gratification' of driving (renting) a brand-new car that you will not own at the end of the terms. It is not a good idea in your case, since this luxury expense sounds like a large amount of money for you. Edited to better answer question The most cost effective solution: Purchase a $2000 car now. Place the $300/mo payment aside for 3 years. Then, go buy a similar car that is 3 years old. You will have almost $10k in cash and probably will need minimal, if any, financing. Same as this answer from Pete: https://money.stackexchange.com/a/63079/40014 Does this plan seem like a reasonable way to proceed, or a big mistake? \"\"Reasonable\"\" is what you must decide. As the first paragraph states, you are paying a large expense to operate the vehicle. Whether you lease or buy, you are still paying this expense, especially from the depreciation on a new vehicle. It does not seem reasonable to pay for this luxury if the cost is significant to you. That said, it will probably not be a 'big mistake' that will destroy your finances, just not the best way to set yourself up for long-term success.\""
},
{
"docid": "522723",
"title": "",
"text": "\"My recommendation is to pay off your student loans as quickly as possible. It sounds like you're already doing this but don't incur any other large debts until you have this taken care of. I'd also recommend not buying a car, especially an expensive one, on credit or lease either. Back during the dotcom boom I and many friends bought or leased expensive cars only to lose them or struggle paying for them when the bottom dropped out. A car instantly depreciates and it's quite rare for them to ever gain value again. Stick with reliable, older, used cars that you can purchase for cash. If you do borrow for a car, shop around for the best deal and avoid 3+ year terms if at all possible. Don't lease unless you have a business structure where this might create a clear financial advantage. Avoid credit cards as much as possible although if you do plan to buy a house with a mortgage you'll need to maintain some credit history. If you have the discipline to keep your balance small and paid down you can use a credit card to build credit history. However, these things can quickly get out of hand and you'll wonder why you suddenly owe $10K, $20K or even more on them so be very careful with them. As for the house (speaking of US markets here), save up for at least a 20% down payment if you can. Based on what you said, this would be about $20-25K. This will give you a lot more flexibility to take advantage of deals that might come your way, even if you don't put it all into the house. \"\"Stretching\"\" to buy a house that's too expensive can quickly lead to financial ruin. As for house size, I recommend purchasing a 4 bedroom house even if you aren't planning on kids right away. It will resell better and you'll appreciate having the extra space for storage, home office, hobbies, etc. Also, life has a way of changing your plans for having kids and such.\""
},
{
"docid": "560308",
"title": "",
"text": "You SHOULDN'T lease one if you are going to get an economy car, if you don't drive too much (<15K / year), and you want to hang on to the car for a long time. Otherwise, if you are a regular driver, driving a leased new quality car can be cost effective. Many cars now have bumper-to-bumper warranties that last as long as the lease (say 80K). So there is rarely any extra costs apart from regular maintenance. The sweet spot for most new cars is in the 5th, 6th, or 7th years, after they are paid off. But at that point, you may find you have maintenance bills that are approaching an average of $200 - $300 per month. In which case, a lease starts to look pretty good. I owned a 7 year old Honda Accord that cost only $80 less per month in maintenance than the new leased VW that replaced it. Haven't looked back after that. Into my 3rd car and 9th year of leasing."
},
{
"docid": "386996",
"title": "",
"text": "I have a colleague who always leases cars first. He's very well off, has piles of money in savings, owns a home, and the cherry on top, he could just write a check for the car.... He sees the lease as an insurance policy on the first couple of years of the car's life. If it gets in an accident or he finds something about it he doesn't like, he can give it back to the dealer at the end of the term with no hassle and move on to the next car. Some people value the fact that a lease is a rental. If you're leasing a luxury car or something you couldn't otherwise afford, no amount of mental gymnastics will turn this in to a good idea. Separately, you should never make a down payment on a lease. If the car is totaled early on, you will not recoupe the money you put down. The issue here is that while the numbers all work out the same between a lease and a purchase your situation is different. If the leased car is totaled, the bank gets its money back from an insurer. If that payment doesn't cover the value of the car, the GAP insurance will cover it. In either situation, if there's an excess remaining it will be returned to you. The issue is the excess may not fully replace your down payment. If you then went to lease another car you would need to come up with that down payment again because you couldn't just simply choose to lease a used car; like you could in the case of a purchase. Additionally, GAP is generally included in a lease whether you want it or not. As far as I'm concerned it doesn't make financial sense to mitigate the value of the GAP coverage once you've decided to live in a lease situation."
},
{
"docid": "184913",
"title": "",
"text": "Trader Joe's operates in 100% cash, no debt. No unions, no shareholders to answer to. The owners don't take any of the money. All the money is circulated back into the company. They lease small buildings and pay the rent in advance."
},
{
"docid": "2830",
"title": "",
"text": "If you are tired of acting as the bank after selling your Real Estate and owner-financing the loan with a promissory note, we can offer a sound and painless exit strategy today. We can fund the purchase in as little as 15 business days. We at Cash Note USA buy Real Estate Promissory Notes Nationwide. We Purchase Owner Financed Mortgage, Land Contract, Contract For Deed, Deed Of Trust, Private Mortgages, Secured Notes, Business Notes, Commercial Notes and Partial Notes and many kinds of seller carry back mortgage notes. Convert Real Estate Note To Cash Now.Sell Your Mortgage Note Fast & get More Cash For Your Note. You will get a Fair Offer Within 24 Hours.Get your Note cashed today! Cash Note USA is a note buyer all over the nation. Convert your mortgage payments into cash. Simple closing process. We buy Promissory Notes, Real Estate Trust Deeds, Seller Carry Back Notes, Land Contract, Contract for Deed, Privately Help Notes, Commercial Mortgage Notes & Business Promissory Notes. Contact Us: Cash Note USA 1307 W.6th St.Suite 219N, Corona, CA 92882 888-297-4099 [email protected] http://cashnoteusa.com/"
},
{
"docid": "338663",
"title": "",
"text": "But.. what I really want to know.... is it illegal, particularly the clause REQUIRING a trade in to qualify for the advertised price? The price is always net of all the parts of the deal. As an example they gave the price if you have $4000 trade in. If you have no trade in, or a trade in worth less than 4K, your final price for the new car will be more. Of course how do you know that the trade in value they are giving you is fair. It could be worth 6K but they are only giving you a credit of 4K. If you are going to trade in a vehicle while buying another vehicle the trade in should be a separate transaction. I always get a price quote for selling the old car before visiting the new car dealer. I do that to have a price point that I can judge while the pressure is on at the dealership.. Buying a car is a complex deal. The price, interest rate, length of loan, and the value of the trade in are all moving parts. It is even more complex if a lease is involved. They want to adjust the parts to be the highest profit that you are willing to agree to, while you think that you are getting a good deal. This is the fine print: All advertised amounts include all Hyundai incentives/rebates, dealer discounts and $2500 additional down from your trade in value. +0% APR for 72 months on select models subject to credit approval through HMF. *No payments or 90 days subject to credit approval. Value will be added to end of loan balance. 15MY Sonata - Price excludes tax, title, license, doc, and dealer fees. MSRP $22085- $2036 Dealer Discount - $500 HMA Lease Cash - $500 HMA Value Owner Coupon - $1000 HMA Retail Bonus Cash - $500 HMA Military Rebate - $500 HMA Competitive Owner Coupon - $400 HMA College Grad Rebate - $500 HMA Boost Program - $4000 Trade Allowance = Net Price $12149. On approved credit. Certain qualifications apply to each rebate. See dealer for details. Payment is 36 month lease with $0 due at signing. No security deposit required. All payment and prices include HMA College Grad Rebate, HMA Military Rebate, HMA Competitive Owner Coupon and HMA Valued Owner Coupon. Must be active military or spouse of same to qualify for HMA Military Rebate. Must graduate college in the next 6 months or within the last 2 years to qualify for HMA College Grad rebate. Must own currently registered Hyundai to qualify for HMA Valued Owner Coupon. Must own qualifying competitive vehicle to qualify for HMA Competitive Owner Coupon."
},
{
"docid": "50047",
"title": "",
"text": "I would like to add that from my own research, a pro to leasing over buying a new vehicle would be that with the lease the entire 7,500 federal incentive is applied directly to the lease, or so they say. If you buy a new car you get a 7,500 federal tax incentive also but if you dont have 7,500 bucks in taxes this wont be as much value. It doesn't sense to me to buy used since you dont get the tax incentive and also if you're in california the 2,500 rebate only applies to buying new or leasing 30 month or longer."
},
{
"docid": "237911",
"title": "",
"text": "\"Your comment is more related to economics rather than finance. You're right that with conventional, everyday goods that \"\"value\"\" is an entirely subjective thing. Economists formalize this idea with the notion that people's preferences determine market prices. In finance, though, \"\"fundamental value\"\" relates to the value of the cash-flows produced by a financial asset. In Marxian terms, we're talking about exchange value - what can I get if I take this bond/stock and sell it. The value I get should be equivalent to the monetary value of the cashflows produced by that asset over time, discounting for uncertainty, etc. So, \"\"fundamental value\"\" is a bit more objective in finance since these things produce something quasi-objective - cash.\""
},
{
"docid": "386151",
"title": "",
"text": "Leasing is never a good idea. A car is a depreciating asset -- it loses money over time. Pay cash for your car and buy used ones until your net worth reaches at least $1M."
},
{
"docid": "311446",
"title": "",
"text": "I never understood why people lease rather than buy or finance. I'm financing a new civic 09 @ 0.9%. At the end of the 5 year terms I will have paid less than $800 in interest."
},
{
"docid": "364543",
"title": "",
"text": "It depends on if it is a non-refundable deposit, retainer, etc. The remaining $1,500 is not included in that quarter's sales, because you have not yet received it and it is not guaranteed. The question is really if you should count the $500 toward the quarter where it is received, or during the quarter where you invoice. This deposit might be categorized as a liability until you invoice, and there is no sales tax to be calculated until the invoice for the total. I say 'might' because this can vary by state and the type of transaction or business. For example, if someone makes a cash down payment on a lease for a car, some states will require that sales tax be charged on this."
},
{
"docid": "364701",
"title": "",
"text": "Financial health is typically assessed with 3 things. Balance Sheet Cash Flow Analysis Profit & Loss Statement That should give you a pretty solid view on where the business has been, where it is now, and where it is headed. You also want to see any specific contracts currently in-place. Things like leases for property or facilities or any long term customer contracts. I also often like to look at the last year's tax information. Pay attention to Retained Earnings, that'll tell you about the long term functioning of the business from a historical perspective. Source: Am M&A guy"
},
{
"docid": "457547",
"title": "",
"text": "Sorry, this post is horribly misguided. First of all, any boat or yacht is a terrible investment. The depreciation is horrendous. Secondly saying you lease as otherwise you’re tying up capital stupidly is incorrect. It depends on what your marginal cost of capital vs that of companies leasing. When you lease you also compensate the lessor for its cost of capital. If your cost of capital is less than that of the lessor then you would be stupid to get the lease. You would be better off paying the 250mln out of pocket and borrowing it from the market yourself."
},
{
"docid": "10882",
"title": "",
"text": "http://finance.yahoo.com/news/tesla-q2-loss-narrower-estimates-113042878.html >Including the impact of Model S revenues deferred due to lease accounting, top line jumped 89.9% to $769.3 million in the quarter from $405.1 million a year ago. Revenues, however, lagged the Zacks Consensus Estimate of $802 million. >The year-over-year revenue growth was driven by higher vehicle deliveries. Tesla delivered 7,579 cars in the second quarter, surpassing the guidance of 7,500 deliveries and increasing more than 17% over the first quarter of 2014. The automaker also benefited from initiation of the delivery of powertrains to Daimler AG (DDAIF) for the Mercedes-Benz B Class Electric Drive, although the winding down of electric powertrain components sales to Toyota Motor Corp. (TM) for the RAV4 EV is hurting revenues. >Gross profit, including the impact of Model S gross profit deferred due to lease accounting and stock-based compensation expenses, amounted to $213.0 million in second-quarter 2014, against $100.5 million in the year-ago quarter. >Revenues (on a reported basis) from Automotive sales, jumped to $768.2 million in the quarter from $401.5 million a year ago. Reported revenues from Development services (producing electric vehicle powertrain components and systems for other automobile manufacturers) slumped to $1.1 million from $3.6 million a year ago. >Financial Position >Tesla had cash and cash equivalents of $2.7 billion as of Jun 30, 2014, compared with $845.9 million as Dec 31, 2013. Long-term debt was $2.4 billion as of Jun 30, 2014, versus $586.3 million as of Dec 31, 2013. >Cash flow from operating activities amounted to $57.1 million in the first half of 2014, compared with $28.8 million in the year-ago period. Capital expenditures increased to $317.0 million from $98.2 million in the first half of 2013. >Gigafactory Update >Tesla has signed a formal agreement with Panasonic Corp. (PCRFY) for partnership in the Gigafactory. Under the agreement, Panasonic will invest in production equipment for the manufacture of lithium-ion battery cells, while Tesla will invest in land, buildings and utilities for the Gigafactory as well as production equipment for battery module and pack production. Moreover, Tesla will be responsible for the management of the Gigafactory. Other partners will also be involved in the Gigafactory for manufacture of the required precursor materials. >In June, Tesla broke ground for the potential construction of the Gigafactory near Reno, NV. While the location of the Gigafactory has not been decided yet, Tesla is planning to hold ground-breaking ceremony for the factory at three sites to avoid any delay in construction. Construction work will begin at one of the three sites by the end of the year and will be wrapped up by 2017. >Outlook >Tesla expects to record a marginal adjusted profit in the third quarter of 2014. Production volume in the third quarter of 2014 is expected to be 9,000 cars, up 2.7% from 8,763 cars produced in the second quarter of 2014. This includes the impact of the two-week production shutdown at the Fremont factory for the transition to the new final assembly line, which is expected to result in production loss of about 2,000 cars in the third quarter. However, due to the enhanced factory capacity, Tesla expects production volume to increase to an average of 1,000 cars per week in the fourth quarter of 2014 from 800 cars at present. >Further, vehicle deliveries are expected to increase to 7,800 in the third quarter of 2014 from 7,579 cars in the second quarter. However, deliveries are expected to be lower than production due to increase in the number of vehicles in transit. Tesla also plans to lease about 300 vehicles in North America in the third quarter, which is expected to increase further in the fourth quarter. Further, the automaker anticipates to deliver more than 35,000 vehicles globally in 2014, up 55% over 2013. >Adjusted automotive gross margin, excluding ZEV credits, is expected to increase to 28% by the end of 2014. The company believes that declining parts prices and economies of scale will benefit its gross margin. >Operating expenses are expected to increase in the third quarter of 2014. The company believes that research and development expenses will increase 20% sequentially in the quarter. Selling, general and administrative (SG&A) expenses are projected to rise 15%. >Capital expenses for the year are expected to range between $750 million and $950 million, up from the previous projection of $650–$850 million. Tesla is investing heavily in increasing production capacity, development of Model S and Model X, the Gigafactory construction and expansion of sales, service and Supercharger infrastructure. Increasing revenue, increasing sales, increasing gross profits, increasing margins = increasing investments into the company for exponential growth. Baby you've never been risk taking in your life before?"
},
{
"docid": "221439",
"title": "",
"text": "When getting a car always start with your bank or credit union. They are very likely to offer better loan rate than the dealer. Because you start there you have a data point so you can tell if the dealer is giving you a good rate. Having the loan approved before going to the dealer allows you to negotiate the best deal for the purchase price for the car. When you are negotiating price, length of loan, down payment, and trade in it can get very confusing to determine if the deal is a good one. Sometimes you can also get a bigger rebate or discount because to the dealer you are paying cash. The general advice is that a lease for the average consumer is a bad deal. You are paying for the most expensive months, and at the end of the lease you don't have a car. With a loan you keep the car after you are done paying for it. Another reason to avoid the lease. It allows you to purchase a car that is two or three years old. These are the ones that just came off lease. I am not a car dealer, and I have never needed a work visa, but I think their concern is that there is a greater risk of you not being in the country for the entire period of the lease."
},
{
"docid": "146603",
"title": "",
"text": "Your tenant made a mistake. You deal with this exactly as you would deal with a delinquent tenant, which is a hard and sticky question that involves you, your lease, your relationship with the tenant, your priorities, your values, local laws, your estimation of tenant's honest and creditworthiness, and so forth. It's not an easy question. It just falls under the question of how to deal with delinquency that happens to involve the circumstance of allegedly paying cash and having it stolen, which is a hard question."
},
{
"docid": "477257",
"title": "",
"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."
}
] |
4681 | How to fix Finance::Quote to pull quotes in GnuCash | [
{
"docid": "181909",
"title": "",
"text": "\"The Yahoo Finance API is no longer available, so Finance::Quote needs to point at something else. Recent versions of Finance::Quote can use AlphaVantage as a replacement for the Yahoo Finance API, but individual users need to acquire and input an AlphaVantage API key. Pretty decent documentation for how to this is available at the GnuCash wiki. Once you've followed the directions on the wiki and set the API key, you still need to tell each individual security to use AlphaVantage rather than Yahoo Finance: As a warning, I've been having intermittent trouble with AlphaVantage. From the GnuCash wiki: Be patient. Alphavantage does not have the resources that Yahoo! did and it is common for quote requests to time out, which GnuCash will present as \"\"unknown error\"\". I've certainly been experiencing those errors, though not always.\""
}
] | [
{
"docid": "64121",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://apnews.com/440dc0bb5b464b1dbd8aa7714f779c48) reduced by 89%. (I'm a bot) ***** > NEW YORK - Martin Shkreli, the eccentric former pharmaceutical CEO notorious for a price-gouging scandal and for his snide &quot;Pharma Bro&quot; persona on social media, was convicted Friday on federal charges he deceived investors in a pair of failed hedge funds. > &quot;There is an image issue that Martin and I are going to be discussing in the next few days,&quot; he said, adding that while Shkreli was a brilliant mind, sometimes his &quot;People skills&quot; need work. > Shkreli&#039;s lawyer agreed his client could be annoying but said his hedge fund investors knew what they were getting. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6rncn2/pharma_bro_shkreli_is_convicted_at_securities/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~183442 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*: **Shkreli**^#1 **investors**^#2 **million**^#3 **case**^#4 **prosecutor**^#5\""
},
{
"docid": "284651",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](http://www.reuters.com/investigates/special-report/usa-bodies-brokers/) reduced by 98%. (I'm a bot) ***** > Few state laws provide any oversight whatsoever, and almost anyone, regardless of expertise, can dissect and sell human body parts. > &quot;There is a big market for dead bodies,&quot; said Ray Madoff, a Boston College Law School professor who studies how U.S. laws treat the dead. &quot;We know very little about who is acquiring these bodies and what they are doing with them.\"\" > Generally, a broker can sell a donated human body for about $3,000 to $5,000, though prices sometimes top $10,000. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/78gdhw/each_year_thousands_of_americans_donate_their/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~234179 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*: **body**^#1 **broker**^#2 **part**^#3 **state**^#4 **funeral**^#5\""
},
{
"docid": "333278",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://techcrunch.com/2017/06/21/ebay-will-now-match-amazons-walmarts-and-others-prices-on-over-50000-items/) reduced by 70%. (I'm a bot) ***** > At any time, eBay says there are &quot;Tens of thousands&quot; of items offered through the Deals site, with featured deals updating at least once per day, beginning at 8 AM PT. In case you somehow missed how this launch is a response to the looming Amazon threat, eBay&#039;s announcement about the new price match feature hits you over the head with the comparison: it makes special note of the fact that there&#039;s &quot;No membership required&quot; to access eBay Deals. > Ebay says it will only match prices on identical items sold online on a competitor&#039;s website - and yes, the item must be currently in stock at the time you request the Price Match Guarantee. > &quot;Our eBay Deals selection has grown exponentially since being launched in 2011. The prices are already extremely competitive, but if a shopper finds it for less, we&#039;ll gladly match the price of our competitors,&quot; he added. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6im07b/ebay_will_now_match_amazons_and_walmarts_prices/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~149398 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*: **eBay**^#1 **Price**^#2 **item**^#3 **Match**^#4 **Deals**^#5\""
},
{
"docid": "123384",
"title": "",
"text": "\"It comes down to the resolution you want to have on your personal finances. A package like GNUCash allows you to easily answer questions like \"\"Exactly how much do I spend on interest per month/year/decade.\"\" Same with pretty much any other expense, liability or asset you have whether it be taxes, utilities, your home equity or your net worth. The other tools you mention are nice, and certainly convenient, but they tend to lump things together in broad strokes and omit many categories altogether (taxes). Ultimately by having such a fine grained accounting tool, you can target small or large things to better budget your money. Another thing a package like GNUCash provides is a single, private place to consolidate all of your finances. This is nice for things like net worth and asset accounts that you might not want to give a company access to. Finally, GNUcash in particular helps normal people think like accountants. Rather than lump everything into 'income' and 'expenses', once you start using GNUCash you'll start thinking in terms of equity, liabilities, net-worth and assets in addition to income and expenses. This gives me a much more accurate view of my finances and helps me better target areas for improvement. In short, it helps me to see the broader picture which helps me to keep my eye on the prize - which of course is to not have to worry about money at all.\""
},
{
"docid": "510314",
"title": "",
"text": "Former software developer at an insurance company here (not State Farm though). All of the above answers are accurate and address how the business analysts come up with factors on which to rate your quote. I wanted to chime in on the software side here; specifically, what goes into actually crunching those numbers to produce an end result. In my experience, business analysts provide the site developers with a spreadsheet of base rates and factors, which get imported into a database. When you calculate a quote, the site starts by taking your data, and finding the appropriate base rate to start with (usually based on vehicle type, quote type (personal/commercial/etc.) and garaging zip code for the US). The appropriate factors are then also pulled, and are typically either multiplicative or additive relative to the base rate. The most 'creative' operation I've seen other than add/multiply was a linear interpolation to get some kind of gradient value, usually based on the amount of coverage you selected. At this point, you could have upwards of twenty rating factors affecting your base rate: marriage status, MVR reports, SR-22; basically, anything you might've filled into your application. In the case of MVR reports specifically, we'd usually verify your input against an MVR providing service to check that you didn't omit any violations, but we wouldn't penalize for lying about it...we didn't get that creative :) Then we'd apply any fees and discounts before spitting out the final number. With all that said, these algorithms that companies apply to calculate quotes are confidential as far as I'm aware, insofar as they don't publish those steps anywhere for the public to access. The type of algorithm used could even vary based on the state you live in, or really just when the site code is arbitrarily updated to use a new rating system. Underwriters and agents might have access to company-specific rating tables, so they might have more insight at the company level. In short, if there's an equation out there being used to calculate your rate, it's probably a huge string of multiplications with some base rate additions and linear interpolations peppered in, based on factors (and base rates) that aren't readily publicized. Your best bet is to not go through the site at all and talk to a State Farm agent about agency-specific practices if you're really curious about the numbers."
},
{
"docid": "435722",
"title": "",
"text": "what do you mean exactly? Do you have a future target price and projected future dividend payments and you want the present value (time discounted price) of those? Edit: The DCF formula is difficult to use for stocks because the future price is unknown. It is more applicable to fixed-income instruments like coupon bonds. You could use it but you need to predict / speculate a future price for the stock. You are better off using the standard stock analysis stuff: Learn Stock Basics - How To Read A Stock Table/Quote The P/E ratio and the Dividend yield are the two most important. The good P/E ratio for a mature company would be around 20. For smaller and growing companies, a higher P/E ratio is acceptable. The dividend yield is important because it tells you how much your shares grow even if the stock price stays unchanged for the year. HTH"
},
{
"docid": "14493",
"title": "",
"text": "\"I'm not sure there's a good reason to do a \"\"closing the books\"\" ceremony for personal finance accounting. (And you're not only wanting to do that, but have a fiscal year that's different from the calendar year? Yikes!) My understanding is that usually this process is done for businesses to be able to account for what their \"\"Retained Earnings\"\" and such are for investors and tax purposes; generally individuals wouldn't think of their finances in those terms. It's certainly not impossible, though. Gnucash, for example, implements a \"\"Closing Books\"\" feature, which is designed to create transactions for each Income and Expenses account into an end-of-year Equity Retained Earnings account. It doesn't do any sort of closing out of Assets or Liabilities, however. (And I'm not sure how that would make any sense, as you'd transfer it from your Asset to the End-of-year closing account, and then transfer it back as an Opening Balance for the next year?) If you want to keep each year completely separate, the page about Closing Books in the Gnucash Wiki mentions that one can create a separate Gnucash file per year by exporting the account tree from your existing file, then importing that tree and the balances into a new file. I expect that it makes it much more challenging to run reports across multiple years of data, though. While your question doesn't seem to be specific to Gnucash (I just mention it because it's the accounting tool I'm most familiar with), I'd expect that any accounting program would have similar functionality. I would, however, like to point out this section from the Gnucash manual: Note that closing the books in GnuCash is unnecessary. You do not need to zero out your income and expense accounts at the end of each financial period. GnuCash’s built-in reports automatically handle concepts like retained earnings between two different financial periods. In fact, closing the books reduces the usefulness of the standard reports because the reports don’t currently understand closing transactions. So from their point of view it simply looks like the net income or expense in each account for a given period was simply zero. And that's largely why I'm just not sure what your goals are. If you want to look at your transactions for a certain time, to \"\"just focus on the range of years I'm interested in for any given purpose\"\" as you say, then just go ahead and run the report you care about with those years as the dates. The idea of \"\"closing books\"\" comes from a time when you'd want to take your pile of paper ledgers and go put them in storage once you didn't need to refer to them regularly. Computers now have no challenges storing \"\"every account from the beginning of time\"\" at all, and you can filter out that data to focus on whatever you're looking for easily. If you don't want to look at the old data, just don't include them in your reports. I'm pretty sure that's the \"\"better way to keep the books manageable\"\".\""
},
{
"docid": "477062",
"title": "",
"text": "The product you seek is called a fixed immediate annuity. You also want to be clear it's inflation adjusted. In the US, the standard fixed annuity for a 40year old male (this is the lowest age I find on the site I use) has a 4.6% return. $6000/ yr means one would pay about $130,000 for this. The cost to include the inflation adder is about 50%, from what I recall. So close to $200,000. This is an insurance product, by the way, and you need to contact a local provider to get a better quote."
},
{
"docid": "254152",
"title": "",
"text": "First of all, think of anyone you know in your circle locally who may have gotten a mortgage recently. Ask him, her, or them for a recommendation on what brokers they found helpful and most of all priced competitively. Second of all, you may consider asking a real estate agent. Note that this is generally discouraged because agents sometimes (and sometimes justifiably) get a bad reputation for doing anything to get themselves the highest commission possible, and so folks want to keep the lender from knowing the agent. Yet if you have a reputable, trustworthy agent, he or she can point you to a reputable, trustworthy broker who has been quoting your agent's other clients great rates. Third of all, make sure to check out the rates at places you might not expect - for example, any credit unions you or your spouse might have access to. Credit unions often offer very competitive rates and fees. After you have 2-3 brokers lined up, visit them all within a short amount of time (edit courtesy of the below comments, which show that 2 weeks has been quoted but that it may be less). The reason to visit them close together is that in the pre-approval process you will be getting your credit hard pulled, which means that your score will be dinged a bit. Visiting them all close together tells the bureaus to count all the hits as one new potential credit line instead of a couple or several, and so your score gets dinged less. Ask about rates, fees (they are required by law to give you what is called a Good Faith Estimate of their final fees), if pre-payment of the loan is allowed (required to re-finance or for paying off early), alternative schedules (such as bi-weekly or what a 20 year mortgage rate might be), the amortization schedule for your preferred loan, and ask for references from past clients. Pick a broker not only who has the best rates but also who appears able to be responsive if you need something quickly in order to close on a great deal."
},
{
"docid": "391515",
"title": "",
"text": "\"Note that the series you are showing is the historical spot index (what you would pay to be long the index today), not the history of the futures quotes. It's like looking at the current price of a stock or commodity (like oil) versus the futures price. The prompt futures quote will be different that the spot quote. If you graphed the history of the prompt future you might notice the discontinuity more. How do you determine when to roll from one contract to the other? Many data providers will give you a time series for the \"\"prompt\"\" contract history, which will automatically roll to the next expiring contract for you. Some even provide 2nd prompt, etc. time series. If that is not available, you'd have to query multiple futures contracts and interleave them based on the expiry rules, which should be publicly available. Also is there not a price difference from the contract which is expiring and the one that is being rolled forward to? Yes, since the time to delivery is extended by ~30 days when you roll to the next contract. but yet there are no sudden price discontinuities in the charts. Well, there are, but it could be indistinguishable from the normal volatility of the time series.\""
},
{
"docid": "567766",
"title": "",
"text": "\"This article is a libertarian orgasmic delight: If granny can't pull her weight then she can die in the street. \"\"If you’re going to cut that much money out, it’s going to be coming from older people and people with disabilities” says this quote from the article.\""
},
{
"docid": "182341",
"title": "",
"text": "This started as a comment but then really go too long so I am posting an answer: @yarun, I am also using GnuCash just like you as a non-accountant. But I think it really pays off to get to know more about accounting via GnuCash; it is so useful and you learn a lot about this hundreds of years old double entry system that all accountants know. So start learning about 5 main accounts and debits and credits, imho. It is far easier than one can think. Now the answer: even without balancing amounts exactly program is very useful as you still can track your monthly outgoings very well. Just make/adjust some reports and save their configurations (so you can re-run quickly when new data comes in) after you have classified your transactions properly. If I still did not know what some transactions were (happens a lot at first import) - I just put them under Expenses:Unaccounted Expenses - thus you will be able to see how much money went who knows where. If later you learn what those transactions were - you still can move them to the right account and you will be pleased that your reports show less unaccounted money. How many transactions to import at first - for me half a year or a year is quite enough; once you start tracking regularly you accumulate more date and this becomes a non-issue. Reflecting that personal finance is more about behaviour than maths and that it is more for the future where your overview of money is useful. Gnucash wil learn from import to import what transactions go where - so you could import say 1 or 3 month intervals to start with instead of a while year. No matter what - I still glance at every transaction on import and still sometimes petrol expense lands in grocery (because of the same seller). But to spot things like that you use reports and if one month is abnormal you can drill down to transactions and learn/correct things. Note that reports are easy to modify and you can save the report configurations with names you can remember. They are saved on the machine you do the accounting - not within the gnucash file. So if you open the file (or mysql database) on another computer you will miss your custom reports. You can transfer them, but it is a bit fiddly. Hence it makes sense to use gnucash on your laptop as that you probably will have around most often. Once you start entering transactions into GnuCash on the day or the week you incur the expense, you are getting more control and it is perhaps then you would need the balance to match the bank's balance. Then you can adjust the Equity:Opening Balances to manipulate the starting sums so that current balances match those of your bank. This is easy. When you have entered transactions proactively (on the day or the week) and then later do an import from bank statement the transactions are matched automatically and then they are said to be reconciled (i.e. your manual entry gets matched by the entry from your statement.) So for beginning it is something like that. If any questions, feel free to ask. IMHO this is a process rather a one-off thing; I began once - got bored, but started again and now I find it immensely useful."
},
{
"docid": "421639",
"title": "",
"text": "That would have been a good idea. They don't charge interest on a $0 balance, but if you payoff your account after the cycle date, there is a hidden balance and that balance will accrue interest. It is only a few cents a day. I just don't think it is legal for them to refuse to provide you a payoff quote mid cycle. I'm almost certain. When I worked for Discover it was a key point in training to not give the wrong amount and to make sure to use the calculator in the system to quote a daily balance, how much it goes up per day, and how much they should send if they were mailing the payment, giving consideration for the time it takes to receive/process the payment."
},
{
"docid": "197943",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://medium.com/united-green-alliance/the-reality-of-how-the-economy-of-the-third-reich-functioned-is-steeped-in-mystery-and-deception-80c29d28d0d9) reduced by 97%. (I'm a bot) ***** > Outlining the ideas that &quot;Unemployment causes poverty, employment creates prosperity,&quot; and &quot;Capital does not create jobs, rather jobs create capital.&quot; The complete and total elimination of unemployment is central to National Socialist economics, and was especially important to the German National Socialists of the 1920s and 30s, given Germany&#039;s situation. > In point two, the NSDAP addressed the claim that there would be no markets for these new German goods. > The concept of resettlement in the East is mentioned again, and it&#039;s goal is to reestablish the lost German agriculture in the East.In conclusion, the economic policies of NSDAP can best be seen as economically pragmatic; not wholly protectionist or pro-free trade, and not wholly pro-free market or pro-central planning. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/70uz3g/the_economics_of_the_nsdap_united_green_alliance/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~212049 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*: **German**^#1 **work**^#2 **Germany**^#3 **economic**^#4 **National**^#5\""
},
{
"docid": "435170",
"title": "",
"text": "\"Any sensible lender will require a lean lien against your formerly-free-and-clear property, and will likely require an appraisal of the property. The lender is free to reject the deal if the house is in any way not fitting their underwriting requirements; examples of such situations would be if the house is in a flood/emergency zone, in a declining area, an unusual property (and therefore hard to compare to other properties), not in salable condition (so even if they foreclose on it they'd have a questionable ability to get their money back), and so forth. Some lenders won't accept mobile homes (manufactured housing) as collateral, for instance, and also if the lender agrees they may also require insurance on the property to be maintained so they can ensure that a terrible fate doesn't befall both properties at one time (as happens occasionally). On the downside, in my experience (in the US) lenders will often require a lower loan percentage than a comparable cash down deal. An example I encountered was that the lender would happily provide 90% loan-to-value if a cash down payment was provided, but would not go above 75% LTV if real estate was provided instead. These sort of deals are especially common in cases of new construction, where people often own the land outright and want to use it as collateral for the building of a home on that same land, but it's not uncommon in any case (just less common than cash down deals). Depending on where you live and where you want to buy vs where the property you already own is located, I'd suggest just directly talking to where you want to first consider getting a quote for financing. This is not an especially exotic transaction, so the loan officer should be able to direct you if they accept such deals and what their conditions are for such arrangements. On the upside, many lenders still treat the LTV% to calculate their rate quote the same no matter where the \"\"down payment\"\" is coming from, with the lower the LTV the lower the interest rate they'll be willing to quote. Some lenders might not, and some might require extra closing fees - you may need to shop around. You might also want to get a comparative quote on getting a direct mortgage on the old property and putting the cash as down payment on the new property, thus keeping the two properties legally separate and giving you some \"\"walk away\"\" options that aren't possible otherwise. I'd advise you to talk with your lenders directly and shop around a few places and see how the two alternatives compare. They might be similar, or one might be a hugely better deal! Underwriting requirements can change quickly and can vary even within individual regions, so it's not really possible to say once-and-for-all which is the better way to go.\""
},
{
"docid": "544274",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://qz.com/1055287/an-error-made-in-1925-led-to-a-crisis-in-modern-science-now-researchers-are-joining-to-fix-it/) reduced by 85%. (I'm a bot) ***** > Fast forward more than a century later, and many researchers believe Fisher&#039;s choice of.05 has led to a crisis in science. > What&#039;s to be done? A new proposal, authored by 72 prominent statisticians, economists, psychologists and medical researchers, offers a simple answer: Use.005 instead. &quot;This is an idea whose time has come,&quot; the University of Southern California behavioral economist Daniel Benjamin, a lead author of the paper, told Quartz. > Benjamin points out that in two fields in which the p-value threshold was reduced, genetics and high energy physics, the change emerged from researchers who thought it was necessary for the maintaining the reliability of findings. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6v73kx/an_error_made_in_1925_led_to_a_crisis_in_modern/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~195821 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*: **research**^#1 **finding**^#2 **published**^#3 **new**^#4 **Fisher**^#5\""
},
{
"docid": "100188",
"title": "",
"text": "They could have different quotes as there are more than a few pieces here. Are you talking a Real Time Level II quote or just a delayed quote? Delayed quotes could vary as different companies would be using different time points in their data. You aren't specifying exactly what kind of quote from which system are you using here. The key to this question is how much of a pinpoint answer do you want and how prepared are you to pay for that kind of access to the automated trades happening? Remember that there could well be more than a few trades happening each millisecond and thus latency is something to be very careful here, regardless of the exchange as long as we are talking about first-world stock exchanges where there are various automated systems being used for trading. Different market makers is just a possible piece of the equation here. One could have the same market maker but if the timings are different,e.g. if one quote is at 2:30:30 and the other is at 2:30:29 there could be a difference given all the trades processed within that second, thus the question is how well can you get that split second total view of bids and asks for a stock. You want to get all the outstanding orders which could be a non-trivial task."
},
{
"docid": "146642",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-07-08/yellen-bet-on-pulling-workers-back-to-labor-force-is-paying-off) reduced by 88%. (I'm a bot) ***** > Even as U.S. unemployment crept lower in recent years, Federal Reserve Chair Janet Yellen stuck with a glacial pace of policy tightening that she justified with a powerful message: there were still millions of potential workers to pull in from the labor market&#039;s sidelines. > If workers hadn&#039;t come back, the strategy could have spurred an overly-tight labor market that sent wages and inflation up too quickly. > The surge of job holders coming from outside the labor force &quot;Speaks to the reduction in slack in the labor force,&quot; said Tom Simons, a senior economist at Jefferies LLC in New York. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6m5f49/yellen_bet_on_pulling_workers_back_to_labor_force/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~162709 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*: **labor**^#1 **works**^#2 **rate**^#3 **market**^#4 **force**^#5\""
},
{
"docid": "402174",
"title": "",
"text": "I use GnuCash which I really like. However, I've never used any other personal finance software so I can't really compare. Before GnuCash, I used an Excel spreadsheet which works fine for very basic finances. Pros Cons"
}
] |
4681 | How to fix Finance::Quote to pull quotes in GnuCash | [
{
"docid": "587959",
"title": "",
"text": "The yahoo finance API is no longer which broke the Finance:Quote perl module. The Finance:Quote developers have been quick to fix things and have produced several new versions in the last week or two. The short of it is that you need to update Finance:Quote, then obtain an AlphaVantage free key and tell Gnucash to use AlphaVantage as it's source for online quotes by editing your securities in the Price Editor."
}
] | [
{
"docid": "123384",
"title": "",
"text": "\"It comes down to the resolution you want to have on your personal finances. A package like GNUCash allows you to easily answer questions like \"\"Exactly how much do I spend on interest per month/year/decade.\"\" Same with pretty much any other expense, liability or asset you have whether it be taxes, utilities, your home equity or your net worth. The other tools you mention are nice, and certainly convenient, but they tend to lump things together in broad strokes and omit many categories altogether (taxes). Ultimately by having such a fine grained accounting tool, you can target small or large things to better budget your money. Another thing a package like GNUCash provides is a single, private place to consolidate all of your finances. This is nice for things like net worth and asset accounts that you might not want to give a company access to. Finally, GNUcash in particular helps normal people think like accountants. Rather than lump everything into 'income' and 'expenses', once you start using GNUCash you'll start thinking in terms of equity, liabilities, net-worth and assets in addition to income and expenses. This gives me a much more accurate view of my finances and helps me better target areas for improvement. In short, it helps me to see the broader picture which helps me to keep my eye on the prize - which of course is to not have to worry about money at all.\""
},
{
"docid": "64121",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://apnews.com/440dc0bb5b464b1dbd8aa7714f779c48) reduced by 89%. (I'm a bot) ***** > NEW YORK - Martin Shkreli, the eccentric former pharmaceutical CEO notorious for a price-gouging scandal and for his snide &quot;Pharma Bro&quot; persona on social media, was convicted Friday on federal charges he deceived investors in a pair of failed hedge funds. > &quot;There is an image issue that Martin and I are going to be discussing in the next few days,&quot; he said, adding that while Shkreli was a brilliant mind, sometimes his &quot;People skills&quot; need work. > Shkreli&#039;s lawyer agreed his client could be annoying but said his hedge fund investors knew what they were getting. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6rncn2/pharma_bro_shkreli_is_convicted_at_securities/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~183442 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*: **Shkreli**^#1 **investors**^#2 **million**^#3 **case**^#4 **prosecutor**^#5\""
},
{
"docid": "284651",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](http://www.reuters.com/investigates/special-report/usa-bodies-brokers/) reduced by 98%. (I'm a bot) ***** > Few state laws provide any oversight whatsoever, and almost anyone, regardless of expertise, can dissect and sell human body parts. > &quot;There is a big market for dead bodies,&quot; said Ray Madoff, a Boston College Law School professor who studies how U.S. laws treat the dead. &quot;We know very little about who is acquiring these bodies and what they are doing with them.\"\" > Generally, a broker can sell a donated human body for about $3,000 to $5,000, though prices sometimes top $10,000. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/78gdhw/each_year_thousands_of_americans_donate_their/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~234179 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*: **body**^#1 **broker**^#2 **part**^#3 **state**^#4 **funeral**^#5\""
},
{
"docid": "402174",
"title": "",
"text": "I use GnuCash which I really like. However, I've never used any other personal finance software so I can't really compare. Before GnuCash, I used an Excel spreadsheet which works fine for very basic finances. Pros Cons"
},
{
"docid": "510314",
"title": "",
"text": "Former software developer at an insurance company here (not State Farm though). All of the above answers are accurate and address how the business analysts come up with factors on which to rate your quote. I wanted to chime in on the software side here; specifically, what goes into actually crunching those numbers to produce an end result. In my experience, business analysts provide the site developers with a spreadsheet of base rates and factors, which get imported into a database. When you calculate a quote, the site starts by taking your data, and finding the appropriate base rate to start with (usually based on vehicle type, quote type (personal/commercial/etc.) and garaging zip code for the US). The appropriate factors are then also pulled, and are typically either multiplicative or additive relative to the base rate. The most 'creative' operation I've seen other than add/multiply was a linear interpolation to get some kind of gradient value, usually based on the amount of coverage you selected. At this point, you could have upwards of twenty rating factors affecting your base rate: marriage status, MVR reports, SR-22; basically, anything you might've filled into your application. In the case of MVR reports specifically, we'd usually verify your input against an MVR providing service to check that you didn't omit any violations, but we wouldn't penalize for lying about it...we didn't get that creative :) Then we'd apply any fees and discounts before spitting out the final number. With all that said, these algorithms that companies apply to calculate quotes are confidential as far as I'm aware, insofar as they don't publish those steps anywhere for the public to access. The type of algorithm used could even vary based on the state you live in, or really just when the site code is arbitrarily updated to use a new rating system. Underwriters and agents might have access to company-specific rating tables, so they might have more insight at the company level. In short, if there's an equation out there being used to calculate your rate, it's probably a huge string of multiplications with some base rate additions and linear interpolations peppered in, based on factors (and base rates) that aren't readily publicized. Your best bet is to not go through the site at all and talk to a State Farm agent about agency-specific practices if you're really curious about the numbers."
},
{
"docid": "256587",
"title": "",
"text": "\"You're looking at the \"\"wrong\"\" credit. Here's the Wikipedia article about the bookkeeping (vs the Finance, that you've quoted) term.\""
},
{
"docid": "165246",
"title": "",
"text": "\"There is no fundamental, good reason, I think; \"\"that's just how it's done\"\" (which is what all the other answers seem to be saying, w/o coming out and admitting it). Just guessing, but I'll bet most of the reason is historical: Before up-to-the-moment quotes were readily available, that was a bit tedious to calculate/update the fund's value, so enacted-laws let it be done just once per day. (@NL7 quotes the security act of 1940, which certainly has been updated, but also still might contain the results of crufty rationales, like this.) There are genuinely different issues between funds and stocks, though: One share of a fund is fundamentally different from one share of stock: There is a finite supply of Company-X-stock, and people are trading that piece of ownership around, and barter to find an mutually-agreeable-price. But when you buy into a mutual-fund, the mutual-fund \"\"suddenly has more shares\"\" -- it takes your money and uses it to buy shares of the underlying stocks (in a ratio equal to its current holdings). As a consequence: the mutual fund's price isn't determined by two people bartering and agreeing on a price (like stock); there is exactly one sane way to price a mutual fund, and that's the weighted total of its underlying stock. If you wanted to sell your ownership-of-Mutual-Fund-Z to a friend at 2:34pm, there wouldn't be any bartering, you'd just calculate the value based on the stated-value of the underlying stock at that exact moment. So: there's no inherent reason you can't instantaneously price a mutual fund. BUT people don't really buy/sell funds to each other -- they go to the fund-manager and essentially make a deposit-or-withdraw. The fund-manager is only required by law to do it once a day (and perhaps even forbidden from doing it more often?), so that's all they do. [Disclaimer: I know very little about markets and finance. But I recognize answers that are 'just because'.]\""
},
{
"docid": "146642",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-07-08/yellen-bet-on-pulling-workers-back-to-labor-force-is-paying-off) reduced by 88%. (I'm a bot) ***** > Even as U.S. unemployment crept lower in recent years, Federal Reserve Chair Janet Yellen stuck with a glacial pace of policy tightening that she justified with a powerful message: there were still millions of potential workers to pull in from the labor market&#039;s sidelines. > If workers hadn&#039;t come back, the strategy could have spurred an overly-tight labor market that sent wages and inflation up too quickly. > The surge of job holders coming from outside the labor force &quot;Speaks to the reduction in slack in the labor force,&quot; said Tom Simons, a senior economist at Jefferies LLC in New York. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6m5f49/yellen_bet_on_pulling_workers_back_to_labor_force/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~162709 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*: **labor**^#1 **works**^#2 **rate**^#3 **market**^#4 **force**^#5\""
},
{
"docid": "547865",
"title": "",
"text": "\"Question - Why does Renn Tech limit capital from outside investors while also leveraging their positions 4-5X ? Wouldn't they rather gain more in fees than pay interest on the leverage? Quote: \"\"The investment paid off. Today the equities group accounts for the majority of Medallion’s profits, primarily using derivatives and leverage of four to five times its capital, according to documents filed with the U.S. Department of Labor. 4\"\" https://www.bloomberg.com/news/articles/2016-11-21/how-renaissance-s-medallion-fund-became-finance-s-blackest-box\""
},
{
"docid": "242238",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](http://www.cnbc.com/2017/06/28/chinas-debt-surpasses-300-percent-of-gdp-iif-says-raising-doubts-over-yellens-crisis-remarks.html) reduced by 69%. (I'm a bot) ***** > Casrten Brzeski, senior economist at ING said that &quot;High debt levels mean that the debt crisis has not been solved, yet. Neither in the US, nor in the Eurozone. Increasing debt levels in Asia and other emerging market economies also show that a structural change has not yet taken place.\"\" > According to the IIF, despite the fact that debt levels have slowed down in mature economies, emerging market debt rose 5 percentage points from a year ago. > &quot;The household debt-to-GDP ratio hit an all-time high of over 45 percent in the first quarter of 2017 -well above the Emerging Market average of around 35 percent. In addition, our estimates based on monthly data on total social financing suggest that China&#039;s total debt surpassed 304 percent of GDP as of May 2017,&quot; the IIF noted. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6p6vug/chinas_debt_surpasses_300_percent_of_gdp_iif_says/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~174153 tl;drs so far.\"\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **debt**^#1 **Bank**^#2 **market**^#3 **trillion**^#4 **levels**^#5\""
},
{
"docid": "491917",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-06-06/are-low-interest-rates-bad-for-growth) reduced by 83%. (I'm a bot) ***** > James Chessen, the chief economist of the American Bankers&#039; Association, said in a June 5 interview, &quot;Interest rates have been too low for too long. It has created a problem for banks.&quot; The Independent Community Bankers of America, which represents smaller U.S. banks, believes that &quot;Higher interest rates would be a net plus for the community banking sector that would help them extend more credit,&quot; according to spokesman Paul Merski. > Officials at the European Central Bank and the Bank of Japan are sensitive to the side effects of extremely low or even subzero interest rates. > In a May 24 speech in Madrid, ECB President Mario Draghi acknowledged that low policy rates &quot;May compress banks&#039; net interest margins and thus exert pressure on their profitability.&quot; But he said that ECB researchers found that taking into account offsetting beneficial effects, &quot;The overall impact of our measures on bank profitability was positive.\"\" ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6fodm5/is_the_world_overdoing_low_interest_rates/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~138044 tl;drs so far.\"\") | [Theory](http://np.reddit.com/r/autotldr/comments/31bfht/theory_autotldr_concept/) | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **bank**^#1 **rate**^#2 **interest**^#3 **Low**^#4 **Calomiris**^#5\""
},
{
"docid": "86383",
"title": "",
"text": "How can I find out what these 'additional' costs will be when looking to buy a car? If you know what model you're interested in buying you can try out Edmund's True Cost To Own calculator. This will estimate the depreciation, taxes and fees, financing costs, fuel costs, insurance premiums, maintenance, repairs, and any tax credits for owning a certain model for various periods of time. You can improve the accuracy be substituting your own calculations, like if you already have an insurance quote. Consumer Reports has a useful chart to demonstrate how much each of those additional costs will add up, percentage-wise. They also list the most and least expensive cars to own."
},
{
"docid": "567766",
"title": "",
"text": "\"This article is a libertarian orgasmic delight: If granny can't pull her weight then she can die in the street. \"\"If you’re going to cut that much money out, it’s going to be coming from older people and people with disabilities” says this quote from the article.\""
},
{
"docid": "356767",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](http://eh.net/book_reviews/rulers-religion-and-riches-why-the-west-got-rich-and-the-middle-east-did-not/) reduced by 93%. (I'm a bot) ***** > Here is the basic argument: any kind of ruler has power because his or her subjects accept their rule and their main concern is what Rubin calls &quot;Propagating their rule.&quot; How do you get people to accept you as their ruler and let you keep your job? Political power is supported by a combination of coercion and legitimacy. > Why and how did this matter to economic history? Rubin argues that religious authorities were in general conservative, and that the institutions they established are less aligned with commerce and finance than when an economically important elite such as rich urban merchants and artisans are more powerful. > As a result of their political influence, religious authorities in the Middle East were successful in blocking critical breakthroughs, most notably the printing press and more sophisticated financial institutions. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6kt8n1/rulers_religion_and_riches_why_the_west_got_rich/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~157447 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*: **Rubin**^#1 **rule**^#2 **religious**^#3 **religion**^#4 **economic**^#5\""
},
{
"docid": "31542",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](https://www.cnbc.com/2017/08/17/a-gary-cohn-resignation-would-crash-the-markets-jeffrey-sonnenfeld.html) reduced by 66%. (I'm a bot) ***** > The New York Times reported Wednesday that Cohn, who is Jewish, was &quot;Upset&quot; and &quot;Disgusted&quot; with President Donald Trump&#039;s response to Saturday&#039;s deadly white nationalist rally in Virginia. > During a heated press conference Tuesday, Trump defended his comments that &quot;Both sides&quot; were to blame for the violence over the weekend that left a counterprotester dead. That prompted several members of Trump&#039;s advisory councils to announce their resignations, which caused Trump to eventually dissolve the councils entirely. > A Cohn resignation could be a hit to Trump&#039;s plans to revamp the tax code. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6ub6qf/a_gary_cohn_resignation_would_crash_the_markets/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~193173 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*: **Trump**^#1 **Cohn**^#2 **White**^#3 **markets**^#4 **CNBC**^#5\""
},
{
"docid": "21764",
"title": "",
"text": "The amount stated is the total amount of money the customer will be paying to the company. How much profit that will translate into is dependent on the type of contract. Some types of contracts: Cost plus fixed fee: they are paid what it costs to complete the contract plus a fee on top of that. That fee represents their profits. The costs will include salary, benefits, overhead, equipment, supplies. Firm fixed price: They perform the service, and they get paid a fixed amount. If their costs are higher than they forecast, then they may lose money. If they can be more efficient than they forecast, then they make more money. Time and materials: They are paid for completing each sub-task based on the number of hours it takes to complete each sub task, plus materials. This is used to hire a company to maintain a fleet of trucks. If the trucks are used a lot they will need more standard maintenance, plus additional repairs based on the type of use. They pay X for labor and Y for materials for an oil change, but A for labor and B for materials for a complete engine rebuild. There are many variations on these themes. Some put the risk on the customer, some on the company. How and when the company is paid is based on the terms of the contract. Some pay X% a month, others pay based on meeting milestones. Some pay based on the number of tasks completed in each time period. Some contracts run for a specific period of time, others have an initial period plus option years. The article may or may not specify if the quoted amount is the minimum amount of the contract or the maximum amount. The impact on the stock price is much more complex. Much more needs to be known about the structure of the contract, and who will be providing the service to determine if there will be profits. Some companies will bid to lose money, if it will serve as a bridge to another contract or to fill a gap that will allow them to delay layoffs."
},
{
"docid": "37558",
"title": "",
"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.\""
},
{
"docid": "53868",
"title": "",
"text": "\"> So, are you against Trump? Yes or no? Yes, I think you would categorize me as against him but I don't think I'm against him but against the things I see him doing things that I do not think will make life better for the average American. > ...according to VOX (known fake-news anti-Trump \"\"news\"\" site)... Vox does spin things left but that doesn't make their reporting fiction. They directly quoted President Trump after that meeting when he said, \"\"I'll oppose anything that makes it harder for smaller, younger companies to take the risk of bringing their product to a vibrantly competitive market. That includes price-fixing by the biggest dog in the market, Medicare, which is what's happening.\"\" I think the quote is very clear that President Trump changed his position on Medicare negotiating with drug companies. Do you disagree? > ...the amendment by Collins and McCaskill was passed last month and is sitting Trump's desk to be signed soon. I don't know why you bring this up. Their amendment is about streamlining the FDA and has nothing to do with my issue with President Trump, that he first supported and then opposed Medicare using its market share to get Americans lower cost drugs.\""
},
{
"docid": "457081",
"title": "",
"text": "tl;dr: I think you can find a much better deal. Doing a strait refi will cost you some amount of money. However, a 2.5% fee ont top of closing costs seems really high. You can get a quote from Quicken loans pretty quick and compare their fee. Also I would check with a local bank, preferably one you already do business with. The 2.5% is probably their commission for originating the loan. If you are in the Southeast I have had great luck with Regions bank. They are large enough, but also small enough. Please know that I have no affiliation with either company. BTW the rate also seems high. Doing a quick search of Bank Rate, it seems you can get 3.25% with zero fee as of this writing. The worse deal they show is 3.46 with a .75% fee, much better than you were quoted. If you can afford it I would also encourage you to think outside the box. A client of mine was able to obtain a Home Equity Loan (not line of credit) to replace their mortgage. They went for a 7 year pay off, with the loan in first position, at a rate about .75 below the then current 15 year rate. The key was there was zero closing costs. It saved them quite a bit of money. Also look at a 10 year fixed. It might not be much more than you are paying now."
}
] |
4700 | Better to get loan from finance company or bank considering the drop of credit score? | [
{
"docid": "345137",
"title": "",
"text": "If your primary concern is a drop in your credit score, go to a mortgage broker instead of multiple banks and finance companies. Each time you ask a bank or financial institution for a loan, they do a hard pull on your credit rating which costs you a couple of points. Visit a dozen lenders and you'll lose 24 points. You will also be signalling to lenders that you're shopping for money. If you visit a mortgage broker he does a single hard pull on your credit score and offers your loan query to a dozen or more lenders, some of which you may not have even heard of. This costs you 2 points instead of 24. If you are only going to visit one financial institution or another specific one, the drop in credit score is the same couple of points. The above answer only applies if you make loan inquiries at multiple institutions."
}
] | [
{
"docid": "513256",
"title": "",
"text": "One of the other things you could do to improve your score would be along the lines of what Pete said in his answer, but using the current financial climate to your advantage. I'm not sure what interest rates are available to you in the UK, but I currently have 4 lines of credit aside from my house. One is a credit card I use for every day purchases and like you pay off immediately with every statement. The other three are technically credit cards, however all three were used to make purchases with 0% financing. The one was for a TV I bought that even gave me 5% off if I pay it off within 6 months. That cash has been sitting in my savings since the day I bought it. I'm making regular payments on all three, but not having to pay any interest. My credit score dropped 25 points with the one as it was an elective medical expense (Visian eye surgery), so for the time the balance is near my credit limit. However, that will bounce back up as the balance lowers. My score was also able to take that hit and still be very high. If you don't have 0% (or very close) available, your better bet would be to follow the other suggestions about saving for a sizable down payment, or other every day expenses like a cell phone."
},
{
"docid": "453263",
"title": "",
"text": "Is your name on the title at all? You may have (slightly) more leverage in that case, but co-signing any loans is not a good idea, even for a friend or relative. As this article notes: Generally, co-signing refers to financing, not ownership. If the primary accountholder fails to make payments on the loan or the retail installment sales contract (a type of auto financing dealers sell), the co-signer is responsible for those payments, or their credit will suffer. Even if the co-signer makes the payments, they’re still not the owner if their name isn’t on the title. The Consumer Finance Protection Bureau (CFPB) notes: If you co-sign a loan, you are legally obligated to repay the loan in full. Co-signing a loan does not mean serving as a character reference for someone else. When you co-sign, you promise to pay the loan yourself. It means that you risk having to repay any missed payments immediately. If the borrower defaults on the loan, the creditor can use the same collection methods against you that can be used against the borrower such as demanding that you repay the entire loan yourself, suing you, and garnishing your wages or bank accounts after a judgment. Your credit score(s) may be impacted by any late payments or defaults. Co-signing an auto loan does not mean you have any right to the vehicle, it just means that you have agreed to become obligated to repay the amount of the loan. So make sure you can afford to pay this debt if the borrower cannot. Per this article and this loan.com article, options to remove your name from co-signing include: If you're name isn't on the title, you'll have to convince your ex-boyfriend and the bank to have you removed as the co-signer, but from your brief description above, it doesn't seem that your ex is going to be cooperative. Unfortunately, as the co-signer and guarantor of the loan, you're legally responsible for making the payments if he doesn't. Not making the payments could ruin your credit as well. One final option to consider is bankruptcy. Bankruptcy is a drastic option, and you'll have to weigh whether the disruption to your credit and financial life will be worth it versus repaying the balance of that auto loan. Per this post: Another not so pretty option is bankruptcy. This is an extreme route, and in some instances may not even guarantee a name-removal from the loan. Your best bet is to contact a lawyer or other source of legal help to review your options on how to proceed with this issue."
},
{
"docid": "52250",
"title": "",
"text": "It sounds like your current loan is in your name. As such, you are responsible for paying it. Not your family, you. It also sounds like the loan payments are regularly late. That'll likely drastically affect your credit rating. Given what you've said, it doesn't surprise me that you were declined for a credit card. With the information on your credit report, you are a poor risk. Assuming your family is unable to pay loan on time (and assuming you aren't willing to do so), you desperately need to get your name off the loan. This may mean selling the property and closing out the loan. This won't be enough to fix your credit, though. All that will do is stop making your credit worse. It'll take a few years (five years in Canada, not sure how many years in India) until this loan stops showing up on your credit report. That's why it is important to do this immediately. Now, can a bank give you a loan or a credit card despite bad credit? Yes, absolutely. It all depends on how bad your credit is. If the bank is willing to do so, they'll most likely charge a higher interest rate. But the bank may well decide not to give you a loan. After all, your credit report shows you don't make your loan payments on time. You may also want to request your own copy of your credit report. You may have to pay for this, especially if you want to see your score. This could be valuable information if you are looking to fix your finances, and may be worth the cost. If you are sure it's just this one loan, it may not be necessary. Good luck! Edit: In India CIBIL is the authority that maintains records. Getting to know you exact score will help. CIBIL offers it via TransUnion. The non-payment will keep appearing on your record for 3 years. As you don't have any loans, get a credit card from a Bank where you have Fixed Deposits / PPF Account as it would be easier to get one. It can then help you build the credit."
},
{
"docid": "361448",
"title": "",
"text": "Imagine that your normal mode of using credit gets you a score of X. As time goes by your score trends upward if the positive items (length of credit) outweigh your negative items. But there are no big increases or decrease in your score. Then you make a one time change to how you use credit. If this is a event that helps your score, there will be a increase in your score. If it is bad thing your score will drop. But if you go back to your standard method of operating your score will drift back to the previous range. Getting a car loan for a few months to get a bump in your credit score, will not sustain your score at the new level indefinitely. Overtime the impact will lessen, and the score will return your your normal range. Spending money on the loan just to buy a temporary higher credit score is throwing away money."
},
{
"docid": "184175",
"title": "",
"text": "\"Credit reports have line items that, if all is well, say \"\"paid as agreed.\"\" A car loan almost certainly gets reported. In your case it probably says the happy \"\"paid as agreed.\"\" It will continue to say that if you pay it off in full. You can get the happy \"\"paid as agreed\"\" from a credit card too. You can get it by paying the balance by the due date every month, or paying the mininum, or anything in between, on time. But you'll blow less money in interest if you pay each bill in full each month. You don't have to carry a balance. In the US you can get a free credit report once a year from each of the three credit bureaus. Here's the way to do that with minimal upsell/cross-sell hassles. https://www.annualcreditreport.com/ In your situation you'd probably be smart to ask for a credit report every four months (from each bureau in turn) so you can see how things are going. They don't give you your FICO score for free, but you don't really care about that until you're going for a big loan, like for a condo. It might be good to take a look at one of those free credit reports real soon, as you prepare to close out your car loan. If you need other loans, consider working with a credit union. They sometimes offer better interest rates, and they often are diligent about making credit bureau reports for their good customers; they help you build credit. You mentioned wanting to cut back on insurance coverage. It's a worthy goal, but it's generally called \"\"self-insuring\"\" in the business. If you cancel your collision coverage and then wreck your car, you absorb the cost of replacing it. So think about your personal ability to handle that kind of risk.\""
},
{
"docid": "530987",
"title": "",
"text": "The SCHUFA in Germany works a bit different from the FICO score in the US. My background: I am a German currently living in the US. The information others want to see from the SCHUFA are a bit different. If you want to example rent a house or an apartment, the landlord often wants to see a SCHUFA statement which only shows that there are no negative entries. This statement you can get easily from online and they don't mention your credit score there. If you apply for a real credit or want to lease a car, they want to look deeper in your SCHUFA profile. However, very important is: They need signed permission to do this. Every participating company can submit entries to your profile where the score is calculated from. For example mobile phone plans, leasing a car, applying for a loan. Some lenders decide on the score itself, some on the overall profile and some also take your income into account. Since there is no hire & fire in Germany you are often asked to show your last 3 paychecks. This, in combination with your SCHUFA score is used for determination if you are eligible for a loan or not. However, they check through every entry which is made there and as long as it is reasonable and fits to your income (car for 800 EUR/month with a 1000 EUR salary does not!) you should not have a problem establishing a good score. The, in my eyes, unfair part about Schufa is that they take your zip code and your neighborhood into account when calculating their score. Also moving often affects the score negatively. To finally answer your question: Credit history is also built by mobile phone plans etc. in Germany. As long as you pay everything on time you should be fine. A bad score can definitely hurt you, but it is not as important to have a score as it is in the US because the banks also determine your creditworthiness based on your monthly income and your spending behavior."
},
{
"docid": "69938",
"title": "",
"text": "If your credit is good, you should immediately attempt to refinance your high rate credit cards by transferring the balance to credit cards with lower interest rates.You might want to check at your local credit union, credit unions can offer great rates. Use the $4000 to pay off whatever is left on the high rate cards. If your credit is bad, I suggest you call your credit card company and try to negotiate with them. If they consider you a risk they might settle your account for fraction of what you own if you can send payment immediately. Don't tell them you have money, just tell them your are trying to get your finances under control and see what they can offer you. This will damage your credit score but will get you out of depth much sooner and save you money in the long term. Also keep in mind that if they do settle, they'll close your account. That way, you leverage the $4000 and use it as a tool to get concessions from the bank."
},
{
"docid": "285033",
"title": "",
"text": "\"Here I thought I would not ever answer a question on this site and boom first ten minutes. First and foremost I am in the automotive industry, specifically one of our core competencies is finance department management consulting and the sales process both for the sale of the care as well as the financial transaction. First and foremost new vehicle gross profits are nowhere near 20% for the dealership. In an entry level vehicle like say a Toyota Corolla there is only a few hundreds of dollars in markup from invoice to M.S.R.P. There is also something called holdback that dealers get for achieving certain goals such as sales volume. These are usually pretty easy to hit. As a matter of fact I have never heard of a dealer not getting the hold back on a deal. This hold back is there to cover overhead for the car, the cost of getting it ready to sell, having a lot to park it on, making it ready for delivery, offset some of the cost of sales labor etc. Most dealerships consider the holdback portion of the invoice to not be part of the deal when it comes to negotiations. Certain brands such as KIA and Chrysler have something called \"\"Dealer Cash\"\" these payouts are usually stair stepped according to volume and vary by dealer, location, past history, how the guys at the factory feel that day and any number of combinations. Then there is CSI or Customer Service Index payments, these payments are usually made every 1/4 are on the Parts Statement not the Sales Doc and while they effect the dealers bottom line they almost never affect the sales managers or sales persons payroll so they are not considered a part of the cost of the car. They are however extremely important to the dealer and this is why after you have your new car they want you to bring in your survey for a free oil change or something. IF you are going to give a bad survey they want to throw it away and not send it in, if you are going to give a good survey they want to make sure you fill it out correctly. This is because lets say they ask you on a scale of 1-10 how was your sales person and you put a 9 that is a failing score. Dumb I know but that is how every factory CSI score system I have seen worked. According to NADA the average New Vehicle gross profit including hold back and dealer cash is around $1000.00. No where near 20%. Dealerships would love it if they made 20% on your new F250 Supercrew Diesel at around $50,000.00. One last thing there is something on the invoice called Wholesale Finance Reserve. This is the amount of money the factory forwards to the Dealership to offset the cost of financing vehicle on the floor plan so they can have it for you to look at before you buy. This is usually equal to around 3 months of interest and while you might buy a vehicle that has been on the lot for 2 days they have plenty that have been there much longer so this equals out in a fair to middling run store. General Mangers that know what they are doing can make this really pad their net profit to statement. On to incentives, there are basically 3 kinds. Cash to customer in the form of rebates, Dealer Cash in the form of incentives to dealerships based on volume or the undesirability of a vehicle, and incentive rates or Subvented leases. The rates are pretty self explanatory as they advertised as such (example 0% for 60 Months). Subvented Leased are harder to figure out and usually not disclosed as they are hard to explain and also a source of increased profit. Subvented leases are usually powered by lower cost of money called a money factor (think of it as an interest rate) that is discounted from the lease company or a subsidized residual. Subsidized residuals are virtually verboten on domestic vehicles due to their poor resell values. A subsidized residual works like this, you buy a Toyota Camry and the ALG (automotive lease guide) says it has a residual at 36 months of 48%. Well Toyota Motor Credit says we will give you a subvented residual of 60% basically subsidizing a 2% increase in residual. Since they do not expect to be able to sell the car at auction for that amount they have to set aside the 2% as a future expense. What does this mean to you, it means a lower payment. Also a good rule of thumb if you are told a money factor by your salesperson to figure out what the interest rate is just multiply it by 2400. So if a money factor is give of .00345 you know your actual interest rate is a little bit lower than 8.28% (illustration purposes only money factors are much lower than that right now). So how does this save you money well a lease is basically calculated by multiplying the MSRP by the residual and then subtracting that amount from the \"\"Capitalized Cost\"\" which is the Price paid for the car - trade in + payoff + TT&L-Rebate-Down Payment. That is the depreciation. Then you divide that number by the term of the loan and you have the depreciation amount. So if you have 20K CC and 10K R your D = 10K / 36 = 277 monthly payment. For the rest of the monthly payment you add (I think been a long time since I did this with out a computer) the Residual plus the CC for $30,000 * MF of .00345 = 107 for a total payment of 404 ish. This is not completely accurate but you can use it to make sure a salesperson/finance person is not trying to do one thing and say another as so often happens on leases. 0% how the heck do they make money at that, well its simple. First in 2008 the Fed made all the \"\"Captive\"\" lenders into actual banks instead of whatever they were before. So now they have access to the Fed's discounting window which with todays monetary policies make it almost free money. In the past these lenders had to go through all kinds of hoops to raise funds and securitize loans even for super prime credit. Those days are essentially over. Now they get their short term money just like Bank of America does. Eventually they still bundle these loans and sell them. So in the short term YOU pay for the 0% by giving up part or all of your rebate. This is really important DO NOT GIVE up your rebate for 0% unless it makes sense to do so. When you can get the money at 2.5% and get a $7000.00 rebate (customer cash) on that F250 or 0% take the cash. First of all make the finance guy/gal show you the the difference in total cost they can do do this using the federal truth in lending disclosures on a finance contract. Secondly how long will you keep the vehicle? If you come out ahead by say $1500 by taking the lower rate but you usually trade out every three years this is not going to work. Also and this is important if you are involved in a situation with a total loss like a stolen car or even worse a bad wreck before the breakeven point you lose that price break. Finally on judging what is right for you, just know that future value of the vehicle on for resell or trade-in will take into effect all of these past rebates and value the car accordingly. So if a vehicle depreciates 20% a year for the first 3 years the starting point will essentially be $7000.00 less than you actually paid, using rough numbers. How does this help the dealers and car companies? Well while a dealer struggles to make money on new cars the factory makes all of their money on the new cars and the new car financing. While your individual loan might lose money that money is offset by the loss of rebate and I think Ford does actually pay Ford Motor Credit Company the difference in the rate. The most important thing is what happens later FMCC now has 2500 loans with people with perfect credit. They can now use those loans to budle with people with not so perfect credit that they financed at 12%-18% and buy that money with interest rates in the 2%-3% range. Well that is a hell of a lot of profit. 'How does it help the dealership, well the more super prime credit they have in their portfolio the more subprime credit the banks will buy for them. This means they have more loans originated that are more profitable for them. Say you come in for the 0% but have 590 credit score, they get FMCC to buy the deal because they have a good portfolio and you win because the dealer gets to buy the money at say 9% and sell it to you at say 12% making the spread. You win there because you actually qualified for a rate of around 18% with a subprime company like Santander or Capital One (yes that capital one) so you save a ton on your overall cost of the car. Any dealership that is half way well run makes as much or money in the finance and insurance office than the rest of the dealership. When you factor in what a good F&I Director can do to get deals done with favorable terms that really goes up. Think about that the guys sitting a desk drinking coffee making more than the service department guys all put together. Well that was long winded but there I broke down the car business for whoever read this far.\""
},
{
"docid": "32867",
"title": "",
"text": "This works even better when you have a good credit score when you want to arbitrarily inflate it for bragging rights or lowest interest rates, I'm only pointing this out because it has nothing to do with your current score and CK's recommendation. The presence of an installment loans is 10% of your credit score, according to some credit scoring models. So theoretically someone with a solid 720 score could gain 72 points, while someone with a 480 score would only gain 48 points. But the scores are weighted so you wouldn't get that kind out outcome regardless, it will have less of an impact. You can do this, amongst other things, but if that installment loan alters your utilization of credit it will more greatly lower your score, and the hard inquiry to apply for the loan will also temporarily hurt your score and you also might not be approved. These are the things to consider (but fortunately utilization has no history). Yes you can pay the loan off with a monthly payment. The loan's interest will cost slightly more than the monthly payments, by the end of the loan term. I've done this with a 5 year $500 installment loan at a credit union. As others pointed out, you don't have to spend money to raise your credit score (unnecessary interest, in this case), but you certainly can!"
},
{
"docid": "528186",
"title": "",
"text": "\"Your credit-score is concerned with your current credit accounts (credit-cards, HELOC, loans, mortgage, et cetera) - your Current/Checking bank account is not a credit account so it is not reported to the credit agencies. Granted, being overdrawn is effectively the same as having a very expensive loan from the bank- however banks do not routinely report these to the credit-agencies - and of course, if you fail to pay overdraft fees in a timely manner then your bank will take it to collections or possibly even get a judgement against you, and that will be reported in your credit report (under the \"\"Derogatory remarks\"\" section). I cannot find any sources as to whether repeated but always-paid overdrafts will be reported - but certainly your bank isn't complaining because they'll be making lots of money from you. (Via https://www.thebalance.com/will-a-bank-overdraft-hurt-my-credit-score-960554).\""
},
{
"docid": "156873",
"title": "",
"text": "\"With the scenario that you laid out (ie. 5% and 10% loans), it makes no sense at all. The problem is, when you're in trouble the rates are never 5% or 10%. Getting behind on credit cards sucks and is really hard to recover from. The problem with multiple accounts is that as the banks tack on fees and raise your interest rate to the default rate (usually 30%) when you give them any excuse (late payment, over the limit, etc). The banks will also cut your credit lines as you make payments, making it more likely that you will bump over the limit and be back in \"\"default\"\" status. One payment, even at a slightly higher rate is preferable when you're deep in the hole because you can actually pay enough to hit principal. If you have assets like a house, you'll get a much better rate as well. In a scenario where you're paying 22-25% interest, your minimum payment will be $150-200 a month, and that is mostly interest and penalty. \"\"One big loan\"\" will usually result in a smaller payment, and you don't end up in a situation where the banks are jockeying for position so they get paid first. The danger of consolidation is that you'll stop triggering defaults and keep making your payments, so your credit score will improve. Then the vultures will start circling and offering you more credit cards. EDIT: Mea Culpa. I wrote this based on experiences of close friends whom I've helped out over the years, not realizing how the law changed in 2009. Back around 2004, a single late payment would trigger universal default on most cards, jacking all rates up to 30% and slashing credit lines, resulting in over the limit and other fees. Credit card banks generally apply payments (in order, to interest on penalties, penalties, interest on principal, principal) in a way that makes it very difficult to pay down principal for people deep in debt. They would also offer \"\"payment plans\"\" to entice you to pay Bank B vs. Bank A, which would trigger overlimit fees from Bank A. Another change is that minimum payments were generally 2% of statement balance, which often didn't cover the monthly finance charge. The new law changed that, resulting in a payment of 1% of balance + accrued interest. Under the old regime, consolidation made it less likely that various circumstances would trigger default, and gave the struggling debtor one throat to choke. With the new rules, there are definitely a smaller number of scenarios where consolidation actually makes sense.\""
},
{
"docid": "256921",
"title": "",
"text": "\"In the other question, the OP had posted a screenshot (circa 2010) from Transunion with suggestions on how to improve the OP's credit score. One of these suggestions was to obtain \"\"retail revolving accounts.\"\" By this, they are referring to credit accounts from a particular retail store. Stores have been offering credit accounts for many years, and today, this usually takes the form of a store credit card. The credit card does not have the Visa or MasterCard logo on it, and is only valid at that particular store. (For example, Target has their own credit card that only works at Target stores.) The \"\"revolving\"\" part simply means that it is an open account that you can continue to make new charges and pay off, as opposed to a fixed retail financing loan (such as you might get at a high-end furniture store, where you obtain a loan for a single piece of furniture, and when it is paid off, the account is closed). The formula for credit scores are proprietary secrets. However, I haven't read anything that indicates that a store credit card helps your credit score more than a standard credit card. I suspect that Transunion was offering this tip in an attempt to give the consumer more ideas of how to add credit cards to their account that the consumer might not have thought of. But it is possible that buried deep in the credit score formula, there is something in there that gives you a higher score if you have a store credit card. As an aside, the OP in the other question had a credit score of 766 and was trying to make it higher. In my opinion, this is pointless. Remember that the financial services industry has an incentive to sell you as much debt as possible, and so all of their advice will point to you getting more credit accounts and getting more in debt.\""
},
{
"docid": "580818",
"title": "",
"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."
},
{
"docid": "376403",
"title": "",
"text": "A lender will look at three things when giving a loan: Income. Do you make enough money each month to afford the payments. They will subtract from your income any other loans, credit card debt, student loan debt, mortgage. They will also figure in your housing costs. Your Collateral. For a mortgage the collateral is the house, for a car loan it is the car. They will only give you a loan to a specific percentage of the value of the collateral. Your money in the bank isn't collateral, but it can serve as a down payment on the loan. Your Credit score. This is a measure of how well you handle credit. The longer the history the better. Using credit wisely is better than not using the credit you have. If you don't have a credit card, get one. Start with your current bank. You have a history with them. If they won't help you join a credit union. Another source of car loans is the auto dealer. Though their rates can be high. Make sure that the purchase price doesn't require a monthly payment too high for your income. Good rules of thumb for monthly payments are 25% for housing and 10% for all other loans combined. Even a person with perfect credit can't get a loan for more than the bank thinks they can afford. Note: Don't drain all your savings, you will need it to pay for the unexpected expenses in life. You might think you have enough cash to pay off the student loan or to make a big down payment, but you don't want to stretch yourself too thin."
},
{
"docid": "401267",
"title": "",
"text": "Regardless of how it exactly impacts the credit score, the question is does it help improve your credit situation? If the score does go up, but it goes up slowly that was a lot of effort to retard credit score growth. Learning to use a credit card wisely will help you become more financially mature. Start to use the card for a class of purchases: groceries, gas, restaurants. Pick one that won't overwhelm your finances if you lose track of the exact amount you have been charging. You can also use it to pay some utilities or other monthly expenses automatically. As you use the card more often, and you don't overuse it, the credit card company will generally raise your credit limit. This will then help you because that will drop your utilization ratio. Just repeat the process by adding another class of charges to you credit card usage. This expanded use of credit will in the long run help your score. The online systems allow you to see every day what your balance is, thus minimizing surprises."
},
{
"docid": "274832",
"title": "",
"text": "It can certainly help build a credit score, but remember that businesses gain credit differently from individuals. Depending on the country, there isn't usually a national register of business credit ratings the way there is for individuals. The credit record you'd be gaining is with your own bank only. Banks will usually base your business credit record on revenue and transactional loads rather than merely on having and holding a credit card. That said, it isn't always that easy to get a business credit card and so it is a useful thing to have for credibility with clients (depending on the type of work you do). A credit card can also sometimes work out cheaper (and faster) for financing small overdrafts than a regular business overdraft facility. That said, I've found that larger loans over a five-year term can work out much cheaper for an established business than they would for an individual, even where the business itself has no history of using credit."
},
{
"docid": "331653",
"title": "",
"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. :)\""
},
{
"docid": "23949",
"title": "",
"text": "\"So there are a few angles to this. The previous answers are correct in saying that cash is different than financing and, therefore, the dealer can rescind the offer. As for financing, the bank or finance company can give the dealership a \"\"kickback\"\" or charge a \"\"fee\"\" based on the customer's credit score. So everyone saying that the dealers want you to finance....well yes, so long as you have good credit. The dealership will make the most money off of someone with good credit. The bank charges a fee to the dealership for the loan to a customer with bad credit. Use that tactic with good credit...no problem. Use that tactic with bad credit.....problem.\""
},
{
"docid": "489561",
"title": "",
"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."
}
] |
4714 | Personal finance app where I can mark transactions as “reviewed”? | [
{
"docid": "505057",
"title": "",
"text": "\"Otto, I totally agree with you. That feature would be awesome addition to mint. Have you thought of adding Custom tag called \"\"reviewed\"\" and just mark that to the transaction. Ved\""
}
] | [
{
"docid": "544765",
"title": "",
"text": "\"The whole point of the \"\"envelope system\"\" as I understand it is that it makes it easy to see that you are staying within your budget: If the envelope still has cash in it, then you still have money to spend on that budget category. If you did this with a bunch of debit cards, you would have to have a way to quickly and easily see the balance on that card for it to work. There is no physical envelope to look in. If your bank lets you check your balance with a cell-phone app I guess that would work. But at that point, why do you need separate debit cards? Just create a spreadsheet and update the numbers as you spend. The balance the bank shows is always going to be a little bit behind, because it takes time for transactions to make it through the system. I've seen on my credit cards that sometimes transactions show up the same day, but other times they can take several days or even a week or more. So keeping a spreadsheet would be more accurate, or at least, more timely. But all that said, I can check my bank balance and my credit card balances on web sites. I've never had a desire to check from a cell phone but at least some banks have such apps -- my daughter tells me she regularly checks her credit card balance from her cell phone. So I don't see why you couldn't do it with off-the-shelf technology. Side not, not really related to your question: I don't really see the point of the envelope system. Personally, I keep my checkbook electronically, using a little accounting app that I wrote myself so it's customized to my needs. I enter fixed bills, like insurance premiums and the mortgage payment, about a month in advance, so I can see that that money is already spoken for and just when it is going out. Besides that, what's the advantage of saying that you allot, say, $50 per month for clothes and $100 for gas for the car and $60 for snacks, and if you use up all your gas money this month than you can't drive anywhere even though you have money left in the clothes and snack envelopes? I mean, it makes good sense to say, \"\"The mortgage payment is due next week so I can't spend that money on entertainment, I have to keep it to pay the mortgage.\"\" But I don't see the point in saying, \"\"I can't buy new shoes because the shoe envelope is empty. I've accumulated $5000 in the shampoo account since I went bald and don't use shampoo any more, but that money is off limits for shoes because it's allocated to shampoo.\"\"\""
},
{
"docid": "65957",
"title": "",
"text": "\"You Need A Budget is a nice budgeting tool that works on the desktop. It is more focused on manual entry and budgeting over auto-downloading and categorizing. It does support downloading transactions from banks and then importing the transaction files. You mentioned having \"\"trust issues\"\" with a bank and this would be safe as you don't enter your credentials into the app. It also has a mobile app that works well. Not exactly what you are looking for, but it would work in India and be safe if you have an untrustworthy bank and it would allow you to import transactions.\""
},
{
"docid": "225944",
"title": "",
"text": "\"I ended up with YNAB. It worked quite well, and I highly recommend it. It does cost money, but I found it saved me far more than its cost in the first month alone, since I saved between $500 and $1000. And it's flexible; when you overspend on something you can flex your budget, rather than it breaking and you give up in frustration. Dropbox support has recently been added, \"\"cloudifying\"\" it and making it where the smartphone apps can be really useful. I use the iPhone app occasionally, having recently transitioned to an iPhone.\""
},
{
"docid": "153968",
"title": "",
"text": "\"As an investment opportunity: NO. As a friendly assist with money you don't mind ever getting back, legal depending on amount. A few years back I was in the housing market myself and researching interest rates and mortgages. For one property I was very interested in, I would need about $4K extra in liquid cash to complete the down-payment. A pair of options I saw were a \"\"combo loan\"\" 15yr 4% interest for the house, 1yr 8% interest for the $4K. Alternately, the \"\"bank of mom and dad\"\" could offer the 4K loan for a much lower rate. The giftable limit where reporting is not required was $12,000 at the time I did the review. IRS requires personal loans to be counted as having interest at the commercial rate. Thus an interest free loan of $10K with commercial interest rate of 1% (for easy math) would be counted as a gift of $10,100 for that calendar year. Disclaimer: Ultimately, I did not use this approach and did not have it subjected to a legal review.\""
},
{
"docid": "251980",
"title": "",
"text": "It is probably safe to throw away the receipt. Without a system to process and store receipts, they are of little use. With regards to personal finances I'm guilty of preaching without practicing 100% of the time, but here are some arguments for keeping receipts. To reconcile your statement to receipts before paying the credit card bill - people make mistakes all the time. I bet if you have an average volume of transactions, you will find at least one mistake in 12 months. To establish baseline spending and calculate a realistic budget. So many people will draft a budget by 'estimating' where their money goes. When it comes to this chore, I think people are about as honest with themselves as exercise and counting calories. Receipts are facts. To abide by record keeping requirements for warranty, business, IRS, etc... Personally, the only thing I've caught so far is Bank of America charging me interest when I pay my bill in full every month!"
},
{
"docid": "351584",
"title": "",
"text": "Generally, the paperwork realtors use is pre-written and pre-approved by the relevant State and real-estate organizations. The offers, contracts, etc etc a pretty straightforward and standard. You can ask a realtor for a small fee to arrange the documents for you (smaller than the usual 5% sellers' fee they charge, I would say 0.5% or a couple of hundreds of dollars flat fee would be enough for the work). You can try and get these forms yourself, sometimes you can buy them in the neighborhood Staples, or from various law firms and legal plans that sell standard docs. You can get a lawyer to go over it with you for almost nothing: I used the LegalZoom plan for documentation review, and it cost me $30 (business plan, individual is cheaper) to go over several purchase contracts ($30 is a monthly subscription, but you don't have to pay it for more than one month). But these are standard, so you do it once and you know how to read them all. If you have a legal plan from work, this may cover document review and preparation. Preparing a contract that is not a standard template can otherwise cost you hundreds of dollars. Title company will not do any paperwork for you except for the deed itself. They can arrange the deed and the recording, escrow and title insurance, but they will not write a contract for the parties to use. You have to come with the contract already in place, and with escrow instructions already agreed upon. Some jurisdictions require using a lawyer in a real-estate transaction. If you're in a jurisdiction (usually on a county level) that requires the transaction to go through a lawyer - then the costs will be higher."
},
{
"docid": "34239",
"title": "",
"text": "In my experience, Yelp reviews have accurately represented the quality of the establishment reviewed and have been right in line with my tastes and expectations. I find Google reviews perform comparatively worse. So far Yelp is the best tool I can find for quickly making decisions about where to spend my money."
},
{
"docid": "550496",
"title": "",
"text": "Keeping a receipt does allow you to verify that the expected amount was charged/debited it also can help when you need to return an item. Regarding double charging, the credit card companies look for that. If the same card is used at the same vendor for the same exact amount in a short period of time the credit card company will flag the transaction. They assume either a mistake was made, or fraud is being attempted. The most likely result is that the transaction is denied. A dishonest vendor can write down the card number, expiration date and CVV number. Then after you leave make up a new transaction for any amount they want. You of course wouldn't have a paper receipt for this fraudulent transaction. The key is reviewing your transaction history every few days: looking for unexpected amounts, locations, or number of transactions."
},
{
"docid": "219940",
"title": "",
"text": "All this speculation and no one really has the right idea what's going on. It has almost nothing to do with VAT and nothing to do compliance. [It has everything to do with a very a chronically weak Euro.](https://www.google.com/finance?client=safari&rls=en&q=eur&oe=UTF-8&um=1&ie=UTF-8&sa=N&tab=we) Apps in the App Store are tied to tiers. My app sells at tier 10. For USD, this means I sell my app for $10 and make $7 after their cut. Tier 10 used to translate to 7,99€. Now it's 8,99€. This means before the hike I, as an American, would get 4,79€ or $6.19 after the exchange. This wasn't a problem back when the app store opened. The economy was relatively strong and the Euro stood around 1.5 to one American dollar. This means in 2008 I'd get about the same $7 after the conversion. With the Euro crisis, the tiers remained the same which meant each European sale only netted around $5.75, a $1.25 discount for each European. The Euro conversion was a long standing issue and the price hike restores the exchange back to the $7 dollars it used to be."
},
{
"docid": "421987",
"title": "",
"text": "Since then I had gotten a job at a supermarket stocking shelves, but recently got fired because I kept zoning out at work This is not a good sign for day trading, where you spend all day monitoring investments. If you start focusing on the interesting math problem and ignoring your portfolio, you can easily lose money. Not so big a problem for missed buy opportunities, but this could be fatal for missed sale opportunities. Realize that in day trading, if you miss the uptick, you can get caught in a stock that is now going down. And I agree with those who say that you aren't capitalized well enough to get started. You need significantly more capital so that you can buy a diversified portfolio (diversification is your limitation, not hedging). Let's say that you make money on two out of three stocks on average. What are the chances that you will lose money on three stocks in a row? One in twenty-seven. What if that happens on your first three stocks? What if your odds at starting are really one in three to make money? Then you'll lose money more than half the time on each of your first three stocks. The odds don't favor you. If you really think that finance would interest you, consider signing up for an internship at an investment management firm or hedge fund. Rather than being the person who monitors stocks for changes, you would be the person doing mathematical analysis on stock information. Focusing on the math problem over other things is then what you are supposed to be doing. If you are good at that, you should be able to turn that into a permanent job. If not, then go back to school somewhere. You may not like your schooling options, but they may be better than your work options at this time. Note that most internships will be easier to get if you imply that you are only taking a break from schooling. Avoid outright lying, but saying things like needing to find the right fit should work. You may even want to start applying to schools now. Then you can truthfully say that you are involved in the application process. Be open about your interest in the mathematics of finance. Serious math minds can be difficult to find at those firms. Given your finances, it is not practical to become a day trader. If you want proof, pick a stock that is less than $100. Found it? Write down its current price and the date and time. You just bought that stock. Now sell it for a profit. Ignore historical data. Just monitor the current price. Missed the uptick? Too bad. That's reality. Once you've sold it, pick another stock that you can afford. Don't forget to mark your price down for the trading commission. A quick search suggests that $7 a trade is a cheap price. Realize that you make two trades on each stock (buy and sell), so that's $14 that you need to make on every stock. Keep doing that until you've run out of money. Realize that that is what you are proposing to do. If you can make enough money doing that to replace a minimum wage job, then we're all wrong. Borrow a $100 from your mom and go to town. But as others have said, it is far more realistic to do this with a starting stake of $100,000 where you can invest in multiple stocks at once and spread your $7 trading fee over a hundred shares. Starting with $100, you are more likely to run out of money within ten stocks."
},
{
"docid": "500807",
"title": "",
"text": "\"It is if you want apps. The platform is stuck in a Catch-22, where people won't buy the phone because it has no apps, and devs won't make apps for it because no one is buying the phone. Windows 8 will probably ease the problem with its app store and presumed port channel, but given how MS has handled potential devs so far, the future is not bright. They should have been pursuing aggressively and digging into their massive warchest to basically throw money at devs to get hem on board and kick-start the ecosystem. I personally couldn't give a crap about apps, as I just want my phone to make and take calls, guide me with map directions, and let me Google quick bits of information on-demand. It's not a \"\"platform\"\" to me. It's a tool. But I'm apparently in the minority.\""
},
{
"docid": "65659",
"title": "",
"text": "I work in banking for the private bank division for a major bank as a banker. I have been helping clients with these types of transactions for years. I believe that large transactions like this are best left to the big boys. That is where the talented bankers/loan officers/underwriters are, and that is the type of transaction they specialize in. I know for a fact that your credit union will not be able to suit your needs, and a smaller bank will be tough to deal with. I wouldn't worry at all about the credit pulls as much as picking a rock solid bank with lots of experiences doing these kinds of deals. That is my 2 cents, albeit a little bit biased, but it is also coming from experience. History with the bank definitely matters, but what business you can bring to the bank along with the lending (deposits, 401k management, personal investments, business services, etc) matter just as much and can make or break the approval/decline or even the terms being favorable or not favorable to your company."
},
{
"docid": "287991",
"title": "",
"text": "I have about $1K in savings, and have been told that you should get into investment and saving for retirement early. I make around $200 per week, which about $150 goes into savings. That's $10k per year. The general rule of thumb is that you should have six months income as an emergency fund. So your savings should be around $5k. Build that first. Some argue that the standard should be six months of living expenses rather than income. Personally, I think that this example is exactly why it is income rather than living expenses. Six months of living expenses in this case would only be $1250, which won't pay for much. And note that living expenses can only be calculated after the fact. If your estimate of $50 a week is overly optimistic, you might not notice for months (until some large living expense pops up). Another problem with using living expenses as the measure is that if you hold down your living expenses to maximize your savings, this helps both measures. Then you hit your savings target, and your living expenses increase. So you need more savings. By contrast, if your income increases but your living expenses do not, you still need more savings but you can also save more money. Doesn't really change the basic analysis though. Either way you have an emergency savings target that you should hit before starting your retirement savings. If you save $150 per week, then you should have around $4k in savings at the beginning of next year. That's still low for an emergency fund by the income standard. So you probably shouldn't invest next year. With a living expenses standard, you could have $6250 in savings by April 15th (deadline for an IRA contribution that appears in the previous tax year). That's $5000 more than the $1250 emergency fund, so you could afford an IRA (probably a Roth) that year. If you save $7500 next year and start with $4k in savings (under the income standard for emergency savings), that would leave you with $11,500. Take $5500 of that and invest in an IRA, probably a Roth. After that, you could make a $100 deposit per week for the next year. Or just wait until the end. If you invested in an IRA the previous year because you decided use the living expenses standard, you would only have $6500 at the end of the year. If you wait until you have $6750, you could max out your IRA contribution. At that point, your excess income for each year would be larger than the maximum IRA contribution, so you could max it out until your circumstances change. If you don't actually save $3k this year and $7500 next year, don't sweat it. A college education is enough of an investment at your age. Do that first, then emergency savings, then retirement. That will flip around once you get a better paying, long term job. Then you should include retirement savings as an expected cost. So you'd pay the minimum required for your education loans and other required living expenses, then dedicate an amount for retirement savings, then build your emergency savings, then pay off your education loans (above the minimum payment). This is where it can pay to use the more aggressive living expenses standard, as that allows you to pay off your education loans faster. I would invest retirement savings in a nice, diversified index fund (or two since maintaining the correct stock/bond mix of 70%-75% stocks is less risky than investing in just bonds much less just stocks). Investing in individual stocks is something you should do with excess money that you can afford to lose. Secure your retirement first. Then stock investments are gravy if they pan out. If they don't, you're still all right. But if they do, you can make bigger decisions, e.g. buying a house. Realize that buying individual stocks is about more than just buying an app. You have to both check the fundamentals (which the app can help you do) and find other reasons to buy a stock. If you rely on an app, then you're essentially joining everyone else using that app. You'll make the same profit as everyone else, which won't be much because you all share the profit opportunities with the app's system. If you want to use someone else's system, stick with mutual funds. The app system is actually more dangerous in the long term. Early in the app's life cycle, its system can produce positive returns because a small number of people are sharing the benefits of that system. As more people adopt it though, the total possible returns stay the same. At some point, users saturate the app. All the possible returns are realized. Then users are competing with each other for returns. The per user returns will shrink as usage grows. If you have your own system, then you are competing with fewer people for the returns from it. Share the fundamental analysis, but pick your stocks based on other criteria. Fundamental analysis will tell you if a stock is overvalued. The other criteria will tell you which undervalued stock to buy."
},
{
"docid": "419786",
"title": "",
"text": "You know, I have egg on my face. I'd seen all of these reviews, and I am instinctively suspicious of a reviewer with no friends or a person with 4 friends and one review, so I discounted them. I looked at Monica's review and saw the number of reviews and friends and shrugged. Then I read all of the reviews, and you are 100% spot-on. She's hired a ghostwriter. Monica's review is her only lengthy review - the others are fairly terse, though human - and is written in exactly the same style. I'm flabbergasted, because the wordiness should have been a dead giveaway. There are a handful of reviews, however, which were clearly written by someone (you can spot dumb), but those reviewers all share the traits of robot accounts. I would really love to write a review for this place and see whether or not it gets filtered. That having been said, you might have explained away the Monica point, and I'm impressed. Thanks for pointing it out!"
},
{
"docid": "454412",
"title": "",
"text": "Unless a study accounts for whether the users are following a budget or not, it is irrelevant to those who are trying to take their personal finances seriously. I can certainly believe that those who have no budget will spend more on a credit card than they will on a debit card or with cash. Under the right circumstances spending with cards can actually be a tool to track and reduce spending. If you can see on a monthly and yearly basis where all of your money was spent, you have the information to make decisions about the small expenses that add up as well as the obvious large expenses. Debit cards and credit cards offer the same advantage of giving you an electronic record of all of your transactions, but debit cards do not come with the same fraud protection that credit cards have, so I (and many people like me) prefer to use credit cards for security reasons alone. Cash back and other rewards points bolster the case for credit cards over debit cards. It is very possible to track all of your spending with cash, but it is also more work. The frustration of accounting for bad transcriptions and rechecking every transaction multiple times is worth discussing too (as a reason that people get discouraged and give up on budgeting). My point is simply that credit cards and the electronic records that they generate can greatly simplify the process of tracking your spending. I doubt any study out there accounts for the people who are specifically using those benefits and what effect it has on their spending."
},
{
"docid": "302152",
"title": "",
"text": "Sign Up to Just Been Paid for FREE INFORMATION to get started to make money daily with JSS Tripler. You can get no obligation free information to evaluate JSS Tripler further and find out why, many others like YOU who has been searching to make money online has found out how to make passive daily income with no sponsoring required in JSS Tripler. You can sign up free and seconds away from receiving information to help you get started and making money! I want to personaly thank you for taking the time to read my bonus offer. You'll see in a moment that it is truly the Best Bonus Ever offered for the Just Been Paid Reviews Program. And I do mean ever. Let's get one thing clear from the begining. There's only one reason I'm promoting Just Been Paid Reviews Program : It Really Is That Good! And if you can't see the true power of this program than you're better off without it. Seriously. Just Been Paid Reviews Program has everything you need to start earning money online from the first week of aplying the techniques taught inside. That's why I want to be clear on this: Just Been Paid Reviews Program is by far the best package I've seen so far this entire year. And such a great product simply deserves a great bonus package. Period. And here's where I step in. But before I present to you my truly amazing bonus package for the Just Been Paid Reviews Program course I want to ask you something. And by God this is serious. Where do you consider yourself to be in this very moment? I mean... are you really happy with your current state of your financial situation? Seriously. This is not a trick question and you don't have to be ashamed to answer. There's no one here beside you and me. And you're the only one that can answer that question. Because you see...you're the only one that can change something in your life for the better."
},
{
"docid": "218793",
"title": "",
"text": "Mint.com does a pretty good job at this, for a free service, but it's mostly for personal finance. It looks at all of your transactions and tries to categorize them, and also allows you to create your own categories and filters. For example, when I started using it, it imported the last three months of my transactions and detected all of my 'coffee house' transactions. This is how I learned that I was spending about $90 a month going to Starbucks, rather than the $30 I had estimated. I know it's not a 'system' like an accounting outfit might use, but most accounting offices I've worked with have had their own home-brewed system."
},
{
"docid": "62439",
"title": "",
"text": "I just decided to start using GnuCash today, and I was also stuck in this position for around an hour before I figured out what to do exactly. The answer by @jldugger pointed me partially on the right track, so this answer is intended to help people waste less time in the future. (Note: All numbers have been redacted for privacy issues, but I hope the images are sufficient to allow you to understand what is going on. ) Upon successfully importing your transactions, you should be able to see your transactions in the Checking Account and Savings Account (plus additional accounts you have imported). The Imbalance account (GBP in my case) will be negative of whatever you have imported. This is due to the double-entry accounting system that GnuCash uses. Now, you will have to open your Savings Account. Note that except for a few transactions, most of them are going to Imbalance. These are marked out with the red rectangles. What you have to do, now, is to click on them individually and sort them into the correct account. Unfortunately (I do not understand why they did this), you cannot move multiple transactions at once. See also this thread. Fortunately, you only have to do this once. This is what your account should look like after it is complete. After this is done, you should not have to move any more accounts, since you can directly enter the transactions in the Transfer box. At this point, your Accounts tab should look like this: Question solved!"
},
{
"docid": "34778",
"title": "",
"text": "Ahh the vest. The mark of a Finance professional. Seriously, I don't know of any other person outside of a Finance career that wears it. My theory is that it's warm and it lessens the need to re-tuck your shirt every few minutes for those that don't have tailored shirts."
}
] |
4714 | Personal finance app where I can mark transactions as “reviewed”? | [
{
"docid": "584450",
"title": "",
"text": "\"On mint, you can create your own tags for transactions. So, you could create a tag called \"\"reviewed\"\" and tag each transaction as reviewed once you review it. I've done something similar to this called \"\"reimbursable expense\"\" to tag which purchases I made on behalf of someone else who is going to pay me back.\""
}
] | [
{
"docid": "421987",
"title": "",
"text": "Since then I had gotten a job at a supermarket stocking shelves, but recently got fired because I kept zoning out at work This is not a good sign for day trading, where you spend all day monitoring investments. If you start focusing on the interesting math problem and ignoring your portfolio, you can easily lose money. Not so big a problem for missed buy opportunities, but this could be fatal for missed sale opportunities. Realize that in day trading, if you miss the uptick, you can get caught in a stock that is now going down. And I agree with those who say that you aren't capitalized well enough to get started. You need significantly more capital so that you can buy a diversified portfolio (diversification is your limitation, not hedging). Let's say that you make money on two out of three stocks on average. What are the chances that you will lose money on three stocks in a row? One in twenty-seven. What if that happens on your first three stocks? What if your odds at starting are really one in three to make money? Then you'll lose money more than half the time on each of your first three stocks. The odds don't favor you. If you really think that finance would interest you, consider signing up for an internship at an investment management firm or hedge fund. Rather than being the person who monitors stocks for changes, you would be the person doing mathematical analysis on stock information. Focusing on the math problem over other things is then what you are supposed to be doing. If you are good at that, you should be able to turn that into a permanent job. If not, then go back to school somewhere. You may not like your schooling options, but they may be better than your work options at this time. Note that most internships will be easier to get if you imply that you are only taking a break from schooling. Avoid outright lying, but saying things like needing to find the right fit should work. You may even want to start applying to schools now. Then you can truthfully say that you are involved in the application process. Be open about your interest in the mathematics of finance. Serious math minds can be difficult to find at those firms. Given your finances, it is not practical to become a day trader. If you want proof, pick a stock that is less than $100. Found it? Write down its current price and the date and time. You just bought that stock. Now sell it for a profit. Ignore historical data. Just monitor the current price. Missed the uptick? Too bad. That's reality. Once you've sold it, pick another stock that you can afford. Don't forget to mark your price down for the trading commission. A quick search suggests that $7 a trade is a cheap price. Realize that you make two trades on each stock (buy and sell), so that's $14 that you need to make on every stock. Keep doing that until you've run out of money. Realize that that is what you are proposing to do. If you can make enough money doing that to replace a minimum wage job, then we're all wrong. Borrow a $100 from your mom and go to town. But as others have said, it is far more realistic to do this with a starting stake of $100,000 where you can invest in multiple stocks at once and spread your $7 trading fee over a hundred shares. Starting with $100, you are more likely to run out of money within ten stocks."
},
{
"docid": "478514",
"title": "",
"text": "\"I believe no-one who's in a legal line of business would tell you to default voluntarily on your obligations. Once you get an offer that's too good to be true, and for which you have to do something that is either illegal or very damaging to you - it is probably a scam. Also, if someone requires you to send any money without a prior written agreement - its probably a scam as well, especially in such a delicate matter as finances. Your friend now should also be worried about identity theft as he voluntary gave tons of personal information to these people. Bottom line - if it walks like a duck, talks like a duck and looks like a duck, it is probably a duck. Your friend had all the warning signs other than a huge neon light saying \"\"Scam\"\" pointing at these people, and he still went through it. For real debt consolidation companies, research well: online reviews, BBB ratings and reviews, time in business, etc. If you can't find any - don't deal with them. Also, if you get promises for debtors to out of the blue give up on some of their money - its a sign of a scam. Why would debtors reduce the debt by 60%? He's paying, he can pay, he is not on the way to bankruptcy (or is he?)? Why did he do it to begin with?\""
},
{
"docid": "493043",
"title": "",
"text": "It seems to be that your main point is this: No matter what, my chances cannot be worse than random and if my trading system has an edge that is greater than the percentage of the transaction that is transaction cost, then I am probabilistically likely to make a profit? In general, yes, that is true, but... Consider this very bad strategy: Buy one share of stock and sell it one minute later, and repeat this every minute of the day. Obviously you would bleed your account dry with fees. However, even this horrible strategy still meets your criteria because: if this bad strategy had an edge beyond the transaction fees you would likely still make a profit. In other words, your conclusion reduces to an uninteresting statement: If there were no transactions fees, then if your trading system has an edge then you will likely make a profit. Sorry to be the bearer of bad news, but IMHO, that statement, and others made in the question are just obvious things stated in convoluted ways. I don't want to discourage you from thinking about these things though. I personally really enjoy these type of thought experiments. I just feel you missed the mark on this one..."
},
{
"docid": "430900",
"title": "",
"text": "Unlike other responses, I am also not good with money. Actually, I understand personal finance well, but I'm not good at executing my financial life responsibly. Part is avoiding tough news, part is laziness. There are tools that can help you be better with your money. In the past, I used YNAB (You Need a Budget). (I'm not affiliated, and I'm not saying this product is better than others for OP.) Whether you use their software or not, their strategy works if you stick with it. Each time you get paid, allocate every dollar to categories where your budget tells you they need to be, prioritizing expenses, then bills, then debt reduction, then wealth building. As you spend money, mark it against those categories. Reconcile them as you spend the money. If you go over in one category (eating out for example), you have to take from another (entertainment). There's no penalties for going over, but you have to take from another category to cover it. So the trick to all of it is being honest with yourself, sticking to it, recording all expenditures, and keeping priorities straight. I used it for three months. Like many others, I saved enough the first month to pay the cost of the software. I don't remember why I stopped using it, but I wish I had not. I will start again soon."
},
{
"docid": "505953",
"title": "",
"text": "If you are downloading the app from legit stores [Apple store, Google Play], then it is fine. Adidas is indeed running a campain to get more users download the app and get exclusive shoes that they don't intend to sell in retail market. The adidas strategy seems to make the product exclusive and available only to individuals. Note you have to be in person and show photo ID at the adidas retail outlet, pay and pick-up the shoes. One can only register once per phone number. The reservation is random, first come first reserved. The person on facebook is trying to circumvent this by having quite a few people download the app and book. He is then looking at buying this from you. Not sure what would the price of shoes be and is the 350 EUR in addition to the price of the shoes that you need to pay the store. I couldn't find about Paris, but there were similar campaigns in US last December. WHY DO I HAVE TO REGISTER IN THE CONFIRMED APP? In order to have a chance to get a reservation through adidas Confirmed you need to sign up in the app. If you are able to get a reservation, we will use this information (plus your photo ID) to verify your identity when you pick up. WHAT ARE THE STEPS TO MAKE A RESERVATION? STEP 1: Create an account in the app, verify through SMS, and enable location services and push notifications. STEP 2: Follow @adidasoriginals on Twitter to learn when reservations open. STEP 3: Once the reservation period begins, open the app and navigate to a product page to select your size and confirm your reservation. You must be located within New York City, Chicago, or Los Angeles areas to participate. STEP 4: If you get a reservation within adidas Confirmed you will receive a retail location and timeframe for pickup within the app. STEP 5: Go to the designated location to complete purchase and receive product."
},
{
"docid": "344236",
"title": "",
"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).\""
},
{
"docid": "86304",
"title": "",
"text": "\"Your question is very broad. Whole books can and have been written on this topic. The right place to start is for you and your wife to sit down together and figure out your goals. Where do you want to be in 5 years, 25 years, 50 years? To quote Yogi Berra \"\"If you don't know where you are going, you'll end up someplace else.\"\" Let's go backwards. 50 Years I'm guessing the answer is \"\"retired, living comfortably and not having to worry about money\"\". You say you work an unskilled government job. Does that job have a pension program? How about other retirement savings options? Will the pension be enough or do you need to start putting money into the other retirement savings options? Career wise, do you want to be working as in unskilled government jobs until you retire, or do you want to retire from something else? If so, how do you get there? Your goals here will affect both your 25 year plan and your 5 year plan. Finally, as you plan for death, which will happen eventually. What do you want to leave for your children? Likely the pension will not be transferred to your children, so if you want to leave them something, you need to start planning ahead. 25 Years At this stage in your life, you are likely talking, college for the children and possibly your wife back at work (could happen much earlier than this, e.g., when the kids are all in school). What do you want for your children in college? Do you want them to have the opportunity to go without having to take on debt? What savings options are there for your children's college? Also, likely with all your children out of the house at college, what do you and your wife want to do? Travel? Give to charity? Own your own home? 5 Years You mention having children and your wife staying at home with them. Can your family live on just your income? Can you do that and still achieve your 50 and 25 year goals? If not, further education or training on your part may be needed. Are you in debt? Would you like to be out of debt in the next 5-10 years? I know I've raised more questions than answers. This is due mostly to the nature of the question you've asked. It is very personal, and I don't know you. What I find most useful is to look at where I want to be in the near, mid and long term and then start to build a plan for how I get there. If you have older friends or family who are where you want to be when you reach their age, talk to them. Ask them how they got there. Also, there are tons of resources out there to help you. I won't suggest any specific books, but look around at the local library or look online. Read reviews of personal finance books. Read many and see how they can give you the advice you need to reach your specific goals. Good luck!\""
},
{
"docid": "324931",
"title": "",
"text": "\"It's worth pointing out that most \"\"cash\"\" deals are actually debt financed, at least in part. A quick review of the 8K tells us they plan on debt financing the entire transaction with some senior notes and not use any of the 15B on their BS. This is fairly typical these days because debt is cheaper then the foregone interest on cash.\""
},
{
"docid": "315983",
"title": "",
"text": "Hey Forum, I recently had an update to the app where it now allows you to find out your markup percentage. All you have to do is put in your desired profit at the end of the month and then put in how many items you want to sell each month and the entire formula is calculated for you in less than a second. Extremely convenient and extremely time-saving. You can download the Android version here: https://play.google.com/store/apps/details?id=com.markupmagic.companymarkup&hl=en And the iOS here: https://itunes.apple.com/us/app/markup-magic-profit-calculator/id1183206273?mt=8 We are currently redoing the website so you can look out for that soon enough. :) As always, suggestions and comments are always welcome as we want this to be the best app it can be for users. Take care and have a wonderful time."
},
{
"docid": "213463",
"title": "",
"text": "I use the taxi app in the tri-citys it's way quicker then calling dispatch. It's as close to getting uber, in bc as far as I can tell. Gives you the dollar amount when booked and tells you can drivers name you're going to get then you can leave reviews on the cab driver as well. General wait time on busy nights is under 20mins. Try going through dispatch and its hours and many phone calls to get a cab. I'd call this a huge improvement."
},
{
"docid": "351584",
"title": "",
"text": "Generally, the paperwork realtors use is pre-written and pre-approved by the relevant State and real-estate organizations. The offers, contracts, etc etc a pretty straightforward and standard. You can ask a realtor for a small fee to arrange the documents for you (smaller than the usual 5% sellers' fee they charge, I would say 0.5% or a couple of hundreds of dollars flat fee would be enough for the work). You can try and get these forms yourself, sometimes you can buy them in the neighborhood Staples, or from various law firms and legal plans that sell standard docs. You can get a lawyer to go over it with you for almost nothing: I used the LegalZoom plan for documentation review, and it cost me $30 (business plan, individual is cheaper) to go over several purchase contracts ($30 is a monthly subscription, but you don't have to pay it for more than one month). But these are standard, so you do it once and you know how to read them all. If you have a legal plan from work, this may cover document review and preparation. Preparing a contract that is not a standard template can otherwise cost you hundreds of dollars. Title company will not do any paperwork for you except for the deed itself. They can arrange the deed and the recording, escrow and title insurance, but they will not write a contract for the parties to use. You have to come with the contract already in place, and with escrow instructions already agreed upon. Some jurisdictions require using a lawyer in a real-estate transaction. If you're in a jurisdiction (usually on a county level) that requires the transaction to go through a lawyer - then the costs will be higher."
},
{
"docid": "62439",
"title": "",
"text": "I just decided to start using GnuCash today, and I was also stuck in this position for around an hour before I figured out what to do exactly. The answer by @jldugger pointed me partially on the right track, so this answer is intended to help people waste less time in the future. (Note: All numbers have been redacted for privacy issues, but I hope the images are sufficient to allow you to understand what is going on. ) Upon successfully importing your transactions, you should be able to see your transactions in the Checking Account and Savings Account (plus additional accounts you have imported). The Imbalance account (GBP in my case) will be negative of whatever you have imported. This is due to the double-entry accounting system that GnuCash uses. Now, you will have to open your Savings Account. Note that except for a few transactions, most of them are going to Imbalance. These are marked out with the red rectangles. What you have to do, now, is to click on them individually and sort them into the correct account. Unfortunately (I do not understand why they did this), you cannot move multiple transactions at once. See also this thread. Fortunately, you only have to do this once. This is what your account should look like after it is complete. After this is done, you should not have to move any more accounts, since you can directly enter the transactions in the Transfer box. At this point, your Accounts tab should look like this: Question solved!"
},
{
"docid": "488127",
"title": "",
"text": "I would like to offer a different perspective here. The standard fee for a credit card transaction is typically on the order of 30 cents + 2.5% of the amount (the actual numbers vary, but this is the ballpark). This makes small charges frequently unprofitable for small merchants. Because of this they will often have minimum purchase requirements for credit/debit card payments. The situation changes for large retailers (think Wal-mart, Target, Safeway, Home Depot). I cannot find a citation for this right now, but large retailers are able to negotiate volume discounts from credit card companies (a guy who used to work in finance at Home Depot told me this once). Their transaction fees are MUCH lower than 30 cents + 2.5%. But you get the same reward points on your credit card/debit card regardless of where you swipe it. So my personal philosophy is: large chain - swipe away without guilt for any amount. Small merchant - use cash unless it's hundreds of dollars (and then they may give you a cash discount in that case). And make sure to carry enough cash for such situations. When I was a student, that was about $20 (enough for coffee or lunch at a small place)."
},
{
"docid": "126814",
"title": "",
"text": "I'd be a bit concerned about someone who wanted to transact that large of a transaction in cash. Also consider what you are going to do with the funds, if you deposit it, you will need to tell the bank where it comes from. Why does the bank want to know, because most legal businesses don't transact business with large sums of currency.. What does that tell you about the likelihood the person you are about to do business with is a criminal or involved in criminal affairs? The lower bill of sale price might be more than just to dodge taxes, it could be part of money laundering.. If they can turn right around and 'sell' the boat for $10K, or trade it in on a bigger boat for the same amount, and have a bill than says $4K, then they have just come up with a legal explanation for how they made 6 grand. and you could potentially be considered an accomplice if someone is checking up on their finances. Really, is it worth the risk."
},
{
"docid": "34239",
"title": "",
"text": "In my experience, Yelp reviews have accurately represented the quality of the establishment reviewed and have been right in line with my tastes and expectations. I find Google reviews perform comparatively worse. So far Yelp is the best tool I can find for quickly making decisions about where to spend my money."
},
{
"docid": "62047",
"title": "",
"text": "\"I think this question is perfectly on topic, and probably has been asked and answered many times. However, I cannot help myself. Here are some basics however: Personal Finance is not only about math. As a guy who \"\"took vector calculus just for fun\"\", I have learned that superior math skills do not translate into superior net worth. Personal finance is about 50% behavior. Take a look at the housing crisis, car loans, or payday lenders and you will understand that the desire to be accepted by others often trumps the math surrounding a transaction. Outline your goals What is it that you want in life? A pile of money or to retire early? What does your business look like? How much cash will you need? Do you want to own a ton of rental properties? How does all this happen (set intermediate goals). Then get on a budget A budget is a plan to spend your money in advance. Stick to it. From there you can see how much money you have to implement various goals. Are your goals to aggressive? This is really important as people have a tendency to spend more money then they have. Often times when people receive a bonus at work, they spend that one bonus on two or three times over. A budget will prevent this from happening. Get an Emergency Fund Without an emergency fund, you be subject to the financial whims of people involved in your own life and that of the broader marketplace. Once you have one, you are free to invest with impunity and have less stress in a world that deals out plenty. Bad things will happen to you financially, protect against them. The best first investments are simple: Invest in yourself. Find a way to make a very healthy income with upward mobility. Also get out and stay out of debt. These things are not sexy, but they pay off in the long run. The next best investment is also simple: Index funds. These become the bench mark for all other investments. If you do not stand a good chance of beating the S&P 500 index fund, why bother? Just dump the money in the fund and sleep well at night.\""
},
{
"docid": "450830",
"title": "",
"text": "\"The bottom line is that you are kind of a terrible customer for them. Granted you are far better than one that does not pay his bills, but you are (probably) in the tier right above that. Rewards cards are used to lure the unorganized into out of control interest rates and late payments. These people are Capital One's, and others, best customers. They have traded hundreds of dollars in interest payments for a couple of dollars in rewards. The CC company says: \"\"YUMMY\"\"! You, on the other hand, cut into their \"\"meager\"\" profits from fees collected from your transactions. Why should they help you make more money? Why should they further cut into your profits? Response to comment: Given your comment I think the bottom line is a matter of perspective. You seem like a logical, altruistic type person who probably seeks a win-win situation in business dealings. This differs from CC companies they operate to seek one thing: enslavement. BTW the \"\"terrible customer\"\" remark should be taken as a compliment. After you get past the marketing lies you begin to see what reward programs and zero percent financing is all about. How do most people end up with 21%+ interest rates? They started with a zero percent balance loan, and was late for a payment. Reward cards work a bit differently. Studies show that people tend to spend about 17% more when they use a reward card. I've caught myself ordering an extra appetizer or beer and have subsequently stopped using a reward card for things I can make a decision at the time of purchase. For people with tight budgets this leads to debt. My \"\"meager\"\" profits paragraph makes sense when you understand the onerous nature of CC companies. They are not interested in earning 2% on purchases (charge 3% and give back 1%) for basically free money. You rightly see this as what should be a win-win for all parties involved. Thus the meager in quotation marks. CC companies are willing to give back 1% and charge 3% if you then pay 15% or more on your balance. Some may disagree with me on the extracting nature of CC companies, but they are wrong. I like him as an actor, but I don't believe Samuel Jackson's lines.\""
},
{
"docid": "309909",
"title": "",
"text": "Are you allowed to have two personal current accounts with a debit card attached to each one? Yes, you may have as many current accounts you want, but you should ask why should I have more than one. It is cumbersome and time consuming to keep track of ongoing incoming credits and outgoing debits. Open to bank fraud too, if you aren't careful. If yes, can a sole trader in the UK use the second personal account for business transactions? Yes, but no payments to the business. At the end of the year you file you P11D, even if you have a business bank account. You would need to justify the expenses by keeping the bills and stuff. As it will be a personal account, you have to little more careful, not to mix personal and business expenses. If you are allowed to use a second personal account for business transactions, then why would someone choose to open a business bank account, where you have to pay? What are the benefits? First of all no company will pay into you personal account, for any transactions, they need to pay you. They will only pay to an account registered with the business, with whom they are dealing with. Benefits are you have your business expenses sorted out in one account and personal expenses in other. Pure business expenses comes out of the business account, rather than from your personal purse, keeps the accounts smooth. No need to sort out expenses at the end of each quarter or at the end of each month."
},
{
"docid": "564180",
"title": "",
"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."
}
] |
4714 | Personal finance app where I can mark transactions as “reviewed”? | [
{
"docid": "450819",
"title": "",
"text": "Not web-based, but both Moneydance and You Need A Budget allow this."
}
] | [
{
"docid": "553643",
"title": "",
"text": "Third year here, and let me echo what everybody below is saying: math, math, math. That being said, most programs will give you a chance depending on your quant score from the gmat/gre. It had better be high though, low seven hundreds wont even garner a look from any school in the top 20 (and your quant should be higher than your verbal). From what it looks like from your background it sounds like the masters would be helpful (although a masters in econ wont be as much of a help as you think; finance is a sub field of econ, and so to justify our work we have to distinguish ourselves as much as we can...). My advice is use the masters to take probability theory, and statistics courses (or econometrics) and as many of them as you can. My next advice is apply to as many schools as you can afford and stagger the applications across school rankings. Some of the foreign students in my program have told me that they sent out dozens of applications and that even 100 apps is not unusual. I call it the shotgun approach. Third I will agree with some of the other comments in that you will need less math for corporate stuff and or behavioral/experimental stuff. BUT it is unlikely that any school will take that into consideration. I cant think of any other phd student that I have talked to, from many other programs, that don't have to take asset pricing and other theory courses. PhD programs start very generally and then you are allowed to specialize as time goes on. Basically, expect this shit to be hard. Finance profs are some of the highest paid in academia, which means there is an insane amount of applicants for each spot. In my program we average 400 qualified applicants a year for a meager three spots. And many of the applicants will already have Phds in physics, math, or engineering (they get tired of making no money as a post doc, and decide to come for another one in finance where they can get paid). Not to discourage you at all, but revise your expectations."
},
{
"docid": "584450",
"title": "",
"text": "\"On mint, you can create your own tags for transactions. So, you could create a tag called \"\"reviewed\"\" and tag each transaction as reviewed once you review it. I've done something similar to this called \"\"reimbursable expense\"\" to tag which purchases I made on behalf of someone else who is going to pay me back.\""
},
{
"docid": "144561",
"title": "",
"text": "\"An international Outlook (in this case Sweden in European Union). According to laws and regulations large cash transactions are considered conspicuous. The law makers might have reasoned is that cash transactions can be used in as example: - financing terrorism - avoiding taxes - buying or selling illegal goods such as drugs or stolen items - general illegal transactions such as paying bribes Starting there, all banks (at least in Europe) are required to report all suspicious transactions to the relevant authorities (in Sweden it is Finanspolisen, roughly the Financial Police). This is regardless of how the transactions are performed, in cash or otherwise. In order to monitor this all banks in Sweden are required to \"\"know the customers\"\", as example where does money come from and go to in general. In addition special software monitors all transactions and flags suspicious patterns for further investigation and possibly notification of the police. So, at least in Sweden: there is no need to get permission from the FBI to withdraw cash. You will however be required to describe the usage of the Money and your description will be kept and possibly sent to the Financial police. The purpose is not to hinder legitimate transactions, but to Catch illegal activities.\""
},
{
"docid": "394191",
"title": "",
"text": "If this isn't a case where you would be willing to forgive the debt if they can't pay, it's a business transaction, not a friend transaction. Establish exactly what the interest rate will be, what the term of the loan is, whether periodic payments are required, how much is covered by those payments vs. being due at the end of the term as a balloon payment, whether they can make additional payments to reduce the principal early... Get it all in writing and signed by all concerned before any money changes hands. Consider having a lawyer review the language before signing. If the loan is large enough that it might incur gift taxes, then you may want to go the extra distance to make it a real, properly documented, intra-family loan. To do this you must charge (of at least pay taxes on) at least a certain minimal interest rate, and they have to make regular payments (or you can gift them the payments but you still won't up paying tax on the interest income). In this case you definitely want a lawyer to draw up the papers, I think. There are services on the web Antioch specialize in helping to set this up properly, and which offer services such as bookkeeping and monthly billing (aT extra cost) to make it less hassle for the lender. If the loan will be structured as a mortgage on the borrower's house -- making the interest deductible for the borrower in the US -- there are additional forms that need to be filled. The services can help with that too, for appropriate fees. Again, this probably wants experts writing the agreement, to make sure it's properly written for where you and the borrower live. Caveat: all the above is assuming USA. Rules may be very different elsewhere. I've done a formal intractability mortgage -- mostly to avoid gift tax -- and it wasn't too awful a hassle. Your mileage will vary."
},
{
"docid": "478514",
"title": "",
"text": "\"I believe no-one who's in a legal line of business would tell you to default voluntarily on your obligations. Once you get an offer that's too good to be true, and for which you have to do something that is either illegal or very damaging to you - it is probably a scam. Also, if someone requires you to send any money without a prior written agreement - its probably a scam as well, especially in such a delicate matter as finances. Your friend now should also be worried about identity theft as he voluntary gave tons of personal information to these people. Bottom line - if it walks like a duck, talks like a duck and looks like a duck, it is probably a duck. Your friend had all the warning signs other than a huge neon light saying \"\"Scam\"\" pointing at these people, and he still went through it. For real debt consolidation companies, research well: online reviews, BBB ratings and reviews, time in business, etc. If you can't find any - don't deal with them. Also, if you get promises for debtors to out of the blue give up on some of their money - its a sign of a scam. Why would debtors reduce the debt by 60%? He's paying, he can pay, he is not on the way to bankruptcy (or is he?)? Why did he do it to begin with?\""
},
{
"docid": "589130",
"title": "",
"text": "\"Good. Although I could see their case for having opt-in location sharing to \"\"help them improve their service\"\" as knowing where potential customers are located would enable them to know where more cars are needed during certain times *before* bookings start to come in. eg. if they see thousands of their app users are at a sports game or concert they might send cars to the location in advance to get faster turnaronud times on bookings that will likely come in once people start to leave the venue. But yeah, this should 100% be an opt-in and should be completely anonymised. --- But yeah, personally I'd never enable it, however I can see the case for why it might make the service better.\""
},
{
"docid": "17092",
"title": "",
"text": "I work in marketing. Finance is probably the safest route with regards to opportunity and stability. Marketing can be expendable. Finance usually can't. That being said, it really depends on your personality type. Marketing people and Finance people are two different breeds. If you're the type that likes a very linear, matter-of-fact field, stick to finance where numbers don't lie. If your more of an extrovert who likes to think creatively in a field of a lot of unknowns, marketing may be the way to go."
},
{
"docid": "344236",
"title": "",
"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).\""
},
{
"docid": "309909",
"title": "",
"text": "Are you allowed to have two personal current accounts with a debit card attached to each one? Yes, you may have as many current accounts you want, but you should ask why should I have more than one. It is cumbersome and time consuming to keep track of ongoing incoming credits and outgoing debits. Open to bank fraud too, if you aren't careful. If yes, can a sole trader in the UK use the second personal account for business transactions? Yes, but no payments to the business. At the end of the year you file you P11D, even if you have a business bank account. You would need to justify the expenses by keeping the bills and stuff. As it will be a personal account, you have to little more careful, not to mix personal and business expenses. If you are allowed to use a second personal account for business transactions, then why would someone choose to open a business bank account, where you have to pay? What are the benefits? First of all no company will pay into you personal account, for any transactions, they need to pay you. They will only pay to an account registered with the business, with whom they are dealing with. Benefits are you have your business expenses sorted out in one account and personal expenses in other. Pure business expenses comes out of the business account, rather than from your personal purse, keeps the accounts smooth. No need to sort out expenses at the end of each quarter or at the end of each month."
},
{
"docid": "493469",
"title": "",
"text": "> Every Yelp businesses gets same Yelp treatment. This statement is untrue. I want people to see something fun. I live in LA and am on Yelp quite a bit. After having used Yelp for years, I needed to buy a particular couch. That got me into looking for interior designers, and I stumbled upon this wonderful person: http://www.yelp.com/biz/asd-interiors-burbank-2 Wow - one star. That's horrid. Why would I ever **20 filtered reviews**. Uh. Ok - let's see what happened here. *20 five star reviews, written at different dates and times by different people who are clearly not bots. The only non-filtered review is a one-star review.* Yelp is one of the most evil businesses I've ever seen, because they've so casually buried her. You could make a case for many of those 5 star reviews - they're all the only review the person has ever posted, etc. But I see a few in there from people with MANY reviews and MANY friends. Those aren't fake, and there's NO WAY you could have designed a filter to remove them automatically. Look at the review by Monica A. Tell me that a filter caught that review. Yelp, as a business, intentionally sinks small businesses if they don't agree to the shakedown. It's amazing to see it so clearly. Hope you enjoy the example."
},
{
"docid": "218793",
"title": "",
"text": "Mint.com does a pretty good job at this, for a free service, but it's mostly for personal finance. It looks at all of your transactions and tries to categorize them, and also allows you to create your own categories and filters. For example, when I started using it, it imported the last three months of my transactions and detected all of my 'coffee house' transactions. This is how I learned that I was spending about $90 a month going to Starbucks, rather than the $30 I had estimated. I know it's not a 'system' like an accounting outfit might use, but most accounting offices I've worked with have had their own home-brewed system."
},
{
"docid": "170387",
"title": "",
"text": "\"Most of the work done as an analyst or associate depends on whether or not you are assigned to a deal at the time. If not, you're probably going to be working on pitch books, which is basically putting together a firm template-style powerpoint file \"\"pitching\"\" a company to a potential client. The pace is slower, but the work is boring. If you're on a deal, then the stress level is raised as you have to respond to client demands and timing immediately. You are typically doing some basic forms of analysis/modeling and then importing that into a powerpoint report. You are working on these reports endlessly, turning review comments from associates, VP's, and MD's. As you get higher up the chain you do more of the dealrunning (communicating to all the various parties to the deal, third party diligence, buy-side, etc.) and client-facing activities. You can find a lot of good info on the finance industry on wallstreetoasis.com. I'm personally in transaction services doing diligence work at a Big4, and I've always found WSO to be a good resource for at least basic info. You obviously need to weed out the people who are dumbasses/don't know anything (current students), but plenty of guys actually in the industry post regularly.\""
},
{
"docid": "324931",
"title": "",
"text": "\"It's worth pointing out that most \"\"cash\"\" deals are actually debt financed, at least in part. A quick review of the 8K tells us they plan on debt financing the entire transaction with some senior notes and not use any of the 15B on their BS. This is fairly typical these days because debt is cheaper then the foregone interest on cash.\""
},
{
"docid": "315983",
"title": "",
"text": "Hey Forum, I recently had an update to the app where it now allows you to find out your markup percentage. All you have to do is put in your desired profit at the end of the month and then put in how many items you want to sell each month and the entire formula is calculated for you in less than a second. Extremely convenient and extremely time-saving. You can download the Android version here: https://play.google.com/store/apps/details?id=com.markupmagic.companymarkup&hl=en And the iOS here: https://itunes.apple.com/us/app/markup-magic-profit-calculator/id1183206273?mt=8 We are currently redoing the website so you can look out for that soon enough. :) As always, suggestions and comments are always welcome as we want this to be the best app it can be for users. Take care and have a wonderful time."
},
{
"docid": "62047",
"title": "",
"text": "\"I think this question is perfectly on topic, and probably has been asked and answered many times. However, I cannot help myself. Here are some basics however: Personal Finance is not only about math. As a guy who \"\"took vector calculus just for fun\"\", I have learned that superior math skills do not translate into superior net worth. Personal finance is about 50% behavior. Take a look at the housing crisis, car loans, or payday lenders and you will understand that the desire to be accepted by others often trumps the math surrounding a transaction. Outline your goals What is it that you want in life? A pile of money or to retire early? What does your business look like? How much cash will you need? Do you want to own a ton of rental properties? How does all this happen (set intermediate goals). Then get on a budget A budget is a plan to spend your money in advance. Stick to it. From there you can see how much money you have to implement various goals. Are your goals to aggressive? This is really important as people have a tendency to spend more money then they have. Often times when people receive a bonus at work, they spend that one bonus on two or three times over. A budget will prevent this from happening. Get an Emergency Fund Without an emergency fund, you be subject to the financial whims of people involved in your own life and that of the broader marketplace. Once you have one, you are free to invest with impunity and have less stress in a world that deals out plenty. Bad things will happen to you financially, protect against them. The best first investments are simple: Invest in yourself. Find a way to make a very healthy income with upward mobility. Also get out and stay out of debt. These things are not sexy, but they pay off in the long run. The next best investment is also simple: Index funds. These become the bench mark for all other investments. If you do not stand a good chance of beating the S&P 500 index fund, why bother? Just dump the money in the fund and sleep well at night.\""
},
{
"docid": "493671",
"title": "",
"text": "\"i'm absolutely a newcomer in economics and i wish to understand how things work around finance. This is a pretty loaded question. To understand finance, you need the basics of economics. In almost every economics school in the country, you first study microeconomics and then economics. So, we'll start with micro. One of, if not the, most popular books is \"\"Principles of Microeconomics\"\" by Mankiw. This book covers the fundamentals of micro econ (opportunity, supply, demand, consumer choice, production, costs, basic game theory, and allocation of resources) in a clear and effective manner. It's designed for the novice and very easy to read. Like Mankiw's other book, \"\"Principles of Macroeconomics\"\" is also top notch. There is some overlap in key areas (i.e. opportunity cost, supply, demand, indifference curves, elasticity, taxation) because they are fundamental to economics and the overlap will always be there, but from there the book goes into key macro concepts like GDP, CPI, Employment, Monetary and Fiscal policy, and Inflation. An excellent intro primer indeed. Now that you have the fundamentals down, it's time to learn about finance. The best resource, in my opinion, is \"\"Financial Markets\"\" by Robert Shiller on Open Yale Courses. I've personally taken Prof. Shiller's class last semester, and the man is brilliant. The lectures cover every single aspect of finance and can turn the complete novice into a fairly experienced finance student. The first lecture also covers all the math required so you don't get lost at any point. Be warned, however, that the course is very deep. We used Fabozzi's textbook \"\"Foundations of Financial Markets and Institutions,\"\" which is over 600 pages deep and we were required to know essentially all of it. Watch the videos and follow the readings and you'll be a finance whiz soon! Financial Markets on Open Yale And that's your roadmap to what you want. There are other economics books and it's true that the first few chapters of both Mankiw books are largely the same, but that's because any economics course always covers the basics first. If you want to look at other books, Krugman has written some good books as well. Be sure to read reviews because some books are meant for 2nd/3rd year econ students, so you don't want to get a too advanced book. At the novice level, we're interested in understanding the basic concepts so we can master Fabozzi. As for finance books - Fabozzi teaches you all the fundamentals of financial markets so you've got a powerful foundation. From there you can expand to more niche books such as books on investing or on monetary policy or whatever you want. Best of luck!\""
},
{
"docid": "129350",
"title": "",
"text": "There are many reasons for buying new versus used vehicles. Price is not the only factor. This is an individual decision. Although interesting to examine from a macro perspective, each vehicle purchase is made by an individual, weighing many factors that vary in importance by that individual, based upon their specific needs and values. I have purchased both new and used cars, and I have weighted each of these factors as part of each decision (and the relative weightings have varied based upon my individual situation). Read Freakonomics to gain a better understanding of the reasons why you cannot find a good used car. The summary is the imbalance of knowledge between the buyer and seller, and the lack of trust. Although much of economics assumes perfect market information, margin (profit) comes from uncertainty, or an imbalance of knowledge. Buying a used car requires a certain amount of faith in people, and you cannot always trust the trading partner to be honest. Price - The price, or more precisely, the value proposition of the vehicle is a large concern for many of us (larger than we might prefer that it be). Selection - A buyer has the largest selection of vehicles when they shop for a new vehicle. Finding the color, features, and upgrades that you want on your vehicle can be much harder, even impossible, for the used buyer. And once you have found the exact vehicle you want, now you have to determine whether the vehicle has problems, and can be purchased at your price. Preference - A buyer may simply prefer to have a vehicle that looks new, smells new, is clean, and does not have all the imperfections that even a gently used vehicle would exhibit. This may include issues of pride, image, and status, where the buyer may have strong emotional or psychological needs to statisfy through ownership of a particular vehicle with particular features. Reviews - New vehicles have mountains of information available to buyers, who can read about safety and reliability ratings, learn about problems from the trade press, and even price shop and compare between brands and models. Contrasted with the minimal information available to used vehicle shoppers. Unbalanced Knowledge - The seller of a used car has much greater knowledge of the vehicle, and thus much greater power in the negotiation process. Buying a used car is going to cost you more money than the value of the car, unless the seller has poor knowledge of the market. And since many used cars are sold by dealers (who have often taken advantage of the less knowledgeable sellers in their transaction), you are unlikely to purchase the vehicle at a good price. Fear/Risk - Many people want transportation, and buying a used car comes with risk. And that risk includes both the direct cost of repairs, and the inconvenience of both the repair and the loss of work that accompanies problems. Knowing that the car has not been abused, that there are no hidden or lurking problems waiting to leave you stranded is valuable. Placing a price on the risk of a used car is hard, especially for those who only want a reliable vehicle to drive. Placing an estimate on the risk cost of a used car is one area where the seller has a distinct advantage. Warranties - New vehicles come with substantial warranties, and this is another aspect of the Fear/Risk point above. A new vehicle does not have unknown risk associated with the purchase, and also comes with peace of mind through a manufacturer warranty. You can purchase a used car warranty, but they are expensive, and often come with (different) problems. Finance Terms - A buyer can purchase a new vehicle with lower financing rate than a used vehicle. And you get nothing of value from the additional finance charges, so the difference between a new and used car also includes higher finance costs. Own versus Rent - You are assuming that people actually want to 'own' their cars. And I would suggest that people want to 'own' their car until it begins to present problems (repair and maintenance issues), and then they want a new vehicle to replace it. But renting or leasing a vehicle is an even more expensive, and less flexible means to obtain transportation. Expense Allocation - A vehicle is an expense. As the owner of a vehicle, you are willing to pay for that expense, to fill your need for transportation. Paying for the product as you use the product makes sense, and financing is one way to align the payment with the consumption of the product, and to pay for the expense of the vehicle as you enjoy the benefit of the vehicle. Capital Allocation - A buyer may need a vehicle (either to commute to work, school, doctor, or for work or business), but either lack the capital or be unwilling to commit the capital to the vehicle purchase. Vehicle financing is one area banks have been willing to lend, so buying a new vehicle may free capital to use to pay down other debts (credit cards, loans). The buyer may not have savings, but be able to obtain financing to solve that need. Remember, people need transportation. And they are willing to pay to fill their need. But they also have varying needs for all of the above factors, and each of those factors may offer value to different individuals."
},
{
"docid": "351340",
"title": "",
"text": "In my opinion, every person, regardless of his or her situation, should be keeping track of their personal finances. In addition, I believe that everyone, regardless of their situation, should have some sort of budget/spending plan. For many people, it is tempting to ignore the details of their finances and not worry about it. After all, the bank knows how much money I have, right? I get a statement from them each month that shows what I have spent, and I can always go to the bank's website and find out how much money I have, right? Unfortunately, this type of thinking can lead to several different problems. Overspending. In olden days, it was difficult to spend more money than you had. Most purchases were made in cash, so if your wallet had cash in it, you could spend it, and when your wallet was empty, you were required to stop spending. In this age of credit and electronic transactions, this is no longer the case. It is extremely easy to spend money that you don't yet have, and find yourself in debt. Debt, of course, leads to interest charges and future burdens. Unpreparedness for the future. Without a plan, it is difficult to know if you have saved up enough for large future expenses. Will you have enough money to pay the water bill that only shows up once every three months or the property tax bill that only shows up once a year? Will you have enough money to pay to fix your car when it breaks? Will you have enough money to replace your car when it is time? How about helping out your kids with college tuition, or funding your retirement? Without a plan, all of these are very difficult to manage without proper accounting. Anxiety. Not having a clear picture of your finances can lead to anxiety. This can happen whether or not you are actually overspending, and whether or not you have enough saved up to cover future expenses, because you simply don't know if you have adequately covered your situation or not. Making a plan and doing the accounting necessary to ensure you are following your plan can take the worry out of your finances. Fear of spending. There was an interesting question from a user last year who was not at all in trouble with his finances, yet was always afraid to spend any money, because he didn't have a budget/spending plan in place. If you spend money on a vacation, are you putting your property tax bill in jeopardy? With a good budget in place, you can know for sure whether or not you will have enough money to pay your future expenses and can spend on something else today. This can all be done with or without the aid of software, but like many things, a computer makes the job easier. A good personal finance program will do two things: Keeps track of your spending and balances, apart from your bank. The bank can only show you things that have cleared the bank. If you set up future payments (outside of the bank), or you write a check that has not been cashed yet, or you spend money on a credit card and have not paid the bill yet, these will not be reflected in your bank balance online. However, if you manually enter these things into your own personal finance program, you can see how much money you actually have available to spend. Lets you plan for future spending. The spending plan, or budget, lets you assign a job to every dollar that you own. By doing this, you won't spend rent money at the bar, and you won't spend the car insurance money on a vacation. I've written before about the details on how some of these software packages work. To answer your question about double-entry accounting: Some software packages do use true double-entry accounting (GnuCash, Ledger) and some do not (YNAB, EveryDollar, Mvelopes). In my opinion, double-entry accounting is an unnecessary complication for personal finances. If you don't already know what double-entry accounting is, stick with one of the simpler solutions."
},
{
"docid": "151391",
"title": "",
"text": "Your assets are marked to market. If you buy at X, and the market is bidding at 99.9% * X then you've already lost 0.1%. This is a market value oriented way of looking at costs. You could always value your assets with mark to model, and maybe you do, but no one else will. Just because you think the stock is worth 2*X doesn't mean the rest of the world agrees, evidenced by the bid. You surely won't get any margin loans based upon mark to model. Your bankers won't be convinced of the valuation of your assets based upon mark to model. By strictly a market value oriented way of valuing assets, there is a bid/ask cost. more clarification Relative to littleadv, this is actually a good exposition between the differences between cash and accrual accounting. littleadv is focusing completely on the cash cost of the asset at the time of transaction and saying that there is no bid/ask cost. Through the lens of cash accounting, that is 100% correct. However, if one uses accrual accounting marking assets to market (as we all do with marketable assets like stocks, bonds, options, etc), there may be a bid/ask cost. At the time of transaction, the bids used to trade (one's own) are exhausted. According to exchange rules that are now practically uniform: the highest bid is given priority, and if two bids are bidding the exact same highest price then the oldest bid is given priority; therefore the oldest highest bid has been exhausted and removed at trade. At the time of transaction, the value of the asset cannot be one's own bid but the highest oldest bid leftover. If that highest oldest bid is lower than the price paid (even with liquid stocks this is usually the case) then one has accrued a bid/ask cost."
}
] |
4714 | Personal finance app where I can mark transactions as “reviewed”? | [
{
"docid": "324833",
"title": "",
"text": "I had exactly the same need and I ended up using BillGuard and I like it. At the end of the day, it sends an alert where I need to review all the transactions - takes hardly 5seconds and I am on top of all transactions. From the last 1yr I have found 1 fraudulent and 2 duplicate charge using billguard. Didn't really save a ton of money but its useful to understand how you use your credit card. Don't work for or promoting the app, its just useful."
}
] | [
{
"docid": "287991",
"title": "",
"text": "I have about $1K in savings, and have been told that you should get into investment and saving for retirement early. I make around $200 per week, which about $150 goes into savings. That's $10k per year. The general rule of thumb is that you should have six months income as an emergency fund. So your savings should be around $5k. Build that first. Some argue that the standard should be six months of living expenses rather than income. Personally, I think that this example is exactly why it is income rather than living expenses. Six months of living expenses in this case would only be $1250, which won't pay for much. And note that living expenses can only be calculated after the fact. If your estimate of $50 a week is overly optimistic, you might not notice for months (until some large living expense pops up). Another problem with using living expenses as the measure is that if you hold down your living expenses to maximize your savings, this helps both measures. Then you hit your savings target, and your living expenses increase. So you need more savings. By contrast, if your income increases but your living expenses do not, you still need more savings but you can also save more money. Doesn't really change the basic analysis though. Either way you have an emergency savings target that you should hit before starting your retirement savings. If you save $150 per week, then you should have around $4k in savings at the beginning of next year. That's still low for an emergency fund by the income standard. So you probably shouldn't invest next year. With a living expenses standard, you could have $6250 in savings by April 15th (deadline for an IRA contribution that appears in the previous tax year). That's $5000 more than the $1250 emergency fund, so you could afford an IRA (probably a Roth) that year. If you save $7500 next year and start with $4k in savings (under the income standard for emergency savings), that would leave you with $11,500. Take $5500 of that and invest in an IRA, probably a Roth. After that, you could make a $100 deposit per week for the next year. Or just wait until the end. If you invested in an IRA the previous year because you decided use the living expenses standard, you would only have $6500 at the end of the year. If you wait until you have $6750, you could max out your IRA contribution. At that point, your excess income for each year would be larger than the maximum IRA contribution, so you could max it out until your circumstances change. If you don't actually save $3k this year and $7500 next year, don't sweat it. A college education is enough of an investment at your age. Do that first, then emergency savings, then retirement. That will flip around once you get a better paying, long term job. Then you should include retirement savings as an expected cost. So you'd pay the minimum required for your education loans and other required living expenses, then dedicate an amount for retirement savings, then build your emergency savings, then pay off your education loans (above the minimum payment). This is where it can pay to use the more aggressive living expenses standard, as that allows you to pay off your education loans faster. I would invest retirement savings in a nice, diversified index fund (or two since maintaining the correct stock/bond mix of 70%-75% stocks is less risky than investing in just bonds much less just stocks). Investing in individual stocks is something you should do with excess money that you can afford to lose. Secure your retirement first. Then stock investments are gravy if they pan out. If they don't, you're still all right. But if they do, you can make bigger decisions, e.g. buying a house. Realize that buying individual stocks is about more than just buying an app. You have to both check the fundamentals (which the app can help you do) and find other reasons to buy a stock. If you rely on an app, then you're essentially joining everyone else using that app. You'll make the same profit as everyone else, which won't be much because you all share the profit opportunities with the app's system. If you want to use someone else's system, stick with mutual funds. The app system is actually more dangerous in the long term. Early in the app's life cycle, its system can produce positive returns because a small number of people are sharing the benefits of that system. As more people adopt it though, the total possible returns stay the same. At some point, users saturate the app. All the possible returns are realized. Then users are competing with each other for returns. The per user returns will shrink as usage grows. If you have your own system, then you are competing with fewer people for the returns from it. Share the fundamental analysis, but pick your stocks based on other criteria. Fundamental analysis will tell you if a stock is overvalued. The other criteria will tell you which undervalued stock to buy."
},
{
"docid": "351584",
"title": "",
"text": "Generally, the paperwork realtors use is pre-written and pre-approved by the relevant State and real-estate organizations. The offers, contracts, etc etc a pretty straightforward and standard. You can ask a realtor for a small fee to arrange the documents for you (smaller than the usual 5% sellers' fee they charge, I would say 0.5% or a couple of hundreds of dollars flat fee would be enough for the work). You can try and get these forms yourself, sometimes you can buy them in the neighborhood Staples, or from various law firms and legal plans that sell standard docs. You can get a lawyer to go over it with you for almost nothing: I used the LegalZoom plan for documentation review, and it cost me $30 (business plan, individual is cheaper) to go over several purchase contracts ($30 is a monthly subscription, but you don't have to pay it for more than one month). But these are standard, so you do it once and you know how to read them all. If you have a legal plan from work, this may cover document review and preparation. Preparing a contract that is not a standard template can otherwise cost you hundreds of dollars. Title company will not do any paperwork for you except for the deed itself. They can arrange the deed and the recording, escrow and title insurance, but they will not write a contract for the parties to use. You have to come with the contract already in place, and with escrow instructions already agreed upon. Some jurisdictions require using a lawyer in a real-estate transaction. If you're in a jurisdiction (usually on a county level) that requires the transaction to go through a lawyer - then the costs will be higher."
},
{
"docid": "129350",
"title": "",
"text": "There are many reasons for buying new versus used vehicles. Price is not the only factor. This is an individual decision. Although interesting to examine from a macro perspective, each vehicle purchase is made by an individual, weighing many factors that vary in importance by that individual, based upon their specific needs and values. I have purchased both new and used cars, and I have weighted each of these factors as part of each decision (and the relative weightings have varied based upon my individual situation). Read Freakonomics to gain a better understanding of the reasons why you cannot find a good used car. The summary is the imbalance of knowledge between the buyer and seller, and the lack of trust. Although much of economics assumes perfect market information, margin (profit) comes from uncertainty, or an imbalance of knowledge. Buying a used car requires a certain amount of faith in people, and you cannot always trust the trading partner to be honest. Price - The price, or more precisely, the value proposition of the vehicle is a large concern for many of us (larger than we might prefer that it be). Selection - A buyer has the largest selection of vehicles when they shop for a new vehicle. Finding the color, features, and upgrades that you want on your vehicle can be much harder, even impossible, for the used buyer. And once you have found the exact vehicle you want, now you have to determine whether the vehicle has problems, and can be purchased at your price. Preference - A buyer may simply prefer to have a vehicle that looks new, smells new, is clean, and does not have all the imperfections that even a gently used vehicle would exhibit. This may include issues of pride, image, and status, where the buyer may have strong emotional or psychological needs to statisfy through ownership of a particular vehicle with particular features. Reviews - New vehicles have mountains of information available to buyers, who can read about safety and reliability ratings, learn about problems from the trade press, and even price shop and compare between brands and models. Contrasted with the minimal information available to used vehicle shoppers. Unbalanced Knowledge - The seller of a used car has much greater knowledge of the vehicle, and thus much greater power in the negotiation process. Buying a used car is going to cost you more money than the value of the car, unless the seller has poor knowledge of the market. And since many used cars are sold by dealers (who have often taken advantage of the less knowledgeable sellers in their transaction), you are unlikely to purchase the vehicle at a good price. Fear/Risk - Many people want transportation, and buying a used car comes with risk. And that risk includes both the direct cost of repairs, and the inconvenience of both the repair and the loss of work that accompanies problems. Knowing that the car has not been abused, that there are no hidden or lurking problems waiting to leave you stranded is valuable. Placing a price on the risk of a used car is hard, especially for those who only want a reliable vehicle to drive. Placing an estimate on the risk cost of a used car is one area where the seller has a distinct advantage. Warranties - New vehicles come with substantial warranties, and this is another aspect of the Fear/Risk point above. A new vehicle does not have unknown risk associated with the purchase, and also comes with peace of mind through a manufacturer warranty. You can purchase a used car warranty, but they are expensive, and often come with (different) problems. Finance Terms - A buyer can purchase a new vehicle with lower financing rate than a used vehicle. And you get nothing of value from the additional finance charges, so the difference between a new and used car also includes higher finance costs. Own versus Rent - You are assuming that people actually want to 'own' their cars. And I would suggest that people want to 'own' their car until it begins to present problems (repair and maintenance issues), and then they want a new vehicle to replace it. But renting or leasing a vehicle is an even more expensive, and less flexible means to obtain transportation. Expense Allocation - A vehicle is an expense. As the owner of a vehicle, you are willing to pay for that expense, to fill your need for transportation. Paying for the product as you use the product makes sense, and financing is one way to align the payment with the consumption of the product, and to pay for the expense of the vehicle as you enjoy the benefit of the vehicle. Capital Allocation - A buyer may need a vehicle (either to commute to work, school, doctor, or for work or business), but either lack the capital or be unwilling to commit the capital to the vehicle purchase. Vehicle financing is one area banks have been willing to lend, so buying a new vehicle may free capital to use to pay down other debts (credit cards, loans). The buyer may not have savings, but be able to obtain financing to solve that need. Remember, people need transportation. And they are willing to pay to fill their need. But they also have varying needs for all of the above factors, and each of those factors may offer value to different individuals."
},
{
"docid": "450830",
"title": "",
"text": "\"The bottom line is that you are kind of a terrible customer for them. Granted you are far better than one that does not pay his bills, but you are (probably) in the tier right above that. Rewards cards are used to lure the unorganized into out of control interest rates and late payments. These people are Capital One's, and others, best customers. They have traded hundreds of dollars in interest payments for a couple of dollars in rewards. The CC company says: \"\"YUMMY\"\"! You, on the other hand, cut into their \"\"meager\"\" profits from fees collected from your transactions. Why should they help you make more money? Why should they further cut into your profits? Response to comment: Given your comment I think the bottom line is a matter of perspective. You seem like a logical, altruistic type person who probably seeks a win-win situation in business dealings. This differs from CC companies they operate to seek one thing: enslavement. BTW the \"\"terrible customer\"\" remark should be taken as a compliment. After you get past the marketing lies you begin to see what reward programs and zero percent financing is all about. How do most people end up with 21%+ interest rates? They started with a zero percent balance loan, and was late for a payment. Reward cards work a bit differently. Studies show that people tend to spend about 17% more when they use a reward card. I've caught myself ordering an extra appetizer or beer and have subsequently stopped using a reward card for things I can make a decision at the time of purchase. For people with tight budgets this leads to debt. My \"\"meager\"\" profits paragraph makes sense when you understand the onerous nature of CC companies. They are not interested in earning 2% on purchases (charge 3% and give back 1%) for basically free money. You rightly see this as what should be a win-win for all parties involved. Thus the meager in quotation marks. CC companies are willing to give back 1% and charge 3% if you then pay 15% or more on your balance. Some may disagree with me on the extracting nature of CC companies, but they are wrong. I like him as an actor, but I don't believe Samuel Jackson's lines.\""
},
{
"docid": "65957",
"title": "",
"text": "\"You Need A Budget is a nice budgeting tool that works on the desktop. It is more focused on manual entry and budgeting over auto-downloading and categorizing. It does support downloading transactions from banks and then importing the transaction files. You mentioned having \"\"trust issues\"\" with a bank and this would be safe as you don't enter your credentials into the app. It also has a mobile app that works well. Not exactly what you are looking for, but it would work in India and be safe if you have an untrustworthy bank and it would allow you to import transactions.\""
},
{
"docid": "17092",
"title": "",
"text": "I work in marketing. Finance is probably the safest route with regards to opportunity and stability. Marketing can be expendable. Finance usually can't. That being said, it really depends on your personality type. Marketing people and Finance people are two different breeds. If you're the type that likes a very linear, matter-of-fact field, stick to finance where numbers don't lie. If your more of an extrovert who likes to think creatively in a field of a lot of unknowns, marketing may be the way to go."
},
{
"docid": "471160",
"title": "",
"text": "\"This happened to my review, I had reviewed a new business, and created a yelp account for that reason. I also reviewed maybe 10 other businesses in two days so I wasn't a one and done account. My account was flagged, and my first review was put as filtered. In retrospect, it makes sense. They want to keep reviews up from consistent yelp users who review alot of businesses. I think if yelp sees a new account, it flags the first business that person reviews, until its established that person is a regular yelp user. I would guess this happens alot on yelp. Someone says \"\"Review my business, but make sure you review a few others too, so you look like a real user\"\" The algorithms they have try to catch people like I was. People who create an account to review one company, and then do 10 reviews in a one week span, only to never log in. These aren't really good reviews in the grand scheme of things. For me, I kept using Yelp, and consistently reviewing more businesses. My review was unflagged a few weeks ago, now that I have 40 or so reviews and add a few each week.\""
},
{
"docid": "126814",
"title": "",
"text": "I'd be a bit concerned about someone who wanted to transact that large of a transaction in cash. Also consider what you are going to do with the funds, if you deposit it, you will need to tell the bank where it comes from. Why does the bank want to know, because most legal businesses don't transact business with large sums of currency.. What does that tell you about the likelihood the person you are about to do business with is a criminal or involved in criminal affairs? The lower bill of sale price might be more than just to dodge taxes, it could be part of money laundering.. If they can turn right around and 'sell' the boat for $10K, or trade it in on a bigger boat for the same amount, and have a bill than says $4K, then they have just come up with a legal explanation for how they made 6 grand. and you could potentially be considered an accomplice if someone is checking up on their finances. Really, is it worth the risk."
},
{
"docid": "249450",
"title": "",
"text": "\"Split transactions are indispensable to anybody interested in accurately tracking their spending. If I go to the big-box pharmacy down the road to pick up a prescription and then also grab a loaf of bread and a jug of milk while there, then I'd want to enter the transaction into my software as: I desire entering precise data into the software so that I can rely on the reports it produces. Often, I don't need an exact amount and estimated category totals would have been fine, e.g. to inform budgeting, or compare to a prior period. However, in other cases, the expenses I'm tracking must be tracked accurately because I'd be using the total to claim an income tax deduction (or credit). Consider how Internet access might be commingled on the same bill with the home's cable TV service. One is a reasonable business expense and deduction for the work-at-home web developer, whereas the other is a personal non-deductible expense. Were split transaction capability not available, the somewhat unattractive alternatives are: Ignore the category difference and, say, categorize the entire transaction as the larger or more important category. But, this deliberately introduces error in the tracked data, rendering it useless for cases where the category totals need to be accurate, or, Split the transaction manually. This doesn't introduce error into the tracked data, but suffers another problem: It makes a lot of work. First, one would need to manually enter two (or more) top-level transactions instead of the single one with sub-amounts. Perhaps not that much more work than if a split were entered. Worse is when it comes time to reconcile: Now there are two (or more) transactions in the register, but the credit card statement has only one. Reconciling would require manually adding up those transactions from the register just to confirm the amount on the statement is correct. Major pain! I'd place split transaction capability near the top of the list of \"\"must have\"\" features for any finance management software.\""
},
{
"docid": "544765",
"title": "",
"text": "\"The whole point of the \"\"envelope system\"\" as I understand it is that it makes it easy to see that you are staying within your budget: If the envelope still has cash in it, then you still have money to spend on that budget category. If you did this with a bunch of debit cards, you would have to have a way to quickly and easily see the balance on that card for it to work. There is no physical envelope to look in. If your bank lets you check your balance with a cell-phone app I guess that would work. But at that point, why do you need separate debit cards? Just create a spreadsheet and update the numbers as you spend. The balance the bank shows is always going to be a little bit behind, because it takes time for transactions to make it through the system. I've seen on my credit cards that sometimes transactions show up the same day, but other times they can take several days or even a week or more. So keeping a spreadsheet would be more accurate, or at least, more timely. But all that said, I can check my bank balance and my credit card balances on web sites. I've never had a desire to check from a cell phone but at least some banks have such apps -- my daughter tells me she regularly checks her credit card balance from her cell phone. So I don't see why you couldn't do it with off-the-shelf technology. Side not, not really related to your question: I don't really see the point of the envelope system. Personally, I keep my checkbook electronically, using a little accounting app that I wrote myself so it's customized to my needs. I enter fixed bills, like insurance premiums and the mortgage payment, about a month in advance, so I can see that that money is already spoken for and just when it is going out. Besides that, what's the advantage of saying that you allot, say, $50 per month for clothes and $100 for gas for the car and $60 for snacks, and if you use up all your gas money this month than you can't drive anywhere even though you have money left in the clothes and snack envelopes? I mean, it makes good sense to say, \"\"The mortgage payment is due next week so I can't spend that money on entertainment, I have to keep it to pay the mortgage.\"\" But I don't see the point in saying, \"\"I can't buy new shoes because the shoe envelope is empty. I've accumulated $5000 in the shampoo account since I went bald and don't use shampoo any more, but that money is off limits for shoes because it's allocated to shampoo.\"\"\""
},
{
"docid": "151391",
"title": "",
"text": "Your assets are marked to market. If you buy at X, and the market is bidding at 99.9% * X then you've already lost 0.1%. This is a market value oriented way of looking at costs. You could always value your assets with mark to model, and maybe you do, but no one else will. Just because you think the stock is worth 2*X doesn't mean the rest of the world agrees, evidenced by the bid. You surely won't get any margin loans based upon mark to model. Your bankers won't be convinced of the valuation of your assets based upon mark to model. By strictly a market value oriented way of valuing assets, there is a bid/ask cost. more clarification Relative to littleadv, this is actually a good exposition between the differences between cash and accrual accounting. littleadv is focusing completely on the cash cost of the asset at the time of transaction and saying that there is no bid/ask cost. Through the lens of cash accounting, that is 100% correct. However, if one uses accrual accounting marking assets to market (as we all do with marketable assets like stocks, bonds, options, etc), there may be a bid/ask cost. At the time of transaction, the bids used to trade (one's own) are exhausted. According to exchange rules that are now practically uniform: the highest bid is given priority, and if two bids are bidding the exact same highest price then the oldest bid is given priority; therefore the oldest highest bid has been exhausted and removed at trade. At the time of transaction, the value of the asset cannot be one's own bid but the highest oldest bid leftover. If that highest oldest bid is lower than the price paid (even with liquid stocks this is usually the case) then one has accrued a bid/ask cost."
},
{
"docid": "505953",
"title": "",
"text": "If you are downloading the app from legit stores [Apple store, Google Play], then it is fine. Adidas is indeed running a campain to get more users download the app and get exclusive shoes that they don't intend to sell in retail market. The adidas strategy seems to make the product exclusive and available only to individuals. Note you have to be in person and show photo ID at the adidas retail outlet, pay and pick-up the shoes. One can only register once per phone number. The reservation is random, first come first reserved. The person on facebook is trying to circumvent this by having quite a few people download the app and book. He is then looking at buying this from you. Not sure what would the price of shoes be and is the 350 EUR in addition to the price of the shoes that you need to pay the store. I couldn't find about Paris, but there were similar campaigns in US last December. WHY DO I HAVE TO REGISTER IN THE CONFIRMED APP? In order to have a chance to get a reservation through adidas Confirmed you need to sign up in the app. If you are able to get a reservation, we will use this information (plus your photo ID) to verify your identity when you pick up. WHAT ARE THE STEPS TO MAKE A RESERVATION? STEP 1: Create an account in the app, verify through SMS, and enable location services and push notifications. STEP 2: Follow @adidasoriginals on Twitter to learn when reservations open. STEP 3: Once the reservation period begins, open the app and navigate to a product page to select your size and confirm your reservation. You must be located within New York City, Chicago, or Los Angeles areas to participate. STEP 4: If you get a reservation within adidas Confirmed you will receive a retail location and timeframe for pickup within the app. STEP 5: Go to the designated location to complete purchase and receive product."
},
{
"docid": "324931",
"title": "",
"text": "\"It's worth pointing out that most \"\"cash\"\" deals are actually debt financed, at least in part. A quick review of the 8K tells us they plan on debt financing the entire transaction with some senior notes and not use any of the 15B on their BS. This is fairly typical these days because debt is cheaper then the foregone interest on cash.\""
},
{
"docid": "597681",
"title": "",
"text": "I have not used Quicken; I've used GnuCash exclusively. It feels a bit rough with the UI: Balancing that, the data is stored in a gzip-compressed xml file. The compression is also optional, so you can save it as a plain xml file. This means that you have some hope of recovery if you wind up with a corrupted file. (And for programmer-types, you could keep it in source control for additional peace of mind.) My wife and I have been using it for several years now, and has worked well for us. LWN.net had a pair of Grumpy Editor reviews on personal finance software here and here which would be worth reading."
},
{
"docid": "302152",
"title": "",
"text": "Sign Up to Just Been Paid for FREE INFORMATION to get started to make money daily with JSS Tripler. You can get no obligation free information to evaluate JSS Tripler further and find out why, many others like YOU who has been searching to make money online has found out how to make passive daily income with no sponsoring required in JSS Tripler. You can sign up free and seconds away from receiving information to help you get started and making money! I want to personaly thank you for taking the time to read my bonus offer. You'll see in a moment that it is truly the Best Bonus Ever offered for the Just Been Paid Reviews Program. And I do mean ever. Let's get one thing clear from the begining. There's only one reason I'm promoting Just Been Paid Reviews Program : It Really Is That Good! And if you can't see the true power of this program than you're better off without it. Seriously. Just Been Paid Reviews Program has everything you need to start earning money online from the first week of aplying the techniques taught inside. That's why I want to be clear on this: Just Been Paid Reviews Program is by far the best package I've seen so far this entire year. And such a great product simply deserves a great bonus package. Period. And here's where I step in. But before I present to you my truly amazing bonus package for the Just Been Paid Reviews Program course I want to ask you something. And by God this is serious. Where do you consider yourself to be in this very moment? I mean... are you really happy with your current state of your financial situation? Seriously. This is not a trick question and you don't have to be ashamed to answer. There's no one here beside you and me. And you're the only one that can answer that question. Because you see...you're the only one that can change something in your life for the better."
},
{
"docid": "335798",
"title": "",
"text": "Try downloading a finance app like yahoo finance. Follow a few stocks, read through the articles - look up terms you don’t understand. Search them on YouTube, Investopedia, - note book recommendations. Learn some economics as well. Even if you’re not interested in trading, this should help you learn the language enough to get an idea of what’s out there - how money is thought of in different time periods, etc. Finance can be very opaque when you first dip your feet in. You’ll find you only understand 75% - 25% of what you’re reading but that’s ok just keep looking things up. I guarantee your understanding of what “finance” means will slowly evolve as you keep learning. Expect to spend maybe a few years to a lifetime figuring this stuff out."
},
{
"docid": "65659",
"title": "",
"text": "I work in banking for the private bank division for a major bank as a banker. I have been helping clients with these types of transactions for years. I believe that large transactions like this are best left to the big boys. That is where the talented bankers/loan officers/underwriters are, and that is the type of transaction they specialize in. I know for a fact that your credit union will not be able to suit your needs, and a smaller bank will be tough to deal with. I wouldn't worry at all about the credit pulls as much as picking a rock solid bank with lots of experiences doing these kinds of deals. That is my 2 cents, albeit a little bit biased, but it is also coming from experience. History with the bank definitely matters, but what business you can bring to the bank along with the lending (deposits, 401k management, personal investments, business services, etc) matter just as much and can make or break the approval/decline or even the terms being favorable or not favorable to your company."
},
{
"docid": "550496",
"title": "",
"text": "Keeping a receipt does allow you to verify that the expected amount was charged/debited it also can help when you need to return an item. Regarding double charging, the credit card companies look for that. If the same card is used at the same vendor for the same exact amount in a short period of time the credit card company will flag the transaction. They assume either a mistake was made, or fraud is being attempted. The most likely result is that the transaction is denied. A dishonest vendor can write down the card number, expiration date and CVV number. Then after you leave make up a new transaction for any amount they want. You of course wouldn't have a paper receipt for this fraudulent transaction. The key is reviewing your transaction history every few days: looking for unexpected amounts, locations, or number of transactions."
},
{
"docid": "505562",
"title": "",
"text": "I don't know that. I know mine has a great mobile app where I can deposit a check online. And all the smaller banks I've seen dont build their own sites or apps, they white label generic ones from common vendors."
}
] |
4756 | What is the formula for the Tesla Finance calculation? | [
{
"docid": "340254",
"title": "",
"text": "From here The formula is M = P * ( J / (1 - (1 + J)^ -N)). M: monthly payment RESULT = 980.441... P: principal or amount of loan 63963 (71070 - 10% down * 71070) J: monthly interest; annual interest divided by 100, then divided by 12. .00275 (3.3% / 12) N: number of months of amortization, determined by length in years of loan. 72 months See this wikipedia page for the derivation of the formula"
}
] | [
{
"docid": "379445",
"title": "",
"text": "\"The fundamental concept of the time value of money is that money now is worth more than the same amount of money later, because of what you can do with money between now and later. If I gave you a choice between $1000 right now and $1000 in six months, if you had any sense whatsoever you would ask for the money now. That's because, in the six months, you could use the thousand dollars in ways that would improve your net worth between now and six months from now; paying down debt, making investments in your home or business, saving for retirement by investing in interest-bearing instruments like stocks, bonds, mutual funds, etc. There's absolutely no advantage and every disadvantage to waiting 6 months to receive the same amount of money that you could get now. However, if I gave you a choice between $1000 now and $1100 in six months, that might be a harder question; you will get more money later, so the question becomes, how much can you improve your net worth in six months given $1000 now? If it's more than $100, you still want the money now, but if nothing you can do will make more than $100, or if there is a high element of risk to what you can do that will make $100 that might in fact cause you to lose money, then you might take the increased, guaranteed money later. There are two fundamental formulas used to calculate the time value of money; the \"\"future value\"\" and the \"\"present value\"\" formulas. They're basically the same formula, rearranged to solve for different values. The future value formula answers the question, \"\"how much money will I have if I invest a certain amount now, at a given rate of return, for a specified time\"\"?. The formula is FV = PV * (1+R)N, where FV is the future value (how much you'll have later), PV is the present value (how much you'll have now), R is the periodic rate of return (the percentage that your money will grow in each unit period of time, say a month or a year), and N is the number of unit periods of time in the overall time span. Now, you asked what \"\"compounding\"\" is. The theory is very simple; if you put an amount of money (the \"\"principal\"\") into an investment that pays you a rate of return (interest), and don't touch the account (in effect reinvesting the interest you earn in the account back into the same account), then after the first period during which interest is calculated and paid, you'll earn interest on not just the original principal, but the amount of interest already earned. This allows your future value to grow faster than if you were paid \"\"simple interest\"\", where interest is only ever paid on the principal (for instance, if you withdrew the amount of interest you earned each time it was paid). That's accounted for in the future value formula using the exponent term; if you're earning 8% a year on your investment, then after 1 year you'll have 108% of your original investment, then after two years you'll have 1.082 = 116.64% (instead of just 116% which you'd get with simple interest). That .64% advantage to compounding doesn't sound like much of an advantage, but stay tuned; after ten years you'll have 215.89% (instead of 180%) of your original investment, after 20 you'll have 466.10% (instead of 260%) and after 30 your money will have grown by over 1000% as opposed to a measly 340% you'd get with simple interest. The present value formula is based on the same fundamental formula, but it's \"\"solved\"\" for the PV term and assumes you'll know the FV amount. The present value formula answers questions like \"\"how much money would I have to invest now in order to have X dollars at a specific future time?\"\". That formula is PV = FV / (1+R)N where all the terms mean the same thing, except that R in this form is typically called the \"\"discount rate\"\", because its purpose here is to lower (discount) a future amount of money to show what it's worth to you now. Now, the discount rate (or yield rate) used in these calculations isn't always the actual yield rate that the investment promises or has been shown to have over time. Investors will calculate the discount rate for a stock or other investment based on the risks they see in the company's financial numbers or in the market as a whole. The models used by professional investors to quantify risk are rather complex (the people who come up with them for the big investment banks are called \"\"quants\"\", and the typical quant graduates with an advanced math degree and is hired out of college with a six-figure salary), but it's typically enough for the average investor to understand that there is an inherent risk in any investment, and the longer the time period, the higher the chance that something bad will happen that reduces the return on your investment. This is why the 30-year Treasury note carries a higher interest rate than the 10-year T-note, which carries higher interest than the 6-month, 1-year and 5-year T-bills. In most cases, you as an individual investor (or even an institutional investor like a hedge fund manager for an investment bank) cannot control the rate of return on an investment. The actual yield is determined by the market as a whole, in the form of people buying and selling the investments at a price that, coupled with the investment's payouts, determines the yield. The risk/return numbers are instead used to make a \"\"buy/don't buy\"\" decision on a particular investment. If the amount of risk you foresee in an investment would require you to be earning 10% to justify it, but in fact the investment only pays 6%, then don't buy it. If however, you'd be willing to accept 4% on the same investment given your perceived level of risk, then you should buy.\""
},
{
"docid": "19999",
"title": "",
"text": "You need the Present Value, not Future Value formula for this. The loan amount or 1000 is paid/received now (not in the future). The formula is $ PMT = PV (r/n)(1+r/n)^{nt} / [(1+r/n)^{nt} - 1] $ See for example http://www.calculatorsoup.com/calculators/financial/loan-calculator.php With PV = 1000, r=0.07, n=12, t=3 we get PMT = 30.877 per month"
},
{
"docid": "35971",
"title": "",
"text": "Dividend reinvestment plans are a great option for some of your savings. By making small, regular investments, combined with reinvested dividends, you can accumulate a significant nest egg. Pick a medium to large cap company that looks to be around for the foreseeable future, such as JNJ, 3M, GE, or even Exxon. These companies typically raise their dividends every year or so, and this can be a significant portion of your long term gains. Plus, these programs are usually offered with miniscule fees. Also, have a go at the interest rate formulas contained in your favorite spreadsheet application. Calculate the FutureValue of a series of payments at various interest rates, to see what you can expect. While you cannot depend on earning a specific rate with a stock investment, a basic familiarity with the formula can help you determine a rate of return you should aim for."
},
{
"docid": "534552",
"title": "",
"text": "The calculation can be made on the basis that the loan is equal to the sum of the repayments discounted to present value. (For more information see Calculating the Present Value of an Ordinary Annuity.) With Deriving the loan formula from the simple discount summation. As you can see, this is the same as the loan formula given here. In the UK and Europe APR is usually quoted as the effective interest rate while in the US it is quoted as a nominal rate. (Also, in the US the effective APR is usually called the annual percentage yield, APY, not APR.) Using the effective interest rate finds the expected answer. The total repayment is £30.78 * n = £1108.08 Using a nominal interest rate does not give the expected answer."
},
{
"docid": "284865",
"title": "",
"text": "As your question is written now, it looks like you have a typo. Your stated APR is 5.542% = 0.05542, not 0.005542 as you've written. I ran the numbers that you gave (accounting for the typo) through the formula at Wikipedia and got $849.2528 / month, which will round to $849.25 for most payments. That doesn't match the number that you computed or the number on your TIL. (Maybe you also miskeyed the result of your calculation?) I agree that it's unlikely that this is just a calculation error by the mortgage company, although I wouldn't completely rule it out. Are you paying anything else like a property tax escrow? I didn't pull a blank TIL form to see what might go into the monthly payment line that you showed, but in many cases you do pay more than just principle and interest each month. (Not sure if that gets reflected at that point on the form though.)"
},
{
"docid": "210939",
"title": "",
"text": "\"When we talk about compounding, we usually think about interest payments. If you have a deposit in a savings account that is earning compound interest, then each time an interest payment is made to your account, your deposit gets larger, and the amount of your next interest payment is larger than the last. There are compound interest formulas that you can use to calculate your future earnings using the interest rate and the compounding interval. However, your mutual fund is not earning interest, so you have to think of it differently. When you own a stock (and your mutual fund is simply a collection of stocks), the value of the stock (hopefully) grows. Let's say, for example, that you have $1000 invested, and the value goes up 10% the first year. The total value of your investment has increased by $100, and your total investment is worth $1100. If it grows by another 10% the following year, your investment is then $1210, having gained $110. In this way, your investment grows in a similar way to compound interest. As your investment pays off, it causes the value of the investment to grow, allowing for even higher earnings in the future. So in that sense, it is compounding. However, because it is not earning a fixed, predictable amount of interest as a savings account would, you can't use the compound interest formula to calculate precisely how much you will have in the future, as there is no fixed compounding interval. If you want to use the formula to estimate how much you might have in the future, you have to make an assumption on the growth of your investment, and that growth assumption will have a time period associated with it. For example, you might assume a growth rate of 10% per year. Or you might assume a growth rate of 1% per month. This is what you could use in a compound interest formula for your mutual fund investment. By reinvesting your dividends and capital gains (and not taking them out in cash), you are maximizing your \"\"compounding\"\" by allowing those earnings to cause your investment to grow.\""
},
{
"docid": "43964",
"title": "",
"text": "Basically you need to use a time-value-of-money equation to discount the cashflows back to today. The Wikipedia formula will likely work fine for you, then you just need to pick an effective interest rate to use in the calculation. Run each of your amounts and dates though the formula (there are various on-line calculators to pick from, and sum up the values. You did not mention your location or jurisdiction, but a useful proxy for the interest rate would be the average between the same duration mortgage rate and fixed-deposit rate at your bank; it should be close enough for your purposes - although if an actual lawsuit is involved and the sums high enough to have lawyers, it might be worth engaging an accountant as well to defend the veracity of both the calculation and the interest rates chosen."
},
{
"docid": "349611",
"title": "",
"text": "I would like to know how they calculated such monthly payment The formula is: Your values would come out to be: r = (1+3.06/(100*365))^31-1=0.002602 (converting your annual percentage to a monthly rate equivalent of daily compounded interest) PV = 12865.57 n = 48 Inserting your values into the formula: P = [r*(PV)]/[1-(1+r)^(-n)] P = [0.002602*(12865.57)]/[1-(1.002602)^(-48)] P = 285.47"
},
{
"docid": "101580",
"title": "",
"text": "\"The short of it is that bonds are valued based on a fundamental concept of finance called the \"\"time value of money\"\". Stated simply, $100 one year from now is not the same as $100 now. If you had $100 now, you could use it to make more money and have more than $100 in a year. Conversely, if you didn't invest it, the $100 would not buy as much in a year as it would now, and so it would lose real value. Therefore, for these two benefits to be worth the same, the money received a year from now must be more than $100, in the amount of what you could make with $100 if you had it now, or at least the rate of inflation. Or, the amount received now could be less than the amount recieved a year from now, such that if you invested this lesser amount you'd expect to have $100 in a year. The simplest bonds simply pay their face value at maturity, and are sold for less than their face value, the difference being the cost to borrow the cash; \"\"interest\"\". These are called \"\"zero-coupon bonds\"\" and they're around, if maybe uncommon. The price people will pay for these bonds is their \"\"present value\"\", and the difference between the present value and face value determines a \"\"yield\"\"; a rate of return, similar to the interest rate on a CD. Now, zero-coupon bonds are uncommon because they cost a lot. If I buy a zero-coupon bond, I'm basically tying up my money until maturity; I see nothing until the full bond is paid. As such, I would expect the bond issuer to sell me the bond at a rate that makes it worth my while to keep the money tied up. So basically, the bond issuer is paying me compound interest on the loan. The future value of an investment now at a given rate is given by FV = PV(1+r)t. To gain $1 million in new cash today, and pay a 5% yield over 10 years, a company or municipality would have to issue $1.629 million in bonds. You see the effects of the compounding there; the company is paying 5% a year on the principal each year, plus 5% of each 5% already accrued, adding up to an additional 12% of the principal owed as interest. Instead, bond issuers can offer a \"\"coupon bond\"\". A coupon bond has a coupon rate, which is a percentage of the face value of the bond that is paid periodically (often annually, sometimes semi-annually or even quarterly). A coupon rate helps a company in two ways. First, the calculation is very straightforward; if you need a million dollars and are willing to pay 5% over 10 years, then that's exactly how you issue the bonds; $1million worth with a 5% coupon rate and a maturity date 10 years out. A $100 5% coupon bond with a 10-year maturity, if sold at face value, would cost only $150 over its lifetime, making the total cost of capital only 50% of the principal instead of 62%. Now, that sounds like a bad deal; if the company's paying less, then you're getting less, right? Well yes, but you also get money sooner. Remember the fundamental principle here; money now is worth more than money later, because of what you can do with money between now and later. You do realize a lower overall yield from this investment, but you get returns from it quickly which you can turn around and reinvest to make more money. As such, you're usually willing to tolerate a lower rate of return, because of the faster turnaround and thus the higher present value. The \"\"Income Yield %\"\" from your table is also referred to as the \"\"Flat Yield\"\". It is a very crude measure, a simple function of the coupon rate, the current quote price and the face value (R/P * V). For the first bond in your list, the flat yield is (.04/114.63 * 100) = 3.4895%. This is a very simple measure that is roughly analogous to what you would expect to make on the bond if you held it for one year, collected the coupon payment, and then sold the bond for the same price; you'd earn one coupon payment at the end of that year and then recoup the principal. The actual present value calculation for a period of 1 year is PV = FV/(1+r), which rearranges to r = FV/PV - 1; plug in the values (present value 114.63, future value 118.63) and you get exactly the same result. This is crude and inaccurate because in one year, the bond will be a year closer to maturity and will return one less coupon payment; therefore at the same rate of return the present value of the remaining payout of the bond will only be $110.99 (which makes a lot of sense if you think about it; the bond will only pay out $112 if you bought it a year from now, so why would you pay $114 for it?). Another measure, not seen in the list, is the \"\"simple APY\"\". Quite simply, it is the yield that will be realized from all cash flows from the bond (all coupon payments plus the face value of the bond), as if all those cash flows happened at maturity. This is calculated using the future value formula: FV = PV (1+r/n)nt, where FV is the future value (the sum of the face value and all coupon payments to be made before maturity), PV is present value (the current purchase price), r is the annual rate (which we're solving for), n is the number of times interest accrues and/or is paid (for an annual coupon that's 1), and t is the number of years to maturity. For the first bond in the list, the simple APY is 0.2974%. This is the effective compound interest rate you would realize if you bought the bond and then took all the returns and stuffed them in a mattress until maturity. Since nobody does this with investment returns, it's not very useful, but it can be used to compare the yield on a zero-coupon bond to the yield on a coupon bond if you treated both the same way, or to compare a coupon bond to a CD or other compound-interest-bearing account that you planned to buy into and not touch for its lifetime. The Yield to Maturity, which IS seen, is the true yield percentage of the bond in time-valued terms, assuming you buy the bond now, hold it to maturity and all coupon payments are made on time and reinvested at a similar yield. This calculation is based on the simple APY, but takes into account the fact that most of the coupon payments will be made prior to maturity; the present value of these will be higher because they happen sooner. The YTM is calculated by summing the present values of all payments based on when they'll occur; so, you'll get one $4 payment a year from now, then another $4 in two years, then $4 in 3 years, and $104 at maturity. The present value of each of those payments is calculated by flipping around the future value formula: PV = FV/(1+r)t. The present value of the entire bond (its current price) is the sum of the present value of each payment: 114.63 = 4/(1+r) + 4/(1+r)2 + 4/(1+r)3 + 104/(1+r)4. You now have to solve for r, which is difficult to isolate; the easiest way to find the rate with a computer is to \"\"goal seek\"\" (intelligently guess and check). Based on the formula above, I calculated a YTM of .314% for the first bond if you bought on Sept 7, 2012 (and thus missed the upcoming coupon payment). Buying today, you'd also be entitled to about 5 weeks' worth of the coupon payment that is due on Sept 07 2012, which is close enough to the present day that the discounted value is a rounding error, putting the YTM of the bond right at .40%. This is the rate of return you'll get off of your investment if you are able to take all the returns from it, when you receive them, and reinvest them at a similar rate (similar to having a savings account at that rate, or being able to buy fractional shares of a mutual fund giving you that rate).\""
},
{
"docid": "472646",
"title": "",
"text": "Using the standard loan formula with 21% APR nominal, compounded weekly. Calculate an adjusted loan start value by adding 31 - 7 = 24 extra days of daily interest (by converting the nominal compounded weekly rate to a daily rate). For details see Converting between compounding frequencies Applying the standard formula r (pv)/(1 - (1 + r)^-n) = 189.80 So every weekly payment will be 189.80 Alternatively Directly arriving at the same result by using the loan formula described here, The extension x is 31 - 7 = 24 daily fractions of an average week (where 7 daily fractions of an average week equal one average week). As before, the weekly payment will be 189.80 Both methods are effectively the same calculation."
},
{
"docid": "483123",
"title": "",
"text": "\"The question is: how do you quantify investment risk? As Michael S says, one approach is to treat investment returns as a random variable. Bill Goetzmann (Yale finance professor) told me that if you accept that markets are efficient or that the price of an asset reflects it's underlying value, then changes in price represent changes in value, so standard deviation naturally becomes the appropriate measure for riskiness of an asset. Essentially, the more volatile an asset, the riskier it is. There is another school of thought that comes from Ben Graham and Warren Buffett, which says that volatility is not inherently risky. Rather, risk should be defined as the permanent loss of capital, so the riskiness of an asset is the probability of a permanent loss of capital invested. This is easy to do in casino games, based on basic probability such as roulette or slots. But what has been done with the various kinds of investment risks? My point is saying that certain bonds are \"\"low risk\"\" isn't good enough; I'd like some numbers--or at least a range of numbers--and therefore one could calculate expected payoff (in the statistics sense). Or can it not be done--and if not, why not? Investing is more art than science. In theory, a Triple-A bond rating means the asset is riskless or nearly riskless, but we saw that this was obviously wrong since several of the AAA mortgage backed securities (MBS) went under prior to the recent US recession. More recently, the current threat of default suggests that bond ratings are not entirely accurate, since US Treasuries are considered riskless assets. Investors often use bond ratings to evaluate investments - a bond is considered investment grade if it's BBB- or higher. To adequately price bonds and evaluate risk, there are too many factors to simply refer to a chart because things like the issuer, credit quality, liquidity risk, systematic risk, and unsystematic risk all play a factor. Another factor you have to consider is the overall portfolio. Markowitz showed that adding a riskier asset can actually lower the overall risk of a portfolio because of diversification. This is all under the assumption that risk = variance, which I think is bunk. I'm aware that Wall Street is nothing like roulette, but then again there must be some math and heavy economics behind calculating risk for individual investors. This is, after all, what \"\"quants\"\" are paid to do, in part. Is it all voodoo? I suspect some of it is, but not all of it. Quants are often involved in high frequency trading as well, but that's another note. There are complicated risk management products, such as the Aladdin system by BlackRock, which incorporate modern portfolio theory (Markowitz, Fama, Sharpe, Samuelson, etc) and financial formulas to manage risk. Crouhy's Risk Management covers some of the concepts applied. I also tend to think that when people point to the last x number of years of stock market performance, that is of less value than they expect. Even going back to 1900 provides \"\"only\"\" 110 years of data, and in my view, complex systems need more data than those 40,500 data points. 10,000 years' worth of data, ok, but not 110. Any books or articles that address these issues, or your own informed views, would be helfpul. I fully agree with you here. A lot of work is done in the Santa Fe Institute to study \"\"complex adaptive systems,\"\" and we don't have any big, clear theory as of yet. Conventional risk management is based on the ideas of modern portfolio theory, but a lot of that is seen to be wrong. Behavioral finance is introducing new ideas on how investors behave and why the old models are wrong, which is why I cannot suggest you study risk management and risk models because I and many skilled investors consider them to be largely wrong. There are many good books on investing, the best of which is Benjamin Graham's The Intelligent Investor. Although not a book on risk solely, it provides a different viewpoint on how to invest and covers how to protect investments via a \"\"Margin of Safety.\"\" Lastly, I'd recommend Against the Gods by Peter Bernstein, which covers the history of risk and risk analysis. It's not solely a finance book but rather a fascinating historical view of risk, and it helps but many things in context. Hope it helps!\""
},
{
"docid": "205070",
"title": "",
"text": "Thanks to this youtube video I think I understood the required calculation. Based on following notation: then the formula to find x is: I found afterwards an example on IB site (click on the link 'How to Determine the Last Stock Price Before We Begin to Liquidate the Position') that corroborate the formula above."
},
{
"docid": "522532",
"title": "",
"text": "Regarding the opportunity cost comparison, consider the following two scenarios assuming a three-year lease: Option A: Keep your current car for three years In this scenario, you start with a car that's worth $10,000 and end with a car that's worth $7,000 after three years. Option B: Sell your current car, invest proceeds, lease new car Here, you'll start out with $10,000 and invest it. You'll start with $10,000 in cash from the sale of your old car, and end with $10,000 plus investment gains. You'll have to estimate the return of your investment based on your investing style. Option C: Use the $10k from proceeds as down payment for new car In this scenario you'll get a reduction in finance charges on your lease, but you'll be out $10,000 at the end. Overall Cost Comparison To compare the total cost to own your current car versus replacing it with a new leased car, first look up the cost of ownership for your current car for the same term as the lease you're considering. Edmunds offers this research and calls it True Cost to Own. Specifically, you'll want to include depreciation, fuel, insurance, maintenance and repairs. If you still owe money you should also factor the remaining payments. So the formula is: Cost to keep car = Depreciation + Fuel + Insurance + Maintenance + Repairs On the lease side consider taxes and fees, all lease payments, fuel, and maintenance. Assume repairs will be covered under warranty. Assume you will put down no money on the lease and you will finance fees, taxes, title, and license when calculating lease payments. You also need to consider the cost to pay off your current car's loan if applicable. Then you should subtract the gains you expect from investing for three years the proceeds from the sale of your car. Assume that repairs will be covered under warranty. The formula to lease looks like: Lease Cost = Fuel + Insurance + Maintenance + Lease payments - (gains from investing $10k) For option C, where you use the $10k from proceeds as down payment for new lease, it will be: Lease Cost = Fuel + Insurance + Maintenance + Lease payments + $10,000 A somewhat intangible factor to consider is that you'll have to pay for body damage to a leased car at the end of the lease, whereas you are obviously free to leave damage unrepaired on your own vehicle."
},
{
"docid": "308294",
"title": "",
"text": "The PE ratio stands for the Price-Earnings ratio. The price-earnings ratio is a straightforward formula: Share Price divided by earnings per share. Earnings per share is calculated by dividing the pre-tax profit for the company by the number of shares in issue. The PE ratio is seen by some as a measure of future growth of a company. As a general rule, the higher the PE, the faster the market believes a company will grow. This question is answered on our DividendMax website: http://www.dividendmax.co.uk/help/investor-glossary/what-is-the-pe-ratio Cheers"
},
{
"docid": "553574",
"title": "",
"text": "\"Thing is, it's already explained in the letter, in the end of the first paragraph: \"\"Tesla’s annualized delivery rate should exceed 100,000 units **by the end of next year**\"\" (emphasis mine). When I first saw the number I got excited, but then I read the actual sentence, realized what they meant, and it's still impressive but it's not 3x increase in production YoY (which would be absurd to expect, esp. when Tesla's trajectory has been just-under-100% increases per year so far and into the mid-term foreseeable future). *Then* they explained it *again* on the CC (Elon said *something like* \"\"we'll exit next year at a 100k rate, but it's hard to tell how steep the curve will be, but we'll probably have over 60k deliveries...I think...yeah probably\"\"). I emailed the author of this article and he still believes that Tesla has \"\"unequivocally\"\" stated that they will produce and deliver 100k cars in 2015...but that's simply not correct. I have some people who know press contacts within Tesla working on hammering it out, though their efficacy at press communications has not been ideal at times in the past. If Tesla did unequivocally state that they would deliver 100k cars next year, after delivering just over 35k this year and 22k last year, that would be enormous news and should have sent the stock to $300 today, up 30-50%+ instead of the 4% it did go up. But it didn't send it that high, because that's just not what's happening. I'm extraordinarily bullish on Tesla, but 100k in 2015 is just not what's going to happen. 100k+ in 2016, though, sounds about right. And is in line with every other estimate everyone has done for the past several years, including Tesla themselves. So yeah, this number isn't really news, but it's nice to see them reiterate it.\""
},
{
"docid": "193783",
"title": "",
"text": "For this, the internal rate of return is preferred. In short, all cash flows need to be discounted to the present and set equal to 0 so that an implied rate of return can be calculated. You could try to work this out by hand, but it's practically hopeless because of solving for roots of the implied rate of return which are most likely complex. It's better to use a spreadsheet with this capability such as OpenOffice's Calc. The average return on equity is 9%, so anything higher than that is a rational choice. Example Using this simple tool, the formula variables can easily be input. For instance, the first year has a presumed cash inflow of $2,460 because the insurance has a 30% discount from $8,200 that is assumed to be otherwise paid, a cash inflow of $40,000 to finance the sprinklers, a cash outflow of $40,000 to fund the sprinklers, a $400 outflow for inspection, and an outflow in the amount of the first year's interest on the loan. This should be repeated for each year. They can be input undiscounted, as they are, for each year, and the calculator will do the rest."
},
{
"docid": "289396",
"title": "",
"text": "Tesla doesn't exist without a loan from the public sector that got them up and running. They have since paid that back and obtained public financing, but Tesla certainly doesn't disprove the notion that subsidies are required to make nonhydrocarbon energy sources competitive with traditional fuels."
},
{
"docid": "597653",
"title": "",
"text": "The price-earnings ratio is calculated as the market value per share divided by the earnings per share over the past 12 months. In your example, you state that the company earned $0.35 over the past quarter. That is insufficient to calculate the price-earnings ratio, and probably why the PE is just given as 20. So, if you have transcribed the formula correctly, the calculation given the numbers in your example would be: 0.35 * 4 * 20 = $28.00 As to CVRR, I'm not sure your PE is correct. According to Yahoo, the PE for CVRR is 3.92 at the time of writing, not 10.54. Using the formula above, this would lead to: 2.3 * 4 * 3.92 = $36.06 That stock has a 52-week high of $35.98, so $36.06 is not laughably unrealistic. I'm more than a little dubious of the validity of that formula, however, and urge you not to base your investing decisions on it."
},
{
"docid": "260569",
"title": "",
"text": "In this case, it looks like the interest is simply the nominal daily interest rate times number of days in the period. From that you can use a spreadsheet to calculate the total payment by trial and error. With the different number of days in each period, any formula would be very complicated. In the more usual case where the interest charge for each period is the same, the formula is: m=P*r^n*(r-1)/(r^n-1) where * is multiplication ^ is exponentiation / is division (Sorry, don't know if there's a way to show formulas cleanly on here) P=original principle r=growth factor per payment period, i.e. interest rate + 100% divided by 100, e.g. 1% -> 1.01 n=number of payments Note the growth factor above is per period, so if you have monthly payments, it's the rate per month. The last payment may be different because of rounding errors, unequal number of days per period, or other technicalities. Using that formula here won't give the right answer because of the unequal periods, but it should be close. Let's see: r=0.7% times an average of 28.8 days per period gives 20.16% + 1 = 1.2016. n=5 P=500 m=500*1.2016^5*(1.2016-1)/(1.2016^5-1) =167.78 Further off than I expected, but ballpark."
}
] |
4767 | New car: buy with cash or 0% financing | [
{
"docid": "280805",
"title": "",
"text": "Some things you missed in your analysis: How will financing change your insurance costs? I.e. what is the difference between the insurance that you would buy for yourself and what they require? Note that it is possible that your insurance preferences are more stringent than the financing company's. If so, this isn't a big deal. But what's important is to consider if that's true. Because if you'd prefer to drive with only the legal minimum insurance and they insist that you have full coverage with no more than a $1000 deductible, that's a significant difference. Remember that you don't have $22.5k for six years. You have an average of $10.5k (($22.5k + -$1500)/2) for six years. Because you make payments ($24k) throughout. So you start with $22.5k and subtract $333.33 a month until you reach -$1500. That neglects both investment gains and potential losses. It's not the $333 payment that will freak out mortgage companies. It's the $24k debt. But that's offset by your $22.5k in assets at the beginning. And the car of course counts as an asset, albeit at lower than its sale value. I.e. from the bank's perspective, paying $22.5k for a car out of savings is almost as bad as borrowing $24k for a car. Both reduce your net worth. Watch out for hidden fees. In particular, 0% interest can often change into higher interest under certain circumstances. If we assume a 7% return for the six years, that's about $1400 the first year and less each year after. Perhaps $4500 over six years. But you aren't going to get a 7% return if you keep $24,000 in a bank account in case you have to pay off the loan. Instead, you'll get more like 1%, less than inflation. Even five year Certificates of Deposit are only about 2%, right around inflation (1.9% for previous twelve months). You can't keep the $24,000 in a securities account and be sure that it will be there when you need it. If the market crashes tomorrow, your $24,000 might be worth $12,000 instead. You'd have to throw in extra money from elsewhere. Instead of making $4500 at the cost of $1500, you'd have paid $25,500 for $12,000. Not a good deal. So for your plan to work, that $24,000 needs to be in an account that won't fall in value. You either need to compromise on the idea of a separate account that is always there when you need it, or you have to accept rather low returns. Personally, I would prefer not to have the debt and not to pay extra on the insurance. But that's me. The potential investment returns are not worth it to me. If you give up the separate account, you can make a few thousand dollars more. But your risk is higher."
}
] | [
{
"docid": "115935",
"title": "",
"text": "\"The real answer is to talk to the bank. In the case of the last car loan I got, the answer is \"\"no\"\". When I asked them about rates, they gave me a printed sheet that listed the loan rates they offered based on how old the car was, period. I forget the exact numbers but it was like: New car: 4%, 1 year old: 4.5%, 2-3 years old 5%, etc. I suspect that at most banks these days, it's not up to the loan officer to come up with what he considers reasonable terms for a loan based on whatever factors you may bring up and he agrees are relevant. The bank is going to have a set policy, under these conditions, this is the rate, and that's what you get. So if the bank includes the size of the down payment in their calculations, then yes, it will be relevant. If they don't, than it won't. The thing to do would be to ask your bank. If you're only borrowing $2000, and you've managed to save up $11,000, I'd guess you can pay off the $2,000 pretty quickly. So as Keshlam says, the interest rate probably isn't all that important. If you can pay it off in a year, then the difference between 5% and 1% is only $80. If you're buying a $13,000 car, I can't imagine you're going to agonize over $80. BTW I've bought two cars in the last few years with about half the cost in cash and putting the rest on my credit card. (One for me and one for my daughter.) Then I paid off the credit card in a couple of months. Sure, the interest rate on a credit card is much higher than a car loan, but as it was only for a few months, it made very little real difference, and it took zero effort to arrange the loan and gave me total flexibility in the repayment schedule. Credit card companies often offer convenience checks where you pay like 3% or so transaction fee and then 0% interest for a year or more, so it would just cost the 3% up front fee.\""
},
{
"docid": "56867",
"title": "",
"text": "Do you need the car, or is this an optional purchase for you? Do you currently have a car that is in good working order? If you can continue to save for the car instead of buying now, you'll be getting interest on what you've saved -- and that's a lot better than 0% financing."
},
{
"docid": "440806",
"title": "",
"text": "In many (most?) cases, luxury cars are leased rather than purchased, so the payments on even an expensive car might not be as high as you'd expect. For simplicity, take a $100,000 car. If you were to buy that in cash or do a standard five-year auto loan, that would be incredibly expensive for all but the wealthiest of people. But a lease is different. When you lease a car, you are financing the car's depreciation over the lease term. So, let's suppose that you're signing up for a three-year lease. The car manufacturer will make an estimate of what that car will be worth when you bring it back in three years (this is called the residual value). If this number is $80,000, that means the lessee is only financing the $20,000 difference between the car's price and its residual value after three years - rather than the full $100,000 MSRP. At the end of the lease, he or she just turns the car back in. Luxury cars are actually especially amenable to leasing because they have excellent brand power - just because of the name on the hood, there are many people who would be happy to pay a lot for a three-year-old Mercedes or BMW. With a mid- or low-range car, the brand is not as powerful and used cars consequentially have a lower residual value (as a percentage of the MSRP) than luxury cars. So, don't look at an $80,000 luxury car and assume that the owner has paying for the entire $80,000."
},
{
"docid": "95321",
"title": "",
"text": "The other answers have offered some great advice, but here is an alternative that hasn't been mentioned yet. I'm assuming that you have an adequately-sized emergency fund in savings, and that your cars are your only non-mortgage debt. Since you still have car debt, you probably don't have anything saved for buying a new car when your current cars are at the end-of-life. Consider paying off your car loans early, then begin saving for your next car. Having cash in the bank for a car is very freeing, and it changes your mindset when it comes time to purchase a car, as it is easy to waste a lot of money on something that depreciates rapidly when you aren't paying for it immediately. This approach might be counterintuitive if your car loan interest rate is less than your mortgage rate, but you will probably need another car before you need another house, and paying cash for a car is worth doing."
},
{
"docid": "277815",
"title": "",
"text": "You have a few options and sometimes challenges help us improve our situation. First, you can not borrow to buy a car. Reducing the massive depreciation that cars undergo will help you be wealthier. It is hard to find a good use car that you can buy for cash, but it will play out best for your finances in the long run. If your heart is set on borrowing, I would encourage you to go to the bank/credit union where you have your checking account. They will see your history of deposits and may grant you a loan based on that. Also you are likely to get a better deal from the bank than from the car dealer. Thirdly, you can simply go to your employer's HR department and ask them. Surely someone has applied for a loan during the company's history. What did they do for them?"
},
{
"docid": "223502",
"title": "",
"text": "\"It's possible the $16,000 was for more than the car. Perhaps extras were added on at purchase time; or perhaps they were folded into the retail price of the car. Here's an example. 2014: I'm ready to buy. My 3-year-old trade-in originally cost $15,000, and I financed it for 6 years and still owe $6500. It has lots of miles and excess wear, so fair blue-book is $4500. I'm \"\"upside down\"\" by $2000, meaning I'd have to pay $2000 cash just to walk away from the car. I'll never have that, because I'm not a saver. So how can we get you in a new car today? Dealer says \"\"If you pay the full $15,000 retail price plus $1000 of worthless dealer add-ons like wax undercoat (instead of the common discounted $14,000 price), I'll eat your $2000 loss on the trade.\"\" All gets folded into my new car financing. It's magic! (actually it's called rollover.) 2017: I'm getting itchy to trade up, and doggone it, I'm upside down on this car. Why does this keep happening to me? In this case, it's rollover and other add-ons, combined with too-long car loans (6 year), combined with excessive mileage and wear on the vehicle.\""
},
{
"docid": "37070",
"title": "",
"text": "\"There are two issues here: arithmetic and psychology. Scenario 1: You are presently paying an extra $500 per month on your student loan, above the minimum payments. Your credit card company offers a $4000 cash advance at 0% for 8 months. So you take the cash advance, pay it toward the student loan, and then instead of paying the extra $500 per month toward the student loan you use that $500 for 8 months to repay the cash advance. Net result: You pay 0% interest on the loan, and save roughly 8 months times $4000 times the interest on the student loan divided by two. (I say \"\"divided by two\"\" because it's not the difference between $4000 and zero, but between $4000 and the $500 you would have been paying off each month.) Clearly you are better off. If you are NOT presently paying an extra $500 on the student loan -- or even if you are but it is a struggle to come up with the money -- then the question becomes, can you reasonably expect to be able to pay off the credit card before the grace period runs out? Interest rates on credit cards are normally much higher than interest rates on student loans. If you get the cash advance and then can't repay it, after 8 months you are paying a very steep interest rate, and anything you saved on the student loan will quickly be lost. What I mean by \"\"psychological\"\" is that you have to have the discipline to really repay the credit card within the grace period. If you're not very confidant that you can do that, this plan could go bad very quickly. Personally, I've thought about doing things like this many times -- cash advances against credit cards, home equity loans, etc, all give low-interest money that could be used to pay off a higher-interest debt. But it's easy to get into trouble doing things like this. It's easy to say to yourself, Well, I don't need to put ALL the money toward that other debt, I could keep a thousand or so to buy that big screen TV I really need. Or to fail to pay back the low-interest loan on schedule because other things keep coming up that you spend your money on instead, whether frivolous luxuries or true emergencies. And there's always the possibility that something will happen to mess up your finances, from a big car repair bill to losing your job. You don't want to paint yourself into a corner. Finally, maxing out your credit cards hurts your credit rating. The formulas are secret, but I understand that if you use more than half your available credit, that's a minus. How much it hurts you depends on lots of factors.\""
},
{
"docid": "59372",
"title": "",
"text": "According to AutoTrader, there are many different reasons, but here are three: New cars have a better resale value and it's easier to predict its resale value in case you default on the loan and they repossess the car. Lenders that are through auto makers can use different incentives for getting you to buy a new car. Used car financing is usually through other banks. People with higher credit scores tend to buy new cars, and therefore can get a lower rate because of their higher credit score."
},
{
"docid": "351312",
"title": "",
"text": "The optimal down payment is 0% IF your interest rate is also 0%. As the interest rate increases, so does the likelihood of the better option being to pay for the car outright. Note that this is probably a binary choice. In other words, depending on the rate you will pay, you should either put 0% down, or 100% down. The interesting question is what formula should you use to determine which way to go? Obviously if you can invest at a higher return than the rate you pay on the car, you would still want to put 0% down. The same goes for inflation, and you can add these two numbers together. For example, if you estimate 2% inflation plus 1% guaranteed investment, then as long as the rate on your car is less than 3%, you would want to minimize the amount you put down. The key here is you must actually invest it. Other possible reasons to minimize the down payment would be if you have other loans with higher rates- then obviously use that money to pay down those loans before the car loan. All that being said, some dealers will give you cash back if you pay for the car outright. If you have this option, do the math and see where it lands. Most likely taking the cash back is going to be more attractive so you don't even have to hedge inflation at all. Tip: Make sure to negotiate the price of the car before you tell them how you are going to pay for it. (And during this process you can hint that you'll pay cash for it.)"
},
{
"docid": "14745",
"title": "",
"text": "My assumption here is that you paid nearly 32K, but also financed about 2500 in taxes/fees. At 13.5% the numbers come out pretty close. Close enough for discussion. On the positive side, you see the foolishness of your decision however you probably signed a paper that stated the true cost of the car loan. The truth in lending documents clearly state, in bold numbers, that you would pay nearly 15K in interest. If you pay the loan back early, or make larger principle payments that number can be greatly reduced. On top of the interest charge you will also suffer depreciation of the car. If someone offered you 31K for the car, you be pretty lucky to get it. If you keep it for 4 years you will probably lose about 40% of the value, about 13K. This is why it is foolish for most people to purchase a new vehicle. Not many have enough wealth to absorb a loss of this size. In the book A Millionaire Next Door the author debunks the assumption that most millionaires drive new cars. They tend to drive cars that are pretty standard and a couple of years old. They pay cash for their cars. The bottom line is you singed documents indicating that you knew exactly what you were getting into. Failing any other circumstances the car is yours. Talking to a lawyer would probably confirm this. You can attempt to sell it and minimize your losses, or you can pay off the loan early so you are not suffering from finance charges."
},
{
"docid": "34043",
"title": "",
"text": "Very generally speaking if you have a loan, in which something is used as collateral, the leader will likely require you to insure that collateral. In your case that would be a car. Yes certainly a lender will require you to insure the vehicle that they finance (Toyota or otherwise). Of course, if you purchase a vehicle for cash (which is advisable anyway), then the insurance option is somewhat yours. Some states may require that a certain amount of coverage is carried on a registered vehicle. However, you may be able to drop the collision, rental car, and other options from your policy saving you some money. So you buy a new car for cash ($25K or so) and store the thing. What happens if the car suffers damage during storage? Are you willing to save a few dollars to have the loss of an asset? You will have to insure the thing in some way and I bet if you buy the proper policy the amount save will be very minimal. Sure you could drop the road side assistance, rental car, and some other options, during your storage time but that probably will not amount to a lot of money."
},
{
"docid": "396853",
"title": "",
"text": "\"A \"\"true\"\" 0% loan is a losing proposition for the bank, that's true. However when you look at actual \"\"0%\"\" loans they usually have some catches: There might also be late payment fees, prepayment penalties, and other clauses that make it a good deal on average to the bank. Individual borrowers might be able to get away with \"\"free money\"\", but the bank does not look to make money on each loan, they look to make money on thousands of loans overall. For a retailer (including new car sellers). the actual financing costs will be baked into the sales price. They will add, say, 10% to the sales price in exchange for an interest-free loan. They can also sell these loans to an investment bank or other entity, but they would be sold at a deep discount, so the difference will be made up in the sales price or other \"\"fees\"\". It's possible that they would just chalk it up to promotional discounts or customer acquisition costs, but it would not be a good practice on a large scale.\""
},
{
"docid": "129350",
"title": "",
"text": "There are many reasons for buying new versus used vehicles. Price is not the only factor. This is an individual decision. Although interesting to examine from a macro perspective, each vehicle purchase is made by an individual, weighing many factors that vary in importance by that individual, based upon their specific needs and values. I have purchased both new and used cars, and I have weighted each of these factors as part of each decision (and the relative weightings have varied based upon my individual situation). Read Freakonomics to gain a better understanding of the reasons why you cannot find a good used car. The summary is the imbalance of knowledge between the buyer and seller, and the lack of trust. Although much of economics assumes perfect market information, margin (profit) comes from uncertainty, or an imbalance of knowledge. Buying a used car requires a certain amount of faith in people, and you cannot always trust the trading partner to be honest. Price - The price, or more precisely, the value proposition of the vehicle is a large concern for many of us (larger than we might prefer that it be). Selection - A buyer has the largest selection of vehicles when they shop for a new vehicle. Finding the color, features, and upgrades that you want on your vehicle can be much harder, even impossible, for the used buyer. And once you have found the exact vehicle you want, now you have to determine whether the vehicle has problems, and can be purchased at your price. Preference - A buyer may simply prefer to have a vehicle that looks new, smells new, is clean, and does not have all the imperfections that even a gently used vehicle would exhibit. This may include issues of pride, image, and status, where the buyer may have strong emotional or psychological needs to statisfy through ownership of a particular vehicle with particular features. Reviews - New vehicles have mountains of information available to buyers, who can read about safety and reliability ratings, learn about problems from the trade press, and even price shop and compare between brands and models. Contrasted with the minimal information available to used vehicle shoppers. Unbalanced Knowledge - The seller of a used car has much greater knowledge of the vehicle, and thus much greater power in the negotiation process. Buying a used car is going to cost you more money than the value of the car, unless the seller has poor knowledge of the market. And since many used cars are sold by dealers (who have often taken advantage of the less knowledgeable sellers in their transaction), you are unlikely to purchase the vehicle at a good price. Fear/Risk - Many people want transportation, and buying a used car comes with risk. And that risk includes both the direct cost of repairs, and the inconvenience of both the repair and the loss of work that accompanies problems. Knowing that the car has not been abused, that there are no hidden or lurking problems waiting to leave you stranded is valuable. Placing a price on the risk of a used car is hard, especially for those who only want a reliable vehicle to drive. Placing an estimate on the risk cost of a used car is one area where the seller has a distinct advantage. Warranties - New vehicles come with substantial warranties, and this is another aspect of the Fear/Risk point above. A new vehicle does not have unknown risk associated with the purchase, and also comes with peace of mind through a manufacturer warranty. You can purchase a used car warranty, but they are expensive, and often come with (different) problems. Finance Terms - A buyer can purchase a new vehicle with lower financing rate than a used vehicle. And you get nothing of value from the additional finance charges, so the difference between a new and used car also includes higher finance costs. Own versus Rent - You are assuming that people actually want to 'own' their cars. And I would suggest that people want to 'own' their car until it begins to present problems (repair and maintenance issues), and then they want a new vehicle to replace it. But renting or leasing a vehicle is an even more expensive, and less flexible means to obtain transportation. Expense Allocation - A vehicle is an expense. As the owner of a vehicle, you are willing to pay for that expense, to fill your need for transportation. Paying for the product as you use the product makes sense, and financing is one way to align the payment with the consumption of the product, and to pay for the expense of the vehicle as you enjoy the benefit of the vehicle. Capital Allocation - A buyer may need a vehicle (either to commute to work, school, doctor, or for work or business), but either lack the capital or be unwilling to commit the capital to the vehicle purchase. Vehicle financing is one area banks have been willing to lend, so buying a new vehicle may free capital to use to pay down other debts (credit cards, loans). The buyer may not have savings, but be able to obtain financing to solve that need. Remember, people need transportation. And they are willing to pay to fill their need. But they also have varying needs for all of the above factors, and each of those factors may offer value to different individuals."
},
{
"docid": "244986",
"title": "",
"text": "\"I support the strategy to buy a less expensive car at the outset and then save for that more expensive car. You mentioned that you would be able to save $9000 by the time you had to start making payments. That sounds like a great budget for car shopping. For $9k you can get a dependable used car. If you find the right high-yield savings account you can get around 2% on your $500/month direct deposit. That's a difference of about 5% when you add in the 2.9% interest that you would have been paying on the loan. (You can't find such a low risk investment that would yield 5% these days.) Also, at that rate (2%) you would have $27k saved up in less than 52 months, or over $31k in 60 months. Then you could buy a BMW with cash! And I'm sure they would give you a cash discount. Alternatively you could be just finishing paying off the loan and might already be looking at the next car you'll take a loan out for. The point is not that you have to completely deprive yourself for the rest of your life. But by not taking out a loan you were certainly come out ahead in 5-10 years time. Also, one common mistake that new grads make is thinking that they are rich right out of college. Yes, you definitely have a nice salary and \"\"could afford it\"\" by most people's standards. I have a coworker that graduated and started work a year ago. He first bought a brand new Subaru. Why Subaru I do not know, but that is what he thought he wanted. After driving the car for a few months he decided for a few reasons that it was not what he wanted. So he sold the car (for a loss) and bought a slightly used Nissan Z. He has since decided that he needs a more practical car for day to day driving to minimize the abuse that his Z takes. So he has bought another car. This time a low budget Honda. Had he started with a low budget car he could be driving the same car to work right now, but have a good chunk of savings for a new car instead of a loan and a car that he drives only occasionally.\""
},
{
"docid": "131327",
"title": "",
"text": "If a shop offers 0% interest for purchase, someone is paying for it. e.g., If you buy a $X item at 0% interest for 12 months, you should be able to negotiate a lower cash price for that purchase. If the store is paying 3% to the lender, then techincally, you should be able to bring the price down by at least 2% to 3% if you pay cash upfront. I'm not sure how it works in other countries or other purchases, but I negotiated my car purchase for the dealer's low interest rate deal, and then re-negotiated with my preapproved loan. Saved a good chunk on that final price!"
},
{
"docid": "487678",
"title": "",
"text": "Your short-term time frame makes buying used the best option, but it seems you already are aware of that. Look into a certified pre-owned model if you are concerned about lemons. You will usually get some sort of warranty. However, be aware that any car can be a headache with repairs. I would not recommend a lease because basically you are still paying for the depreciation on the car plus interest. Generally, this is the most expensive way to drive a car. You may find the numbers look good for a lease but beware of the 'gotchas' in the terms that can put you way over budget (over mileage, wear and tear, etc.). My best recommendation is to buy gently used with cash. This gives you the most flexibility and best resale value. If you finance a late-model vehicle, be aware that depreciation can leave you upside-down on your loan. That would put you in the position of having to shell out cash just to get rid of the car."
},
{
"docid": "102811",
"title": "",
"text": "Having just purchased an upcoming Samsung phone using their 0% interest I can tell you that the justification is to give you credit. I have the same with Best Buy which is 0% for a specific initial purchase. The bank (in the Samsung case is TD Bank) establishes a rotating credit line for you. The APR after is well established at the very high side of 29.99%. Nobody in their right mind should want to pay that much interest on any purchase. My last car purchase was below 3% APR. Additionally the introductory rate will still calculate their 29.99% interest as if it existed since the first day of credit and will be applied to your balance should you ever be late on any single payment. At that time the interest is factored in as if it were always there and payments are adjusted accordingly. You see, the bank wants you to pay their high interest rate. So they entice you with the 0% and hope you either finance more on that credit line (exempt from the promotional rate) or miss a payment and they can hit you with a whammy. Specifically the question asks how this offer benefits Samsung. To answer that portion; it ensures a sale at full retail price of the phone. Samsung is just an agent between you and the bank. The bank takes on the risk for a potential high reward."
},
{
"docid": "241501",
"title": "",
"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."
},
{
"docid": "470587",
"title": "",
"text": "\"The optimal down payment is 100%. The only way you would do anything else when you have the cash to buy it outright is to invest the remaining money to get a better return. When you compare investments, you need to take risk into account as well. When you make loan payments, you are getting a risk free return. You can't find a risk-free investment that pays as much as your car loan will be. If you think you can \"\"game the system\"\" by taking a 0% loan, then you will end up paying more for the car, since the financing is baked into the sales [price in those cases (there is no such thing as free money). If you pay cash, you have much more bargaining power. Buy the car outright (negotiating as hard as you can), start saving what you would have been making as a car payment as an emergency fund, and you'll be ahead of the game. For the inflation hedge - you need to find investments that act as an inflation hedge - taking a loan does not \"\"hedge\"\" against inflation since you'll still be paying interest regardless of the inflation rate. The fact that you'll be paying slightly less interest (in \"\"real\"\" terms) does not make it a hedge. To answer the actual question, if your \"\"reinvestment rate\"\" (the return you can get from investing the \"\"borrowed\"\" cash) is less than the interest rate, then the more you put down, the greater your present value (PV). If your reinvestment rate is less than the interest rate, then the less you put down the better (not including risk). When you incorporate risk, though, the additional return is probably not worth the risk. So there is no \"\"optimal\"\" down payment in between those mathematically - it will depend on how much liquid cash you need (knowing that every dollar that you borrow is costing you interest).\""
}
] |
4767 | New car: buy with cash or 0% financing | [
{
"docid": "568670",
"title": "",
"text": "I'd finance the car (for 60 or 48 months), but stash enough money in a separate account so to guarantee the ability to pay it off in case of job loss. The rationales would be: Note that I'd only do this if the loan rate were very low (under 2%)."
}
] | [
{
"docid": "30800",
"title": "",
"text": "I think you are making this more complicated that it has to be. In the end you will end up with a car that you paid X, and is worth Y. Your numbers are a bit hard to follow. Hopefully I got this right. I am no accountant, this is how I would figure the deal: The payments made are irrelevant. The downpayment is irrelevant as it is still a reduction in net worth. Your current car has a asset value of <29,500>. That should make anyone pause a bit. In order to get into this new car you will have to finance the shortfall on the current car (29,500), the price of the vehicle (45,300), the immediate depreciation (say 7,000). In the end you will have a car worth 38K and owe 82K. So you will have a asset value of <44,000>. Obviously a much worse situation. To do this car deal it would cost the person 14,500 of net worth the day the deal was done. As time marched on, it would be more as the reduction in debt is unlikely to keep up with the depreciation. Additionally the new car purchase screen shows a payment of $609/month if you bought the car with zero down. Except you don't have zero down, you have -29,500 down. Making the car payment higher, I estamate 1005/month with 3.5%@84 months. So rather than having a hit to your cash flow of $567 for 69 more months, you would have a payment of about $1000 for 84 months if you could obtain the interest rate of 3.5%. Those are the two things I would focus on is the reduction in net worth and the cash flow liability. I understand you are trying to get a feel for things, but there are two things that make this very unrealistic. The first is financing. It is unlikely that financing could be obtained with this deal and if it could this would be considered a sub-prime loan. However, perhaps a relative could finance the deal. Secondly, there is no way even a moderately financially responsible spouse would approve this deal. That is provided there were not sigificant assets, like a few million. If that is the case why not just write a check?"
},
{
"docid": "131327",
"title": "",
"text": "If a shop offers 0% interest for purchase, someone is paying for it. e.g., If you buy a $X item at 0% interest for 12 months, you should be able to negotiate a lower cash price for that purchase. If the store is paying 3% to the lender, then techincally, you should be able to bring the price down by at least 2% to 3% if you pay cash upfront. I'm not sure how it works in other countries or other purchases, but I negotiated my car purchase for the dealer's low interest rate deal, and then re-negotiated with my preapproved loan. Saved a good chunk on that final price!"
},
{
"docid": "307131",
"title": "",
"text": "Yes, of course it is. Car dealers are motivated to write loans even more than selling cars at times. When I bought a new car for the first time in my life, in my 40's, it took longer to get the finance guy out of my face than to negotiate and buy the car. The car dealer selling you the used car would be happy to package the financing into the selling price. Similar to how 'points' are used to adjust the actual cost of a mortgage, the dealer can tinker with the price up front knowing that you want to stretch the payment out a bit. To littleadv's point, 3 months isn't long, I think a used car dealer wold be happy to work with you."
},
{
"docid": "519950",
"title": "",
"text": "Presumably you need a car to get to work, so let's start with the assumption that you need to buy something to replace the car you just lost. The biggest difficulty to overcome in buying a car is the concept of the monthly payment. Dealers will play games with all of the numbers to massage a monthly payment that the buyer can swallow, but this usually doesn't end up giving the customer the best deal. The 18 month term is not normal for a lease, typically you'll see 24 or 36 months. You are focusing on another goal of paying your student loans by then which would free up much more money for other wants (like a car) but at what cost? The big difficulty of personal finance is the mental mind game of delaying gratification for greater long-term benefit. You are focusing on paying your student loans now so that you can be free of that debt and have more flexibility for the future. Good. You're tempted to spend another $5400 (assuming no down-payment or other surprise fees) to drive a car for 18 months. That doesn't sound any wiser than $5,000 for an unreliable used car that gave you more problems than you bargained for. Presumably you got some percentage of that money back from the insurance company when the car was totaled, but even if not, the real lesson should be finding a car that you can afford up-front, but also one that you can still use when the loan is paid off (like your education--that investment will keep giving even when the loans are a distant memory). My advice would be to look for a car that has about 30k miles on it and pay for it as quickly as possible, then drive it at least for 70-120k more miles before replacing it. You may wish for a newer car, especially in 3 or 4 more years when it starts to show its age, but you'll also thank yourself when you can buy a newer better car with cash and break out of the monthly payment game that dealers try to push on you. You might even enjoy negotiating with car salesmen when you see through their manipulations and simply work for the best cash price you can get."
},
{
"docid": "474573",
"title": "",
"text": "\"@Joe's original answer and the example with proportionate application of the payment to the two balances is not quite what will happen with US credit cards. By US law (CARD Act of 2009), if you make only the minimum required payment (or less), the credit-card company can choose which part of the balance that sum is applied to. I am not aware of any company that chooses to apply such payments to anything other than that part of the balance which carries the least interest rate (including the 0% rate that \"\"results\"\" from acceptance of balance transfer offers). If you make more than the minimum required payment, then the excess must, by law, be applied to paying off the highest rate balance. If the highest rate balance gets paid off completely, any remaining amount must be applied to second-highest rate balance, and so on. Thus, it is not the case that that $600 payment (in Joe's example) is applied proportionately to the $5000 and $1000 balances owed. It depends on what the required minimum payment is. So, what would be the minimum required payment? The minimum payment is the total of (i) all finance charges incurred during that month, (ii) all service fees and penalties (e.g. fee for exceeding credit limit, fee for taking a cash advance, late payment penalty) and other charges (e.g. annual card fee) and (iii) a fraction of the outstanding balance that (by law) must be large enough to allow the customer to pay off the entire balance in a reasonable length of time. The law is silent on what is reasonable, but most companies use 1% (which would pay off the balance over 8.33 years). Consider the numbers in Joe's example together with the following assumptions: $5000 and $1000 are the balances owed at the beginning of the month, no new charges or service fees during that month, and the previous month's minimum monthly payment was made on the day that the statement paid so that the finance charge for the current month is on the balances stated). The finance charge on the $5000 balance is $56.25, while the finance charge on the $1000 balance is $18.33, giving a minimum required payment of $56.25+18.33+60 = $134.58. Of the $600 payment, $134.58 would be applied to the lower-rate balance ($5000 + $56.25 = $5056.25) and reduce it to $4921.67. The excess $465.42 would be applied to the high-rate balance of $1000+18.33 = $1018.33 and reduce it to $552.91. In general, it is a bad idea to take a cash advance from a credit card. Don't do it unless you absolutely must have cash then and there to buy something from a merchant who does not accept credit cards, only cash, and don't be tempted to use the \"\"convenience checks\"\" that credit-card companies send you from time to time. All such cash advances not only carry larger rates of interest (there may also be upfront fees for taking an advance) but any purchases made during the rest of the month also become subject to finance charge. In other words, there is no \"\"grace period\"\" for new charges, and this state of affairs will last for one month beyond the first credit-card statement whose statement is paid off in full in timely fashion. Finally, turning to the question asked, viz. \"\" I am trying to determine how much I need to pay monthly to zero the balance, ....\"\", as per the above calculations, if the OP makes the minimum required payment of $134.58 plus $1018.33, that $134.58 will be applied to the low-rate balance and the rest $1018.33 will pay off the high-rate balance in full if the payment is made on the day the statement is issued. If payment is made later, but before the due date, that $1018.33 will be accruing finance charges until the date the payment is made, and these will appear as 22% rate balance on next month's statement. Similarly for the low-rate balance. What if several monthly payments will be required? The best calculator known to me is at https://powerpay.org (free but it is necessary to set up a username and password). Enter in all the credit card balances and the different interest rates, and the total amount of money that can be used to pay off the balances, and the site will lay out a payment plan. (Basically, pay off the highest-interest rate balance as much as possible while making minimum required payments on the rest). Most people are surprised at how much can be saved (and how much shorter the time to be debt-free is) if one is willing to pay just a little bit more each month.\""
},
{
"docid": "446877",
"title": "",
"text": "How you use the metric is super important. Because it subtracts cash, it does not represent 'value'. It represents the ongoing financing that will be necessary if both the equity plus debt is bought by one person, who then pays himself a dividend with that free cash. So if you are Private Equity, this measures your net investment at t=0.5, not the price you pay at t=0. If you are a retail investor, who a) won't be buying the debt, b) won't have any control over things like tax jurisdictions, c) won't be receiving any cash dividend, etc etc .... the metric is pointless."
},
{
"docid": "277815",
"title": "",
"text": "You have a few options and sometimes challenges help us improve our situation. First, you can not borrow to buy a car. Reducing the massive depreciation that cars undergo will help you be wealthier. It is hard to find a good use car that you can buy for cash, but it will play out best for your finances in the long run. If your heart is set on borrowing, I would encourage you to go to the bank/credit union where you have your checking account. They will see your history of deposits and may grant you a loan based on that. Also you are likely to get a better deal from the bank than from the car dealer. Thirdly, you can simply go to your employer's HR department and ask them. Surely someone has applied for a loan during the company's history. What did they do for them?"
},
{
"docid": "244004",
"title": "",
"text": "If you are looking to build wealth, leasing is a bad idea. But so is buying a new car. All cars lose value once you buy them. New cars lose anywhere between 30-60% of their value in the first 4 years of ownership. Buying a good quality, used car is the way to go if you are looking to build wealth. And keeping the car for a while is also desirable. Re-leasing every three years is no way to build wealth. The American Car Payment is probably the biggest factor holding many people back from building wealth. Don't fall into the trap - buy a used car and drive it for as long as you can until the maintenance gets too pricey. Then upgrade to a better used car, etc. If you cannot buy a car outright with cash, you cannot afford it. Period."
},
{
"docid": "155379",
"title": "",
"text": "I tend to agree with Rocky's answer. However it sounds like you want to look at this from the numbers side of things. So let's consider some numbers: I'm assuming you have the money to buy the new car available as cash in hand, and that if you don't buy the car, you'll invest it reasonably. So if you buy the new car today, you're $17K out of pocket. Let's look at some scenarios and compare. Assuming: If you buy the new car today, then after 1 year you'll have: If you keep the old car, after 1 year you get: After 2 years, you have: And after 3 years, you're at: Or in other words, nothing depletes the value of your assets faster than buying the new car. After 1 year, you've essentially lost $5K to depreciation. However, over the short term the immediate cost of the tires combined with the continued depreciation of the old car do reduce your purchasing power somewhat (you won't be able to muster $25K towards a new car without chipping in a bit of extra cash), and inflation will tend to drive the cost of the new car up as time goes on. So the relative gap between the value of your assets and the cost of the new car tends to increase, though it stays well below the $5k that you lose to depreciation if you buy the new car immediately. Which is something that you could potentially spin to support whichever side you prefer, I suppose. Though note that I've made some fairly pessimistic assumptions. In particular, the current U.S. inflation rate is under 1%, and a new car may depreciate by as much as 25% in the first year while older cars may depreciate by less than the 8% assumed. And I selected the cheapest new car price cited, and didn't credit the tires with adding any value to your old car. Each of those aspects tends to make continuing to drive the older car a better option than buying the new one."
},
{
"docid": "396853",
"title": "",
"text": "\"A \"\"true\"\" 0% loan is a losing proposition for the bank, that's true. However when you look at actual \"\"0%\"\" loans they usually have some catches: There might also be late payment fees, prepayment penalties, and other clauses that make it a good deal on average to the bank. Individual borrowers might be able to get away with \"\"free money\"\", but the bank does not look to make money on each loan, they look to make money on thousands of loans overall. For a retailer (including new car sellers). the actual financing costs will be baked into the sales price. They will add, say, 10% to the sales price in exchange for an interest-free loan. They can also sell these loans to an investment bank or other entity, but they would be sold at a deep discount, so the difference will be made up in the sales price or other \"\"fees\"\". It's possible that they would just chalk it up to promotional discounts or customer acquisition costs, but it would not be a good practice on a large scale.\""
},
{
"docid": "205098",
"title": "",
"text": "\"You are still paying a heavy price for the 'instant gratification' of driving (renting) a brand-new car that you will not own at the end of the terms. It is not a good idea in your case, since this luxury expense sounds like a large amount of money for you. Edited to better answer question The most cost effective solution: Purchase a $2000 car now. Place the $300/mo payment aside for 3 years. Then, go buy a similar car that is 3 years old. You will have almost $10k in cash and probably will need minimal, if any, financing. Same as this answer from Pete: https://money.stackexchange.com/a/63079/40014 Does this plan seem like a reasonable way to proceed, or a big mistake? \"\"Reasonable\"\" is what you must decide. As the first paragraph states, you are paying a large expense to operate the vehicle. Whether you lease or buy, you are still paying this expense, especially from the depreciation on a new vehicle. It does not seem reasonable to pay for this luxury if the cost is significant to you. That said, it will probably not be a 'big mistake' that will destroy your finances, just not the best way to set yourself up for long-term success.\""
},
{
"docid": "538023",
"title": "",
"text": "You've never saved money? Have you ever bought anything? There probably was a small window of time that you had to pool some cash to buy something. In my experience, if you make it more interesting by 'allocating money for specific purposes' you'll have better results than just arbitrarily saving for a rainy day. Allocate your money for different things (ie- new car, emergency, travel, or starting a new business) by isolating your money into different places. Ex- your new car allocation could be in a savings account at your bank. Your emergency allocation can be in cash under your bed. Your new business allocation could be in an investment vehicle like a stocks where it could potentially see significant gains by the time you are ready to use it. The traditional concept of savings is gone. There is very little money to be earned in a savings account and any gains will be most certainly wiped out by inflation anyway. Allocate your money, allocate more with new income, and then use it to buy real things and fund new adventures when the time is right."
},
{
"docid": "162389",
"title": "",
"text": "The IRR is the Discount Rate r* that makes Net Present Value NPV(r*)==0. What this boils down to is two ways of making the same kind of profitability calculation. You can choose a project with NPV(10%)>0, or you can choose based on IRR>10%, and the idea is you get to the same set of projects. That's if everything is well behaved mathematically. But that's not the end of this story of finance, math, and alphabet soup. For investments that have multiple positive and negative cash flows, finding that r* becomes solving for the roots of a polynomial in r*, so that there can be multiple roots. Usually people use the lowest positive root but really it only makes sense for projects where NPV(r)>0 for r<r* and NPV(r)<0 for r>r*. To try to help with your understanding, you can evaluate a real estate project with r=10%, find the sum future discounted cash flows, which is the NPV, and do the project if NPV>0. Or, you can take the future cash flows of a project, find the NPV as a function of the rate r, and find r* where NPV(r*)==0. That r* is the IRR. If IRR=r*>10% and the NPV function is well behaved as above, you can also do the project. When we don't have to worry about multiple roots, the preceding two paragraphs will select the same identical sets of projects as meeting the 10% return requirement."
},
{
"docid": "426689",
"title": "",
"text": "I usually use this process: determine fair market value. This will be an estimate from KBB or similar minus any known repairs or maintenance needed. (Est)-(repairs)=FMV IF FMV < $0 walk away and sell it for whatever it will bring. You would be better off even just buying a similar model than buying the repair. If FMV > $0 ask yourself this question: If I had the fair market value in cash, would I purchase this car? Essentially, this is what you are doing if you choose to keep it. This is where your needs and opinions come into play. If you wouldn't, sell it and buy something else. Unless you have certain specific numbers on the future maintenance and repairs needed, you are just speculating on future events. In general, the probability of repair for the age and condition will be reflected in the estimate of value, so that is captured in the analysis already. There is also no guarantee that another car would not have some other large repair, even if it was newer. From just the numbers, I can't think of many reasons not to drive a car until it dies (FMV < $0) or until you find an excellent deal to replace it."
},
{
"docid": "106832",
"title": "",
"text": "In a very similar situation as yours, I bought a used motorcycle for $3000. It was still reasonably new, very reliable, and with California weather, you can use it year-round. It reduced my time in traffic, and it had very low fuel and maintenance costs. The biggest expense was tires. The biggest pitfall in buying a motorcycle is auto-insurance. Do your research and ask for quotes from your broker before even considering a particular model of bike. When I decided that my finances justified a new motorcycle, I was surprised that full collision coverage cost about $3000/year on a lower powered bike that had a bad accident record because it appealed to new riders. I got a much more powerful bike that appealed to more experienced riders and the premium was only $500/year. Is this answer not what you were looking for? Spend as little as you can on a 4-6 year old car. Drive it until you can save enough cash to buy the one you really want. I'm currently driving a 2007 Corolla, and I'm waiting until I can get a new civic turbo with a manual transmission to replace it. (They currently only offer them with a CVT, but next fall they'll have them with the MT, so I'm probably 2 1/2 years out from buying one used.)"
},
{
"docid": "260095",
"title": "",
"text": "\"as a used dealer in subprime sales, finance has to be higher than cash because every finance deal has a lender that takes a percentage \"\"discount\"\" on every deal financed. if you notice a dealer is hesitant to give a price before knowing if cash or finance, because every bit of a cash deal's profit will be taken by a finance company in order to finance the deal and then there's no deal. you might be approved but if you're not willing to pay more for a finance deal, the deal isn't happening if I have $5000 in a car, you want to buy it for $6000 and the finance lender wants to take $1200 as a \"\"buy-fee\"\" leaving me $4800 in the end.\""
},
{
"docid": "95321",
"title": "",
"text": "The other answers have offered some great advice, but here is an alternative that hasn't been mentioned yet. I'm assuming that you have an adequately-sized emergency fund in savings, and that your cars are your only non-mortgage debt. Since you still have car debt, you probably don't have anything saved for buying a new car when your current cars are at the end-of-life. Consider paying off your car loans early, then begin saving for your next car. Having cash in the bank for a car is very freeing, and it changes your mindset when it comes time to purchase a car, as it is easy to waste a lot of money on something that depreciates rapidly when you aren't paying for it immediately. This approach might be counterintuitive if your car loan interest rate is less than your mortgage rate, but you will probably need another car before you need another house, and paying cash for a car is worth doing."
},
{
"docid": "384175",
"title": "",
"text": "\"Without knowing the details of your financial situation, I can only offer general advice. It might be worth having a financial counselor look at your finances and offer some custom advice. You might be able to find someone that will do this for free by asking at your local church. I would advise you not to try to get another loan, and certainly not to start charging things to a credit card. You are correct when you called it a \"\"nightmare.\"\" You are currently struggling with your finances, and getting further into debt will not help. It would only be a very short-term fix and have long-lasting consequences. What you need to do is look at the income that you have and prioritize your spending. For example, your list of basic needs includes: If you have other things that you are spending money on, such as medical debt or other old debt that you are trying to pay off, those are not as important as funding your basic needs above. If there is anything you can do to reduce the cost of the basic needs, do it. For example, finding a cheaper place to live or a place closer to your job might save you money. Perhaps accepting nutrition assistance from a local food bank or the Salvation Army is an option for you. Now, about your car: Your transportation to your job is very much one of your basic needs, as it will enable you to pay for your other needs. If you can use public transportation until you can get a working car again, or you can find someone that will give you a ride, that will solve this problem. If not, you'll need to get a working car. You definitely don't want to take out another loan for a car, as you are already having trouble paying the first loan. I'm guessing that it will be less expensive to get the engine repaired than it will be to buy a new car at this point. But that is just a guess. You'll need to find out how much it will cost to fix the car, and see if you can swing it by perhaps eliminating expenses that aren't necessary, even for a short time. For example, if you are paying installments on medical debt, you might have to skip a payment to fix your car. It's not ideal, but if you are short on cash, it is a better option than losing your job or taking out even more debt for your car. Alternatively, buying another, functional car, if it costs less than fixing your current car, is an option. If you don't have the money to pay your current car loan payments, you'll lose your current car. Just to be clear, many of these options will mess up your credit score. However, borrowing more, in an attempt to save your credit score, will probably only put off the inevitable, as it will make paying everything off that much harder. If you don't have enough income to pay your debts, you might be better off to just take the credit score ding, get back on your feet, and then work to eliminate the debt once you've got your basic needs covered. Sorry to hear about your situation. Again, this advice is just general, and might not all apply to your financial details. I recommend talking to the pastor of a local church and see if they have someone that can sit down with you and discuss your options.\""
},
{
"docid": "351312",
"title": "",
"text": "The optimal down payment is 0% IF your interest rate is also 0%. As the interest rate increases, so does the likelihood of the better option being to pay for the car outright. Note that this is probably a binary choice. In other words, depending on the rate you will pay, you should either put 0% down, or 100% down. The interesting question is what formula should you use to determine which way to go? Obviously if you can invest at a higher return than the rate you pay on the car, you would still want to put 0% down. The same goes for inflation, and you can add these two numbers together. For example, if you estimate 2% inflation plus 1% guaranteed investment, then as long as the rate on your car is less than 3%, you would want to minimize the amount you put down. The key here is you must actually invest it. Other possible reasons to minimize the down payment would be if you have other loans with higher rates- then obviously use that money to pay down those loans before the car loan. All that being said, some dealers will give you cash back if you pay for the car outright. If you have this option, do the math and see where it lands. Most likely taking the cash back is going to be more attractive so you don't even have to hedge inflation at all. Tip: Make sure to negotiate the price of the car before you tell them how you are going to pay for it. (And during this process you can hint that you'll pay cash for it.)"
}
] |
4767 | New car: buy with cash or 0% financing | [
{
"docid": "224057",
"title": "",
"text": "There is a 3rd option: take the cash back offer, but get the money from a auto loan from your bank or credit union. The loan will only be for. $22,500 which can still be a better deal than option B. Of course the monthly payment can make it harder to qualify for the mortgage. Using the MS Excel goal seek tool and the pmt() function: will make the total payment equal to 24K. Both numbers are well above the rates charged by my credit union so option C would be cheaper than option B."
}
] | [
{
"docid": "205098",
"title": "",
"text": "\"You are still paying a heavy price for the 'instant gratification' of driving (renting) a brand-new car that you will not own at the end of the terms. It is not a good idea in your case, since this luxury expense sounds like a large amount of money for you. Edited to better answer question The most cost effective solution: Purchase a $2000 car now. Place the $300/mo payment aside for 3 years. Then, go buy a similar car that is 3 years old. You will have almost $10k in cash and probably will need minimal, if any, financing. Same as this answer from Pete: https://money.stackexchange.com/a/63079/40014 Does this plan seem like a reasonable way to proceed, or a big mistake? \"\"Reasonable\"\" is what you must decide. As the first paragraph states, you are paying a large expense to operate the vehicle. Whether you lease or buy, you are still paying this expense, especially from the depreciation on a new vehicle. It does not seem reasonable to pay for this luxury if the cost is significant to you. That said, it will probably not be a 'big mistake' that will destroy your finances, just not the best way to set yourself up for long-term success.\""
},
{
"docid": "426689",
"title": "",
"text": "I usually use this process: determine fair market value. This will be an estimate from KBB or similar minus any known repairs or maintenance needed. (Est)-(repairs)=FMV IF FMV < $0 walk away and sell it for whatever it will bring. You would be better off even just buying a similar model than buying the repair. If FMV > $0 ask yourself this question: If I had the fair market value in cash, would I purchase this car? Essentially, this is what you are doing if you choose to keep it. This is where your needs and opinions come into play. If you wouldn't, sell it and buy something else. Unless you have certain specific numbers on the future maintenance and repairs needed, you are just speculating on future events. In general, the probability of repair for the age and condition will be reflected in the estimate of value, so that is captured in the analysis already. There is also no guarantee that another car would not have some other large repair, even if it was newer. From just the numbers, I can't think of many reasons not to drive a car until it dies (FMV < $0) or until you find an excellent deal to replace it."
},
{
"docid": "440806",
"title": "",
"text": "In many (most?) cases, luxury cars are leased rather than purchased, so the payments on even an expensive car might not be as high as you'd expect. For simplicity, take a $100,000 car. If you were to buy that in cash or do a standard five-year auto loan, that would be incredibly expensive for all but the wealthiest of people. But a lease is different. When you lease a car, you are financing the car's depreciation over the lease term. So, let's suppose that you're signing up for a three-year lease. The car manufacturer will make an estimate of what that car will be worth when you bring it back in three years (this is called the residual value). If this number is $80,000, that means the lessee is only financing the $20,000 difference between the car's price and its residual value after three years - rather than the full $100,000 MSRP. At the end of the lease, he or she just turns the car back in. Luxury cars are actually especially amenable to leasing because they have excellent brand power - just because of the name on the hood, there are many people who would be happy to pay a lot for a three-year-old Mercedes or BMW. With a mid- or low-range car, the brand is not as powerful and used cars consequentially have a lower residual value (as a percentage of the MSRP) than luxury cars. So, don't look at an $80,000 luxury car and assume that the owner has paying for the entire $80,000."
},
{
"docid": "241501",
"title": "",
"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."
},
{
"docid": "213393",
"title": "",
"text": "\"Electric does make a difference when considering whether to lease or buy. The make/model is something to consider. The state you live in also makes a difference. If you are purchasing a small electric compliance car (like the Fiat 500e), leasing is almost always a better deal. These cars are often only available in certain states (California and Oregon), and the lease deals available are very enticing. For example, the Fiat 500e is often available at well under $100/mo in a three-year lease with $0 down, while purchasing it would cost far more ($30k, minus credits/rebates = $20k), even when considering the residual value. If you want to own a Tesla Model S, I recommend purchasing a used car -- the market is somewhat flooded with used Teslas because some owners like to upgrade to the latest and greatest features and take a pretty big loss on their \"\"old\"\" Tesla. You can save a lot of money on a pre-owned Model S with relatively low miles, and the battery packs have been holding up well. If you have your heart set on a new Model S, I would treat it like any other vehicle and do the comparison of lease vs buy. One thing to keep in mind that buying a Model S before the end of 2016 will grandfather you into the free supercharging for life, which makes the car more valuable in the future. Right now (2016/2017) there is a $7500 federal tax credit when buying an electric vehicle. If you lease, the leasing company gets the credit, not you. The cost of the lease should indirectly reflect this credit, however. Some states have additional incentives. California has a $2500 rebate, for example, that you can receive even if you lease the vehicle. To summarize: a small compliance car often has very good reasons to lease. An expensive luxury car like the Tesla can be looked at like any other lease vs buy decision, and buying a used Model S may save the most money.\""
},
{
"docid": "214749",
"title": "",
"text": "You need to do the maths exactly. The cost of buying a car in cash and using a loan is not the same. The dealership will often get paid a significant amount of money if you get a loan through them. On the other hand, they may have a hold over you if you need their loan (no cash, and the bank won't give you money). One strategy is that while you discuss the price with the dealer, you indicate that you are going to get a loan through them. And then when you've got the best price for the car, that's when you tell them it's cash. Remember that the car dealer will do what's best for their finances without any consideration of what's good for you, so you are perfectly in your rights to do the same to them."
},
{
"docid": "538023",
"title": "",
"text": "You've never saved money? Have you ever bought anything? There probably was a small window of time that you had to pool some cash to buy something. In my experience, if you make it more interesting by 'allocating money for specific purposes' you'll have better results than just arbitrarily saving for a rainy day. Allocate your money for different things (ie- new car, emergency, travel, or starting a new business) by isolating your money into different places. Ex- your new car allocation could be in a savings account at your bank. Your emergency allocation can be in cash under your bed. Your new business allocation could be in an investment vehicle like a stocks where it could potentially see significant gains by the time you are ready to use it. The traditional concept of savings is gone. There is very little money to be earned in a savings account and any gains will be most certainly wiped out by inflation anyway. Allocate your money, allocate more with new income, and then use it to buy real things and fund new adventures when the time is right."
},
{
"docid": "498927",
"title": "",
"text": "What would happen if you was to cash a check, didn’t realize it was to you and your finance company, take it to a local business that has a money center, they cash the check without even having you sign let alone having the finance companies endorsement on it . The money cleared my account like a couple months ago and it was just brought up now .. ? The reason why the check was made out the owner and the lender is to make sure the repairs were done on the car. The lender wants to make sure that their investment is protected. For example: you get a six year loan on a new car. In the second year you get hit by another driver. The damage estimate is $1,000, and you decide it doesn't look that bad, so you decide to skip the repair and spend the money on paying off debts. What you don't know is that if they had done the repair they would have found hidden damage and the repair would have cost $3,000 and would have been covered by the other persons insurance. Jump ahead 2 years, the rust from the skipped repair causes other issues. Now it will cost $5,000 to fix. The insurance won't cover it, and now a car with an outstanding loan balance of $4,000 and a value of $10,000 if the damage didn't exist needs $5,000 to fix. The lender wants the repairs done. They would have not signed the check before seeing the proof the repairs were done to their satisfaction. But because the check was cashed without their involvement they will be looking for a detailed receipt showing that all the work was done. They may require that the repair be done at a certified repair shop with manufacturer parts. If you don't have a detailed bill ask the repair shop for a copy of the original one."
},
{
"docid": "389102",
"title": "",
"text": "\"Yes, he can retract the offer - it was a cash-only offer, and if you're financing, it's no longer \"\"cash\"\". Unless, of course, you get the financing through your local bank / credit union, and they hand you a check (like on a personal loan). Then it's still cash. However, the salesman can still retract the offer unless it's in writing because you haven't signed anything yet. The price of financing will always be higher because the dealer doesn't get all their money today. Also, if you finance, you are not paying just the cost of the vehicle, you are paying interest, so your final cost will be higher (unless you were one of the lucky souls who got 0% financing atop employee pricing, and therefore are actually saving money by having a payment).\""
},
{
"docid": "279897",
"title": "",
"text": "Car dealers as well as boat dealers, RV dealers, maybe farm vehicle dealers and other asset types make deals with banks and finance companies to they can make loans to buyers. They may be paying the interest to the finance companies so they can offer a 0% loan to the retail customer for all or part of the loan term. Neither the finance company nor the dealer wants to make such loans to people who are likely to default. Such customers will not be offered this kind of financing. But remember too that these loans are secured by the asset - the car - which is also insured. But the dealer or the finance company holds that asset as collateral that they can seize to repay the loan. So the finance company gets paid off and the dealer keeps the profit he made selling the car. So these loans are designed to ensure the dealer nor the finance company looses much. These are called asset finance loans because there is always an asset (the car) to use as collateral."
},
{
"docid": "59372",
"title": "",
"text": "According to AutoTrader, there are many different reasons, but here are three: New cars have a better resale value and it's easier to predict its resale value in case you default on the loan and they repossess the car. Lenders that are through auto makers can use different incentives for getting you to buy a new car. Used car financing is usually through other banks. People with higher credit scores tend to buy new cars, and therefore can get a lower rate because of their higher credit score."
},
{
"docid": "338663",
"title": "",
"text": "But.. what I really want to know.... is it illegal, particularly the clause REQUIRING a trade in to qualify for the advertised price? The price is always net of all the parts of the deal. As an example they gave the price if you have $4000 trade in. If you have no trade in, or a trade in worth less than 4K, your final price for the new car will be more. Of course how do you know that the trade in value they are giving you is fair. It could be worth 6K but they are only giving you a credit of 4K. If you are going to trade in a vehicle while buying another vehicle the trade in should be a separate transaction. I always get a price quote for selling the old car before visiting the new car dealer. I do that to have a price point that I can judge while the pressure is on at the dealership.. Buying a car is a complex deal. The price, interest rate, length of loan, and the value of the trade in are all moving parts. It is even more complex if a lease is involved. They want to adjust the parts to be the highest profit that you are willing to agree to, while you think that you are getting a good deal. This is the fine print: All advertised amounts include all Hyundai incentives/rebates, dealer discounts and $2500 additional down from your trade in value. +0% APR for 72 months on select models subject to credit approval through HMF. *No payments or 90 days subject to credit approval. Value will be added to end of loan balance. 15MY Sonata - Price excludes tax, title, license, doc, and dealer fees. MSRP $22085- $2036 Dealer Discount - $500 HMA Lease Cash - $500 HMA Value Owner Coupon - $1000 HMA Retail Bonus Cash - $500 HMA Military Rebate - $500 HMA Competitive Owner Coupon - $400 HMA College Grad Rebate - $500 HMA Boost Program - $4000 Trade Allowance = Net Price $12149. On approved credit. Certain qualifications apply to each rebate. See dealer for details. Payment is 36 month lease with $0 due at signing. No security deposit required. All payment and prices include HMA College Grad Rebate, HMA Military Rebate, HMA Competitive Owner Coupon and HMA Valued Owner Coupon. Must be active military or spouse of same to qualify for HMA Military Rebate. Must graduate college in the next 6 months or within the last 2 years to qualify for HMA College Grad rebate. Must own currently registered Hyundai to qualify for HMA Valued Owner Coupon. Must own qualifying competitive vehicle to qualify for HMA Competitive Owner Coupon."
},
{
"docid": "541595",
"title": "",
"text": "\"I think so. I am doing this with our furniture. It doesn't cost me any more money to pay right now than it will to pay over the course of 3 years, and I can earn interest on the money I didn't spend. But know this: they aren't offering 0%, they are deferring interest for 3 years. If you pay it off before then great, if you don't you will owe all the accumulated interest. The key with these is that you always pay it, and on time. Miss a payment and you get hosed. If you don't pay on time you will owe the interest that is being deferred. They will also be financing this through a third party (like a major bank) and that company is now \"\"doing business with you\"\" which means in the US they can call you and solicit new services. I am willing to deal with those trade offs though, plus, as you say, you can always pay it off. WHY THEY DO IT (what is in it for them...) A friend of mine works for a major bank that often finances these deals here is how they work. Basically, banks do this to generate leads for their divisions that do cold calls. If you are a high credit, high income customer you go to a classic bank and request cash, if you are building credit or have bad credit, you go to a \"\"financial services\"\" branch. If you tend to finance things like cars and furniture, you get more cold calls.\""
},
{
"docid": "396853",
"title": "",
"text": "\"A \"\"true\"\" 0% loan is a losing proposition for the bank, that's true. However when you look at actual \"\"0%\"\" loans they usually have some catches: There might also be late payment fees, prepayment penalties, and other clauses that make it a good deal on average to the bank. Individual borrowers might be able to get away with \"\"free money\"\", but the bank does not look to make money on each loan, they look to make money on thousands of loans overall. For a retailer (including new car sellers). the actual financing costs will be baked into the sales price. They will add, say, 10% to the sales price in exchange for an interest-free loan. They can also sell these loans to an investment bank or other entity, but they would be sold at a deep discount, so the difference will be made up in the sales price or other \"\"fees\"\". It's possible that they would just chalk it up to promotional discounts or customer acquisition costs, but it would not be a good practice on a large scale.\""
},
{
"docid": "359131",
"title": "",
"text": "In a perfect world scenario you would get a car 2-5 years old that has very little mileage. One of the long standing archaic rules of the car world is that age trumps mileage. This was a good rule when any idiot could roll back an odometer. Chances are now that if you rolled your odometer back the car was serviced somewhere, had inspection or whatever and it is on a report. If seller was found to do this they could face jail time and obviously now their car is almost worthless. Why do I mention this? Because you can take a look at 2011 cars. Those with 20K miles go for just a little more than those with 100K miles. As an owner you will start incurring heavy maintenance costs around 100K on most newer cars. By buying cars with lower mileage, keeping them for a year or two, and reselling them before they get up in miles, you can stay in that magic area where you can drive a pretty good car for $200-300 a month. Note that this takes work on both the buying and selling side and you often need cash to get these cars (dealers are good about siphoning really good used cars to employees/friends). This is a great strategy for keeping costs down and car value up but obviously a lot of people try to do this and it takes work and you have to be willing to settle sometimes on a car that is fine, but not exactly what you want. As for leasing this really gets into three main components: If you are going to do EVERYTHING at a dealership and you want something new or newish you might as well lease. At least then you can shop around for apples to apples. The problem with buying a new/used car from the dealers in perpetuity isn't the buying process. It is the fact that they will screw you on the trade-in. A car that books for 20K may trade-in for 17K. Even if the dealer says they are giving you 20K, then they make you pay list price for the car. I have many many times negotiated a price of a car and then wife brought in our car separately and I can count on ZERO fingers how many times that the dealership honored both sides of the negotiations. Not only did they not honor them but most refused to talk with us after they found out. With a lease you don't have to worry about losing this money in the negotiations. You might pay a little extra (or not since you can shop around) but after the lease you wash your hands of the car. The one caveat to this is the high-end market. When you are talking your Acura, Mercedes, Lexus... It is probably better to buy and trade in every couple years. You lose too much equity by leasing, where it won't cover the trade-in gap and cost of your money being elsewhere. I have a friend that does this and gets a slightly better car every 2-3 years with same monthly payment. Another factor to consider is the price of a car. If your car will be worth over $15K at time of sale you are going to have a hard time selling it by owner. When amounts get this high people often need financing. Yes they can get personal financing but most people are too lazy to do this. So the number of used car buyers on let's say craigslist are way way fewer as you start getting over $10-12K and I have found $15K to be kind of that magic amount. The pro-buy-used side is easy. Aim for those cars around $12-18K that are out there (and many still under warranty). These owners will have issues finding cash buyers. They will drop prices somewhere between book price and dealer trade-in. In lucky cases where they need cash maybe below dealer trade-in. And remember these sellers aren't dealing with 100s let alone 10 buyers. You drive the car for 3-4 years. Maybe it is $7-10K. But now you will get much much closer to book price because there will be far more buyers in this range."
},
{
"docid": "527581",
"title": "",
"text": "Option 2. Selling the car yourself will give you the best value, especially if you can get its full value. This will cost you time, but will return much better return for your money. Also, I would strongly recommend buying a used car from a private owner (not a dealer), rather than buying a new car. For $14,000 in cash you can probably get a car like a 2013 Ford Fusion that has excellent all-wheel drive and winter handling. A new Fusion, loaded, will cost at least $25,000 from a dealer. If you buy a 2013 car outright from a private owner, you will have NO PAYMENTS and can spend that money on investments and build your wealth."
},
{
"docid": "256803",
"title": "",
"text": "Never buy a new car if cost is an issue. A big chunk of the price will disappear to depreciation as you drive it off the lot. If you want a shiny new car with the latest equipment (and if you can afford it!), buy a lightly-used car. Normally I would recommend a 1-3 year old car. 95% of the value, with a big cost savings. But this depends on your financial situation. Given that you just need a commuter car for mostly highway driving, in a place where the weather is easier on cars, you could be fine with a 5-6 year old import. Camry's, Accords, Civics, etc are all well-built, reliable, and affordable due to their numbers. As for financing, shop around. Don't blindly use dealer financing. Check with banks and especially local credit unions and see what rate they can offer you. Then, when you are ready to go, get pre-approved (this is when they pull your credit) and get the car."
},
{
"docid": "505467",
"title": "",
"text": "If everyone bought used cars, who would buy the new cars so that everyone else could buy them used? Rental car companies? Your rant expresses a misunderstanding of fundamental economics (as demand for used cars increases, so will prices) but economics is off-topic here, so let me explain why I bought a new car—that I am now in the 10th year of driving. When I bought the car I currently drive, I was single, I was working full-time, and I was going to school full-time. I bought a 2007 Toyota Corolla for about $16,500 cash out the door. I wanted a reliable car that was clean and attractive enough that I wouldn't be embarrassed in it if I took a girl out for dinner. I could have bought a much more expensive car, but I wanted to be real about myself and not give the wrong impression about my views on money. I've done all the maintenance, and the car is still very nice even after 105K miles. It will handle at least that many more miles barring any crashes. Could I have purchased a nice used car for less? Certainly, but because it was the last model year before a redesign, the dealer was clearly motivated to give me a good deal, so I didn't lose too much driving it off the lot. There are a lot of reasons why people buy new cars. I didn't want to look like a chump when out on a date. Real-estate agents often like to make a good impression as they are driving clients to see new homes. Some people can simply afford it and don't want to worry about what abuse a prior owner may have done. I don't feel defensive about my decision to buy a new car those years ago. The other car I've purchased in the last 10 years was a four year old used car, and it certainly does a good job for my wife who doesn't put too many miles on it. I will not rule out buying another new car in the future either. Some times the difference in price isn't significant enough that used is always the best choice."
},
{
"docid": "474573",
"title": "",
"text": "\"@Joe's original answer and the example with proportionate application of the payment to the two balances is not quite what will happen with US credit cards. By US law (CARD Act of 2009), if you make only the minimum required payment (or less), the credit-card company can choose which part of the balance that sum is applied to. I am not aware of any company that chooses to apply such payments to anything other than that part of the balance which carries the least interest rate (including the 0% rate that \"\"results\"\" from acceptance of balance transfer offers). If you make more than the minimum required payment, then the excess must, by law, be applied to paying off the highest rate balance. If the highest rate balance gets paid off completely, any remaining amount must be applied to second-highest rate balance, and so on. Thus, it is not the case that that $600 payment (in Joe's example) is applied proportionately to the $5000 and $1000 balances owed. It depends on what the required minimum payment is. So, what would be the minimum required payment? The minimum payment is the total of (i) all finance charges incurred during that month, (ii) all service fees and penalties (e.g. fee for exceeding credit limit, fee for taking a cash advance, late payment penalty) and other charges (e.g. annual card fee) and (iii) a fraction of the outstanding balance that (by law) must be large enough to allow the customer to pay off the entire balance in a reasonable length of time. The law is silent on what is reasonable, but most companies use 1% (which would pay off the balance over 8.33 years). Consider the numbers in Joe's example together with the following assumptions: $5000 and $1000 are the balances owed at the beginning of the month, no new charges or service fees during that month, and the previous month's minimum monthly payment was made on the day that the statement paid so that the finance charge for the current month is on the balances stated). The finance charge on the $5000 balance is $56.25, while the finance charge on the $1000 balance is $18.33, giving a minimum required payment of $56.25+18.33+60 = $134.58. Of the $600 payment, $134.58 would be applied to the lower-rate balance ($5000 + $56.25 = $5056.25) and reduce it to $4921.67. The excess $465.42 would be applied to the high-rate balance of $1000+18.33 = $1018.33 and reduce it to $552.91. In general, it is a bad idea to take a cash advance from a credit card. Don't do it unless you absolutely must have cash then and there to buy something from a merchant who does not accept credit cards, only cash, and don't be tempted to use the \"\"convenience checks\"\" that credit-card companies send you from time to time. All such cash advances not only carry larger rates of interest (there may also be upfront fees for taking an advance) but any purchases made during the rest of the month also become subject to finance charge. In other words, there is no \"\"grace period\"\" for new charges, and this state of affairs will last for one month beyond the first credit-card statement whose statement is paid off in full in timely fashion. Finally, turning to the question asked, viz. \"\" I am trying to determine how much I need to pay monthly to zero the balance, ....\"\", as per the above calculations, if the OP makes the minimum required payment of $134.58 plus $1018.33, that $134.58 will be applied to the low-rate balance and the rest $1018.33 will pay off the high-rate balance in full if the payment is made on the day the statement is issued. If payment is made later, but before the due date, that $1018.33 will be accruing finance charges until the date the payment is made, and these will appear as 22% rate balance on next month's statement. Similarly for the low-rate balance. What if several monthly payments will be required? The best calculator known to me is at https://powerpay.org (free but it is necessary to set up a username and password). Enter in all the credit card balances and the different interest rates, and the total amount of money that can be used to pay off the balances, and the site will lay out a payment plan. (Basically, pay off the highest-interest rate balance as much as possible while making minimum required payments on the rest). Most people are surprised at how much can be saved (and how much shorter the time to be debt-free is) if one is willing to pay just a little bit more each month.\""
}
] |
4767 | New car: buy with cash or 0% financing | [
{
"docid": "22804",
"title": "",
"text": "If you don't have other installment loans on your credit report, adding this one could help your credit. That could potentially help you get a better interest rate when you apply for a mortgage. There are positive and negative factors. Positive: Negative:"
}
] | [
{
"docid": "416606",
"title": "",
"text": "\"I'm going to ignore your numbers to avoid spending the time to understand them. I'm just going to go over the basic moving parts of trading an upside down car against another financed car because I think you're conflating price and value. I'm also going to ignore taxes, and fees, and depreciation. The car has an acquisition cost (price) then it has a value. You pay the price to obtain this thing, then in the future it is worth what someone else will pay you. When you finance a car you agree to your $10,000 price, then you call up Mr. Bank and agree to pay 10% per year for 5 years on that $10,000. Mr. Banker wires over $10,000 and you drive home in your car. Say in a year you want a different car. This new car has a price of $20,000, and wouldn't you know it they'll even buy your current car from you. They'll give you $7,000 to trade in your current car. Your current car has a value of $7,000. You've made 12 payments of $188.71. Of those payments about $460 was interest, you now owe about $8,195 to Mr. Banker. The new dealership needs to send payment to Mr. Banker to get the title for your current car. They'll send the $7,000 they agreed to pay for your car. Then they'll loan you the additional $1,195 ($8,195 owed on the car minus $7,000 trade in value). Your loan on the new car will be for $21,195, $20,000 for the new car and $1,195 for the amount you still owed on the old car after the dealership paid you $7,000 for your old car. It doesn't matter what your down-payment was on the old car, it doesn't matter what your payment was before, it doesn't matter what you bought your old car for. All that matters is how much you owe on it today and how much the buyer (the dealership) is willing to pay you for it. How much of this is \"\"loss\"\" is an extremely vague number to derive primarily because your utility of the car has a value. But it could be argued that the $1,195 added on to your new car loan to pay for the old car is lost.\""
},
{
"docid": "59372",
"title": "",
"text": "According to AutoTrader, there are many different reasons, but here are three: New cars have a better resale value and it's easier to predict its resale value in case you default on the loan and they repossess the car. Lenders that are through auto makers can use different incentives for getting you to buy a new car. Used car financing is usually through other banks. People with higher credit scores tend to buy new cars, and therefore can get a lower rate because of their higher credit score."
},
{
"docid": "129350",
"title": "",
"text": "There are many reasons for buying new versus used vehicles. Price is not the only factor. This is an individual decision. Although interesting to examine from a macro perspective, each vehicle purchase is made by an individual, weighing many factors that vary in importance by that individual, based upon their specific needs and values. I have purchased both new and used cars, and I have weighted each of these factors as part of each decision (and the relative weightings have varied based upon my individual situation). Read Freakonomics to gain a better understanding of the reasons why you cannot find a good used car. The summary is the imbalance of knowledge between the buyer and seller, and the lack of trust. Although much of economics assumes perfect market information, margin (profit) comes from uncertainty, or an imbalance of knowledge. Buying a used car requires a certain amount of faith in people, and you cannot always trust the trading partner to be honest. Price - The price, or more precisely, the value proposition of the vehicle is a large concern for many of us (larger than we might prefer that it be). Selection - A buyer has the largest selection of vehicles when they shop for a new vehicle. Finding the color, features, and upgrades that you want on your vehicle can be much harder, even impossible, for the used buyer. And once you have found the exact vehicle you want, now you have to determine whether the vehicle has problems, and can be purchased at your price. Preference - A buyer may simply prefer to have a vehicle that looks new, smells new, is clean, and does not have all the imperfections that even a gently used vehicle would exhibit. This may include issues of pride, image, and status, where the buyer may have strong emotional or psychological needs to statisfy through ownership of a particular vehicle with particular features. Reviews - New vehicles have mountains of information available to buyers, who can read about safety and reliability ratings, learn about problems from the trade press, and even price shop and compare between brands and models. Contrasted with the minimal information available to used vehicle shoppers. Unbalanced Knowledge - The seller of a used car has much greater knowledge of the vehicle, and thus much greater power in the negotiation process. Buying a used car is going to cost you more money than the value of the car, unless the seller has poor knowledge of the market. And since many used cars are sold by dealers (who have often taken advantage of the less knowledgeable sellers in their transaction), you are unlikely to purchase the vehicle at a good price. Fear/Risk - Many people want transportation, and buying a used car comes with risk. And that risk includes both the direct cost of repairs, and the inconvenience of both the repair and the loss of work that accompanies problems. Knowing that the car has not been abused, that there are no hidden or lurking problems waiting to leave you stranded is valuable. Placing a price on the risk of a used car is hard, especially for those who only want a reliable vehicle to drive. Placing an estimate on the risk cost of a used car is one area where the seller has a distinct advantage. Warranties - New vehicles come with substantial warranties, and this is another aspect of the Fear/Risk point above. A new vehicle does not have unknown risk associated with the purchase, and also comes with peace of mind through a manufacturer warranty. You can purchase a used car warranty, but they are expensive, and often come with (different) problems. Finance Terms - A buyer can purchase a new vehicle with lower financing rate than a used vehicle. And you get nothing of value from the additional finance charges, so the difference between a new and used car also includes higher finance costs. Own versus Rent - You are assuming that people actually want to 'own' their cars. And I would suggest that people want to 'own' their car until it begins to present problems (repair and maintenance issues), and then they want a new vehicle to replace it. But renting or leasing a vehicle is an even more expensive, and less flexible means to obtain transportation. Expense Allocation - A vehicle is an expense. As the owner of a vehicle, you are willing to pay for that expense, to fill your need for transportation. Paying for the product as you use the product makes sense, and financing is one way to align the payment with the consumption of the product, and to pay for the expense of the vehicle as you enjoy the benefit of the vehicle. Capital Allocation - A buyer may need a vehicle (either to commute to work, school, doctor, or for work or business), but either lack the capital or be unwilling to commit the capital to the vehicle purchase. Vehicle financing is one area banks have been willing to lend, so buying a new vehicle may free capital to use to pay down other debts (credit cards, loans). The buyer may not have savings, but be able to obtain financing to solve that need. Remember, people need transportation. And they are willing to pay to fill their need. But they also have varying needs for all of the above factors, and each of those factors may offer value to different individuals."
},
{
"docid": "14745",
"title": "",
"text": "My assumption here is that you paid nearly 32K, but also financed about 2500 in taxes/fees. At 13.5% the numbers come out pretty close. Close enough for discussion. On the positive side, you see the foolishness of your decision however you probably signed a paper that stated the true cost of the car loan. The truth in lending documents clearly state, in bold numbers, that you would pay nearly 15K in interest. If you pay the loan back early, or make larger principle payments that number can be greatly reduced. On top of the interest charge you will also suffer depreciation of the car. If someone offered you 31K for the car, you be pretty lucky to get it. If you keep it for 4 years you will probably lose about 40% of the value, about 13K. This is why it is foolish for most people to purchase a new vehicle. Not many have enough wealth to absorb a loss of this size. In the book A Millionaire Next Door the author debunks the assumption that most millionaires drive new cars. They tend to drive cars that are pretty standard and a couple of years old. They pay cash for their cars. The bottom line is you singed documents indicating that you knew exactly what you were getting into. Failing any other circumstances the car is yours. Talking to a lawyer would probably confirm this. You can attempt to sell it and minimize your losses, or you can pay off the loan early so you are not suffering from finance charges."
},
{
"docid": "4038",
"title": "",
"text": "\"Two reasons: Many people make lots of financial decisions (and other kinds of decisions) without actually running any numbers to see what is best (or even possible). They just go with their gut and buy things they feel like buying, without making a thoroughgoing attempt to assess the impact on their finances. I share your bafflement at this, but it is true. A sobering example that has stuck with me can be found in this Los Angeles Times story from a few years ago, which describes a family spending $1000 more than their income every month, while defaulting on their mortgage and dipping into their 7-year-old daughter's savings account to cover the bills --- but still spending $275 a month on \"\"beauty products and services\"\" and $200 a month on pet expenses. Even to the extent that people do take finances into account, finances are not the only thing they take into account. For many people, driving a car that is new, looks nice and fresh, has the latest features, etc., is something they are willing to pay money for. Your question \"\"why don't people view a car solely as a means of transportation\"\" is not a financial question but a psychological one. The answer to \"\"why do people buy new cars\"\" is \"\"because people do not view cars solely as a means of transportation\"\". I recently bought a used car, and while looking around at different ones I visited a car lot. When the dealer heard which car I was interested in, he said, \"\"So, I guess you're looking for a transportation car.\"\" I thought to myself, \"\"Duh. Is there any other kind?\"\" But the fact that someone can say something like that indicates that there are many people who are looking for something other than a \"\"transportation car\"\".\""
},
{
"docid": "95321",
"title": "",
"text": "The other answers have offered some great advice, but here is an alternative that hasn't been mentioned yet. I'm assuming that you have an adequately-sized emergency fund in savings, and that your cars are your only non-mortgage debt. Since you still have car debt, you probably don't have anything saved for buying a new car when your current cars are at the end-of-life. Consider paying off your car loans early, then begin saving for your next car. Having cash in the bank for a car is very freeing, and it changes your mindset when it comes time to purchase a car, as it is easy to waste a lot of money on something that depreciates rapidly when you aren't paying for it immediately. This approach might be counterintuitive if your car loan interest rate is less than your mortgage rate, but you will probably need another car before you need another house, and paying cash for a car is worth doing."
},
{
"docid": "507151",
"title": "",
"text": "I would go with the family route if I was you. And i think many other people would if they were fortunate to have such a great option. This will allow you to move faster when your trying to buy a new house because you can easily get a mortage if you see a stellar deal. Also you can establish credit in much cheaper ways than paying the 4% or so on a mortgage. finance a car that you have the money to buy because the interest rates are much lower .9% and you build the credit while paying less interest. Or even better, try and make most of your purchases on a 0 fee credit card and every 6-8 months get a new credit card to have multiple lines of ongoing credit. to use the mortage to establish credit isnt worth the 4% hit in wealth that it offers. now mind you if your options were to buy the house with your own money outright or get a mortgage i would say get the mortgage because the added leverage would help your investments beat the market most years . figure if you get 6% an average portfolio each year and you can write off the taxes on your mortgage you will be ahead by more than 2%"
},
{
"docid": "371720",
"title": "",
"text": "Most of stock trading occurs on what is called a secondary market. For example, Microsoft is traded on NASDAQ, which is a stock exchange. An analogy that can be made is that of selling a used car. When you sell a used car to a third person, the maker of your car is unaffected by this transaction and the same goes for stock trading. Still within the same analogy, when the car is first sold, money goes directly to the maker (actually more complicated than that but good enough for our purposes). In the case of stock trading, this is called an Initial Public Offering (IPO) / Seasoned Public Offering (SPO), for most purposes. What this means is that a drop of value on a secondary market does not directly affect earning potential. Let me add some nuance to this. Say this drop from 20$ to 10$ is permanent and this company needs to finance itself through equity (stock) in the future. It is likely that it would not be able to obtain as much financing in this matter and would either 1) have to rely more on debt and raise its cost of capital or 2) obtain less financing overall. This could potentially affect earnings through less cash available from financing. One last note: in any case, financing does not affect earnings except through cost of capital (i.e. interest paid) because it is neither revenue nor expense. Financing obtained from debt increases assets (cash) and liabilities (debt) and financing obtained from stock issuance increases assets (cash) and shareholder equity."
},
{
"docid": "210958",
"title": "",
"text": "\"This article feels like a project by an editor to see how well his new hire can write a \"\"finance\"\" article. Low hanging fruit: explain Tesla's junk rating compared to Ford's. The conclusion I was hoping he reached, which is my belief, is that Musk flys to close to the sun trying to balance expansion and debt with cash flows and revenue. If they fail Ford's the best positioned car manufacturer in my opinion. Sure, the Volvo's of the world are going all electric, but that's not what makes Tesla appealing in my opinion. They're a tech company masked as a car company. Ford is a car company trying to pivot to a tech company. Electric isn't the future, the vehical cloud is. Someone has to make these cars. Google or apple won't. Ford will hopefully build and service their own.\""
},
{
"docid": "244004",
"title": "",
"text": "If you are looking to build wealth, leasing is a bad idea. But so is buying a new car. All cars lose value once you buy them. New cars lose anywhere between 30-60% of their value in the first 4 years of ownership. Buying a good quality, used car is the way to go if you are looking to build wealth. And keeping the car for a while is also desirable. Re-leasing every three years is no way to build wealth. The American Car Payment is probably the biggest factor holding many people back from building wealth. Don't fall into the trap - buy a used car and drive it for as long as you can until the maintenance gets too pricey. Then upgrade to a better used car, etc. If you cannot buy a car outright with cash, you cannot afford it. Period."
},
{
"docid": "538023",
"title": "",
"text": "You've never saved money? Have you ever bought anything? There probably was a small window of time that you had to pool some cash to buy something. In my experience, if you make it more interesting by 'allocating money for specific purposes' you'll have better results than just arbitrarily saving for a rainy day. Allocate your money for different things (ie- new car, emergency, travel, or starting a new business) by isolating your money into different places. Ex- your new car allocation could be in a savings account at your bank. Your emergency allocation can be in cash under your bed. Your new business allocation could be in an investment vehicle like a stocks where it could potentially see significant gains by the time you are ready to use it. The traditional concept of savings is gone. There is very little money to be earned in a savings account and any gains will be most certainly wiped out by inflation anyway. Allocate your money, allocate more with new income, and then use it to buy real things and fund new adventures when the time is right."
},
{
"docid": "106832",
"title": "",
"text": "In a very similar situation as yours, I bought a used motorcycle for $3000. It was still reasonably new, very reliable, and with California weather, you can use it year-round. It reduced my time in traffic, and it had very low fuel and maintenance costs. The biggest expense was tires. The biggest pitfall in buying a motorcycle is auto-insurance. Do your research and ask for quotes from your broker before even considering a particular model of bike. When I decided that my finances justified a new motorcycle, I was surprised that full collision coverage cost about $3000/year on a lower powered bike that had a bad accident record because it appealed to new riders. I got a much more powerful bike that appealed to more experienced riders and the premium was only $500/year. Is this answer not what you were looking for? Spend as little as you can on a 4-6 year old car. Drive it until you can save enough cash to buy the one you really want. I'm currently driving a 2007 Corolla, and I'm waiting until I can get a new civic turbo with a manual transmission to replace it. (They currently only offer them with a CVT, but next fall they'll have them with the MT, so I'm probably 2 1/2 years out from buying one used.)"
},
{
"docid": "519950",
"title": "",
"text": "Presumably you need a car to get to work, so let's start with the assumption that you need to buy something to replace the car you just lost. The biggest difficulty to overcome in buying a car is the concept of the monthly payment. Dealers will play games with all of the numbers to massage a monthly payment that the buyer can swallow, but this usually doesn't end up giving the customer the best deal. The 18 month term is not normal for a lease, typically you'll see 24 or 36 months. You are focusing on another goal of paying your student loans by then which would free up much more money for other wants (like a car) but at what cost? The big difficulty of personal finance is the mental mind game of delaying gratification for greater long-term benefit. You are focusing on paying your student loans now so that you can be free of that debt and have more flexibility for the future. Good. You're tempted to spend another $5400 (assuming no down-payment or other surprise fees) to drive a car for 18 months. That doesn't sound any wiser than $5,000 for an unreliable used car that gave you more problems than you bargained for. Presumably you got some percentage of that money back from the insurance company when the car was totaled, but even if not, the real lesson should be finding a car that you can afford up-front, but also one that you can still use when the loan is paid off (like your education--that investment will keep giving even when the loans are a distant memory). My advice would be to look for a car that has about 30k miles on it and pay for it as quickly as possible, then drive it at least for 70-120k more miles before replacing it. You may wish for a newer car, especially in 3 or 4 more years when it starts to show its age, but you'll also thank yourself when you can buy a newer better car with cash and break out of the monthly payment game that dealers try to push on you. You might even enjoy negotiating with car salesmen when you see through their manipulations and simply work for the best cash price you can get."
},
{
"docid": "126949",
"title": "",
"text": "I think you are a little confused. If you have 10.000€ in cash for a car, but you decide instead to invest that money and take out a loan for the car at 2,75% interest, you would have to withdraw/sell 178€ each month from your investment to make your loan payment. If you made exactly 2,75% on your investment, you would be left with 0€ in your investment when the loan was paid off. If your investment did better than 2,75%, you would come out ahead, and if your investment did worse than 2,75%, you would have lost money on your decision. Having said all that, I don't recommend borrowing money to buy a car, especially if you have that amount of cash set aside for the car. Here are some of the reasons: Sometimes people feel better about spending large amounts of money if they can pay it off over time, rather than spending it all at once. They tell themselves that they will come out ahead with their investments, or they will be earning more later, or some other story to make themselves feel better about overspending. If getting the loan is allowing you to spend more money on a car than you would spend if you were paying cash, then you will not come out ahead by investing; you would be better off to spend a smaller amount of money now. I don't know where you are in the world, but where I come from, you cannot get a guaranteed investment that pays 2,75%. So there will be risk involved; if the next year is a bad one for your investment, then your investment losses combined with your withdrawals for your car payments could empty your investment before the car is paid off. Conversely, by skipping the 2,75% loan and paying cash for your car, you have essentially made a guaranteed 2,75% on this money, comparatively speaking. I don't know what the going rate is for car loans where you are, but often car dealers will give you a low loan rate in exchange for a higher sales price. As a result, you might think that you can easily invest and beat the loan rate, but it is a false comparison because you overpaid for the car."
},
{
"docid": "504918",
"title": "",
"text": "I'm a finance manager at a dealership. The thing that I tell people about leasing: It's good if you plan to make more money in the future. You can get a new car. The downside of leasing. When you get out of your lease you will either pay straight cash, get another loan for the unit, or get a new unit. 3 years down the road you have no idea what interest rates will be. If you lock in your rate today you are guaranteed that rate. With the government increasing rates we could see higher rates that could cost you more. Also if you get a loan today it will be 5-6 years. Leasing will have a 3 year lease with another 5-6 year loan on top of that. Causing to pay more in the long run If your brother doesn't have straight cash to pay for it at the end of 3 years I recommend buying new"
},
{
"docid": "585241",
"title": "",
"text": "There are several factors here. Firstly, there's opportunity cost, i.e. what you would get with the money elsewhere. If you have higher interest opportunities (investing, paying down debt) elsewhere, you could be paying that down instead. There's also domino effects: by reducing your liquid savings to or below the minimum, you can't move any of it into tax advantaged retirement accounts earning higher interest. Then there's the insurance costs. You are required to buy extra insurance to protect your lender. You should factor in the extra insurance you would buy vs the insurance required. Given that you can buy the car yourself, catastrophic insurance may not be necessary, or you may prefer a higher deductible than your lender will allow. If you're not sufficiently capitalized, you may need gap insurance to cover when your car depreciates faster than your loan is paid down. A 30 percent payment should be enough to not need it though. Finally, there's some value in having options. If you have the loan and the cash, you can likely pay it off without penalty. But it will be harder to get the loan if you don't finance it. Maybe you can take out a loan against the car later, but I haven't looked into the fees that might incur. If it's any help, I'm in the last stretch of a 3 year car loan. At the time paying in cash wasn't an option, and having done it I recognize that it's more complicated than it seems."
},
{
"docid": "357280",
"title": "",
"text": "I've been an F&I Manager at a new car dealership for over ten years, and I can tell you this with absolute certainty, your deal is final. There is no legal obligation for you whatsoever. I see this post is a few weeks old so I am sure by now you already know this to be true, but for future reference in case someone in a similar situation comes across this thread, they too will know. This is a completely different situation to the ones referenced earlier in the comments on being called by the dealer to return the vehicle due to the bank not buying the loan. That only pertains to customers who finance, the dealer is protected there because on isolated occasions, which the dealer hates as much as the customer, trust me, you are approved on contingency that the financing bank will approve your loan. That is an educated guess the finance manager makes based on credit history and past experience with the bank, which he is usually correct on. However there are times, especially late afternoon on Fridays when banks are preparing to close for the weekend the loan officer may not be able to approve you before closing time, in which case the dealer allows you to take the vehicle home until business is back up and running the following Monday. He does this mostly to give you sense of ownership, so you don't go down the street to the next dealership and go home in one of their vehicles. However, there are those few instances for whatever reason the bank decides your credit just isn't strong enough for the rate agreed upon, so the dealer will try everything he can to either change to a different lender, or sell the loan at a higher rate which he has to get you to agree upon. If neither of those two things work, he will request that you return the car. Between the time you sign and the moment a lender agrees to purchase your contract the dealer is the lien holder, and has legal rights to repossession, in all 50 states. Not to mention you will sign a contingency contract before leaving that states you are not yet the owner of the car, probably not in so many simple words though, but it will certainly be in there before they let you take a car before the finalizing contract is signed. Now as far as the situation of the OP, you purchased your car for cash, all documents signed, the car is yours, plain and simple. It doesn't matter what state you are in, if he's cashed the check, whatever. The buyer and seller both signed all documents stating a free and clear transaction. Your business is done in the eyes of the law. Most likely the salesman or finance manager who signed paperwork with you, noticed the error and was hoping to recoup the losses from a young novice buyer. Regardless of the situation, it is extremely unprofessional, and clearly shows that this person is very inexperienced and reflects poorly on management as well for not doing a better job of training their employees. When I started out, I found myself in somewhat similar situations, both times I offered to pay the difference of my mistake, or deduct it from my part of the sale. The General Manager didn't take me up on my offer. He just told me we all make mistakes and to just learn from it. Had I been so unprofessional to call the customer and try to renegotiate terms, I would have without a doubt been fired on the spot."
},
{
"docid": "408308",
"title": "",
"text": "I have a job and would like to buy equipment for producing music at home and it would be easier for me to pay for the equipment monthly I just want to address your contention that it would be easier to pay monthly, with an interest calculation. Lets say you get a credit card with a very reasonable rate of 12% and you buy $2,500 of equipment. A typical credit card minimum payment is interest charges + 1% of the principle. You can see how this is going. You've paid nearly $200 to clear about $100 off your principle. Obviously paying the minimum payment will take forever to wipe out this debt. So you pay more, or maybe you get 0% interest for a while and take advantage of that. Paying $100 per month against $2,500 at 12% per year will take 29 months and cost about $390 in interest. At $200 per month it'll take 14 months and cost $184 in interest. Also note, you'll probably get an interest rate closer to 16 or 17%. It's always easier to pay small amounts frequently than it is to pay a lot of money all at once, that ease has a cost. If you're buying the gear to start a little business, or you already have a little business going and want to upgrade some gear, great; disciplined debt handling is a wonderful skill to have in business. If you want to start yourself in to a new hobby, you should not do that with debt. If interest rates are low enough financing something can make sense. 0.9% apr on a car, sure; 15% apr on a mixing board, no. Credit card interest rates are significant and really should not be trifled with."
},
{
"docid": "376016",
"title": "",
"text": "If you have the money to pay cash for the car. Then 0 months will save you the most money. There are of course several caveats. The money for the car has to be in a relatively liquid form. Selling stocks which would trigger taxes may make the pay cash option non-optimal. Paying cash for the car shouldn't leave you car rich but cash poor. Taking all your savings to pay cash would not be a good idea. Note: paying cash doesn't involve taking a wheelbarrow full of bills to the dealer; You can use a a check. If cash is not an option then the longest time period balanced by the rates available is best. If the bank says x percent for 12-23 months, y percent for 24-47 months, Z percent for 48 to... It may be best to take the 47 month loan, because it keeps the middle rate for a long time. You want to lock in the lowest rate you can, for the longest period they allow. The longer period keeps the required minimum monthly payment as low as possible. The lower rate saves you on interest. Remember you generally can pay the loan off sooner by making extra or larger payments. Leasing. Never lease unless you are writing off the monthly lease payment as a business expense. If the choice is monthly lease payments or depreciation for tax purposes the lease can make the most sense. If business taxes aren't involved then leasing only means that you have a complex deal where you finance the most expensive part of the ownership period, you have to watch the mileage for several years, and you may have to pay a large amount at the end of the period for damages and excess miles. Plus many times you don't end up with the car at the end of the lease. In the United States one way to get a good deal if you have to get a loan: take the rebate from the dealer; and the loan from a bank/credit Union. The interest rate at banking institution is a better range of rates and length. Plus you get the dealer cash. Many times the dealer will only give you the 0% interest rate if you pay in 12 months and skip the rebate; where the interest paid to the bank will be less than the rebate."
}
] |
4767 | New car: buy with cash or 0% financing | [
{
"docid": "125986",
"title": "",
"text": "Cash price is $22,500. Financed, it's the same thing (0% interest) but you pay a $1500 fee. 1500/22500 = 6.6%. Basically the APR for your loan is 1.1% per year but you are paying it all upfront. Opportunity cost: If you take the $22,500 you plan to pay for the car and invested it, could you earn more than the $1500 interest on the car loan? According to google, as of today you can get 1 year CD @ 1.25% so yes. It's likely that interest rates will be going up in medium term so you can potentially earn even more. Insurance cost: If you finance you'll have to get comprehensive insurance which could be costly. However, if you are planning to get it anyway (it's a brand new car after all), that's a wash. Which brings me to my main point: Why do you have $90k in a savings account? Even if you are planning to buy a house you should have that money invested in liquid assets earning you interest. Conclusion: Take the cheap money while it's available. You never know when interest rates will go up again."
}
] | [
{
"docid": "56867",
"title": "",
"text": "Do you need the car, or is this an optional purchase for you? Do you currently have a car that is in good working order? If you can continue to save for the car instead of buying now, you'll be getting interest on what you've saved -- and that's a lot better than 0% financing."
},
{
"docid": "213393",
"title": "",
"text": "\"Electric does make a difference when considering whether to lease or buy. The make/model is something to consider. The state you live in also makes a difference. If you are purchasing a small electric compliance car (like the Fiat 500e), leasing is almost always a better deal. These cars are often only available in certain states (California and Oregon), and the lease deals available are very enticing. For example, the Fiat 500e is often available at well under $100/mo in a three-year lease with $0 down, while purchasing it would cost far more ($30k, minus credits/rebates = $20k), even when considering the residual value. If you want to own a Tesla Model S, I recommend purchasing a used car -- the market is somewhat flooded with used Teslas because some owners like to upgrade to the latest and greatest features and take a pretty big loss on their \"\"old\"\" Tesla. You can save a lot of money on a pre-owned Model S with relatively low miles, and the battery packs have been holding up well. If you have your heart set on a new Model S, I would treat it like any other vehicle and do the comparison of lease vs buy. One thing to keep in mind that buying a Model S before the end of 2016 will grandfather you into the free supercharging for life, which makes the car more valuable in the future. Right now (2016/2017) there is a $7500 federal tax credit when buying an electric vehicle. If you lease, the leasing company gets the credit, not you. The cost of the lease should indirectly reflect this credit, however. Some states have additional incentives. California has a $2500 rebate, for example, that you can receive even if you lease the vehicle. To summarize: a small compliance car often has very good reasons to lease. An expensive luxury car like the Tesla can be looked at like any other lease vs buy decision, and buying a used Model S may save the most money.\""
},
{
"docid": "384175",
"title": "",
"text": "\"Without knowing the details of your financial situation, I can only offer general advice. It might be worth having a financial counselor look at your finances and offer some custom advice. You might be able to find someone that will do this for free by asking at your local church. I would advise you not to try to get another loan, and certainly not to start charging things to a credit card. You are correct when you called it a \"\"nightmare.\"\" You are currently struggling with your finances, and getting further into debt will not help. It would only be a very short-term fix and have long-lasting consequences. What you need to do is look at the income that you have and prioritize your spending. For example, your list of basic needs includes: If you have other things that you are spending money on, such as medical debt or other old debt that you are trying to pay off, those are not as important as funding your basic needs above. If there is anything you can do to reduce the cost of the basic needs, do it. For example, finding a cheaper place to live or a place closer to your job might save you money. Perhaps accepting nutrition assistance from a local food bank or the Salvation Army is an option for you. Now, about your car: Your transportation to your job is very much one of your basic needs, as it will enable you to pay for your other needs. If you can use public transportation until you can get a working car again, or you can find someone that will give you a ride, that will solve this problem. If not, you'll need to get a working car. You definitely don't want to take out another loan for a car, as you are already having trouble paying the first loan. I'm guessing that it will be less expensive to get the engine repaired than it will be to buy a new car at this point. But that is just a guess. You'll need to find out how much it will cost to fix the car, and see if you can swing it by perhaps eliminating expenses that aren't necessary, even for a short time. For example, if you are paying installments on medical debt, you might have to skip a payment to fix your car. It's not ideal, but if you are short on cash, it is a better option than losing your job or taking out even more debt for your car. Alternatively, buying another, functional car, if it costs less than fixing your current car, is an option. If you don't have the money to pay your current car loan payments, you'll lose your current car. Just to be clear, many of these options will mess up your credit score. However, borrowing more, in an attempt to save your credit score, will probably only put off the inevitable, as it will make paying everything off that much harder. If you don't have enough income to pay your debts, you might be better off to just take the credit score ding, get back on your feet, and then work to eliminate the debt once you've got your basic needs covered. Sorry to hear about your situation. Again, this advice is just general, and might not all apply to your financial details. I recommend talking to the pastor of a local church and see if they have someone that can sit down with you and discuss your options.\""
},
{
"docid": "504918",
"title": "",
"text": "I'm a finance manager at a dealership. The thing that I tell people about leasing: It's good if you plan to make more money in the future. You can get a new car. The downside of leasing. When you get out of your lease you will either pay straight cash, get another loan for the unit, or get a new unit. 3 years down the road you have no idea what interest rates will be. If you lock in your rate today you are guaranteed that rate. With the government increasing rates we could see higher rates that could cost you more. Also if you get a loan today it will be 5-6 years. Leasing will have a 3 year lease with another 5-6 year loan on top of that. Causing to pay more in the long run If your brother doesn't have straight cash to pay for it at the end of 3 years I recommend buying new"
},
{
"docid": "262028",
"title": "",
"text": "\"For the future: NEVER buy a car based on the payment. When dealers start negotiating, they always try to have you focus on the monthly payment. This allows them to change the numbers for your trade, the price they are selling the car for, etc so that they maximize the amount of money they can get. To combat this you need to educate yourself on how much total money you are willing to spend for the vehicle, then, if you need financing, figure out what that actually works out to on a monthly basis. NEVER take out a 6 year loan. Especially on a used car. If you can't afford a used car with at most a 3 year note (paying cash is much better) then you can't really afford that car. The longer the note term, the more money you are throwing away in interest. You could have simply bought a much cheaper car, drove it for a couple years, then paid CASH for a new(er) one with the money you saved. Now, as to the amount you are \"\"upside down\"\" and that you are looking at new cars. $1400 isn't really that bad. (note: Yes you were taken to the cleaners.) Someone mentioned that banks will sometimes loan up to 20% above MSRP. This is true depending on your credit, but it's a very bad idea because you are purposely putting yourself in the exact same position (worse actually). However, you shouldn't need to worry about that. It is trivial to negotiate such that you pay less than sticker for a new car while trading yours in, even with that deficit. Markup on vehicles is pretty insane. When I sold, it was usually around 20% for foreign and up to 30% for domestic: that leaves a lot of wiggle room. When buying a used car, most dealers ask for at least $3k more than what they bought them for... Sometimes much more than that depending on blue book (loan) value or what they managed to talk the previous owner out of. Either way, a purchase can swallow that $1400 without making it worse. Buy accordingly.\""
},
{
"docid": "505467",
"title": "",
"text": "If everyone bought used cars, who would buy the new cars so that everyone else could buy them used? Rental car companies? Your rant expresses a misunderstanding of fundamental economics (as demand for used cars increases, so will prices) but economics is off-topic here, so let me explain why I bought a new car—that I am now in the 10th year of driving. When I bought the car I currently drive, I was single, I was working full-time, and I was going to school full-time. I bought a 2007 Toyota Corolla for about $16,500 cash out the door. I wanted a reliable car that was clean and attractive enough that I wouldn't be embarrassed in it if I took a girl out for dinner. I could have bought a much more expensive car, but I wanted to be real about myself and not give the wrong impression about my views on money. I've done all the maintenance, and the car is still very nice even after 105K miles. It will handle at least that many more miles barring any crashes. Could I have purchased a nice used car for less? Certainly, but because it was the last model year before a redesign, the dealer was clearly motivated to give me a good deal, so I didn't lose too much driving it off the lot. There are a lot of reasons why people buy new cars. I didn't want to look like a chump when out on a date. Real-estate agents often like to make a good impression as they are driving clients to see new homes. Some people can simply afford it and don't want to worry about what abuse a prior owner may have done. I don't feel defensive about my decision to buy a new car those years ago. The other car I've purchased in the last 10 years was a four year old used car, and it certainly does a good job for my wife who doesn't put too many miles on it. I will not rule out buying another new car in the future either. Some times the difference in price isn't significant enough that used is always the best choice."
},
{
"docid": "279897",
"title": "",
"text": "Car dealers as well as boat dealers, RV dealers, maybe farm vehicle dealers and other asset types make deals with banks and finance companies to they can make loans to buyers. They may be paying the interest to the finance companies so they can offer a 0% loan to the retail customer for all or part of the loan term. Neither the finance company nor the dealer wants to make such loans to people who are likely to default. Such customers will not be offered this kind of financing. But remember too that these loans are secured by the asset - the car - which is also insured. But the dealer or the finance company holds that asset as collateral that they can seize to repay the loan. So the finance company gets paid off and the dealer keeps the profit he made selling the car. So these loans are designed to ensure the dealer nor the finance company looses much. These are called asset finance loans because there is always an asset (the car) to use as collateral."
},
{
"docid": "368802",
"title": "",
"text": "\"You are co-signer on his car loan. You have no ownership (unless the car is titled in both names). One option (not the best, see below) is to buy the car from him. Arrange your own financing (take over his loan or get a loan of your own to pay him for the car). The bank(s) will help you take care of getting the title into your name. And the bank holding the note will hold the title as well. Best advice is to get with him, sell the car. Take any money left after paying off the loan and use it to buy (cash purchase, not finance) a reliable, efficient, used car -- if you truly need a car at all. If you can get to work by walking, bicycling or public transit, you can save thousands per year, and perhaps use that money to start you down the road to \"\"financial independence\"\". Take a couple of hours and research this. In the US, we tend to view cars as necessary, but this is not always true. (Actually, it's true less than half the time.) Even if you cannot, or choose not to, live within bicycle distance of work, you can still reduce your commuting cost by not financing, and by driving a fuel efficient vehicle. Ask yourself, \"\"Would you give up your expensive vehicle if it meant retiring years earlier?\"\" Maybe as many as ten years earlier.\""
},
{
"docid": "14745",
"title": "",
"text": "My assumption here is that you paid nearly 32K, but also financed about 2500 in taxes/fees. At 13.5% the numbers come out pretty close. Close enough for discussion. On the positive side, you see the foolishness of your decision however you probably signed a paper that stated the true cost of the car loan. The truth in lending documents clearly state, in bold numbers, that you would pay nearly 15K in interest. If you pay the loan back early, or make larger principle payments that number can be greatly reduced. On top of the interest charge you will also suffer depreciation of the car. If someone offered you 31K for the car, you be pretty lucky to get it. If you keep it for 4 years you will probably lose about 40% of the value, about 13K. This is why it is foolish for most people to purchase a new vehicle. Not many have enough wealth to absorb a loss of this size. In the book A Millionaire Next Door the author debunks the assumption that most millionaires drive new cars. They tend to drive cars that are pretty standard and a couple of years old. They pay cash for their cars. The bottom line is you singed documents indicating that you knew exactly what you were getting into. Failing any other circumstances the car is yours. Talking to a lawyer would probably confirm this. You can attempt to sell it and minimize your losses, or you can pay off the loan early so you are not suffering from finance charges."
},
{
"docid": "419851",
"title": "",
"text": "\"Neat points but with regards to your first point there is no car financing to \"\"pay off\"\" unless you take on debt. And few Americans have or can easily accumulate the cash in hand to buy a $15K-30K vehicle. Sure, you can definitely live without debt, but buying a home, a car or making other sizable purchases is not possible under such circumstances unless you make a greater than average salary and are remarkably frugal, including an affordable, tenable living situation.\""
},
{
"docid": "241501",
"title": "",
"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."
},
{
"docid": "205098",
"title": "",
"text": "\"You are still paying a heavy price for the 'instant gratification' of driving (renting) a brand-new car that you will not own at the end of the terms. It is not a good idea in your case, since this luxury expense sounds like a large amount of money for you. Edited to better answer question The most cost effective solution: Purchase a $2000 car now. Place the $300/mo payment aside for 3 years. Then, go buy a similar car that is 3 years old. You will have almost $10k in cash and probably will need minimal, if any, financing. Same as this answer from Pete: https://money.stackexchange.com/a/63079/40014 Does this plan seem like a reasonable way to proceed, or a big mistake? \"\"Reasonable\"\" is what you must decide. As the first paragraph states, you are paying a large expense to operate the vehicle. Whether you lease or buy, you are still paying this expense, especially from the depreciation on a new vehicle. It does not seem reasonable to pay for this luxury if the cost is significant to you. That said, it will probably not be a 'big mistake' that will destroy your finances, just not the best way to set yourself up for long-term success.\""
},
{
"docid": "474573",
"title": "",
"text": "\"@Joe's original answer and the example with proportionate application of the payment to the two balances is not quite what will happen with US credit cards. By US law (CARD Act of 2009), if you make only the minimum required payment (or less), the credit-card company can choose which part of the balance that sum is applied to. I am not aware of any company that chooses to apply such payments to anything other than that part of the balance which carries the least interest rate (including the 0% rate that \"\"results\"\" from acceptance of balance transfer offers). If you make more than the minimum required payment, then the excess must, by law, be applied to paying off the highest rate balance. If the highest rate balance gets paid off completely, any remaining amount must be applied to second-highest rate balance, and so on. Thus, it is not the case that that $600 payment (in Joe's example) is applied proportionately to the $5000 and $1000 balances owed. It depends on what the required minimum payment is. So, what would be the minimum required payment? The minimum payment is the total of (i) all finance charges incurred during that month, (ii) all service fees and penalties (e.g. fee for exceeding credit limit, fee for taking a cash advance, late payment penalty) and other charges (e.g. annual card fee) and (iii) a fraction of the outstanding balance that (by law) must be large enough to allow the customer to pay off the entire balance in a reasonable length of time. The law is silent on what is reasonable, but most companies use 1% (which would pay off the balance over 8.33 years). Consider the numbers in Joe's example together with the following assumptions: $5000 and $1000 are the balances owed at the beginning of the month, no new charges or service fees during that month, and the previous month's minimum monthly payment was made on the day that the statement paid so that the finance charge for the current month is on the balances stated). The finance charge on the $5000 balance is $56.25, while the finance charge on the $1000 balance is $18.33, giving a minimum required payment of $56.25+18.33+60 = $134.58. Of the $600 payment, $134.58 would be applied to the lower-rate balance ($5000 + $56.25 = $5056.25) and reduce it to $4921.67. The excess $465.42 would be applied to the high-rate balance of $1000+18.33 = $1018.33 and reduce it to $552.91. In general, it is a bad idea to take a cash advance from a credit card. Don't do it unless you absolutely must have cash then and there to buy something from a merchant who does not accept credit cards, only cash, and don't be tempted to use the \"\"convenience checks\"\" that credit-card companies send you from time to time. All such cash advances not only carry larger rates of interest (there may also be upfront fees for taking an advance) but any purchases made during the rest of the month also become subject to finance charge. In other words, there is no \"\"grace period\"\" for new charges, and this state of affairs will last for one month beyond the first credit-card statement whose statement is paid off in full in timely fashion. Finally, turning to the question asked, viz. \"\" I am trying to determine how much I need to pay monthly to zero the balance, ....\"\", as per the above calculations, if the OP makes the minimum required payment of $134.58 plus $1018.33, that $134.58 will be applied to the low-rate balance and the rest $1018.33 will pay off the high-rate balance in full if the payment is made on the day the statement is issued. If payment is made later, but before the due date, that $1018.33 will be accruing finance charges until the date the payment is made, and these will appear as 22% rate balance on next month's statement. Similarly for the low-rate balance. What if several monthly payments will be required? The best calculator known to me is at https://powerpay.org (free but it is necessary to set up a username and password). Enter in all the credit card balances and the different interest rates, and the total amount of money that can be used to pay off the balances, and the site will lay out a payment plan. (Basically, pay off the highest-interest rate balance as much as possible while making minimum required payments on the rest). Most people are surprised at how much can be saved (and how much shorter the time to be debt-free is) if one is willing to pay just a little bit more each month.\""
},
{
"docid": "214749",
"title": "",
"text": "You need to do the maths exactly. The cost of buying a car in cash and using a loan is not the same. The dealership will often get paid a significant amount of money if you get a loan through them. On the other hand, they may have a hold over you if you need their loan (no cash, and the bank won't give you money). One strategy is that while you discuss the price with the dealer, you indicate that you are going to get a loan through them. And then when you've got the best price for the car, that's when you tell them it's cash. Remember that the car dealer will do what's best for their finances without any consideration of what's good for you, so you are perfectly in your rights to do the same to them."
},
{
"docid": "131327",
"title": "",
"text": "If a shop offers 0% interest for purchase, someone is paying for it. e.g., If you buy a $X item at 0% interest for 12 months, you should be able to negotiate a lower cash price for that purchase. If the store is paying 3% to the lender, then techincally, you should be able to bring the price down by at least 2% to 3% if you pay cash upfront. I'm not sure how it works in other countries or other purchases, but I negotiated my car purchase for the dealer's low interest rate deal, and then re-negotiated with my preapproved loan. Saved a good chunk on that final price!"
},
{
"docid": "223502",
"title": "",
"text": "\"It's possible the $16,000 was for more than the car. Perhaps extras were added on at purchase time; or perhaps they were folded into the retail price of the car. Here's an example. 2014: I'm ready to buy. My 3-year-old trade-in originally cost $15,000, and I financed it for 6 years and still owe $6500. It has lots of miles and excess wear, so fair blue-book is $4500. I'm \"\"upside down\"\" by $2000, meaning I'd have to pay $2000 cash just to walk away from the car. I'll never have that, because I'm not a saver. So how can we get you in a new car today? Dealer says \"\"If you pay the full $15,000 retail price plus $1000 of worthless dealer add-ons like wax undercoat (instead of the common discounted $14,000 price), I'll eat your $2000 loss on the trade.\"\" All gets folded into my new car financing. It's magic! (actually it's called rollover.) 2017: I'm getting itchy to trade up, and doggone it, I'm upside down on this car. Why does this keep happening to me? In this case, it's rollover and other add-ons, combined with too-long car loans (6 year), combined with excessive mileage and wear on the vehicle.\""
},
{
"docid": "37070",
"title": "",
"text": "\"There are two issues here: arithmetic and psychology. Scenario 1: You are presently paying an extra $500 per month on your student loan, above the minimum payments. Your credit card company offers a $4000 cash advance at 0% for 8 months. So you take the cash advance, pay it toward the student loan, and then instead of paying the extra $500 per month toward the student loan you use that $500 for 8 months to repay the cash advance. Net result: You pay 0% interest on the loan, and save roughly 8 months times $4000 times the interest on the student loan divided by two. (I say \"\"divided by two\"\" because it's not the difference between $4000 and zero, but between $4000 and the $500 you would have been paying off each month.) Clearly you are better off. If you are NOT presently paying an extra $500 on the student loan -- or even if you are but it is a struggle to come up with the money -- then the question becomes, can you reasonably expect to be able to pay off the credit card before the grace period runs out? Interest rates on credit cards are normally much higher than interest rates on student loans. If you get the cash advance and then can't repay it, after 8 months you are paying a very steep interest rate, and anything you saved on the student loan will quickly be lost. What I mean by \"\"psychological\"\" is that you have to have the discipline to really repay the credit card within the grace period. If you're not very confidant that you can do that, this plan could go bad very quickly. Personally, I've thought about doing things like this many times -- cash advances against credit cards, home equity loans, etc, all give low-interest money that could be used to pay off a higher-interest debt. But it's easy to get into trouble doing things like this. It's easy to say to yourself, Well, I don't need to put ALL the money toward that other debt, I could keep a thousand or so to buy that big screen TV I really need. Or to fail to pay back the low-interest loan on schedule because other things keep coming up that you spend your money on instead, whether frivolous luxuries or true emergencies. And there's always the possibility that something will happen to mess up your finances, from a big car repair bill to losing your job. You don't want to paint yourself into a corner. Finally, maxing out your credit cards hurts your credit rating. The formulas are secret, but I understand that if you use more than half your available credit, that's a minus. How much it hurts you depends on lots of factors.\""
},
{
"docid": "63042",
"title": "",
"text": "\"Welcome to Personal Finance and Money. This answer will depend a lot on what is most important to the buyer, for example, whether it is important to always be in a newer car, to save money, or strike a balance between the two. There are trade-offs and I don't think there is one right answer for all circumstances. Leasing Leasing does make financial sense for at least two types of people I'm aware of: The company I work for provides company cars to sales executives, which we lease. We lease because it wouldn't be appropriate for a salesperson to meet a client in a car that clearly appears used. Similarly, I know people who value being in a newer car all the time, and for them, leasing makes more financial sense then buying a new car every 2-3 years, and selling their old car which is now 2-3 years old and has depreciated significantly. They understand that they are paying more to always be able to be in a newer car. I used to work with a manager who, every time the new model of the car he owned came out, would see the car and buy it on the spot, even though he already owned last year's model, and he didn't need two cars. He just couldn't help himself; he felt he had to have the new model. It's no use sermonizing about how he \"\"should\"\" learn to save money by just being content with what he had. In reality, if he is going to buy the new model every year no matter what, he should lease rather than buy. From my experience, I would only recommend leasing if you would otherwise be buying a new car on a regular basis, and the lease would be less expensive. This is probably the most cost effective way to maintain the highest possible quality, but would cost much more than buying and holding a new car or buying a value used car. I don't see reliability as much of a factor here since the seller will have a very good idea of how much maintenance will cost, but you will pay a premium to be able to pay a fixed cost for maintenance instead of risking a worse-than-average experience. Buying New According to Edmunds and BIGResearch, only a relatively small number of people are ever in the market for a new car at a given point in time. While you do pay quite a bit more to own a brand new car instead of the same car that is 2-3 years old, there are several reasons I'm aware of why people buy new cars: Number 4 is probably the biggest reason, and many people are willing to pay for the certainty of knowing that the miles are correct, the parts are new, the car is in good working condition, etc. Additionally, some makes of cars have much higher resale values than others (such as Hondas), meaning that there isn't as large of a drop in price between a new car and a used car. Many people consider buying a new car the best way to ensure they get the best reliability since they know the initial condition of the car and can care for it meticulously from that point on. This can especially make sense when the buyer intends to keep the car for the like of the car as the buyer will then benefit from having no car payments once it is paid off. Buying Used Buying a used car is the most affordable option, but for a given quality of car the reliability can be a significant potential pitfall. It can be very difficult for a non-professional to tell whether they are getting a good value. Additionally, it is hard for an owner who wants to sell a used car in excellent condition to get the true value of the car, and much easier for an unscrupulous seller to to get the market price by selling to an unaware buyer (the \"\"lemons\"\" problem in economics). You could buy an inspected car with a limited warranty from a retail seller like CarMax or a dealership, but you often pay a significant premium that cancels out much of the biggest reason to buy used - saving money. However, there is an opportunity to save money when buying used if you're willing to compromise on the condition of the car (if you don't care whether a car has hail damage, for example), or if you are able to wait until you find a motivated/distressed seller who needs to sell quickly and is willing to sell at a discount. If cost is your primary priority, buying a used car is likely the best option, but I would recommend the following in all circumstances: If the seller isn't willing to offer both of these, I would walk away. When buying used, you will also need to consider maintenance, which will vary significantly based on the make and model of the car as well as the condition, which is another risk you need to be willing to take on if you choose to buy used.\""
},
{
"docid": "102811",
"title": "",
"text": "Having just purchased an upcoming Samsung phone using their 0% interest I can tell you that the justification is to give you credit. I have the same with Best Buy which is 0% for a specific initial purchase. The bank (in the Samsung case is TD Bank) establishes a rotating credit line for you. The APR after is well established at the very high side of 29.99%. Nobody in their right mind should want to pay that much interest on any purchase. My last car purchase was below 3% APR. Additionally the introductory rate will still calculate their 29.99% interest as if it existed since the first day of credit and will be applied to your balance should you ever be late on any single payment. At that time the interest is factored in as if it were always there and payments are adjusted accordingly. You see, the bank wants you to pay their high interest rate. So they entice you with the 0% and hope you either finance more on that credit line (exempt from the promotional rate) or miss a payment and they can hit you with a whammy. Specifically the question asks how this offer benefits Samsung. To answer that portion; it ensures a sale at full retail price of the phone. Samsung is just an agent between you and the bank. The bank takes on the risk for a potential high reward."
}
] |
4775 | Should I finance a car to build credit for a mortgage next year? | [
{
"docid": "72021",
"title": "",
"text": "The fluctuation of interest rates during the next year could easily dwarf the savings this attempt to improve your credit score will have; or the reverse is true. Will the loan improve your score enough to make a difference? It will not change the number of months old your oldest account is. It will increase the breadth of your accounts. Applying for the car loan will result in a short term decrease in the score because of the hard pull. The total impact will be harder to predict. A few points either way will generally not have an impact on your rate. You will also notice the two cores in your question differ by more than 30 points. You can't control which number the lender will use. You also have to realize the number differs every day depending on when they pull it that month. The addition of a car loan, assuming you still have the loan when you buy the house, will not have a major impact on your ability to get afford the home mortgage. The bank cares about two numbers regarding monthly payments: the amount of your mortgage including principal, interest, taxes and insurance; and the amount of all other debt payments: car loan, school loans, credit cards. The PITI number should be no more than 28%-33% of your monthly income; the other payments no more than 10%. If the auto loan payments fit in the 10% window, then the amount of money you can spend each month on the mortgage will not be impacted. If it is too large, then they will want to see a smaller amount of your income to go to PITI. If you buy the car, either by cash or by loan, after you apply for the mortgage they will be concerned because you are impacting directly numbers they are using to evaluate your financial health. I have experienced a delay because the buyer bought a car the week before closing. The biggest impact on your ability to get the loan is the greater than 20% down payment, Assuming you can still do that if you pay cash for the car. Don't deplete your savings to get to the 50% down payment level. Keep money for closing costs, moving expenses, furnishing, plus other emergencies. Make it clear that you can easily cover the 20% level, and are willing to go higher to make the loan numbers work."
}
] | [
{
"docid": "406853",
"title": "",
"text": "If you have no credit score it is generally far easier and more affordable to establish credit the cheapest way possible, which is usually in the form of a small credit card (student card if you are a student, low credit line unsecured, or even secured if you need). Your local bank/credit union will usually be keen to offer you something to start out, but you can also apply online to some of the major credit card vendors. As always, look out for annual fees, etc. In general, trying to get a larger loan to establish credit will cost you a lot as you will not qualify for any legitimate 0% or ultra-low APR car loans - those are reserved for people with established and generally pretty good credit. I expect you'll find a car loan that will have a lower APR than you could get investing your money otherwise - especially if you do not have established excellent credit - to simply be a phantom (you won't find it), and even if you could it is more risky than it is worth. Furthermore, if establishing credit is important to you (such as for buying a house down the road), you can build an excellent credit score without ever having a car loan. So you don't have to buy a car on borrowed money just to hope to get approved for a house some day - it's just not a requirement. Finally, I urge you to make a decision on the best car for you in your situation, ignoring the credit score - especially if you are more than 3-5+ years away from buying a house. Everything else about buying a car is more important - the actual cost of the car, year, mileage, suitability for your needs, gas mileage, maintenance and insurance costs, etc. Then, at the very end of your decision making process, ensure that buying the car would not put you dangerously low on savings by squeezing your emergency fund. Decide if you really need a loan or as expensive of a car, considering the costs over the expected life of you owning the car (or at least the next 2-5 years). Never get trapped into just thinking about monthly payments, which hide the true cost of loans and buying beyond what you can afford to purchase today."
},
{
"docid": "341837",
"title": "",
"text": "It is important to consider your overall financial goals (especially in the 3-5 year range). If you have another financial goal which cannot be met without that additional money then meeting that financial goal might take priority over what I am about to say. Your mortgage rate is another important factor to consider when answering this question. Extra mortgage payments are equivalent to investing that money in a VERY low risk investment with an equivalent yield of the mortgage rate because you will be paying that much less per year in interest. (Actually, when you consider that mortgage interest is often tax-deductible the equivalent yield should be reduced by your income tax rate.) Typically it is not possible to find such a low risk investment with a yield as high as your mortgage rate. For example current mortgage rates are over twice as high as the yield of a one year CD. Also keep in mind that additional mortgage payments help you build equity. This equity will most likely be applied to your next home purchase. If so their effect will be in place throughout the life of your next mortgage too."
},
{
"docid": "159936",
"title": "",
"text": "\"The statistic you cited comes from the Federal Reserve Board's Survey of Consumer Finances, a survey that they do every three years, most recently in 2013. This was reported in the September 2014 issue of the Federal Reserve Bulletin. They list the percentage of Americans with any type of debt as 74.5 in 2013, down slightly from 74.9 in 2010. The Bulletin also has a table with a breakdown of the types of debt that people have, and primary residence mortgages are at the top of the list. So the answer is yes, the 75% statistic includes Americans with home mortgages.* The bigger question is, are you really \"\"in debt\"\" if you have a home mortgage? The answer to that is also yes. When you take out a mortgage, you really do own the house. You decide who lives there, you decide what changes you are going to make to it, and you are responsible for the upkeep. But the mortgage debt you have is secured by the house. This means that if you refuse to pay, the bank is allowed to take possession of the house. They don't even get the \"\"whole\"\" house, though; they will sell it to recoup their losses, and give you back whatever equity you had in the house after the loan is satisfied. Is it good debt? Many people think that if you are borrowing money to purchase an appreciating asset, the debt is acceptable. With this definition, a car loan is bad, credit card debt is very bad, and a home mortgage might be okay. Even Dave Ramsey, radio host and champion of the debt-free lifestyle, is not opposed to home mortgages. Home mortgages allow people to purchase a home that they would otherwise be unable to afford. * Interestingly, according to the bulletin appendix, credit card balances were only included as debt for the survey purposes if there was a balance after the most recent bill was paid, not including purchases made after the bill. So people that do not carry a balance on their credit card were not considered \"\"in debt\"\" in this statistic.\""
},
{
"docid": "66805",
"title": "",
"text": "The eligibilty of the deduction is based on what the borrowed money is used to purchase and NOT what asset is used as collateral. So at the beginning of your mortgage, 10% of the interest is deductible because the entire loan was used to purchase the condo. But when you withdraw money from the account the additional interest is usually not deductible. It can get confusing with all the withdrawals and payments that will be coming in and out of the account if you happen to use it a lot like a chequing account. An easy example would be if you only paid the interest on the loan... Say you had a $100 000 loan at 5% APY (for simplicity's sake). After one year, you would have paid $5000 interest. $500 of the would be deductible given that your office is 10% of the condo. Then you buy a $1000 couch and continue to only pay interest for the next year. You would have paid $5100 interest... $5000 on money borrowed to buy the condo, and $100 on money borrowed to buy the couch. So you can still only deduct $500. What happens when you pay back $500 against the line of credit? Could you designate that 100% of the money should be applied to the non-deductible interest? Or does it have to applied proportionally? I don't know. I think it'd would be wise to separate the loans somehow. Manulife may even have some tools to facilitate that. However, I wouldn't recommend the Manulife One product. I looked into when I was buying my house two years ago, and at that time it was too expensive. The rate was the same that other banks were charging for a home equity line of credit (which was prime at the time). You can replicate the Manulife One in a cheaper way using a traditional mortgage and a home equity line of credit... The majority of the loan will be the traditional mortgage at (hopefully) a cheap rate. Then you can use your line of credit as the chequing account."
},
{
"docid": "120283",
"title": "",
"text": "I think a simplified version of what you are asking is how much benefit you will receive from lower mortgage payments on your future $400k (roughly) home loan by having a higher credit score than now, and whether taking a car loan now will increase that benefit more than the value of the car loan. Since you already know the cost to you of the car loan, the other two thing you need to know in order to answer that question are: 1- the amount of increase a car loan gives your credit score, and 2- how much lower your mortgage interest rate will be with a higher credit score. Answering #1 seems like fuzzy credit magic to me that someone else may be able to answer, but #2 should be easy to determine by talking to a mortgage broker to see what rate you can get with your current credit score, and finding out how much higher it needs to be in order to get a better rate. Then you can take the difference in mortgage payments between the two rates and compare that to your car loan value."
},
{
"docid": "252859",
"title": "",
"text": "Considering I'm putting 30% down and having my father cosign is there any chance I would be turned down for a loan on a $100k car? According to BankRate, the average credit score needed to buy a new car is 714, but they also show average interest rates at 6.39% for new-car loans to people with credit scores in the 601-660 range. High income certainly helps offset credit score to some extent. Not every bank/dealership does things the same way. Being self-employed you'd most likely be required to show 2 years of tax returns, and they'd use those as a basis for your income rather than whatever you have made recently. If using a co-signer, their income matters. Another key factor is debt to income ratio, if too much of someone's income is already spoken for by other debts a lender will shy away. So, yes, there's a chance, given all the information we don't know and the variability with lender policies, that you could be turned down for a car loan. How should I go about this? If you're set on pursuing the car loan, just go talk to some lenders. You'll want to shop around for a good rate anyway, so no need to speculate just go find out. Include the dealership as a potential financing option, they can have great rates. Personally, I'd get a much cheaper car. Your insurance premium on a 100k car will be quite high due to your age. You might be rightly confident in your earning potential, but nothing is guaranteed, situations can change wildly in short order. A new car is not a good investment or a value-retaining asset, so why bother going into debt for one if you don't have to? If you buy something in cash now, you could upgrade in a few years without financing if your earning prediction holds and would save quite a bit in car insurance and interest over the years between."
},
{
"docid": "365651",
"title": "",
"text": "You should. The impact on the credit score is small, and probably not worth the money of the annual fee. I would only change that if you plan to get a mortgage or car loan the next month - then wait until afterwards."
},
{
"docid": "404726",
"title": "",
"text": "\"Most personal loans in the US are for the purpose of purchasing some tangible object (usually a house or car) and that object is the collateral for the loan. Indeed, the loan proceeds are usually paid directly to the seller without passing through the bank account of the borrower, and the seller delivers the title of the car to the lender, or a mortgage lien is recorded on the real property. Except possibly in the case of a refinance of a home mortgage, there is not much cash from such a loan to send to a friend to invest in his business, whether in the US or in India. These types of loans are \"\"relatively easy\"\" to get. Much harder to get are unsecured personal loans. Unless your friend has a very friendly banker, getting an unsecured loan of, say, $20,000 \"\"just for the heck of it\"\" is not easy. Some reasonably well-off people do manage to get such loans and use the money to invest in the stock or bond markets, in which case, the interest paid on such loans can be deducted on Schedule A (but only to the extent of the actual investment income; any extras can be carried over to the next year). So, will your friend be investing in your business or making a loan to your business? and do you anticipate that your business will generate any investment income or interest for your friend? If not, and your friend still wants to finance your business (while making payments on the loan in the US), then your friend must really like you a lot (or have faith that a few years down the road, you will be able to sell your business to GoAppTel for mucho big bucks and pay him off very handsomely).\""
},
{
"docid": "571694",
"title": "",
"text": "\"Don't use a \"\"credit repair\"\" agency. They are scams. One of the myriad of ways in which they work is by setting you up with a bogus loan, which they will dutifully report you as paying on time. They'll pretend to be a used car dealer or some other credit-based merchant. For a time, this will actually work. This is called \"\"false reporting.\"\" The problem is, the data clearinghouses are not stupid and eventually realize some hole-in-the-wall \"\"car dealer\"\" with no cars on the lot (yes, they do physical inspections as part of the credentialing process, just sometimes they're a little slow about it) is reporting trade lines worth millions of dollars per year. It's a major problem in the industry. But eventually that business loses its fraudulent reporting ability, those trade lines get revoked, and your account gets flagged for a fraud investigation. The repair agency has your money, and you still don't have good credit. Bad news if this all goes down while you're trying to close on a house. You're better off trying to settle your debts (usually for 50%) or declaring bankruptcy altogether. The latter isn't so bad if you're in a stable home, because you won't be able to get an apartment for a while, credit cards or a good deal on auto financing. ED: I just saw what one agency was charging, and can tell you declaring bankruptcy costs only a few hundred dollars more than the repair agency and is 100% guaranteed to get you predictable results as long as you name all your debts up front and aren't getting reamed by student loans. And considering you can't stomach creditors-- well guess what, now you'll have a lawyer to deal with them for you. Anything you accomplish through an agency will eventually be reversed because it's fraudulent. But through bankruptcy, your credit will start improving within two years, the tradeoff being that you won't be able to get a mortgage (at all) or apartment (easily) during that time-- so find a place to hunker down for a few years before you declare.\""
},
{
"docid": "230612",
"title": "",
"text": "\"No you should not borrow money at 44.9%. I would recommend not borrowing money except for a home with a healthy deposit (called down payment outside UK). in December 2016, i had financial crisis So that was like 12 days ago. You make it sound like the crisis was a total random event, that you did nothing to cause it. Financial crises are rarely without fault. Common causes are failure to understand risk, borrowing too much, insuring too little, improper maintenance, improper reserves, improper planning, etc... Taking a good step or two back and really understanding the cause of your financial crisis and how it could be avoided in the future is very useful. Talk to someone who is actually wealthy about how you could have behaved differently to avoid the \"\"crisis\"\". There are some small set of crises that are no fault of your own. However in those cases the recipe to recovery is patience. Attempting to recover in 12 days is a recipe for further disaster. Your willingness to consider borrowing at 44% suggests this crisis was self-inflicted. It also indicates you need a whole lot more education in personal finance. This is reinforced by your insatiable desire for a high credit score. Credit score is no indication of wealth, and is meaningless until you desire to borrow money. From what I read, you should not be borrowing money. When the time comes for you to buy a home with a mortgage, its fairly easy to have a high enough credit score to borrow at a good rate. You get there by paying your bills on time and having a sufficient deposit. Don't chase a high credit score at the expense of building real wealth.\""
},
{
"docid": "340484",
"title": "",
"text": "\"Allen, welcome to Money.SE. You've stumbled into the issue of Debt Snowball, which is the \"\"low balance\"\" method of paying off debt. The other being \"\"high interest.\"\" I absolutely agree that when one has a pile of cards, say a dozen, there is a psychological benefit to paying off the low balances and knocking off card after card. I am not dismissive of that motivation. Personal Finance has that first word, personal, and one size rarely fits all. For those who are numbers-oriented, it's worth doing the math, a simple spreadsheet showing the cost of the DS vs paying by rate. If that cost is even a couple hundred dollars, I'll still concede that one less payment, envelope, stamp, etc, favors the DS method. On the other hand, there's the debt so large that the best payoff is 2 or 3 years away. During that time, $10000 paid toward the 24% card is saving you $2400/yr vs the $500 if paid toward 5% debt. Hard core DSers don't even want to discuss the numbers, strangely enough. In your case, you don't have a pile of anything. The mortgage isn't even up for discussion. You have just 2 car loans. Send the $11,000 to the $19K loan carrying the 2.5%. This will save you $500 over the next 2 years vs paying the zero loan down. Once you've done that, the remaining $8000 will become your lowest balance, and you should flip to the Debt Snowball method, which will keep you paying that debt off. DS is a tool that should be pulled out for the masses, the radio audience that The David (Dave Ramsey, radio show host) appeals to. They may comprise the majority of those with high credit card debt, and have greatest success using this method. But, you exhibit none of their symptoms, and are best served by the math. By bringing up the topic here, you've found yourself in the same situation as the guy who happens to order a white wine at a wedding, and finds his Mormon cousin offering to take him to an AA meeting the next day. In past articles on this decision, I've referenced a spreadsheet one can download. It offers an easy way to see your choice without writing your own excel doc. For the situation described here, the low balance total interest is $546 vs $192 for the higher interest. Not quite the $500 difference I estimated. The $350 difference is low due to the small rate difference and relatively short payoffs. In my opinion, knowledge is power, and you can decide either way. What's important is that if you pay off the zero interest first, you can say \"\"I knew it was a $350 difference, but I'd rather have just one outstanding loan for the remain time.\"\" My issue with DS is when it's preached like a religion, and followers are told to not even run the numbers. I wrote an article, Thinking about Dave Ramsey a number of years back, but the topic never gets old.\""
},
{
"docid": "248962",
"title": "",
"text": "\"What is your biggest wealth building tool? Income. If you \"\"nerf\"\" your income with payments to banks, cable, credit card debt, car payments, and lattes then you are naturally handicapping your wealth building. It is sort of like trying to drive home a nail holding a hammer right underneath the head. Normal is broke, don't be normal. Normal obtains student loans while getting an education. You don't have to. You can work part time, or even full time and get a degree. As an example, here is one way to do it in Florida. Get a job working fast food and get your associates degree using a community college that are cheap. Then apply for the state troopers. Go away for about 5 months, earning an income the whole time. You automatically graduate with a job that pays for state schools. Take the next three years (or more if you want an advanced degree) to get your bachelors. Then start your desirable career. What is better to have \"\"wasted\"\" approx 1.5 years being a state trooper, or to have a student loan payment for 20 years? There is not even pressure to obtain employment right after graduation. BTW, I know someone who is doing exactly what I outlined. Every commercial you watch is geared toward getting you to sign on the line that is dotted, often going into debt to do so. Car commercials will tell you that you are a bad mom or not a real man if you don't drive the 2015 whatever. Think differently, throw out your numbers and shoot for zero debt. EDIT: OP, I have a MS in Comp Sci, and started one in finance. My wife also has a masters. We had debt. We paid that crap off. Work like a fiend and do the same. My wife's was significant. She planned on having her employer pay it off for each year she worked there. (Like 20% each year or something.) Guess what, that did not work out! She went to work somewhere else! Live like you are still in college and use all that extra money to get rid of your debt. Student loans are consumer debt.\""
},
{
"docid": "296799",
"title": "",
"text": "\"You got some answers that essentially inform you that CEOs that have £200k written on their paysheet may in fact get much more. I'll take the opposite point of view and talk about people who (according to whatever definition) have a £200k/year income. How can they afford it Guess no 1: not all of them can (in the sense that it is quite possible to end up with negative net worth at £200k/year income - particularly if you immediately want to show off with brand new luxury cars, luxury holidays and a large house in a very representative region). Guess no 2: not all of the £200k/year CEOs are equally visible. There is a trade-off between going for wealth, large house, and luxury car. I deliberately ordered the three points according to increased display of \"\"wealth\"\". However, display of wealth usually comes at a cost (in a very monetary sense). And there are ways to get much display without having much wealth (see below: lease the car, also the mortgage on the house usually isn't displayed on the outside). You also need to take into account how long they are already building up wealth. I guess the typical CEO with £200k/year you're asking about did not just finish school and enter his work life in this position. It would be very interesting to see how income, accumulating wealth (and possibly \"\"displayed wealth\"\") correlate. My guess is that the correlation between income and accumulated wealth isn't that high, and the correlation between displayed and actual wealth is probably even lower. they possess luxury cars, large house and huge savings Are you sure these are the same managers? E.g. the ones with the huge savings are and the ones with the luxury cars? I'm asking particularly about the luxury cars, because such cars loose value very quickly and/or are often not owned by the driver but rather by the bank or leasing company. Which on the other hand offers the more savings-oriented CEO who is not that much interested in having a brand new luxury car the possibility to go for a one-year-old and save the rest. Knowing that, your CEO should be able to buy a one-year-old Mercedes SL 350 / year. Or a new one every 1 1/2 years (without building up savings or buying a house). However, building up wealth will be much faster with the CEO going for the one-year-old as the brand-new car option amounts to loosing ca. £20 - 30k within a year. An even-more-savings-oriented CEO who keeps his existing Mercedes 300 TD for another few years, thinking that this conservative choice of car will be trust-inspiring to the customers. Or goes for the SLK thinking that most people anyways don't know that the K between SL and SLK halves the price... However, if you just want to be seen with the car: after an initial payment of say £8-10k, you can get a decent SLK 350 (not the base model, either) at a monthly rate of ca. 600£/month or less than £7k/year. Note however, that this money does not count towards any kind of wealth, it's just renting a nice car. In other words: If driving the SLK 350 is your absolute goal, you could in theory have that with a net salary of £25k/year (according to your tax calculation, that should be somewhere around £35k / year gross), if you have the savings for the initial payment (being able to make the initial payment may also help convincin the leasing company that you're serious about it and able to pay your rates). There are also huge differences in value between large houses, compare e.g. these 2: And, last but not least, there is a decided one-way component in the timing of priorities here: it is much easier to go and get a luxury car when you have savings than first going for the luxury car and then trying to make up with the savings... I forgot to answer the question in the caption of your question: How do I build wealth By going on to live as if your income were only £50k (as far as that is compatible with your job) - I gather the median gross income in the UK is about £30k, so aiming at £50k leaves you a very comfortable budget for luxury spending. If you want to build up wealth faster, adjust that. In general, if you can manage to withhold much of any income increase from spending, that will help (trivial but powerful truth). From the leasing calculation you can conclude that you basically have no chance to show off your wealth by luxury cars. That is, you'd need to go for luxury cars that are completely incompatible with with building if you want to show your built up wealth by the car: there are too many people who even destroy their existing wealth in order to display luxury. At least if anyone is around who has either a correct idea what luxury cars cost (or don't cost) or will look that up in the internet. Also, people who know such things may also have the idea that the probability that such a car was downright paid (wealth) is small compared to the probability of meeting a leased or (mortgaged) car. Which means, the plan to show off doesn't work out that well with the people you'd want to impress. As for the other people: just a bit of display you can get far cheaper: If you really want to drive the SLK, rent it for an occasion (weekend) rather than for years. I met a sales manager who told me which rental cars they get when important customers from far east are visiting. The rest of the year they drive normal business cars. You may want to choose a rental company that doesn't write their name on the license plate. Apply the same ideas to the decision of buying a house. Think about what you want for yourself, and then look where you can get how much of that for how much money. Oh, and by the way: if I understand correctly, the average UK CEO wage is £120k, not £200k.\""
},
{
"docid": "59147",
"title": "",
"text": "Answers to this your question break down along a few lines regarding opportunity costs of tying up a significant chunk of your salary and assets in one piece of property, as opposed to other things you'd like to do with your life. The 30 year standard mortgage was invented in the 30's as part of FDR's new deal to make housing affordable to more people, while relieving the strain on the market of foreclosed homes from ~10 year interest only balloon mortgages (sound familiar?). The 30 year term tends to follow the career of the average American of that era, allowing them to pay the house off and live out the remainder of their lives there at a lower cost. Houses are depreciating assets because they wear out over time. Their greatest investment value is a place to live. The appreciation on a home comes from the real estate it sits on and the community the property is located in. Value is determined by desirability of the house and community in their current state, and the supply of property in the area. This value can only be extracted when you sell the home. This partially answers your last question noting that you shouldn't buy a really expensive building for investment value. We've learned in recent years that there are no long term guarantees of property value either, because land and communities can decrease in value due to unemployment, over supply, crime, pollution, etc. Only buy as much home as you will need in the next decade or so, in a place that you will like living over that time period, and don't consider it much of an investment. I will tell you to get a fifteen year fixed rate mortgage since it's readily available at lower rates and has a significantly lower total purchase price than the standard 30 years. The monthly payment difference isn't that great, and anyone who looks at the monthly payment as opposed to the total costs, your priorities and the opportunity costs shouldn't be trusted for financial advice. I don't like debt. There are psychological benefits to being free from the bondage and drain of a long term mortgage on your finances. The biggest argument for paying off your home quickly is freedom to pursue other desires with all of your salary and the assets you have available to you. Some financial advisers will tell you to keep your mortgage costs under 25% of your income, so that you can actually live off the money you make. I would also recommend paying at least enough into your 401k to get the company match and fully funding your Roth IRA. I'd also have an emergency fund to cover at least 6 months of expenses, including this mortgage in case you lose your job. A 15 or 20 year mortgage will give you breathing room to take care of these other priorities, and you can overpay on almost any mortgage to decrease the principal and finish in a shorter time period (make sure to get a mortgage that allows prepayment) . More financially savvy people may tell you to take the 30 year mortgage and invest the difference. Especially with mortgage rates around 4%, this is a very cheap way to increase your purchasing power and total assets. Most people lack the investment prowess and self discipline to make this plan pay off. There are even fewer guarantees regarding markets and investments than property. This also is a way of diversifying your total assets to protect against loss of value in your home. This approach has backfired for thousands of people who are underwater on their homes. This problem is often compounded by job loss forcing you to move, or increasing your commute, making your home less desirable for you. Some people will tell you to maintain the mortgage for the tax credit. This fails a basic math test since you only get about a quarter of the money (depending on your tax rate) that you are paying in interest back from the government. The rest of the money goes to bank at no gain to you. This approach is basically a taxpayer subsidized decrease of your 4% interest payment to a 3% interest payment (assuming you have ~ $5000 in other deductions), and only pays off if you can successfully invest the money at a rate somewhat greater than 3%."
},
{
"docid": "516444",
"title": "",
"text": "\"I'd like to suggest a plan. First, I know you want to buy a house. I get that, and that is an awesome goal to work for. You need to really sit down and decide why you want a house. People often tell we that they want a house because they are throwing their money away renting. This is just not true. There is a cost of renting, that is true, but there is also a cost of owning. There are many things with a house that you will have to pay for that will add little or no equity/value. Now that equity is nice to have, but make no mistake under no circumstance does every dime you put into your house increase its value. This is a huge misconception. There is interest, fees, repairs, taxes, and a bunch of other stuff that you will spend money on that will not increase the value of your home. You will do no harm, waiting a bit, renting, and getting to a better place before you buy a house. With that out of the way, time for the plan. Note: I'm not saying wait to buy a house; I am saying think of these as steps in the large house buying plan. Get your current debt under control. Your credit score doesn't suck, but it's not good either. It's middle of the road. Your going to want that higher if you can, but more importantly than that, you want to get into a pattern of making debt then honoring it. The single best advise I can give you is what my wife and I did. Get a credit card (you have one; don't get more) and then get into a habit of not spending more on that credit card than you actually have in the bank. If you have $50 in the bank, only spend that on your credit card. Then pay it in full, 100%, every payday (twice a month). This will improve your score quite a bit, and will, in time, get you in the habit of buying only what you can afford. Unless there has been an emergency, you should not be spending more on credit than you actually have. Your car loan needs to get under control. I'm not going to tell you to pay it off completely, but see point 2. Your car debt should not be more than you have in the bank. This, again is a credit building step. If you have 7.5k in the bank and own 7.5k on your car, your ability to get a loan will improve greatly. Start envelope budgeting. There are many systems out there, but I like YNAB a lot. It can totally turn your situation around in just a few months. It will also allow you to see your \"\"house fund\"\" growing. Breaking Point So far this sounds like a long wait, but it's not. It also sounds like I am saying to wait to actually buy a house, and I'm not. I am not saying get your debt to 0, nor do I think you should wait that long. The idea is that you get your debt under control and build a nice solid set of habits to keep it under control. A look at your finances at this point Now, at this point you still have debt, but your credit cards are at 0 and have been, every payday for a few months. Your car loan still exists, but you have money in the bank to cover this debt, and you could pay it off. It would eat your nest egg, but you could. You also have 15k set aside, just for the house. As you take longer looking for that perfect house, that number keeps growing. Your bank account now has over $25,000 in it. That's a good feeling on its own, and if you stick with your plan, buy your house and put down $15k, you still have plenty of wiggle room between credit cards that are not maxed out, and a $7.5k \"\"padding\"\" in case the roof falls in. Again it sounds like I'm saying wait. But I'm not, I'm saying plan better. All of these goals are very doable inside one year, a rough year to be sure, but doable. If you want to do it comfortably, then take two years. In that time you're looking, searching and learning.\""
},
{
"docid": "141189",
"title": "",
"text": "The key here is the bank, they hold the title to the car and as such have the final say in things. The best thing you can do is to pay off the loan. Could you work like crazy and pay off the car in 6 months to a year? The next best thing would be to sell the car. You will probably have to cover the depreciation out of pocket. You will also need to have some cash to buy a different car, but buy it for cash like you should have done in the first place. The worst option and what most people opt for, which is why they are broke, is to seek to refinance the car. I am not sure why you would have to wait 6 months to a year to refinance, but unless you have truly horrific credit, a local bank or credit union will be happy for your business. Choose this option if you want to continue to be broke for the next five years or so. Once any of those happen it will be easy to re-title the car in your name only provided you are on good terms with the girlfriend. It is just a matter of going to the local title office and her signing over her interest in the car. My hope is that you understand the series of foolish decisions that you made in this vehicle purchase and avoid them in the future. Or, at the very least, you consciously make the decision to appear wealthy rather than actually being wealthy."
},
{
"docid": "60981",
"title": "",
"text": "So if I understand your plan right, this will be your situation after the house is bought: Total Debt: 645,000 Here's what I would do: Wait until your house sells before buying a new one. That way you can take the equity from that sale and apply it towards the down payment rather than taking a loan on your retirement account. If something happens and your house doesn't sell for as mush as you think it will, you'll lose out on the gains from the amount you borrow, which will more than offset the interest you are paying yourself. AT WORST, pay off the 401(k) loan the instant your sale closes. Take as much of the remaining equity as you can and start paying down student loans. There are several reasons why they are a higher priority than a mortgage - some are mathematical, some are not. Should I look to pay off student loans sooner (even if I refi at a lower rate of 3.5% or so), or the mortgage earlier ... My thoughts are that the student loans follow me for life, but I can always sell and buy another home So you want this baggage for the rest of your life? How liberating will it be when you get that off your back? How much investing are you missing out on because of student loan payments? What happens if you get lose your license? What if you become disabled? Student loans are not bankruptable, but you can always sell the asset behind a mortgage or car loan. They are worse than credit card debt in that sense. You have no tangible asset behind it and no option for forgiveness (unless you decide to practice in a high-need area, but I don't get the sense that that's your path). The difference in interest is generally only a few payment' worth over 15 years. Is the interest amortized the same as a 15 year if I pay a 30 year mortgage in 15 years? Yes, however the temptation to just pay it off over 30 years is still there. How often will you decide that a bigger car payment, or a vacation, or something else is more important? With a 15-year note you lock in a plan and stick to it. Some other options:"
},
{
"docid": "14083",
"title": "",
"text": "\"A person can finance housing expenses in one of two ways. You can pay rent to a landlord. Or you can buy a house with a mortgage. In essence, you become your own landlord. That is, insta the \"\"renter\"\" pays an amount equal to the mortgage to insta the \"\"landlord,\"\" who pays it to the bank to reduce the mortgage. Ideally, your monthly debt servicing payments (minus tax saving on interest) should approximate the rent on the house. If they are a \"\"lot\"\" more, you may have overpaid for the house and mortgage. The advantage is that your \"\"rent\"\" is applied to building up equity (by reducing the mortgage) in your house. (And mortgage payments are tax deductible to the extent of interest expense.) At the end of 30 years, or whatever the mortgage term, you have \"\"portable equity\"\" in the form a fully paid house, that you can sell to move another house in Florida, or wherever you want to retire. Sometimes, you will \"\"get lucky\"\" if the value of the house skyrockets in a short time. Then you can borrow against your appreciation. But be careful, because \"\"sky rockets\"\" (in housing and elsewhere) often fall to earth. But this does represent another way to build up equity by owning a house.\""
},
{
"docid": "295495",
"title": "",
"text": "I doubt it. Securitizations refer to deals that issue tranched bonds backed by a specific cash flow asset. That asset can be mortgages, credit cards, auto loans, syndicated loans, aircraft loans, trade finance...pretty much any type of loan. - MBS refers to any securitization backed by mortgages. - CLO refers to any securitization backed by syndicated loans. - CMS refers to any securitization backed by commercial mortgage debt. - ABS refers to the rest (car loans, credit cards, airplanes, etc) CDO refers to a securitization of other securitizations. The underlying securitizations could be MBS, CLO, CMS, ABS, whatever. Most common CDOs are securitizations of MBS or CLO, with the vast majority being MBS from the go-go years '05-'07. And don't even get me started on synthetic structures. To my knowledge (and again I could be wrong here, please let me know if you've seen otherwise) the market for CDOs has been firmly dead since '07. ABS is still very active, although less than in the mid-oughts, and CLO is around still too. These two proved the best application of the concepts behind securitization: their underlying loans were truly diversified, so a general economic downturn hurt them less then the national collapse in the housing market. MBS issuance that does not involve Fannie/Freddie/Ginnie is rare but still exists. The lack of non-prime issuance of MBS is a huge reason for why the average American can't refi or take out a mortgage: there's no MBS issuance to package the loan into! Edit: typos"
}
] |
4777 | How to finance necessary repairs to our home in order to sell it? | [
{
"docid": "590710",
"title": "",
"text": "A typical HELOC will have about $300 in fees to open it. From there, it's up to you how much or how long to use it. I'd shop around to find the bank that offers the right product for you."
}
] | [
{
"docid": "406974",
"title": "",
"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.\""
},
{
"docid": "289594",
"title": "",
"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.\""
},
{
"docid": "499900",
"title": "",
"text": "It's probably too far gone at this point, and the world has moved on from their business model...that said, here's what I would do. 1.) Sears is going to go back to being a hardware store first and foremost. Craftsman tools used to enjoy a reputation as the premier brand of tools. Made in the U.S., highest quality you could get without spending 40 bucks on a pair of needle-nose pliers, wouldn't break for 3 generations, and if they did, you could take it back to Sears and walk out with a new one, no questions asked. We're going back to that. If nothing else, Sears is where you go for tools. No tools that are not made in the U.S., and nothing that isn't Craftsman unless absolutely necessary. 2.) Second to that is going to be appliances. I'd need a good team of analysts to tell me if it's remotely viable, but I'd like to adapt a little of the Craftsman mentality to appliances. Take your pick of any appliance at Sears, it will be of the highest quality, and if it breaks within X years, we'll have tech at your house in 24 hours to fix it, and you'll never see a bill. 4.) For everything else, we're going full Amazon, + local pickup. Free next day or same day delivery. Order your new wrench set from your phone, pull up to the store on your way home from work, and we'll drop the box in your trunk faster than McDonald's hands you your burgers. 5.) Our retail stores are going to get a complete overhaul. No more dingy shops with checkout computers from the early 90s. No more staff that looks and acts more beaten down than fast food workers. I want people working there who know the store and what it sells, and can at least pretend to be happy to help. Yes, I know I'll have to pay for it, that's fine. This place is supposed to sell the best tools available on a household budget, it shouldn't be a shittier shopping experience than fucking Harbor Freight."
},
{
"docid": "315168",
"title": "",
"text": "Your house is not an asset, it is a liability. Assets feed you. Liabilites eat you. Robert Kiyosaki From a cash flow perspective your primary residence (ie your house) is an investment but it is not an asset. If you add up all the income your primary residence generates and subtract all the expenses it incurs, you will see why investment gurus claim this. Perform the same calculations for a rental property and you're more likely to find it has a positive cash flow. If it has a negative cash flow, it's not an asset either; it's a liability. A rental property with a negative cash flow is still an investment, but cash flow gurus will tell you it's a bad investment. While it is possible that your house may increase in value and you may be able to sell it for more than you paid, will you be able to sell it for more than all of the expenses incurred while living there? If so, you have an asset. Some people will purchase a home in need of repair, live in it and upgrade it, sell it for profit exceeding all expenses, and repeat. These people are flipping houses and generating capital gains based on their own hard work. In this instance a person's primary residence can be an asset. How much of an asset is calculated when the renovated house is sold."
},
{
"docid": "599358",
"title": "",
"text": "\"I am forgetful and a parent of 2 young boys. It's way easier to order something walking through the house while it's fresh in my mind than trying to remember to go online and order stuff once they're in bed. * I clean litter boxes, realize were low, on my way out the door with old litter in garbage bag I yell \"\"Alexa, order more of our cat litter\"\". * Doing dishes and grab the one of the last pods for the dishwasher \"\"alexa order more dish washer detergent\"\". In the world of being a parent, I go from one task to the next when not playing with my kids, and i get distracted very easily. My wife and I make it a point to not be on our phones when with our kids, so I can't just open my amazon app and order from there since it's usually on the charger when I'm home.\""
},
{
"docid": "522532",
"title": "",
"text": "Regarding the opportunity cost comparison, consider the following two scenarios assuming a three-year lease: Option A: Keep your current car for three years In this scenario, you start with a car that's worth $10,000 and end with a car that's worth $7,000 after three years. Option B: Sell your current car, invest proceeds, lease new car Here, you'll start out with $10,000 and invest it. You'll start with $10,000 in cash from the sale of your old car, and end with $10,000 plus investment gains. You'll have to estimate the return of your investment based on your investing style. Option C: Use the $10k from proceeds as down payment for new car In this scenario you'll get a reduction in finance charges on your lease, but you'll be out $10,000 at the end. Overall Cost Comparison To compare the total cost to own your current car versus replacing it with a new leased car, first look up the cost of ownership for your current car for the same term as the lease you're considering. Edmunds offers this research and calls it True Cost to Own. Specifically, you'll want to include depreciation, fuel, insurance, maintenance and repairs. If you still owe money you should also factor the remaining payments. So the formula is: Cost to keep car = Depreciation + Fuel + Insurance + Maintenance + Repairs On the lease side consider taxes and fees, all lease payments, fuel, and maintenance. Assume repairs will be covered under warranty. Assume you will put down no money on the lease and you will finance fees, taxes, title, and license when calculating lease payments. You also need to consider the cost to pay off your current car's loan if applicable. Then you should subtract the gains you expect from investing for three years the proceeds from the sale of your car. Assume that repairs will be covered under warranty. The formula to lease looks like: Lease Cost = Fuel + Insurance + Maintenance + Lease payments - (gains from investing $10k) For option C, where you use the $10k from proceeds as down payment for new lease, it will be: Lease Cost = Fuel + Insurance + Maintenance + Lease payments + $10,000 A somewhat intangible factor to consider is that you'll have to pay for body damage to a leased car at the end of the lease, whereas you are obviously free to leave damage unrepaired on your own vehicle."
},
{
"docid": "66993",
"title": "",
"text": "\"Go on a website that has real estate listings. Find similar homes in the same neighborhood and list out the prices. Once you have prices, pick out two with different prices and call the realtor of the more expensive listing. Tell that realtor about the other listing and ask why their listing is more expensive. Compare their answer to the home that you are considering buying. For example, they may say that their house has a newly remodeled kitchen. Does the house you are considering have a newly remodeled kitchen? If so, then use the higher priced listing and throw out the cheaper one. If not, use the cheap listing and throw out the expensive one. Or they might say that the expensive house is in a better location than the cheaper house. Further away from traffic. Easier to get to the highway or public transportation. If so, ask how the location compares to the house you are actually considering. The realtor will tell you if the listings are comparable. When I talk about \"\"similar homes,\"\" I mean homes that are similar in square footage, number of bedrooms, and number of bathrooms. Generally real estate sites will allow you to search by all of these as well as location. After all this, the potential seller may still turn you down. If he really wanted to sell, he'd have suggested a price. He may just be seeing if you're willing to overpay. If so, he could turn down an otherwise reasonable offer. How much he is willing to take is up to him. Note that this would all be easier if you just bought a house the normal way. Then the realtors would do the comparables portion of the work. You might be able to find a realtor or appraiser who would do the work for a set fee. Perhaps your bank would help you with that, as they have to appraise the property to offer a mortgage. You asked if you can buy out a mortgaged house with a mortgage. Yes, you can. That's a pretty normal occurrence. Normally the realtors would make all the necessary arrangements. I'm guessing that a title transfer company could handle that.\""
},
{
"docid": "60088",
"title": "",
"text": "When evaluating a refinance, it all comes down to the payback. Refinancing costs money in closing costs. There are different reasons for refinancing, and they all have different methods for calculating payback. One reason to finance is to get a lower interest rate. When determining the payback time, you calculate how long it would take to recover your closing costs with the amount you save in interest. For example, if the closing costs are $2,000, your payback time is 2 years if it takes 2 years to save that amount in interest with the new interest rate vs. the old one. The longer you hold the mortgage after you refinance, the more money you save in interest with the new rate. Generally, it doesn't pay to refinance to a lower rate right before you sell, because you aren't holding the mortgage long enough to see the interest savings. You seem to be 3 years away from selling, so you might be able to see some savings here in the next three years. A second reason people refinance is to lower their monthly payment if they are having trouble paying it. I see you are considering switching from a 15 year to a 30 year; is one of your goals to reduce your monthly payment? By refinancing to a 30 year, you'll be paying a lot of interest in your first few years of payments, extending the payback time of your lower interest rate. A third reason people refinance is to pull cash out of their equity. This applies to you as well. Since you are planning on using it to remodel the home you are trying to sell, you have to ask yourself if the renovations you are planning will payoff in the increased sale price of your home. Often, renovations don't increase the value of their home as much as they cost. You do renovations because you will enjoy living in the renovated home, and you get some of your money back when you sell. But sometimes you can increase the value of your home by enough to cover the cost of the renovation. Talk to a real estate agent in your area to get their advice on how much the renovations you are talking about will increase the value of your home."
},
{
"docid": "385086",
"title": "",
"text": "\"This was a huge question for me when I graduated high school, should I buy a new or a used car? I opted for buying used. I purchased three cars in the span of 5 years the first two were used. First one was $1500, Honda, reliable for one year than problem after problem made it not worth it to keep. Second car was $2800, Subaru, had no problems for 18 months, then problems started around 130k miles, Headgasket $1800 fix, Fixed it and it still burnt oil. I stopped buying old clunkers after that. Finally I bought a Nissan Sentra for $5500, 30,000 miles, private owner. Over 5 years I found that the difference between your \"\"typical\"\" car for $1500 and the \"\"typical\"\" car you can buy for $5500 is actually a pretty big difference. Things to look for: Low mileage, one owner, recent repairs, search google known issues for the make and model based on the mileage of the car your reviewing, receipts, clean interior, buying from a private owner, getting a deal where they throw in winter tires for free so you already have a set are all things to look for. With that said, buying new is expensive for more than just the ticket price of the car. If you take a loan out you will also need to take out full insurance in order for the bank to loan you the car. This adds a LOT to the price of the car monthly. Depending on your views of insurance and how much you're willing to risk, buying your car outright should be a cheaper alternative over all than buying new. Save save save! Its very probably that the hassles of repair and surprise break downs will frustrate you enough to buy new or newer at some point. But like the previous response said, you worked hard to stay out of debt. I'd say save another grand, buy a decent car for $3000 and continue your wise spending habits! Try to sell your cars for more than you bought them for, look for good deals, buy and sell, work your way up to a newer more reliable car. Good luck.\""
},
{
"docid": "77304",
"title": "",
"text": "In general, for a home you live in, there's maintenance, which is just that, you pay to keep your house in good repair. There's also real improvements. I spend $xxx to turn my poured cement basement into living space. Here, I keep my receipts and the cost (although not my labor) is added to the basis of my home when I sell. The couple things that may offer a deduction have to do with energy. When I insulated my basement, there was a state tax credit which I got back when I filed taxes. There are also credits for installing solar panels. What you've described in your question just sounds like one of the small joys of home ownership."
},
{
"docid": "139953",
"title": "",
"text": "> The demand for fiat currencies comes from the fact they are necessary to pay taxes Only because the collective population has decided that the fiat currency has value. Taxes are not handed down by some benevolent leader, it is you and I deciding that we can do better things if we pool a portion of our wealth together. Let's say we want to build a road between our homes to improve the act of visiting each other. We decide to share the cost of building the road. I throw in 10 chicken, and you toss in 100 seashells. We work our way over to our road-building friend's place. We give him our offering in exchange for building the road. He doesn't like seashells, but he is willing to take 20 chickens in exchange for building the road. But now we are 10 chickens short from reaching our goal of having a new road between our homes. We decide to implement a strict agreement that all future pooling of wealth needs to be done with chickens. Seashells are not acceptable. And now we have a tax paid by a mutually agreed upon exchange medium. It works because everyone agrees that chickens have value. If everyone suddenly became vegetarian and saw chickens as having no value, our tax pool would become worthless. The fact that our tax is paid for in chickens does not mean that chickens will forever have value."
},
{
"docid": "463857",
"title": "",
"text": "A lot of this example is idealistic and the analysis stops right at the point the loan is issued. If you use generous interest rates you could just skirt by the bare minimum debt service coverage ratio for an asset-backed loan if you found a lender to approve it. However, he doesn't address any of the issues of running a business that will be insolvent if expenses rise more than about ~2% above the monthly average in a given month (those pesky 3-pay period months; equipment repairs; heating/cooling in winter/summer; etc.), or you have a similarly small sag in sales (selling dirtbikes in January?). Most companies doing LBOs have skin in it, and a plan to make the company more valuable, not run it exactly the way it is. This allows them to either acquire more debt capital than just a percentage of the collateral -- and so they can finance capital projects to improve the business, deal with fluctuations in cash flow, and/or implement plans to increase the free cash flows above how it was running previously. This site's advice is a bit like teaching someone the basics of how to take off in an airplane, and then telling them they're ready to fly."
},
{
"docid": "81904",
"title": "",
"text": "We provide the best Indian motorcycle spare parts and its service in the USA. That means if anything goes wrong with your motorcycle you can book in for repairs and service with our company workshop. We provide offer a wide range of spare parts or be able to order spare parts for your Old Indian motorcycle and offer a service by trained technicians. We provide the one weak full warranty of the spare parts if anything goes wrong in spare parts then we will change the parts without a price."
},
{
"docid": "200821",
"title": "",
"text": "ICSE The subjects that are offered are isolated into three gatherings. ICSE Home Tuition in Mumbai Gathering I incorporates Compulsory Subjects — English, History and Civics, and Geography, and Indian Language, Group II which incorporates any two from Mathematics, Science (Physics, Biology, Chemistry) as partitioned subjects, Environmental Science, Computer Science, Agricultural Science, Commercial Studies, Technical Drawing, A Modern Foreign Language, ICSE Home Tuition in Mumbai A Classical Language and Economics, and Group III has any one from Computer Applications, Economic Applications, Commercial Applications, Art, Performing Arts, Home Science, Cookery, Fashion Designing, Physical Education, Technical Drawing Applications, Yoga, and Environmental Applications. In subjects where there are more than one paper (e.g., Science), the imprints acquired in the subject are figured by taking the normal of the considerable number of papers in the subject. Applicants showing up for the examination need to think about six subjects, with one to three papers in each subject. ICSE Home Tuition in Mumbai For subject HC&G the paper 1 comprises of History and Civics and paper 2 comprises of Geography. ICSE Home Tuition in Mumbai Science comprises of three papers each for Physics, Chemistry, and Biology. This makes for a sum of eight to eleven papers, contingent upon the subjects. ICSC comes about are taken from best five of six subjects out of which English imprints is necessary. ICSE Home Tuition in Mumbai We are passionate about teaching. We ICSE Home Tuition in Mumbai Academy nurture our students to possess confidence and the necessary skills to get the success in exams. Why Choose OM Academy We IICSE Home Tuition in Mumbai completely believe in balance approach to excel in exams. Hence we provide the academic and non-academic courses to enhance the ability of the students to perform better in the real life challenges."
},
{
"docid": "51899",
"title": "",
"text": "Apex repairing service is largest washing machine repair service center in mumbai. Is your washing machine stuck and you don't have any clue why it is not working, you reached to the right place! Apex repairing services have experienced washing machine repair engineers who are fully skilled on multiple brands like IFB, LG, Samsung, Whirlpool and all other brands. Our washer repairing service cost is highly competitive and our domestic repairing service is quick and professional. If you are looking for a solution to any faulty household appliance, Apex repairing service are here to help. We undertake washing machine repair for households across Mumbai and the surrounding area, and are proud to be saving the day for so many customers."
},
{
"docid": "248448",
"title": "",
"text": "\"You are suggesting that a 1% return per month is huge. There are those who suggest that one should assume (a rule of thumb here) that you should assume expenses of half the rent. 6% per year in this case. With a mortgage cost of 4.5% on a rental, you have a forecast profit of 1.5%/yr. that's $4500 on a $300K house. If you buy 20 of these, you'll have a decent income, and a frequently ringing phone. There's no free lunch, rental property can be a full time business. And very lucrative, but it's rarely a slam dunk. In response to OP's comment - First, while I do claim to know finance fairly well, I don't consider myself at 'expert' level when it comes to real estate. In the US, the ratio varies quite a bit from area to area. The 1% (rent) you observe may turn out to be great. Actual repair costs low, long term tenants, rising home prices, etc. Improve the 1.5%/yr to 2% on the 20% down, and you have a 10% return, ignoring appreciation and principal paydown. And this example of leverage is how investors seem to get such high returns. The flip side is bad luck with tenants. An eviction can mean no rent for a few months, and damage that needs fixing. A house has a number of long term replacement costs that good numbers often ignore. Roof, exterior painting, all appliances, heat, AC, etc. That's how that \"\"50% of rent to costs\"\" rule comes into play.\""
},
{
"docid": "205217",
"title": "",
"text": "As noted above but with sources An improvement materially adds to the value of your home, considerably prolongs its useful life, or adapts it to new uses. You must add the cost of any improvements to the basis of your home. You cannot deduct these costs. Source Page 11, Adjusted Basis, Improvements Second, A repair keeps your home in an ordinary, efficient operating condition. It does not add to the value of your home or prolong its life. Repairs include repainting your home inside or outside, fixing your gutters or floors, fixing leaks or plastering, and replacing broken window panes. You cannot deduct repair costs and generally cannot add them to the basis of your home. Source Page 12, Adjusted Basis, Repairs versus improvements Generally, an expense for repairing or maintaining your rental property may be deducted if you are not required to capitalize the expense. You must capitalize any expense you pay to improve your rental property. An expense is for an improvement if it results in a betterment to your property, restores your property, or adapts your property to a new or different use. Source Page 5, Repairs and Improvements Good Luck,"
},
{
"docid": "367745",
"title": "",
"text": "Thanks for the writeup, it was a really informative read. I've been aware for a while now that Reagan and Reaganomics were in a large way the 'start' of most of the current problems in the economic and political landscape, but you filled in a few gaps that were really useful for me. So I guess ultimately a lot of conservatives see it as a kind of necessary evil in order to bring about the success story that the current economy needs right now. Unfortunately, their strategy is totally wrong. That kind of makes sense with my observation that rather than supporting the cronyism and corruption, they turn a blind eye to it because they think it's necessary. My view is not so much that labour and finance capital returns need to be balanced (although that is probably a great thing to aim for), but that creation of wealth/capital needs to be intrinsically linked with the creation of real value. The modern banking crisis was a great example of the ability to generate wealth while in fact destroying real value."
},
{
"docid": "464203",
"title": "",
"text": "\"I worked at a Best Buy for a summer. I worked in merch (basically I was a stock boy) and we \"\"sold\"\" something greater than 80% of the product if I remember correctly. People mostly don't want/need a person to help them. That said, even though I wasn't really supposed to talk to customers I still really enjoyed helping them. I even sent a few home to the internet to order basic computer hardware because our store prices were stupid expensive (50%-100% more than a similar product online). I wasn't ranked on how many stupid extended warranties I sold though because I was merch and not sales. That shit was stupid. Most of the products they sell at Best Buy are disposable. Even the more expensive items will probably last longer than is worth trying to get them fixed. But that shit gets pushed on employees and if they want to get raises they push it on customers. Margins are shit on lots of the stuff they sell though. Except car audio. Car audio has a massive mark-up.\""
}
] |
4785 | What is the difference between a structured collar and a normal collar in finance? | [
{
"docid": "37517",
"title": "",
"text": "Let's start with a definition: A Collar is a protective strategy for a position in the underlying instrument created by purchasing a put and selling a call to partially pay for the put option purchased or vice versa. Based on that definition, there are two different types of collars. Each is a combination of two simpler strategies: References Multi-Leg Options Orders"
}
] | [
{
"docid": "419526",
"title": "",
"text": "Not likely, but there has been minor pressure to get white collars to unionize. So their second headquarters should probably be outside of a state like Michigan that has some extra rules which exist presumably because they are favorable to labor."
},
{
"docid": "223475",
"title": "",
"text": "When the money grubbing jobs thin out and fade away all those middle management white collar types will be wishing all those manufacturing jobs hadn't been shipped to China.....without a fraudulent financial house of cards to manage, what will they do now?"
},
{
"docid": "349336",
"title": "",
"text": "Have you made the effort to even look? Don't take the argument that because the average american spends little of their money on chinese goods its ok. From your already linked and cited article. What is an average american? What about the 50% that are above average? Spending, in fact is not the issue. Jobs are. Off-shoring is talking a toll on american manufacturing. Then there are the white collar IT jobs. Free trade agreements created jobs. Where they equal to the jobs that moved out because of NAFTA? No."
},
{
"docid": "244442",
"title": "",
"text": "\"You make several good points. I'll start with Black-Scholes; the arbitrage argument in Black-Scholes is between the option and a hypothetical and unobserved portfolio with identical cash flows (the replicating portfolio). We then value the replicating portfolio via an equilibrium model. When you use BS, there isn't necessarily *any* observed security whose is guaranteed not imply some arbitrage opportunity, because BS makes no reference to observed prices. A no-arbitrage modification might look like this: \"\"I observe the prices (and implied volatilities) of some options, and use the implied volatilities to price another option (maybe with a different strike). Doing so ensures that there is no arbitrage between my price and the market prices implied by my model.\"\" Realistically, the problem arbitrage-free models are addressing is that our models and assumptions are wrong, even though they're reasonable approximations a lot of the time. A no-arbitrage model removes some set of obvious deficiencies, but at the cost of not being able to explain why things are priced as they are. So, for instance, Vasicek won't reproduce the observed term structure, and Hull-White fixes this, but Hull-White doesn't explain where the term structure comes from (i.e., what the term structure *should* be).\""
},
{
"docid": "137040",
"title": "",
"text": "\"For sure, the engineer was told to do that by someone in management who was told to do that by someone higher in management. So, in the trial, the engineer did not say who told him/her to do that? P/S: for a VERY LARGE sum of money, I will go for 3 years in white-collar \"\"prison\"\" and not say who told me to do that.\""
},
{
"docid": "10549",
"title": "",
"text": "\"Very interesting. I'm actually glad you mentioned term structure models, because that's something I'm interested in. But I don't think the distinction you draw between \"\"equilibrium\"\" and \"\"arbitrage free\"\" models makes sense with Black-Scholes. My understanding was that the discrepancy between equilibrium and arbitrage-free term structure models arises because term structure models lack market completeness. In other words, when the market is incomplete (as it is with interest rates), you'll have a continuum of bond prices that are compatible with no arbitrage, and the exact price will depend on the market price for risk. However, in Black-Scholes, the market price for risk term basically falls out of the equation because of market completeness. Or in other words, since we have market completeness, there's a *unique* martingale measure that gives the price for the option. So when you have market completeness, there should be no difference between an equilibrium and a no-arbitrage model - they're one and the same.\""
},
{
"docid": "99546",
"title": "",
"text": "I was just talking about this with my father in law. When the min wage was about $1.50 a hour, going camping at a state park for a night was just over $1 a night. Now, where we live, it's often $20 a night just for a campsite in a state park. Min wage is $7.25. My family paid $400 for a Beta vcr in 1980. Single income family, factory worker, blue collar job. Could someone do that today, adjusting for inflation? Absolutely not."
},
{
"docid": "205537",
"title": "",
"text": "Their names read like fictional characters out of a white collar crime drama. They Plodded this Gamble as they Loughed and Ran away. But really we should grab our pitchforks and meet in Atlanta because fuck the rich elite and their special rules."
},
{
"docid": "120358",
"title": "",
"text": "If you have your long positions established and are investing responsibly (assuming you know the risks and can accept them), the next step IMO is typically learning hedging - using options or option strategies to solidify positions. Collars (zero cost) and put options are a good place to start your education and they can be put to use to both speculate (what you are effectively doing with short-position trading) or long-term oriented edging. Day trading equites can be lucrative but it is a difficult game to play - learning options (while more complex on speculation) can provide opportunities to solidify positions. Options trading is difficult grounds. I just think the payoff long term to knowing options is much greater than day-trading tactics (because of versatility)"
},
{
"docid": "55535",
"title": "",
"text": "If the position starts losing money as soon as it is put on, then I would close it out ,taking a small loss. However, if it starts making money,as in the stock inches higher, then you can use part of the premium collected to buy an out of money put, thereby limiting your downside. It is called a collar."
},
{
"docid": "506733",
"title": "",
"text": "Sounds like you have a nice rental on your hands, honestly, if it's blue-collar-ish material. Not too expensive for a rental. Is the rental market fairly strong there? You're probably looking at $400-$500 per month income after you pay everybody. (My property manager takes 10% of gross rents and she would inspect the property quarterly for me.) I'd take as many of those as I can get, though if I had ten of them I could be set for the rest of my life. :) That way you can offset any losses you might incur by selling now."
},
{
"docid": "470435",
"title": "",
"text": "You are correct, our founding fathers were not stupid enough to 'claim how great the president is based off square miles under control of a party'...what kind of stupid fucking statement is that you just made? It's called a system of checks and balances dumbass. And it's not empty land...it's land worked by farmers and blue collar workers... yeah, that's right, work... something you know nothing about. Crawl back in your hole."
},
{
"docid": "341222",
"title": "",
"text": "> if higher skill jobs like IT are being outsourced for the sake of saving money, you can bet your ass that the lowly unskilled labor positions will be the first to go. Guys this ain't new, and its not news. Outsourcing has been going on for decades, and tons if not all of the unskilled blue collar jobs are gone. Yet we still have 5% unemployment and a drastic shortage of skilled programers, mathematicians, scientists, physicists etc. Globalization isnt a bad thing."
},
{
"docid": "391238",
"title": "",
"text": "yeah. you're right. actually, it was more like the middle class that ended up being hunted and the small number of elites' advanced brains controlled the workers psychically. now that i think of it, the dog collar metaphor works even better with that story. you just replace the psychic control with nanobots relaying an operators commands directly to the worker's brain."
},
{
"docid": "379057",
"title": "",
"text": "\"It's not well-defined, since the [term \"\"middle class\"\"](https://en.wikipedia.org/wiki/Middle_class) has been used in *dramatically* different ways. However: >The modern sociological usage of the term \"\"middle class\"\", however, dates to the 1911 UK Registrar-General's report, in which the statistician T.H.C. Stevenson identified the middle class as that falling between the upper class and the working class. Included as belonging to the middle class are professionals, managers, and senior civil servants. The chief defining characteristic of membership in the middle class is possession of significant human capital. > >Within capitalism, middle class initially referred to the bourgeoisie and petite bourgeoisie. However, with the immiserisation and proletarianisation of much of the petit bourgeois world, and the growth of finance capitalism, middle class came to refer to the combination of labour aristocracy, professionals and white collar workers. > >The size of the middle class depends on how it is defined, whether by education, wealth, environment of upbringing, social network, manners or values, etc. These are all related, though far from deterministically dependent. The following factors are often ascribed in modern usage to a \"\"middle class\"\":[by whom?] > > Achievement of tertiary education. > > Holding professional qualifications, including academics, lawyers, chartered engineers, politicians and doctors regardless of their leisure or wealth. > >* Belief in bourgeois values, such as high rates of house ownership and jobs which are perceived to be \"\"secure\"\". > >* Lifestyle. In the United Kingdom, social status has historically been linked less directly to wealth than in the United States,[4] and has also been judged by pointers such as accent, manners, place of education, occupation and the class of a person's family, circle of friends and acquaintances.[5][6] > >* Cultural identification. Often in the United States, the middle class are the most eager participants in pop culture whereas the reverse is true in Britain.[7] The highest income professionals in the United States are IIRC neurosurgeons, which average ~$400k, so that's probably about as far as the middle class can extend. Then there's the [upper class](https://en.wikipedia.org/wiki/Upper_class): >The main distinguishing feature of upper class is its ability to derive enormous incomes from wealth through techniques such as investment and money management, rather than engaging in wage-labor or salaried employment.[4][5][6] Successful entrepreneurs, CEOs, politicians, investment bankers, some lawyers and top flight physicians, heirs to fortunes, successful venture capitalists, stockbrokers as well as most celebrities are considered members of this class by contemporary sociologists, such as James Henslin or Dennis Gilbert.[4] There may be prestige differences between different upper-class households. An A-list actor, for example, might not be accorded as much prestige as a former U.S. President,[5] yet all members of this class are so influential and wealthy as to be considered members of the upper class.[4] The [working class](https://en.wikipedia.org/wiki/Lower_class): >As with many terms describing social class, working class is defined and used in many different ways. When used non-academically, it typically refers to a section of society dependent on physical labor, especially when compensated with an hourly wage. Its use in academic discourse is contentious, especially following the decline of manual labor in postindustrial societies. And the [underclass](https://en.wikipedia.org/wiki/Underclass) or poor: >The underclass is located by a collection of identifying characteristics, such as high levels of joblessness, out-of-wedlock births, female-headed households, crime, violence, substance abuse, and high school dropout rates. The underclass harbors these traits to a greater degree than the general population, and other classes more specifically. Obviously, it's all a set of essentially arbitrary and artificial lines to draw; we don't have a true class system (as existed in the Middle Ages, where there were real legal distinctions between members of the clergy, the nobility, and the peasants, or as happened under India's caste system).\""
},
{
"docid": "319928",
"title": "",
"text": "I switched from engineering into finance, into an entry level position as an analyst on the investment side. I can tell you about my experience and how I did it. Yes, it is incredibly hard to get a position on the buyside. Investment management doesn't scale well with numbers, adding more analysts typically doesn't improve results (i.e. Buffett and Munger made all the investment decisions at Berkshire Hathaway, the most successful investment team is a two man team running more than a hundred billion dollars of assets). So teams are very small. A large amount of money goes through the hands of very few people, so naturally the pay is very big. The recruiters are not lying when they say there are hundreds of applicants chasing each one of those jobs. I tried asking my friends and family, but being a first generation American, most of the people I know are blue-collar types that work with their hands. I had some success tapping into the alumni network, I got many responses with advice but no interviews. It doesn't help that the finance world is currently shrinking and there are talented people losing their jobs. I had the most success attending my schools career fair. If you graduated from one of the top schools, the firms that are recruiting will still show up. Also, check your schools career office. All the top schools I know of have on-campus interviews. They are generally open to alumni. It is summer right now, but on-campus recruiting season will start in the fall. You should be able to get some interviews through your school. Now the most important thing you need to do is to differentiate yourself. What are you doing right now? Are you working in some other area of finance or a different field altogether? I think the best way to do it (and it is how I did it) is to invest your own money. If you are in an interview and you say you invest your own money, you are pretty much guaranteed that you will be explaining one of your investment theses for the next half hour. This is effectively what you will be doing in the real job if you get it. Firms want to hire someone who can start working, they don't want to pay you that big money only to find that you can't do anything for the next year or two before they cut you. So you have to prove that you can do the job. Interns do it by working for cheap for a summer or two. Someone who graduated already can do it by claiming that they do it on the side, and then backing that up by being able to explaining positions intelligently (you will NOT get the job if it looks anything like /r/investing). There is also something hypocritical if you say that you should be paid boatloads of money because you are capable of managing money well (that is what you are claiming by applying to an investment job) and you don't manage your own money and you haven't formulated any investment theses. Students typically won't be able to do this because they don't have any money to invest, so they get their jobs through the internship route."
},
{
"docid": "241751",
"title": "",
"text": "This is based on evidence over the past 35 years which coincides with the largest technology revolution in human history. Those automated jobs were going away even if minimum wage was cut. Our business community is enamored of technology solutions that enrich them in the short term and to hell with the law no term. To keep telling the public this then prevents people demanding a livable wage in fear of no job at all. It keeps working class people complacent with the abuses in their work environment, such as forbidding legal breaks, not paying overtime that is due, last minute schedule changes, unpaid 24 on call status and less than 8 hours between shifts. Fear is the most powerful mute button in the world. Long term, profits will begin to slide slowly as we are seeing in retail right now. It will be blamed on Internet shopping, millennials are minimalists or student loan payments. This doesn't explain deceased shopping by other age groups, but shhh, not suppose to notice. As more and more people are left in poverty or near poverty by lack of wage increases, the number of customers fall. When it hits the middle class and they stop shopping so much, our economy will be in a persistent recession. Layoffs to reduce expenses leads to fewer customers for products leads to decreased profits leads to layoffs.... Automation will, of course, reduce the expenses in the short term, but will also eliminate the market. All the white collar workers that think they are immune will be shocked when it hits their industry, but it only makes sense in myopic business circles to eliminate higher wages workers, too. Sometimes technology is the problem, not the solution. I expect to be banned for saying so."
},
{
"docid": "555851",
"title": "",
"text": "\">I fucking hate it when I see another rich kid acting like they came from slums Where did David Knopf claim he was from the slums? You got a source for that? >and worked their way up the ladder How do you know he didn't? Life is a bell curve. Some people climb the ladder much faster than others. Some people may climb because of nepotism. Some people genuinely are better than most other people. You think everyone should rise up at the same pace? Move to Japan. >delusional twats much like yourself believe that you can earn anything with just some \"\"hard work bruh.\"\" Not just hard work, but also talent. If everyone works the same amount, those who are more talented will *generally* have more success. Of course, some is subject to chance, some people have a head start, etc., but in general, that's the way that the world has proven to work. >About every successful silicon valley startup such as Microsoft, Facebook, and Snapchat were founded by kids with very prominent parents. Yeah, Microsoft. K. So Bill Gates grew up with upper middle class parents. Know what? So did a fucking *huge* amount of people. Know how many are as rich as Bill Gates? Fucking none of them. He had a head start, absolutely, but that doesn't take away his success. He's done more with what he was given than any of his peers, and likely more than anyone regardless of beginning income level could do. Zuckerberg's dad was a dentist. Upper middle class, but if you're *really* being honest with yourself, you'd realize that there are almost 200k dentists in the US alone, and yet there aren't 200k multi billionaires. Hm. Sergey Brin, co-founder of Google, was the son of a professor who immigrated from Russia. Steve Jobs was the adopted child of two blue collar workers. Of course, if we move out of just Silicon Valley, your narrative really, *really* falls apart, since Silicon Valley of course has a little bit of a lean towards the wealthy, as computers aren't cheap and getting started in that arena requires the use of a computer. [Take a look at billionaires in general](https://www.bloomberg.com/news/photo-essays/2010-12-06/twenty-billionaires-who-started-with-nothing). Most billionaires [did not inherit their wealth](https://www.forbes.com/forbes-400/self-made/#7d08bb1941cb). And, something like a [third](https://blog.adioma.com/wp-content/uploads/2013/04/from-poor-to-rich-billionare-infographic.jpg) of the richest billionaires came from 'poor' parents, in addition to simply not inheriting their wealth. >whats the fucking difference between someone who inherits their money and someone who practically has a trust fund? A trust fund is a sort of an inheritance. I'm not sure why you're bringing this up? >Again he is not self made. He's just an extension of his parents achievements... Source? I saw that someone who shares the name Knopf is wealthy (posted in this thread), but are those actually his parents? Do you have proof of that? Or are you just guessing that since he's made it to an executive position and shares the name of someone wealthy, that those are his parents? Further, *if* those are his parents, how does wealth from publishing transferring into a job at a consumer staples company work? Why is your first assumption when you see someone successful that they had it handed to them? Why do you need to selectively choose a small subset of people (Silicon Valley startups) out of an already limited group (billionaires) to be able to even attempt to make your point?\""
},
{
"docid": "145014",
"title": "",
"text": "I would like to open a bra shop, since where I live we have Victoria's Secret and nothing else. I have a name and logo thought out, and always keep an eye out for reasonable locations. I've talked myself out of moving forward with it, because it seems any time there's talk of a store fancier than a Walmart/Dollar store coming to town, everyone gets on about it being a working class/blue collar town, and how no one can afford x/y/z. Good bras aren't cheap. I'd also need to hire staff, because I'm not keen on being that close to people. I've daydreamed about bars and restaurants, with questionable, kitschy themes."
}
] |
4804 | How do financial services aimed at women differ from conventional services? | [
{
"docid": "583651",
"title": "",
"text": "It is just marketing and market segmentation. We could all shop at WalMart, but some people prefer wider aisles and mood music so they shop at Macys. Other people are fine shopping at Target or online. Women face no different challenges. The challenges in investing depend on who you are, where you are in life and what your goals are. I think it is fine to target a certain demographic over another, but they are just trying to make a niche. I prefer to not think about worst case scenarios, and I view all financial advisors with a healthy skepticism, regardless of gender."
}
] | [
{
"docid": "61319",
"title": "",
"text": "We live in a community, and as citizens we all have the right to shop in public shops and eat in public restaurants. If that right is abridged, then freedom is abridged. And the freedom to enjoy the public services of one's community is far more important than the freedom to deny services due to one's prejudice. Either way someone loses a bit of freedom. Which is more important? According to you the freedom to do what you will with your property outweighs any and all possible consequences of exercising that freedom. This is a very extreme viewpoint. I know because I once held it. >Go start a business and get back to us Yeah I did that. 15 years ago and still going. And I actually hire people. You may not want to make too many assumptions about the person you are debating. As a business owner I would happily choose a world in which I had to hire the best qualified candidate regardless of my prejudices over one in which other business owners could arbitrarily refuse me services that are offered to the general public just because of who I am. >If a person is refused service for any reason, they can find another store, shop, or vendor. And what if all the stores in your town have similar policies? Am I to drive to the next town every time I need to go shopping? What if all the shops within 1000 miles have discriminatory policies? How am I to live? The only reason you can make this argument is because of the success of the civil rights act. If it was repealed today you would likely be able to avoid racist restaurants and shops by going elsewhere. If it had never existed that would not be the case. >THERE IS NO EQUAL OPPORTUNITY IN LIFE FOR SUCCESS That is why I very specifically said that all citizens must have a REALISTIC opportunity for success, and NOT that there should be EQUAL opportunity (impossible) or equal outcomes (ridiculous and counter-productive). What must be avoided is the creation of an economic status quo that ensures the poor remain poor and the rich remain rich. Such a status quo is just slavery without the whips. Even if the government is not enforcing the status quo, it can be just as hard to break free from. >Forceful acts by government are ALWAYS far worse than forceful acts in the private sector It is the results of the act of force that matters, not its source or methodology. This once again is an argument from pure ideology. Because you believe that government force is always worse than the private sector, you are unable to see examples of how the private sector can limit our freedoms in even worse ways. Simply stating that government acts of force are always worse does not prove it so. >that's exactly where your collectivist sewer leads I would argue that the centers of poverty you listed are much more a symptom of the systematic undercutting of education, social services and other support systems that once gave the underprivileged a realistic way to improve their lot in life. Now, with blue-collar wages on the decline and public education gutted, poverty gets more entrenched and harder to overcome. You really think it's going to get better for these people if we take away the minimum wage? Do away with public schools? Food stamps? Medicaid? Is there any point at which lack of social mobility becomes a more damaging than minor economic regulations? Is it OK to effectively return to the feudal system if it means nobody will ever have one penny taxed from them and given to someone who wasn't born rich? Nobody made you get born poor so there's no force and therefore everything is right and good? Such a shallow view of our moral obligations as members of a society. We live in a society. Extreme individualism will lead only to self-destruction just as fast as extreme collectivism. The only rational view is to analyze the facts, weigh the benefits and consequences to any given policy, and make decisions without any preconceived notion of what the solution should look like. In the case at hand, I, and the vast majority of people, think the minor inconvenience of not being able to make discriminatory hiring decisions is far outweighted by the benefits of not having large segments of the population chronically unemployed and impoverished because their race. The only effective argument against this would be to posit a way in which the benefits of this policy could be achieved (or bettered) without the use of government coercion, and that I haven't seen. >You'd better grow up fast on this one Remember, you are talking to someone who thought and argued exactly the same viewpoint you are now espousing for 10 years. I was even a delegate to the national Libertarian convention once. I was a true believer. I did grow up."
},
{
"docid": "284393",
"title": "",
"text": "\"The article ends saying Steve's success was not attributed to him being an asshole but, I think it did. Steve figured out how to tap into a human desire that ~30% of the market who can afford and is in the market for an iPhone has. The desire to be \"\"smug\"\" and have the \"\"new and greatest\"\"; he marketed that to the predisposed \"\"asshole types.\"\" Now don't down vote me yet, hear me out. I am not saying all iphone users are in this category but: Using men as a sample here. We like toys, and having the best toy out of your peers is something of a status symbol. Think back in the days of old when having a sword or weapon was the normal thing to carry around. The man with the most elaborate, or bigger or advanced sward/weapon was revered; and could use it to brag. Now a days there are a lot more beta males (yes I am taking it there) than in the \"\"rugged past\"\" due to institutions like police and insurance allowing for these men to get mates and pass along their genes. This allows for the propagation of Dick measuring rituals via possessions rather than actions. Look around at all your iphone owners how tough are they really, how often do they complain about trivial shit that doesnt matter or do nothing about it. How often do they say \"\"check out this cool new (in reality useless) app I have\"\"? This is the personality that Steve cornered and marketed to. As for women, women like to have the newest and nicest things as well for a different reason. They use it to show off their desirability to other women in the big race that women run: women only care about what other women think of them, they care about men in the sense that they can brag to other women how many men are after them- giving them status among their peers. The iPhone is marketed like jewelry to women, an accessory that complements them, like earings and a purse. And for all the people who say they like it for the usefulness and such, okay you are truly 10% the 100% of his market. That is the excuse apple can use as the conscious part of the advertising, and the few people that use it for those reason make the vast minority. Because realistically an Android and a BB can do many things, and some better than the ipone for WAY less. If you'd like to know I used to own a BB was going to get an iphone, but wanted to \"\"disconnect\"\" from the google everything that comes up in conversation, email always on, facebook always on lifestyle.- So I got a pos phone that i dont worry about dropping, getting wet, etc.\""
},
{
"docid": "583646",
"title": "",
"text": "Put simply: Financial Services provides or facilitates access to capital in some capacity, and are companies unto themselves (TD Ameritrade, Goldman Sachs, Bank of America, etc), this also includes accounting companies which provide financial information, and insurance companies that deal with risk. Corporate Finance is part of all businesses in any industry (So for example Starbucks has a finance department, and those employees are doing corporate finance), and plans how to use capital to fund a company's projects and make sure there is sufficient cash on hand as it's needed for daily operations. Corporate Finance interacts with Financial Services to access the capital needed to fund the business's activities."
},
{
"docid": "583666",
"title": "",
"text": "Wikipedia has a nice definition of financial literacy (emphasis below is mine): [...] refers to an individual's ability to make informed judgments and effective decisions about the use and management of their money. Raising interest in personal finance is now a focus of state-run programs in countries including Australia, Japan, the United States and the UK. [...] As for how you can become financially literate, here are some suggestions: Learn about how basic financial products works: bank accounts, mortgages, credit cards, investment accounts, insurance (home, car, life, disability, medical.) Free printed & online materials should be available from your existing financial service providers to help you with your existing products. In particular, learn about the fees, interest, or other charges you may incur with these products. Becoming fee-aware is a step towards financial literacy, since financially literate people compare costs. Seek out additional information on each type of product from unbiased sources (i.e. sources not trying to sell you something.) Get out of debt and stay out of debt. This may take a while. Focus on your highest-interest loans first. Learn the difference between good debt and bad debt. Learn about compound interest. Once you understand compound interest, you'll understand why being in debt is bad for your financial well-being. If you aren't already saving money for retirement, start now. Investigate whether your employer offers an advantageous matched 401(k) plan (or group RRSP/DC plan for Canadians) or a pension plan. If your employer offers a good plan, sign up. If you get to choose your own investments, keep it simple and favor low-cost balanced index funds until you understand the different types of investments. Read the material provided by the plan sponsor, try online tools provided, and seek out additional information from unbiased sources. If your employer doesn't offer an advantageous retirement plan, open an individual retirement account or IRA (or personal RRSP for Canadians.) If your employer does offer a plan, you can set one of these up to save even more. You could start with access to a family of low-cost mutual funds (examples: Vanguard for Americans, or TD eFunds for Canadians) or earn advanced credit by learning about discount brokers and self-directed accounts. Understand how income taxes and other taxes work. If you have an accountant prepare your taxes, ask questions. If you prepare your taxes yourself, understand what you're doing and don't file blind. Seek help if necessary. There are many good books on how income tax works. Software packages that help you self-file often have online help worth reading – read it. Learn about life insurance, medical insurance, disability insurance, wills, living wills & powers of attorney, and estate planning. Death and illness can derail your family's finances. Learn how these things can help. Seek out and read key books on personal finance topics. e.g. Your Money Or Your Life, Why Smart People Make Big Money Mistakes, The Four Pillars of Investing, The Random Walk Guide to Investing, and many more. Seek out and read good personal finance blogs. There's a wealth of information available for free on the Internet, but do check facts and assumptions. Here are some suggested blogs for American readers and some suggested blogs for Canadian readers. Subscribe to a personal finance periodical and read it. Good ones to start with are Kiplinger's Personal Finance Magazine in the U.S. and MoneySense Magazine in Canada. The business section in your local newspaper may sometimes have personal finance articles worth reading, too. Shameless plug: Ask more questions on this site. The Personal Finance & Money Stack Exchange is here to help you learn about money & finance, so you can make better financial decisions. We're all here to learn and help others learn about money. Keep learning!"
},
{
"docid": "449079",
"title": "",
"text": "If something in any transaction in life—financial or otherwise—doesn’t make you feel comfortable and the choice is between saving money with one thing versus another, don’t sell your personal needs short. Pay more elsewhere that treats you the way you expect to be treated. In the long run the $$$ you “save” in a cheaper transaction might cost you more in the headaches and annoyance you have to swallow in dealing with this “bargain” in the future. Your question is this: “Do his sales tactics indicate other underlying problems? How can I deal effectively with those tactics?” And you state this as well: “To make a long story short, the dealer's aggressive sales tactics have made me somewhat uncomfortable.” And finally ask: “How can I deal effectively with those tactics?” Okay, first and foremost if you feel discomfort in anything in life—not just a financial situation—just walk away. You might have to say “No…” when doing this but it’s not always the case you will have to counter aggression with aggression. And specifically in the case of a purchase like this, you need to also ask yourself: “Is this discount being offered me worth the headache I am getting?” At the end of the day money is meaningless and has it’s main worth as an economic motivator/stimulator: Someone has a need and someone else has something that can solve that need. What would it take for the side of need to connect to the side of solution to that need? This is the basic concept surrounding all economics. So that said, I have personally avoided buying things for less money and paid slightly more elsewhere for a service experience that made me feel comfortable. At the end of the day, if you feel happy in the transaction it helps in the long run more than—let’s say—the $20 to $40 you “save” by buying from someone else. Also—on the side of customer service—this person’s sales techniques sound like something out of a very old fashioned sales playbook. Nowadays it’s all about relationships and service: The immediate sale is not as important for competent and reputable businesses because they know a better customer service experience will bring people back. So it doesn’t matter how long this guy has been in business: It could be that he’s been in business a long time just because he has been in business a long time. That said—and in the case of musical instruments—maybe this guy is really good at care and upkeep of instruments but has crappy sales techniques. Keep that in mind as well and just push back on their sales methods. For things like musical instruments, people might be jerks on the sales side but in the maintenance and repair side they are great. Will you need to go to them if/when your instrument needs repair? Or you don’t care? At the end of the day, go with your gut. And if your gut says, “No…” then just go somewhere else and spend your money on an item you like from a place that treats you the way you need."
},
{
"docid": "115419",
"title": "",
"text": "\"> they want to lower the standards we have for goods and services Their avowed goal is \"\"regulatory coherence\"\" but its [not being done in a good way](http://www.ciel.org/Publications/ToxicPartnership_Mar2014.pdf), its an attempt to sneak through a [huge long long list](http://www.ttip2014.eu) of bad ideas that would not fly in any kind of light of day, and then make them permanent, with special [eternal entitlements](http://tpplegal.files.wordpress.com/2012/05/isds-domestic-legal-process-background-brief.pdf) for multinational corporations, so permanent that future elections can not change them, nor can states individually protect people, their laws would be preempted to the extent that unaccountable trade tribunals [can order huge fines against countries and states for merely doing their jobs](http://www.italaw.com/sites/default/files/case-documents/italaw3206.pdf), because they impinge upon new suddenly materialized \"\"rights\"\" as perceived by the trade agreements. Almost nobody knows they are doing this. often countries dont realize that they have lost their rights to determine their policies, and then countries usually lose. There are SO many problems I don't know where to begin. > in part by opening up public services to private business? Privatization often goes badly. They are hiding that and portraying privatization as the only possible future. Well at the beginning, the prototypes FTAs, NAFTA and GATS mandated the privatization of most public services in countries that signed them, with services (everything you can't drop on your foot) especially some of the add on documents to GATS. That was in 1995. It contains a \"\"standstill\"\" (they all do) which said that countries could not change anything if it was a move back towards public ownership and control, in the case of services, they frame that as bad, as a theft from businesses.. So standstill typically says things like they can not create any new public services and [if there was any money involved in the market sector at all that it would have to be privatized](http://www.iatp.org/files/GATS_and_Public_Service_Systems.htm) in tiny steps. No going back to public services allowed. But of course, people dont know that and often don't believe it when told. For example, do you believe me when i tell you thats the reason US health care is so bad-? Can you see how and why they might lie about what they,, politicians, can do, can do about things because they want to win elections by promising things - like affordable health care- But also hide the ugly act [that they gave away the store](http://www.law.harvard.edu/programs/lwp/nafta.pdf) starting in 1995. The FTAs that we can read (the early ones) tried to do it by being undecipherable to non-experts- they are so complicated and ambiguous only a few people really know what they demanded, at least up until recently. Now they are top secret. Really secret. Only the 600 lobbyists have access. Now, a growing number of people, especially in Europe, seem to realize this is really scary and a red flag., but its not because the news was any help, its because of the net, the media - especially in the US, has been completely unhelpful. They dont cover this at all. TTIP is a huge controversy. But I have a feeling the worst one is TiSA, which has remained largely out of the news. Except for Wikileaks and the financial services chapter. Just one chapter is known. And its an old version. Now they want in TiSA to greatly [expand the scope of these FTAs to millions of service jobs](https://www.youtube.com/watch?v=2_pPqnbXpA4) in a huge number of countries. Countries want things, like the US wants to be able to charge more money for drugs and they want to force other countries to allow US companies into their markets, for example, insurance, or financial instruments, it seems that they are trying to deregulate banking when it should be re-regulated to avoid a repeat of the 2008 GFC. Another thing the US wants is to limit generic drugs and make it easier for companies to open factories, send contractors, etc. elsewhere. Its not always a good thing to open markets up to \"\"liberalisation\"\". In many cases, it could lead to substantial job losses, as it has in [Central America after CAFTA](http://citizen.typepad.com/eyesontrade/2014/08/central-america-crisis-belies-caftas-empty-promises.html).\""
},
{
"docid": "559111",
"title": "",
"text": "Here's a reality check. They likely cost on the order of a few million/yr, which is small potatoes compared to what Taibbi makes it sound like. They got caught, and are going to jail. Since Taibbi exggerates at every turn, and demonstrably so, I do not trust his reporting. The bid riggers were charged with corrupting *dozens* of bids from 1999 to 2006. Know how many bids were performed in that time? I challenge you to find out. I bet there was more than dozens issued over that 7 year period. In fact, since there appear to be 400B in new bonds issues a year and the one mentioned in the story was for 300M, if that is representative of the sizes then there are over 1,000 issued a year, for 7000 or so over that period. They corrupted *dozens*! Oh the humanity. Feel free to correct any of these numbers as you see fit. Reading the actual PDF from the charges, one finds that the fraud was no where near as egregious as the Taibbi story makes it out to be. [Here](http://www.justice.gov/atr/cases/f261600/261602.htm) is the indictment, and [here is the DOJ](http://www.justice.gov/opa/pr/2012/May/12-at-620.html) press release. [Here's](http://www.bondbuyer.com/issues/121_88/cdr-financial-bid-rigging-trial-1039416-1.html) article reporting on the trial with no where near the sensationalism that Taibbi lives for, an article that actually reports *facts* from the case and makes no innunendo. [Here's](http://www.fbi.gov/newyork/press-releases/2012/three-former-financial-services-executives-convicted-for-roles-in-conspiracies-involving-investment-contracts-for-the-proceeds-of-municipal-bonds) FBI press release. Not a single one of these sources that actually had something to do with the investigation, trial, and conviction includes anything near what Taibbi writes. In fact, other than Taibbi's story and those reporting on it, it appears this is not all the big banks in cahoots to defraud poor bond markets, but a few bad apples that got caught and are getting appropriate punishment. Let me ask you - how much money did they take? The *total* market appears to be 400B in new sales. Some of the charges included something like changing a 5.04% instrument to a 5% instrument, for an item in a 300 million dollar range. If they reaped the entire difference (which is not likely since there were bid rigging which returns far less the the difference in the rigged bid) that comes to 120K/yr for one of dozens. Taibbi himself writes they may have made up to 87K/yr on that one. Wooo - massive theft!. If all were like that, then dozens is approximately 48 * 87k/yr = 4 million a year. The biggest number for stolen money in any of the actual court documents I have seen ranges in the 50-100K range. Please provide better evidence *from actual court documents* and not Taibbi style hearsay. Until then I provided you a reality check."
},
{
"docid": "78259",
"title": "",
"text": "Are there particular, established businesses that provide these services? Yes! There are many fee-based financial advisors that provide such services. These might help: http://www.ricedelman.com/galleries/default-file/how-to-choose-financial-advisor.pdf http://www.ricedelman.com/cs/education/article?articleId=990#.Us7cyPRDt1Y"
},
{
"docid": "323601",
"title": "",
"text": "\">My father and my grandfather and my great grandfather could all sustain their families on a single middle class income Well, depends on what you define as \"\"middle class income\"\". Some of it is a **rising expected standard of living**: What size house did they have? How many automobiles did they have? If you go back to your great grandfather's time, he probably had far fewer sets of clothing. They probably didn't have the television, telephone, and air conditioning services that I expect most middle-class people expect. My dad ate fruits and vegetables only in season; you didn't get to have strawberries in the middle of winter or avocadoes shipped in from Chile. I expect to be able to travel via air to visit relatives; go back to the 1960s or even into the 1970s, and it was considered something that only the well-to-do would expect to be doing. My father didn't have video game consoles available to him. Some of these are driven purely by technology, of course, and someone can manage to pay no larger a chunk of change than they did before. We eat more meat, if I remember a lecture on this correctly. My parents had a lot more casserole and spaghetti (inexpensive foods) than I do. But some of it is also adjusting norms. Reading about the sort of house that a farmer lived in a few hundred years back would make me think of horrible poverty by modern standards... Most women seem not to have wanted to remain housewives when women started going out and doing men's historical work. So if they go out into the workforce, then keeping up with the Joneses, doing what's considered middle-class requires doubling income, and downwards pressure on some fixed costs (like, say, utility costs or gas costs) is lessened; that makes things tough on the few holdout families who want to have a single-income standard. Sure, maybe a small percentage of people out there want less-expensive beef, but its the bulk of people who get catered to... **Automation** has greatly decreased demand for some types of jobs; performing a repetitive, pre-defined task on an assembly line has fallen dramatically in value as the need for more people to do this sort of work has fallen off. Wages for a particular job are a function of how many people are available to do them relative to how many are needed. Every ATM is one less bank teller, every e-commerce website fewer retail workers. That increases the productive capacity of society, but whereas before there might be tremendous demand for someone to perform a repeated task on an assembly line (which it was easy to train people to do), many of the types of labor that are currently under-supplied are things that take longer to train people to do and require more specialization. **Debt Service**. Any debt that someone has that doesn't have a positive return-on-investment (an engineering degree would probably have a positive ROI, a large television probably a negative) winds up making them poorer in the long run. Any debt at *all* (barring investors making bad pricing decisions and hitting default or unexpectedly low returns) means transfer of wealth from people without money to people with money. The more (non-defaulted-upon) debt, the more people with more wealth make more wealth from lending. People have vastly more *personal debt* than they once did. Compare the amount of debt that someone has today with the amount of debt that they typically had in your great-grandfather's time, in the 1930s. There's a constant *drain* of wealth towards the lenders. This is one of Elizabeth Warren's favorite grousing points — people take out a *lot* more debt, particularly on housing, than they ever did in the past, and so a lot of their income is eaten year-by-year on debt service. There are lots of factors that make it easier to take out more debt. The biggest source of personal debt is [by far mortgages](http://www.utahfoundation.org/img/pdfs/rr689summary.pdf), and this is where the largest increases have taken place; policies to try to encourage people to go into debt to take out larger and larger mortgages have been steadily ramped up over this time, with the government subsidizing and taking on risk for insurance liability on mortgages to keep encouraging ever-larger amounts of debt. Lenders have computers and much more information and sophisticated systems for evaluating risk of default, which permits lending out more wealth. So there are technological changes driving this. The government has more *public debt* which means more such payments, even if they don't show up on your personal checkbook and are only seen by an increasing disparity between what you pay in taxes and the services you get back. Here's a chart of [inflation-adjusted debt per capita](http://www.theatlantic.com/business/archive/2011/07/chart-of-the-day-americans-income-and-the-us-debt/241463/) in the United States. That means that there's a constant increasing in the siphoning off of taxes as well to pay for the government having purchased a good or service without having actually paid for it at the time it was ordered. That decreasing green line means not that personal debt is falling (well, most of the time) but that the government is taking out debt on your behalf even faster than private debt has been going up. **The rest of the world catching up and breaking a temporary limited monopoly on certain goods**. China and India were not industrialized (and the former stuck under Maoism and not trading much with the rest of the world), so there were fewer people available to do this sort of work. Europe rebuilt from World War II, so it didn't have to purchase from the overseas US manufacturing industry. What could change? Well, standard-of-living is a cultural thing; that seems hard to manipulate. I'm sure that it's possible to change that, but I have a hard time suggesting how. Automation would be an across-the-board good thing if workers could be efficiently shifted into fields which currently have more demand; it's only an issue for workers if they stay in a field that has falling demand. I'm sure that our mechanisms for re-educating workers are not terribly good. Today, our education system still involves having a person stand up in front of a lot of other people and talk at them, then have those other people go and repeat some rote tasks to try and hammer something into their brain; it's the same mechanism that the wealthy used hundreds of years ago to tutor their children, but ramped up on a larger scale. If it were cheaper and easier to learn a new trade, it'd be easier to enter lucrative fields. College costs in particular are ridiculous. When you take college classes, you're basically getting a reading list, a very few limited slots to ask questions, and a set of predefined tasks plus some grading. That can be done far less-expensively than it is provided today. I personally have high hopes for online courses as a start here, though I'm sure that there will be stumbling blocks. Ditto for things like Wikipedia; using hypertext means that I can skip over things I already know and focus on what I don't understand, and electronic, automatic distribution means that it can be done far less-expensively than having some guy with a PhD stand up in front of a room and read some lecture notes aloud. Instead of answering questions generation after generation, *those* people should be polishing databases of *answers* to questions so that every subsequent human being can quickly and easily refer to their answer, and so that we can direct people to the best explanation easily. It's possible to adopt some measures that would reduce debt service by reducing public debt, but the public debt has been growing for a long time, and it seems very clear that people are much more willing to take out debt than to cut into *their* favorite concern (low taxes or lots of services) in the immediate future. As for reducing debt service via reducing private debt, most of the policy and technological factors that drive private debt seem unlikely to change to me. Maybe if we see some sort of cultural change, an aversion to taking out debt with a negative ROI, but all of the information I'm giving here has been public for a long time and people haven't changed, so I doubt that we'll see any kind of a reversal or social movement against taking out lots of debt. You'd have to have the equivalent of a [Great Awakening](https://en.wikipedia.org/wiki/Great_awakening) with respect to debt...and given that attempts to excite interest in the matter have generally not gone anywhere thus far, I suspect that this is human nature and doubt that things will change. You can always change *your* personal debt decisions, but society as a whole? As for the temporary monopoly...well, I think that it's pretty much inevitable that the rest of the world catches up to a great degree. Asia will catch up, even Africa will eventually get there. I think that that would be a pretty difficult thing to stop, and I think that most of the world would object to someone attempting to stop it.\""
},
{
"docid": "262152",
"title": "",
"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."
},
{
"docid": "466232",
"title": "",
"text": "And they get paid like everyone else. Is the worker more important than anyone else? Or are they equal? And as equals should they not pay the same rate for the same services as anyone else? Walmart doesn't treat you any different based on account status, neither does any other voluntary service provider. Why does an involuntary service provider get the right to discriminate based on success? McDonald's doesn't do a survey of the in store customers and make a segment pay more than another so they can eat for free. Im not sure how people can fight inequality by treating people unequally."
},
{
"docid": "32097",
"title": "",
"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.\""
},
{
"docid": "573523",
"title": "",
"text": "\"I'll assume United States as the country; the answer may (probably does) vary somewhat if this is not correct. Also, I preface this with the caveat that I am neither a lawyer nor an accountant. However, this is my understanding: You must recognize the revenue at the time the credits are purchased (when money changes hands), and charge sales tax on the full amount at that time. This is because the customer has pre-paid and purchased a service (i.e. the \"\"credits\"\", which are units of time available in the application). This is clearly a complete transaction. The use of the credits is irrelevant. This is equivalent to a customer purchasing a box of widgets for future delivery; the payment is made and the widgets are available but have simply not been shipped (and therefore used). This mirrors many online service providers (say, NetFlix) in business model. This is different from the case in which a customer purchases a \"\"gift card\"\" or \"\"reloadable debit card\"\". In this case, sales tax is NOT collected (because this is technically not a purchase). Revenue is also not booked at this time. Instead, the revenue is booked when the gift card's balance is used to pay for a good or service, and at that time the tax is collected (usually from the funds on the card). To do otherwise would greatly complicate the tax basis (suppose the gift card is used in a different state or county, where sales tax is charged differently? Suppose the gift card is used to purchase a tax-exempt item?) For justification, see bankruptcy consideration of the two cases. In the former, the customer has \"\"ownership\"\" of an asset (the credits), which cannot be taken from him (although it might be unusable). In the latter, the holder of the debit card is technically an unsecured creditor of the company - and is last in line if the company's assets are liquidated for repayment. Consider also the case where the cost of the \"\"credits\"\" is increased part-way through the year (say, from $10 per credit to $20 per credit) or if a discount promotion is applied (buy 5 credits, get one free). The customer has a \"\"tangible\"\" item (one credit) which gets the same functionality regardless of price. This would be different if instead of \"\"credits\"\" you instead maintain an \"\"account\"\" where the user deposited $1000 and was billed for usage; in this case you fall back to the \"\"gift card\"\" scenario (but usage is charged at the current rate) and revenue is booked when the usage is purchased; similarly, tax is collected on the purchase of the service. For this model to work, the \"\"credit\"\" would likely have to be refundable, and could not expire (see gift cards, above), and must be usable on a variety of \"\"services\"\". You may have particular responsibility in the handling of this \"\"deposit\"\" as well.\""
},
{
"docid": "321637",
"title": "",
"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.\""
},
{
"docid": "104395",
"title": "",
"text": "Less so today, but there was a time that women played a smaller role in the household finances, letting the husband manage the family money. Women often found themselves in a frightening situation when the husband died. Still, despite those who protest to the contrary, men and women tend to think differently, how they problem solve, how they view risk. An advisor who understands these differences and listens to the client of either sex, will better serve them."
},
{
"docid": "146441",
"title": "",
"text": "\"Written with some mild snark , but no insult intended, because financial stuff can be ridiculously confusing... Looked at another way, you're basically asking if the Biblical \"\"Parable of the Talents\"\" can be implemented as a business model. You as the investor wish to be the \"\"master\"\", with the entity doing the investing playing the part of the \"\"servant\"\". Since the law prohibits actual servitude as described in scripture, the model must substitute a contractual profit- and loss-sharing scheme. OK, based on what you've proposed, and by way of example, let's say you invested a thousand dollars. You give the investment service your money. At the end of a year, they give you back - Your capital ($1000) - Plus 1/2 of any profits OR - Less 1/2 of any losses So let's say the worst happens and they lose ALL of it. According to your proposal, they have to cover 1/2 of the loss. You end up with $500...but they end up with LESS than nothing. They will be in a deficit situation because all the expense was theirs. They don't just fail to make a profit. They go in the hole. It doesn't matter what percentages you use. Regardless of how the loss is shared, you've only guaranteed YOU can't lose all your money. The company CAN. Given a large enough investment, or enough market fluctuation, a big shared loss could shut down a smaller firm. To summarize: - You want a service that charges you nothing - Does all the work of expertly managing and investing your capital - Takes on part of the risk you would normally bear - (on top of their usual risk and liability) - Agrees to do so solely for a percentage of any return (where higher returns will likely involve a higher degree of risk) - AND that guarantees, after just 1 year, you'll get X% of your capital back, no matter what. Win or lose. - Even if the market crashes and all your capital, and theirs, is wiped out Superbest, um, to be serious briefly: what you're proposing is, if nothing else, inherently unfair and inequitable. I believe you intended it as a mutually beneficial scenario, but the real-world imbalance in risk and reward prevents it being so. Any financial service that would accept those terms along with the extra degree of risk would be fiscally irresponsible. From a business standpoint it's an untenable model, and no company would build on it. It would be tantamount to corporate suicide. The requirement that a service promise to give you back X% of your money, no matter how great the loss, makes your proposal impossible. You need to think about how much all this costs, realistically, as well what kind of returns you can actually expect. And that more risk for higher return is exactly what a service could NOT take a chance on if it had to \"\"share\"\" investors' losses. Besides, it's not really sharing, now is it? They will always lose more than you, always end up in a negative situation, unable even to recoup costs. Circumstances beyond their control could result in a drop in the value that not only wipes out any profit, but requires them to pay YOU for work performed and expenses incurred on your behalf. Why would they let anyon double-dip like that? Yeah, we all prefer getting something for nothing...but you want valuable services and for them to pay you money for the privilege of providing them? I totally agree that would be fantastic, but in this world even \"\"free\"\" doesn't come cheap anymore. And getting back to costs: Without consistent income the service would have nowhere to work and no resources to work with. No office, computer, phone, electricity, Internet, insurance, payroll, licensing, training, maintenance, security, lobbying, etc., etc., etc. Why do people always forget overhead? There's a reason these services operate the way they do. Even the best are working with fairly slim margins in a volatile sector. They're not into 1-year gambles unlikely to cover their cost of doing business, or having to pay for a negative return out of their own pocket. Look, if you're the Biblical master asking your servant to manage things, overhead is built-in. You're taking all the risk as well. You're paying for all three servants' food, home, clothing, etc, plus you had to buy the servants themselves. So its reasonable that you reap the reward of their labor. You paid for it, and you didn't even punish the servant who buried your money in a hole. The two good servants may have done the legwork, but you took on the burden of everything else. In your proposed service, however, contrary to the servant's usual role, the servant - i.e., the company - would be assuming a portion of your risk on top of their own, yet without any guarantee of profit, income, or even coverage of costs. They're also subject to regulations, fees, liability, legal stuff, etc. that you're not, against most of which you are indemnified and held harmless. If they agree to cover a share of your loss, it exposes to greater liability and more related risk. It robs them of resources they need to invest in their own business, while at the same time forcing them to do all the work. As a result, your model doesn't give such a service a fighting chance. Getting it off the ground and lasting past the first-year payouts would require more luck than skill. They'd be better off heading to Vegas and the blackjack table, where the only overhead is a cheap flight and room, where the odds and rules don't change overnight, and they at least get free drinks. If none of the equivalents satisfies, then the Biblical parable appears to describe your only option for obtaining exactly what you want: Move to a country where slavery is legal and buy an investor :-) Cheers, c\""
},
{
"docid": "255795",
"title": "",
"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."
},
{
"docid": "425527",
"title": "",
"text": "\"Related to this question: I came across a post at The Financial Planning Exchange* titled \"\"The Top 10 Ways To Tell If You're Working With A Really Good Financial Planner.\"\" Here are a few tips I particularly liked: (* site is no longer available) 4. Make sure the planner is going to work with you on a Fiduciary basis. This means that they are going to recommend only what is in your best interest. A planner who tries to sell you a product is generally a red flag that they aren't looking out for your best interests. [...] 8. Interview the prospective planner that you are about to hire. Understand how they think, what their speciality is, and most importantly how they are going to get paid for their services. Be very very careful with a planner who is going to provide you with a free financial plan as that person more often than not has a motivation to sell you something. [..] 10. Last but not least, go to a person who works hand in hand with financial planners like an accountant or estate planning attorney for a referral. Accountants and estate planning/tax attorneys know the difference between a good and bad planner. Chances are they are a client of the person they'll refer you to.\""
},
{
"docid": "291398",
"title": "",
"text": "I do think you know how communism works. You are looking for the word 'socialism,' I believe. Examples: Communism Healthcare - Government is the ENTIRE healthcare system. So you get only one source. Socialism Healthcare - Government regulated/augmented healthcare system/market. You'll get different sources from the market and some standard services from the gov, but it all needs to meet standards and regulations SET by the gov."
}
] |
4804 | How do financial services aimed at women differ from conventional services? | [
{
"docid": "104395",
"title": "",
"text": "Less so today, but there was a time that women played a smaller role in the household finances, letting the husband manage the family money. Women often found themselves in a frightening situation when the husband died. Still, despite those who protest to the contrary, men and women tend to think differently, how they problem solve, how they view risk. An advisor who understands these differences and listens to the client of either sex, will better serve them."
}
] | [
{
"docid": "169267",
"title": "",
"text": "\"> * How did you get started? I realized there's little to no overhead for a service-based business, so I thought up a name and concept and spent a few hundred on licensing with the state. > * What kind of services do you offer? All the simple shit an average person can't do. OS upgrade, RAM upgrades, home entertainment installation and troubleshooting, purchase consulting, HIPAA compliance, and whatever else works for both me and my customer. > * Do you follow an \"\"Hourly Rate\"\" or \"\"Flat Rate\"\" payment system? Depends on the job, but usually hourly. My standard rate is $30 an hour, if you were wondering. I could charge more, but my rate is already flexible, so I don't really care to push away potential client experiences with a high price tag. > * What services make you the most income? The easy stuff. Upgrading a businesses machines. I get paid $30 an hour to reddit and click buttons, not because the business can't, but because they don't want to. > * What physical things would you recommend I acquire prior to getting started? Go on ifixit.com. Buy every unique tool they have. I wish I was kidding. > * How long until you were able to \"\"make a living\"\" from your business? I still don't because I'm in school. In theory, if I just doubled my hours per week, I'd be able to make more than enough to support myself for about four or less work days a week. > * What would you do differently if you were to start again from scratch? Not name the business after myself... > * Any other tips / words of wisdom on how to make this work? Consultants only thrive on word of mouth. It's better to lose money supporting a client than losing their trust. Their recommendations mean EVERYTHING. Widespread dvertising is a good way to get a ton of one-time customers who don't respect your services or your rate.\""
},
{
"docid": "325249",
"title": "",
"text": "\">More wisdom from the armchair economist who can't answer a simple question. Ok dude. You are a complete moron. The reason I didn't bother answering your question is because it has 0 relevance to your original post and my reply, and it's also something you can literally google. So let me do it for you. >Citibank is the consumer division of financial services multinational Citigroup This makes Citibank a commercial depository bank. Now get to your point. And please include how * Citibank is JP Morgan, * JP Morgan needed to be bailed out, * JP Morgan \"\"gambled\"\" * tax payers covered their losses * the CEO of a financial institution that was partly responsible for keeping the US economy from the shithole is a \"\"fucker\"\" fucking retard.\""
},
{
"docid": "297500",
"title": "",
"text": "**Economy of the Bahamas** The Bahamas is a stable, developing nation with an economy heavily dependent on tourism and offshore banking. Steady growth in tourism receipts and a boom in construction of new hotels, resorts, and residences had led to solid GDP growth for many years, but the slowdown in the US economy and the attacks of September 11, 2001 held back growth in these sectors in 2001-03. Financial services constitute the second-most important sector of the Bahamian economy, accounting for about 15% of GDP. However, since December 2000, when the government enacted new regulations on the financial sector, many international businesses have left The Bahamas. Manufacturing and agriculture together contribute approximately a tenth of GDP and show little growth, despite government incentives aimed at those sectors. Overall growth prospects in the short run rest heavily on the fortunes of the tourism sector, which depends on growth in the US, the source of more than 80% of the visitors. *** ^[ [^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/economy/about/banned) ^| [^FAQ ^/ ^Information](https://np.reddit.com/r/WikiTextBot/wiki/index) ^] ^Downvote ^to ^remove ^| ^v0.21"
},
{
"docid": "486729",
"title": "",
"text": "Someone else might be able to provide more details - but generally yes, of course. International corporations can pursue debt collection across borders - whether or not they do is a matter of convenience rather than law. My understanding is that a company's ability to report on your credit report is dependent on their membership in Equifax, USA etc. - so while most of your credit is country by country, international companies or companies with any relationship in other countries can follow you cross-border if they find out your new address and report the debt w/ that address. Since virtually every major company has some American affiliate, I wouldn't hold my breath that you can escape it indefinitely ESPECIALLY since you don't already have the debt, and have the power to actually pay for the service that you're using. Also - this is an incredibly scummy thing to do, and no matter how you dress it up as a financial decision it's just theft. Would you leave the country without paying your landlord? Without paying for groceries or other physical goods? Why is stealing from a telecom company any different?"
},
{
"docid": "592892",
"title": "",
"text": "It's a good question, I am amazed how few people ask this. To summarise: is it really worth paying substantial fees to arrange a generic investment though your high street bank? Almost certainly not. However, one caveat: You didn't mention what kind of fund(s) you want to invest in, or for how long. You also mention an “advice fee”. Are you actually getting financial advice – i.e. a personal recommendation relating to one or more specific investments, based on the investments' suitability for your circumstances – and are you content with the quality of that advice? If you are, it may be worth it. If they've advised you to choose this fund that has the potential to achieve your desired returns while matching the amount of risk you are willing to take, then the advice could be worth paying for. It entirely depends how much guidance you need. Or are you choosing your own fund anyway? It sounds to me like you have done some research on your own, you believe the building society adviser is “trying to sell” a fund and you aren't entirely convinced by their recommendation. If you are happy making your own investment decisions and are merely looking for a place to execute that trade, the deal you have described via your bank would almost certainly be poor value – and you're looking in the right places for an alternative. ~ ~ ~ On to the active-vs-passive fund debate: That AMC of 1.43% you mention would not be unreasonable for an actively managed fund that you strongly feel will outperform the market. However, you also mention ETFs (a passive type of fund) and believe that after charges they might offer at least as good net performance as many actively managed funds. Good point – although please note that many comparisons of this nature compare passives to all actively managed funds (the good and bad, including e.g. poorly managed life company funds). A better comparison would be to compare the fund managers you're considering vs. the benchmark – although obviously this is past performance and won't necessarily be repeated. At the crux of the matter is cost, of course. So if you're looking for low-cost funds, the cost of the platform is also significant. Therefore if you are comfortable going with a passive investment strategy, let's look at how much that might cost you on the platform you mentioned, Hargreaves Lansdown. Two of the most popular FTSE All-Share tracker funds among Hargreaves Lansdown clients are: (You'll notice they have slightly different performance btw. That's a funny thing with trackers. They all aim to track but have a slightly different way of trading to achieve it.) To hold either of these funds in a Hargreaves Lansdown account you'll also pay the 0.45% platform charge (this percentage tapers off for portolio values higher than £250,000 if you get that far). So in total to track the FTSE All Share with these funds through an HL account you would be paying: This gives you an indication of how much less you could pay to run a DIY portfolio based on passive funds. NB. Both the above are a 100% equities allocation with a large UK companies weighting, so won't suit a lower risk approach. You'll also end up invested indiscriminately in eg. mining, tobacco, oil companies, whoever's in the index – perhaps you'd prefer to be more selective. If you feel you need financial advice (with Nationwide) or portfolio management (with Nutmeg) you have to judge whether these services are worth the added charges. It sounds like you're not convinced! In which case, all the best with a low-cost passive funds strategy."
},
{
"docid": "66072",
"title": "",
"text": "There is a lot of difference in the way a commercial cleaning service provider works and the way in which your daily office cleaners perform their job. Lets’ describe in detail how the services of professional commercial cleaning company is different from the regular cleaners and how they can help you in efficiently running your organization."
},
{
"docid": "374211",
"title": "",
"text": "The buying service your credit union uses is similar to the one my credit union uses. I have used their service several times. There is no direct cost to use the service, though the credit union as a whole might have a fee to join the service. I have used it 4 times over the decades. If you know what make and model you want to purchase, or at least have it narrowed down to just a few choices, you can get an exact price for that make, model, and options. You do this before negotiating a price. You are then issued a certificate. You have to go to a specific salesman at a specific dealership, but near a large city there will be several dealers to pick from. There is no negotiating at the dealership. You still have to deal with a trade in, and the financing option: dealer, credit union, or cash. But it is nice to not have to negotiate on the price. Of course there is nobody to stop you from using the price from the buying service as a goal when visiting a more conveniently located dealership, that is what I did last time. The first couple of times I used the standard credit union financing, and the last time I didn't need a loan. Even if you don't use the buying service, one way to pay for the car is to get the loan from the credit union, but get the rebate from the dealer. Many times if you get the low dealer financing you can't get the rebate. Doing it this way actually saves money. Speaking of rebates see how the buying service addresses them. The big national rebates were still honored during at least one of my purchases. So it turned out to be the buying service price minus $1,000. If your service worked like my experience, the cost to you was a little time to get the price, and a little time in a different dealer to verify that the price was good."
},
{
"docid": "564806",
"title": "",
"text": "Business is likewise crucial to have a corporation identification variety which could be essential for doing business inside the US primarily based businesses and it is crucial to have an agency so that the commercial enterprise can able to run very easily. With Free company formation, people can capable of starting their business very easily and they could capable of delivering all of the services in order that the business can capable of run a protracted. Forming a enterprise, in particular, include all of the conventional form that's fully separate and the from the ownership which in particular did now not have any necessary factor."
},
{
"docid": "425527",
"title": "",
"text": "\"Related to this question: I came across a post at The Financial Planning Exchange* titled \"\"The Top 10 Ways To Tell If You're Working With A Really Good Financial Planner.\"\" Here are a few tips I particularly liked: (* site is no longer available) 4. Make sure the planner is going to work with you on a Fiduciary basis. This means that they are going to recommend only what is in your best interest. A planner who tries to sell you a product is generally a red flag that they aren't looking out for your best interests. [...] 8. Interview the prospective planner that you are about to hire. Understand how they think, what their speciality is, and most importantly how they are going to get paid for their services. Be very very careful with a planner who is going to provide you with a free financial plan as that person more often than not has a motivation to sell you something. [..] 10. Last but not least, go to a person who works hand in hand with financial planners like an accountant or estate planning attorney for a referral. Accountants and estate planning/tax attorneys know the difference between a good and bad planner. Chances are they are a client of the person they'll refer you to.\""
},
{
"docid": "32097",
"title": "",
"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.\""
},
{
"docid": "321637",
"title": "",
"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.\""
},
{
"docid": "318111",
"title": "",
"text": "This is how a consulting engagement in India works. If you are registered for Service Tax and have a service tax number, no tax is deducted at source and you have to pay 12.36% to service tax department during filing (once a quarter). If you do not have Service tax number i.e. not registered for service tax, the company is liable to deduct 10% at source and give the same to Income Tax Dept. and give you a Form-16 at the end of the financial year. If you fall in 10% tax bracket, no further tax liability, if you are in 30%, 20% more needs to be paid to Income Tax Dept.(calculate for 20% tax bracket). The tax slabs given above are fine. If you fail to pay the remainder tax (if applicable) Income Tax Dept. will send you a demand notice, politely asking you to pay at the end of the FY. I would suggest you talk to a CA, as there are implications of advance tax (on your consulting income) to be paid once a quarter."
},
{
"docid": "78259",
"title": "",
"text": "Are there particular, established businesses that provide these services? Yes! There are many fee-based financial advisors that provide such services. These might help: http://www.ricedelman.com/galleries/default-file/how-to-choose-financial-advisor.pdf http://www.ricedelman.com/cs/education/article?articleId=990#.Us7cyPRDt1Y"
},
{
"docid": "329202",
"title": "",
"text": "\"Yes! Banks, Insurance companies, and other \"\"financial\"\" service companies do not contribute anything to the economy. They are mostly a burden and added costs on those who earn money by MAKING things and adding value to existing things, from manufacturers, to transportation, retailers, services, etc.\""
},
{
"docid": "115274",
"title": "",
"text": "Marilyn Angelena is a Transformational Business Coach and Mentor known as Magic Makeover Genie!Marilyn works with Women Entrepreneurs and Small Business Owners who struggle to market their business effectively. What separates my service from other Business Coaches, Consultants and Mentors is that I only work with Women Entrepreneurs and Small Business Owners and I specialize in transforming your businesses using outrageous marketing strategies, both offline and online. Your business can literally be transformed in 26 weeks or less, regardless if you are just starting out with a new and fresh idea, you have been in business for a while and you aren’t making any money or you are making a profit and you are now ready to go to the “next level”."
},
{
"docid": "583666",
"title": "",
"text": "Wikipedia has a nice definition of financial literacy (emphasis below is mine): [...] refers to an individual's ability to make informed judgments and effective decisions about the use and management of their money. Raising interest in personal finance is now a focus of state-run programs in countries including Australia, Japan, the United States and the UK. [...] As for how you can become financially literate, here are some suggestions: Learn about how basic financial products works: bank accounts, mortgages, credit cards, investment accounts, insurance (home, car, life, disability, medical.) Free printed & online materials should be available from your existing financial service providers to help you with your existing products. In particular, learn about the fees, interest, or other charges you may incur with these products. Becoming fee-aware is a step towards financial literacy, since financially literate people compare costs. Seek out additional information on each type of product from unbiased sources (i.e. sources not trying to sell you something.) Get out of debt and stay out of debt. This may take a while. Focus on your highest-interest loans first. Learn the difference between good debt and bad debt. Learn about compound interest. Once you understand compound interest, you'll understand why being in debt is bad for your financial well-being. If you aren't already saving money for retirement, start now. Investigate whether your employer offers an advantageous matched 401(k) plan (or group RRSP/DC plan for Canadians) or a pension plan. If your employer offers a good plan, sign up. If you get to choose your own investments, keep it simple and favor low-cost balanced index funds until you understand the different types of investments. Read the material provided by the plan sponsor, try online tools provided, and seek out additional information from unbiased sources. If your employer doesn't offer an advantageous retirement plan, open an individual retirement account or IRA (or personal RRSP for Canadians.) If your employer does offer a plan, you can set one of these up to save even more. You could start with access to a family of low-cost mutual funds (examples: Vanguard for Americans, or TD eFunds for Canadians) or earn advanced credit by learning about discount brokers and self-directed accounts. Understand how income taxes and other taxes work. If you have an accountant prepare your taxes, ask questions. If you prepare your taxes yourself, understand what you're doing and don't file blind. Seek help if necessary. There are many good books on how income tax works. Software packages that help you self-file often have online help worth reading – read it. Learn about life insurance, medical insurance, disability insurance, wills, living wills & powers of attorney, and estate planning. Death and illness can derail your family's finances. Learn how these things can help. Seek out and read key books on personal finance topics. e.g. Your Money Or Your Life, Why Smart People Make Big Money Mistakes, The Four Pillars of Investing, The Random Walk Guide to Investing, and many more. Seek out and read good personal finance blogs. There's a wealth of information available for free on the Internet, but do check facts and assumptions. Here are some suggested blogs for American readers and some suggested blogs for Canadian readers. Subscribe to a personal finance periodical and read it. Good ones to start with are Kiplinger's Personal Finance Magazine in the U.S. and MoneySense Magazine in Canada. The business section in your local newspaper may sometimes have personal finance articles worth reading, too. Shameless plug: Ask more questions on this site. The Personal Finance & Money Stack Exchange is here to help you learn about money & finance, so you can make better financial decisions. We're all here to learn and help others learn about money. Keep learning!"
},
{
"docid": "146441",
"title": "",
"text": "\"Written with some mild snark , but no insult intended, because financial stuff can be ridiculously confusing... Looked at another way, you're basically asking if the Biblical \"\"Parable of the Talents\"\" can be implemented as a business model. You as the investor wish to be the \"\"master\"\", with the entity doing the investing playing the part of the \"\"servant\"\". Since the law prohibits actual servitude as described in scripture, the model must substitute a contractual profit- and loss-sharing scheme. OK, based on what you've proposed, and by way of example, let's say you invested a thousand dollars. You give the investment service your money. At the end of a year, they give you back - Your capital ($1000) - Plus 1/2 of any profits OR - Less 1/2 of any losses So let's say the worst happens and they lose ALL of it. According to your proposal, they have to cover 1/2 of the loss. You end up with $500...but they end up with LESS than nothing. They will be in a deficit situation because all the expense was theirs. They don't just fail to make a profit. They go in the hole. It doesn't matter what percentages you use. Regardless of how the loss is shared, you've only guaranteed YOU can't lose all your money. The company CAN. Given a large enough investment, or enough market fluctuation, a big shared loss could shut down a smaller firm. To summarize: - You want a service that charges you nothing - Does all the work of expertly managing and investing your capital - Takes on part of the risk you would normally bear - (on top of their usual risk and liability) - Agrees to do so solely for a percentage of any return (where higher returns will likely involve a higher degree of risk) - AND that guarantees, after just 1 year, you'll get X% of your capital back, no matter what. Win or lose. - Even if the market crashes and all your capital, and theirs, is wiped out Superbest, um, to be serious briefly: what you're proposing is, if nothing else, inherently unfair and inequitable. I believe you intended it as a mutually beneficial scenario, but the real-world imbalance in risk and reward prevents it being so. Any financial service that would accept those terms along with the extra degree of risk would be fiscally irresponsible. From a business standpoint it's an untenable model, and no company would build on it. It would be tantamount to corporate suicide. The requirement that a service promise to give you back X% of your money, no matter how great the loss, makes your proposal impossible. You need to think about how much all this costs, realistically, as well what kind of returns you can actually expect. And that more risk for higher return is exactly what a service could NOT take a chance on if it had to \"\"share\"\" investors' losses. Besides, it's not really sharing, now is it? They will always lose more than you, always end up in a negative situation, unable even to recoup costs. Circumstances beyond their control could result in a drop in the value that not only wipes out any profit, but requires them to pay YOU for work performed and expenses incurred on your behalf. Why would they let anyon double-dip like that? Yeah, we all prefer getting something for nothing...but you want valuable services and for them to pay you money for the privilege of providing them? I totally agree that would be fantastic, but in this world even \"\"free\"\" doesn't come cheap anymore. And getting back to costs: Without consistent income the service would have nowhere to work and no resources to work with. No office, computer, phone, electricity, Internet, insurance, payroll, licensing, training, maintenance, security, lobbying, etc., etc., etc. Why do people always forget overhead? There's a reason these services operate the way they do. Even the best are working with fairly slim margins in a volatile sector. They're not into 1-year gambles unlikely to cover their cost of doing business, or having to pay for a negative return out of their own pocket. Look, if you're the Biblical master asking your servant to manage things, overhead is built-in. You're taking all the risk as well. You're paying for all three servants' food, home, clothing, etc, plus you had to buy the servants themselves. So its reasonable that you reap the reward of their labor. You paid for it, and you didn't even punish the servant who buried your money in a hole. The two good servants may have done the legwork, but you took on the burden of everything else. In your proposed service, however, contrary to the servant's usual role, the servant - i.e., the company - would be assuming a portion of your risk on top of their own, yet without any guarantee of profit, income, or even coverage of costs. They're also subject to regulations, fees, liability, legal stuff, etc. that you're not, against most of which you are indemnified and held harmless. If they agree to cover a share of your loss, it exposes to greater liability and more related risk. It robs them of resources they need to invest in their own business, while at the same time forcing them to do all the work. As a result, your model doesn't give such a service a fighting chance. Getting it off the ground and lasting past the first-year payouts would require more luck than skill. They'd be better off heading to Vegas and the blackjack table, where the only overhead is a cheap flight and room, where the odds and rules don't change overnight, and they at least get free drinks. If none of the equivalents satisfies, then the Biblical parable appears to describe your only option for obtaining exactly what you want: Move to a country where slavery is legal and buy an investor :-) Cheers, c\""
},
{
"docid": "582269",
"title": "",
"text": "\"There is a lot misinformation in this thread that I'd like to clear up. In fact, you're more than welcomed to PM me if you wish to see any backup to the statements I'm about to make. First, I'd like to say that as an Uber/Lyft driver, the experience has been nothing short of exhilarating. I normally work in the L.A. and O.C. areas of So. Cal and the amount of interesting, super successful, and wonderful people I meet on a daily basis is off the charts. It's as if I'm some sort of talk show host on wheels. Initially, I applied for Lyft, as the social and community angle of its service intrigued the hell out of me. I'm an outgoing guy and I'm also an artist of some type who receives a royalty check only once a month. Instead of doing kickstarters and begging for money, I thought doing Lyft would be a great idea instead. So far my customers have been nothing short of an inspiration. Anyway, after passing a background check, a driving test with my mentor, a driving record check, alongside submitting all my documentation (license, registration, insurance) , and a quick vehicle inspection (my car is rather new and in great condition) I was hired quickly. That same day I decided to get to work quickly, see how the whole system works. As soon as I got to the destination I wanted to get to I got my first call on my phone within 5 minutes. I use my GPS and rush to pick my customer up (while obeying all traffic laws, of course). After a couple of minutes of chit chat I come to find out my first Lyft customer ever is an Uber recruiter. She likes my car and my approach so she hands me a Uber logo'd black bag with an iPhone, a car charger, and a mount. I asked her if this means I have to work exclusively for Uber, she says, \"\"Nope.\"\" My eyes then light up like some medieval lights in the sky, chicken little for the peasantry, ancient aliens approved phenomena when I realize I'll have access to both customer bases just one week removed from not being able to pay my phone bill. After submitting a background check, a driving record check, and pretty much all the stuff Lyft asked for, I was driving for both Uber and Lyft a week after I was hired for Lyft. The good news for you the consumer is that both companies are being cut throat because they want your money! There's never been a better time to hitch a ride on the cheap. Both companies have thrown millions of dollars over the past couple of months through social media, driver bonuses, and other venues, so you're able to get a free ride or a deep discount off a long ride. If you haven't tried both services, now's the time. Don't want to risk getting a DUI just for driving down a couple of blocks to your favorite bar this weekend? You'll probably be able to get a free ride there (if you scour gently for specials) and pay between $7-13 for the trip back. Better than getting your car impounded, losing your license, and paying $10,000+ in penalties and court fees, eh? You have no idea how many poor saps I take to and from work who can't drive because they just got a D.U.I., and who are now plunking $25-35 per ride just to get to where they gotta go. **INSURANCE** As for insurance, both companies have given me supplemental insurance. I have full coverage on my car for when I'm off the clock (which was required at time of hiring, btw). So here's how the insurance for Lyft and Uber works. [For Lyft](http://i.imgur.com/mc6hanN.jpg) When App is turned on (on the way to pick up client) -or- \"\"Contingent Liability\"\" 1. * up to $50k/person (bodily injury) 1. * up to $100k/accident (bodily injury) 1. * up to $25k/accident (Property damage) When you pick up client(s) in the car and you're on your way to the destination. Excessive liability & UM/UIM 1. Up to $1,000,000/occurence Contingent Collision & Comprehensive 1. up to $50,000/accident ($2500 deductible) [For UberX](http://i.imgur.com/k9kIvzB.png) When App is turned on (on the way to pick up client) -or- \"\"Contingent Liability\"\" 1. up to $50k/person (bodily injury) 1. up to $100k/accident (bodily injury) 1. up to $25k/accident (Property damage) When you pick up client(s) in the car and you're on your way to the destination. Excessive liability & UM/UIM Up to $1,000,000/occurence Contingent Collision & Comprehensive up to $50,000/accident ($1000 deductible) Other than the deductible, as you can see both plans are pretty much the same. Which in my opinion, should be more than enough. **SERVICES & EXPECTATIONS** Both apps are easy to use and within 5-10 minutes (sometimes much sooner, there've been many times where I get a call and the customer is on the sidewalk a few feet from where I was parked waiting for my next call). Both passengers and drivers adhere to a rating system. As of today, if either driver or passenger fail to maintain a rating of 4.6 and above they risk being booted from using the app. So it's important that drivers know what the hell they are doing (like being courteous, respectful, professional, clean, and know how to use a GPS while driving accurately and safely and/or knowing their routes instinctively) and passengers should also be polite, respectful, communicative (very important since drivers aren't psychics). Also, don't be so drunk that you either pass out or throw up in the back and make sure that if your bring your friends along for the ride, that they adhere to the code of conduct expected of passengers. I've run into numerous instances where an otherwise perfect passenger gets dinged for their drunk and/or rude friends. Also, as a driver, for your insurance to work, don't EVER end a drive early because you made a wrong turn or were late for a pick up. You're risking an insurance hiccup in the event of an incident, and passengers should also make sure that their driver has their app online throughout the entire trip, as well as making sure the driver's pic of him/her and his/her car match the profile you see on the app. As for safety, I've yet to hear from a passenger they felt they were ever in immediate danger. Did they get a creepy vibe from one of their drivers? Sure, not everyone is a social butterfly, and there has been an inundation of ex-cab drivers going over to Uber (which is good, cause' the service is getting pro drivers with experience, but could prove detrimental, since they're gonna have a hard time competing with Lyft on the charisma side of things). However, I've already numerous accounts from young women in Hollywood who are now refusing to call for a yellow cab or taxis on Hollywood Blvd and Sunset and the surrounding areas due to unwelcome sexual advances by drivers looking to take advantage of their sometimes solitary and inebriated drive home. It's heartwarming and great to hear whenever you drop one of these young women off at their places and they thank you for being both professional, courteous, welcoming, and above all else, trustworthy, all while paying a fraction of the cost of what a cab would normally run at that time of night. **MY PERSONAL EXPERIENCE (IN SUMMARY)** I'm literally having the time of my life. My other job requires me to interact with humanity, pick its brain, and then express those experiences to everyone else in an invigorating, positive, and inspirational manner. What better way to do it--while earning some decent money--than driving around for Uber and Lyft. These services are, without a doubt, revolutionary, and are being used and employed by both young and old, men and women, struggling students, and strategically utilized by incredibly wealthy and successful Hollywood types and investment bankers. It's cheap, reliable, and very fun too. It's also bringing back the long lost art of human interaction and conversation back into our daily lives. So far, so good, and it breaks my heart whenever I hear misinformation and astroturfing about these services throughout the internet, and I'm supremely angered as to how certain municipalities are colluding with taxi cab lobbies to prevent Uber and Lyft and other ride-share services from competing fairly at a time where cities are desperate to ease congestion, reduce DUI's, and make sure their citizens are happy and are left with more money in their pocketbooks.\""
},
{
"docid": "124826",
"title": "",
"text": "Our aim is to build high quality and strong structural buildings that provide a long term solution to our customers. With years of experience and highly competent team, we ensure a quality service catering to your every need. We can accommodate any requirement and budget without compromising in the quality of the product or service."
}
] |
4813 | Dealer Financing Fell Through on vehicle purchase: Scam? | [
{
"docid": "98356",
"title": "",
"text": "There's a good explanation of this type of scam at the following link; It's known as a Spot-Delivery scam. https://www.carbuyingtips.com/top-10-scams/scam1.htm Also, I read this one a while back, and immediately this post reminded me of it: http://oppositelock.kinja.com/when-the-dealership-steals-back-the-car-they-just-sold-1636730607 Essentially, they claim you'll get one level of financing, let you take the car home, and then attempt to extort a higher financing APR out of you or request more money / higher payments. Check your purchasing agreement, it may have a note with something along the lines of 'Subject to financing approval' or something similar. If it does, you might be 'out of luck', as it were. Contact an attorney; in some cases (Such as the 'oppositelock.kinja.com' article above) consumers have been able to sue dealers for this as theft."
}
] | [
{
"docid": "260095",
"title": "",
"text": "\"as a used dealer in subprime sales, finance has to be higher than cash because every finance deal has a lender that takes a percentage \"\"discount\"\" on every deal financed. if you notice a dealer is hesitant to give a price before knowing if cash or finance, because every bit of a cash deal's profit will be taken by a finance company in order to finance the deal and then there's no deal. you might be approved but if you're not willing to pay more for a finance deal, the deal isn't happening if I have $5000 in a car, you want to buy it for $6000 and the finance lender wants to take $1200 as a \"\"buy-fee\"\" leaving me $4800 in the end.\""
},
{
"docid": "253596",
"title": "",
"text": "\"As others have said, if the dealer accepted payment and signed over ownership of the vehicle, that's a completed transaction. While there may or may not be a \"\"cooling-off period\"\" in your local laws, those protect the purchaser, not (as far as I know) the seller. The auto dealer could have avoided this by selling for a fixed price. Instead, they chose to negotiate every sale. Having done so, it's entirely their responsibility to check that they are happy with their final agreement. Failing to do so is going to cost someone their commission on the sale, but that's not the buyer's responsibility. They certainly wouldn't let you off the hook if the final price was higher than you had previously agreed to. He who lives by the fine print shall die by the fine print. This is one of the reasons there is huge turnover in auto sales staff; few of them are really good at the job. If you want to be kind to the guy you could give him the chance to sell you something else. Or perhaps even offer him a $100 tip. But assuming the description is correct, and assuming local law doesn't say otherwise (if in any doubt, ask a lawyer!!!), I don't think you have any remaining obligation toward them On the other hand, depending on how they react to this statement, you might want to avoid their service department, just in case someone is unreasonably stupid and tries to make up the difference that was.\""
},
{
"docid": "205098",
"title": "",
"text": "\"You are still paying a heavy price for the 'instant gratification' of driving (renting) a brand-new car that you will not own at the end of the terms. It is not a good idea in your case, since this luxury expense sounds like a large amount of money for you. Edited to better answer question The most cost effective solution: Purchase a $2000 car now. Place the $300/mo payment aside for 3 years. Then, go buy a similar car that is 3 years old. You will have almost $10k in cash and probably will need minimal, if any, financing. Same as this answer from Pete: https://money.stackexchange.com/a/63079/40014 Does this plan seem like a reasonable way to proceed, or a big mistake? \"\"Reasonable\"\" is what you must decide. As the first paragraph states, you are paying a large expense to operate the vehicle. Whether you lease or buy, you are still paying this expense, especially from the depreciation on a new vehicle. It does not seem reasonable to pay for this luxury if the cost is significant to you. That said, it will probably not be a 'big mistake' that will destroy your finances, just not the best way to set yourself up for long-term success.\""
},
{
"docid": "394551",
"title": "",
"text": "\"add the interest for the next 5 payments and divide that by how much you paid on the principal during that time Let's see - on a $200K 6% loan, the first 5 months is $4869. Principal reduction is $1127. I get 4.32 or 432%. But this is nonsense, you divide the interest over the mortgage balance, and get 6%. You only get those crazy numbers by dividing meaningless ratios. The fact that early on in a mortgage most of the payment goes to interest is a simple fact of the the 30 year nature of amortizing. You are in control, just add extra principal to the payment, if you wish. This idea sounds like the Money Merge Account peddled by UFirst. It's a scam if ever there was one. I wrote about it extensively on my site and have links to others as well. Once you get to this page, the first link is for a free spreadsheet to download, it beats MMA every time and shows how prepaying works, no smoke, no mirrors. The second link is a 65 page PDF that compiles nearly all my writing on this topic as I was one of the finance bloggers doing what I could to expose this scam. I admit it became a crusade, I went as far as buying key word ads on google to attract the search for \"\"money merge account\"\" only to help those looking to buy it find the truth. In the end, I spent a few hundred dollars but saved every visitor the $3500 loss of this program. No agent who dialoged with me in public could answer my questions in full, as they fell back on \"\"you need to believe in it.\"\" I have no issue with faith-based religion, it actually stands to reason, but mortgages are numbers and there's order to them. If you want my $3500, you should know how your system works. Not one does, or they would know it was a scam. Nassim Taleb, author of \"\"The Black Swan\"\" offered up a wonderful quote, \"\"if you see fraud, and do not say 'fraud,' you are a fraud.\"\" The site you link to isn't selling a product, but a fraudulent idea. What's most disturbing to me is that the math to disprove his assertion is not complex, not beyond grade school arithmetic. Update 2015 - The linked \"\"rule of thumb\"\" is still there. Still wrong of course. Another scam selling software to do this is now promoted by a spin off of UFirst, called Worth Unlimited. Same scam, new name.\""
},
{
"docid": "276466",
"title": "",
"text": "Dumb Coder has already given you a link to a website that explains your rights. The only thing that remains is how to execute the return without getting more grief from the dealer. Though the legal aspects are different, I believe the principle is the same. I had a case where I had to rescind the sale of a vehicle in the US. I was within my legal rights to do so, but I knew that when I returned to the dealership they would not be pleased with my decision. I executed my plan by writing a letter announcing my intention to return the vehicle siting the relevant laws involved with a space at the bottom of the letter for the sales person to acknowledge receipt of the letter and indicate that there was no visible damage to the car when the vehicle was returned. I printed two copies of the letter, one for them to keep, and one for me to keep with the signed acknowledgement of receipt. As expected, they asked me to meet with the finance manager who told me that I wouldn't be able to return the car. I thanked him for meeting with me and told him that I would be happy to meet in court if I didn't receive a check within 7 days. (That was his obligation under the local laws that applied.)"
},
{
"docid": "584187",
"title": "",
"text": "The amount you are earning in the savings account is insignificant, since you would only have the money in the account for 1 month after purchasing the car. The instant 1.5% cashback (or travel mile reward), on the other hand, can be significant. However, it is not normal for a car dealership to allow you to put $16k on a credit card. The reason is that the fees that the dealer has to pay to process your credit card would be too burdensome. Car dealers have a much smaller profit margin on their sales than a typical retail store, so if the dealer has to pay 3 or 4% of the sales price in credit card fees, it just eats up too much of their profit. If the dealer does allow you to put the entire purchase price on a credit card, be aware that they have already factored in their processing fees into the price. You might be able to get a better than 1.5% discount by offering to pay with cash instead."
},
{
"docid": "108560",
"title": "",
"text": "If a high mileage car has been thoroughly maintained with a credible service history, there is no reason to discard the vehicle because of a hypothetical future expense. Considering the low value of the vehicle, it would be prudent to also lower the cost of the repairs. U.S. car dealerships have a well-known reputation for charging significantly higher repair rates than independent repair shops. Lower the cost of the repairs: brakes can be done at independent shops for half what the dealer quoted. Sears can install a set of 4 tires on an '04 Accord for $331 out the door. It makes no financial sense to purchase costly repairs for a low-cost automobile when economical alternatives are available."
},
{
"docid": "571694",
"title": "",
"text": "\"Don't use a \"\"credit repair\"\" agency. They are scams. One of the myriad of ways in which they work is by setting you up with a bogus loan, which they will dutifully report you as paying on time. They'll pretend to be a used car dealer or some other credit-based merchant. For a time, this will actually work. This is called \"\"false reporting.\"\" The problem is, the data clearinghouses are not stupid and eventually realize some hole-in-the-wall \"\"car dealer\"\" with no cars on the lot (yes, they do physical inspections as part of the credentialing process, just sometimes they're a little slow about it) is reporting trade lines worth millions of dollars per year. It's a major problem in the industry. But eventually that business loses its fraudulent reporting ability, those trade lines get revoked, and your account gets flagged for a fraud investigation. The repair agency has your money, and you still don't have good credit. Bad news if this all goes down while you're trying to close on a house. You're better off trying to settle your debts (usually for 50%) or declaring bankruptcy altogether. The latter isn't so bad if you're in a stable home, because you won't be able to get an apartment for a while, credit cards or a good deal on auto financing. ED: I just saw what one agency was charging, and can tell you declaring bankruptcy costs only a few hundred dollars more than the repair agency and is 100% guaranteed to get you predictable results as long as you name all your debts up front and aren't getting reamed by student loans. And considering you can't stomach creditors-- well guess what, now you'll have a lawyer to deal with them for you. Anything you accomplish through an agency will eventually be reversed because it's fraudulent. But through bankruptcy, your credit will start improving within two years, the tradeoff being that you won't be able to get a mortgage (at all) or apartment (easily) during that time-- so find a place to hunker down for a few years before you declare.\""
},
{
"docid": "421848",
"title": "",
"text": "I worked in auto finance years ago, what dealers tend to do in refinance the negative value of the customer current car to the new one. So if a car is worth 30k they may finance it for 35k. Finance company will do as not to lose the dealer and customer is happy to get a new car. I had one customer call on a car he financed for 85k, car brand new was worth 70k. Told me how he was looking to pay out the loan and go to the competition for better rates. Before offering anything I did a quick value check and no way was it worth it for us to reduce the rates. Told him good luck and he needed to pay X amount, he asked me if I'm not going to offer a better deal, I told him no. He blew up telling me the dealer told him to call 6 mouths later and the financial company would reduce the rates if he asked for a payout. Customer also had a car that dropped its value like no tomorrow, so it book value was around 60k. So over the refinance limit. 6 mouths later get a call from collection, telling me just a heads up this guy's cars was sold at the auction as he couldn't make repayments for 30k. Guy was also told by the dealer he could just hand the car back in but wasn't told he still needed to pay back the difference in the loan once he did. My god some people had no clue."
},
{
"docid": "85373",
"title": "",
"text": "If you plan to keep this asset for ten years then you can take the deprecation of its cost over that time period. For simplicity lets treat that as 120 monthly payments. So at a purchase price of $60,000 you are committing around $500 per month not including vehicle maintenance. I typically allocate around 20 percent of the purchase price of my vehicles for future maintenance costs. Since you have the cash to purchase this outright you have an option not afforded to most people. This adds for additional consideration. Here is an example. You purchase a $60,000 car and put $10,000 down. You finance $50,000 at 2.84% over 60 months. Your total finance cost is $53,693 if you do not miss any payments. The question here is can you make more than $3,693 on the $50,000 that you would retain in this situation over a five year period? I know that I most certainly can and is an excellent example of why I finance my vehicles. Obviously this all goes out the window if you do not have the credit for top rates. I have also negotiated a vehicle maintenance plan with the dealership at the time of my vehicle purchases. Most dealerships offer this service, the key here is negotiating. On my last truck I was able to get an all inclusive maintenance policy for 72 months for 8% of the purchase price. Your mileage will vary with manufacturer and dealership. As described in the comments above it is never beneficial for an individual to lease. You end up paying more for the newer models. I consider that to be a lifestyle choice as it is most certainly not a sound financial decision."
},
{
"docid": "185405",
"title": "",
"text": "For a lease, your payment is a function of sale price minus residual value. If the car has a low residual value then the lease payments will be higher. If it has a high residual value then lease payments will be lower but the purchase price at the end of the lease will be higher (potentially even higher than the KBB of the car). There is no gaming the system. Whether you buy now or lease now and buy later, you will be paying for the entire car. Calculate the payments in both scenarios with appropriate interest rates/money factors, sale price, and residual value. This will demonstrate there is no free lunch to be had here. Also, don't forget that financing the vehicle after a three year lease will probably mean a higher interest rate than if you were to finance it all now. With a purchase now you will likely get more favorable financing terms and be able to talk them down on sale price. Leasing will not allow such flexibility generally. Tldr No, that's not how it works. If you plan on owning the car for the duration of a loan (e.g. 5 years) it will be cheaper to just finance now."
},
{
"docid": "374243",
"title": "",
"text": "\"I read a really good tract that my credit union gave me years ago written by a former car salesman about negotiation tactics with car dealers. Wish I could find it again, but I remember a few of the main points. 1) Never negotiate based on the monthly payment amount. Car salesmen love to get you into thinking about the monthly loan payment and often start out by asking what you can afford for a payment. They know that they can essentially charge you whatever they want for the car and make the payments hit your budget by tweaking the loan terms (length, down payment, etc.) 2) (New cars only) Don't negotiate on the price directly. It is extremely hard to compare prices between dealerships because it is very hard to find exactly the same combination of options. Instead negotiate the markup amount over dealer invoice. 3) Negotiate one thing at a time A favorite shell game of car dealers is to get you to negotiate the car price, trade-in price, and financing all at one time. Unless you are a rain-man mathematical genius, don't do it. Doing this makes it easy for them to make concessions on one thing and take them right back somewhere else. (Minus $500 on the new car, plus $200 through an extra half point on financing, etc). 4) Handling the Trade-In 5) 99.9999% of the time the \"\"I forgot to mention\"\" extra items are a ripoff They make huge bonuses for selling this extremely overpriced junk you don't need. 6) Scrutinize everything on the sticker price I've seen car dealers have the balls to add a line item for \"\"Marketing Costs\"\" at around $500, then claim with a straight face that unlike OTHER dealers they are just being upfront about their expenses instead of hiding them in the price of the car. Pure bunk. If you negotiate based on an offset from the invoice instead of sticker price it helps you avoid all this nonsense since the manufacturer most assuredly did not include \"\"Marketing costs\"\" on the dealer invoice. 7) Call Around before closing the deal Car dealers can be a little cranky about this, but they often have an \"\"Internet sales person\"\" assigned to handle this type of deal. Once you know what you want, but before you buy, get the model number and all the codes for the options then call 2-3 dealers and try to get a quote over the phone or e-mail on that exact car. Again, get the quote in terms of markup from dealer invoice price, not sticker price. Going through the Internet sales guy doesn't at all mean you have to buy on the Internet, I still suggest going down to the dealership with the best price and test driving the car in person. The Internet guy is just a sales guy like all the rest of them and will be happy to meet with you and talk through the deal in-person. Update: After recently going through this process again and talking to a bunch of dealers, I have a few things to add: 7a) The price posted on the Internet is often the dealer's bottom line number. Because of sites like AutoTrader and other car marketplaces that let you shop the car across dealerships, they have a lot of incentive to put their rock-bottom prices online where they know people aggressively comparison shop. 7b) Get the price of the car using the stock number from multiple sources (Autotrader, dealer web site, eBay Motors, etc.) and find the lowest price advertised. Then either print or take a screenshot of that price. Dealers sometimes change their prices (up or down) between the time you see it online and when you get to the dealership. I just bought a car where the price went up $1,000 overnight. The sales guy brought up the website and tried to convince me that I was confused. I just pulled up the screenshot on my iPhone and he stopped arguing. I'm not certain, but I got the feeling that there is some kind of bait-switch law that says if you can prove they posted a price they have to honor it. In at least two dealerships they got very contrite and backed away slowly from their bargaining position when I offered proof that they had posted the car at a lower price. 8) The sales guy has ultimate authority on the deal and doesn't need approval Inevitably they will leave the room to \"\"run the deal by my boss/financing guy/mom\"\" This is just a game and negotiating trick to serve two purposes: - To keep you in the dealership longer not shopping at competitors. - So they can good-cop/bad-cop you in the negotiations on price. That is, insult your offer without making you upset at the guy in front of you. - To make it harder for you to walk out of the negotiation and compromise more readily. Let me clarify that last point. They are using a psychological sales trick to make you feel like an ass for wasting the guy's time if you walk out on the deal after sitting in his office all afternoon, especially since he gave you free coffee and sodas. Also, if you have personally invested a lot of time in the deal so far, it makes you feel like you wasted your own time if you don't cross the goal line. As soon as one side of a negotiation forfeits the option to walk away from the deal, the power shifts significantly to the other side. Bottom line: Don't feel guilty about walking out if you can't get the deal you want. Remember, the sales guy is the one that dragged this thing out by playing hide-and-seek with you all day. He wasted your time, not the reverse.\""
},
{
"docid": "381400",
"title": "",
"text": "Do new automobiles typically release in low numbers? and later you say The car released 2 days ago. I called around and discovered local dealers only have ~10 2018's total for all trims. So you are calling local dealers and they have ten after two days. Let's say you are in New York City, population eight million (about 2.5% of the United States population). That would suggest that there are around four hundred produced in two days (10 is 2.5% of 400), or two hundred a day. That would be four thousand a month (assuming four weeks, each with five workdays). Considering that the most sold in a month were 14,207 in June of 2013 and March's 7727 was the best this year, that seems to be a decent pace if a little slow to start. Now, let's assume that you are using a local area with a population of only two million. This could still be New York City if you only call dealers in a quarter of the area. Their two day pace would put them on a rate to produce sixteen thousand the first month, which is more than they can reasonably expect to sell. If your local area is an even smaller portion of the US overall, this might not actually be low inventory. Don't forget that some dealers may also still have 2017 vehicles left. They might want to sell those before they order too many new vehicles. Particularly as they may not know what feature packages sell best yet. If they're willing to tell you that they have three 2018s (and sold a fourth), they should be eager to tell you how many 2017s they have. A high 2018 price gives them a better chance to sell the 2017s at a profit. If you really want to check if they are having production problems, ask how long it will be to order a vehicle. For a US manufactured car, special order should fall in the five to eight weeks range. If that's what they're quoting, then there probably are not production problems. When trading with a dealer, do your research, tell them what you believe a fair price is, and then be ready to walk if they won't give it to you. Be up front. Tell them that you're willing to pay $X to the first dealer that takes the offer. You'd prefer that dealer because (whatever--maybe they're closest), but you aren't paying more than $X. If they let you get in your car and drive away, then they really think they can get a better price."
},
{
"docid": "110371",
"title": "",
"text": "There are a few things you should keep in mind when getting another vehicle: DON'T use dealership financing. Get an idea of the price range you're looking for, and go to your local bank or find a local credit union and get a pre-approval for a loan amount (that will also let you know what kind of interest rates you'll get). Your credit score is high enough that you shouldn't have any problems securing a decent APR. Check your financing institution's rules on financing beyond the vehicle's value. The CU that refinanced my car noted that between 100% and 120% of the vehicle's value means an additional 2% APR for the life of the loan. Value between 120% and 130% incurred an additional 3% APR. Your goal here is to have the total amount of the loan less than or equal to the value of the car through the sale / trade-in of your current vehicle, and paying off whatever's left out of pocket (either as a down-payment, or simply paying off the existing loan). If you can't manage that, then you're looking at immediately being upside-down on the new vehicle, with a potential APR penalty."
},
{
"docid": "205946",
"title": "",
"text": "Some questions: Will you need a car after 18 months? What are you going to do then? How likely are you able to go over the mileage? Granted paying $300 per month seems somewhat attractive as a fixed cost. However lease are notorious for forcing people into making bad decisions. If your car is over miles, or there is some slight damage (even normal wear and tear), or you customize your car (such as window tint) the dealer can demand extra dollars or force you to purchase the car for more than it is actually worth. The bottom line is leasing is one of the most expensive ways to own a vehicle, and while you have a great income you have a poor net worth. So yes I would say it is somewhat irresponsible for you to own a vehicle. If I was in your shoes, I would cut my gym expenses, cut my retirement contributions to the match, and buy another used car. I understand you may have some burnout over your last car, but it is the best mathematical choice. Having said all that you have a great income and you can absorb a lot of less than efficient decisions. You will probably be okay leasing the car. I would suggest going for a longer term, or cutting something to pay off the student loans earlier. This way there is some cushion between when the lease ends and the student loan ends. This way, when lease turn in comes, you will have some room in your budget to pay some fees as you won't have your student loan payment (assuming around 1400/month) that you can then pay to the dealer."
},
{
"docid": "244418",
"title": "",
"text": "The dealership is getting a kickback for having you use a particular bank to finance through. The bank assumes you will take the full term of the loan to pay back, and will hopefully be a repeat customer. This tactic isn't new, and although it maybe doesn't make sense to you, the consumer, in the long run it benefits the bank and the dealership. (They wouldn't do it otherwise. These guys have a lot of smart people running #s for them). Be sure to read the specifics of the loan contract. There may be a penalty for paying it off early. Most customers won't be able to pay that much in cash, so the bank makes a deal with the dealership to send clients their way. They will lose money on a small percentage of clients, but make more off of the rest of the clients. If there's no penalty for paying it off early, you may just want to take the financing offer and pay it off ASAP. If you truly can only finance $2500 for 6 mos, and get the full discount, then that might work as well. The bank had to set a minimum for the dealership in order to qualify as a loan that earns the discount. Sounds like that's it. Bonus Info: Here's a screenshot of Kelley Blue Book for that car. Car dealers get me riled up, always have, always will, so I like doing this kind of research for people to make sure they get the right price. Fair price range is $27,578 - $28,551. First time car buyers are a dealers dream come true. Don't let them beat you down! And here's more specific data about the Florida area relating to recent purchases:"
},
{
"docid": "234161",
"title": "",
"text": "The most likely reason for this is that the relocation company wants to have a guaranteed sale so as to get a new mortgage in the new location. Understand that the relocation company generally works for a prospective employer. So they are trying to make the process as painless as possible for the homeowner (who is probably getting hired as a professional, either a manager or someone like an engineer or accountant). If the sale is guaranteed to go through regardless of any problems, then it is easy for them to arrange a new mortgage. In fact, they may bridge the gap by securing the initial financing and making the downpayment, then use the payout from the house you are buying to buy out their position. That puts them on the hook for a bunch of money (a downpayment on a house) while they're waiting on the house you're purchasing to close. This does not necessarily mean that there is anything wrong with the house. The relocation company would only know about something wrong if the owner had disclosed it. They don't really care about the house they're selling. Their job is to make the transition easy. With a relocation company, it is more likely that they are simply in a hurry and want to avoid a busted purchase. If this sale fails to go through for any reason, they have to start over. That could make the employment change fall through. This is a variation of a no contingencies sale. Sellers like no contingencies sales because they are easier. Buyers dislike them because their protections are weaker. But some buyers will offer them because they get better prices that way. In particular, house flippers will do this frequently so as to get the house for less money than they might otherwise pay. This is better than a pure no contingencies sale, as they are agreeing to the repairs. This is a reasonable excuse to not proceed with the transaction. If this makes you so uncomfortable that you'd rather continue looking, that's fine. However, it also gives you a bit of leverage, as it means that they are motivated to close this transaction quickly. You can consider any of the following: Or you can do some combination of those or something else entirely that makes you fell more secure. If you do decide to move forward with any version of this provision, get a real estate lawyer to draft the agreement. Also, insist on disclosure of any previous failed sales and the reason for the failure before signing the agreement. The lawyer can make that request in such a way as to get a truthful response. And again, in case you missed it when I said this earlier. You can say no and simply refuse to move forward with such a provision. You may not get the house, but you'll save a certain amount of worry. If you do move forward, you should be sure that you are getting a good deal. They're asking for special provisions; they should bear the cost of that. Either your current deal is already good (and it may be) or you should make them adjust until it is."
},
{
"docid": "239167",
"title": "",
"text": "Break the transactions into parts. Go to your bank or credit union and get a loan commitment. When applying for loan get the maximum amount they will let you borrow assuming that you will no longer own the first car. Take the car to a dealer and get a written estimate for selling the car. Pick one that gives you an estimate that is good for a week or ten days. You now know a data point for the trade-in value. Finally go to the dealer where you will buy the replacement car. Negotiate the price, tell them you don't need financing and you will not be trading in the car. Get all you can regarding rebates and other special incentives. Once you have a solid in writing commitment, then ask about financing and trade in. If they beat the numbers you have regarding interest rate and trade-in value accept those parts of the deal. But don't let them change anything else. If you keep the bank financing the dealer will usually give you a couple of days to get a check. If you decide to ell the car to the first dealer do so as soon as you pick up the replacement car. If you try to start with the dealer you are buying the car from they will keep adjusting the rate, length of loan, trade-in value, and price until you have no idea if you are getting a good deal."
},
{
"docid": "180295",
"title": "",
"text": "I am going to give advice that is slightly differently based on my own experiences. First, regarding the financing, I have found that the dealers do in fact have access to the best interest rates, but only after negotiating with a better financing offer from a bank. When I bought my current car, the dealer was offering somewhere around 3.3%, which I knew was way above the current industry standard and I knew I had good credit. So, like I did with my previous car and my wife's car, I went to local and national banks, came back with deals around 2.5 or 2.6%. When I told the dealer, they were able to offer 2.19%. So it's ok to go with the dealer's financing, just never take them at face value. Whatever they offer you and no matter how much they insist it's the best deal, never believe it! They can do better! With my first car, I had little credit history, similar to your situation, and interest rates were much higher then, like 6 - 8%. The dealer offered me 10%. I almost walked out the door laughing. I went to my own bank and they offered me 8%, which was still high, but better than 10%. Suddenly, the dealer could do 7.5% with a 0.25% discount if I auto-pay through my checking account. Down-payment wise, there is nothing wrong with a 35% down payment. When I purchased my current car, I put 50% down. All else being equal, the more cash down, the better off you'll be. The only issue is to weigh that down payment and interest rate against the cost of other debts you may have. If you have a 7% student loan and the car loan is only 3%, you're better off paying the minimum on the car and using your cash to pay down your student loan. Unless your student loan balance is significantly more than the 8k you need to finance (like a 20k or 30k loan). Also remember that a car is a depreciating asset. I pay off cars as fast as I can. They are terrible debt to have. A home can rise in value, offsetting a mortgage. Your education keeps you employed and employable and will certainly not make you dumber, so that is a win. But a car? You pay $15k for a car that will be worth $14k the next day and $10k a year from now. It's easy to get underwater with a car loan if the down payment is small, interest rate high, and the car loses value quickly. To make sure I answer your questions: Do you guys think it's a good idea to put that much down on the car? If you can afford it and it will not interfere with repayment of much higher interest debts, then yes. A car loan is a major liability, so if you can minimize the debt, you'll be better off. What interest rate is reasonable based on my credit score? I am not a banker, loan officer, or dealer, so I cannot answer this with much credibility. But given today's market, 2.5 - 4% seems reasonable. Do you think I'll get approved? Probably, but only one way to find out!"
}
] |
4823 | Close to retirement & we may move within 7 years. Should we re-finance our mortgage, or not? | [
{
"docid": "104726",
"title": "",
"text": "Think of your mortgage this way - you have a $130K 16 year mortgage, at 6.75%. At 4%, the same payment ($1109 or so) will pay off the loan in 12.4 years. So, I agree with littleadv, go for a 15yr fixed (but still make the higher payment) or 10 yr if you don't mind the required higher payment. Either way, a refinance is the way to go. Edit - My local bank is offering me a 3.5% 15 yr loan with fees totaling $2500. For the OP here, a savings of 3.25% or first year interest savings of $4225. 7 months to breakeven. It's important not to get caught up in trying to calculate savings 15-20 years out. What counts today is the rate difference and looking at it over the next 12 months is a start. If you break even to closing costs so soon, that's enough to make the decision."
}
] | [
{
"docid": "175200",
"title": "",
"text": "@foreverBroke - Ok, here are the questions - Is mom's house paid for in full? If there's any mortgage, is it current? If not, what are the numbers? Is it underwater, i.e. owe more that it's worth? Will the tax department talk to you and negotiate? Maybe let you make payments over time? If you have that kind of cash flow, the slower payment may keep you from killing your savings. We don't know your age. I do know that the early years savings, often around the first 8-12 years, are the funds that turn into half your final retirement savings due to compounding. Obviously, this a tough time emotionally, what I don't want is for you to make a financial move that is a temporary fix. Not knowing the rest of the story limits my answer. If my mom needed my help I'd want to understand the whole picture. Not that I'm a fan, but have you considered a reverse mortgage? It may be a way to keep the house but give up the equity, or some of it, on her moving out or passing."
},
{
"docid": "258423",
"title": "",
"text": "\"What I've found works best when working on my personal budget is to track my income and spending two different ways: bank accounts and budget categories. Here is what I mean: When I deposit my paycheck, I do two things with it: It goes into my checking account, so the balance of my checking account goes up by the amount of my paycheck. I also \"\"deposit\"\" the money from my checking account into my various budget category balances. This is separate from my bank account balances. Some of my paycheck money goes into my groceries category, some goes into clothing, some into car fuel, entertainment, mortgage, phone, etc. Some goes into longer range bills that only happen once or twice a year, such as car insurance, life insurance, property tax, etc. Some goes into savings goals of ours, such as car replacement, vacation, furniture, etc. Every dollar that we have in a bank account or in cash in our wallets is also accounted for in a budget category. If you add up the balances of our bank accounts and cash, and you add up the balances of our budget categories, they add up to the same number. When we make a purchase, this also gets accounted for twice: The appropriate bank account (or cash wallet) balance gets reduced by the purchase amount. The appropriate budget category gets reduced by the purchase amount. In this way, we don't really need to worry about having separate bank accounts for different purposes. We don't need to put our savings goal money in a separate bank account from our grocery money, if we don't want to. The budget category accounting keeps track of how much money is allocated to each purpose. Now, the budget category amounts are not spent yet; the money in them is still in our bank account, and we can move money around in the categories, if we change our mind on how to allocate them. For example, if we don't spend all of our gas money for the month, we can either keep that money in the gas category, or we can move it to a different category, such as the car replacement category or the vacation category. If the phone bill is more than we expect, we can move money around from a different category to cover it. Now, back to your question: We allocate some money from each paycheck into our furniture category. But the money is not really spent until we actually buy some furniture. When we do, the furniture category balance and bank account balance both go down by the amount of the purchase. All of this can be kept track of on the computer in a spreadsheet. However, it's not easy to keep track of so many categories and bank balances. An easier solution is custom budgeting software designed for this purpose. I use and recommend YNAB.\""
},
{
"docid": "147245",
"title": "",
"text": "\"I don't have a lot of time to keep going back and forth. It seems like we differ on a bunch of things. But I do want to respect your final question when you ask me what I thought was wrong in that post. You mention things like the government regulating things like water and air. Those are common goods. These cannot be in the hands of a corporation. Man did not put those things there. So, man cannot take ownership of these things. Bottled water, running water, oxygen tanks, etc, those things are man-made products or services for a market. I can go to a public body of water and swim in it because no one owns it. I can go to the shore in my favorite bathing suit and swim in the beautiful ocean water if I so please without needing to pay or trade with anyone for access to the ocean. But I cannot start pumping water out of the ocean and into a big tank for me to haul away. The government needs to step in and put an end to anyone that does that sort of thing. Same goes for anyone trying to tamper with the water or doing something that is harmful to people or the life living in the water. Government needs to stop all of that. Also, yes the \"\"municipality then cleans and purifies the water and pumps it to your house in public facilities and treats the resultant sewage\"\". But are you also claiming that it was the government that created the solution to clean and purify our water supplies? Because they sure didn't. As for electricity, the way it is delivered and made available to our homes is a commodity. Electricity is natural, but just like how water when bottled becomes a consumer product, the generation and delivery of electricity to our homes is a product and service. If a company delivering electricity to customers in a city is using public infrastructure, then of course they have to share it. That makes sense as the electric company does not own the utility poles, streets, etc. The government should regulate that. The government handling trade agreements is a job of the government. We need them to do that. I believe in an open, free, and consumer-driven market. I don't want a lot of regulation on this - such as tariffs that Trump has talked about - because history shows that could lead to the costs inflating with quality not following suit. His rants on jobs fleeing offshores followed by his talks of tariffs on foreign imports would be a terrible idea. I want the government to negotiate trade deals as long as it is in the best interest for this country. This is what grows an economy. Imagine if Apple couldn't import iPhones unless they paid a 30% tax since it was assembled in China. That would kill sales of iPhones because Apple would have to pass most - if not all - of that cost on to the consumer. Samsung phones (for argument's sake, let's say these aren't made in China. I don't think they are anyway, but just saying) would begin to take a larger share of the consumer market because prices would be lower since Samsung didn't have to pay a 30% tax. As for the coffee pot from china starting a fire in my house. No one would by a coffee pot if there was a known fire-starting issue with those coffee pots. The government telling china that coffee pots need to be a certain specification is really irrelevant. The issue would resolve itself because no one would by the coffee pots. Once this became a known problem, stores would take it off the shelves and no longer sell it. We have cars that are recalled left and right. Car seats for infants and toddlers that are recalled every year. So on and so forth. I know the federal government has a recall process, but usually its the manufacturer that will announce the recall first. If there is a bad product out there, it will die out and no longer be made available for purchase. I don't see the the federal government slapping regulations on car manufacturers that mandate \"\"all tires must not fall off of the car while in motion\"\". No. Instead, the manufacturer, who is in the business of making money, which they need to sell cars to make money, would create a car where the tires are not likely to ever fall off while a car is in motion (or even when idle). The last thing I want to touch on is the Obamacare mandate. If I don't want something, why am I being forced to pay for it? Why do you agree with this? I am already paying into social security and I wish I wasn't. I will make my own investments with my income to prepare for retirement. Why should I pay for health insurance if I don't want it. The government should not be making my life choices for me. I have one responsibility on this earth as it pertains to my behavior. That is to respect others inalienable rights such as the right to life, liberty, property, and the pursuit of happiness. As long as I do not harm someone in an immoral way (e.g. steal, kill, physical harm, property damage, disclose personally identifiable information, etc), I should be free to live my life without government interference. I am fine with paying into a system for true welfare cases. Some people fall into bad situations that they could not help. Some people are born into a terrible situation. Those people need help. But I don't want to pay for stupid ass things like Chuck Schumer's idiotic idea of Medicare for people over 55. He wants to lower the medicare age by 10 years. This is the insane progressive ideas that literally just worsen societies. [\"\"In 2016, Medicare benefit payments totaled $675 billion, up from $375 billion in 2006.](http://www.kff.org/medicare/issue-brief/the-facts-on-medicare-spending-and-financing/) A $300 billion increase in just 10 years and that schmuck wants to lower eligibility by 10 years. If this were ever signed into law, I am (plus other American workers) going to be forced to pay into this. That means less money for me to save and invest for retire or an emergency. Less for my daughter. Less for my mortgage. Less for me to continue my education. Less on whatever I choose to do with my money that I spend 40 hours/week in an office for. My time is spent doing something asked of me by a corporation. That corporation pays me for my time. It's a mutual agreement resulting in a trade of money for my services. I do it because I want to do things and provide for my family. I don't do it because someone decided to spend 4 years for a degree in graphic design and can't get a job. I also don't do it for people that have a cash only income (both illegal immigrants and legal citizens do this) and don't declare all of their income making them eligible for Obamacare. And, lastly, I do not do it for people that decide to live off of the system and are physically and mentally fit to work in some capacity. I should not be forced to pay a mandate just because I'm here breathing. Obama - just like all progressives - normalized this \"\"breathing\"\" tax. It isn't right. Of course, Obamacare falls apart if there aren't enough healthy people to subsidize the sick people. That's why the mandate was obviously put in place. But just because the mandate is needed to make it work, doesn't make it right to force on people. My mortgage needs to get paid. If all my neighbors chipped in $75/month, I could make it work. Well, is it right to force my neighbors to pay my mortgage? Nope. I made the decision to buy my house. They did not. Not to mention, with socialized health care, services are rationed and that is just sickening. Big Gov: \"\"Oh, you're 80 years old and you need a knew knee? Well, you did live for 80 years, so we're going to deny that request.\"\" In a system where I pay for my own health care and insurance, I can get a new hip and a new knew if I needed it and it would all be done within a week or 2 most likely. You have 51 week-old Charlie Gard who Britain and the wonderful EU (sarcasm) ordered to die. He did so just last week even though his parents had the money to fly him here and have a doctor perform a potentially life-saving surgery. Yep. When the government owns healthcare, they own your health. That's my other big reason for hating Obamacare. It truly is a bad thing. We have world history that can easily show anyone what it looks like if we keep going down this path. I am done for now. I am not trying to convince you of anything. That usually doesn't happen as people are set in their ways. If anything, this exchange of messages is for the person(s) out there that want to learn what is right and what is wrong. What liberty is and what it isn't. Taxing people as a way to redistribute wealth is wrong. Imposing mandates so people buy a product/service is just straight up wrong. Our income is a representation of our time spent fulfilling the responsibilities of an agreement that we voluntarily made with an employer. Our money is our time. Our time is our liberty. And if we aren't infringing on the rights of others during our time, then the government needs to stay out. Catch you later.\""
},
{
"docid": "149978",
"title": "",
"text": "My wife and I set up a shared bank account. We knew the monthly costs of the mortgage and estimated the cost of utilities. Each month, we transferred enough to cover these, plus about 20% so we could make an extra mortgage payment each year and build up an emergency fund, and did so using automatic transactions. Other shared expenses such as groceries, we handled on an ad-hoc basis, settling up every month or three. We initially just split everything 50-50 because we both earned roughly the same income. When that changed, we ended up going with a 60-40 split. We maintained our separate bank accounts, though this may have changed in the future. A system like this may work for you, or may at least provide a starting point for a discussion. And I do strongly advise having a frank and open discussion on these points. Dealing with money can be tricky in the bounds of a marriage."
},
{
"docid": "304938",
"title": "",
"text": "1) Financial Analyst in a way is a big title but that is the way it is with anything to do with Finance like almost everyone is a Vice President in an investment bank. Take it slow. Consider and know that you got to swim thru the ocean and learn with every stroke and you may be coming out better than many. 2) First job is always very critical. We all have an image of that real life before starting it. It happens many times that what we imagined was very different than the realities and those cracks in the illusions may make us think that this is just the first step and the first block to give a shape to the resume to get the next better job. That is something which may prove to be suicidal at times because then we just try to learn the macros and not the micros as our objective is not to sail thru it but to use it as a sail to move to the next boat. I always feel that take the job as you are going to retire with it and learn all the details, the micros.... that really adds better value to the resume and yourself."
},
{
"docid": "202355",
"title": "",
"text": "\"Is the mortgage debt too high? The rental property is in a hot RE market, so could be easily sold with significant equity. However, they would prefer to keep it. Given the current income, there is no stress. However in absence of any other liquid [cash/near cash] assets, having everything locked into Mortgage is quite high. Even if real estate builds assets, these are highly illiquid investments. Have debt on such investments is risky; if there are no other investments. Essentially everything looks fine now, but if there is an crisis, unwinding mortgage debt is time consuming and if it forces distress sale, it would wipe out any gains. Can they afford another mortgage, and in what amount? (e.g. they are considering $50K for a small cabin, which could be rented out). I guess they can. But should they? Or diversify into other assets like stocks etc. Other than setting cash aside, what would be some good uses of funds to make sure the money would appreciate and outpace inflation and add a nice bonus to retirement? Mutual Funds / Stocks / bullions / 401K or other such retirement plans. They are currently in mid-30's. If there is ONE key strategy or decision they could make today that would help them retire \"\"early\"\" (say, mid-50's), what should it be? This opinion based ... it depends on \"\"what their lifestyle is\"\" and what would they want their \"\"lifestyle\"\" to be when they retire. They should look at saving enough corpus that would give an year on year yield equivalent to the retirement expenses.\""
},
{
"docid": "353186",
"title": "",
"text": "Should I use the money to pay off student loans and future grad expenses for me? Yes. The main drawback to student loans is that they cannot be gotten rid of except by paying them off (other than extreme circumstances such as death or complete disability). A mortgage, car loan, or other collateralized loans can be dealt with by selling the underlying collateral. Credit card loans can be discharged in bankruptcy. Stop borrowing for college, pay for it in cash, then decide what to do with the rest. Make sure you have a comfortable amount saved for emergencies in a completely liquid account (not a retirement account or CDs), and continue to pay off with the rest. You might also consider putting some away for your kids' college, so I want to get my older son into a private middle school for 2 years. They have a hardy endowment and may offer us a decent need based scholarship if we look worthy on paper I have a hard time getting behind this plan with a 238K mortgage. If you want to apply for scholarships that's great - but don't finagle your finances to look like you're poor when you have a quarter-million-dollar house. If you want to save some for private school then do that out of what you have. Otherwise either rearrange your priorities so you can afford it or private school might not be in the cards for you. That said- while it was a blessing to be able to pay off the second mortgage and credit cards, your hesitancy to pay off the student loans makes me wonder if you will start living within your means after the loans are paid off. My concern is that your current spending levels that got you in this much debt in the first place will put you back in debt in the near future, and you won't have another inheritance to help pull you out. I know that wasn't your question, but I felt like I needed to add that to my answer as well."
},
{
"docid": "547984",
"title": "",
"text": "The buyer discloses the financing arrangements to the seller because it makes his offer more attractive. When a seller receives and accepts an offer, the deal does not usually close until 30 to 60 days later. If the buyer cannot come up with the money by closing, the deal falls apart. This is a risk for the seller. When a seller is considering whether or not to accept an offer, it is helpful to know the likelihood that the buyer can actually obtain the amount of cash in the offer by the closing date. If the buyer can't acquire the funding, the offer isn't worth the paper it is printed on. The amount of the down payment vs. the amount of financing is also relevant to the seller. Let me give you a real-world example that happened to me once when I was selling a house. The buyer was doing a no-money-down mortgage and had no money for a down payment. He was even borrowing the closing costs. We accepted the offer, but when the bank did the appraisal, it was short of the purchase price. For most home sales, this would not be a problem, as long as the appraisal was more than the amount borrowed. But in this case, because the amount borrowed was more than the appraisal, the bank had a problem. The deal was at risk, and in order to continue either the buyer had to find some money somewhere (which he couldn't), or we had to lower the price to save the deal. Certainly, accepting the offer from a buyer with no cash to bring to the table was a risk. (In our case, we got lucky. We found some errors that were made in the appraisal, and got it redone.)"
},
{
"docid": "71709",
"title": "",
"text": "The rules of thumb are there for a reason. In this case, they reflect good banking and common sense by the buyer. When we bought our house 15 years ago it cost 2.5 times our salary and we put 20% down, putting the mortgage at exactly 2X our income. My wife thought we were stretching ourselves, getting too big a house compared to our income. You are proposing buying a house valued at 7X your income. Granted, rates have dropped in these 15 years, so pushing 3X may be okay, the 26% rule still needs to be followed. You are proposing to put nearly 75% of your income to the mortgage? Right? The regular payment plus the 25K/yr saved to pay that interest free loan? Wow. You are over reaching by double, unless the rental market is so tight that you can actually rent two rooms out to cover over half the mortgage. Consider talking to a friendly local banker, he (or she) will likely give you the same advice we are. These ratios don't change too much by country, interest rate and mortgages aren't that different. I wish you well, welcome to SE."
},
{
"docid": "441497",
"title": "",
"text": "\"> So raise taxes on individuals and eliminate business taxes? The government still has to pay for things eventually. The big thing the US pays for that other countries don't is our massive, most-expensive-in-the-world military, which can take up roughly half our budget, Yes we should decrease military spending and stop policing the world. The biggest future expenditure will be unfunded obligations which are between $20 to $60 trillion USD. Without reform the US will go bankrupt. The dollar could be hyper-inflated which destroys the value and people's savings. The dollar will lose world reserve currency status. > We defend other countries through alliances like NATO and bilateral agreements. For that, we need a higher tax rate. We can tax individuals or businesses. Let other countries defend themselves unless they absolutely need help. People and businesses can be taxed, but high taxes and regulations are counter-productive. It hurts small business, innovation, job growth and pushes companies to move abroad and outsource. There's alarming record high unemployment in the US: >**[One in Five Families Are on Food Stamps](http://reason.com/24-7/2013/04/25/one-in-five-families-are-on-food-stamps)** The latest available data from the United States Department of Agriculture (USDA) shows that **a record number 23 million households in the United States are now on food stamps.** > The most recent Supplemental Assistance Nutrition Program (SNAP) statistics of **the number of households receiving food stamps shows that 23,087,886 households participated in January 2013 - an increase of 889,154 families from January 2012 when the number of households totaled 22,188,732.** As John F. Kennedy said:. >**“It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now … Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.”** >– John F. Kennedy, Nov. 20, 1962, president’s news conference >**\"\"'Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased – not a reduced – flow of revenues to the federal government.”*** >– John F. Kennedy, Jan. 17, 1963, annual budget message to the Congress, fiscal year 1964 >“In today’s economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarges the federal deficit – why reducing taxes is the best way open to us to increase revenues.”* >– John F. Kennedy, Jan. 21, 1963, annual message to the Congress: “The Economic Report Of The President” [Read more]( http://www.wnd.com/2004/07/25640/#GRyFgRZYqUiKoud6.99)\""
},
{
"docid": "72683",
"title": "",
"text": "Interesting thing is not all of this analysis is typically done by the person you are speaking with re: your mortgage. Likely there is an economic team (at some institution or another, as many many loans are sold/distributed in some fashion), finance team, and all of them are looking at various rates etc. Typically what is offered is matching an offsetting liability somewhere else. So there may be cases where the spread someone is looking to pick up might be tighter or looser within institutions or types of institutions vs others, even though the overall market is at one place. (e.g. banks vs. insurance companies). So you may have negotiating room at a certain term, but not another, or the reverse at another firm. One firm might have lots of 10 year money, while another might be limited, so will be picky in what they choose. Either more conservative loan terms/ltv, or a higher spread, for example. So many things go into the ultimate rate someone can get, but in theory the blog did a decent job."
},
{
"docid": "317803",
"title": "",
"text": "\"Maria, there are a few questions I think you must consider when considering this problem. Do fundamental or technical strategies provide meaningful information? Are the signals they produce actionable? In my experience, and many quantitative traders will probably say similar things, technical analysis is unlikely to provide anything meaningful. Of course you may find phenomena when looking back on data and a particular indicator, but this is often after the fact. One cannot action-ably trade these observations. On the other hand, it does seem that fundamentals can play a crucial role in the overall (typically long run) dynamics of stock movement. Here are two examples, Technical: suppose we follow stock X and buy every time the price crosses above the 30 day moving average. There is one obvious issue with this strategy - why does this signal have significance? If the method is designed arbitrarily then the answer is that it does not have significance. Moreover, much of the research supports that stocks move close to a geometric brownian motion with jumps. This supports the implication that the system is meaningless - if the probability of up or down is always close to 50/50 then why would an average based on the price be predictive? Fundamental: Suppose we buy stocks with the best P/E ratios (defined by some cutoff). This makes sense from a logical perspective and may have some long run merit. However, there is always a chance that an internal blowup or some macro event creates a large loss. A blended approach: for sake of balance perhaps we consider fundamentals as a good long-term indication of growth (what quants might call drift). We then restrict ourselves to equities in a particular index - say the S&P500. We compare the growth of these stocks vs. their P/E ratios and possibly do some regression. A natural strategy would be to sell those which have exceeded the expected return given the P/E ratio and buy those which have underperformed. Since all equities we are considering are in the same index, they are most likely somewhat correlated (especially when traded in baskets). If we sell 10 equities that are deemed \"\"too high\"\" and buy 10 which are \"\"too low\"\" we will be taking a neutral position and betting on convergence of the spread to the market average growth. We have this constructed a hedged position using a fundamental metric (and some helpful statistics). This method can be categorized as a type of index arbitrage and is done (roughly) in a similar fashion. If you dig through some data (yahoo finance is great) over the past 5 years on just the S&P500 I'm sure you'll find plenty of signals (and perhaps profitable if you calibrate with specific numbers). Sorry for the long and rambling style but I wanted to hit a few key points and show a clever methods of using fundamentals.\""
},
{
"docid": "157414",
"title": "",
"text": "Let's look at some of your options: In a savings account, your $40,000 might be earning maybe 0.5%, if you are lucky. In a year, you'll have earned $200. On the plus side, you'll have your $40,000 easily accessible to you to pay for moving, closing costs on your new house, etc. If you apply it to your mortgage, you are effectively saving the interest on the amount for the life of the loan. Let's say that the interest rate on your mortgage is 4%. If you were staying in the house long-term, this interest would be compounded, but since you are only going to be there for 1 year, this move will save you $1600 in interest this year, which means that when you sell the house and pay off this mortgage, you'll have $1600 extra in your pocket. You said that you don't like to dabble in stocks. I wouldn't recommend investing in individual stocks anyway. A stock mutual fund, however, is a great option for investing, but only as a long-term investment. You should be able to beat your 4% mortgage, but only over the long term. If you want to have the $40,000 available to you in a year, don't invest in a mutual fund now. I would lean toward option #2, applying the money to the mortgage. However, there are some other considerations: Do you have any other debts, maybe a car loan, student loan, or a credit card balance? If so, I would forget everything else and put everything toward one or more of these loans first. Do you have an emergency fund in place, or is this $40,000 all of the cash that you have available to you? One rule of thumb is that you have 3 to 6 months of expenses set aside in a safe, easily accessible account ready to go if something comes up. Are you saving for retirement? If you don't already have retirement savings in place and are adding to it regularly, some of this cash would be a great start to a Roth IRA or something like that, invested in a stock mutual fund. If you are already debt free except for this mortgage, you might want to do some of each: Keep $10,000 in a savings account for an emergency fund (if you don't already have an emergency fund), put $5,000 in a Roth IRA (if you aren't already contributing a satisfactory amount to a retirement account), and apply the rest toward your mortgage."
},
{
"docid": "368504",
"title": "",
"text": "Have you looked at conventional financing rather than VA? VA loans are not a great deal. Conventional tends to be the best, and FHA being better than VA. While your rate looks very competitive, it looks like there will be a .5% fee for a refinance on top of other closing costs. If I have the numbers correct, you are looking to finance about 120K, and the house is worth about 140K. Given your salary and equity, you should have no problem getting a conventional loan assuming good enough credit. While the 30 year is tempting, the thing I hate about it is that you will be 78 when the home is paid off. Are you intending on working that long? Also you are restarting the clock on your mortgage. Presumably you have paid on it for a number of years, and now you will start that long journey over. If you were to take the 15 year how much would go to retirement? You claim that the $320 in savings will go toward retirement if you take the 30 year, but could you save any if you took the 15 year? All in all I would rate your plan a B-. It is a plan that will allow you to retire with dignity, and is not based on crazy assumptions. Your success comes in the execution. Will you actually put the $320 into retirement, or will the needs of the kids come before that? A strict budget is really a key component with a stay at home spouse. The A+ plan would be to get the 15 year, and put about $650 toward retirement each month. Its tough to do, but what sacrifices can you make to get there? Can you move your plan a bit closer to the ideal plan? One thing you have not addressed is how you will handle college for the kids. While in the process of long term planning, you might want to get on the same page with your wife on what you will offer the kids for help with college. A viable plan is to pay their room and board, have them work, and for them to pay their own tuition to community college. They are responsible for their own spending money and transportation. Thank you for your service."
},
{
"docid": "8849",
"title": "",
"text": "It was then we determined that with our large revel in within the textiles, recycling enterprise. We'd begin in our quest to help Africa and open our first cash 4 garments shop. At Recycle four Cash for clothes kent, we offer a friendly, rapid and reliable provider to every person seeking our offerings. We remember the fact that you may favor donating your garb to charity; HOWEVER, did you already know by the point the retail outlet of the charity pays its walking costs, handiest a small percent will go to the actual charity. Should you desire to donate the monies we pay you to the charity."
},
{
"docid": "198394",
"title": "",
"text": "\"I find this very hard to believe Believe it. The bottom quarter of American households have negative net worth, and the bottom three quarters have no more than a tiny amount saved up. https://en.wikipedia.org/wiki/Wealth_in_the_United_States#/media/File:MeanNetWorth2007.png In an emergency, 63% of Americans would not be able to come up with $500 without going into debt. http://www.forbes.com/sites/maggiemcgrath/2016/01/06/63-of-americans-dont-have-enough-savings-to-cover-a-500-emergency/ Nobody can retire with 5k in the U.S. The money will be gone within a year. Is it possible? Now you begin to see why the long-term stability of Social Security and Medicare are at present hot topics in American political life. Without them, a great many more Americans would die in poverty. What is the actual figure? The $5000 figure is accurate but irrelevant; that median includes people who are thirty years from retirement and people who are two days from retirement. The more relevant statistics are those restricted to people at or close to retirement age, and they can be found lower down in the article you cite, or in numerous other studies. Here's one from the GAO for example: http://www.gao.gov/products/GAO-15-419 The figures here are, unfortunately, no less terrifying: Now $104K is a lot better than $5K, but it's still not much to retire on. Why we believe that it is reasonable to throw out all the zeros before taking the median, I do not know. That seems like bad math to me. UPDATE: There is some discussion of this point in the comments; all I'm saying here is that this is a clumsy and possibly misleading way to characterize the situation. The linked report has the actual data, but let's try to summarize it here in a more meaningful way. Let's suppose that we make buckets for how dependent on SS is a retirement-age household to avoid starving to death, being homeless, and so on? Maybe these buckets are not ideal, and we could move them around a bit. The takeaways here are that the ratios of nothing:inadequate:barely adequate:comfortable is about 40:30:20:10. That only the top decile of retirement-age households can fund a comfortable retirement without help illustrates just how dependent on SS American households are. how do 50% of old Americans survive in their old age? Social Security and Medicare. As the cited GAO report indicates: \"\"Social Security provides most of the income for about half of households age 65 and older.\"\" Do most old Americans rely on their children for financial support? One day I met a woman at a party and we were making small talk about her kids. She had a couple already and one more was on the way. \"\"I want to have lots of children to support me in my old age\"\", she said. \"\"Do you support your parents?\"\" I asked, which frankly seemed like an entirely reasonable question. \"\"Of course not! I can't afford it. I've got a baby on the way and two more kids at home!\"\" I left her to draw her own conclusions as to the viability of her retirement plan.\""
},
{
"docid": "424220",
"title": "",
"text": "\"short answer: any long term financial planning (~10yrs+). e.g. mortgage and retirement planning. long answer: inflation doesn't really matter in short time frames. on any given day, you might get a rent hike, or a raise, or the grocery store might have a sale. inflation is really only relevant over the long term. annual inflation is tiny (2~4%) compared to large unexpected expenses(5-10%). however, over 10 years, even your \"\"large unexpected expenses\"\" will still average out to a small fraction of your spending (5~10%) compared to the impact of compounded inflation (30~40%). inflation is really critical when you are trying to plan for retirement, which you should start doing when you get your first job. when making long-term projections, you need to consider not only your expected nominal rate of investment return (e.g. 7%) but also subtract the expected rate of inflation (e.g. 3%). alternatively, you can add the inflation rate to your projected spending (being sure to compound year-over-year). when projecting your income 10+ years out, you can use inflation to estimate your annual raises. up to age 30, people tend to get raises that exceed inflation. thereafter, they tend to track inflation. if you ever decide to buy a house, you need to consider the impact of inflation when calculating the total cost over a 30-yr mortgage. generally, you can expect your house to appreciate over 30 years in line with inflation (possibly more in an urban area). so a simple mortgage projection needs to account for interest, inflation, maintenance, insurance and closing costs. you could also consider inflation for things like rent and income, but only over several years. generally, rent and income are such large amounts of money it is worth your time to research specific alternatives rather than just guessing what market rates are this year based on average inflation. while it is true that rent and wages go up in line with inflation in the long run, you can make a lot of money in the short run if you keep an eye on market rates every year. over 10-20 years your personal rate of inflation should be very close to the average rate when you consider all your spending (housing, food, energy, clothing, etc.).\""
},
{
"docid": "394740",
"title": "",
"text": "It may depend on the rental agreement you signed, some agreements may include clauses that allow for early termination so check your agreement carefully. Where there is an early termination clause included it will usually have some sort of notice period or financial penalty associated with it. For example you may have to give a couple of months notice and pay rent up to the end of that period or be able to pay some sort of one-off penalty. As a more practical example I broke a US rental agreement early last Autumn and had two early termination options in my rental agreement: In my case we chose the second option since we were actually moving out of the country and it was easier to have our US finances completely settled. I'm now planning on breaking another agreement because I'm in the process of purchasing a property and the purchase will likely go through before the lease expires. In this case the early termination clause requires 2 months notice i.e. we will have to give 2 months notice and pay rent for those two months (unless we are less than 2 months from the end of the lease). As @BrenBarn points out you should also check the laws for the jurisdiction your rental agreement is in to understand what your rights and options are if your agreement does not have an early termination clause"
},
{
"docid": "333219",
"title": "",
"text": "\"All of the provided advice is great, but a slightly different viewpoint on debt is worth mentioning. Here are the areas that you should concentrate your efforts and the (rough) order you should proceed. Much of the following is predicated upon your having a situation where you need to get out of debt, and learn to better budget and control your spending. You may already have accomplished some of these steps, or you may prioritize differently. Many people advise prioritizing contributing to a 401(k) savings plan. But with the assumption that you need advise because you have debt trouble, you are probably paying absurd interest rates, and any savings you might have will be earning much lower rates than you are paying on consumer debt. If you are already contributing, continue the plan. But remember, you are looking for advice because your financial situation is in trouble, so you need to put out the fire (your present problem), and learn how to manage your money and plan for the future. Compose a budget, comprised of the following three areas (the exact percentages are fungible, fit them to your circumstances). Here is where planning can get fun, when you have freed yourself from debt, and you can make choices that resonate with your individual goals. Once you have \"\"put out the fire\"\" of debt, then you should do two things at the same time. As you pay off debt (and avoid further debt), you will find that saving for both independence and retirement become easier. The average American household may have $8000+ credit card debt, and at 20-30%, the interest payments are $150-200/month, and the average car payment is nearly $500/month. Eliminate debt and you will have $500-800/month that you can comfortably allocate towards retirement. But you also need to learn (educate yourself) how to invest your money to grow your money, and earn income from your savings. This is an area where many struggle, because we are taught to save, but we are not taught how to invest, choose investments wisely and carefully, and how to decide our goals. Investing needs to be addressed separately, but you need to learn how. Live in an affordable house, and pay off your mortgage. Consider that the payment on a mortgage on even a modest $200K house is over $1000/month. Combine saving the money you would have paid towards a mortgage payment with the money you would have paid towards credit card debt or a car loan. Saving becomes easy when you are freed from these large debts.\""
}
] |
4823 | Close to retirement & we may move within 7 years. Should we re-finance our mortgage, or not? | [
{
"docid": "362919",
"title": "",
"text": "Refinance, definitely. Go for Fixed 15 years, which will leave you with the same remaining time for the loan that you have now, but a much lower interest (you can find below 4%, if you look hard enough). You might end up with lower payments and higher portion of interest to deduct from your taxes. win-win. If you're confident you're able to pay it off within 7 years, you can get an even better rate with an ARM 10/1 or 7/1."
}
] | [
{
"docid": "333219",
"title": "",
"text": "\"All of the provided advice is great, but a slightly different viewpoint on debt is worth mentioning. Here are the areas that you should concentrate your efforts and the (rough) order you should proceed. Much of the following is predicated upon your having a situation where you need to get out of debt, and learn to better budget and control your spending. You may already have accomplished some of these steps, or you may prioritize differently. Many people advise prioritizing contributing to a 401(k) savings plan. But with the assumption that you need advise because you have debt trouble, you are probably paying absurd interest rates, and any savings you might have will be earning much lower rates than you are paying on consumer debt. If you are already contributing, continue the plan. But remember, you are looking for advice because your financial situation is in trouble, so you need to put out the fire (your present problem), and learn how to manage your money and plan for the future. Compose a budget, comprised of the following three areas (the exact percentages are fungible, fit them to your circumstances). Here is where planning can get fun, when you have freed yourself from debt, and you can make choices that resonate with your individual goals. Once you have \"\"put out the fire\"\" of debt, then you should do two things at the same time. As you pay off debt (and avoid further debt), you will find that saving for both independence and retirement become easier. The average American household may have $8000+ credit card debt, and at 20-30%, the interest payments are $150-200/month, and the average car payment is nearly $500/month. Eliminate debt and you will have $500-800/month that you can comfortably allocate towards retirement. But you also need to learn (educate yourself) how to invest your money to grow your money, and earn income from your savings. This is an area where many struggle, because we are taught to save, but we are not taught how to invest, choose investments wisely and carefully, and how to decide our goals. Investing needs to be addressed separately, but you need to learn how. Live in an affordable house, and pay off your mortgage. Consider that the payment on a mortgage on even a modest $200K house is over $1000/month. Combine saving the money you would have paid towards a mortgage payment with the money you would have paid towards credit card debt or a car loan. Saving becomes easy when you are freed from these large debts.\""
},
{
"docid": "353268",
"title": "",
"text": "You could walk away from your mortgage. When you signed the mortgage you and the bank agreed that if you stopped making payments the bank would get the house. Give them the house. Of course this would be a huge hit to your credit score and you would probably not be able to obtain another mortgage at a decent rate for at least 7 years. You may have trouble obtaining other financing as well (i.e. auto loans). If you plan on moving to an apartment and don't need to finance car purchases this may be OK."
},
{
"docid": "352638",
"title": "",
"text": "\"There are a number of bona fide reasons to consider here. If there is a cost to discharging a security packet, or a mortgage, it may not be convenient if we are advanced in the repayment schedule. Early exit fees may apply, or the interest may be \"\"pre-determined\"\". As a rule of thumb, when we are talking about rates above 10% p.a. then arrangements should be short (bridging finance - keep it short and charge 'em heaps), and for personal arrangements, small.\""
},
{
"docid": "128406",
"title": "",
"text": "St. John's Church, Richmond, Virginia March 23, 1775. MR. PRESIDENT: No man thinks more highly than I do of the patriotism, as well as abilities, of the very worthy gentlemen who have just addressed the House. But different men often see the same subject in different lights; and, therefore, I hope it will not be thought disrespectful to those gentlemen if, entertaining as I do, opinions of a character very opposite to theirs, I shall speak forth my sentiments freely, and without reserve. This is no time for ceremony. The question before the House is one of awful moment to this country. For my own part, I consider it as nothing less than a question of freedom or slavery; and in proportion to the magnitude of the subject ought to be the freedom of the debate. It is only in this way that we can hope to arrive at truth, and fulfil the great responsibility which we hold to God and our country. Should I keep back my opinions at such a time, through fear of giving offence, I should consider myself as guilty of treason towards my country, and of an act of disloyalty toward the majesty of heaven, which I revere above all earthly kings. Mr. President, it is natural to man to indulge in the illusions of hope. We are apt to shut our eyes against a painful truth, and listen to the song of that siren till she transforms us into beasts. Is this the part of wise men, engaged in a great and arduous struggle for liberty? Are we disposed to be of the number of those who, having eyes, see not, and, having ears, hear not, the things which so nearly concern their temporal salvation? For my part, whatever anguish of spirit it may cost, I am willing to know the whole truth; to know the worst, and to provide for it. I have but one lamp by which my feet are guided; and that is the lamp of experience. I know of no way of judging of the future but by the past. And judging by the past, I wish to know what there has been in the conduct of the British ministry for the last ten years, to justify those hopes with which gentlemen have been pleased to solace themselves, and the House? Is it that insidious smile with which our petition has been lately received? Trust it not, sir; it will prove a snare to your feet. Suffer not yourselves to be betrayed with a kiss. Ask yourselves how this gracious reception of our petition comports with these war-like preparations which cover our waters and darken our land. Are fleets and armies necessary to a work of love and reconciliation? Have we shown ourselves so unwilling to be reconciled, that force must be called in to win back our love? Let us not deceive ourselves, sir. These are the implements of war and subjugation; the last arguments to which kings resort. I ask, gentlemen, sir, what means this martial array, if its purpose be not to force us to submission? Can gentlemen assign any other possible motive for it? Has Great Britain any enemy, in this quarter of the world, to call for all this accumulation of navies and armies? No, sir, she has none. They are meant for us; they can be meant for no other. They are sent over to bind and rivet upon us those chains which the British ministry have been so long forging. And what have we to oppose to them? Shall we try argument? Sir, we have been trying that for the last ten years. Have we anything new to offer upon the subject? Nothing. We have held the subject up in every light of which it is capable; but it has been all in vain. Shall we resort to entreaty and humble supplication? What terms shall we find which have not been already exhausted? Let us not, I beseech you, sir, deceive ourselves. Sir, we have done everything that could be done, to avert the storm which is now coming on. We have petitioned; we have remonstrated; we have supplicated; we have prostrated ourselves before the throne, and have implored its interposition to arrest the tyrannical hands of the ministry and Parliament. Our petitions have been slighted; our remonstrances have produced additional violence and insult; our supplications have been disregarded; and we have been spurned, with contempt, from the foot of the throne. In vain, after these things, may we indulge the fond hope of peace and reconciliation. There is no longer any room for hope. If we wish to be free² if we mean to preserve inviolate those inestimable privileges for which we have been so long contending²if we mean not basely to abandon the noble struggle in which we have been so long engaged, and which we have pledged ourselves never to abandon until the glorious object of our contest shall be obtained, we must fight! I repeat it, sir, we must fight! An appeal to arms and to the God of Hosts is all that is left us! They tell us, sir, that we are weak; unable to cope with so formidable an adversary. But when shall we be stronger? Will it be the next week, or the next year? Will it be when we are totally disarmed, and when a British guard shall be stationed in every house? Shall we gather strength by irresolution and inaction? Shall we acquire the means of effectual resistance, by lying supinely on our backs, and hugging the delusive phantom of hope, until our enemies shall have bound us hand and foot? Sir, we are not weak if we make a proper use of those means which the God of nature hath placed in our power. Three millions of people, armed in the holy cause of liberty, and in such a country as that which we possess, are invincible by any force which our enemy can send against us. Besides, sir, we shall not fight our battles alone. There is a just God who presides over the destinies of nations; and who will raise up friends to fight our battles for us. The battle, sir, is not to the strong alone; it is to the vigilant, the active, the brave. Besides, sir, we have no election. If we were base enough to desire it, it is now too late to retire from the contest. There is no retreat but in submission and slavery! Our chains are forged! Their clanking may be heard on the plains of Boston! The war is inevitable²and let it come! I repeat it, sir, let it come. It is in vain, sir, to extenuate the matter. Gentlemen may cry, Peace, Peace²but there is no peace. The war is actually begun! The next gale that sweeps from the north will bring to our ears the clash of resounding arms! Our brethren are already in the field! Why stand we here idle? What is it that gentlemen wish? What would they have? Is life so dear, or peace so sweet, as to be purchased at the price of chains and slavery? Forbid it, Almighty God! I know not what course others may take; but as for me, give me liberty or give me death! This speech is the best response I can give."
},
{
"docid": "317803",
"title": "",
"text": "\"Maria, there are a few questions I think you must consider when considering this problem. Do fundamental or technical strategies provide meaningful information? Are the signals they produce actionable? In my experience, and many quantitative traders will probably say similar things, technical analysis is unlikely to provide anything meaningful. Of course you may find phenomena when looking back on data and a particular indicator, but this is often after the fact. One cannot action-ably trade these observations. On the other hand, it does seem that fundamentals can play a crucial role in the overall (typically long run) dynamics of stock movement. Here are two examples, Technical: suppose we follow stock X and buy every time the price crosses above the 30 day moving average. There is one obvious issue with this strategy - why does this signal have significance? If the method is designed arbitrarily then the answer is that it does not have significance. Moreover, much of the research supports that stocks move close to a geometric brownian motion with jumps. This supports the implication that the system is meaningless - if the probability of up or down is always close to 50/50 then why would an average based on the price be predictive? Fundamental: Suppose we buy stocks with the best P/E ratios (defined by some cutoff). This makes sense from a logical perspective and may have some long run merit. However, there is always a chance that an internal blowup or some macro event creates a large loss. A blended approach: for sake of balance perhaps we consider fundamentals as a good long-term indication of growth (what quants might call drift). We then restrict ourselves to equities in a particular index - say the S&P500. We compare the growth of these stocks vs. their P/E ratios and possibly do some regression. A natural strategy would be to sell those which have exceeded the expected return given the P/E ratio and buy those which have underperformed. Since all equities we are considering are in the same index, they are most likely somewhat correlated (especially when traded in baskets). If we sell 10 equities that are deemed \"\"too high\"\" and buy 10 which are \"\"too low\"\" we will be taking a neutral position and betting on convergence of the spread to the market average growth. We have this constructed a hedged position using a fundamental metric (and some helpful statistics). This method can be categorized as a type of index arbitrage and is done (roughly) in a similar fashion. If you dig through some data (yahoo finance is great) over the past 5 years on just the S&P500 I'm sure you'll find plenty of signals (and perhaps profitable if you calibrate with specific numbers). Sorry for the long and rambling style but I wanted to hit a few key points and show a clever methods of using fundamentals.\""
},
{
"docid": "194563",
"title": "",
"text": "\"Here's what my wife and I did. First, we stopped using credit cards and got rid of all other expenses that we absolutely didn't need. A few examples: cable TV, home phone, high end internet - all shut off. We changed our cell phone plan to a cheap one and stopped going out to restaurants or bars. We also got rid of the cars that had payments on them and replaced them with ones we paid cash for. Probably the most painful thing for me was selling a 2 year old 'vette and replacing it with a 5 year old random 4 door. Some people might tell you don't do this because older cars need repairs. Fact is, nearly all cars are going to need repairs. It's just a matter of whether you are also making payments on it when they need them and if you can discipline yourself enough to save up a bit to cover those. After doing all this the only payments we had to make were for the house (plus electric/gas/water) and the debt we had accumulated. I'd say that if you have the option to move back into your parent's house then do it. Yes, it will suck for a while but you'll be able to pay everything off so much faster. Just make sure to help around the house. Ignore the guys saying that this tanks your score and will make getting a house difficult. Although they are right that it will drop your score the fact is that you aren't in any position to make large purchases anyway and won't be for quite some time, so it really doesn't matter. Your number one goal is to dig yourself out of this hole, not engage in activity that will keep you in it. Next, if you are only working part time then you need to do one of two things. Either get a full time job or go find a second part time one. The preference is obviously on the first, which you should be able to do in your spare time. If, for some reason, you don't have the tech skills necessary to do this then go find any part time job you can. It took us about 3 years to finally pay everything (except the house) off - we owed a lot. During that time everything we bought was paid for in cash with the vast majority of our money going to pay off those accounts. Once the final account was paid off, I did go ahead and get a credit card. I made very minor purchases on it - mostly just gas - and paid it off a few days before it was due each month. Every 4 months they increased my limit. After around 18 months of using that one card my credit score was back in the 700+ range and with no debt other than the mortgage. *note: I echo what others have said about \"\"Credit Repair\"\" companies. Anything they can do, you can too. It's a matter of cutting costs, living within your means and paying the bills. If the interest rates are killing you, then try to get a consolidation loan. If you can't do that then negotiate settlements with them, just get everything in writing prior to making a payment on it if you go this route. BTW, make sure you actually can't pay them before attempting to settle.\""
},
{
"docid": "8849",
"title": "",
"text": "It was then we determined that with our large revel in within the textiles, recycling enterprise. We'd begin in our quest to help Africa and open our first cash 4 garments shop. At Recycle four Cash for clothes kent, we offer a friendly, rapid and reliable provider to every person seeking our offerings. We remember the fact that you may favor donating your garb to charity; HOWEVER, did you already know by the point the retail outlet of the charity pays its walking costs, handiest a small percent will go to the actual charity. Should you desire to donate the monies we pay you to the charity."
},
{
"docid": "72683",
"title": "",
"text": "Interesting thing is not all of this analysis is typically done by the person you are speaking with re: your mortgage. Likely there is an economic team (at some institution or another, as many many loans are sold/distributed in some fashion), finance team, and all of them are looking at various rates etc. Typically what is offered is matching an offsetting liability somewhere else. So there may be cases where the spread someone is looking to pick up might be tighter or looser within institutions or types of institutions vs others, even though the overall market is at one place. (e.g. banks vs. insurance companies). So you may have negotiating room at a certain term, but not another, or the reverse at another firm. One firm might have lots of 10 year money, while another might be limited, so will be picky in what they choose. Either more conservative loan terms/ltv, or a higher spread, for example. So many things go into the ultimate rate someone can get, but in theory the blog did a decent job."
},
{
"docid": "66476",
"title": "",
"text": "It's pretty simple. - Increase banks ability to lend for... a. mortgages b. Small businesses Banks have tremendous quantities of cash trapped on their balance sheets that should be deployed into the economy where it generates growth, jobs, and strengthens the middle class. - improve infrastructure Our infrastructure is in disrepair and improving it will generate growth and something to show for the massive debt load we've accumulated for our nation. - repatriation holiday This capital needs to be working in our economy. - Increase taxes The massive flood of liquidity we've seen from the FED, what we should be seeing released from banks, and then what we should see from corporations repatriating cash will need to move through the economy and and going to work. Then, taxed; reducing deficits and eventually liquidity. - raise interest rates In that order. Capital moves through the market at different rates and paces. I'm usually for lower taxes, but it isn't always the solution. Lower taxes, reduced regulation, and low interest rates are all different ways of increasing liquidity, but should be increased/reduced at different parts of the economic cycle. Dimon is right about Washington. This is bullshit."
},
{
"docid": "135511",
"title": "",
"text": "\"I agree that cutting spending is generally a bad idea in a bad economy. However, we cannot sustain deficit spending forever. Our government has been spending money it doesn't have for decades. Now that we need spending to boost the economy, we've started to run out of ammunition. Years of stupid spending have caught up with us in the midst of a major depression. It's bad, but reality. So many people (including many people here on Reddit) have ideas that our debt-GDP ratio isn't a problem. Many people have pointed out that other countries have survived with much higher GDP ratios than ours. That is true, but we can't make that comparison based on that one variable. Those countries seemed to be on the brink of a major economic expansion as they conquered market shares in the global economy or developed new industries. As their economies started booming, they were able to pay down their debts. People argue that when our economy improves we can do the same. The problem is that after spending $5 trillion, we are still in a terribly stagnant economy after three years of recovery. How long do they think it is going to take before the recovery kicks in? It's inevitable that sooner or later we need to cut debts. Even if we do see a sudden economic rebound, the amount of debt it would take to get there would be extreme at this rate. That would require major cuts in spending which would send us right back where we started. Some people say that paying the debt is similar to paying down a mortgage. By those standards we are doing fine and it is more than affordable. That is a bad argument. For one thing, the revenue we generate in taxes is coming from economic growth developed by that spending. If you cut one, you cut the other. The way our economy is working right now, in order to generate more revenue to pay down the debt, we need to take on more debt. Also, unlike a mortgage, we are at the mercy of the financial markets. When investors decide that we have too much debt, the rates will rise or they stop buying altogether. Then we have to rely on the federal reserve to finance it, which can cause serious inflation. If we lose our reserve status (anyone who thinks this isn't possible is sadly delusional) then we are basically going to end up like Greece because we wouldn't be able to pay off our debts to foreign investors with our printing press. It's also important to note that America has a very big advantage it doesn't really deserve. We have the world reserve currency. People say that we deserve to have that because our economy is stronger. That is circular logic, because so much of our economic strength is due to the fact we had the reserve currency in the first place. Where would we be without it? Would we still be the strongest economy in the world? I think that's an impossible question to answer, because we have had it and given a free pass for so long that we don't know what life would be like. We can sit and chastise Europe for not doing as well as us, but the truth is we have a huge advantage so it's not a valid comparison. Also, we may be doing better for now. But if our sovereign debt bubble bursts (either due to the loss of world reserve currency status or otherwise) we won't be any better off. I don't believe in austerity in a depression, but this unsustainable deficit spending seems equally reckless. I think we need a more strategic plan that rests somewhere in the middle ground. Cutting spending on wasteful projects and redirecting that money into areas that are going to have a high return on investment in the form of GDP growth. Obama's roads don't qualify. Otherwise, if we keep wasting money we will someday reach the point where deficit spending is no longer an option and we have to cut it regardless of how stagnant the economy is. That would be really bad and we need to change gears before we reach that tipping point. To answer your question, I think the people you speak of are wrong, but not stupid. They certainly have good points. The problem is that everyone looks at it as an \"\"either/or\"\" situation rather than seeing a continuum where the real answer may lie somewhere in the middle.\""
},
{
"docid": "355477",
"title": "",
"text": "Let me offer what I did in a similar situation - Two points (a) we were banking $20K/yr or so to the cash fund, 2 good incomes, and the ability to go indefinitely on just one of the 2. (b) A HELOC that was prime-1.5%. The result was to mentally treat the HELOC as our emergency fund, but to enjoy the interest savings of over $16,500/yr for the $100K that had a sub-1% return. When I first referenced this story, I came under criticism. Fair enough, it's not for everyone. Let's jump ahead. We owe $228K @3.5%. We had tapped the equity line for brief periods, but never over $20,000. When we lost our jobs, both of us, we had hit our number and are semi-retired now. Our retirement budget included the current mortgage payment, so we are in line for that dropping out of the budget in 12 years, and starting social security after that, which I did not include as part of the budget. Note - when we lost our jobs, the severance was 6 month's pay, and we collected unemployment as well. The first 12 months were covered without tapping our retirement funds at all. So, to Nick's point (and excellent answer) our first line of defense against unemployment was this combination of severance and unemployment insurance."
},
{
"docid": "237043",
"title": "",
"text": "\"There are two ways that mortgages are sold: The loan is collateralized and sold to investors. This allows the bank to free up money for more loans. Of course sometime the loan may be treated like in the game of hot potato nobody want s to be holding a shaky loan when it goes into default. The second way that a loan is sold is through the servicing of the loan. This is the company or bank that collects your monthly payments, and handles the disbursement of escrow funds. Some banks lenders never sell servicing, others never do the servicing themselves. Once the servicing is sold the first time there is no telling how many times it will be sold. The servicing of the loan is separate from the collateralization of the loan. When you applied for the loan you should have been given a Servicing Disclosure Statement Servicing Disclosure Statement. RESPA requires the lender or mortgage broker to tell you in writing, when you apply for a loan or within the next three business days, whether it expects that someone else will be servicing your loan (collecting your payments). The language is set by the US government: [We may assign, sell, or transfer the servicing of your loan while the loan is outstanding.] [or] [We do not service mortgage loans of the type for which you applied. We intend to assign, sell, or transfer the servicing of your mortgage loan before the first payment is due.] [or] [The loan for which you have applied will be serviced at this financial institution and we do not intend to sell, transfer, or assign the servicing of the loan.] [INSTRUCTIONS TO PREPARER: Insert the date and select the appropriate language under \"\"Servicing Transfer Information.\"\" The model format may be annotated with further information that clarifies or enhances the model language.]\""
},
{
"docid": "129862",
"title": "",
"text": "I'm assuming this is the US. Is this illegal? Are we likely to be caught? What could happen if caught? If you sign an occupancy affidavit at closing that says you intend to move in within 60-days, with no intention of doing so, then you'll be committing fraud, specifically mortgage/occupancy fraud, a federal crime with potential for imprisonment and hefty fines. In general, moving in late is not something that's likely to be noticed, if the lender is getting their money then they probably don't care. Renting it out prior to moving in seems much riskier, especially if you live in a city/state that requires rental licensing, or are depending on rental income to carry the mortgage. No idea how frequently people are caught/punished for this type of fraud, but it hardly seems worth finding out."
},
{
"docid": "488338",
"title": "",
"text": "\"I will solely address your fear because from what I read you fear investing in something that could possibly go down in the future. This is almost identical to market timing, so let's use the SPY as an example. Look at the SPY on Yahoo Finance, specifically in 2011. The market experienced a little bit of a pull back during the year, and some \"\"analysts\"\" claimed that it would fall below 600 (read this). In fact, a co-worker of mine said that he feared buying the S&P 500 in 2011 (as well as in 2010), so he bought gold (compare the two from 2011 to now - to put it bluntly he experienced 50% less gain than I did). Did the S&P 500 ever fall below 600 in that timeframe, or according to the linked analyst (there were plenty of similar predictions then)? No. If you avoid doing something because you're afraid it could drop, technically, you should be just as afraid of it rising (Fear of Losing Everything, FOLE, vs. Fear of Missing Out, FOMO - both are real). That's not to say invest out of fear, but that fear cuts both ways, and generally, we only look at it from one side. Retirement investing should be a boring, automated process where, ideally, we don't try and time the market (though some will try, and like in 2011, fail). If you can't help your fear, you can always approach retirement investing with automated re-balancing where you hold some money in \"\"less risky\"\" forms and others in \"\"higher risk\"\" forms and automate a rebalance every month or quarter.\""
},
{
"docid": "303851",
"title": "",
"text": "\"Exactly it. I declared bankruptcy over 7 years ago. I was in a bad situation - I was laid off, the jobs in Salt Lake dried up after the Olympics, everything was in the crapper. I found new work - in California. Went off and lived there alone for six months while my wife and children stayed behind. We used all of our savings keeping up on the mortgage, paying bills - and living like paupers. Once my wife came down, we knew we couldn't afford a place in CA *and* our home, so we rented it out. To people who didn't pay their rent for six months, and we were so far away we couldn't just fly back to make it happen. And my wife was pregnant this whole time. Finally, because of my wife, we gave in. And I felt awful. I had failed my family, I had failed my wife - and I felt like I had failed myself. I remember being so ashamed I told *no one* for almost 6 years. Until I found out I wasn't the only one. Until I had close friends tell me of their troubles. I hadn't been overly irresponsible, I hadn't been buying up big TVs and junk. I was just trying to make a living, did good work - and just got caught up in bad luck. But the shame didn't go away. And it's only now, when I know more, when I see companies declare bankruptcy, or very wealthy people do so, that I realize that yeah - I have to take care of my shit, and I do everything I can for that. But at the same time, if bad stuff happens, I shouldn't spend my life beating up on myself because I had \"\"shit happen.\"\" Shit happens. Everybody should have a second chance to try again. Learn from the mistakes you made, plan better if you can, and realize that the best laid plans of might and men oft go awry. Try again, and hopefully it'll work out better next time.\""
},
{
"docid": "123013",
"title": "",
"text": "On paper the whole 6 months living costs sounds (and is) great, but in real life there are a lot of things that you need to consider. For example, my first car was constantly falling apart and was an SUV that got 16MPG. I have to travel for work (about 300 miles per week) so getting a sedan that averages close to 40MPG saves me more in gas and maintenance than the monthly payment for the new car costs. When our apartment lease was up, the new monthly rent would have been $1685 per month, we got a 30 year mortgage with a monthly payment of $1372. So buying a house actually let us put aside more each month. We have just under 3 months of living expenses set aside (1 month in liquid assets, 2 months in a brokerage account) and I worry about it. I wish we had a better buffer, but in our case the house and car made more sense as an early investment compared to just squirreling away all our savings. Also, do you have any debt? Paying off debt (student loans, credit card debt, etc.) should often take top priority. Have some rainy day funds, of course, but pay down debts, and then create a personal financial plan for what works best in your situation. That would be my suggestion."
},
{
"docid": "376084",
"title": "",
"text": "I am going through this right now. We recently moved and learned the lesson of needing a good bit of wealth in easily accessible accounts. In our case for a down payment on a new house. So we have decided to increase our emergency fund to $50,000.00 minimum. Then throwing the rest in retirement accounts seems like a safe bet. So my rule of thumb is think of how much a 20% down payment would be on a new house if you needed to move. That way you can avoid pmi while also avoiding penalties for withdrawing from your retirement accounts."
},
{
"docid": "384819",
"title": "",
"text": "This is of course a perfectly normal thing to happen. People trade up to a bigger house every day. When you've found a bigger house you want to move to and a buyer for your existing one, you arrange 'closing dates' for both i.e. the date on which the sale actually happens. Usually you make them very close, either on the same day or with an overlap of a few weeks. You use the equity (i.e. the difference between the house value and the mortgage) in the old house as the down payment on the new house. You can't of course use the part of the old house that is mortgaged. If the day you buy the new and sell the old is the same, your banks and lawyers do everything for you on that day. If there is an overlap then you need something called 'bridge financing' to cover the period when you own two houses. Banks are used to doing this, and it's not really that expensive when you take into account all the other costs of moving house. Talk to them for details. As a side note, it is generally reckoned not to be worth buying a house if you only intended to live there one or two years. The costs involved in the process of buying, selling and moving usually outweigh any gains in house value. You may find yourself with a higher down payment if you rent for a year or two and save up a down payment for your 'bigger' house instead."
},
{
"docid": "66943",
"title": "",
"text": "\"The bill proposed to \"\"Under existing law, employers may take tax deductions for the costs associated with moving jobs out of the country. The proposed legislation would have eliminated that, and used the resulting new revenue to fund a 20 percent tax credit for the costs companies run up \"\"insourcing\"\" labor back into the U.S.\"\" From http://abcnews.go.com/m/blogEntry?id=16816660 as found by beermethestrength. I will explain this in an example below. Lets use allen edmonds. I manufacture shoes and sell them in the US. The facts we will assume is Revenue or sales is $100. Manufacturing cost is $50. Tax rate is 10%. Therefore, Profit before tax is $100 -$50 = $50. Tax is $5. Net profit is $45. However, suppose offshoring to Canada saves money. They say please and thank you at every opportunity and the positive work environment allows them to work faster. Correspondingly to make the same number of shoes our costs has decreased because we pay less for labour. The manufacturing cost decreases to $30. However, we incur costs to move such as severance payments to layoff contracted employees. (I promise to hire you and pay $1 a year for 2 years. I fire you at the end of the first year. To be fair, I pay you $1) However, it can be any legitimate expense under the sun. In this case we suppose this moving cost is $10. Revenue or sales is $100. Manufacturing cost is $30. Moving cost is $10. Tax rate is 10%. Profit before tax is $100 -$40 = $60. Tax is $6. Net profit is $54. Yay more jobs for Canadians. However, the legislation would have changed this. It would have denied that moving expense if you were moving out of the country. Therefore, we cannot consider $10 worth of expenses for tax purposes. Therefore Revenue or sales is $100. Manufacturing cost is $30. Tax rate is 10%. Profit before tax for tax purposes is $100 - $30 = $70. Tax is $7. Net profit for tax purposes is $63. However, my accounting/net/real profit is $53. I must deduct the $10 associated with moving. The difference between the two scenarios is $1. In general our net profit changes by our moving cost * our tax rate. There is no tax break associated with moving. In Canadian tax, any business expense in general can be deducted as long as it is legitimate and not specifically denied. I am uncertain but would assume US tax law is similar enough. Moving expenses in general are legitimate and not specifically denied and therefore can be deducted. Offshoring and onshoring are seen as legitimate business activities as in general companies do things to increase profit. (forget about patriotism for the moment). The bill was to make offshoring more expensive and therefore fewer companies would find offshoring profitable. However, republicans defeated this bill in congress. Most likely the house For completeness let us examine what would happen when we onshore (bring jobs from canada to us :( ). In our example, silly unions demand unrealistically high wages and increase our cost of manufacturing to $50 again. We decide to move back to the US because if it is the same everywhere for the sake of silly national pride we move our jobs back to the US. We incur the same moving cost of $10. Therefore we have Revenue or sales is $100. Manufacturing cost is $50. Moving cost of $10. Tax rate is 10%. Profit before tax for tax purposes is $100 - $60 = $40. Tax is $4. However, we are given a 20% tax credit for moving expense. $10 * .2 = 2. The government only assess us tax of 2. Net profit is $38. Tax credits are a one time deal so profit in the future will be $100 -$50 - $5 = $45. Same as the first example. insourcing = onshoring , outsourcing = offshoring for the purposes of this article. Not quite the same in real life.\""
}
] |
4823 | Close to retirement & we may move within 7 years. Should we re-finance our mortgage, or not? | [
{
"docid": "561929",
"title": "",
"text": "I would think it depends on when within the 7 years you're planning to move. If you want to move within a year or two, the closing costs for the new mortgage may postpone the break even until after your move date; that wouldn't be a financially smart decision. If your plans suggest you're going to move after the break even point I'd definitely refi sooner rather than later and would try to reduce the term, either by overpaying or by choosing a 15 year mortgage that should have an even lower interest rate anyway."
}
] | [
{
"docid": "557734",
"title": "",
"text": "Yes, you will come out ahead slightly by putting the money in the savings account, then paying off your mortgage later. However, we don't know what will happen to these interest rates after 1 year. If you put the £300 per month into the savings account for a year, then put the money into you mortgage, you will save about £78 for the year over just putting the money toward your mortgage in the first place. For me, I'm more concerned about longer term strategy. What happens to your mortgage rate after 2 years? What happens to your savings account rate after 1 year? The mortgage rate likely goes up and the savings account rate likely goes down, making the savings of this strategy even less after the first year. Instead, you may want to put this £300 per month toward retirement investments (assuming you have no other debt), which should, over the long term, earn more than the savings account."
},
{
"docid": "547984",
"title": "",
"text": "The buyer discloses the financing arrangements to the seller because it makes his offer more attractive. When a seller receives and accepts an offer, the deal does not usually close until 30 to 60 days later. If the buyer cannot come up with the money by closing, the deal falls apart. This is a risk for the seller. When a seller is considering whether or not to accept an offer, it is helpful to know the likelihood that the buyer can actually obtain the amount of cash in the offer by the closing date. If the buyer can't acquire the funding, the offer isn't worth the paper it is printed on. The amount of the down payment vs. the amount of financing is also relevant to the seller. Let me give you a real-world example that happened to me once when I was selling a house. The buyer was doing a no-money-down mortgage and had no money for a down payment. He was even borrowing the closing costs. We accepted the offer, but when the bank did the appraisal, it was short of the purchase price. For most home sales, this would not be a problem, as long as the appraisal was more than the amount borrowed. But in this case, because the amount borrowed was more than the appraisal, the bank had a problem. The deal was at risk, and in order to continue either the buyer had to find some money somewhere (which he couldn't), or we had to lower the price to save the deal. Certainly, accepting the offer from a buyer with no cash to bring to the table was a risk. (In our case, we got lucky. We found some errors that were made in the appraisal, and got it redone.)"
},
{
"docid": "234890",
"title": "",
"text": "1 - For FHA loans PMI is required for mortages where there is not at least 20% equity. Bank Financed Non-FHA loans may have other standards. If you are getting an FHA loan ,if possible put down 20% so that you do not have to pay PMI. That said your PMI costs should be reduced by the size of your down payment since the PMI covers the difference between your equity value (Based on the appraisal at time of purchase) and 20% equity value of the home. So if you buy a home for 425k(assuming 100% appraisal price) 20% equity would be 85k. So if you put 10% down you would be paying PMI until you accrue an addition 42500 in equity. And you will be paying PMI on that for about 12 years(typical on 30 year mortgage) or until you refinance(having home appraised at higher value than purchase price where you would have 20% equity). There are ways to get out of PMI early but few banks are willing to help you through the hoops unless you refinance(and pay more closing costs). 2 - Different banks offer better rates or other benefits for paying points. We paid $300 for a 1.5% reduction in our interest rate (less than 1%) but it was called a point. We were offered a few other points (.25% for 2500 and an one time on demand interest rate adjustment for ~3k) but declined but they may make more sense on a 425k home than our more modest one. You can talk to a banker about this now, get preapproved(which helps with getting offers accepted sometimes), and find out more details about the mortgage they will offer you. This meeting should be free(I would say will but some bank would charge just to prove me wrong) and help answer your questions more authoritatively than anyone here can. 3 - The costs will come out of your down payment. So if you put down 42.5k down your costs will come out of that. So you will probably end up with 30~35k being applied towards your purchase price with the rest going for costs. You can tell the banker you want to put 10% towards the price and the banker will give you a down payment probably around 50k to cover costs etc. (My figures are hopefully intentionally high better to find out that it will cost less than my guesstimate than get your hopes up just to find out the costs are higher than expected.)"
},
{
"docid": "207815",
"title": "",
"text": "You will find Joe.E, that rents have increased considerably over the last 4 to 5 years in Australia. You can probably achieve rental yields of above 5% more than 20km from major Cities, however closer to cities you might get closer to 5% or under. In Western Sydney, we have been able to achieve rental yields close to 7%. We bought mainly in 2007 and 2008 when no one was buying and we were getting properties for 15% to 20% below market rates. As we bought cheap and rents were on the increase we were able to achieve higher rental yields. An example of one particular deal where we bought for $225K and rented for $300/wk giving us a yield of 6.9%. The rent is now $350/wk giving us a current yield of 8%, and with our interest rate at 6.3% and possibly heading down further, this property is positively geared and pays for itself plus provides us with some additional income. All our properties are yielding between 7.5% to 8.5% and are all positively geared. The capital gains might not be as high as with properties closer to the city, but even if we stopped working we wouldn't have to sell as they all provide us income after paying all expenses on associated with the properties. So in answer to your question I would be aiming for a property with a yield above 5% and preferably above 6%, as this will enable your property/ies to be positively geared at least after a couple of years if not straight away."
},
{
"docid": "135511",
"title": "",
"text": "\"I agree that cutting spending is generally a bad idea in a bad economy. However, we cannot sustain deficit spending forever. Our government has been spending money it doesn't have for decades. Now that we need spending to boost the economy, we've started to run out of ammunition. Years of stupid spending have caught up with us in the midst of a major depression. It's bad, but reality. So many people (including many people here on Reddit) have ideas that our debt-GDP ratio isn't a problem. Many people have pointed out that other countries have survived with much higher GDP ratios than ours. That is true, but we can't make that comparison based on that one variable. Those countries seemed to be on the brink of a major economic expansion as they conquered market shares in the global economy or developed new industries. As their economies started booming, they were able to pay down their debts. People argue that when our economy improves we can do the same. The problem is that after spending $5 trillion, we are still in a terribly stagnant economy after three years of recovery. How long do they think it is going to take before the recovery kicks in? It's inevitable that sooner or later we need to cut debts. Even if we do see a sudden economic rebound, the amount of debt it would take to get there would be extreme at this rate. That would require major cuts in spending which would send us right back where we started. Some people say that paying the debt is similar to paying down a mortgage. By those standards we are doing fine and it is more than affordable. That is a bad argument. For one thing, the revenue we generate in taxes is coming from economic growth developed by that spending. If you cut one, you cut the other. The way our economy is working right now, in order to generate more revenue to pay down the debt, we need to take on more debt. Also, unlike a mortgage, we are at the mercy of the financial markets. When investors decide that we have too much debt, the rates will rise or they stop buying altogether. Then we have to rely on the federal reserve to finance it, which can cause serious inflation. If we lose our reserve status (anyone who thinks this isn't possible is sadly delusional) then we are basically going to end up like Greece because we wouldn't be able to pay off our debts to foreign investors with our printing press. It's also important to note that America has a very big advantage it doesn't really deserve. We have the world reserve currency. People say that we deserve to have that because our economy is stronger. That is circular logic, because so much of our economic strength is due to the fact we had the reserve currency in the first place. Where would we be without it? Would we still be the strongest economy in the world? I think that's an impossible question to answer, because we have had it and given a free pass for so long that we don't know what life would be like. We can sit and chastise Europe for not doing as well as us, but the truth is we have a huge advantage so it's not a valid comparison. Also, we may be doing better for now. But if our sovereign debt bubble bursts (either due to the loss of world reserve currency status or otherwise) we won't be any better off. I don't believe in austerity in a depression, but this unsustainable deficit spending seems equally reckless. I think we need a more strategic plan that rests somewhere in the middle ground. Cutting spending on wasteful projects and redirecting that money into areas that are going to have a high return on investment in the form of GDP growth. Obama's roads don't qualify. Otherwise, if we keep wasting money we will someday reach the point where deficit spending is no longer an option and we have to cut it regardless of how stagnant the economy is. That would be really bad and we need to change gears before we reach that tipping point. To answer your question, I think the people you speak of are wrong, but not stupid. They certainly have good points. The problem is that everyone looks at it as an \"\"either/or\"\" situation rather than seeing a continuum where the real answer may lie somewhere in the middle.\""
},
{
"docid": "277791",
"title": "",
"text": "\"While that's possible, there is no guarantee. The ultimate thing causing the \"\"scare\"\" was a loss of jobs due to outsourcing. I know we associate it with the housing bubble. But really we moved to housing from dot-com, and we moved to dot-com from real manufacturing and production. These more recent bubbles were ways of \"\"making up\"\" for the lost of manufacturing jobs. Manufacturing jobs left (I'm going to focus on the US) the US because it was cheaper in other countries. Now, once debt is largely payed off, people will likely be willing to accept lower pay, making production in the US cheaper. However, we still have environmental regulations and basic labor laws. Further, initial education to enter the job market brings about massive debt as well. This is pure speculation, but what I think will happen is collapse of the \"\"education bubble\"\". People will lose faith in college degrees and start working as contractors, plumbers, mechanics, etc. This will generate a direct wealth, but it will also severely hurt our ability to innovate due to the resulting \"\"brain drain\"\". Multiple educational facilities will close down or contract, and some private schools will convert to public to stay afloat. Many jobs will also be lost. The resulting outflow of academicians will stimulate the development of new start-ups in online education and smaller institutes. This will lead to cheaper education with more \"\"certifications\"\" over \"\"degrees\"\". This will also lead to more start-ups in direct production of goods. I'm thinking this process will take another 5-7 years or so. Again, this is just wild-ass guessing on my side based on observed trends.\""
},
{
"docid": "198394",
"title": "",
"text": "\"I find this very hard to believe Believe it. The bottom quarter of American households have negative net worth, and the bottom three quarters have no more than a tiny amount saved up. https://en.wikipedia.org/wiki/Wealth_in_the_United_States#/media/File:MeanNetWorth2007.png In an emergency, 63% of Americans would not be able to come up with $500 without going into debt. http://www.forbes.com/sites/maggiemcgrath/2016/01/06/63-of-americans-dont-have-enough-savings-to-cover-a-500-emergency/ Nobody can retire with 5k in the U.S. The money will be gone within a year. Is it possible? Now you begin to see why the long-term stability of Social Security and Medicare are at present hot topics in American political life. Without them, a great many more Americans would die in poverty. What is the actual figure? The $5000 figure is accurate but irrelevant; that median includes people who are thirty years from retirement and people who are two days from retirement. The more relevant statistics are those restricted to people at or close to retirement age, and they can be found lower down in the article you cite, or in numerous other studies. Here's one from the GAO for example: http://www.gao.gov/products/GAO-15-419 The figures here are, unfortunately, no less terrifying: Now $104K is a lot better than $5K, but it's still not much to retire on. Why we believe that it is reasonable to throw out all the zeros before taking the median, I do not know. That seems like bad math to me. UPDATE: There is some discussion of this point in the comments; all I'm saying here is that this is a clumsy and possibly misleading way to characterize the situation. The linked report has the actual data, but let's try to summarize it here in a more meaningful way. Let's suppose that we make buckets for how dependent on SS is a retirement-age household to avoid starving to death, being homeless, and so on? Maybe these buckets are not ideal, and we could move them around a bit. The takeaways here are that the ratios of nothing:inadequate:barely adequate:comfortable is about 40:30:20:10. That only the top decile of retirement-age households can fund a comfortable retirement without help illustrates just how dependent on SS American households are. how do 50% of old Americans survive in their old age? Social Security and Medicare. As the cited GAO report indicates: \"\"Social Security provides most of the income for about half of households age 65 and older.\"\" Do most old Americans rely on their children for financial support? One day I met a woman at a party and we were making small talk about her kids. She had a couple already and one more was on the way. \"\"I want to have lots of children to support me in my old age\"\", she said. \"\"Do you support your parents?\"\" I asked, which frankly seemed like an entirely reasonable question. \"\"Of course not! I can't afford it. I've got a baby on the way and two more kids at home!\"\" I left her to draw her own conclusions as to the viability of her retirement plan.\""
},
{
"docid": "353186",
"title": "",
"text": "Should I use the money to pay off student loans and future grad expenses for me? Yes. The main drawback to student loans is that they cannot be gotten rid of except by paying them off (other than extreme circumstances such as death or complete disability). A mortgage, car loan, or other collateralized loans can be dealt with by selling the underlying collateral. Credit card loans can be discharged in bankruptcy. Stop borrowing for college, pay for it in cash, then decide what to do with the rest. Make sure you have a comfortable amount saved for emergencies in a completely liquid account (not a retirement account or CDs), and continue to pay off with the rest. You might also consider putting some away for your kids' college, so I want to get my older son into a private middle school for 2 years. They have a hardy endowment and may offer us a decent need based scholarship if we look worthy on paper I have a hard time getting behind this plan with a 238K mortgage. If you want to apply for scholarships that's great - but don't finagle your finances to look like you're poor when you have a quarter-million-dollar house. If you want to save some for private school then do that out of what you have. Otherwise either rearrange your priorities so you can afford it or private school might not be in the cards for you. That said- while it was a blessing to be able to pay off the second mortgage and credit cards, your hesitancy to pay off the student loans makes me wonder if you will start living within your means after the loans are paid off. My concern is that your current spending levels that got you in this much debt in the first place will put you back in debt in the near future, and you won't have another inheritance to help pull you out. I know that wasn't your question, but I felt like I needed to add that to my answer as well."
},
{
"docid": "108845",
"title": "",
"text": "IMHO your thinking is spot on. More than likely, you are years away from retirement, like 22 if you retire somewhat early. Until you get close keep it in aggressive growth. Contribute as much as you can and you probably end up with 3 million in today's dollars. Okay so what if you were retiring in a year or two from now, and you have 3M, and have managed your debt well. You have no loans including no mortgage and an nice emergency fund. How much would you need to live? 60 or 70K year would provide roughly the equivalent of 100K salary (no social security tax, no commute, and no need to save for retirement) and you would not have a mortgage. So what you decide to do is move 250K and move it to bonds so you have enough to live off of for the next 3.5 years or so. That is less than 10% of your nest egg. You have 3.5 years to go through some roller coaster time of the market and you can always cherry pick when to replenish the bond fund. Having a 50% allocation for bonds is not very wise. The 80% probably good for people who have little or no savings like less than 250k and retired. I think you are a very bright individual and have some really good money sense."
},
{
"docid": "53945",
"title": "",
"text": "Read about Upfront Mortgage Brokers. That site has a bunch of information on mortgages and brokers, including mistakes to avoid when shopping for a mortgage. You can also find lenders with upfront pricing. I've used it for shopping and you will find very competitive rates. I'm wary of brokers. When we sold our house, the buyers (young first time buyers) got screwed by an unscrupulous broker and didn't actually have a loan lined up. Delayed closing by 2 days while they scrambled to find a legit lender who could put together funding. The one time we used a broker (our first time), we got a deal that wasn't really as good as it should have been. (Hindsight.)"
},
{
"docid": "237043",
"title": "",
"text": "\"There are two ways that mortgages are sold: The loan is collateralized and sold to investors. This allows the bank to free up money for more loans. Of course sometime the loan may be treated like in the game of hot potato nobody want s to be holding a shaky loan when it goes into default. The second way that a loan is sold is through the servicing of the loan. This is the company or bank that collects your monthly payments, and handles the disbursement of escrow funds. Some banks lenders never sell servicing, others never do the servicing themselves. Once the servicing is sold the first time there is no telling how many times it will be sold. The servicing of the loan is separate from the collateralization of the loan. When you applied for the loan you should have been given a Servicing Disclosure Statement Servicing Disclosure Statement. RESPA requires the lender or mortgage broker to tell you in writing, when you apply for a loan or within the next three business days, whether it expects that someone else will be servicing your loan (collecting your payments). The language is set by the US government: [We may assign, sell, or transfer the servicing of your loan while the loan is outstanding.] [or] [We do not service mortgage loans of the type for which you applied. We intend to assign, sell, or transfer the servicing of your mortgage loan before the first payment is due.] [or] [The loan for which you have applied will be serviced at this financial institution and we do not intend to sell, transfer, or assign the servicing of the loan.] [INSTRUCTIONS TO PREPARER: Insert the date and select the appropriate language under \"\"Servicing Transfer Information.\"\" The model format may be annotated with further information that clarifies or enhances the model language.]\""
},
{
"docid": "533789",
"title": "",
"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."
},
{
"docid": "123013",
"title": "",
"text": "On paper the whole 6 months living costs sounds (and is) great, but in real life there are a lot of things that you need to consider. For example, my first car was constantly falling apart and was an SUV that got 16MPG. I have to travel for work (about 300 miles per week) so getting a sedan that averages close to 40MPG saves me more in gas and maintenance than the monthly payment for the new car costs. When our apartment lease was up, the new monthly rent would have been $1685 per month, we got a 30 year mortgage with a monthly payment of $1372. So buying a house actually let us put aside more each month. We have just under 3 months of living expenses set aside (1 month in liquid assets, 2 months in a brokerage account) and I worry about it. I wish we had a better buffer, but in our case the house and car made more sense as an early investment compared to just squirreling away all our savings. Also, do you have any debt? Paying off debt (student loans, credit card debt, etc.) should often take top priority. Have some rainy day funds, of course, but pay down debts, and then create a personal financial plan for what works best in your situation. That would be my suggestion."
},
{
"docid": "72683",
"title": "",
"text": "Interesting thing is not all of this analysis is typically done by the person you are speaking with re: your mortgage. Likely there is an economic team (at some institution or another, as many many loans are sold/distributed in some fashion), finance team, and all of them are looking at various rates etc. Typically what is offered is matching an offsetting liability somewhere else. So there may be cases where the spread someone is looking to pick up might be tighter or looser within institutions or types of institutions vs others, even though the overall market is at one place. (e.g. banks vs. insurance companies). So you may have negotiating room at a certain term, but not another, or the reverse at another firm. One firm might have lots of 10 year money, while another might be limited, so will be picky in what they choose. Either more conservative loan terms/ltv, or a higher spread, for example. So many things go into the ultimate rate someone can get, but in theory the blog did a decent job."
},
{
"docid": "100241",
"title": "",
"text": "Simply, most of the above given 'answers' are mere 'justifications' for a practice that has become anachronistic. It did make sense once in the past, but not any more. Computers and networks can run non-stop 24/7; even though the same human beings cannot be expected to work 24/7, we have invented the beautiful concept of multiple shifts; banks may be closed during nights and weekends, but banking is never closed in the internet era; ...The answer must lie in the vested interests of a few stakeholder groups - or - it could just be our difficult to change habits."
},
{
"docid": "355477",
"title": "",
"text": "Let me offer what I did in a similar situation - Two points (a) we were banking $20K/yr or so to the cash fund, 2 good incomes, and the ability to go indefinitely on just one of the 2. (b) A HELOC that was prime-1.5%. The result was to mentally treat the HELOC as our emergency fund, but to enjoy the interest savings of over $16,500/yr for the $100K that had a sub-1% return. When I first referenced this story, I came under criticism. Fair enough, it's not for everyone. Let's jump ahead. We owe $228K @3.5%. We had tapped the equity line for brief periods, but never over $20,000. When we lost our jobs, both of us, we had hit our number and are semi-retired now. Our retirement budget included the current mortgage payment, so we are in line for that dropping out of the budget in 12 years, and starting social security after that, which I did not include as part of the budget. Note - when we lost our jobs, the severance was 6 month's pay, and we collected unemployment as well. The first 12 months were covered without tapping our retirement funds at all. So, to Nick's point (and excellent answer) our first line of defense against unemployment was this combination of severance and unemployment insurance."
},
{
"docid": "488338",
"title": "",
"text": "\"I will solely address your fear because from what I read you fear investing in something that could possibly go down in the future. This is almost identical to market timing, so let's use the SPY as an example. Look at the SPY on Yahoo Finance, specifically in 2011. The market experienced a little bit of a pull back during the year, and some \"\"analysts\"\" claimed that it would fall below 600 (read this). In fact, a co-worker of mine said that he feared buying the S&P 500 in 2011 (as well as in 2010), so he bought gold (compare the two from 2011 to now - to put it bluntly he experienced 50% less gain than I did). Did the S&P 500 ever fall below 600 in that timeframe, or according to the linked analyst (there were plenty of similar predictions then)? No. If you avoid doing something because you're afraid it could drop, technically, you should be just as afraid of it rising (Fear of Losing Everything, FOLE, vs. Fear of Missing Out, FOMO - both are real). That's not to say invest out of fear, but that fear cuts both ways, and generally, we only look at it from one side. Retirement investing should be a boring, automated process where, ideally, we don't try and time the market (though some will try, and like in 2011, fail). If you can't help your fear, you can always approach retirement investing with automated re-balancing where you hold some money in \"\"less risky\"\" forms and others in \"\"higher risk\"\" forms and automate a rebalance every month or quarter.\""
},
{
"docid": "152111",
"title": "",
"text": "with me and my wife coming from different countries, and us both living in a non-native country, we have very little clue where we will eventually settle down. The answer depends on where you reside currently, tax rules and ability to move funds. As well as where you plan to settle down and the tax rules there. From what I understand, once you eventually retire and take an annuity from your pension you are then taxed on it as income anyway? Yes and No. For example if you move from US to India, stay in India for 7 years. You then move your retirement funds from US to India the entire amount would be taxable in India. but would this 'freedom' would come with significant costs in terms of savings at retirement? The cost would be hard to predict. It depends on the tax treatments in the respective countries on the retirement kitty. It also depends on whether the country you are staying in will allow complete withdrawal and transfer of retirement funds without penalty."
},
{
"docid": "424598",
"title": "",
"text": "\"I'm probably going to get a bunch of downvotes for this, but here's my not-very-popular point of view: I think many times we tend to shoot ourselves in the foot by trying to get too clever with our money. In all our cleverness, we forget a few basic rules about how money works: It's better to have 0 debt and a small amount of savings than lots of debt and lots of savings. Debt will bite you. Many times even the \"\"good\"\" mortgage debt will bite you. I have several friends who have gotten mortgages only to find out they had to move long before they were able to pay it off. And they weren't able to sell their homes or they sold at a loss. When you have debt, you are restricted. Someone else is always holding something over your head. You're bound to it. Pay it off ASAP (within reason) while putting a decent amount into a high-yield savings account. Only after the debt is gone, go and be clever with your money.\""
}
] |
4827 | Are all financial advisors compensated in the same way? | [
{
"docid": "495791",
"title": "",
"text": "No, they certainly are not compensated the same way. Some are paid by commission that they earn from the products they sell (ie, certain mutual funds, insurance, etc.) Others are paid for their advice based on an hourly fee, or a percentage of the portfolio you have to invest. This is a great question, because too many of us just assume that if someone is in the business, they will give trustworthy advice. This may certainly be the case, but think about it, the financial planner at your bank (who also is a mutual fund specialist - just flip that handy business card over) is employed by Bank X. Bank X sells mutual funds, GIC's, insurance, all kinds of great products. That Bank X employee is not likely to tell you about products from Bank Z down the street that might be a better fit for you. Find a fee based planner, someone you can pay by the hour for advice, and let them help you review products across the industry. It's like asking your bank for mortgage advice...they will discuss the options THEY offer, but may not tell you about a deal down the street. Using a mortgage broker helps you find the best deal across the board. I believe the current issue of Moneysense magazine has an insert discussing planners. Their magazine and website (www.moneysense.ca) are good sources of reliable, Canadian financial advice."
}
] | [
{
"docid": "201415",
"title": "",
"text": "\"Until you get some financial education, you will be vulnerable to people wanting your money. Once you are educated, you will be able to live a tidy life off this-- which is exactly why this amount was awarded to you, rather than some other amount. They gave you enough money. This is not a lottery win. I mean \"\"financial counselors\"\" who will want to help you with strategies to invest your money. Every one will promise your money will grow. The latter case describes every full-service broker, e.g. what will happen if you walk into EdwardJones. This industry has a long tradition of charmingly selling investments which significantly underperform the market, and making their money by kickbacks (sales commissions) from those investments (which is why they significantly underperform.) They also offer products which are unnecessarily complex meant to confuse customers and hide fees. One mark of trouble is \"\"early exit\"\" fees, which they need to recoup the sales commission they already paid out. Unfortunately, one of those people is you. You are treating this like a windfall, falling into old, often-repeated cliché of \"\"lottery-win thinking\"\". \"\"Gosh, there's so much money there, what could go wrong?\"\" This always ends in disaster and destitution, on top of your other woes. It's not a windfall. They gave you just enough money to live on - barely. Because these lawyers and judges do this all day every day, and they know exactly how much capital will replace a lifelong salary, and if anything you got cheated a bit. Read on. You don't want to feel like greedy Scrooge, hoarding every penny. I get that. But generous spending won't fix that. What will is financial education, and once you have real understanding and certainty about your financial situation, you will be able to both provide for yourself and be giving in a sensible manner. This stuff isn't taught in school. If it was, there'd be a lot more millionaires, because wealth isn't about luck, it's about intelligent management of money. Good advisers do exist. They're hard to find. Good advisors work only one way: for a flat rate or hourly fee. This is called a \"\"Fee-only advisor\"\". S/he never takes commissions. Beware of brokers who normally work on commission but will happily take an upfront fee. Even if they promise to hand you their commission check, they're still recommending you into the same sub-par investments because that's their training! I get the world of finance is extremely confusing and it's hard to know where to start. Just make one leap of faith with me: You can learn this. One place it's not confusing: University endowments. They get windfalls just like you, and they need to manage it to support them for a very long time, just like you. Endowments are very closely watched by the smartest people in finance -- no lottery fever here. It's agreed by all that there is one best way to invest an endowment. And it's mandatory by law. An endowment is a chunk of money (say, $1.2 million) that must fund a purpose (say, a math professorship or \"\"chair\"\") in perpetuity. You're not planning to live quite that long, but when you're in your 20's, the investment strategy is the same. The endowment is designed to generate income of some amount, on average, over the long term. You can draw from the endowment even in \"\"down years\"\". The rule of thumb is 4-6% is a sustainable rate that won't overtax the endowment (usually, but you have to keep an eye on it). On $1.2M, that's $48,000 to $72,000 per year. Not half bad. See, I told you it could work. Read Jane Austen? Mister Darcy, referred to as a gentleman of 10,000 pounds -- meaning his assets were many times that, but they yield income of £10,000 a year. Same idea. Keep in mind that you need to pay taxes. But if you plan your investments so you're holding them more than a year, you're in the much lower 0-10-15% capital gains tax bracket. So, here's where I'd like you to go. I would say more, but this will give you quite an education by itself. Say you gave all your money to me. And said \"\"Your nonprofit needs an executive director. Fund it. In perpetuity.\"\" I'd say \"\"Thank you\"\", \"\"you're right\"\", and I'd create an endowment and invest it about like this. That is fairly close to the standard mix you'll find in most endowments, because that is what's considered \"\"prudent\"\" under endowment law (UPMIFA). I'd carry all that in a Vanguard or Fidelity account and follow Bogle's advice on limiting fees. That said, dollar-cost-averaging is not a suicide pact, and bonds are ugly right now (for reason Suze Orman describes) and real estate seems really bubbly right now... so I'd back out of those for now. I'd aim to draw about $60k/year out of it or 5%, and on average, in the very long term, the capital should grow. I would adjust it downward somewhat if the next few years are a hard recession, to avoid taking too much out of the capital... and resist the urge to take more out in boom years, because that is your hedge against the next recession. Over 7% is not prudent per the law (absent very reasonable reasons). UPMIFA doesn't apply to you, but I'd act as if it did. A very reasonable reason to take more than 7% would be to shift investment into a house for living in. I would aim for a duplex/triplex to also have income from the property, if the numbers made sense, which they often don't in California, but that's another question. At your financial level -- never, never, never give cash to a charity. You will get marked as a \"\"soft target\"\" and every commercial fundraiser on earth will stalk you for the rest of your life. At your level, you open a Donor Advised Fund, and let the Fund do your giving for you. Once you've funded it (which is tax deductible) you later tell them which charities to fund when. They screen out fake charities and protect your identity. I discuss DAFs at length here. Now when \"\"charities\"\" harass you for an immediate handout, just tell them that's not how you support charities.\""
},
{
"docid": "132738",
"title": "",
"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.\""
},
{
"docid": "525080",
"title": "",
"text": "Compare the different trading accounts available at Money and MoneySuperMarket. All are regulated by FSA and they give protection according to the FSA standards for client deposits i.e. deposits distributed across multiple banks. I personally hold a trading account from Selftrade. You can find statements like below, in their terms and conditions regarding protection of your money deposited with them. If we cannot meet our obligations, your investment may be protected by the Financial Services Compensation Scheme. Compensation is provided for 100% of £50,000."
},
{
"docid": "70702",
"title": "",
"text": "\"This is not a direct answer to your question, but you might want to consider whether you want to have a financial planner at all. Would a large mutual fund company or brokerage serve your needs better than a bank? You are still quite young and so have been contributing to IRAs for only a few years. Also, the wording in your question suggests that your IRA investments have not done spectacularly well, and so it is reasonable to infer that your IRA is not a large amount, or at least not as large as what it would be 30 years from now. At this level of investment, it would be difficult for you to find a financial planner who spends all that much time looking after your interests. That you should get away from your current planner, presumably a mid-level employee in what is typically called the trust division of the bank, is a given. But, to go to another bank (or even to a different employee in the same bank), where you will also likely be nudged towards investing your IRA in CDs, annuities, and a few mutual funds with substantial sales charges and substantial annual expense fees, might just take you from the frying pan into the fire. You might want to consider transferring your IRA to a large mutual fund company and investing it in something simple like one of their low-cost (meaning small annual expense ratio) index funds. The Couch Potato portfolio suggests equal amounts invested in a no-load S&P 500 Index fund and a no-load Bond Index fund, or a 75%-25% split favoring the stock index fund (in view of your age and the fact that the IRA should be a long-term investment). But the point is, you can open an IRA account, have the money transferred from your IRA account with the bank, and make the investments on-line all by yourself instead of having a financial advisor do it on your behalf and charge you a fee for doing so (not to mention possibly screwing it up.) You can set up Automated Investment too; the mutual fund company will gladly withdraw money from your checking account and invest it in whatever fund(s) you choose. All this is not complicated at all. If you would like to follow the Couch Potato strategy and rebalance your portfolio once a year, you can do it by yourself too. If you want to invest in funds other than the S&P 500 Index fund, etc. most mutual fund companies offer a \"\"portfolio analysis\"\" and advice for a fee (and the fee is usually waived when the assets increase above certain levels - varies from company to company). You could thus have a portfolio analysis done each year, and hopefully it will be free after a few more years. Indeed, at that level, you also typically get one person assigned as your advisor, just as you have with a bank. Once you get the recommendations, you can choose to follow them or not, but you have control over how and where your IRA assets are invested. Over the years, as your IRA assets grow, you can branch out into investments other than \"\"staid\"\" index funds, but right now, having a financial planner for your IRA might not be worth it. Later, when you have more assets, by all means if you want to explore investing in specific stocks with a brokerage instead of sticking to mutual funds only but this might also mean phone calls urging you to sell Stock A right now, or buy hot Stock B today etc. So, one way of improving your interactions and have a better experience with your new financial planner is to not have a planner at all for a few years and do some of the work yourself.\""
},
{
"docid": "304641",
"title": "",
"text": "\"Fred is correct ... MOST financial advisors (but not all) are paid either for managing your assets or for selling you financial products. But success at anything, especially building wealth, is all about PROCESS, not products. I applaud your desire to find a financial advisor to help you because this is not something that most people have the education, experience or capacity to do themselves (it is impossible to get the perspective you need to make the best choices). Start with a CERTIFIED FINANCIAL PLANNER professional - they have an ethical duty to do what is in your best interests ahead of their own (the \"\"fiduciary standard\"\"). You might interview two or three. Work with the one who is transparent about how they are paid and whose process is focused on helping you achieve your goals ... not following any rule of thumb or standard boilerplate. Your goals are different. Your financial life is different. Find someone who can help YOU follow YOUR agenda ... not their own.\""
},
{
"docid": "131365",
"title": "",
"text": "but then they make suggestions such as paying extra each month on your mortgage. How else does one pay off his mortgage early other than by paying extra each month? The principal and interest are fixed, no matter how much money you throw at them. The interest rate is fixed. The total interest paid varies depending on how much extra you pay towards the principal. You'll pay the same amount every month regardless. That's factually incorrect. just put the extra money into savings At 1.2%, if you're smart enough to put it in an on-line savings account. until you have enough to pay off the mortgage Which costs you 3.5%. This way, the money is locked up in your home. Who says that all of your money must be locked up in your home? (I'm sure that there are financial advisors who recommend that you throw every single spare dime into extra mortgage payments, but they're rare.) Am I missing something? Yes: the mathematical sense to see that a 3.5% loan costs more than than 1.2% savings earns you"
},
{
"docid": "445693",
"title": "",
"text": "\"Sending your money off to do the heavy lifting is just a stylish way to say \"\"investing\"\". He is saying hold back 6 months of living expenses and don't invest it. Keep it in cash or some cash-like investment (genuinely safe and liquid). It's good basic solid advice you'll also get from Dave Ramsey, Suze Orman and any financial advisor worth a darn. While this is good advice, that does not mean all of his advice is good. A classic con-man trick is to tell you three things you know are true, mixed with a lie they want you to believe. They want you to think \"\"I know 3/4 are true so the fourth probably is too.\"\"\""
},
{
"docid": "248368",
"title": "",
"text": "I'd advise you to look for an advisor who is a NAPFA-Registered Financial Advisor. If you visit the National Association of Personal Financial Advisors (NAPFA) website (http://www.napfa.org) and understand why they are different, I think you'll agree that the NAPFA-Registered Financial Advisor is the highest standard of excellence you will find in a financial planner."
},
{
"docid": "305901",
"title": "",
"text": "\"It's a problem from hell because all solutions have drawbacks/unintended consequences and because they are all pretty complex to implement in practice. Breaking up the big banks so that no bank is enough to bring down the economy with it is the strongest move, but is riddled with problems when you start looking at it practically. How do you determine the \"\"maximum size\"\" a bank should have? Should it be based on assets? Systemic importance (i.e. interconnectedness with other banks)? How do you enforce it? Banks will find ways to offload assets, etc. into special purpose corporations to get around the laws somehow. How do you compensate for the fact that size does help financial efficiency in some ways? Imposing higher capital requirements is the next solution. But that too is not so easy to implement with full success in practice. What should be classified as a low-risk asset? How much capital do you require against a CDO vs a Mexican government bond? How often do you need to revise these standards? At what point does the cost of higher capital requirements start to strangle lending and financial flows? The weaker maneuvers are things like constant government-imposed stress tests, orderly resolution mechanisms, higher standards for internal risk management practices, etc. but those may not be adequate and also have their implementation problems.\""
},
{
"docid": "29891",
"title": "",
"text": "Our compensation is pretty typical for a study like this. And, it's actually frowned upon by the IRB to offer too much, because it runs up against ethical concerns for coercion to participate in studies. Given the population for this study, of course, we also added the raffle for the Oculus Rift, as something that might actually interest people. And, along with the value of supporting research to improve financial decisions, we hope this is sufficient motivation for some people to enroll! (So far, so good!) In my experience, people have all sorts of reasons for participating in research. A lot of people who do our studies tell us that its just kind of fun -- and the small monetary compensation is a nice quantitative indicator of how well they perform. One related topic is Amazon Turk, where people do tasks for incredibly small amounts. Surprisingly, statistics show a very wide distribution of education and income levels for these participants. Honestly, I'm not quite sure why people sign up for that site. People just have all sorts of reasons for doing things. In sum: we're not embarrassed by the size of our compensation! But seriously, we really appreciate the feedback, and I'll definitely be sharing your comments with our lab director for the next time."
},
{
"docid": "403017",
"title": "",
"text": "\"Most financial \"\"advisors\"\" are actually financial-product salesmen. Their job is to sweet-talk you into parting with as much money as possible - either in management fees, or in commissions (kickbacks) on high-fee investment products** (which come from fees charged to you, inside the investment.) This is a scrappy, cutthroat business for the salesmen themselves. Realistically that is how they feed their family, and I empathize, but I can't afford to buy their product. I wish they would sell something else. These people prey on people's financial lack of knowledge. For instance, you put too much importance on \"\"returns\"\". Why? because the salesman told you that's important. It's not. The market goes up and down, that's normal. The question is how much of your investment is being consumed by fees. How do you tell that (and generally if you're invested well)? You compare your money's performance to an index that's relevant to you. You've heard of the S&P 500, that's an index, relevant to US investors. Take 2015. The S&P 500 was $2058.20 on January 2, 2015. It was $2043.94 on December 31, 2015. So it was flat; it dropped 0.7%. If your US investments dropped 0.7%, you broke even. If you made less, that was lost to the expenses within the investment, or the investment performing worse than the S&P 500 index. I lost 0.8% in 2015, the extra 0.1% being expenses of the investment. Try 2013: S&P 500 was $1402.43 on December 28, 2012 and $1841.10 on Dec. 27, 2013. That's 31.2% growth. That's amazing, but it also means 31.2% is holding even with the market. If your salesman proudly announced that you made 18%... problem! All this to say: when you say the investments performed \"\"poorly\"\", don't go by absolute numbers. Find a suitable index and compare to the index. A lot of markets were down in 2015-16, and that is not your investment's fault. You want to know if were down compared to your index. Because that reflects either a lousy funds manager, or high fees. This may leave you wondering \"\"where can I invest that is safe and has sensible fees? I don't know your market, but here we have \"\"discount brokers\"\" which allow self-selection of investments, charge no custodial fees, and simply charge by the trade (commonly $10). Many mutual funds and ETFs are \"\"index funds\"\" with very low annual fees, 0.20% (1 in 500) or even less. How do you pick investments? Look at any of numerous books, starting with John Bogle's classic \"\"Common Sense on Mutual Funds\"\" book which is the seminal work on the value of keeping fees low. If you need the cool, confident professional to hand-hold you through the process, a fee-only advisor is a true financial advisor who actually acts in your best interest. They honestly recommend what's best for you. But beware: many commission-driven salespeople pretend to be fee-only advisors. The good advisor will be happy to advise investment types, and let you pick the brand (Fidelity vs Vanguard) and buy it in your own discount brokerage account with a password you don't share. Frankly, finance is not that hard. But it's made hard by impossibly complex products that don't need to exist, and are designed to confuse people to conceal hidden fees. Avoid those products. You just don't need them. Now, you really need to take a harder look at what this investment is. Like I say, they make these things unnecessarily complex specifically to make them confusing, and I am confused. Although it doesn't seem like much of a question to me. 1.5% a quarter is 6% a year or 60% in 10 years (to ignore compounding). If the market grows 6% a year on average so growth just pays the fees, they will consume 60% of the $220,000, or $132,000. As far as the $60,000, for that kind of money it's definitely worth talking to a good lawyer because it sounds like they misrepresented something to get your friend to sign up in the first place. Put some legal pressure on them, that $60k penalty might get a lot smaller. ** For instance they'll recommend JAMCX, which has a 5.25% buy-in fee (front-end load) and a 1.23% per year fee (expense ratio). Compare to VIMSX with zero load and a 0.20% fee. That front-end load is kicked back to your broker as commission, so he literally can't recommend VIMSX - there's no commission! His company would, and should, fire him for doing so.\""
},
{
"docid": "20504",
"title": "",
"text": "that's just it, though - they are splitting up the 1%! and in most cases, especially vanguard, they are splitting up far less. ETFs don't have 12b-1 fees. explaining why you're experiencing different returns for ETFs will almost certainly involve something other than their expense. again, this is especially true for vanguard. they have the cheapest ETFs around (though i think schwab beats them on a few now). i can only guess at the full compensation structure. betterment likely earns money on cash reserves and securities hypothecation (i guess?). they also charge a small fee from what i understand. finance is very slim these days. i guess i'm wondering what your ultimate question is. if it's the inter corporate compensation structure, above is my best guess. if it's about performance, then we need to compare the ETFs you are looking at. if it's about the fees on funds, i think we covered that! as an advisor, it's my experience that very specific inquiries about fees have a deeper concern. people hear a lot about being overcharged so cost is a very standard place for clients to initially look when trying to compare performance of portfolios or securities."
},
{
"docid": "558836",
"title": "",
"text": "\"Let's imagine an economy where 100% of wealth creation comes from existing financial assets and 0% comes from new wealth creation. That would essentially be a dead economy. I don't think it matters what your philosophy on economics is--that's a bad outcome. If you don't agree with that point we'll stop here. Note, if you don't think it's bad for this to keep going higher, Japan is at about 80% and we know how they're doing. If you agree 100% would be bad then we're 70% of the way there in the US. Trump's tax plan, if enacted, would push us even further. The question we should be asking is what is a reasonable way to encourage NEW wealth creation rather than protect and preserve existing wealth. For starters, it makes little sense to have a preferential tax rate for capital gains/dividends/estates as compared to earned income. Even if you just hate taxes and want them all to be gone I think it's fairly easy to say IF we're going to have taxes they should not favor income/transfer from existing financial assets as compared to earned income. A much more reasonable way to approach this is to say, we have a lot of concentration of financial assets in the top decile of wealth spectrum. Let's just level the tax rate so that income from financial assets is taxes at a similar rate to income from work. That's not even an \"\"eat the rich\"\" proposal, it's just a \"\"eat everyone equally\"\" proposal. All it would do is tax the very substantial gains in stocks at the same rate as the very meagre (median) gains from working. The fact that taxing income from financial assets at the same rate as work is a controversial idea is, to me, emblematic of a government completely captured by wealthy interests.\""
},
{
"docid": "300287",
"title": "",
"text": "\"Exactly what you do with the money depends on various personal choices you'll have to make for yourself. Investing your money in Vanguard index funds such as the ones you mentioned is certainly one smart move. However, I think you're quite right to be suspicious of an advisor with a 1% fee. In many cases, such advisors are not worth their costs. The thing to remember is that, typically with that type of fee structure, you always pay the costs, even if the advisor turns out to be wrong and your money doesn't grow. One thing to check is whether the advisor you mentioned is paid only by the fees he charges (a \"\"fee-only financial planner') , or whether he also makes money via the sales of financial products. Some advisors earn money by selling you financial products (such as mutual funds), which can create a conflict of interest. You can read about fee-only financial advisors and choosing a financial advisor on Investopedia.\""
},
{
"docid": "214798",
"title": "",
"text": "Like @littleadv, I don't consider a mortgage on a primary residence to be a low-risk investment. It is an asset, but one that can be rather illiquid, depending on the nature of the real estate market in your area. There are enough additional costs associated with home-ownership (down-payment, insurance, repairs) relative to more traditional investments to argue against a primary residence being an investment. Your question didn't indicate when and where you bought your home, the type of home (single-family, townhouse, or condo) the nature of your mortgage (fixed-rate or adjustable rate), or your interest rate, but since you're in your mid-20s, I'm guessing you bought after the crash. If that's the case, your odds of making a profit if/when you sell your home are higher than they would be if you bought in the 2006/2007 time-frame. This is no guarantee of course. Given the amount of housing stock still available, housing prices could still fall further. While it is possible to lose money in all sorts of investments, the illiquid nature of real estate makes it a lot more difficult to limit your losses by selling. If preserving principal is your objective, money market funds and treasury inflation protected securities are better choices than your home. The diversification your financial advisor is suggesting is a way to manage risk. Not all investments perform the same way in a given economic climate. When stocks increase in value, bonds tend to decrease (and vice versa). Too much money in a single investment means you could be wiped out in a downturn."
},
{
"docid": "21742",
"title": "",
"text": "Doom and gloom. Everything adjusts. Less tax break here compensated by lower overall tax rates. Actually, Realtors have less concern with this then you would think. Those really concerned are bankers. The financial industry has been messaging Americans for years that mortgage deductions are the best thing in the world. They are just another way to promote bank loans."
},
{
"docid": "345091",
"title": "",
"text": "You should ensure that your broker is a member of the Securities Investor Protection Corporation (SIPC). SIPC protects the cash and securities in your brokerage account much like the Federal Deposit Insurance Corporation (FDIC) protects bank deposits. Securities are protected with a limit of $500,000 USD. Cash is protected with a limit of $250,000 USD. It should be noted that SIPC does not protect investors against loss of value or bad advice. As far as having multiple brokerage accounts for security, I personally don’t think it’s necessary to have multiple accounts for that reason. Depending on account or transaction fees, it might not hurt to have multiple accounts. It can actually be beneficial to have multiple accounts so long as each account serves a purpose in your overall financial plan. For example, I have three brokerage accounts, each of which serves a specific purpose. One provides low cost stock and bond transactions, another provides superior market data, and the third provides low cost mutual fund transactions. If you’re worried about asset security, there are a few things you can do to protect yourself. I would recommend you begin by consulting a qualified financial advisor about your risk profile. You stated that a considerable portion of your total assets are in securities. Depending on your risk profile and the amount of your net worth held in securities, you might be better served by moving your money into lower risk asset classes. I’m not an attorney or a financial advisor. This is not legal advice or financial advice. You can and should consult your own attorney and financial advisor."
},
{
"docid": "166826",
"title": "",
"text": "\"It's never too early to start estate planning, and if you already have a family, getting your personal affairs in order is a must. The sooner you start planning, the more prepared you will be for life's unexpected twists and turns. The following tips, aimed at those under 40, can help you approach and simplify the estate planning process: Start now, regardless of net worth. [Estate planning](http://money.usnews.com/money/personal-finance/articles/2013/09/19/estate-planning-tips-for-people-under-40) is a crucial process for everyone, regardless of wealth level, says Marc Henn, a certified financial planner and president of Harvest Financial Advisors. \"\"Many people will say, 'Well, I don't have a lot of assets, therefore I don't need an estate plan,'\"\" he says. \"\"Maybe you only have debt, but it still applies. If you want the people around you to appropriately deal with your finances, a plan is still just as important.\"\" This is especially true if you are responsible for financially dependent individuals, such as young children. \"\"The less you have, the more important every bit you've got is to you and the people you care about,\"\" says Lawrence Lehmann, a partner at Lehmann, Norman and Marcus L.C. in New Orleans. \"\"If you don't have much money, you really can't afford to make a mistake.\"\" Have the \"\"what if?\"\" conversation with friends and family. Before jumping into the estate planning process, it's important to establish exactly what you want, and need, to happen after you die and relay those wishes to those around you. \"\"We find that the best transitions and financial transfers happen when all family members are involved in the [decision making](http://corlisslawgroup.com),\"\" says John Sweeney, executive vice president of retirement and investing strategies at Fidelity Investments. \"\"This way, after a loved one is gone, no one is squabbling over a couch or going, 'Why did person A get more than person B?' If wishes are laid out clearly while the individual is living, they can share the rationale behind the decisions.\"\" Focus on the basic estate plan components. Experts say life insurance, a will, a living will and a durable power of attorney are all important aspects of an estate plan that should be established at the start of the planning process. In the event of an untimely death, life insurance can replace lost earnings, which can be especially beneficial for younger individuals, says Bill Kirchick, a partner with Bingham McCutchen law firm in Boston. \"\"Young people can't afford to die,\"\" he says. \"\"They are going to lose a source of income if something happens to a young couple and they haven't had enough time to accumulate wealth from earnings to put aside in savings or a retirement plan.\"\" Also, the earlier you take out a life insurance policy, the more likely you are to be approved for reduced rates compared to older individuals. Utilize estate planning professionals. To draft these basic estate plans, experts recommend carefully selecting a team of professionals who will educate you and draft what you need based on your individual situation. \"\"Don't feel like you have to jump at the first person whose name is given to you,\"\" Kirchick says. \"\"I think that people should interview two or more attorneys, accountants, trust officers, financial advisors and so on.\"\" According to financial planning experts, the average initial cost for the legal drafting of a will, living will and durable power of attorney documentation is between $500 and $1,200, depending on the family size and location. Continue to review your plan over time. Finally, your estate plan should never be a \"\"one and done thing,\"\" according to Henn. \"\"Every five to seven years, the documents should be readdressed to adapt to significant life events, tax law changes or even the addition of more children,\"\" he says. It is also important to keep tabs on your insurance policies and investments, as they all tie into the estate plan and can fluctuate based on the economic environment. If you have to make revisions, Henn says it will cost as much as it did to create the documents in the first place.\""
},
{
"docid": "320073",
"title": "",
"text": "Fisher Capital Management: Leading 10 Monetary Suggestions Posted on 17/10/2011 by fcminvestment Even though resolutions boost financial condition a great idea to accomplish in any period for year is for numerous persons discover this less difficult from the starting of the New Year. Irrespective of any time one start, the fundamentals stay identical. Fisher Capital Management shares recommendations in order to be in advance monetarily. 1. Be Compensated How Much you are worth and Save Some Part of It This appears easy; however countless individuals have difficulty having this specific initial fundamental principle. Be positive and understand exactly what your task is worth within the industry, through executing the assessment of your expertise, productiveness, career responsibilities, involvement to the firm, and the current fee, equally within and beyond the organization, regarding what you perform. Becoming under compensated actually a thousand bucks a year may possess a substantial collective result more than the actual process of one’s employment existence. Irrespective of the amount or perhaps how small you are compensated, you will in no way obtain be advance in case one devote far more compared to a person gain. Frequently it is less difficult to invest much less compared to this will be to make much more, and the small efforts within the amount of places may outcome in large savings. This will not usually have that which includes producing large sacrifices. 2. Adhere to the Price Range How many people understand when the funds will be heading when one never budget? How does a person can easily established investing and saving targets when one never understands in which the cash is actually heading? People require the budget whether or not a person creates thousands or perhaps hundreds of thousands of bucks a year. 3. Settle Credit Card Accounts Credit card financial obligation is actually the number one hindrance to becoming ahead monetarily. These small items of plastic tend to be so convenient to utilize, it is therefore very easy to overlook that it is actual cash we are coping with whenever you whip these away to pay out for any transaction, big or even little. In spite of the great resolves in order to shell out balance away swiftly, the truth is that it usually will not, and wind up having to pay much more regarding issues compared to make paid off when you made use of money. 4. Chip in towards the Pension Program When the company has a 401(k) plan and a person do not contribute to this, you are running away through one of the finest discounts right there. Request the boss if they have the 401(k) plan (or even comparable program), and sign up right now. In the event that you happen to be contributing, attempt to increase the contribution. In case the company will not provide the pension program, think about the Individual retirement account. 5. Make Financial Savings Program You might have discovered this before: Pay for yourself first! If perhaps a person delay till you have satisfied most ones monetary commitments prior to finding what is remaining around for saving, probabilities tend to be you will in no way possess a wholesome financial savings accounts or perhaps opportunities. Deal with it in order to fix apart the minimal for 5% to 10% of the income to get savings prior to shelling out the expenses. More desirable however, get cash instantly taken off through the income and deposit straight into a distinct account. 6. Make Investments! Should you are contributing the pension program and the savings account as well as one may also handle to set a number of funds in to some other ventures, all the far better. 7. Improve Ones Career Rewards Work benefits such as the 401(k) program, flexible expenditure consideration, healthcare as well as dental care coverage, and so on. are usually valued at huge money. Try to make certain you will be making the most of your own and also getting benefit of these kinds which can easily help save cash through lowering taxation or perhaps out-of-pocket expenditures. 8. Evaluate Ones Coverage Protections Overly numerous individuals tend to be though in to spending a lot regarding life and impairment coverage, no matter if it is through incorporating all these protections to automobile mortgages, purchasing whole-life insurance if term-life creates a lot more feeling, or perhaps purchasing life insurance any time one possess absolutely no dependents. In the different side, it really is essential to an individual get sufficient insurance coverage to be able to safeguard the loved ones and also the earnings in the event of fatality or possibly impairment. 9. Revise Your Current Will 70% of American citizens do not possess a will. In case a person have dependents, irrespective of just how small or what amount a person own, an individual need a will. When the predicament is not very difficult a person may actually carry out the personal plan just like WillMaker through Nolo Press. Safeguard your own cherished family members. Create your will. 10. Maintain Suitable Data When a person do not maintain useful data, you are most likely in no way proclaiming all the allowable revenue taxes deductions as well as credits. Established a method today and utilize this each of the year. It is a lot simpler compared to rushing in order to discover all the things from taxes period, just to skip things which may have rescued a person capital."
}
] |
4837 | When applying for a mortgage, can it also cover outstanding debts? | [
{
"docid": "531841",
"title": "",
"text": "That really depends on the lender, and in the current climate this is extremely unlikely. In the past it was possible to get a loan which is higher than the value of the house (deposit considered), usually on the basis that the buyer is going to improve the property (extend, renovate, etc.) and this increase the value of the property. Responsible lenders required some evidence of the plans to do this, but less responsible ones simply seem to have given the money. Here in the UK this was often based on the assumption that property value tends to rise relatively quickly anyway so a seemingly-reasonable addition to the loan on top of the current value of the property will quickly be covered. That meant that indeed some people have been able to get a loan which is higher than the cost of the purchase, even without concrete plans to actively increase the value of the property. Today the situation is quite different, lenders are a lot more careful and I can't see this happening. All that aside - had it been possible, is it a good idea? I find it difficult to come up with a blanket rule, it really depends on many factors - On the one hand mortgage interest rates tend to be significantly lower than shorter term interest rates and from that point of view, it makes sense, right?! However - they are usually very long term, often with limited ability to overpay, which means the interest will be paid over a longer period of time."
}
] | [
{
"docid": "133194",
"title": "",
"text": "This might vary from other answers but I generally prefer to use debt before touching an emergency fund. But one of the reasons I have an emergency fund is to that I can make sure I can cover any debt payments. Essentially, this give you leverage. You might start off with a small emergency such as needing a new refrigerator. If you pull the cash out of the fund to pay this off immediately, you've depleted your account and if something major comes along, you might be short. By using debt, you can often cover the costs with cash-flow and leave your risk buffer in place. Often, retailers will offer really sweet financing deals. 0% for 12 months or whatever. Often, though, if you don't pay it off in time, they can be costly. I'm not sure if this is legal (in the US) anymore but if it wasn't fully paid off in time, you'd be retroactively charged interest on the whole amount. But if you have an emergency fund, you pretty much guarantee that won't happen. The only time it will is if something else happens that requires the emergency fund to be cashed in. But if things are that dire, the debt is unsecured. You're credit may suffer but they can't come after your assets. It's not an either-or situation. You give yourself options by having the cash available. It allows you to take advantage of opportunities that might be too risky otherwise. Ultimately what you want to be able to weather the storm in a situation where you have, say, a mortgage on a house that is underwater, the stock market is down, and you have no income. In that situation, you don't want to liquidate your stock when it's down and you (probably) don't want to lose your home equity in a foreclosure."
},
{
"docid": "77153",
"title": "",
"text": "Common investment advice recommends paying off all debt before you invest. This is certainly not debated when the debt is credit card debt or other high interest debt. Some would argue this doesn't necessarily apply to school debt or mortgage debt, however its not clear what to suggest. Since any investment you make is unknown whether you will win or lose money, and every debt you have is guaranteed to be a loss via interest, its almost always a good idea to pay off all of your debt first."
},
{
"docid": "11791",
"title": "",
"text": "I would apply extra cash left over at the end of the month as follows, in order of priority: Realize, though, that this is my take on priority. My experience has been that a liquidity crisis is much more stressful than having a mortgage or other debt -- illiquid wealth is almost useless when you need cash. So if you still have strong feelings about retiring that debt after considering the liquidity issue, go ahead and swap #3 and #4 above. Make plans to pay off the mortgage over the next 10 years. Find a mortgage payoff calculator and make extra monthly payments that keep you on a 10 year schedule. I'd strongly suggest making sure your retirement savings are on track, though. Time is on your side here, and your required monthly contribution will be low now while you're still in your 20s."
},
{
"docid": "342210",
"title": "",
"text": "Do you have any other debt besides your mortgage such as credit card debt, student loans, or a car payment? Unless those are lower interest than your mortgage, pay them off first. There are a lot of other considerations besides just mortgage and emergency fund. Do you have some money for the things in life that happen - car repairs, unexpected medical bills, your next vehicle purchase, and the eventual replacing of those big ticket items in your home that will break eventually? A bit of savings towards each of those each month is not a bad idea. Then there is your retirement. Are you on track to make enough to support yourself in retirement plus pay for the cost of health care as it applies in your country (more in some countries, less in others)? There is also the cost of higher education for your children if you have any or are planning on having any. If so, were you planning on contributing to their higher eduction? Do you have a savings plan in place for that? Paying off the house is a great thing to do - in my mind it's great even if it reduces your mortgage deduction, although others disagree. It's just not the number one financial priority anyone should have."
},
{
"docid": "122807",
"title": "",
"text": "\"I actually had a similar situation when I tried to buy my house. I paid off all my loans and was proud of my \"\"debt free\"\" status. I had no car note, no student loans... absolutely no debt, but I did have a bank-issued credit card. (USAA, not Chase, but I assume the same may apply). When I tried to get a home loan they told me I had \"\"absolutely no information on my credit report.\"\" AKA I had no credit. The mortgage lender had no idea what was going on, nor did I or anybody else. It took a lot of research before I realized that the credit bureaus use a formula for the credit rating that involves a lot of things, but if you haven't had a current line of credit reported to the agency in over a year (maybe it was longer, I didn't have anything for 3 years) you aren't going to have a credit score. Because I was \"\"debt free\"\" I was also credit report free and eventually the credit bureaus had nothing to go on, and my score disappeared. The bank-issued credit card was on my credit report, but they didn't report monthly balances so the bureaus couldn't use it to determine if I was paying off the card or if I even had a balance on it. It was essentially not doing my credit any favors, despite what I had thought. In short, based on the fact that you have no debt in her name, and you have taken on all debt in your own name, its very plausible that she has no credit rating anymore. It won't take long to get it back. Once you have ANYTHING on your credit that's actually reported the formula can kick back in and look at credit history as well as current credit and she'll be fine.\""
},
{
"docid": "74709",
"title": "",
"text": "\"The decision as to what counts as income is up to the bank. You'll need to ask them whether or not rental income can be included in the total. I can offer some anecdotal evidence: when I applied for a mortgage to buy my home, I already had a rental property with a buy-to-let mortgage on it. Initially the bank regarded that property as a liability, not an asset, because it was mortgaged! However, once I was able to show that there was a good history of receiving enough rent, they chose to ignore the property altogether -- i.e. it wasn't regarded as a liability, but it wasn't regarded as a source of income either. More generally, as AakashM says, residential mortgages are computed based on affordability, which is more than just a multiple of your salary. To answer your specific questions: Covered above; it's up to the bank. If you're married, and you don't have a written tenancy agreement, and you're not declaring the \"\"rent\"\" on your tax return, then it seems unlikely that this would be regarded as income at all. Conversely, if your partner is earning, why not put their name on the mortgage application too? Buy-to-let mortgages are treated differently. While it used to be the case that they were assessed on rental income only, nowadays lenders may ask for proof of the landlord's income from other sources. Note that a BTL cannot be used for a property you intend to live in, and a residential mortgage cannot be used for a property you intend to let to tenants -- at least, not without the bank's permission.\""
},
{
"docid": "275410",
"title": "",
"text": "\"TARP was ~$475 billion of loans to institutions. Loans that are to be paid back, with interest (albeit very low interest). A significant percentage of the TARP loans have been (or will be) paid back. So, the final price tag of the TARP was only a few $billion (pretty low considering the scale of the program). There is ~$10 trillion in mortgage debt outstanding. That's a much higher price tag than TARP. Secondly, paying off the mortgages = no repayment to the government as there was with TARP. The initial price tag of your plan would be ~$10 trillion, instead of a few $billion. Furthermore how does a government with >$15 trillion in debt already come up with an extra ~$10 trillion to pay off people's mortgages? Should the government go deeper into debt? Print more money and trigger inflation? (Note: Some people like to talk about a \"\"secret bailout\"\" by the Fed, implying that the true cost of TARP was much higher than claimed by the government. The \"\"secret bailout\"\" was a series of short-term low/no interest loans to banks. Because they were loans, which were paid back, my point still stands.) Some other issues to consider: Remember that the principal balance of your mortgage is only a small portion of your payments to the bank. Over 30 years, you pay a lot of $$$ in interest to the bank (that's how banks make a profit). Banks are expecting that revenue, and it is factored into their financial projections. If those revenue streams suddenly disappeared, I expect it would majorly screw the up the financial industry. Many people bought houses during the real estate boom, when housing prices were inflated far beyond the \"\"real\"\" value of the house. Is it right to overpay for these houses? This rewards the banks for accepting the inflated value during the appraisal process. (Loan modification forces banks to accept the \"\"real\"\" value of the house.) The financial crisis was triggered by people buying houses they could not afford. Should they be rewarded with a free house for making poor financial decisions?\""
},
{
"docid": "503100",
"title": "",
"text": "Due to the fact that months have gone by since the item was shipped to you it will be hard to resolve by sending it back. The collection agency is now only interested in getting as much of the money as they can from you. They may have sent a percentage of the debt to the original company when they bought the debt. They may also be working on a commission. Therefore they are not interested in having everybody happy with the result. They need to follow the law, but they don't care if you are a happy customer. The longer you wait to resolve it, the longer it will remain on the credit report. The fact that it went to collections has already hurt your score. Yes, make sure that they update your credit file to reflect that you have paid the debt. Get it in writing. Also check with your health insurance company to see if this is at least partially covered by insurance. They generally won't cover the $12 in fees from the collections company, but they might cover part of the original bill. Depending on the item, it might also be an allowable expense for your FSA (Flexible spending account) or your HSA (Health Spending account)."
},
{
"docid": "257644",
"title": "",
"text": "I notice that a lot happened four months ago. You were denied credit twice. Your income went up from $20k to $60k. I'm wondering if you were denied credit based on your $20k income. Since you couldn't provide proof of your income I wonder if they used $0 for your income. Debt to income ratio is one significant factor included in the credit score calculation. You may not have a lot of debt, but if you don't have any income even a few hundred dollars on a credit card would throw your debt to income ratio into a panic. I'm assuming that your change from $20k to $60k income involved a change of jobs. Perhaps now you can provide proof of income. You would certainly need to do that before being approved for a mortgage. Well that's my two cents about what may (or may not) have gone wrong last time. As for what to do next I would agree that the most helpful thing you could do is check your credit score and fix any errors that might negatively impact your credit score. (There might also be non-errors that need addressed such as open credit accounts that you thought you had closed.) When building credit history, time is on your side. If you just go on living your life and paying your bills promptly, your credit will slowly climb to an acceptable level. Unfortunately in the time frame you mentioned (~1 year) there isn't really enough time to build it significantly. You bring up a valid point about credit applications reducing your credit score. Of course, that effect is somewhat minimal and temporary (2 yrs according to the thread linked to above). But again 1 year is not enough to recover. If you're considering applying for additional credit as a means to improve your credit score it may be too late to reap the benefits before your mortgage application. Of course if you could pay off any debts, that would help your debt to income ratio. But it would also reduce any house down payment you could save up and thereby increase the amount of your mortgage. Better just save those pennies (or preferably Washingtons and Benjamins) to put toward a down payment."
},
{
"docid": "77570",
"title": "",
"text": "First of all, a person that relies on their ability to tap a line of credit to cover an emergency isn't generally the kind of person that has investments they can cash out to cover the debt. That being said, my personal reasons for having a liquid emergency fund revolve around bank errors and identify theft. I used to work for a company that made bank software. Errors are a common occurrence. You'd be surprised how many transactions are still input by human hands despite our computerized world. All it takes is one typo to wipe out your ability to swipe plastic for a few days. This has actually happened to me. My utility company sent me a bill for $240 and wound up taking $2400 by accident, overdrawing my account and sending me into a fee spiral. They fixed their mistake... several days later. The snowball of fees from other transactions that bounced took another two months to correct. In the meantime, I also had my mortgage payment due. In the US, you can't pay your mortgage with credit, and for those who rent, many landlords won't let you pay with credit either. I have also seen this scenario play out twice with other people I've known who've had their ID stolen. Yes, the bank will cover the fraud after a lengthy process. But the disruption causes fees and overdrafts to quickly snowball out of control. I have a separate savings account at a different bank for this kind of thing, and I have a few hundred dollars cash in my house at all times. Having a liquid emergency fund allows you to quickly stabilize the situation and gives you walking around money for those times where the banking system becomes your enemy for a time."
},
{
"docid": "33006",
"title": "",
"text": "Think carefully about the added expenses. It may still make sense, but it probably won't be as cheap as you are thinking. In addition to the mortgage and property taxes, there is also insurance and building maintenance and repairs. Appliances, carpets, and roofs need to be replaced periodically. Depending on the area of the country there is lawn maintenance and now removal. You need to make sure you can cover the expenses if you are without a tenant for 6 months or longer. When tenants change, there is usually some cleaning and painting that needs to be done. You can deduct the mortgage interest and property taxes on your part of the building. You need to claim any rent as income, but can deduct the other part of the mortgage interest and taxes as an expense. You can also deduct building maintenance and repairs on the rental portion of the building. Some improvements need to be depreciated over time (5-27 years). You also need to depreciate the cost of the rental portion of the building. This basically means that you get a deduction each year, but lower the cost basis of the building so you owe more capital gains taxes when you sell. If you do this, I would get a professional to do your taxes at least the first year. Its not hard once you see it done, but there are a lot of details and complications that you want to get right."
},
{
"docid": "85003",
"title": "",
"text": "\"I'd lean toward using the $3,000 from the emergency fund although depending on your monthly bills, a $2,000 emergency fund (or even a $5,000 one) may be a bit small. But here are a couple of other options for you: Zero-interest balance transfers: If you have cards and have a zero balance on them, your credit card companies are keen to see you put a balance on them. Find out if they're offering any \"\"12 months no interest on balance transfers\"\" offers (or if any of their rivals is), since of course the car loan is an outstanding balance you can transfer (you're not asking them for cash). Put the $3,000 on that zero-balance transfer option, get rid of the car, and pay the $300/mo to pay down the balance on the card. 10 months later, two months before the end of the free period, you're at zero again — without dipping into your emergency fund. You'll also now have a history with that card company of paying back, which may lead them to attempt to entice you to go into more debt (which you'll resist, of course) by increasing the limit. (If you don't want a higher limit, just tell them to reduce it again.) A $3,000 unsecured loan with no pre-payment penalty provided the math works out. The interest may be expensive (unless you find something with a teaser rate for the first X months), but if you find an option, do the math on it to see if it's actually more expensive than carrying the car payments, insurance, etc. on a depreciating asset. It may not be as expensive as the 20% rate or whatever makes it sound (but again, do the math), and if you apply your $300/mo to it, within (say) 11 months you're clear again — with a nice little paid-back loan on your credit report. Both of these ensure that you still have your emergency fund at your disposal, and both capitalize on the fact that right now, you're probably a good credit risk. If you dip into your emergency fund, and an emergency happens (like loss of a job) and you find yourself short of funds, you may have trouble securing further credit at that point to cover the gap in your emergency fund.\""
},
{
"docid": "591714",
"title": "",
"text": "The two factors that will hurt you the most is the age of the credit account, and your available credit to debt ratio. Removing an older account takes that account out of the equation of calculating your overall credit score, which can hurt significantly, especially if that is the only, or one of just a couple, of open credit lines you have available. Reducing your available credit will make your current debt look bigger than what it was before you closed your account. Going over a certain percentage for your debt to available credit can make you look less favorable to lenders. [As stated above, closing a credit card does remove it from the credit utilization calculation which can raise your debt/credit ratio. It does not, however; affect the average age of credit cards. Even closed accounts stay on your credit report for ten years and are credited toward average age of cards. When the closed credit card falls off your report, only then, will the average age of credit cards be recalculated.] And may I suggest getting your free credit report from https://www.annualcreditreport.com . It's the only place considered 'official' to receive your free annual credit report as told by the FTC. Going to other 3rd party sites to pull your credit report can risk your information being traded or sold. EDIT: To answer your second point, there are numerous factors that banks and creditors will consider depending on the type of card you're applying for. The heavier the personal rewards (cash back, flyer miles, discounts, etc.) the bigger the stipulation. Some factors to consider are your income to debt ratio, income to available credit ratio, number of revolving lines of credit, debt to available credit ratio, available credit to debt ratio, and whether or not you have sufficient equity and/or assets to cover both your debt and available credit. They want to make sure that if you go crazy and max out all of your lines of credit, that you are capable of paying it all back in a sufficient amount of time. In other words, your volatility as a debt-consumer."
},
{
"docid": "95778",
"title": "",
"text": "\"The expression \"\"in debt\"\" when talking about a person's financial affairs means that the sum of debit balances on all accounts exceeds the sum of credit balances on all accounts. A mortgage account is not excluded from that. This definition also does not consider whether any of the debt is secured, or ownership of assets (shares, property, chattels, etc). So, someone with a mortgage of one million dollars for a home that is worth two million is in debt by one million dollars, until they they sell the home (for that amount) and pay down the mortgage. That means \"\"in debt\"\" is not necessarily a statement about net worth.\""
},
{
"docid": "340484",
"title": "",
"text": "\"Allen, welcome to Money.SE. You've stumbled into the issue of Debt Snowball, which is the \"\"low balance\"\" method of paying off debt. The other being \"\"high interest.\"\" I absolutely agree that when one has a pile of cards, say a dozen, there is a psychological benefit to paying off the low balances and knocking off card after card. I am not dismissive of that motivation. Personal Finance has that first word, personal, and one size rarely fits all. For those who are numbers-oriented, it's worth doing the math, a simple spreadsheet showing the cost of the DS vs paying by rate. If that cost is even a couple hundred dollars, I'll still concede that one less payment, envelope, stamp, etc, favors the DS method. On the other hand, there's the debt so large that the best payoff is 2 or 3 years away. During that time, $10000 paid toward the 24% card is saving you $2400/yr vs the $500 if paid toward 5% debt. Hard core DSers don't even want to discuss the numbers, strangely enough. In your case, you don't have a pile of anything. The mortgage isn't even up for discussion. You have just 2 car loans. Send the $11,000 to the $19K loan carrying the 2.5%. This will save you $500 over the next 2 years vs paying the zero loan down. Once you've done that, the remaining $8000 will become your lowest balance, and you should flip to the Debt Snowball method, which will keep you paying that debt off. DS is a tool that should be pulled out for the masses, the radio audience that The David (Dave Ramsey, radio show host) appeals to. They may comprise the majority of those with high credit card debt, and have greatest success using this method. But, you exhibit none of their symptoms, and are best served by the math. By bringing up the topic here, you've found yourself in the same situation as the guy who happens to order a white wine at a wedding, and finds his Mormon cousin offering to take him to an AA meeting the next day. In past articles on this decision, I've referenced a spreadsheet one can download. It offers an easy way to see your choice without writing your own excel doc. For the situation described here, the low balance total interest is $546 vs $192 for the higher interest. Not quite the $500 difference I estimated. The $350 difference is low due to the small rate difference and relatively short payoffs. In my opinion, knowledge is power, and you can decide either way. What's important is that if you pay off the zero interest first, you can say \"\"I knew it was a $350 difference, but I'd rather have just one outstanding loan for the remain time.\"\" My issue with DS is when it's preached like a religion, and followers are told to not even run the numbers. I wrote an article, Thinking about Dave Ramsey a number of years back, but the topic never gets old.\""
},
{
"docid": "37636",
"title": "",
"text": "Rich people use debt for various reasons. The question should not assume that billionaires don't use debt. They also pay lower interest rates on that debt because they have enough collateral that their debt is safer than a typical mortgage. Many rich people will use interest only mortgages on their primary residences so that they can keep their stock earning at higher growth rates than the mortgage interest that they are paying all while writing off a portion of that mortgage interest on their taxes. Taking an artificially low salary and receiving equity for the larger portion of compensation is also a tax strategy to limit the amount of taxes owed on that income. If paid directly in stock grants, that will count as income, but if paid in options, then the purchased stock will only be taxed at the lower capital gains rates if the stock is held for a year after the options are exercised. Every billionaire will have complicated tax avoidance strategies that will require multi-year planning for the best long-term minimization of taxes. Debt is a strategic part of that planning. Also consider that a major part of that upscale lifestyle (corporate jets, fancy meals, etc.) is on the company dime because the CEO is always on the clock. As long as he is meeting with business prospects or doing other company business, those expenses will be justified for the corporation and not attributed as income."
},
{
"docid": "333605",
"title": "",
"text": "\"After the initial public offering, the company can raise money by selling more stock (equity financing) or selling debt (e.g. borrowing money). If a company's stock price is high, they can raise money with equity financing on more favorable terms. When companies raise money with equity financing, they create new shares and dilute the existing shareholders, so the number of shares outstanding is not fixed. Companies can also return money to shareholders by buying their own equity, and this is called a share repurchase. It's best for companies to repurchase their shared when their stock price is low, but \"\"American companies have a terrible track record of buying their own shares high and selling them low.\"\" The management of a company typically likes a rising stock price, so their stock options are more valuable and they can justify bigger pay packages.\""
},
{
"docid": "450783",
"title": "",
"text": "\"Basically, the money you pay in student loan interest is tax deductible, which means as far as the IRS is concerned, you didn't make that money. However, what that saves you on your taxes is a percentage of a percentage; you save the amount of your current marginal rate on the money you paid as interest. Simple example with made-up numbers: Let's say you had a student loan outstanding, and you were making payments of $150 monthly on it. Total payments to said loan in one tax year would be $1800. Of that amount, let's for the sake of argument say that half, $900, was interest. You get your 1098-E with that number on it, and reduce your taxable income by that amount. You're currently doing well, not outstanding but OK, so you're in the 25% tax bracket that most single middle-classers are in. So, your reduction in taxable income of $900 saves you the 25% that those 900 simoleons would have been taxed at, which is $225. So, all told, this loan is a net drain on your disposable income of $1,575, of which $675 is pure cost of capital; you never received a dollar in disbursements to match this amount you're paying, so it's money lost now in return for previous gains. 10 years later, you pay off the debt. Now that $1800 is yours to keep, and to pay full taxes on. You pay $225 more in taxes (actually, because of amortization, the amount of additional taxes has been steadily increasing as the interest portion of the loan payments has reduced) but have the remaining $1575 in your pocket to do something else. While there is good debt and bad debt, debt is debt; whether deductible or not, the IRS will never credit your tax bill in the amount of interest owed (AFAIK; if someone knows of a loan whose interest is a credit instead of a deduction I'm all ears). So, the deduction on this loan reduces your cost of capital to an effective APR of 4.5%, and because it's a student loan and not a mortgage, you don't have to itemize so this is in effect a \"\"free\"\" deduction (even with an FHA mortgage allowing me to deduct interest, property taxes and PMI, and the residual medical costs after insurance of having our new baby, the $11,900 standard deduction for my wife and I was still the better deal this year). But, you're still losing 4.5% per year to interest. That's your break-even; if the money you could use to pay your debt could earn a better return than 4.5%, then invest it, but if not, pay off the loan. Right now, investments that could make you 4.5% are at the bottom edge of a steep increase in risk and variance, so if your expected ROI is close, I'd lean toward paying off the debt.\""
},
{
"docid": "249320",
"title": "",
"text": "While there are many very good and detailed answers to this question, there is one key term from finance that none of them used and that is Net Present Value. While this is a term generally associate with debt and assets, it also can be applied to the valuation models of a company's share price. The price of the share of a stock in a company represents the Net Present Value of all future cash flows of that company divided by the total number of shares outstanding. This is also the reason behind why the payment of dividends will cause the share price valuation to be less than its valuation if the company did not pay a dividend. That/those future outflows are factored into the NPV calculation, actually performed or implied, and results in a current valuation that is less than it would have been had that capital been retained. Unlike with a fixed income security, or even a variable rate debenture, it is difficult to predict what the future cashflows of a company will be, and how investors chose to value things as intangible as brand recognition, market penetration, and executive competence are often far more subjective that using 10 year libor rates to plug into a present value calculation for a floating rate bond of similar tenor. Opinion enters into the calculus and this is why you end up having a greater degree of price variance than you see in the fixed income markets. You have had situations where companies such as Amazon.com, Google, and Facebook had highly valued shares before they they ever posted a profit. That is because the analysis of the value of their intellectual properties or business models would, overtime provide a future value that was equivalent to their stock price at that time."
}
] |
4837 | When applying for a mortgage, can it also cover outstanding debts? | [
{
"docid": "20958",
"title": "",
"text": "Yes, but should you be even trying to get a mortgage if you can't aford at least a 5% deposit? Prove you do want the house by doing without a new car for a few years..."
}
] | [
{
"docid": "71082",
"title": "",
"text": "A point that hasn't been mentioned is whether paying down the mortgage sooner will get you out of unnecessary additional costs, such as PMI or a lender's requirement that you carry flood insurance on the outstanding mortgage balance, rather than the actual value/replacement cost of the structures. (My personal bugbear: house worth about $100K, while the bare land could be sold for about twice that, so I'm paying about 50% extra for flood insurance.) May not apply to your loan-from-parents situation, but in the general case it should be considered. FWIW, in your situation I'd probably invest the money."
},
{
"docid": "570071",
"title": "",
"text": "\"As advised you need to budget, but there are a few simple things you can do to make it easier. Work out how much your fixed bills are every month, for example, council tax, gas and electric, mortgage and rent etc. On pay-day, move an amount of cash equal to this into another bank account when you get paid. It's easier if this other account, let's call it a bills account, can pay the bills automatically via direct debits, you can then forget about it. Now your budget should tell you how much you spend on things that are more variable, food, fuel, travel etc. Again on pay-day, move an amount of cash aside to cover this (plus a small buffer amount) into another account. Whatever is now left in your main account is yours to spend or save as you see fit. You just need to make sure you are sticking to your budget and it's as easy as that. If you cannot pay direct debits from the other accounts you just need to move the money over to cover them when they need paying. Most banks will let you set up extra accounts so you can mvoe the money easily using internet banking or by a monthly standing order. If they won't let you have several \"\"current\"\" accounts you can use savings accounts but will need to manually move the money around as the bills are due. If you get all your direct debits to debit on pay-day, that makes it even easier. If you are struggling for money then prioritise paying off debt first and prioritise the debt with the highest interest rate.\""
},
{
"docid": "27987",
"title": "",
"text": "Foreclosure is at a high level the bank declaring that the debtor cannot pay their promissory note (their debt). This is shortly followed by default, which is the removal of debtors rights to the property. After the debtor has defaulted, he either chooses to voluntarily remove himself and his belongings from the property, or is forcibly evicted. In the US eviction is carried out by local law enforcement, such as the sheriff's office. The bank is now the sole owner of the property, and proceeds to sell it, in an attempt to recoup their investment. If the bank cannot recoup their investment by selling the house, the rest may be converted to unsecured debt against the debtor. If the bank chooses to forgive the remaining debt, the debtor may have a tax liability for cancellation of debt. Also the debtor may also be liable for any appreciation the house did before it was sold, but this likely to be nontaxable if the house in question is the debtor's primary residence. They also send the credit bureaus the notice of foreclosure, which is how your credit score is hurt. Private Mortgage Insurance or Lenders Mortgage Insurance will pay the lender some amount back to cover their losses. See Also:"
},
{
"docid": "249320",
"title": "",
"text": "While there are many very good and detailed answers to this question, there is one key term from finance that none of them used and that is Net Present Value. While this is a term generally associate with debt and assets, it also can be applied to the valuation models of a company's share price. The price of the share of a stock in a company represents the Net Present Value of all future cash flows of that company divided by the total number of shares outstanding. This is also the reason behind why the payment of dividends will cause the share price valuation to be less than its valuation if the company did not pay a dividend. That/those future outflows are factored into the NPV calculation, actually performed or implied, and results in a current valuation that is less than it would have been had that capital been retained. Unlike with a fixed income security, or even a variable rate debenture, it is difficult to predict what the future cashflows of a company will be, and how investors chose to value things as intangible as brand recognition, market penetration, and executive competence are often far more subjective that using 10 year libor rates to plug into a present value calculation for a floating rate bond of similar tenor. Opinion enters into the calculus and this is why you end up having a greater degree of price variance than you see in the fixed income markets. You have had situations where companies such as Amazon.com, Google, and Facebook had highly valued shares before they they ever posted a profit. That is because the analysis of the value of their intellectual properties or business models would, overtime provide a future value that was equivalent to their stock price at that time."
},
{
"docid": "465801",
"title": "",
"text": "I concur with pretty much what everyone else said. Let me break it down in a concrete plan of action. First, though, note that at least the minimum payments for the credit cards needs to be on this list of fixed expenses. Also, you have $868 remaining in a normal month -- food could be $500 or more easily for a family, so find out how much! Adding in just those 2 things, and you're already at your max. And there are other expenses in life. Ok, cutting from the top: DirectTv -- gone. Pure luxury, and between netflix, hulu and your internet connection (hook your computer to the tv), there's no need for it. $80 savings. Cell phones -- you're already moving in the right direction, but not far enough. In a financial crunch why does your stay-at-home wife have a cell? Especially when she could just as easily use Google Voice for free? Both plans gone, replaced by one of the prepaids @$45. $105 savings, total $186 savings. 529 plans -- Of course you want to save for your kids college, but it doesn't help them for you to drown financially. Gone until your credit card debit is too. $50 savings, $236 total. Ok, we're already up to $236/month in savings just cutting items you don't need. That probably gets you back into the black, but why stop there? Trimming expenses Electric -- ok, I know it's summer, but can you cut this back? Is the thermostat set as high as you can comfortably bear? Are you diligent in turning of lights, especially incandescent? Do you turn off your computer when you're not using it? See if you can get the Electric down by 10%. That's $20/month savings. Doesn't seem like much, but it adds up. Gas -- same with gas. Do you have gas hot water? If so, cut shower length. Saves on water too. Food -- this one you didn't list. But as I said, you could be spending $500 or $600 a month easily for a family. Do you guys plan meals, and thus plan shopping trips? If not, do it. You'll be surprised how much you can save. Either way, 10% reduction should be doable. That's $50/month. If you don't plan now, 20% is within reach -- that's $100/month. Ok, that may have added as much as $130 or so. If so, you're now up to $366/month savings. That's like a 15% raise. Simply cutting, however, is only half the plan. You want to improve your situation, so you can get the Directtv back (assuming you'll even want it at that point), and the wife's cell phone, for starters. To do that, you've got to nail down that debt. I figure you've got minimum $567.23/month in debt payments. That's not including your mortgage, and including an assumed $80/month minimum credit card payments. You pay over 21% of your take-home to short term and consumer debt! Yea, that's why you're hurting. Here's what you do In both cases, apply the extra payments entirely to one balance at a time. Pick either the smallest balance (psychologically best because you quickly see a loan & it's payment dissappear), or the highest interest (mathematically the best). Roll each regular payment that's paid off into the extra debt payments. You didn't list total debt balances, but you did say you had $4000 in credit card debt. Applying an extra $250/month to debt (out of that $366 savings), plus two extra paychecks of $1300 each, is $5600/year paid off. In under a year, you could have those credit cards paid off, and likely that window loan too. Start the 529s again, but keep going paying down the rest. When you have the car paid off, bring back the wife's cell (you and I both know that's going to be #1 on the list :) ), then finish off those student loans. Then bask in the extra $567/month - 21% of your income - you'll have in sweet, sweet green cash!"
},
{
"docid": "157728",
"title": "",
"text": "A common rule of thumb is the 28/36 ratio. It's described here. In your case, with a gross (?) salary of £50,000, that means that you should spend no more than 28% of it, or £1,167 per month on housing. You may be able to swing a bit more because you have no debts and a modest amount in your savings. The 36% part comes in as the amount you can spend servicing all your debt, including mortgage. In your case, based on a gross (?) salary of £50,000, that'd be £1,500 per month. Again, that is to cover your housing costs and any additional debt you are servicing. So, you need to figure out how much you could bring in through rent to make up the rest. As at least one other person has commented, the rule of thumb is that your mortgage should be no more than 2.5 - 3 times your income. I personally think you are not a good candidate for a mortgage of the size you are discussing. That said, I no longer live in England. If you could feel fairly secure getting someone to pay you enough in rent to bring down your total mortgage and loan repayment amounts to £1,500 or so a month, you may want to consider it. Remember, though, that it may not always be easy to find renters."
},
{
"docid": "503100",
"title": "",
"text": "Due to the fact that months have gone by since the item was shipped to you it will be hard to resolve by sending it back. The collection agency is now only interested in getting as much of the money as they can from you. They may have sent a percentage of the debt to the original company when they bought the debt. They may also be working on a commission. Therefore they are not interested in having everybody happy with the result. They need to follow the law, but they don't care if you are a happy customer. The longer you wait to resolve it, the longer it will remain on the credit report. The fact that it went to collections has already hurt your score. Yes, make sure that they update your credit file to reflect that you have paid the debt. Get it in writing. Also check with your health insurance company to see if this is at least partially covered by insurance. They generally won't cover the $12 in fees from the collections company, but they might cover part of the original bill. Depending on the item, it might also be an allowable expense for your FSA (Flexible spending account) or your HSA (Health Spending account)."
},
{
"docid": "28083",
"title": "",
"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."
},
{
"docid": "543607",
"title": "",
"text": "This may not apply in your particular situation, but I think it's important to mention: When a debt collector doesn't act like a debt collector, it may be because they aren't actually a debt collector. It's certainly strange that someone called you to collect money from you, and when you asked for a simple document, they not only got off the phone quickly but they also told you the debt would be cancelled. That just doesn't make sense: Why would they cancel the debt? Why wouldn't they send you the document? My initial impression is that you were possibly being scammed. The scam can take on many forms: Whenever you are called by a debt collector (or someone pretending to be one), it's a good idea to verify their identity first. More info here."
},
{
"docid": "336922",
"title": "",
"text": "Is it possible to pay off my balance more than once in a payment period in order to increase the amount I can spend in a payment period? Yes, but you should only do that if you expect an expense that is larger than your limit allows. Then, provide an extra payment before your expense occurs since it will take longer for the issuer to apply it to the outstanding balance. For instance, when going on holiday you could deposit additional money to increase your balance temporarily. That said if your goal is to improve your credit score I would recommend using the card, staying within your limit and pay it off every month. The 2 largest factors going into calculating your credit score are: By paying off the balance each month you After 6-9 months you can probably get a bigger limit, to improve your score. I wouldn't change to a different card or get a second one, as some issuers will run a check on your creditscore that lowers it temporarily. Also: you're entitled to a free credit report each year. I'd recommend asking for one every year so you can keep track on how your credit score improves. It also gives you the opportunity to check for mistakes on your report. Check here for more information: http://www.myfico.com/crediteducation/whatsinyourscore.aspx"
},
{
"docid": "47572",
"title": "",
"text": "When you purchase a mortgage, you have to prove the source of your down payment. Primarily this is so that the mortgage lender knows that there are no other outstanding liens against the property. If you show that some or part of your down payment was a gift, there is no fraud, but it may affect your qualification for the mortgage. Consult a lawyer in your area to determine if there is a legal way to gift the money that is not taxed. If all else fails you could just pay the tax. Also, you should research whether your gift is above the floor of taxable gifts."
},
{
"docid": "394474",
"title": "",
"text": "Others have suggested paying off the student loan, mostly for the satisfaction of one less payment, but I suggest you do the math on how much interest you would save by paying early on each of the loans: When you do the calculations I think you'll see why paying toward the debt with the highest interest rate is almost always the best advice. Whether you can refinance the mortgage to a lower rate is a separate question, but the above calculation would still apply, just with different amortization schedules."
},
{
"docid": "591714",
"title": "",
"text": "The two factors that will hurt you the most is the age of the credit account, and your available credit to debt ratio. Removing an older account takes that account out of the equation of calculating your overall credit score, which can hurt significantly, especially if that is the only, or one of just a couple, of open credit lines you have available. Reducing your available credit will make your current debt look bigger than what it was before you closed your account. Going over a certain percentage for your debt to available credit can make you look less favorable to lenders. [As stated above, closing a credit card does remove it from the credit utilization calculation which can raise your debt/credit ratio. It does not, however; affect the average age of credit cards. Even closed accounts stay on your credit report for ten years and are credited toward average age of cards. When the closed credit card falls off your report, only then, will the average age of credit cards be recalculated.] And may I suggest getting your free credit report from https://www.annualcreditreport.com . It's the only place considered 'official' to receive your free annual credit report as told by the FTC. Going to other 3rd party sites to pull your credit report can risk your information being traded or sold. EDIT: To answer your second point, there are numerous factors that banks and creditors will consider depending on the type of card you're applying for. The heavier the personal rewards (cash back, flyer miles, discounts, etc.) the bigger the stipulation. Some factors to consider are your income to debt ratio, income to available credit ratio, number of revolving lines of credit, debt to available credit ratio, available credit to debt ratio, and whether or not you have sufficient equity and/or assets to cover both your debt and available credit. They want to make sure that if you go crazy and max out all of your lines of credit, that you are capable of paying it all back in a sufficient amount of time. In other words, your volatility as a debt-consumer."
},
{
"docid": "310629",
"title": "",
"text": "Different bonds (and securitized mortgages are bonds) that have similar average lives tend to have similar yields (or at least trade at predictable yield spreads from one another). So, why does a 30 year mortgage not trade in lock-step with 30-year Treasuries? First a little introduction: Mortgages are pooled together into bundles and securitized by the Federal Agencies: Fannie Mae, Freddie Mac, and Ginnie Mae. Investors make assumptions about the prepayments expected for the mortgages in those pools. As explained below: those assumptions show that mortgages tend to have an average life similar to 10-year Treasury Notes. 100% PSA, a so-called average rate of prepayment, means that the prepayment increases linearly from 0% to 6% over the first 30 months of the mortgage. After the first 30 months, mortgages are assumed to prepay at 6% per year. This assumption comes from the fact that people are relatively unlikely to prepay their mortgage in the first 2 1/2 years of the mortgage's life. See the graph below. The faster the repayments the shorter the average life of the mortgage. With 150% PSA a mortgage has an average life of nine years. On average your investment will be returned within 9 years. Some of it will be returned earlier, and some of it later. This return of interest and principal is shown in the graph below: The typical investor in a mortgage receives 100% of this investment back within approximately 10 years, therefore mortgages trade in step with 10 year Treasury Notes. Average life is defined here: The length of time the principal of a debt issue is expected to be outstanding. Average life is an average period before a debt is repaid through amortization or sinking fund payments. To calculate the average life, multiply the date of each payment (expressed as a fraction of years or months) by the percentage of total principal that has been paid by that date, summing the results and dividing by the total issue size."
},
{
"docid": "77570",
"title": "",
"text": "First of all, a person that relies on their ability to tap a line of credit to cover an emergency isn't generally the kind of person that has investments they can cash out to cover the debt. That being said, my personal reasons for having a liquid emergency fund revolve around bank errors and identify theft. I used to work for a company that made bank software. Errors are a common occurrence. You'd be surprised how many transactions are still input by human hands despite our computerized world. All it takes is one typo to wipe out your ability to swipe plastic for a few days. This has actually happened to me. My utility company sent me a bill for $240 and wound up taking $2400 by accident, overdrawing my account and sending me into a fee spiral. They fixed their mistake... several days later. The snowball of fees from other transactions that bounced took another two months to correct. In the meantime, I also had my mortgage payment due. In the US, you can't pay your mortgage with credit, and for those who rent, many landlords won't let you pay with credit either. I have also seen this scenario play out twice with other people I've known who've had their ID stolen. Yes, the bank will cover the fraud after a lengthy process. But the disruption causes fees and overdrafts to quickly snowball out of control. I have a separate savings account at a different bank for this kind of thing, and I have a few hundred dollars cash in my house at all times. Having a liquid emergency fund allows you to quickly stabilize the situation and gives you walking around money for those times where the banking system becomes your enemy for a time."
},
{
"docid": "159936",
"title": "",
"text": "\"The statistic you cited comes from the Federal Reserve Board's Survey of Consumer Finances, a survey that they do every three years, most recently in 2013. This was reported in the September 2014 issue of the Federal Reserve Bulletin. They list the percentage of Americans with any type of debt as 74.5 in 2013, down slightly from 74.9 in 2010. The Bulletin also has a table with a breakdown of the types of debt that people have, and primary residence mortgages are at the top of the list. So the answer is yes, the 75% statistic includes Americans with home mortgages.* The bigger question is, are you really \"\"in debt\"\" if you have a home mortgage? The answer to that is also yes. When you take out a mortgage, you really do own the house. You decide who lives there, you decide what changes you are going to make to it, and you are responsible for the upkeep. But the mortgage debt you have is secured by the house. This means that if you refuse to pay, the bank is allowed to take possession of the house. They don't even get the \"\"whole\"\" house, though; they will sell it to recoup their losses, and give you back whatever equity you had in the house after the loan is satisfied. Is it good debt? Many people think that if you are borrowing money to purchase an appreciating asset, the debt is acceptable. With this definition, a car loan is bad, credit card debt is very bad, and a home mortgage might be okay. Even Dave Ramsey, radio host and champion of the debt-free lifestyle, is not opposed to home mortgages. Home mortgages allow people to purchase a home that they would otherwise be unable to afford. * Interestingly, according to the bulletin appendix, credit card balances were only included as debt for the survey purposes if there was a balance after the most recent bill was paid, not including purchases made after the bill. So people that do not carry a balance on their credit card were not considered \"\"in debt\"\" in this statistic.\""
},
{
"docid": "386994",
"title": "",
"text": "The main reason for paying your mortgage off quickly is to reduce risk should a crisis happen. If you don't have a house payment, you have much higher cash flow every month, and your day-to-day living expenses are much lower, so if an illness or job loss happens, you'll be in a much better position to handle it. You should have a good emergency fund in place before throwing extra money at the mortgage so that you can cover the bigger surprises that come along. There is the argument that paying off your mortgage ties up cash that could be used for other things, but you need to be honest with yourself: would you really invest that money at a high enough rate of return to make up your mortgage interest rate after taxes? Or would you spend it on other things? If you do invest it, how certain are you of that rate of return? Paying off the mortgage saves you your mortgage interest rate guaranteed. Finally, there is the more intangible aspect of what it feels like to be completely debt free with no payments whatsoever. That feeling can be a game-changer for people, and it can free you up to do things that you could never do when you're saddled with a mortgage payment every month."
},
{
"docid": "85003",
"title": "",
"text": "\"I'd lean toward using the $3,000 from the emergency fund although depending on your monthly bills, a $2,000 emergency fund (or even a $5,000 one) may be a bit small. But here are a couple of other options for you: Zero-interest balance transfers: If you have cards and have a zero balance on them, your credit card companies are keen to see you put a balance on them. Find out if they're offering any \"\"12 months no interest on balance transfers\"\" offers (or if any of their rivals is), since of course the car loan is an outstanding balance you can transfer (you're not asking them for cash). Put the $3,000 on that zero-balance transfer option, get rid of the car, and pay the $300/mo to pay down the balance on the card. 10 months later, two months before the end of the free period, you're at zero again — without dipping into your emergency fund. You'll also now have a history with that card company of paying back, which may lead them to attempt to entice you to go into more debt (which you'll resist, of course) by increasing the limit. (If you don't want a higher limit, just tell them to reduce it again.) A $3,000 unsecured loan with no pre-payment penalty provided the math works out. The interest may be expensive (unless you find something with a teaser rate for the first X months), but if you find an option, do the math on it to see if it's actually more expensive than carrying the car payments, insurance, etc. on a depreciating asset. It may not be as expensive as the 20% rate or whatever makes it sound (but again, do the math), and if you apply your $300/mo to it, within (say) 11 months you're clear again — with a nice little paid-back loan on your credit report. Both of these ensure that you still have your emergency fund at your disposal, and both capitalize on the fact that right now, you're probably a good credit risk. If you dip into your emergency fund, and an emergency happens (like loss of a job) and you find yourself short of funds, you may have trouble securing further credit at that point to cover the gap in your emergency fund.\""
},
{
"docid": "167896",
"title": "",
"text": "If you are able to buy a 150K home for 50K now that would be a good deal! However, you can't you have to borrow 100K in order to make this deal happen. This dramatically increases the risk of any investment, and I would no longer classify it as passive income. The mortgage on a 150K place would be about 710/month (30 year fixed). Reasonably I would expect no more than 1200/month in rent, or 14,400. A good rule of thumb is to assume that half of rental revenue can be counted as profit before debt service. So in your case 7200, but you would have a mortgage payment of 473/month. Leaving you a profit of 1524 after debt service. This is suspiciously like 2K per year. Things, in the financial world, tend to move toward an equilibrium. The benefit of rental property you can make a lot more than the numbers suggest. For example the home could increase in value, and you can have fewer than expected repairs. So you have two ways to profit: rental revenue and asset appreciation. However, you said that you needed passive income. What happens if you have a vacancy or the tenant does not pay? What happens if you have greater than expected repairs? What happens if you get a fine from the HOA or a special assessment? Not only will you have dip into your pocket to cover the payment, you might also have to dip into your pocket to cover the actual event! In a way this would be no different than if you borrowed 100K to buy dividend paying stocks. If the fund/company does not pay out that month you would still have to make the loan payment. Where does the money come from? Your pocket. At least dividend paying companies don't collect money from their shareholders. Yes you can make more money, but you can also lose more. Leverage is a two edged sword and rental properties can be great if you are financial able to absorb the shocks that are normal with ownership."
}
] |
4844 | How to read bond yield quotes? What do the time, coupon, price, yield, and time mean? | [
{
"docid": "275257",
"title": "",
"text": "The 1 month and 1 year columns show the percentage change over that period. Coupon (coupon rate) is the amount of interest paid on the bond each period (as specified on the coupon itself. Price is the normalised price of the bond; the price of taking a position of $100 worth of the principal in the bond. Yield is the interest rate that you would receive by buying at that price (this is the inverse of the price). The time is the time of the quote presented."
}
] | [
{
"docid": "563092",
"title": "",
"text": "\"Since you want to know exactly what \"\"yield\"\" means, let's get all the details of the security down first. Treasury Bills are 0-1 year and do not pay interest/coupons. The yield comes from buying the T-Bill at a discount. For example, you buy a T-Bill for $99 and it pays $100 when it matures, and the yield over that holding period is 1/99. When people talk about \"\"yield\"\" they are generally talking about annualized yield unless stated otherwise. Treasury Notes are 2-10 years. They pay interest semi-annually. Treasury Bonds are 20-30 years and they also pay interest semi-annually. Again, \"\"yield\"\" is typically the annualized yield, or the two semi-annual interest payments added together (without compounding). These have interest payments so they are typically sold at par. They may trade a premium/discount afterwards. TIPS pay a constant coupon rate, but the principal is adjusted up and down with inflation.\""
},
{
"docid": "272093",
"title": "",
"text": "\"Yes, the \"\"effective\"\" and \"\"market\"\" rates are interchangeable. The present value formula will help make it possible to determine the effective interest rate. Since the bond's par value, duration, and par interest rate is known, the coupon payment can be extracted. Now, knowing the price the bond sold in the market, the duration, and the coupon payment, the effective market interest rate can be extracted. This involves solving large polynomials. A less accurate way of determining the interest rate is using a yield shorthand. To extract the market interest rate with good precision and acceptable accuracy, the annual coupon derived can be divided by the market price of the bond.\""
},
{
"docid": "198465",
"title": "",
"text": "The duration of a bond tells you the sensitivity of its price to its yield. There are various ways of defining it (see here for example), and it would have been preferable to have a more precise statement of the type of duration we should assume in answering this question. However, my best guess (given that the duration is stated without units) is that this is a modified duration. This is defined as the percentage decrease in the bond price for a 1% increase in the yield. So, change in price = -price x duration (as %) x change in yield (in %) For your duration of 5, this means that the bond price decreases by a relative 5% for every 1% absolute increase in its yield. Using the actual yield change in your question, 0.18%, we find: change in price = -1015 x 5% x (4.87 - 4.69) = -9.135 So the new price will be 1015 - 9.135 = £1005.865"
},
{
"docid": "546075",
"title": "",
"text": "\"Brendan, The short answer is no, there is no need to get into any other funds. For all intents and purposes the S&P 500 is \"\"The Stock Market\"\". The news media may quote the Dow when the market reaches new highs or crashes but all of the Dow 30 stocks are included in the S&P 500. The S&P is also marketcap weighted, which means that it owns in higher proportion the big \"\"Blue Chip\"\" stocks more than the smaller less known companies. To explain, the top 10 holdings in the S&P represent 18% of the total index, while the bottom 10 only represent 0.17% (less than 1 percent). They do have an equal weighted S&P in which all 500 companies represent only 1/500th of the index and that is technically even more diversified but in actuality it makes it more volatile because it has a higher concentration of those smaller less known companies. So it will tend to perform better during up markets and worse during down markets. As far as diversification into different asset classes or other countries, that's non-sense. The S&P 500 has companies in it that give you that exposure. For example, it includes companies that directly benefit from rising oil prices, rising gold prices, etc known as the Energy and Materials sector. It also includes companies that own malls, apartment complexes, etc. known as the Real Estate sector. And as far as other countries, most of the companies in the S&P are multi-national companies, meaning that they do business over seas in many parts of the world. Apple and FaceBook for example sell their products in many different countries. So you don't need to invest any of your money into an Emerging Market fund or an Asia Fund because most of our companies are already doing business in those parts of the world. Likewise, you don't need to specifically invest into a real estate or gold fund. As far as bonds go, if you're in your twenties you have no need for them either. Why, because the S&P 500 also pays you dividends and these dividends grow over time. So for example, if Microsoft increases its dividend payment by 100% over a ten year period , all of the shares you buy today at a 2.5% yield will, in 10 years, have a higher 5% yield. A bond on the other hand will never increase its yield over time. If it pays out 4%, that's all it will ever pay. You want to invest because you want to grow your money and if you want to invest passively the fastest way to do that is through index ETFs like the $SPY, $IVV, and $RSP. Also look into the $XIV, it's an inverse VIX ETF, it moves 5x faster than the S&P in the same direction. If you want to actively trade your money, you can grow it even faster by getting into things like options, highly volatile penny stocks, shorting stocks, and futures. Don't get involved in FX or currency trading, unless it through futures.\""
},
{
"docid": "411966",
"title": "",
"text": "\"The most fundamental observation of bond pricing is this: Bond price is inversely proportional to bond yields When bond yields rise, the price of the bond falls. When bond yields fall, the price of the bond rises. Higher rates are \"\"bad\"\" for bonds. If a selloff occurs in the Russian government bond space (i.e. prices are going down), the yield on that bond is going to increase as a consequence.\""
},
{
"docid": "189761",
"title": "",
"text": "Imagine a $1,000 face value bond paying 10% interest semi-annually. That means every 6 months there is $50 being paid. Now, if the price of that bond doubled to $2,000, what is the yield? It is still paying $50 every 6 months but now sports a 5% yield as the price went up a great deal. Similarly, if the price of the bond was cut in half to $500, now it is yielding 20% because it is still paying out the $50 every 6 months. The dollar figure is fixed. What percentage of the price it is can vary and that is why there is the inverse relationship between prices and yields. Note that the length of the bond isn't mentioned here where while usually longer bonds will have higher yields, there can be inverted yield curves as well as calls on some bonds. Also, inflation-indexed and convertible bonds could have different calculations used as principal adjustments or possible conversion to stock can change a perception on the overall return."
},
{
"docid": "247895",
"title": "",
"text": "The real value of a share of stock is the current cash value of all dividends the owner will receive, plus the current cash value of the final liquidation if any. Since people with different needs may judge the current cash value of an income stream differently, there would be a market basis for people to buy and sell stocks even if everyone could predict all future payouts perfectly. If shareholders knew that a company wouldn't pay any dividends until it was liquidated in the year 2066, whereupon it would pay $2000/share, then each share would in 2016 effectively be a fifty-year zero-coupon bond with a $2000 maturity value. While some investors would be willing to trade in such an instrument, the amount of money a company could charge for such an instrument would be far lower than the money it could charge for one with payouts that were more evenly distributed through time. Since the founders of most companies want their companies to be around for a long time, that would mean that shareholders would have no expectation of their shares ever yielding anything of value within any foreseeable timeframe. Even those who would be more interested in share-price appreciation than dividends wouldn't be able to see share prices rise if there wasn't any likelihood of the stock being bought by someone who wanted the dividends."
},
{
"docid": "517279",
"title": "",
"text": "\"If the time horizon is not indicated, this is just a \"\"fair price\"\". The price of the stock, which corresponds with the fair value of the whole company. The value, which the whole business is worth, taking into consideration its net income, current bonds yield, level of risk of the business, perspective of the business etc.. The analyst thinks the price will sooner or later hit the target level (if the price is high, investors will exit stocks, if the price is cheap, investors will jump in), but no one knows, how much time will it take.\""
},
{
"docid": "237317",
"title": "",
"text": "A large number of bond holders decide to sell their bonds. If they all decide to do this at the same time then there will be a large supply of bonds being sold in the market. This will drive down the price of the bonds which will increase yields. Why do bond yields move inversely to bond prices? You purchase a $100 bond today that yields 5%. You spent $100. The very next day the same bonds are being sold with a yield of 10%. If you wanted to sell your bond to someone you would have to sell it so it competed with the new bonds being sold. You could not sell it for $100 which is what you paid for it. You would have to sell it for less than the $100 you paid for it in order for it to have the equivalent yield of the new bonds being sold with a 10% yield. This is why bond yields move inversely to bond prices. Why does rising yields increase the cost of borrowing? If someone is trying to sell new bonds they will have to sell bonds that compete with the yields of the current bonds already in the market. If yields are rising on the existing bonds then the issuer of the new bonds will have to pay higher interest rates to offer equivalent yields on the new bonds. The issuer is now paying more in interest making it more expensive to borrow money. What are the incentives for the bond vigilante to sell his/her bonds? One reason a bond holder will sell his/her bonds is they believe inflation will outpace the yield on the bond they are holding. If a bond yields 3% and inflation is at 5% then the bond holder is essentially losing purchasing power if they continue to hold onto the bond. Another reason to sell would be if the bond holder has doubts in the ability of the issuer to repay the interest and/or principal of the bond."
},
{
"docid": "290562",
"title": "",
"text": "Edited to incorporate the comments elsewhere of @Atkins Assuming, (apparently incorrectly) that duration is time to maturity: First, note that the question does not mention the coupon rate, the size of the regular payments that the bond holder will get each year. So let's calculate that. Consider the cash flow described. You pay out 1015 at the start of Year #1, to buy the bond. At the end of Years #1 to #5, you receive a coupon payment of X. Also at the end of Year #5, you receive the face value of the bond, 1000. And you are told that the pay out equals the money received, using a time value of money of 4.69% So, if we use the date of maturity of the bond as our valuation date, we have the equation: Maturity + Future Value of coupons = Future value of Bond Purchase price 1000 + X *( (1 + .0469)^5-1)/0.0469 = 1015 * 1.0469^5 Solving this for X, we obtain 50.33; the coupon rate is 5.033%. You will receive 50.33 at the end of each of the five years. Now, we can take this fixed schedule of payments, and apply the new yield rate to the same formula above; only now, the unknown is the price paid for the bond, Y. 1000 + 50.33 * ((1 + 0.0487)^5 - 1) / .0487 = Y * 1.0487^5 Solving this equation for Y, we obtain: Y = 1007.08"
},
{
"docid": "403826",
"title": "",
"text": "For bonds bought at par (the face value of the bond, like buying a CD for $1000) the payment it makes is the same as yield. You pay $1000 and get say, $40 per year or 4%. If you buy it for more or less than that $1000, say $900, there's some math (not for me, I use a finance calculator) to tell you your return taking the growth to maturity into account, i.e. the extra $100 you get when you get the full $1000 back. Obviously, for bonds, you care about whether the comp[any or municipality will pay you back at all, and then you care about how much you'll make when then do. In that order. For stocks, the picture is abit different as some companies give no dividend but reinvest all profits, think Berkshire Hathaway. On the other hand, many people believe that the dividend is important, and choose to buy stocks that start with a nice yield, a $30 stock with a $1/yr dividend is 3.3% yield. Sounds like not much, but over time you expect the company to grow, increase in value and increase its dividend. 10 years hence you may have a $40 stock and the dividend has risen to $1.33. Now it's 4.4% of the original investment, and you sit on that gain as well."
},
{
"docid": "138213",
"title": "",
"text": "\"The real question is what does FT mean by \"\"Eurozone Bond\"\". There is no central European government to issue bonds. What they seem to be quoting is the rate for German Bunds. Germany has a strong economy with a manageable debt load, which means it is a safe Euro denominated investment. Bunds are in high demand across the Eurozone, which drives their price up, and their yield down. Greek 10yr bonds, which are Euro denominated, are yielding over 8%.\""
},
{
"docid": "37234",
"title": "",
"text": "Usually the market. I'm a company issuing a 5-year bond with 5% coupon payments. It goes on the market to whoever is willing to pay the most for it. The prices that those investors pay implies what the required yield is. For instance, if they're willing to pay exactly face value for the bond, then that shows they have a required return of (in this case) 5%. Paying more or less for the bond implies a require rate less than or greater than 5%, with the exact amounts derivable with basic algebra. The same principle can be applied to any other asset."
},
{
"docid": "256631",
"title": "",
"text": "Negative coupons are not the same as a negative yield. A $1000 bond that you purchase, at a premium, for $2100 that produces 10 annual coupons of $100 and a redemption of $1000 has a real, positive coupon ($100). The holder of the bond gets this coupon, and the maturity value However, you get back less than your initial investment. There is no growth; the original investment shrinks, or has a negative growth rate. Most mortgage or bond calculators choke on this situation..."
},
{
"docid": "231268",
"title": "",
"text": "Companies do not support their stock. Once the security is out on the wild (market), its price fluctuates according to what investors think they are worth. Support is a whole different concept, financially speaking: Support or support level refers to the price level below which, historically, a stock has had difficulty falling. It is the level at which buyers tend to enter the stock. So it is the lowest assumed price for that stock. Once it reaches its price, buyers will rush to the stock, raising its price. The company wants to keep the stock price at acceptable levels, as it can be seen as the general view of the company's health. Also several employees/executives in the company have stock or stock options, so it is in their interest to keep their stock price up. A bond that goes down in value may indicate a believe the bond issuer (government in this case) won't honor the bond when it matures. As for bonds, there is a wealth of reading in this site: Can someone explain how government bonds work? Who sets the prices on government bonds? Basic understanding of bonds, values, rates and yields"
},
{
"docid": "495600",
"title": "",
"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.\""
},
{
"docid": "457122",
"title": "",
"text": "\"For a two year time frame, a good insured savings account or a low-cost short-term government bond fund is most likely the way I would go. Depending on the specific amount, it may also be reasonable to look into directly buying government bonds. The reason for this is simply that in such a short time period, the stock market can be extremely volatile. Imagine if you had gone all in with the money on the stock market in, say, 2007, intending to withdraw the money after two years. Take a broad stock market index of your choice and see how much you'd have got back, and consider if you'd have felt comfortable sticking to your plan for the duration. Since you would likely be focused more on preservation of capital than returns during such a relatively short period, the risk of the stock market making a major (or even relatively minor) downturn in the interim would (should) be a bigger consideration than the possibility of a higher return. The \"\"return of capital, not return on capital\"\" rule. If the stock market falls by 10%, it must go up by 11% to break even. If it falls by 25%, it must go up by 33% to break even. If you are looking at a slightly longer time period, such as the example five years, then you might want to add some stocks to the mix for the possibility of a higher return. Still, however, since you have a specific goal in mind that is still reasonably close in time, I would likely keep a large fraction of the money in interest-bearing holdings (bank account, bonds, bond funds) rather than in the stock market. A good compromise may be medium-to-high-yield corporate bonds. It shouldn't be too difficult to find such bond funds that can return a few percentage points above risk-free interest, if you can live with the price volatility. Over time and as you get closer to actually needing the money, shift the holdings to lower-risk holdings to secure the capital amount. Yes, short-term government bonds tend to have dismal returns, particularly currently. (It's pretty much either that, or the country is just about bankrupt already, which means that the risk of default is quite high which is reflected in the interest premiums demanded by investors.) But the risk in most countries' short-term government bonds is also very much limited. And generally, when you are looking at using the money for a specific purpose within a defined (and relatively short) time frame, you want to reduce risk, even if that comes with the price tag of a slightly lower return. And, as always, never put all your eggs in one basket. A combination of government bonds from various countries may be appropriate, just as you should diversify between different stocks in a well-balanced portfolio. Make sure to check the limits on how much money is insured in a single account, for a single individual, in a single institution and for a household - you don't want to chase high interest bank accounts only to be burned by something like that if the institution goes bankrupt. Generally, the sooner you expect to need the money, the less risk you should take, even if that means a lower return on capital. And the risk progression (ignoring currency effects, which affects all of these equally) is roughly short-term government bonds, long-term government bonds or regular corporate bonds, high-yield corporate bonds, stock market large cap, stock market mid and low cap. Yes, there are exceptions, but that's a resonable rule of thumb.\""
},
{
"docid": "498645",
"title": "",
"text": "\"Bonds might not be simple, but in general there are only a few variables that need to be understood: bid, coupon (interest) rate, maturity, and yield. Bond tables clearly lay those out, and if you're talking about government bonds a lot of things (like convertibles) don't apply (although default is still a concern). This might be overly simplistic, but I view ETF's primarily as an easy way to bring somewhat esoteric instruments (like grain futures) into the easily available markets of Nasdaq and the NYSE. That they got \"\"enhanced\"\" with leveraged funds and the such is interesting, but perhaps not the original intent of the instrument. Complicating your situation a bit more is the fee that gets tacked onto the ETF. Even Vanguard government bond funds hang out north of 0.1%. That's not huge, but it's not particularly appealing either considering that (unlike rounding up live cattle futures), it's not that much work to buy US government bonds, so the expense might not seem worth it to someone who's comfortable purchasing the securities directly. I'd be interested to see someone else's view on this, but in general I'd say that if you know what you want and know how to buy it, the government bond ETF becomes a lot less relevant as the liquidity offered (including the actual \"\"ease of transacting\"\") seem to to be the biggest factors in favor. From Investopedia's description: The bond ETF is an exciting new addition to the bond market, offering an excellent alternative to self-directed investors who, looking for ease of trading and increased price transparency, want to practice indexing or active bond trading. However, bond ETFs are suitable for particular strategies. If, for instance, you are looking to create a specific income stream, bond ETFs may not be for you. Be sure to compare your alternatives before investing.\""
},
{
"docid": "480318",
"title": "",
"text": "IMHO bonds are not a good investment at this present time, nor generally. Appreciate for a moment that the yield of an investment is DIRECTLY related to the face/trading value. If a thing (bond/stock) trades for $100 and yields 3%, it pays $3. In the case of a bond, the bond doesn't pay a % amount, it pays a $ amount. Meaning it pays $3. SO, for the yield to rise, what has to happen to the trading price? It has to decrease. As of 2013/14 bonds are trading at historically LOW yields. The logical implication of this is if a bond pays a fixed $ amount, the trading price of the bond has to have increased. So if you buy bonds now, you will see a decrease in its face value over the long term. You may find the first tool I built at Simple Stock Search useful as you research potential investments."
}
] |
4844 | How to read bond yield quotes? What do the time, coupon, price, yield, and time mean? | [
{
"docid": "192193",
"title": "",
"text": "\"The first thing that it is important to note here is that the examples you have given are not individual bond prices. This is what is called the \"\"generic\"\" bond price data, in effect a idealised bond with the indicated maturity period. You can see individual bond prices on the UK Debt Management Office website. The meaning of the various attributes (price, yield, coupon) remains the same, but there may be no such bond to trade in the market. So let's take the example of an actual UK Gilt, say the \"\"4.25% Treasury Gilt 2019\"\". The UK Debt Management Office currently lists this bond as having a maturity date of 07-Mar-2019 and a price of GBP 116.27. This means that you will pay 116.27 to purchase a bond with a nominal value of GBP 100.00. Here, the \"\"nominal price\"\" is the price that HM Treasury will buy the bond back on the maturity date. Note that the title of the bond indicates a \"\"nominal\"\" yield of 4.25%. This is called the coupon, so here the coupon is 4.25%. In other words, the treasury will pay GBP 4.25 annually for each bond with a nominal value of GBP 100.00. Since you will now be paying a price of GBP 116.27 to purchase this bond in the market today, this means that you will be paying 116.27 to earn the nominal annual interest of 4.25. This equates to a 3.656% yield, where 3.656% = 4.25/116.27. It is very important to understand that the yield is not the whole story. In particular, since the bond has a nominal value of GBP100, this means that as the maturity date approaches the market price of the bond will approach the nominal price of 100. In this case, this means that you will witness a loss of capital over the period that you hold the bond. If you hold the bond until maturity, then you will lose GBP 16.27 for each nominal GBP100 bond you hold. When this capital loss is netted off the interest recieved, you get what is called the gross redemption yield. In this case, the gross redemption yield is given as approximately 0.75% per annum. NB. The data table you have included clearly has errors in the pricing of the 3 month, 6 month, and 12 month generics.\""
}
] | [
{
"docid": "64130",
"title": "",
"text": "\"Even though the article doesn't actually use the word \"\"discount\"\", I think the corresponding word you are looking for is \"\"premium\"\". The words are used quite frequently even outside of the context of negative rates. In general, bonds are issued with coupons close to the prevailing level of interest rates, i.e. their price is close to par (100 dollar price). Suppose yields go up the next day, then the price moves inversely to yields, and that bond will now trade at a \"\"discount to par\"\" (less than 100 dollar price). And vice versa, if yields went down, prices go up, and the bond is now at a \"\"premium to par\"\" (greater than 100 dollar price)\""
},
{
"docid": "538898",
"title": "",
"text": "The Fed sets the overnight borrowing costs by setting its overnight target rate. The markets determine the rates at which the treasury can borrow through the issuance of bonds. The Fed's actions will certainly influence the price of very short term bonds, but the Fed's influence on anything other than very short term bonds in the current environment is very muted. Currently, the most influential factor keeping bond prices high and yields low is the high demand for US treasuries coming from overseas governments and institutions. This is being caused by two factors : sluggish growth in overseas economies and the ongoing strength of the US dollar. With many European government bonds offering negative redemption yields, income investors see US yields as relatively attractive. Those non-US economies which do not have negative bond yields either have near zero yields or large currency risks or both. Political issues such as the survival of the Euro also weigh heavily on market perceptions of the current attractiveness of the US dollar. Italian banks may be about to deliver a shock to the Eurozone, and the Spanish and French banks may not be far behind. Another factor is the continued threat of deflation. Growth is slowing around the world which negatively effects demand. Commodity prices remain depressed. Low growth and recession outside of the US translate into a prolonged period of near zero interest rates elsewhere together with renewed QE programmes in Europe, Japan, and possibly elsewhere. This makes the US look relatively attractive and so there is huge demand for US dollars and bonds. Any significant move in US interest rates risks driving to dollar ever higher which would be very negative for the future earning of US companies which rely on exports and foreign income. All of this makes the market believe that the Fed's hands are tied and low bond yields are here for the foreseeable future. Of course, even in the US growth is relatively slow and vulnerable to a loss of steam following a move in interest rates."
},
{
"docid": "269550",
"title": "",
"text": "Buy a fund of bonds, there are plenty and are registered on your stockbroker account as 'funds' rather than shares. Otherwise, to the individual investor, they can be considered as the same thing. Funds (of bonds, rather than funds that contain property or shares or other investments) are often high yield, low volatility. You buy the fund, and let the manager work it for you. He buys bonds in accordance to the specification of the fund (ie some funds will say 'European only', or 'global high yield' etc) and he will buy and sell the bonds regularly. You never hold to maturity as this is handled for you - in many cases, the manager will be buying and selling bonds all the time in order to give you a stable fund that returns you a dividend. Private investors can buy bonds directly, but its not common. Should you do it? Up to you. Bonds return, the company issuing a corporate bond will do so at a fixed price with a fixed yield. At the end of the term, they return the principal. So a 20-year bond with a 5% yield will return someone who invests £10k, £500 a year and at the end of the 20 years will return the £10k. The corporate doesn't care who holds the bond, so you can happily sell it to someone else, probably for £10km give or take. People say to invest in bonds because they do not move much in value. In financially difficult times, this means bonds are more attractive to investors as they are a safe place to hold money while stocks drop, but in good times the opposite applies, no-one wants a fund returning 5% when they think they can get 20% growth from a stock."
},
{
"docid": "327556",
"title": "",
"text": "\"You are asking multiple questions here, pieces of which may have been addressed in other questions. A bond (I'm using US Government bonds in this example, and making the 'zero risk of default' assumption) will be priced based on today's interest rate. This is true whether it's a 10% bond with 10 years left (say rates were 10% on the 30 yr bond 20 years ago) a 2% bond with 10 years, or a new 3% 10 year bond. The rate I use above is the 'coupon' rate, i.e. the amount the bond will pay each year in interest. What's the same for each bond is called the \"\"Yield to Maturity.\"\" The price adjusts, by the market, so the return over the next ten years is the same. A bond fund simply contains a mix of bonds, but in aggregate, has a yield as well as a duration, the time-and-interest-weighted maturity. When rates rise, the bond fund will drop in value based on this factor (duration). Does this begin to answer your question?\""
},
{
"docid": "403826",
"title": "",
"text": "For bonds bought at par (the face value of the bond, like buying a CD for $1000) the payment it makes is the same as yield. You pay $1000 and get say, $40 per year or 4%. If you buy it for more or less than that $1000, say $900, there's some math (not for me, I use a finance calculator) to tell you your return taking the growth to maturity into account, i.e. the extra $100 you get when you get the full $1000 back. Obviously, for bonds, you care about whether the comp[any or municipality will pay you back at all, and then you care about how much you'll make when then do. In that order. For stocks, the picture is abit different as some companies give no dividend but reinvest all profits, think Berkshire Hathaway. On the other hand, many people believe that the dividend is important, and choose to buy stocks that start with a nice yield, a $30 stock with a $1/yr dividend is 3.3% yield. Sounds like not much, but over time you expect the company to grow, increase in value and increase its dividend. 10 years hence you may have a $40 stock and the dividend has risen to $1.33. Now it's 4.4% of the original investment, and you sit on that gain as well."
},
{
"docid": "138213",
"title": "",
"text": "\"The real question is what does FT mean by \"\"Eurozone Bond\"\". There is no central European government to issue bonds. What they seem to be quoting is the rate for German Bunds. Germany has a strong economy with a manageable debt load, which means it is a safe Euro denominated investment. Bunds are in high demand across the Eurozone, which drives their price up, and their yield down. Greek 10yr bonds, which are Euro denominated, are yielding over 8%.\""
},
{
"docid": "205585",
"title": "",
"text": "\"Here's an answer to a related question I once wrote. I'm reposting here. I can, but it takes a significant amount of time. I'll do a short version which unfortunatley might leave more holes than you like. Basically, traders don't want to barter because it is hard to find the person with precisely the goods you want who wants to trade for the goods you have. Thus the need for \"\"coupons\"\" that represent value in a marketplace. Then you need to decide who gets to create coupons. If too many can issue them, problems arise, and no one trusts the coupons will be good later. Eventually you want one large bank/nation/trader to be able to issue them so everyone has the same level of trust in them, and you don't have the economic inefficiencies of many coupon issuers. Next, the number of coupons needs to be enough to facilitate trade. If the amount of trade increases a lot, and the number of coupons doesn't increase similarly they become worth more, and people start to hoard them. This causes deflation, which causes less investment, which causes less growth, which hurts everyone in the long run. If there are too many coupons added, this causes inflation, which causes people to spent them quicker instead of holding them. For reasons I won't cover here slight, predictable inflation is much better than deflation, so remember inflation is slightly preferred. Note that inflation is often caused not by the number of coupons but by external price changes. Now, for a modern economy to do well, somone has to watch the economy, measure it carefully, and add/subtract coupons into the system as needed. Coupons, like all money, have no real value (whatever that means), but only have value because the holder expects to be able to trade them *later* for goods and services. You cannot eat coupons, use them for shelter (usually!), or wear them, but you want to trade them for such needs. The same is true for paper money, gold, stones, or almost whatever money system one uses. Money in all these forms is merely an IOU tradable for future goods. The Fed is tasked (among other things) with making sure there is precisely enough coupons in the economy to keep trade functioning as well as possible. This is very hard to do since there are external and internal shocks to an economy (think disaster, foreign govts shutting off resources, rapid changes in people's tastes, etc.). Central banks such as the Fed need to be independent of political control, since empirical evidence has shown that politicians tend to add more money to the system than is needed, because the short term gains give them votes, but the long term consequences (rapid inflation, unemployment, lower economic growth) are bad for society. This is why the Fed is largely out of congressional control, and large amounts of empirical evidence across hundreds of years and dozens of cultures shows this to be good. Note: another function of the Fed is to be a lender of last resort to help prevent bank panics that were widespread in the 18th and early 19th century, something that none of us now remember, but it was a real problem. I'll skip that part for now. So now we're at the point where the Fed needs to add/subtract coupons from society. To do this part justice takes significant time to cover all the reasons why various rules are in place (banking reserve requirements, for example), and you cannot learn it from one pass of reading. But I'll try. Instead of being like the majority of internet fools that rail against the system, try to learn the *why* of all this, and you'll be much wiser and understand that it is all a pretty good system. One method they use is the interbank lending rate. Banks have a reserve requirement, which is the ratio of coupons they need to have on hand as a ratio compared to the total coupons depositors lent them. This is usually around 1:10. The amount deposited that they can lend goes to business loans, school loans, mortgage loans, etc., and helps economies grow. Now when a bank on a given day falls short due to too many withdrawals, other banks (or the Fed) offers an overnight loan to meet reserve requirements, and the Fed sets the interest rate, which in turn drives other interest rates in the system. This does not change the money supply very much. Secondly, the Fed sets the reserve requirement, which vastly can change the amount of money available to society. But they change this rate so rarely (all the historical data is on the St. Loius Fed site, among others) that it is not usually an issue. I'll explain below how this can drastically change the money supply though the money multiplier. Thirdly, and this is the part the poster above seems upset about, they conduct open market operations. This is the primary means by which the Fed exercises control over the number of coupons in play. The government, like businesses, like individuals, often needs to borrow money, in theory to invest in wise causes like infrastructure or perhaps money making enterprises such as technology investmeny (and I know what they often use the money for causes many to complain). The government, like companies, offers the sale of various contracts such as bonds to investors, who want a place to park some accumulated coupons for safety, and they get a return plus some interest. So the government sells bonds on the open market to investors, banks, pensions, foreign governments, basically to whomever wishes to purchase them at the market rate, and the government, like many individuals and banks, uses these loans to perform day to day functioning and possible smooth out volatility in spending needs. By law the Fed cannot purchase directly from Treasury. Now, once on the market, these bonds are traded, packaged, resold, etc., since they have inherent value, and since those owning them want to buy/sell them, perhaps before maturity date. This \"\"liquidity\"\" (ability to sell your goods) is necessary - fewer would purchase an item if they could not sell it when they desire. Thus bonds are bought, sold, and traded, and their prices fluctuate based on what the market thinks they are worth, just like any good. Now, the Fed can buy/sell these bonds on the *open market*, like anyone else. So when the Fed wishes to increase the money supply, they can buy bonds that are not \"\"spendable\"\" money and inject money into the system. Note they now hold a bond that had at the time of transaction the same value as the money they injected. Note investors freely bought these from Treasury, meaning the market thought at the time of purchase that this was a good invesement. It is *not* the government merely wishing more money into existance. It is market forces that require more money for trades and is selling goods from the marketplace of (presumably) equal value to the Fed. This increases liquidity, but takes valuable assets from circulation. When the Fed wishes to shrink the money supply, they sell these bonds back into circulation basically by offering better terms than Treasury. In fact, you can find graphs of the Fed operations and see how every December they inject money for more Christmas shpping (need more coupons for more trade) and every January they extract some. So open market transactions, buying and selling goods at market prices in the marketplace along with other traders, is how the Fed injects and removes money from the money supply. This is the primary mechanism that the Fed uses to control the number of coupons in the economy. Finally, a little about reserve requirements and the money multiplier, since it affects so much of the number of coupons in play. This also I must simplify drastically. Each bank needs to hold 1/10 of all deposits in cash. The rest can be lent, which lands in another bank, which again can be lent, etc... Thus each $1 deposited can result in loans totalling 9/10 + (9/10)^2 + (9/10)^3 +... = 9 more dollars. Many people claim that banks are printing money, which is nonsense, since each also has an equal debt to pay to the person they borrowed from. When all loans are paid back there is no net money gain. However, this allows for each $1 the Fed injects by buying bonds for there to be up to $9 in the economy, *if banks all loan to the fullest extent*. Banks tend to want to loan since loaned money makes them profit. Banks used to loan too much and runs on the banks caused significant problems, which is why laws were made to require *all* banks to have the same reserve requirement. Now, when banks get scared and stop loaning, this 9 fold multiplier dries up, and the Fed has much less inpact on being able to target the proper number of coupons to keep the economy smooth. During the recent crash when banks stopped loaning, as each dollar was paid back on debts, there was significant shrinkage of available money for transactions, and this kills the economy. This is the \"\"liquidity crisis\"\". Hope this helps. As I said, this is vastly simplified and I cannot go into all the reasons and historical items needed to understand it fully. It is a vastly complex (and necessarily so) and takes significant study to grasp the genius of it. It's similar to not being able to understand nuances of particle physics in one go, but as you study and work at it you see *why* things go as they do, and you learn all the failed methods (the gold standard is one example) that were thrown out for many good reasons. Cheers.\""
},
{
"docid": "523140",
"title": "",
"text": "G spread - you have a 5.5 year bond, you take your yield minus the yield on the 5.5y point (interpolated) of the benchmark sovereign curve. Think of G = Government. I Spread - same as G Spread but you use the relevant Swap Curve. E.g. USD bond, compare against the USD Swaps curve. I = interpolated. Z Spread - stands for zero volatility curve spread. You strip the swaps curve to get zero rates (i.e. Zero coupon rates for each tenor), then find the constant spread on top of each part of the curve's zero rates to arrive at your bond's yield. In G and I Spread, you're basically discounting the bond's cash flows using one rate (i.e. The interpolated yield on the curve). With Z Spread, you're discounting using the entire portion of the curve that's relevant to your bond's maturity."
},
{
"docid": "130727",
"title": "",
"text": "\"The answer is yes. And the reason is if today's interest rates are lower than the interest rate (coupon) at which the bond was issued. The bond's \"\"lifetime value\"\" is 100 cents on the dollar. That's the principal repayment that the investor will get on the maturity date. But suppose the bond's coupon rate is 4% while today's interest rate is 3%. Then, people who bought the bond at 100 would get 4% on their money, while everyone else was getting 3%. To compensate, a three year bond would have to rise to almost 103 so that the so-called yield to maturity\"\" would be 3%. Then there would be a \"\"capital loss\"\" (from almost 103 to 100) that would exactly offset the extra interest, that is 1% \"\"more\"\" for three years. If today's interest rates are negative (as they were from time to time in the 1930s, and in the present decade), the \"\"negative\"\" interest rates will prevent the buyer from getting the \"\"lifetime value\"\" (as defined by the OP) of principal plus interest over the original life of the bond. This happens in a \"\"flight to quality\"\" situation, where people are willing to take a (small) capital loss on Treasuries in order to prevent a large possible loss from bank failures like those that took place in 2008.\""
},
{
"docid": "343693",
"title": "",
"text": "\"The answer to your question depends very much on your definition of \"\"long-term\"\". Because let's make something clear: an investment horizon of three to six months is not long term. And you need to consider the length of time from when an \"\"emergency\"\" develops until you will need to tap into the money. Emergencies almost by definition are unplanned. When talking about investment risk, the real word that should be used is volatility. Stocks aren't inherently riskier than bonds issued by the same company. They are likely to be a more volatile instrument, however. This means that while stocks can easily gain 15-20 percent or more in a year if you are lucky (as a holder), they can also easily lose just as much (which is good if you are looking to buy, unless the loss is precipitated by significantly weaker fundamentals such as earning lookout). Most of the time stocks rebound and regain lost valuation, but this can take some time. If you have to sell during that period, then you lose money. The purpose of an emergency fund is generally to be liquid, easily accessible without penalties, stable in value, and provide a cushion against potentially large, unplanned expenses. If you live on your own, have good insurance, rent your home, don't have any major household (or other) items that might break and require immediate replacement or repair, then just looking at your emergency fund in terms of months of normal outlay makes sense. If you own your home, have dependents, lack insurance and have major possessions which you need, then you need to factor those risks into deciding how large an emergency fund you might need, and perhaps consider not just normal outlays but also some exceptional situations. What if the refrigerator and water heater breaks down at the same time that something breaks a few windows, for example? What if you also need to make an emergency trip near the same time because a relative becomes seriously ill? Notice that the purpose of the emergency fund is specifically not to generate significant interest or dividend income. Since it needs to be stable in value (not depreciate) and liquid, an emergency fund will tend towards lower-risk and thus lower-yield investments, the extreme being cash or the for many more practical option of a savings account. Account forms geared toward retirement savings tend to not be particularly liquid. Sure, you can usually swap out one investment vehicle for another, but you can't easily withdraw your money without significant penalties if at all. Bonds are generally more stable in value than stocks, which is a good thing for a longer-term portion of an emergency fund. Just make sure that you are able to withdraw the money with short notice without significant penalties, and pick bonds issued by stable companies (or a fund of investment-grade bonds). However, in the present investment climate, this means that you are looking at returns not significantly better than those of a high-yield savings account while taking on a certain amount of additional risk. Bonds today can easily have a place if you have to pick some form of investment vehicle, but if you have the option of keeping the cash in a high-yield savings account, that might actually be a better option. Any stock market investments should be seen as investments rather than a safety net. Hopefully they will grow over time, but it is perfectly possible that they will lose value. If what triggers your financial emergency is anything more than local, it is certainly possible to have that same trigger cause a decline in the stock market. Money that you need for regular expenses, even unplanned ones, should not be in investments. Thus, you first decide how large an emergency fund you need based on your particular situation. Then, you build up that amount of money in a savings vehicle rather than an investment vehicle. Once you have the emergency fund in savings, then by all means continue to put the same amount of money into investments instead. Just make sure to, if you tap into the emergency fund, replenish it as quickly as possible.\""
},
{
"docid": "591967",
"title": "",
"text": "But the notes are always called at par, no? So you have a fixed yield which depends on the coupon and price you bought it at. I still don't see how the company doing better than expected changes the yield on your investment."
},
{
"docid": "431386",
"title": "",
"text": "\"TL;DR: If your currently held bond's bid yield is smaller than another bonds' ask yield. You can swap your bond for bigger returns. Let's imagine you buy a long bond for $12000 (face value of $10000) and it has 6% coupon. The cash flows will have an internal return rate of 4.37%, this is the published \"\"ask yield\"\" in 2014 of the bond. After six years, prices have fallen, inflation and yields went up. So you can sell it for only $10000. If you would do it, the IRR will be only 2.55%, so there will be less return, than if you keep it. But if you would \"\"undo\"\" the transaction, then the future cash flows would yield 6.38%. This is the \"\"bid yield\"\" in 2020 of the bond. If you can find an offer that yields more than 6.38%, you have better returns if you sell your bond and invest that $10000 in the other bond. But as other answers pointed it out, you rarely have this opportunity as the market is very effective. (Assuming everything else is equal.)\""
},
{
"docid": "141174",
"title": "",
"text": "Smallest risk of default would depend on where Alice and Bob live I suppose, but lets assume they are in a lower yielding nation where default is not a big concern. Remember for instance that Greece was a lower yielding nation at one point and that the US has defaulted before. Let's start with Bob because he is easier to analyze. Yield curves inversions generally pre-date recessions which is generally not so good for Bob as rates tend to drop during recessions and he will be at the short end of the curve so his bonds will be less sensitive. However, he will generally get higher yields in good times to make up for this, but these higher yields come with a price in that he is generally much more sensitive to yield changes and can get much larger swings in portfolio value. First off as JB mentioned Alice would likely own inflation-linked (IL) bonds. Which behave fairly differently from Bob's bonds. However, to keep this simple lets say they live in a place without IL bonds or IL bonds are not a consideration. Then generally Alice has lower yielding bonds in good times but may do very well when the fed steps in during a crisis. So, who wins in the long run? Likely Christi who owns a mix of a broad index of stocks and bonds in a risk mix where she wouldn't have to sell in downturns. Especially, as Christi wouldn't have to pay the trading costs of moving her whole portfolio between long and short bonds. Between Bob and Alice however Bob would likely win in the long run as the markets generally reward risk taking in the long run. Still inflation (even without the IL bonds) and general rate trends (long-term rates are historically low right now) could have Bob losing for uncomfortably long periods."
},
{
"docid": "498645",
"title": "",
"text": "\"Bonds might not be simple, but in general there are only a few variables that need to be understood: bid, coupon (interest) rate, maturity, and yield. Bond tables clearly lay those out, and if you're talking about government bonds a lot of things (like convertibles) don't apply (although default is still a concern). This might be overly simplistic, but I view ETF's primarily as an easy way to bring somewhat esoteric instruments (like grain futures) into the easily available markets of Nasdaq and the NYSE. That they got \"\"enhanced\"\" with leveraged funds and the such is interesting, but perhaps not the original intent of the instrument. Complicating your situation a bit more is the fee that gets tacked onto the ETF. Even Vanguard government bond funds hang out north of 0.1%. That's not huge, but it's not particularly appealing either considering that (unlike rounding up live cattle futures), it's not that much work to buy US government bonds, so the expense might not seem worth it to someone who's comfortable purchasing the securities directly. I'd be interested to see someone else's view on this, but in general I'd say that if you know what you want and know how to buy it, the government bond ETF becomes a lot less relevant as the liquidity offered (including the actual \"\"ease of transacting\"\") seem to to be the biggest factors in favor. From Investopedia's description: The bond ETF is an exciting new addition to the bond market, offering an excellent alternative to self-directed investors who, looking for ease of trading and increased price transparency, want to practice indexing or active bond trading. However, bond ETFs are suitable for particular strategies. If, for instance, you are looking to create a specific income stream, bond ETFs may not be for you. Be sure to compare your alternatives before investing.\""
},
{
"docid": "457122",
"title": "",
"text": "\"For a two year time frame, a good insured savings account or a low-cost short-term government bond fund is most likely the way I would go. Depending on the specific amount, it may also be reasonable to look into directly buying government bonds. The reason for this is simply that in such a short time period, the stock market can be extremely volatile. Imagine if you had gone all in with the money on the stock market in, say, 2007, intending to withdraw the money after two years. Take a broad stock market index of your choice and see how much you'd have got back, and consider if you'd have felt comfortable sticking to your plan for the duration. Since you would likely be focused more on preservation of capital than returns during such a relatively short period, the risk of the stock market making a major (or even relatively minor) downturn in the interim would (should) be a bigger consideration than the possibility of a higher return. The \"\"return of capital, not return on capital\"\" rule. If the stock market falls by 10%, it must go up by 11% to break even. If it falls by 25%, it must go up by 33% to break even. If you are looking at a slightly longer time period, such as the example five years, then you might want to add some stocks to the mix for the possibility of a higher return. Still, however, since you have a specific goal in mind that is still reasonably close in time, I would likely keep a large fraction of the money in interest-bearing holdings (bank account, bonds, bond funds) rather than in the stock market. A good compromise may be medium-to-high-yield corporate bonds. It shouldn't be too difficult to find such bond funds that can return a few percentage points above risk-free interest, if you can live with the price volatility. Over time and as you get closer to actually needing the money, shift the holdings to lower-risk holdings to secure the capital amount. Yes, short-term government bonds tend to have dismal returns, particularly currently. (It's pretty much either that, or the country is just about bankrupt already, which means that the risk of default is quite high which is reflected in the interest premiums demanded by investors.) But the risk in most countries' short-term government bonds is also very much limited. And generally, when you are looking at using the money for a specific purpose within a defined (and relatively short) time frame, you want to reduce risk, even if that comes with the price tag of a slightly lower return. And, as always, never put all your eggs in one basket. A combination of government bonds from various countries may be appropriate, just as you should diversify between different stocks in a well-balanced portfolio. Make sure to check the limits on how much money is insured in a single account, for a single individual, in a single institution and for a household - you don't want to chase high interest bank accounts only to be burned by something like that if the institution goes bankrupt. Generally, the sooner you expect to need the money, the less risk you should take, even if that means a lower return on capital. And the risk progression (ignoring currency effects, which affects all of these equally) is roughly short-term government bonds, long-term government bonds or regular corporate bonds, high-yield corporate bonds, stock market large cap, stock market mid and low cap. Yes, there are exceptions, but that's a resonable rule of thumb.\""
},
{
"docid": "408610",
"title": "",
"text": "\"Google is a poor example since it doesn't pay a dividend (and doesn't expect to), so let's use another example with easy numbers. Company X has a stock price of $100, and it pays a quarterly dividend (many companies do). Let's assume X pays a dividend of $4. Dividends are always quoted in annual terms, as is dividend yield. When a company says that they pay \"\"quarterly dividends,\"\" it means that the company pays dividends every quarter, or every 3 months. BUT, if a company has a $4 dividend, you will not receive $4 every quarter per share. You will receive $4/4 = $1 per share, every quarter. So over the course of a fiscal year, or 4 quarters, you'll get $1 + $1 + $1 + $1 = $4 per share, which is the annual dividend. The dividend yield = annual dividend/stock price. So in this case, company X's div. yield will be $4/$100 * 100 = 4%. It's important to note that this is the annual yield. To get the quarterly yield, you must divide by 4. It's also important to note that the yield fluctuates based on stock price, but the dividend payment stays constant unless the company states an announcement. For a real world example, consider Intel Corp. (TICKER: INTC) http://finance.yahoo.com/q?s=INTC The share price is currently $22.05, and the dividend is $0.84. This makes the annual yield = $0.84/$22.05 * 100 = 3.80%. Intel pays a quarterly dividend, so you can expect to receive $0.21 every quarter for every share of Intel that you own. Hope that clears it up!\""
},
{
"docid": "211308",
"title": "",
"text": "Say you buy a bond that currently costs $950, and matures in one year, at $1000 face value. It has one coupon ($50 interest payment) left. The coupon, $50, is 50/950 or 5.26%, but you get the face value, $1000, for an additional $50 return. This is why the yield to maturity is higher than current yield. If the maturity were in two years, the coupons still provide 5.26%, and the extra 1000/950 is another 5.26% over 2 years, or (approx) 2.6%/yr compounded, for a total YTM of 7.86%. This is a back-of envelope calculation, the real way to calculate is with a finance calculator. Entering PV (present value) FV (future value) PMT (coupon payment(s)) and N (number of periods). With no calculator or spreadsheet, my estimate will be pretty close."
},
{
"docid": "538278",
"title": "",
"text": "\"A title such as \"\"5% Treasury Gilt 2020\"\" expresses the nominal yield. In other words, 5% is the yield you will receive if you are able to buy the Gilt at the nominal (issue) price of GBP100. Of course, you will not be able to buy such a Gilt in today's market for the nominal price of GBP100. It will be trading at a considerable premium and therefore, if you hold it until maturity you will realise a capital loss to offset the relatively high income you have received. Here is an example. The \"\"8% June 2021 Gilt\"\" has a coupon of 8%. To purchase a GBP100 nominal Gilt in today's market will cost you GBP135.89. Thus, you will pay 135.89 to receive GBP8.00 income annually. This represents a 5.88% yield (8/135.89 = 5.88%). That sounds pretty good. However, if you hold the Gilt until maturity you will only receive GBP100 on redemption and therefore you will experience a capital loss GBP35.89 on each Gilt purchased. When this capital loss is taken into account it means that the 5.88% yield you are receiving as income will be offset by the capital loss so that you have earned the equivalent of 0.757% annually. You can of course sell the Gilt before its 2021 maturity date, however as the maturity date gets closer the market price will get closer to the GBP100 nominal value and you will again face a capital loss. There's no free ride in the markets. 5 year Gilts currently have a redemption yield of about 0.75%, while 10 year Gilts currently have a redemption yield of about 1.15%. You may also wish to note that buying Gilts in the open market requires a minimum purchase of GBP10,000 nominal value. However, you can purchase small Gilt holdings through the post office.\""
},
{
"docid": "247895",
"title": "",
"text": "The real value of a share of stock is the current cash value of all dividends the owner will receive, plus the current cash value of the final liquidation if any. Since people with different needs may judge the current cash value of an income stream differently, there would be a market basis for people to buy and sell stocks even if everyone could predict all future payouts perfectly. If shareholders knew that a company wouldn't pay any dividends until it was liquidated in the year 2066, whereupon it would pay $2000/share, then each share would in 2016 effectively be a fifty-year zero-coupon bond with a $2000 maturity value. While some investors would be willing to trade in such an instrument, the amount of money a company could charge for such an instrument would be far lower than the money it could charge for one with payouts that were more evenly distributed through time. Since the founders of most companies want their companies to be around for a long time, that would mean that shareholders would have no expectation of their shares ever yielding anything of value within any foreseeable timeframe. Even those who would be more interested in share-price appreciation than dividends wouldn't be able to see share prices rise if there wasn't any likelihood of the stock being bought by someone who wanted the dividends."
}
] |
4845 | What is the difference between fund and portfolio? | [
{
"docid": "40424",
"title": "",
"text": "\"A \"\"Fund\"\" is generally speaking a collection of similar financial products, which are bundled into a single investment, so that you as an individual can buy a portion of the Fund rather than buying 50 portions of various products. e.g. a \"\"Bond Fund\"\" may be a collection of various corporate bonds that are bundled together. The performance of the Fund would be the aggregate of each individual item. Generally speaking Funds are like pre-packaged \"\"diversification\"\". Rather than take time (and fees) to buy 50 different stocks on the same stock index, you could buy an \"\"Index Fund\"\" which represents the values of all of those stocks. A \"\"Portfolio\"\" is your individual package of investments. ie: the 20k you have in bonds + the 5k you have in shares, + the 50k you have in \"\"Funds\"\" + the 100k rental property you own. You might split the definition further buy saying \"\"My 401(k) portfolio & my taxable portfolio & my real estate portfolio\"\"(etc.), to denote how those items are invested. The implication of \"\"Portfolio\"\" is that you have considered how all of your investments work together; ie: your 5k in stocks is not so risky, because it is only 5k out of your entire 185k portfolio, which includes some low risk bonds and funds. Another way of looking at it, is that a Fund is a special type of Portfolio. That is, a Fund is a portfolio, that someone will sell to someone else (see Daniel's answer below). For example: Imagine you had $5,000 invested in IBM shares, and also had $5,000 invested in Apple shares. Call this your portfolio. But you also want to sell your portfolio, so let's also call it a 'fund'. Then you sell half of your 'fund' to a friend. So your friend (let's call him Maurice) pays you $4,000, to invest in your 'Fund'. Maurice gives you $4k, and in return, you given him a note that says \"\"Maurice owns 40% of atp9's Fund\"\". The following month, IBM pays you $100 in dividends. But, Maurice owns 40% of those dividends. So you give him a cheque for $40 (some funds automatically reinvest dividends for their clients instead of paying them out immediately). Then you sell your Apple shares for $6,000 (a gain of $1,000 since you bought them). But Maurice owns 40% of that 6k, so you give him $2,400 (or perhaps, instead of giving him the money immediately, you reinvest it within the fund, and buy $6k of Microsoft shares). Why would you set up this Fund? Because Maurice will pay you a fee equal to, let's say, 1% of his total investment. Your job is now to invest the money in the Fund, in a way that aligns with what you told Maurice when he signed the contract. ie: maybe it's a tech fund, and you can only invest in big Tech companies. Maybe it's an Index fund, and your investment needs to exactly match a specific portion of the New York Stock Exchange. Maybe it's a bond fund, and you can only invest in corporate bonds. So to reiterate, a portfolio is a collection of investments (think of an artist's portfolio, being a collection of their work). Usually, people refer to their own 'portfolio', of personal investments. A fund is someone's portfolio, that other people can invest in. This allows an individual investor to give some of their decision making over to a Fund manager. In addition to relying on expertise of others, this allows the investor to save on transaction costs, because they can have a well-diversified portfolio (see what I did there?) while only buying into one or a few funds.\""
}
] | [
{
"docid": "240591",
"title": "",
"text": "\"It depends on what you're talking about. If this is for your retirement accounts, like IRAs, then ABSOLUTELY NOT! In your retirement accounts you should be broadly diversified - not just between stocks, but also other markets like bonds. Target retirement funds and solid conservative or moderate allocation funds are the best 'quick-and-dirty' recommendation for those accounts. Since it's for the long haul, you want to be managing risk, not chasing returns. Returns will happen over the 40 or so years they have to grow. Now, if you're talking about a taxable stock account, and you've gotten past PF questions like \"\"am I saving enough for retirement\"\", and \"\"have I paid off my debt\"\", then the question becomes a little more murky. First, yes, you should be diversified. The bulk of how a stock's movement will be in keeping with how its sector moves; so even a really great stock can get creamed if its sector is going down. Diversification between several sectors will help balance that. However, you will have some advantage in this sector. Knowing which products are good, which products everybody in the industry is excited about, is a huge advantage over other investors. It'll help you pick the ones that go up more when the sector goes up, and down less when the sector goes down. That, over time and investments, really adds up. Just remember that a good company and a good stock investment are not the same thing. A great company can have a sky-high valuation -- and if you buy it at that price, you can sit there and watch your investment sink even as the company is growing and doing great things. Have patience, know which companies are good and which are bad, and wait for the price to come to you. One final note: it also depends on what spot you are in. If you're a young guy looking looking to invest his first few thousand in the market, then go for it. On the other hand, if you're older, and we're talking about a couple hundred grand you've got saved up, then it's a whole different ball of wax. It that spot, you're back to managing risk, and need to build a solid portfolio, at a measured pace.\""
},
{
"docid": "75372",
"title": "",
"text": "Bond MF/ETF comes in many flavour, one way to look at them is corporate, govt. (gilt/sovreign), money market (short term, overnight lending etc.), govt. backed bonds. The ETF/MFs that invest money in these are also different types. One way to evaluate an ETF/MF is to see where they invest your money. Corporate debts are by the highest coupon paying bonds, however, the chance of default is also greater, if you wish to invest in these, it is preferable to look at the ETF/MF's debt portfolio financial ratings (Moodies etc.). Govt. bonds are more stable and unless the govt. defaults (which happens more often than we would like to think), here also look for higher rating bonds portfolio that the fund/scheme carries. The govt. backed bonds are somewhat similar to sovreign bonds, however, these are issuesd by institutions which are backed by govt. (e.g. national railways, municipal bodies etc.), any fund/scheme that invests in these bonds could also be considered and similarly measured. The last are the short term money market related, which provides the least return but are very liquid. It is very difficult to answer how you should invest large sum on ETF/MFs that are bond oriented. However, from any investment perspective, it is better to spread your money. If I take your hypthetical case of 1M$, I would divide it into 100K$ pieces and invest in 10 different ETF/MF schemes of different flavour: Hope this helps."
},
{
"docid": "173846",
"title": "",
"text": "CFDs (Contracts for Difference) are basically a contract between you and the broker on the difference in price of the underlying between the time you open a position and close a position. You are not actually buying the underlying. With share CFDs, the outcome is a bit like buying the underlying shares on margin. You pay interest for every day you hold the CFDs overnight for long CFDs. However, with short positions, you get paid interest for every day you hold your short position overnight. Most people use CFDs for short term trading, however they can be used for medium to longer term trading just as you would hold a portfolio on margin. What you have to remember is that because you are buying on margin you can lose more than your initial contract amount. A way to manage this risk is by using position sizing and stop loses. With your position sizing, if you wanted to invest $10,000 in a particular share trading at $10 per share, you would then buy 1000 shares or 1000 CFDs in that share. Your initial expense with the CFDs might be only $1000 (at a margin rate of 10%). So instead of increasing your risk by having an initial outlay of $10,000 with the CFDs you limit your risk to the same as you were buying the shares directly."
},
{
"docid": "69762",
"title": "",
"text": "I looked a bit at the first 3, .24% expense. There's a direction to not discuss individual investments here, so the rest of my answer will need to lean generic. I see you have 5 funds. I'm surmising it's an attempt at 'diversifying'. I'll ask you - what do these five, when combined, offer that a straight S&P 500 index (or some flavor of extended market) doesn't? I've gone through the exercise of looking at portfolios with a dozen funds and found overlap so great that 2 or 3 funds would have been sufficient. There are S&P funds that are as low as .05%. this difference may not seem like much, but it adds over time. To your last point, I'd consider a Solo 401(k) as you're self employed. One that offers the Roth option if you are in the marginal 15% bracket."
},
{
"docid": "19364",
"title": "",
"text": "\"Loads may be widespread but they are absolutely not an \"\"industry standard\"\". Almost every major provider of mutual funds has \"\"no load\"\" funds. I'm sure your bank wants you to buy the funds with front loads, but they can't force you to buy those funds (unless you sign such a disclaimer when you open the account). What your bank can do is charge their own transaction fees for \"\"third-party\"\" funds, and those may end up being as much as or more than the funds' own loads. I don't know which bank you have, but many banks have their own mutual funds that have no loads or other transaction fees. Essentially you can rearrange your portfolio however you want (within reason) at no cost as long as you buy and sell their funds exclusively. But of course every bank is different, and in many cases those funds will perform poorly compared to investment companies like Vanguard. Of course every mutual fund must report its performance so you can always check that yourself. If your bank refuses to let you buy any no-load mutual funds (even ones that they run themselves) and/or wants to charge you steep transaction fees in order to discourage buying them, then may I suggest a different bank? FYI, mutual funds generally \"\"make their money\"\" on management fees. If a fund advertises a load but a particularly low management fee, it may actually be worth buying compared to another fund with no load and a high management fee, if you don't expect to be buying and selling frequently. On the other hand, if a fund has a high management fee and a high load, it's probably garbage.\""
},
{
"docid": "358997",
"title": "",
"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."
},
{
"docid": "148541",
"title": "",
"text": "\"Your only real alternative is something like T-Bills via your broker or TreasuryDirect or short-term bond funds like the Vanguard Short-Term Investment-Grade Fund. The problem with this strategy is that these options are different animals than a money market. You're either going to subject yourself to principal risk or lose the flexibility of withdrawing the money. A better strategy IMO is to look at your overall portfolio and what you actually want. If you have $100k in a money market, and you are not going to need $100k in cash for the forseeable future -- you are \"\"paying\"\" (via the low yield) for flexibility that you don't need. If get your money into an appropriately diversified portfolio, you'll end up with a more optimal return. If the money involved is relatively small, doing nothing is a real option as well. $5,000 at 0.5% yields $25, and a 5% return yields only $250. If you need that money soon to pay tuition, use for living expenses, etc, it's not worth the trouble.\""
},
{
"docid": "436020",
"title": "",
"text": "\"TD e-series index funds are great for regular contributions every paycheck since there is no trading commission. The personal finance blog \"\"Canadian Couch Potato\"\" has great examples of what they call \"\"model portfolios\"\" and one consists of entirely TD e-series index funds. Check it out: http://canadiancouchpotato.com/model-portfolios-2/ The e-series portfolio that is described in the Model Portfolios (linked above) made returns of just over 10%. This is very similar to the ETF Model Portolio. One thing to remember is that these funds have a 30 day no sell time frame, otherwise a 2% fee is applied to the funds you withdraw.\""
},
{
"docid": "44349",
"title": "",
"text": "\"There's a huge difference between \"\"can an anverage person make a profit on the stock market\"\" and \"\"can an average person get rich off the stock market\"\". It is certainly possible for an average person to profit, but of course you are unlikely to profit as much as the big Wall Street guys. An S&P 500 index fund, for instance, would be a pretty good way to profit. People with high-powered tools may make a lot of money picking individual stocks, and may even make some choices that help them when the market is down, but it's difficult to see how they could consistently make money over the long term without the S&P 500 also going up. The same applies, to varying extents, to various other index funds, ETFs, and mutual funds. I agree with littleadv that there is no single \"\"right\"\" thing for everyone to do. My personal take is that index funds are a good bet, and I've seen a lot of people take that view on personal finance blogs, etc. (for whatever that's worth). One advantage of index funds that track major indexes (like the S&P 500) is that because they are and are perceived as macro-indicators of the overall economic situation, at least you're in the same boat as many other people. On one level, that means that if you lose money a lot of other investors are also losing money, and when large numbers of people start losing money, that makes governments take action, etc., to turn things around. On another level, the S&P 500 is a lot of big companies; if it goes down, some of those big companies are losing value, and they will use their big-company resources to gain value, and if they succeed, the index goes up again and you benefit. In other words, index funds (and large mutual funds, ETFs, etc.) make investing less about what day-trading wonks focus on, which is trying to make a \"\"hot choice\"\" for a large gain. They make it more about hitching your wagon to an extremely large star that is powered by all the resources of extremely large companies, so that when those companies increase their value, you gain. The bigger the pool of people whose fortunes rise and fall with your own, the more you become part of an investment portfolio that is (I can't resist saying it) \"\"too big to fail\"\". That isn't to say that the S&P 500 can't lose value from time to time, but rather that if it does go down big and hard and stay there, you probably have bigger problems than losing money in the stock market (e.g., the US economy is collapsing and you should begin stockpiling bullets and canned food).\""
},
{
"docid": "198229",
"title": "",
"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."
},
{
"docid": "555237",
"title": "",
"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.\""
},
{
"docid": "70702",
"title": "",
"text": "\"This is not a direct answer to your question, but you might want to consider whether you want to have a financial planner at all. Would a large mutual fund company or brokerage serve your needs better than a bank? You are still quite young and so have been contributing to IRAs for only a few years. Also, the wording in your question suggests that your IRA investments have not done spectacularly well, and so it is reasonable to infer that your IRA is not a large amount, or at least not as large as what it would be 30 years from now. At this level of investment, it would be difficult for you to find a financial planner who spends all that much time looking after your interests. That you should get away from your current planner, presumably a mid-level employee in what is typically called the trust division of the bank, is a given. But, to go to another bank (or even to a different employee in the same bank), where you will also likely be nudged towards investing your IRA in CDs, annuities, and a few mutual funds with substantial sales charges and substantial annual expense fees, might just take you from the frying pan into the fire. You might want to consider transferring your IRA to a large mutual fund company and investing it in something simple like one of their low-cost (meaning small annual expense ratio) index funds. The Couch Potato portfolio suggests equal amounts invested in a no-load S&P 500 Index fund and a no-load Bond Index fund, or a 75%-25% split favoring the stock index fund (in view of your age and the fact that the IRA should be a long-term investment). But the point is, you can open an IRA account, have the money transferred from your IRA account with the bank, and make the investments on-line all by yourself instead of having a financial advisor do it on your behalf and charge you a fee for doing so (not to mention possibly screwing it up.) You can set up Automated Investment too; the mutual fund company will gladly withdraw money from your checking account and invest it in whatever fund(s) you choose. All this is not complicated at all. If you would like to follow the Couch Potato strategy and rebalance your portfolio once a year, you can do it by yourself too. If you want to invest in funds other than the S&P 500 Index fund, etc. most mutual fund companies offer a \"\"portfolio analysis\"\" and advice for a fee (and the fee is usually waived when the assets increase above certain levels - varies from company to company). You could thus have a portfolio analysis done each year, and hopefully it will be free after a few more years. Indeed, at that level, you also typically get one person assigned as your advisor, just as you have with a bank. Once you get the recommendations, you can choose to follow them or not, but you have control over how and where your IRA assets are invested. Over the years, as your IRA assets grow, you can branch out into investments other than \"\"staid\"\" index funds, but right now, having a financial planner for your IRA might not be worth it. Later, when you have more assets, by all means if you want to explore investing in specific stocks with a brokerage instead of sticking to mutual funds only but this might also mean phone calls urging you to sell Stock A right now, or buy hot Stock B today etc. So, one way of improving your interactions and have a better experience with your new financial planner is to not have a planner at all for a few years and do some of the work yourself.\""
},
{
"docid": "322725",
"title": "",
"text": "In the past 10 years there have been mutual funds that would act as a single bucket of stocks and bonds. A good example is Fidelity's Four In One. The trade off was a management fee for the fund in exchange for having to manage the portfolio itself and pay separate commissions and fees. These days though it is very simple and pretty cheap to put together a basket of 5-6 ETFs that would represent a balanced portfolio. Whats even more interesting is that large online brokerage houses are starting to offer commission free trading of a number of ETFs, as long as they are not day traded and are held for a period similar to NTF mutual funds. I think you could easily put together a basket of 5-6 ETFs to trade on Fidelity or TD Ameritrade commission free, and one that would represent a nice diversified portfolio. The main advantage is that you are not giving money to the fund manager but rather paying the minimal cost of investing in an index ETF. Overall this can save you an extra .5-1% annually on your portfolio, just in fees. Here are links to commission free ETF trading on Fidelity and TD Ameritrade."
},
{
"docid": "117827",
"title": "",
"text": "\"The topic you are apparently describing is \"\"safe withdrawal rates\"\", more here. Please, note that the asset allocation is crucial decision with your rates. If you continue to keep a lot in cash, you cannot withdraw too much money \"\"to live and to travel\"\" because the expected return from cash is too low in the long run. In contrast, if you moved to more sensible decision like 30% bonds and 70% world portfolio -- the rates will me a lot different. As you are 30 years old, you could pessimist suppose to live next 100 years -- then your possible withdrawal rates would be much lower than let say over 50 years. Anyway besides deciding asset allocation, you need to estimate the time over which you need your assets. You have currently 24% in liquid cash and 12% in bonds but wait you use the word \"\"variety of funds\"\" with about 150k USD, what are they? Do you have any short-term bonds or TIPS as inflation hedge? Do you miss small and value? What is your sector allocation between small-med-large and value-blend-growth? If you are risk-averse, you could add some value small. Read the site, it does much better job than any question-answer site can do (the link above).\""
},
{
"docid": "59670",
"title": "",
"text": "\"Lifecycle funds might be a suitable fit for you. Lifecycle funds (aka \"\"target date funds\"\") are a mutual fund that invests your money in other mutual funds based on how much time is left until you need the money-- they follow a \"\"glide-path\"\" of reducing stock holdings in favor of bonds over time to reduce volatility of your final return as you near retirement. The ones I've looked at don't charge a fee of their own for this, but they do direct your portfolio to actively managed funds. That said, the ones I've seen have an \"\"acquired\"\" expense ratio of less than what you're proposing you'd pay a professional. FWIW, my current plan is to invest in a binary portfolio of cheap mutual funds that track S&P500 and AGG and rebalance regularly. This is easy enough that I don't see the point of adding in a 1 percent commission.\""
},
{
"docid": "460779",
"title": "",
"text": "\"Your retirement plan shouldn't necessarily be dictated by your perceived employment risks. If you're feeling insecure about your short-term job longevity and mid-career prospects, you will likely benefit from a thoughtful and robust emergency fund plan. Your retirement plan is really designed to fund your life after work, so the usual advice to contribute as much as you can as early as you can applies either way. While a well-funded retirement portfolio will help you feel generally more secure in the long run (and worst case can be used earlier), a good emergency fund will do more to address your near-term concerns. Both retirement and emergency fund planning are fundamental to a comprehensive personal finance plan. This post on StackExchange has some basic info about your retirement options. Given your spare income, you should be able to fully fund an IRA and your 401K every year with some left over. Check the fees in your 401K to determine if you really want to fully fund the 401K past employer matching. There are several good answers and info about that here. Low-cost mutual funds are a good choice for starting your IRA. There is a lot of different advice about emergency funds (check here) ranging from x months salary in savings to detailed planning for each of your expenses. Regardless of which method you chose, it is important to think about your personal risk tolerance and create a plan that addresses your personal needs. It's difficult to live life and perform well at work if you're always worried about your situation. A good emergency plan should go a long way toward calming those fears. Your concern about reaching mid-life and becoming obsolete or unable to keep up in your career may be premature. Of course your mind, body, and your abilities will change over the years, but it is very difficult to predict where you will be, what you will be doing, and whether your experience will offset any potential decrease in your ability to keep up. It's good to think ahead and consider the \"\"what-ifs\"\", but keep in mind that those scenarios are not preordained. There isn't anything special about being 40 that will force you into a different line of work if you don't want to switch.\""
},
{
"docid": "438547",
"title": "",
"text": "There are many ways to calculate the return, and every way will give you a different results in terms of a percentage-value. One way to always get something meaningful - count the cash. You had 977 (+ 31) and in the end you have 1.370, which means you have earned 363 dollars. But what is your return in terms of percentage? One way to look at it, is by pretending that it is a fund in which you invest 1 dollar. What is the fund worth in the beginning and in the end? The tricky part in your example is, you injected new capital into the equation. Initially you invested 977 dollars which later, in the second period became worth 1.473. You then sold off 200 shares for 950 dollars. Remember your portfolio is still worth 1.473, split between 950 in cash and 523 in Shares. So far so good - still easy to calculate return (1.473 / 977 -1 = 50.8% return). Now you buy share for 981 dollars, but you only had 950 in cash? We now need to consider 2 scenarios. Either you (or someone else) injected 31 dollars into the fund - or you actually had the 31 dollars in the fund to begin with. If you already had the cash in the fund to begin with, your initial investment is 1.008 and not 977 (977 in shares and 31 in cash). In the end the value of the fund is 1.370, which means your return is 1.370 / 1.007 = 36%. Consider if the 31 dollars was paid in to the fund by someone other than you. You will then need to recalculate how much you each own of the fund. Just before the injection, the fund was worth 950 in cash and 387 in stock (310 - 200 = 110 x 3.54) = 1.339 dollars - then 31 dollars are injected, bringing the value of the fund up to 1.370. The ownership of the fund is split with 1.339 / 1.370 = 97.8% of the value for the old capital and 2.2% for the new capital. If the value of the fund was to change from here, you could calculate the return for each investor individually by applying their share of the funds value respective to their investment. Because the value of the fund has not changed since the last period (bullet 3), the return on the original investment is (977 / 1.339 - 1 = 37.2%) and the return on the new capital is (31 / 31 = 0%). If you (and not someone else) injected the 31 dollar into the fund, you will need to calculate the weight of each share of capital in each period and get the average return for each period to get to a total return. In this specific case you will still get 37.2% return - but it gets even more comlex for each time you inject new capital."
},
{
"docid": "134542",
"title": "",
"text": "\"When you invest in a single index/security, you are completely exposed to the risk of that security. Diversification means spreading the investments so the losses on one side can be compensated by the gains on the other side. What you are talking about is one thing called \"\"risk apettite\"\", more formally known as Risk Tolerance: Risk tolerance is the degree of variability in investment returns that an investor is willing to withstand. (emphasis added) This means that you are willing to accept some losses in order to get a potential bigger return. Fidelity has this graph: As you can see in the table above, the higher the risk tolerance, the bigger the difference between the best and worst values. That is the variability. The right-most pie can be one example of an agressive diversified portfolio. But this does not mean you should go and buy exactly that security compostion. High-risk means playing with fire. Unless you are a professional stuntman, playing with fire usually leaves people burnt. In a financial context this usually means the money is gone. Recommended Reading: Investopedia; Risk and Diversification: The Risk-Reward Tradeoff Investopedia; How to construct a High Risk portfolio Fidelity: Guide to Diversification KPMG: Understanding and articulating Risk Appetite (pdf)\""
},
{
"docid": "30774",
"title": "",
"text": "The biggest challenge with owning any individual stock is price fluctuation, which is called risk. The scenarios you describe assume that the stock behaves exactly as you predict (price/portfolio doubles) and you need to consider risk. One way to measure risk in a stock or in a portfolio is Sharpe Ratio (risk adjusted return), or the related Sortino ratio. One piece of advice that is often offered to individual investors is to diversify, and the stated reason for diversification is to reduce risk. But that is not telling the whole story. When you are able to identify stocks that are not price correlated, you can construct a portfolio that reduces risk. You are trying to avoid 10% tax on the stock grant (25%-15%), but need to accept significant risk to avoid the 10% differential tax ($1000). An alternative to a single stock is to invest in an ETF (much lower risk), which you can buy and hold for a long time, and the price/growth of an ETF (ex. SPY) can be charted versus your stock to visualize the difference in growth/fluctuation. Look up the beta (volatility) of your stock compared to SPY (for example, IBM). Compare the beta of IBM and TSLA and note that you may accept higher volatility when you invest in a stock like Tesla over IBM. What is the beta of your stock? And how willing are you to accept that risk? When you can identify stocks that move in opposite directions, and mix your portfolio (look up beta balanced portolio), you can smooth out the variability (reduce the risk), although you may reduce your absolute return. This cannot be done with a single stock, but if you have more money to invest you could compose the rest of your portfolio to balance the risk for this stock grant, keep the grant shares, and still effectively manage risk. Some years ago I had accumulated over 10,000 shares (grants, options) in a company where I worked. During the time I worked there, their price varied between $30/share and < $1/share. I was able to liquidate at $3/share."
}
] |
4845 | What is the difference between fund and portfolio? | [
{
"docid": "339928",
"title": "",
"text": "\"A fund is a portfolio, in that it is a collection, so the term is interchangeable for the most part. Funds are made up of a combination of equities positions (i.e., stocks, bonds, etc.) plus some amount of un-invested cash. Most of the time, when people are talking about a \"\"fund\"\", they are describing what is really an investment strategy. In other words, an example would be a \"\"Far East Agressive\"\" fund (just a made up name for illustration here), which focuses on investment opportunities in the Far East that have a higher level of risk than most other investments, thus they provide better returns for the investors. The \"\"portfolio\"\" part of that is what the stocks are that the fund has purchased and is holding on behalf of its investors. Other funds focus on municipal bonds or government bonds, and the list goes on. I hope this helps. Good luck!\""
}
] | [
{
"docid": "70702",
"title": "",
"text": "\"This is not a direct answer to your question, but you might want to consider whether you want to have a financial planner at all. Would a large mutual fund company or brokerage serve your needs better than a bank? You are still quite young and so have been contributing to IRAs for only a few years. Also, the wording in your question suggests that your IRA investments have not done spectacularly well, and so it is reasonable to infer that your IRA is not a large amount, or at least not as large as what it would be 30 years from now. At this level of investment, it would be difficult for you to find a financial planner who spends all that much time looking after your interests. That you should get away from your current planner, presumably a mid-level employee in what is typically called the trust division of the bank, is a given. But, to go to another bank (or even to a different employee in the same bank), where you will also likely be nudged towards investing your IRA in CDs, annuities, and a few mutual funds with substantial sales charges and substantial annual expense fees, might just take you from the frying pan into the fire. You might want to consider transferring your IRA to a large mutual fund company and investing it in something simple like one of their low-cost (meaning small annual expense ratio) index funds. The Couch Potato portfolio suggests equal amounts invested in a no-load S&P 500 Index fund and a no-load Bond Index fund, or a 75%-25% split favoring the stock index fund (in view of your age and the fact that the IRA should be a long-term investment). But the point is, you can open an IRA account, have the money transferred from your IRA account with the bank, and make the investments on-line all by yourself instead of having a financial advisor do it on your behalf and charge you a fee for doing so (not to mention possibly screwing it up.) You can set up Automated Investment too; the mutual fund company will gladly withdraw money from your checking account and invest it in whatever fund(s) you choose. All this is not complicated at all. If you would like to follow the Couch Potato strategy and rebalance your portfolio once a year, you can do it by yourself too. If you want to invest in funds other than the S&P 500 Index fund, etc. most mutual fund companies offer a \"\"portfolio analysis\"\" and advice for a fee (and the fee is usually waived when the assets increase above certain levels - varies from company to company). You could thus have a portfolio analysis done each year, and hopefully it will be free after a few more years. Indeed, at that level, you also typically get one person assigned as your advisor, just as you have with a bank. Once you get the recommendations, you can choose to follow them or not, but you have control over how and where your IRA assets are invested. Over the years, as your IRA assets grow, you can branch out into investments other than \"\"staid\"\" index funds, but right now, having a financial planner for your IRA might not be worth it. Later, when you have more assets, by all means if you want to explore investing in specific stocks with a brokerage instead of sticking to mutual funds only but this might also mean phone calls urging you to sell Stock A right now, or buy hot Stock B today etc. So, one way of improving your interactions and have a better experience with your new financial planner is to not have a planner at all for a few years and do some of the work yourself.\""
},
{
"docid": "571913",
"title": "",
"text": "I am a firm believer in TD's e-series funds. No other bank in Canada has index funds with such low management fees. Index funds offer the flexibility to re-balance your portfolio every month without the need to pay commission fees. Currently I allocate 10% of my paycheck to be diversified between Canadian, US, and International e-series index funds. In terms of just being for beginners, this opinion is most likely based on the fact that an e-series portfolio is very easy to manage. But this doesn't mean that it is only for beginners. Sometimes the easiest solution is the best one! :)"
},
{
"docid": "438582",
"title": "",
"text": "I think you need a diversified portfolio, and index funds can be a part of that. Make sure that you understand the composition of your funds and that they are in fact invested in different investments."
},
{
"docid": "274945",
"title": "",
"text": "Investors hungry for returns are piling back into securities once tarnished by the financial crisis. Complex structured investments developed a bad reputation during the credit crunch. Ten years later, investors seeking yield are overcoming their skepticism and buying into securities that rely on financial engineering to juice returns. Volumes of CLOs, or collateralized loan obligations, hit a record $247 billion in the first nine months of the year, according to data from J.P. Morgan Chase JPM 1.59%▲ & Co. Fueled by a wave of refinancings and nearly $100 billion in new deals, that far outpaces their recent full-year high of $151 billion in 2014 and the precrisis peak of $136 billion in 2006. The CLO boom is the latest sign of the ferocious hunt for yield permeating markets. Stellar performance over the past year has made CLOs increasingly hard to ignore for investors like insurance companies and pension funds. CLOs carve up a portfolio of bank loans to highly indebted companies into slices of securities with different levels of risk. The securities at the bottom of the CLO stack offer the highest potential source of returns, but they are also the first to absorb losses if there are defaults in the underlying loan portfolio. The more senior slices offer lower returns but are more insulated from losses. CLOs are often lumped together with other alphabet-soup acronyms of the financial crisis, such as more toxic CDOs, or collateralized debt obligations. But CLOs actually weathered the financial crisis well: Investors who bought at the top of the market in 2007 suffered paper losses, but there were no defaults at all for the highest-rated securities. That track record has helped boost CLOs’ appeal for investors with lingering concerns over scooping up more complex investments. . Taking off / Global CLO volumes “The demand for things like CLOs….is extraordinary,” said Rick Rieder, chief investment officer for global fixed income at BlackRock Inc. CLOs are one of the largest demand sources for the leveraged loan market, which has also been booming this year. Volumes of leveraged loans, often used by private-equity firms to fund buyouts, are on track to surpass their 2007 record, according to LCD, a unit of S&P Global Market Intelligence. At the same time, investors have voiced concerns about companies’ rising leverage level, and weaker creditor protections. Within a CLO are different risk profiles: Investors in the most senior, AAA-rated piece of debt get paid first and are the most insulated from losses if defaults rise in the underlying loan portfolio. They also receive the skinniest returns. Slices of debt further down receive higher returns, but will suffer losses if defaults spike. At the bottom sits the equity tranche, the first loss-absorber and last to get paid, but the highest potential source of returns. A 2014 report from Standard & Poor’s Ratings Services stated that AAA-rated and AA-rated CLO tranches incurred no losses at all between 1994 and 2013. Loss rates for lower-rated tranches, meanwhile, were low—just 1.1% for B-rated securities over that period. . Flying High / Market returns since J.P. Morgan recommended buying CLOs last July That doesn’t prevent some conservative investors from conflating the CLOs with the now-infamous CDOs, many of which were linked to subprime mortgages and spread and amplified losses in the U.S. housing market. One breed of CDOs are on a comeback path of their own, with more investors returning to them during an aging bull market. Many people were “burnt by these acronyms from the crisis,” said Zak Summerscale, head of credit fund management for Europe and Asia Pacific at Intermediate Capital Group . He is currently recommending that clients buy senior CLO tranches over investment-grade bonds. CLOs, like other types of securitizations, have been subject to greater regulation since the financial crisis. That includes forcing funds that manage a CLO to retain 5% of the securities, in an effort to align incentives with investors. That has “attracted additional capital into the market,” said Mike Rosenberg, a principal at alternative investment manager Tetragon. Assets under management in the “loan participation” sector—a proxy for funds that invest in CLOs—have grown 21% this year to $206 billion, according to Thomson Reuters Lipper. The pickup in CLOs has been a boon to banks weathering declines in trading revenues in the current low-volatility environment. Revenue from CLO-related activity at the top 12 global investment banks more than doubled over the first half of 2017 from a year earlier to almost $1 billion, according to financial consultancy Coalition. CLO investors have been handsomely rewarded in recent months. J.P. Morgan strategist Rishad Ahluwalia recommended clients buy CLOs last July as he thought they looked too cheap. Between then and the end of September, BB-rated CLO tranches returned 25.4%, compared with a 25.2% return for the technology-oriented Nasdaq stock index, according to his calculations. “CLOs have been an absolute home run,” said Mr. Ahluwalia, though he added such chunky returns aren’t repeatable. Analysts say CLOs got beaten down last year following a series of troubles in the underlying loan market, including distress in the energy sector. Some analysts think the strong rally in CLO tranches since then should give investors pause; others think the market has further to run. Renaud Champion, head of credit strategies at Paris-based hedge fund La Française Investment Solutions, likes AAA-rated CLO tranches but with a twist: leverage. Mr. Champion says he buys senior European CLO tranches and borrows money against them to increase the size of his position between five and 10 times. That can amplify gains—and losses—significantly. “The difference between now and a year ago is the availability of leverage,” he said. Bankers say only a small proportion of CLO buyers use leverage and emphasize that trades are subject to daily margin calls. That means investors have to post cash to cover mark-to-market losses on a position, which in turn limits how much they are willing to borrow. “The leverage in the system today is a fraction compared to precrisis,” said J.P. Morgan’s Mr. Ahluwalia. Write to Christopher Whittall at [email protected] Appeared in the October 23, 2017, print edition as 'Crisis-Era Securities Regain Investors’ Favor.'"
},
{
"docid": "50119",
"title": "",
"text": "It depends on what you are looking for in the investment. Sharpe is generally used when you are choosing among portfolios(mutual funds, hedge funds, ETFs, etc.) to be the optimal risky portfolio. Treynor is typically used when deciding which security will be added to your portfolio. And the information ratio (alpha/residual standard deviation) is used when deciding which one you will add to a passive portfolio. Also don't forget, when analyzing a stock you need to look at the fundamentals. I hope this helps. And correct me if I'm wrong any you more experienced guys."
},
{
"docid": "322806",
"title": "",
"text": "\"Diversification is the only real free lunch in finance (reduction in risk without any reduction in expected returns), so clearly every good answer to your question will be \"\"yes.\"\" Diversification is good.\"\" Let's talk about many details your question solicits. Many funds are already pretty diversified. If you buy a mutual fund, you are generally already getting a large portion of the gains from diversification. There is a very large difference between the unnecessary risk in your portfolio if you only hold a couple of stocks and if you hold a mutual fund. Should you be diversified across mutual funds as well? It depends on what your funds are. Many funds, such as target-date funds, are intended to be your sole investment. If you have funds covering every major asset class, then there may not be any additional benefit to buying other funds. You probably could not have picked your \"\"favorite fund\"\" early on. As humans, we have cognitive biases that make us think we knew things early on that we did not. I'm sure at some point at the very beginning you had a positive feeling toward that fund. Today you regret not acting on it and putting all your money there. But the number of such feelings is very large and if you acted on all those, you would do a lot of crazy and harmful things. You didn't know early on which fund would do well. You could just as well have had a good feeling about a fund that subsequently did much worse than your diversified portfolio did. The advice you have had about your portfolio probably isn't based on sound finance theory. You say you have always kept your investments in line with your age. This implies that you believe the guidelines given you by your broker or financial advisor are based in finance theory. Generally speaking, they are not. They are rules of thumb that seemed good to someone but are not rigorously proven either in theory or empirics. For example the notion that you should slowly shift your investments from speculative to conservative as you age is not based on sound finance theory. It just seems good to the people who give advice on such things. Nothing particularly wrong with it, I guess, but it's not remotely on par with the general concept of being well-diversified. The latter is extremely well established and verified, both in theory and in practice. Don't confuse the concept of diversification with the specific advice you have received from your advisor. A fund averaging very good returns is not an anomaly--at least going forward it will not be. There are many thousand funds and a large distribution in their historical performance. Just by random chance, some funds will have a truly outstanding track record. Perhaps the manager really was skilled. However, very careful empirical testing has shown the following: (1) You, me, and people whose profession it is to select outperforming mutual funds are unable to reliably detect which ones will outperform, except in hindsight (2) A fund that has outperformed, even over a long horizon, is not more likely to outperform in the future. No one is stopping you from putting all your money in that fund. Depending on its investment objective, you may even have decent diversification if you do so. However, please be aware that if you move your money based on historical outperformance, you will be acting on the same cognitive bias that makes gamblers believe they are on a \"\"hot streak\"\" and \"\"can't lose.\"\" They can, and so can you. ======== Edit to answer a more specific line of questions =========== One of your questions is whether it makes sense to buy a number of mutual funds as part of your diversification strategy. This is a slightly more subtle question and I will indicate where there is uncertainty in my answer. Diversifying across asset classes. Most of the gains from diversification are available in a single fund. There is a lot of idiosyncratic risk in one or two stocks and much less in a collection of hundreds of stocks, which is what any mutual fund will hold. Still,you will probably want at least a couple of funds in your portfolio. I will list them from most important to least and I will assume the bulk of your portfolio is in a total US equity fund (or S&P500-style fund) so that you are almost completely diversified already. Risky Bonds. These are corporate, municipal, sovereign debt, and long-term treasury debt funds. There is almost certainly a good deal to be gained by having a portion of your portfolio in bonds, and normally a total market fund will not include bond exposure. Bonds fund returns are closely related to interest rate and inflation changes. They are also exposed to some market risk but it's more efficient to get that from equity. The bond market is very large, so if you did market weights you would have more in bonds than in equity. Normally people do not do this, though. Instead you can get the exposure to interest rates by holding a lesser amount in longer-term bonds, rather than more in shorter-term bonds. I don't believe in shifting your weights toward nor away from this type of bond (as opposed to equity) as you age so if you are getting that advice, know that it is not well-founded in theory. Whatever your relative weight in risky bonds when you are young is should also be your weight when you are older. International. There are probably some gains from having some exposure to international markets, although these have decreased over time as economies have become more integrated. If we followed market weights, you would actually put half your equity weight in an international fund. Because international funds are taxed differently (gains are always taxed at the short-term capital gains rate) and because they have higher management fees, most people make only a small investment to international funds, if any at all. Emerging markets International funds often ignore emerging markets in order to maintain liquidity and low fees. You can get some exposure to these markets through emerging markets funds. However, the value of public equity in emerging markets is small when compared with that of developed markets, so according to finance theory, your investment in them should be small as well. That's a theoretical, not an empirical result. Emerging market funds charge high fees as well, so this one is kind of up to your taste. I can't say whether it will work out in the future. Real estate. You may want to get exposure to real estate by buying a real-estate fund (REIT). Though, if you own a house you are already exposed to the real estate market, perhaps more than you want to be. REITs often invest in commercial real estate, which is a little different from the residential market. Small Cap. Although total market funds invest in all capitalization levels, the market is so skewed toward large firms that many total market funds don't have any significant small cap exposure. It's common for individuals to hold a small cap fund to compensate for this, but it's not actually required by investment theory. In principle, the most diversified portfolio should be market-cap weighted, so small cap should have negligible weight in your portfolio. Many people hold small cap because historically it has outperformed large cap firms of equal risk, but this trend is uncertain. Many researchers feel that the small cap \"\"premium\"\" may have been a short-term artifact in the data. Given these facts and the fact that small-cap funds charge higher fees, it may make sense to pass on this asset class. Depends on your opinion and beliefs. Value (or Growth) Funds. Half the market can be classed as \"\"value\"\", while the other half is \"\"growth.\"\" Your total market fund should have equal representation in both so there is no diversification reason to buy a special value or growth fund. Historically, value funds have outperformed over long horizons and many researchers think this will continue, but it's not exactly mandated by the theory. If you choose to skew your portfolio by buying one of these, it should be a value fund. Sector funds. There is, in general, no diversification reason to buy funds that invest in a particular sector. If you are trying to hedge your income (like trying to avoid investing in the tech sector because you work in that sector) or your costs (buying energy because you buy use a disproportionate amount of energy) I could imagine you buying one of these funds. Risk-free bonds. Funds specializing in short-term treasuries or short-term high-quality bonds of other types are basically a substitute for a savings account, CD, money market fund, or other cash equivalent. Use as appropriate but there is little diversification here per se. In short, there is some value in diversifying across asset classes, and it is open to opinion how much you should do. Less well-justified is diversifying across managers within the same asset class. There's very little if any advantage to doing that.\""
},
{
"docid": "331008",
"title": "",
"text": "\"I would like to first point out that there is nothing special about a self-managed investment portfolio as compared to one managed by someone else. With some exceptions, you can put together exactly the same investment portfolio yourself as a professional investor could put together for you. Not uncommonly, too, at a lower cost (and remember that cost is among the, if not the, best indicator(s) of how your investment portfolio will perform over time). Diversification is the concept of not \"\"putting all your eggs in one basket\"\". The idea here is that there are things that happen together because they have a common cause, and by spreading your investments in ways such that not all of your investments have the same underlying risks, you reduce your overall risk. The technical term for risk is generally volatility, meaning how much (in this case the price of) something fluctuates over a given period of time. A stock that falls 30% one month and then climbs 40% the next month is more volatile than one that falls 3% the first month and climbs 4% the second month. The former is riskier because if for some reason you need to sell when it is down, you lose a larger portion of your original investment with the former stock than with the latter. Diversification, thus, is reducing commonality between your investments, generally but not necessarily in an attempt to reduce the risk of all investments moving in the same direction by the same amount at the same time. You can diversify in various ways: Do you see where I am going with this? A well-diversed portfolio will tend to have a mix of equity in your own country and a variety of other countries, spread out over different types of equity (company stock, corporate bonds, government bonds, ...), in different sectors of the economy, in countries with differing growth patterns. It may contain uncommon classes of investments such as precious metals. A poorly diversified portfolio will likely be restricted to either some particular geographical area, type of equity or investment, focus on some particular sector of the economy (such as medicine or vehicle manufacturers), or so on. The poorly diversified portfolio can do better in the short term, if you time it just right and happen to pick exactly the right thing to buy or sell. This is incredibly hard to do, as you are basically working against everyone who gets paid to do that kind of work full time, plus computer-algorithm-based trading which is programmed to look for any exploitable patterns. It is virtually impossible to do for any real length of time. Thus, the well-diversified portfolio tends to do better over time.\""
},
{
"docid": "322725",
"title": "",
"text": "In the past 10 years there have been mutual funds that would act as a single bucket of stocks and bonds. A good example is Fidelity's Four In One. The trade off was a management fee for the fund in exchange for having to manage the portfolio itself and pay separate commissions and fees. These days though it is very simple and pretty cheap to put together a basket of 5-6 ETFs that would represent a balanced portfolio. Whats even more interesting is that large online brokerage houses are starting to offer commission free trading of a number of ETFs, as long as they are not day traded and are held for a period similar to NTF mutual funds. I think you could easily put together a basket of 5-6 ETFs to trade on Fidelity or TD Ameritrade commission free, and one that would represent a nice diversified portfolio. The main advantage is that you are not giving money to the fund manager but rather paying the minimal cost of investing in an index ETF. Overall this can save you an extra .5-1% annually on your portfolio, just in fees. Here are links to commission free ETF trading on Fidelity and TD Ameritrade."
},
{
"docid": "369612",
"title": "",
"text": "The existing account that her employer set up is probably not a Spousal RRSP, so for you to contribute your money to her RRSP you'd have to create a new account somewhere - could be with the same financial institution or somewhere else. But if you've got a joint bank account, the distinction between your money and her money becomes blurred. You're basically allowed to say the $10000 is her money as long as you can trace the funds back to amounts that she added (her paycheques). So in that case you could just use her existing RRSP if you want to. There may be other reasons to consider an alternate account, such as having more flexibility or lower costs for investing your contributions. Often the plans that employers offer have only a small selection of mutual funds with medium to high MER costs. Since you're planning to withdraw for the HBP soon, this probably doesn't matter that much yet, but as you start re-contributing to replace what you took out, that money will probably not get touched until retirement and therefore you would want to invest it more efficiently. For that, I recommend you take a look at the model portfolios at Canadian Couch Potato, as Tangerine, TD e-Series, or buying ETFs through a discount broker are usually the lowest cost methods of growing your retirement portfolio."
},
{
"docid": "434014",
"title": "",
"text": "\"To answer your question directly.. you can investigate by using google or other means to look up research done in this area. There's been a bunch of it Here's an example of search terms that returns a wealth of information. effect+of+periodic+rebalancing+on+portfolio+return I'd especially look for stuff that appears to be academic papers etc, and then raid the 'references' section of those. Look for stuff published in industry journals such as \"\"Journal of Portfolio Management\"\" as an example. If you want to try out different models yourself and see what works and what doesn't, this Monte Carlo Simulator might be something you would find useful The basic theory for those that don't know is that various parts of a larger market do not usually move in perfect lockstep, but go through cycles.. one year tech might be hot, the next year it's healthcare. Or for an international portfolio, one year korea might be doing fantastic only to slow down and have another country perform better the next year. So the idea of re-balancing is that since these things tend to be cyclic, you can get a higher return if you sell part of a slice that is doing well (e.g. sell at the high) and invest it in one that is not (buy at the low) Because you do this based on some criteria, it helps circumvent the human tendency to 'hold on to a winner too long' (how many times have you heard someone say 'but it's doing so well, why do I want to sell now\"\"? presuming trends will continue and they will 'lose out' on future gains, only to miss the peak and ride the thing down back into mediocrity.) Depending on the volatility of the specific market, and the various slices, using re balancing can get you a pretty reasonable 'lift' above the market average, for relatively low risk. generally the more volatile the market, (such as say an emerging markets portfolio) the more opportunity for lift. I looked into this myself a number of years back, the concensus I came was that the most effective method was to rebalance based on 'need' rather than time. Need is defined as one or more of the 'slices' in your portfolio being more than 8% above or below the average. So you use that as the trigger. How you rebalance depends to some degree on if the portfolio is taxable or not. If in a tax deferred account, you can simply sell off whatever is above baseline and use it to buy up the stuff that is below. If you are subject to taxes and don't want to trigger any short term gains, then you may have to be more careful in terms of what you sell. Alternatively if you are adding funds to the portfolio, you can alter how your distribute the new money coming into the portfolio in order to bring up whatever is below the baseline (which takes a bit more time, but incurs no tax hit) The other question is how will you slice a given market? by company size? by 'sectors' such as tech/finance/industrial/healthcare, by geographic regions?\""
},
{
"docid": "19364",
"title": "",
"text": "\"Loads may be widespread but they are absolutely not an \"\"industry standard\"\". Almost every major provider of mutual funds has \"\"no load\"\" funds. I'm sure your bank wants you to buy the funds with front loads, but they can't force you to buy those funds (unless you sign such a disclaimer when you open the account). What your bank can do is charge their own transaction fees for \"\"third-party\"\" funds, and those may end up being as much as or more than the funds' own loads. I don't know which bank you have, but many banks have their own mutual funds that have no loads or other transaction fees. Essentially you can rearrange your portfolio however you want (within reason) at no cost as long as you buy and sell their funds exclusively. But of course every bank is different, and in many cases those funds will perform poorly compared to investment companies like Vanguard. Of course every mutual fund must report its performance so you can always check that yourself. If your bank refuses to let you buy any no-load mutual funds (even ones that they run themselves) and/or wants to charge you steep transaction fees in order to discourage buying them, then may I suggest a different bank? FYI, mutual funds generally \"\"make their money\"\" on management fees. If a fund advertises a load but a particularly low management fee, it may actually be worth buying compared to another fund with no load and a high management fee, if you don't expect to be buying and selling frequently. On the other hand, if a fund has a high management fee and a high load, it's probably garbage.\""
},
{
"docid": "70072",
"title": "",
"text": "\"Yes, the \"\"based on\"\" claim appears to be true – but the Nobel laureate did not personally design that specific investment portfolio ;-) It looks like the Gone Fishin' Portfolio is made up of a selection of low-fee stock and bond index funds, diversified by geography and market-capitalization, and regularly rebalanced. Excerpt from another article, dated 2003: The Gone Fishin’ Portfolio [circa 2003] Vanguard Total Stock Market Index (VTSMX) – 15% Vanguard Small-Cap Index (NAESX) – 15% Vanguard European Stock Index (VEURX) – 10% Vanguard Pacific Stock Index (VPACX) – 10% Vanguard Emerging Markets Index (VEIEX) – 10% Vanguard Short-term Bond Index (VFSTX) – 10% Vanguard High-Yield Corporates Fund (VWEHX) – 10% Vanguard Inflation-Protected Securities Fund (VIPSX) – 10% Vanguard REIT Index (VGSIX) – 5% Vanguard Precious Metals Fund (VGPMX) – 5% That does appear to me to be an example of a portfolio based on Modern Portfolio Theory (MPT), \"\"which tries to maximize portfolio expected return for a given amount of portfolio risk\"\" (per Wikipedia). MPT was introduced by Harry Markowitz, who did go on to share the 1990 Nobel Memorial Prize in Economic Sciences. (Note: That is the economics equivalent of the original Nobel Prize.) You'll find more information at NobelPrize.org - The Prize in Economics 1990 - Press Release. Finally, for what it's worth, it isn't rocket science to build a similar portfolio. While I don't want to knock the Gone Fishin' Portfolio (I like most of its parts), there are many similar portfolios out there based on the same concepts. For instance, I'm reminded of a similar (though simpler) portfolio called the Couch Potato Portfolio, made popular by MoneySense magazine up here in Canada. p.s. This other question about asset allocation is related and informative.\""
},
{
"docid": "551145",
"title": "",
"text": "None of your options seem mutually exclusive. Ordinarily nothing stops you from participating in your 401(k), opening an IRA, qualifying for your company's pension, and paying off your debts except your ability to pay for all this stuff. Moreover, you can open an IRA anywhere (scottrade, vanguard, etrade, etc.) and freely invest in vanguard mutual funds as well as those of other companies...you aren't normally locked in to the funds of your IRA provider. Consider a traditional IRA. To me your marginal tax rate of 25% doesn't seem that great. If I were in your shoes I would be more likely to contribute to a traditional IRA instead of a Roth. This will save you taxes today and you can put the extra 25% of $5,500 toward your loans. Yes, you will be taxed on that money when you retire, but I think it's likely your rate will be lower than 25%. Moreover, when you are retired you will already own a house and have paid off all your debt, hopefully. You kind of need money now. Between your current tax rate and your need for money now, I'd say a traditional makes good sense. Buy whatever funds you want. If you want a single, cheap, whole-market fund just buy VTSAX. You will need a minimum of $10K to get in, so until then you can buy the ETF version, VTI. Personally I would contribute enough to your 401(k) to get the match and anything else to an IRA (usually they have more and better investment options). If you max that out, go back to the 401(k). Your investment mix isn't that important. Recent research into target date funds puts them in a poor light. Since there isn't a good benchmark for a target date fund, the managers tend to buy whatever they feel like and it may not be what you would prefer if you were choosing. However, the fund you mention has a pretty low expense ratio and the difference between that and your own allocation to an equity index fund or a blend of equity and bond funds is small in expectation. Plus, you can change your allocation whenever you want. You are not locked in. The investment options you mention are reasonable enough that the difference between portfolios is not critical. More important is optimizing your taxes and paying off your debt in the right order. Your interest rates matter more than term does. Paying off debt with more debt will help you if the new debt has a lower interest rate and it won't if it has a higher interest rate. Normally speaking, longer term debt has a higher interest rate. For that reason shorter term debt, if you can afford it, is generally better. Be cold and calculating with your debt. Always pay off highest interest rate debt first and never pay off cheap debt with expensive debt. If the 25 year debt option is lower than all your other interest rates and will allow you to pay off higher interest rate debt faster, it's a good idea. Otherwise it most likely is not. Do not make debt decisions for psychological reasons (e.g., simplicity). Instead, always chose the option that maximizes your ultimate wealth."
},
{
"docid": "407592",
"title": "",
"text": "Finance encompasses many disciplines. What aspect of finance would you like to work in? A hedge fund analyst is very different from a portfolio manager who is also very different from an accountant. All of those would technically fall under finance, but your background for those careers would be very different."
},
{
"docid": "20372",
"title": "",
"text": "\"Alright, I will go through bullet point by bullet point and try to best figure out what you will be doing in layman's terms. Please bear in mind that I do not work for a hedge fund, but rather a much larger entity, so a lot of the work you will be doing is pre-populated: >Roles = In this role, the individual will be the main point of contact for the client on all things related to understanding their trading profit & loss and how their valuations have been sourced. In addition, the Product Controller will work with internal partner areas to ensure all required processes have been performed to verify the valuation accuracy of the client’s portfolio. From my understanding you will act as the middle man between the client and the analyst. As such here is how a real interaction may go: Client X calls, you answer - \"\"Hello, iDade's office, how can I assist you?\"\" Client X asks, \"\"Hey iDadeMarshall I was curious what my capital gains were on my FB purchase?\"\" iDade: \"\"Ok, let me pull up your account, just a moment. It seems as though your current capital are $30,000 (*LOL*) on your FB purchase.\"\" Client X: \"\"Hmm, well do I have any significant loses that I may be able to sell off to off-set the tax on the capital gains?\"\" iDade: \"\"Why yes you do, it seems AAPL has taken a mighty tumble, would you like to sell a position to assist you in offsetting?\"\" Client X: \"\"Why that would be great. Thanks for your help.\"\" The conversation could go on, and that is a pretty deep conversation for the level you are going in, but I have had conversations like these before. The second part of the bullet just means that you will be checking and rechecking the grunt work of the analyst, and in some places actually performing the grunt work. The work will most likely be along the lines of finding returns for different time periods. Popular desired time periods are inception, ytd, qtd, 1yr, 2yr, etc. Remember all of these time periods are not good stand alone; they must be compared to a relevant benchmark. For instance, you would not want to compare the Barclays Intermediate Ag to an equity portfolio. The most common benchmark for an equity portfolio is going to be the S&P 500, but you have to look at where the portfolio is focused. If it is a SCV you may want to look more towards something like the IJS (iShares S&P SmallCap 600 Value Index). In the end always remember that any number you come up with is always relative to a benchmark. A plain return number is useless. >Knowledge/Skills = Knowledge of cash and derivative products across various markets • Knowledge of pricing and valuation • Knowledge of profit and loss reporting and related attribution analysis Pretty much they just want to make sure that if a client asks about a forward/future contract as well as any swap/option that you understand what they are. This bullet points screams “I KNOW WHAT I AM DOING EVEN THOUGH NOBODY KNOWS WHAT IS GOING ON IN THE ECONOMY.” Be up on your current events have a personal conjecture about what you feel is going to happen moving forward, but do not convey it. If you know that the unemployment was the main driver behind today’s poor market then you will be good for the day, because that will suffice for any call in that relates to “why is the market down?” One of my favorite quotes about the current economy is as follows: “Anyone around here, who isn't confused about what’s going on, doesn't understand.\"\" As scary as it is, that is the honest truth. Nobody knows what is about to happen and if anyone tells you they do, they are lying and you need to run away, quickly. I am assuming you know how to calculate profit and loss – I don’t really know of a *special* way to twist the numbers around. >Major Duties = Managing the daily P&L process for one or more client trading desks o Daily review of Quality Control checks o Working with trading desk(s) on P&L differences/inquiries o Working with offshore Product Control Team (India) on QC process o Delivering a final daily (and month-end) P&L statement to the client • Understanding and explaining the key drivers behind the P&L movements • Preparing/Managing monthly (or more frequently as required) price verification process and associated reporting • Updating and maintaining pricing policy for each financial type that is included in the consultant’s P&L reporting • Ad/hoc projects to meet and enhance client deliverables All this means is that you will be sending out the due diligence to the client and you will ensure you are using the proper closing price and include any deposits/withdrawals during the month into your calculation. The main point is knowing the reasons the price moved throughout the day/month. KEEP UP on current events and make sure that you understand a vast knowledge of economic data. For what your day-to-day activity may be, I can walk you through it. Let’s say you get in at 8am. You will get in at 8, read economic data/recent news articles until about 10; from there you will update client A-F P/L worksheet until about noon. You will eat a quick lunch until about 1230 and continue on the grind of E-M until about 4. From 4-5 you will reread what happened at the end of the day and an overall economic activity report for the day. You may stay until 8 or 9 (if you are in a banking hub/NYC), but a lot of the older guys will leave at this time. This is your time to shine. Stay as late as you can and pump out as much work as you can. As for your interview, they may ask you what will be a good play for the next 6 months to a year – you should respond with common themes in the market. The most common theme is the dividend growth play. A ton of people are not predicting large amount of growth for the next 5-10 years, I believe I read something earlier that JPM lowered their growth forecasts by about 30% recently, so dividends IS the play. Dividend payers are generally well established companies (blue chip) that have a strong foothold in their respective industry/sector. There are a ton of funds sprouting out everywhere to follow this trend (you could throw out a few funds for brownie points, I’ll give you some – MADVX and VDIGX are pretty common). I hope this helps and let me know if anything wasn’t clear (wrote it pretty quickly). I am off to have a drink or two or three, I’ll check this in the morning though.\""
},
{
"docid": "358997",
"title": "",
"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."
},
{
"docid": "372381",
"title": "",
"text": "\"You're talking about modern portfolio theory. The wiki article goes into the math. Here's the gist: Modern portfolio theory (MPT) is a theory of finance that attempts to maximize portfolio expected return for a given amount of portfolio risk, or equivalently minimize risk for a given level of expected return, by carefully choosing the proportions of various assets. At the most basic level, you either a) pick a level of risk (standard deviation of your whole portfolio) that you're ok with and find the maximum return you can achieve while not exceeding your risk level, or b) pick a level of expected return that you want and minimize risk (again, the standard deviation of your portfolio). You don't maximize both moments at once. The techniques behind actually solving them in all but the most trivial cases (portfolios of two or three assets are trivial cases) are basically quadratic programming because to be realistic, you might have a portfolio that a) doesn't allow short sales for all instruments, and/or b) has some securities that can't be held in fractional amounts (like ETF's or bonds). Then there isn't a closed form solution and you need computational techniques like mixed integer quadratic programming Plenty of firms and people use these techniques, even in their most basic form. Also your terms are a bit strange: It has correlation table p11, p12, ... pij, pnn for i and j running from 1 to n This is usually called the covariance matrix. I want to maximize 2 variables. Namely the expected return and the additive inverse of the standard deviation of the mixed investments. Like I said above you don't maximize two moments (return and inverse of risk). I realize that you're trying to minimize risk by maximizing \"\"negative risk\"\" so to speak but since risk and return are inherently a tradeoff you can't achieve the best of both worlds. Maybe I should point out that although the above sounds nice, and, theoretically, it's sound, as one of the comments points out, it's harder to apply in practice. For example it's easy to calculate a covariance matrix between the returns of two or more assets, but in the simplest case of modern portfolio theory, the assumption is that those covariances don't change over your time horizon. Also coming up with a realistic measure of your level of risk can be tricky. For example you may be ok with a standard deviation of 20% in the positive direction but only be ok with a standard deviation of 5% in the negative direction. Basically in your head, the distribution of returns you want probably has negative skewness: because on the whole you want more positive returns than negative returns. Like I said this can get complicated because then you start minimizing other forms of risk like value at risk, for example, and then modern portfolio theory doesn't necessarily give you closed form solutions anymore. Any actively managed fund that applies this in practice (since obviously a completely passive fund will just replicate the index and not try to minimize risk or anything like that) will probably be using something like the above, or at least something that's more complicated than the basic undergrad portfolio optimization that I talked about above. We'll quickly get beyond what I know at this rate, so maybe I should stop there.\""
},
{
"docid": "148541",
"title": "",
"text": "\"Your only real alternative is something like T-Bills via your broker or TreasuryDirect or short-term bond funds like the Vanguard Short-Term Investment-Grade Fund. The problem with this strategy is that these options are different animals than a money market. You're either going to subject yourself to principal risk or lose the flexibility of withdrawing the money. A better strategy IMO is to look at your overall portfolio and what you actually want. If you have $100k in a money market, and you are not going to need $100k in cash for the forseeable future -- you are \"\"paying\"\" (via the low yield) for flexibility that you don't need. If get your money into an appropriately diversified portfolio, you'll end up with a more optimal return. If the money involved is relatively small, doing nothing is a real option as well. $5,000 at 0.5% yields $25, and a 5% return yields only $250. If you need that money soon to pay tuition, use for living expenses, etc, it's not worth the trouble.\""
},
{
"docid": "134542",
"title": "",
"text": "\"When you invest in a single index/security, you are completely exposed to the risk of that security. Diversification means spreading the investments so the losses on one side can be compensated by the gains on the other side. What you are talking about is one thing called \"\"risk apettite\"\", more formally known as Risk Tolerance: Risk tolerance is the degree of variability in investment returns that an investor is willing to withstand. (emphasis added) This means that you are willing to accept some losses in order to get a potential bigger return. Fidelity has this graph: As you can see in the table above, the higher the risk tolerance, the bigger the difference between the best and worst values. That is the variability. The right-most pie can be one example of an agressive diversified portfolio. But this does not mean you should go and buy exactly that security compostion. High-risk means playing with fire. Unless you are a professional stuntman, playing with fire usually leaves people burnt. In a financial context this usually means the money is gone. Recommended Reading: Investopedia; Risk and Diversification: The Risk-Reward Tradeoff Investopedia; How to construct a High Risk portfolio Fidelity: Guide to Diversification KPMG: Understanding and articulating Risk Appetite (pdf)\""
}
] |
4845 | What is the difference between fund and portfolio? | [
{
"docid": "41625",
"title": "",
"text": "\"Oddly enough, in the USA, there are enough cost and tax savings between buy-and-hold of a static portfolio and buying into a fund that a few brokerages have sprung up around the concept, such as FolioFN, to make it easier for small investors to manage numerous small holdings via fractional shares and no commission window trades. A static buy-and-hold portfolio of stocks can be had for a few dollars per trade. Buying into a fund involves various annual and one time fees that are quoted as percentages of the investment. Even 1-2% can be a lot, especially if it is every year. Typically, a US mutual fund must send out a 1099 tax form to each investor, stating that investors share of the dividends and capital gains for each year. The true impact of this is not obvious until you get a tax bill for gains that you did not enjoy, which can happen when you buy into a fund late in the year that has realized capital gains. What fund investors sometimes fail to appreciate is that they are taxed both on their own holding period of fund shares and the fund's capital gains distributions determined by the fund's holding period of its investments. For example, if ABC tech fund bought Google stock several years ago for $100/share, and sold it for $500/share in the same year you bought into the ABC fund, then you will receive a \"\"capital gains distribution\"\" on your 1099 that will include some dollar amount, which is considered your share of that long-term profit for tax purposes. The amount is not customized for your holding period, capital gains are distributed pro-rata among all current fund shareholders as of the ex-distribution date. Morningstar tracks this as Potential Capital Gains Exposure and so there is a way to check this possibility before investing. Funds who have unsold losers in their portfolio are also affected by these same rules, have been called \"\"free rides\"\" because those funds, if they find some winners, will have losers that they can sell simultaneously with the winners to remain tax neutral. See \"\"On the Lookout for Tax Traps and Free Riders\"\", Morningstar, pdf In contrast, buying-and-holding a portfolio does not attract any capital gains taxes until the stocks in the portfolio are sold at a profit. A fund often is actively managed. That is, experts will alter the portfolio from time to time or advise the fund to buy or sell particular investments. Note however, that even the experts are required to tell you that \"\"past performance is no guarantee of future results.\"\"\""
}
] | [
{
"docid": "551145",
"title": "",
"text": "None of your options seem mutually exclusive. Ordinarily nothing stops you from participating in your 401(k), opening an IRA, qualifying for your company's pension, and paying off your debts except your ability to pay for all this stuff. Moreover, you can open an IRA anywhere (scottrade, vanguard, etrade, etc.) and freely invest in vanguard mutual funds as well as those of other companies...you aren't normally locked in to the funds of your IRA provider. Consider a traditional IRA. To me your marginal tax rate of 25% doesn't seem that great. If I were in your shoes I would be more likely to contribute to a traditional IRA instead of a Roth. This will save you taxes today and you can put the extra 25% of $5,500 toward your loans. Yes, you will be taxed on that money when you retire, but I think it's likely your rate will be lower than 25%. Moreover, when you are retired you will already own a house and have paid off all your debt, hopefully. You kind of need money now. Between your current tax rate and your need for money now, I'd say a traditional makes good sense. Buy whatever funds you want. If you want a single, cheap, whole-market fund just buy VTSAX. You will need a minimum of $10K to get in, so until then you can buy the ETF version, VTI. Personally I would contribute enough to your 401(k) to get the match and anything else to an IRA (usually they have more and better investment options). If you max that out, go back to the 401(k). Your investment mix isn't that important. Recent research into target date funds puts them in a poor light. Since there isn't a good benchmark for a target date fund, the managers tend to buy whatever they feel like and it may not be what you would prefer if you were choosing. However, the fund you mention has a pretty low expense ratio and the difference between that and your own allocation to an equity index fund or a blend of equity and bond funds is small in expectation. Plus, you can change your allocation whenever you want. You are not locked in. The investment options you mention are reasonable enough that the difference between portfolios is not critical. More important is optimizing your taxes and paying off your debt in the right order. Your interest rates matter more than term does. Paying off debt with more debt will help you if the new debt has a lower interest rate and it won't if it has a higher interest rate. Normally speaking, longer term debt has a higher interest rate. For that reason shorter term debt, if you can afford it, is generally better. Be cold and calculating with your debt. Always pay off highest interest rate debt first and never pay off cheap debt with expensive debt. If the 25 year debt option is lower than all your other interest rates and will allow you to pay off higher interest rate debt faster, it's a good idea. Otherwise it most likely is not. Do not make debt decisions for psychological reasons (e.g., simplicity). Instead, always chose the option that maximizes your ultimate wealth."
},
{
"docid": "504301",
"title": "",
"text": "What decision are you trying to make? Are you interested day trading stocks to make it rich? Or are you looking at your investment options and trying to decide between an actively managed mutual fund and an ETF? If the former, then precise statistics are hard to come by, but I believe that 99% of day traders would do better investing in an ETF. If the latter, then there are lots of studies that show that most actively managed funds do worse than index funds, so with most actively managed funds you are paying higher fees for worse performance. Here is a quote from the Bogleheads Guide to Investing: Index funds outperform approximately 80 percent of all actively managed funds over long periods of time. They do so for one simple reason: rock-bottom costs. In a random market, we don't know what future returns will be. However, we do know that an investor who keeps his or her costs low will earn a higher return than one who does not. That's the indexer's edge. Many people believe that your best option for investing is a diverse portfolio of ETFs, like this. This is what I do."
},
{
"docid": "179664",
"title": "",
"text": "Private Equity is simply some type of an investment company, which is owned in a way not accessible to the public. ie: Warren Buffet runs Berkshire Hatheway, which is an investment company which itself is traded on the New York Stock Exchange. This means that anyone can buy shares in the company, and own a small fraction of it. If Warren Buffet owned all the shares of Berkshire Hatheway, it would be a Private Equity company. Note that 'Equity' refers to the ownership of the company itself; a private investment company may simply buy Bonds (which are a form of Debt), in which case, they would not be technically considered a 'Private Equity' company. A Hedge Fund is a very broad term which I don't believe has significant meaning. Technically, it means something along the lines of an investment fund (either public or private) which attempts to hedge the risks of its portfolio, by carefully considering what type of investments it purchased. This refers back to the meaning of 'hedge', ie: 'hedging your bets'. In my opinion, 'Hedge Fund' is not meaningfully different from 'investment fund' or other similar terms. It is just the most popular way to refer to this type of industry at the present time. You can see the trend of using the term 'investment fund' vs 'hedge fund' using this link: https://trends.google.com/trends/explore?date=all&q=hedge%20fund,investment%20fund Note that the high-point of the use of 'hedge fund' occurred on October 2008, right at the peak of the global financial crisis. The term evokes a certain image of 'high finance' / 'wall-street types' that may exploit various situations (such as tax legislation, or 'secret information') for their own gain. Without a clear definition, however, it is a term without much meaning. If you do a similar comparison between 'hedge fund' and 'private equity', you can see that the two correlate very closely; I believe the term 'private equity' is similarly misused to generally refer to 'investment bankers'. However in that case, 'private equity' has a more clear definition on its own merits."
},
{
"docid": "459596",
"title": "",
"text": "\"Morningstar is often considered a trusted industry standard when it comes to rating mutual funds and ETFs. They offer the same data-centric information for other investments as well, such as individual stocks and bonds. You can consult Morningstar directly if you like, but any established broker will usually provide you with Morningstar's ratings for the products it is trying to sell to you. Vanguard offers a few Emerging Markets stock and bond funds, some actively managed, some index funds. Other investment management companies (Fidelity, Schwab, etc.) presumably do as well. You could start by looking in Morningstar (or on the individual companies' websites) to find what the similarities and differences are among these funds. That can help answer some important questions: I personally just shove a certain percentage of my portfolio into non-US stocks and bonds, and of that allocation a certain fraction goes into \"\"established\"\" economies and a certain fraction into \"\"emerging\"\" ones. I do all this with just a few basic index funds, because the indices make sense (to me) and index funds cost very little.\""
},
{
"docid": "446059",
"title": "",
"text": "\"There are two places to start, the spending side and the income side. Many (in the personal finance blogosphere) have pointed out that frugal has its limits. You can only live so cheaply, eat so little, turn the heat down so much. Your income and your wife's income has no limit. Not to put this all in her lap, but why isn't she working? Between the two of you, there are hundreds of things you can consider doing that will generate a few hundred dollars a week extra income. You said \"\"we can live fairly comfortably paycheck-to-paycheck and routinely put some money into savings,\"\" but you are still paying off debt, and don't have the emergency fund to handle the routine things that come around on a regular basis. The difference between breaking even, and making extra money, is the ability to fund that account. It's important to have a defined plan to pay the remaining debt, and build your fund in as short a time period as you can. As Bren stated, you need to plan for the unexpected. I don't know what appliance will go this year or what day it will break, I just know something will happen and I have the funds to pay for it. The extra income is vital to a workable plan.\""
},
{
"docid": "298350",
"title": "",
"text": "\"Index funds may invest either in index components directly or in other instruments (like ETFs, index options, futures, etc.) which are highly correlated with the index. The specific fund prospectus or description on any decent financial site should contain these details. Index funds are not actively managed, but that does not mean they aren't managed at all - if index changes and the fund includes specific stock, they would adjust the fund content. Of course, the downside of it is that selling off large amounts of certain stock (on its low point, since it's being excluded presumably because of its decline) and buying large amount of different stock (on its raising point) may have certain costs, which would cause the fund lag behind the index. Usually the difference is not overly large, but it exists. Investing in the index contents directly involves more transactions - which the fund distributes between members, so it doesn't usually buy individually for each member but manages the portfolio in big chunks, which saves costs. Of course, the downside is that it can lag behind the index if it's volatile. Also, in order to buy specific shares, you will have to shell out for a number of whole share prices - which for a big index may be a substantial sum and won't allow you much flexibility (like \"\"I want to withdraw half of my investment in S&P 500\"\") since you can't usually own 1/10 of a share. With index funds, the entry price is usually quite low and increments in which you can add or withdraw funds are low too.\""
},
{
"docid": "571913",
"title": "",
"text": "I am a firm believer in TD's e-series funds. No other bank in Canada has index funds with such low management fees. Index funds offer the flexibility to re-balance your portfolio every month without the need to pay commission fees. Currently I allocate 10% of my paycheck to be diversified between Canadian, US, and International e-series index funds. In terms of just being for beginners, this opinion is most likely based on the fact that an e-series portfolio is very easy to manage. But this doesn't mean that it is only for beginners. Sometimes the easiest solution is the best one! :)"
},
{
"docid": "381104",
"title": "",
"text": "Since you already have twice your target in that emergency fund, putting that overage to work is a good idea. The impression that I get is that you'd still like to stay on the safe side. What you're looking for is a Balanced Fund. In a balanced fund the managers invest in both stocks and bonds (and cash). Since you have that diversification between those two asset classes, their returns tend to be much less volatile than other funds. Also, because of their intended audience and the traditions from that class of funds' long history, they tend to invest somewhat more conservatively in both asset classes. There are two general types of balanced funds: Conservative Allocation funds and Moderate Allocation funds. Conservative allocation funds invest in more fixed income than equity (the classic mix is 60% bonds, 40% stocks). Moderate allocation funds invest in more equity than fixed income (classic mix: 40% bonds, 60% stocks). A good pair of funds that are similar but exemplify the difference between conservative allocation and moderate allocation are Vanguard's Wellesley Income Fund (VWINX) for the former and Vanguard's Wellington Fund (VWELX) for the latter. (Disclaimer: though both funds are broadly considered excellent, this is not a recommendation.) Good luck sorting this out!"
},
{
"docid": "245867",
"title": "",
"text": "I strongly suggest you go to www.investor.gov as it has excellent information regarding these types of questions. A mutual fund is a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual fund are known as its portfolio. Investors buy shares in mutual funds. Each share represents an investor’s part ownership in the fund and the income it generates. When you buy shares of a mutual fund you're buying it at NAV, or net asset value. The NAV is the value of the fund’s assets minus its liabilities. SEC rules require funds to calculate the NAV at least once daily. Different funds may own thousands of different stocks. In order to calculate the NAV, the fund company must value every security it owns. Since each security's valuation is changing throughout the day it's difficult to determine the valuation of the mutual fund except for when the market is closed. Once the market has closed (4pm eastern) and securities are no longer trading, the company must get accurate valuations for every security and perform the valuation calculations and distribute the results to the pricing vendors. This has to be done by 6pm eastern. This is a difficult and, more importantly, a time consuming process to get it done right once per day. Having worked for several fund companies I can tell you there are many days where companies are getting this done at the very last minute. When you place a buy or sell order for a mutual fund it doesn't matter what time you placed it as long as you entered it before 4pm ET. Cutoff times may be earlier depending on who you're placing the order with. If companies had to price their funds more frequently, they would undoubtedly raise their fees."
},
{
"docid": "266194",
"title": "",
"text": "\"If you want a Do-It-Yourself solution, look to a Vanguard account with their total market index funds. There's a lot of research that's been done recently in the financial independence community. Basically, there's not many money managers who can outperform the market index (either S&P 500 or a total market index). Actually, no mutual funds have been identified that outperform the market, after fees, consistently. So there's not much sense in paying someone to earn you less than a low fee index fund could do. And some of the numbers show that you can actually lose value on your 401k due to high fees. That's where Vanguard comes in. They offer some of the lowest fees (if not the lowest) and a selection of index funds that will let you balance your portfolio the way you want. Whether you want to go 100% total stock market index fund or a balance between total stock market index fund and total bond index fund, or a \"\"lazy 3 fund portfolio\"\", Vanguard gives you the tools to do it yourself. Rebalancing would require about an hour every quarter. (Or time span you declare yourself). jlcollinsnh A Simple Path to Wealth is my favorite blog about financial independence. Also, Warren Buffet recommended that the trustees for his wife's inheritance when he passes invest her trust in one investment. Vanguard's S&P500 index fund. The same fund he chose in a 10 year $1M bet vs. hedge fund managers. (proceeds go to charity). That was about 9 years ago. So far, Buffet's S&P500 is beating the hedge funds. Investopedia Article\""
},
{
"docid": "134005",
"title": "",
"text": "\"Vanguard released an analysis paper in 2013 titled \"\"Dollar-cost averaging just means taking risk later.\"\" This paper explores the performance difference(s) between a dollar-cost averaging strategy and a lump sum strategy when you already possess the funds. This paper is an excellent read but the conclusion from the executive summary is: We conclude that if an investor expects such trends to continue, is satisfied with his or her target asset allocation, and is comfortable with the risk/return characteristics of each strategy, the prudent action is investing the lump sum immediately to gain exposure to the markets as soon as possible. The caveat to the conclusion is weighing your emotions. If you are primarily concerned with minimizing the possibility of a loss then you should use a dollar cost averaging strategy with the understanding that, on a purely mathematical basis, the dollar cost averaging strategy is likely to under-perform a lump sum investment of the funds. The paper explores a 10 year holding period with either: The analysis includes various portfolio blends and is backtested against the United States, United Kingdom and Australian markets. Based on this, as far as I'm concerned, the rule of thumb is invest the lump sum if you're going to invest at all.\""
},
{
"docid": "322806",
"title": "",
"text": "\"Diversification is the only real free lunch in finance (reduction in risk without any reduction in expected returns), so clearly every good answer to your question will be \"\"yes.\"\" Diversification is good.\"\" Let's talk about many details your question solicits. Many funds are already pretty diversified. If you buy a mutual fund, you are generally already getting a large portion of the gains from diversification. There is a very large difference between the unnecessary risk in your portfolio if you only hold a couple of stocks and if you hold a mutual fund. Should you be diversified across mutual funds as well? It depends on what your funds are. Many funds, such as target-date funds, are intended to be your sole investment. If you have funds covering every major asset class, then there may not be any additional benefit to buying other funds. You probably could not have picked your \"\"favorite fund\"\" early on. As humans, we have cognitive biases that make us think we knew things early on that we did not. I'm sure at some point at the very beginning you had a positive feeling toward that fund. Today you regret not acting on it and putting all your money there. But the number of such feelings is very large and if you acted on all those, you would do a lot of crazy and harmful things. You didn't know early on which fund would do well. You could just as well have had a good feeling about a fund that subsequently did much worse than your diversified portfolio did. The advice you have had about your portfolio probably isn't based on sound finance theory. You say you have always kept your investments in line with your age. This implies that you believe the guidelines given you by your broker or financial advisor are based in finance theory. Generally speaking, they are not. They are rules of thumb that seemed good to someone but are not rigorously proven either in theory or empirics. For example the notion that you should slowly shift your investments from speculative to conservative as you age is not based on sound finance theory. It just seems good to the people who give advice on such things. Nothing particularly wrong with it, I guess, but it's not remotely on par with the general concept of being well-diversified. The latter is extremely well established and verified, both in theory and in practice. Don't confuse the concept of diversification with the specific advice you have received from your advisor. A fund averaging very good returns is not an anomaly--at least going forward it will not be. There are many thousand funds and a large distribution in their historical performance. Just by random chance, some funds will have a truly outstanding track record. Perhaps the manager really was skilled. However, very careful empirical testing has shown the following: (1) You, me, and people whose profession it is to select outperforming mutual funds are unable to reliably detect which ones will outperform, except in hindsight (2) A fund that has outperformed, even over a long horizon, is not more likely to outperform in the future. No one is stopping you from putting all your money in that fund. Depending on its investment objective, you may even have decent diversification if you do so. However, please be aware that if you move your money based on historical outperformance, you will be acting on the same cognitive bias that makes gamblers believe they are on a \"\"hot streak\"\" and \"\"can't lose.\"\" They can, and so can you. ======== Edit to answer a more specific line of questions =========== One of your questions is whether it makes sense to buy a number of mutual funds as part of your diversification strategy. This is a slightly more subtle question and I will indicate where there is uncertainty in my answer. Diversifying across asset classes. Most of the gains from diversification are available in a single fund. There is a lot of idiosyncratic risk in one or two stocks and much less in a collection of hundreds of stocks, which is what any mutual fund will hold. Still,you will probably want at least a couple of funds in your portfolio. I will list them from most important to least and I will assume the bulk of your portfolio is in a total US equity fund (or S&P500-style fund) so that you are almost completely diversified already. Risky Bonds. These are corporate, municipal, sovereign debt, and long-term treasury debt funds. There is almost certainly a good deal to be gained by having a portion of your portfolio in bonds, and normally a total market fund will not include bond exposure. Bonds fund returns are closely related to interest rate and inflation changes. They are also exposed to some market risk but it's more efficient to get that from equity. The bond market is very large, so if you did market weights you would have more in bonds than in equity. Normally people do not do this, though. Instead you can get the exposure to interest rates by holding a lesser amount in longer-term bonds, rather than more in shorter-term bonds. I don't believe in shifting your weights toward nor away from this type of bond (as opposed to equity) as you age so if you are getting that advice, know that it is not well-founded in theory. Whatever your relative weight in risky bonds when you are young is should also be your weight when you are older. International. There are probably some gains from having some exposure to international markets, although these have decreased over time as economies have become more integrated. If we followed market weights, you would actually put half your equity weight in an international fund. Because international funds are taxed differently (gains are always taxed at the short-term capital gains rate) and because they have higher management fees, most people make only a small investment to international funds, if any at all. Emerging markets International funds often ignore emerging markets in order to maintain liquidity and low fees. You can get some exposure to these markets through emerging markets funds. However, the value of public equity in emerging markets is small when compared with that of developed markets, so according to finance theory, your investment in them should be small as well. That's a theoretical, not an empirical result. Emerging market funds charge high fees as well, so this one is kind of up to your taste. I can't say whether it will work out in the future. Real estate. You may want to get exposure to real estate by buying a real-estate fund (REIT). Though, if you own a house you are already exposed to the real estate market, perhaps more than you want to be. REITs often invest in commercial real estate, which is a little different from the residential market. Small Cap. Although total market funds invest in all capitalization levels, the market is so skewed toward large firms that many total market funds don't have any significant small cap exposure. It's common for individuals to hold a small cap fund to compensate for this, but it's not actually required by investment theory. In principle, the most diversified portfolio should be market-cap weighted, so small cap should have negligible weight in your portfolio. Many people hold small cap because historically it has outperformed large cap firms of equal risk, but this trend is uncertain. Many researchers feel that the small cap \"\"premium\"\" may have been a short-term artifact in the data. Given these facts and the fact that small-cap funds charge higher fees, it may make sense to pass on this asset class. Depends on your opinion and beliefs. Value (or Growth) Funds. Half the market can be classed as \"\"value\"\", while the other half is \"\"growth.\"\" Your total market fund should have equal representation in both so there is no diversification reason to buy a special value or growth fund. Historically, value funds have outperformed over long horizons and many researchers think this will continue, but it's not exactly mandated by the theory. If you choose to skew your portfolio by buying one of these, it should be a value fund. Sector funds. There is, in general, no diversification reason to buy funds that invest in a particular sector. If you are trying to hedge your income (like trying to avoid investing in the tech sector because you work in that sector) or your costs (buying energy because you buy use a disproportionate amount of energy) I could imagine you buying one of these funds. Risk-free bonds. Funds specializing in short-term treasuries or short-term high-quality bonds of other types are basically a substitute for a savings account, CD, money market fund, or other cash equivalent. Use as appropriate but there is little diversification here per se. In short, there is some value in diversifying across asset classes, and it is open to opinion how much you should do. Less well-justified is diversifying across managers within the same asset class. There's very little if any advantage to doing that.\""
},
{
"docid": "243797",
"title": "",
"text": "\"MD-Tech's answer is correct. Let me only point out that there are easier ways to invest in the DJIA index without having to buy individual stocks. You can buy a mutual fund or ETF that will track the index and your return will be almost identical to the performance of the underlying index. It's \"\"almost\"\" identical because the fund will take a small management fee, you will have to pay annual taxes on capital gains (if you hold the investment in a taxable account), and because the fund has to actually invest in the underlying stocks, there will be small differences due to rounding and timing of the fund's trades. You also ask: Assuming that I calculated those numbers correctly, is this gain approximately better, equal to, or worse than an average investment for that timespan? While people argue about the numbers, index funds tend to do better than average (depends on what you call \"\"average\"\", of course). They do better than most actively managed funds, too. And since they have low management fees, index funds are often considered to be an important part of a long-term investment portfolio because they require very little activity on your part other than buying and holding.\""
},
{
"docid": "460779",
"title": "",
"text": "\"Your retirement plan shouldn't necessarily be dictated by your perceived employment risks. If you're feeling insecure about your short-term job longevity and mid-career prospects, you will likely benefit from a thoughtful and robust emergency fund plan. Your retirement plan is really designed to fund your life after work, so the usual advice to contribute as much as you can as early as you can applies either way. While a well-funded retirement portfolio will help you feel generally more secure in the long run (and worst case can be used earlier), a good emergency fund will do more to address your near-term concerns. Both retirement and emergency fund planning are fundamental to a comprehensive personal finance plan. This post on StackExchange has some basic info about your retirement options. Given your spare income, you should be able to fully fund an IRA and your 401K every year with some left over. Check the fees in your 401K to determine if you really want to fully fund the 401K past employer matching. There are several good answers and info about that here. Low-cost mutual funds are a good choice for starting your IRA. There is a lot of different advice about emergency funds (check here) ranging from x months salary in savings to detailed planning for each of your expenses. Regardless of which method you chose, it is important to think about your personal risk tolerance and create a plan that addresses your personal needs. It's difficult to live life and perform well at work if you're always worried about your situation. A good emergency plan should go a long way toward calming those fears. Your concern about reaching mid-life and becoming obsolete or unable to keep up in your career may be premature. Of course your mind, body, and your abilities will change over the years, but it is very difficult to predict where you will be, what you will be doing, and whether your experience will offset any potential decrease in your ability to keep up. It's good to think ahead and consider the \"\"what-ifs\"\", but keep in mind that those scenarios are not preordained. There isn't anything special about being 40 that will force you into a different line of work if you don't want to switch.\""
},
{
"docid": "75372",
"title": "",
"text": "Bond MF/ETF comes in many flavour, one way to look at them is corporate, govt. (gilt/sovreign), money market (short term, overnight lending etc.), govt. backed bonds. The ETF/MFs that invest money in these are also different types. One way to evaluate an ETF/MF is to see where they invest your money. Corporate debts are by the highest coupon paying bonds, however, the chance of default is also greater, if you wish to invest in these, it is preferable to look at the ETF/MF's debt portfolio financial ratings (Moodies etc.). Govt. bonds are more stable and unless the govt. defaults (which happens more often than we would like to think), here also look for higher rating bonds portfolio that the fund/scheme carries. The govt. backed bonds are somewhat similar to sovreign bonds, however, these are issuesd by institutions which are backed by govt. (e.g. national railways, municipal bodies etc.), any fund/scheme that invests in these bonds could also be considered and similarly measured. The last are the short term money market related, which provides the least return but are very liquid. It is very difficult to answer how you should invest large sum on ETF/MFs that are bond oriented. However, from any investment perspective, it is better to spread your money. If I take your hypthetical case of 1M$, I would divide it into 100K$ pieces and invest in 10 different ETF/MF schemes of different flavour: Hope this helps."
},
{
"docid": "434014",
"title": "",
"text": "\"To answer your question directly.. you can investigate by using google or other means to look up research done in this area. There's been a bunch of it Here's an example of search terms that returns a wealth of information. effect+of+periodic+rebalancing+on+portfolio+return I'd especially look for stuff that appears to be academic papers etc, and then raid the 'references' section of those. Look for stuff published in industry journals such as \"\"Journal of Portfolio Management\"\" as an example. If you want to try out different models yourself and see what works and what doesn't, this Monte Carlo Simulator might be something you would find useful The basic theory for those that don't know is that various parts of a larger market do not usually move in perfect lockstep, but go through cycles.. one year tech might be hot, the next year it's healthcare. Or for an international portfolio, one year korea might be doing fantastic only to slow down and have another country perform better the next year. So the idea of re-balancing is that since these things tend to be cyclic, you can get a higher return if you sell part of a slice that is doing well (e.g. sell at the high) and invest it in one that is not (buy at the low) Because you do this based on some criteria, it helps circumvent the human tendency to 'hold on to a winner too long' (how many times have you heard someone say 'but it's doing so well, why do I want to sell now\"\"? presuming trends will continue and they will 'lose out' on future gains, only to miss the peak and ride the thing down back into mediocrity.) Depending on the volatility of the specific market, and the various slices, using re balancing can get you a pretty reasonable 'lift' above the market average, for relatively low risk. generally the more volatile the market, (such as say an emerging markets portfolio) the more opportunity for lift. I looked into this myself a number of years back, the concensus I came was that the most effective method was to rebalance based on 'need' rather than time. Need is defined as one or more of the 'slices' in your portfolio being more than 8% above or below the average. So you use that as the trigger. How you rebalance depends to some degree on if the portfolio is taxable or not. If in a tax deferred account, you can simply sell off whatever is above baseline and use it to buy up the stuff that is below. If you are subject to taxes and don't want to trigger any short term gains, then you may have to be more careful in terms of what you sell. Alternatively if you are adding funds to the portfolio, you can alter how your distribute the new money coming into the portfolio in order to bring up whatever is below the baseline (which takes a bit more time, but incurs no tax hit) The other question is how will you slice a given market? by company size? by 'sectors' such as tech/finance/industrial/healthcare, by geographic regions?\""
},
{
"docid": "358997",
"title": "",
"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."
},
{
"docid": "534887",
"title": "",
"text": "\"Typical Human Advisor: Advantages: They can recommend funds and allocations that fit to your portfolio. Disadvantages: Those who are just fund salespeople in disguise will usually recommend poor-performing funds for higher commission pay. Their advice will not be much different from random person internet advice. When your portfolio drops, they still get paid, and they don't care because they are not a fiduciary. Robo-Advisor: Advantages: Rules are automated, and typically based on crunched numbers. Somebody else executes the trades, and remembers to rebalance your portfolio when you'd usually forget to. Disadvantages: Not always accurate, usually relies on momentum from popularity. No one at the helm to adjust for risk. If you follow, you'll usually just lag behind. Yet, those with simple, low-cost diversified ETF portfolios can be attractive. Market ETFs: Advantages: Low cost funds that typically match the market. High performance. Easy to sell when you need to, zero decision making required, and you will be sure to nearly match the general market. Disadvantages: Boring. You need to enter your own orders, but you won't be doing that too often. No thrill except counting all the commas in your account. No wacky stories to wow your friends and family about your gambling addiction. Seriously, some people just can't help but take the high risk route. Newsletter / Portfolio / Online \"\"Expert\"\": Advantages: They usually have some idea of what indicators to look for and can make predictions about price movements. Disadvantages: Predictions are as frequently wrong as they are right. Good ones won't have much to say, and incompetent ones will write multi-paragraph essays about Fibonacci sequences, resistance levels, trends RSI, ROIT, everything that might show an indicator in some direction maybe... and it's usually forgotten by the next newsletter.\""
},
{
"docid": "369612",
"title": "",
"text": "The existing account that her employer set up is probably not a Spousal RRSP, so for you to contribute your money to her RRSP you'd have to create a new account somewhere - could be with the same financial institution or somewhere else. But if you've got a joint bank account, the distinction between your money and her money becomes blurred. You're basically allowed to say the $10000 is her money as long as you can trace the funds back to amounts that she added (her paycheques). So in that case you could just use her existing RRSP if you want to. There may be other reasons to consider an alternate account, such as having more flexibility or lower costs for investing your contributions. Often the plans that employers offer have only a small selection of mutual funds with medium to high MER costs. Since you're planning to withdraw for the HBP soon, this probably doesn't matter that much yet, but as you start re-contributing to replace what you took out, that money will probably not get touched until retirement and therefore you would want to invest it more efficiently. For that, I recommend you take a look at the model portfolios at Canadian Couch Potato, as Tangerine, TD e-Series, or buying ETFs through a discount broker are usually the lowest cost methods of growing your retirement portfolio."
}
] |
4846 | Is there anything comparable to/resembling CNN's Fear and Greed Index? | [
{
"docid": "151104",
"title": "",
"text": "Lipper publishes data on the flow of funds in / out of stock and bond funds: http://www.lipperusfundflows.com Robert Shiller works on stock market confidence indices that are published by Yale: http://som.yale.edu/faculty-research/our-centers-initiatives/international-center-finance/data/stock-market-confidence"
}
] | [
{
"docid": "393412",
"title": "",
"text": "\"Actually there is no law that makes insider trading illegal, except for actual company insiders (people working at the company). Insider trading as you describe is just a court precedent set in the 80s (I think it was the 80s) and it's based on the concept of \"\"fraud\"\", whereby you are misappropriating information that you should not have. So no, insider trading isn't \"\"illegal\"\" in that sense, and the jury is out as to whether it's even bad or not for the markets. That doesn't mean I would recommend doing it or really anything even closely resembling it, since they're pretty aggressive about pursuing those cases.\""
},
{
"docid": "385955",
"title": "",
"text": "\"Comparing index funds to long-term investments in individual companies? A counterintuitive study by Jeremy Siegel addressed a similar question: Would you be better off sticking with the original 500 stocks in the S&P 500, or like an index fund, changing your investments as the index is changed? The study: \"\"Long-Term Returns on the Original S&P 500 Companies\"\" Siegel found that the original 500 (including spinoffs, mergers, etc.) would do slightly better than a changing index. This is likely because the original 500 companies take on a value (rather than growth) aspect as the decades pass, and value stocks outperform growth stocks. Index funds' main strength may be in the behavior change they induce in some investors. To the extent that investors genuinely set-and-forget their index fund investments, they far outperform the average investor who mis-times the market. The average investor enters and leaves the market at the worst times, underperforming by a few percentage points each year on average. This buying-high and selling-low timing behavior damages long-term returns. Paying active management fees (e.g. 1% per year) makes returns worse. Returns compound on themselves, a great benefit to the investor. Fees also compound, to the benefit of someone other than the investor. Paying 1% annually to a financial advisor may further dent long-term returns. But Robert Shiller notes that advisors can dissuade investors from market timing. For clients who will always follow advice, the 1% advisory fee is worth it.\""
},
{
"docid": "159336",
"title": "",
"text": "\"To try and address your 'how' it goes a bit like this. You need to first assess how your stuff is invested, if for example half is in stocks, and the other half is in bonds, then you will need to calculate a 'blended' rate for what are reasonable 'average return' for both. That might mean looking at the S&P500 or Russell 3000 for the stock portion, and some bond index for that portion, then 'blend the rates', in this case using a formula like this then compare the blended rate with the return in your IRA. It is generally a lot more useful to compare the various components of your total return separately, especially if you investing with a particular style such as 'agressive growth' or you are buying actual bonds and not a bond fund since most of the bond oriented indexes are for bond funds, which you can't really compare well with buying and holding bonds to maturity. Lets say your stock side was two mutual funds with different styles, one 'large cap' the other 'aggressive growth'. In that case you might want to compare each one of those funds with an appropriate index such as those provided by Morningstar If you find one of them is consistently below the average, you might want to consider finding an alternative fund who's manager has a better track record (bearing in mind that \"\"past performance....\"\") For me (maybe someone has a good suggestion here) bonds are the hard thing to judge. The normal goal of actually owning bonds (as opposed to a fund) is to retain the entire principal value because there's no principal fluctuation if you hold the bond to maturity (as long as you choose well and the issuer doesn't default) The actual value 'right now' of a bond (as in selling before maturity) and bond funds, goes up and down in an inverse relationship with interest rates. That means the indexes for such things also go up and down a lot, so it's very hard to compare them to a bond you intend to hold to maturity. Also, for such a bond, there's not a lot of point to 'switch out' unless you are worried about the issuer defaulting. If rates are up from what you are getting on your bonds, then you'll have to sell your bond at a discount, and all that happens is you'll end up holding a different bond that is worth less, but has higher interest (basically the net return is likely to be pretty much the same). The better approach there is generally to 'ladder' your maturity dates so you get opportunities to reinvest at whatever the prevailing rates are, without having to sell at a discount.. anyway the point is that I'm not sure there's a lot of value to comparing return on the bond portion of an IRA unless it's invested in bond funds (which a lot of people wanting to preserve principal tend to avoid)\""
},
{
"docid": "314008",
"title": "",
"text": "\"I'm assuming the question is about how to compare two ETFs that track the same index. I'd look at (for ETFs -- ignoring index funds): So, for example you might compare SPY vs IVV: SPY has about 100x the volume. Sure, IVV has 2M shares trading, so it is liquid \"\"enough\"\". But the bigger volume on SPY might matter to you if you use options: open interest is as much as 1000x more on SPY. Even if you have no interest in options, the spreads on SPY are probably going to be slightly smaller. They both have 0.09% expense ratios. When I looked on 2010-9-6, SPY was trading at a slight discount, IVV was at a slight premium. Looking for any sort of trend is left as an exercise to the reader... Grab the prospectus for each to examine the rules they set for fund makeup. Both come from well-known issuers and have a decent history. (Rather than crazy Uncle Ed's pawn shop, or the Central Bank of Stilumunistan.) So unless you find something in the SPY prospectus that makes you queasy, the higher volume and equal expense ratios would seem to suggest it over IVV. The fact that it is at a (tiny) discount right now is a (tiny) bonus.\""
},
{
"docid": "435817",
"title": "",
"text": "Trump is more credible than all the fake-news media: CNN, NYT, WaPo, etc. **He's way way way more credible than Hillary who cheat on debate questions given to her by fake-news CNN! If my son cheated on a test in 1st grade like her, he will be expelled from school. Think for a second just about this.**"
},
{
"docid": "159471",
"title": "",
"text": "Why don't you look at the actual funds and etfs in question rather than seeking a general conclusion about all pairs of funds and etfs? For example, Vanguard's total stock market index fund (VTSAX) and ETF (VTI). Comparing the two on yahoo finance I find no difference over the last 5 years visually. For a different pair of funds you may find something very slightly different. In many cases the index fund and ETF will not have the same benchmark and fees so comparisons get a little more cloudy. I recall a while ago there was an article that was pointing out that at the time emerging market ETF's had higher fees than corresponding index funds. For this reason I think you should examine your question on a case-by-case basis. Index fund and ETF returns are all publicly available so you don't have to guess."
},
{
"docid": "526326",
"title": "",
"text": "\"A financial panic is in my mind would be the opposite of a bubble. A bubble is irrational exuberance -- uncontrolled exhilaration. People will ignore anything negative and exclusively focus on the positive. People are focused on investments that offer huge returns in a short timeframe. If you recall 1999, there were books published about the Dow being at 30,000 by 2010. A panic is the direct opposite -- people are irrationally fearful. Any negative news is focused on exclusively, and positive things ignored. People are focused on preserving wealth and by pursing \"\"safety\"\". Today, you turn on the radio and people are advertising canned food and gold coins.\""
},
{
"docid": "591546",
"title": "",
"text": "\"The goal is to understand the movements of the market as a whole and understand the fortunes of every investor in the S&P. As for why it isn't price-weighted, it is because price is a complely arbitrary notion, whereas market cap is at least \"\"real\"\" in some sense. Imagine Berkshire Hathaway vs Apple. In the S&P, Apple takes up about 75% more of the index because it's market cap is 796B, compared to 452B for Berkshire. This makes intuitive sense. Apple is \"\"worth\"\" 75% more, so it takes up that much more of the index. Now lets look at price. In a price weighted index of only those two stocks, Apple, with a stock price of 154.12 would take up .06% compared to Berkshire Hathaway at 99.94% due to its 274,740 stock price. The only difference is Apple has WAY more shares outstanding. Nothing of economic value (other than a bit of liquidity) is captured in a price-weighted index.\""
},
{
"docid": "136270",
"title": "",
"text": "The vanilla advice is investing your age in bonds and the rest in stocks (index funds, of course). So if you're 25, have 75% in stock index fund and 25% in bond index. Of course, your 401k is tax sheltered, so you want keep bonds there, assuming you have taxable investments. When comparing specific funds, you need to pay attention to expense ratios. For example, Vanguard's SP 500 index has an expense ratio of .17%. Many mutual funds charge around 1.5%. That means every year, 1.5% of the fund total goes to the fund manager(s). And that is regardless of up or down market. Since you're young, I would start studying up on personal finance as much as possible. Everyone has their favorite books and websites. For sane, no-nonsense investment advise I would start at bogleheads.org. I also recommend two books - This is assuming you want to set up a strategy and not fuss with it daily/weekly/monthly. The problem with so many financial strategies is they 1) don't work, i.e. try to time the market or 2) are so overly complex the gains are not worth the effort. I've gotten a LOT of help at the boglehead forums in terms of asset allocation and investment strategy. Good luck!"
},
{
"docid": "543239",
"title": "",
"text": "Videos linked by /u/Pas__: Title|Channel|Published|Duration|Likes|Total Views :----------:|:----------:|:----------:|:----------:|:----------:|:----------: [CNN treats politics like sports — and it’s making us all dumber](https://youtube.com/watch?v=4pS4x8hXQ5c)|Vox|2017-04-17|0:06:03|27,676+ (95%)|679,751 [What happens when you treat health care like a soap opera](https://youtube.com/watch?v=6fKsBj2M-T8)|Vox|2017-06-07|0:06:17|19,172+ (93%)|476,243 --- [^Info](https://np.reddit.com/r/youtubot/wiki/index) ^| [^/u/Pas__ ^can ^delete](https://np.reddit.com/message/compose/?to=_youtubot_&subject=delete\\%20comment&message=disdi8w\\%0A\\%0AReason\\%3A\\%20\\%2A\\%2Aplease+help+us+improve\\%2A\\%2A) ^| ^v1.1.2b"
},
{
"docid": "580820",
"title": "",
"text": "and seems to do better than the S&P 500 too. No, that's not true. In fact, this fund is somewhere between S&P500 and the NASDAQ Composite indexes wrt to performance. From my experience (I have it too), it seems to fall almost in the middle between SPY and QQQ in daily moves. So it does provide diversification, but you're basically diversifying between various indexes. The cost is the higher expense ratios (compare VTI to VOO)."
},
{
"docid": "327978",
"title": "",
"text": "\"From Investopedia: \"\"Beating the market\"\" is a difficult phrase to analyze. It can be used to refer to two different situations: 1) An investor, portfolio manager, fund or other investment specialist produces a better return than the market average. The market average can be calculated in many ways, but usually a benchmark - such as the S&P 500 or the Dow Jones Industrial Average index - is a good representation of the market average. If your returns exceed the percentage return of the chosen benchmark, you have beaten the market - congrats! (To learn more, read Benchmark Your Returns With Indexes.) 2) A company's earnings, sales or some other valuation metric is superior to that of other companies in its industry. Matching the market, I would presume will be generating returns equivalent to the index you are comparing your portfolio with. If for a sector/industry then it would be the returns generated by the sector/industry. As an index is more or less a juxtaposition of the market as a whole, people tend to use an index.\""
},
{
"docid": "20776",
"title": "",
"text": ">when he's already admitted that he has all the money he'll ever need Sounds like he should sell or close the company. >and what he's doing now is fear mongering his own employees so that he doesn't have to pay slightly higher taxes See I can already shoot down your explanation, because it's not just higher taxes, its increased business tax liability, increased business insurance liability. All of which deincentivize not incentivize. If you started out making 80% of a billion dollar gross profit, then 70% , then 60%, then 50%, then 40% and with proposed changes to liability you're now looking at 30% of a billion. How long would you continue? The guy is 70+ years. He probably continues because it is his passion. But at what point is the stress and return on his time and input not worth it? That's the topic. Not greed. Is it greedy that whether he made 80% or even only 10% of a billion? You may say yes, but as a decision maker he must constantly weigh whether or not it is worth it. >He didn't get successful in a vacuum, he got successful in a system which helped fund his success because 42 years ago the people who were where he is today were taxed more so he could get where he is today. But his opinions aren't what I'm mad about, I'm mad because he is greedy and a bully and a liar and a hypocrite of almost incomprehensible proportions. Obama said he didnt build it, but he'll damn well close or sell the company if he wants. Rhetoric is cute until thousands of employees are out of jobs because the owner didn't feel it was worth it to continue the business."
},
{
"docid": "79810",
"title": "",
"text": "I love progress. What I don't love is man's greed and quest for power. The powerful NEVER willingly give up power without a fight. This time around the automation revolution will not be the same as previous tech revolutions. It will permanently displace jobs with NO jobs created to place the vast number of jobs lost. So it's either a universal basic income or a revolution. I predict the latter as the greed of man will never leave until beaten out of them."
},
{
"docid": "573631",
"title": "",
"text": "Millionaires? No offense, but you're talking out of your ass. My mother lives in a house that my parents bought in the 1980s. She's definitely not a millionaire. Nowhere close. But she owns the house free & clear and can afford the taxes. I bought my house from a retired lady for about 5x what she paid for it in the sixties. Maybe more. I don't recall, but she was the original owner. Definitely not a millionaire. Just a retired widow. Most of the folks who own these 1950s to 1980s tract homes in good areas are beneficiaries of good locations and lack of development. The reason those homes are so valuable is because we're not building new housing in anything resembling the scale needed. We need something like 40,000 new units built annually in Los Angeles and Orange counties to catch up to the population growth and lack of new construction happening now. It ain't gonna happen, but that's what we need. In 20 years, I'll benefit from Prop 13. It flows. And it benefits property owners. It encourages property ownership. If you wanted to argue that property taxes on commercial properties should be different from residential properties, I'd be up for the debate. It's an interesting topic and I don't know the answer, but it would result in wholesale reduction in commercial property values in the state because of the reduced cash flow from higher taxes. Huge dislocation and a massive transfer of wealth from commercial property owners to the taxpayers."
},
{
"docid": "457873",
"title": "",
"text": "One thing to keep in mind when calculating P/E on an index is that the E (earnings) can be very close to zero. For example, if you had a stock trading at $100 and the earnings per share was $.01, this would result in a P/E of 10,000, which would dominate the P/E you calculate for the index. Of course negative earnings also skew results. One way to get around this would be to calculate the average price of the index and the earnings per share of the index separately, and then divide the average price of the index by the average earnings per share of the index. Different sources calculate these numbers in different ways. Some throw out negative P/Es (or earnings per share) and some don't. Some calculate the price and earnings per share separate and some don't, etc... You'll need to understand how they are calculating the number in order to compare it to PEs of individual companies."
},
{
"docid": "586029",
"title": "",
"text": "I agree with others here that suggest that you should be taking higher risk since it is repaid with higher returns. You have 40 years or so to go before you might switch to safer but lower return funds. I suggest that you look at the Morningstar rating for the funds you are considering: http://www.morningstar.com/ A fund rated five stars means that the fund performs in the top 20% compared to all similar funds. I prefer five star funds. Next, check the management fees. Here is an example from one of the funds you mentioned; https://www.google.com/finance?cid=466533039917726 Next, I suggest you compare how each fund has performed compared to a benchmark. Here are some common indices: Compare an equity fund to, for example, the S&P 500. Has your fund beat or closely matched the S&P for 1, 5 and 10 years? If not, you may as well buy an index fund, such as SPY."
},
{
"docid": "334909",
"title": "",
"text": "Here are some pretty big name news agencies which have a section dedicated to commodities: CNN Bloomberg Reuters"
},
{
"docid": "482477",
"title": "",
"text": "The Wikipedia has an article on money flow index. The article which you link to correctly uses the typical price. You state that you are comparing the closing prices, which is incorrect. I'm making no statement on the validity of the money flow index itself, just answering your question."
}
] |
4846 | Is there anything comparable to/resembling CNN's Fear and Greed Index? | [
{
"docid": "323749",
"title": "",
"text": "\"There are a number of ways to measure such things and they are generally called \"\"sentiment indicators\"\". The ones that I have seen \"\"work\"\", in the sense that they show relatively high readings near market tops and relatively low readings near market bottoms. The problem is that there are no thresholds that work consistently. For example, at one market top a sentiment indicator may read 62. At the next market top that same indicator might read 55. So what threshold do you use next time? Maybe the top will come at 53, or maybe it will not come until 65. There was a time when I could have listed examples for you with the names of the indicators and what they signaled and when. But I gave up on such things years ago after seeing such wide variation. I have been at this a long time (30+ years), and I have not found anything that works as well as we would like at identifying a top in real time. The best I have found (although it does give false signals) is a drop in price coupled with a bearish divergence in breadth. The latter is described in \"\"Stan Weinstein's Secrets For Profiting in Bull and Bear Markets\"\". Market bottoms are a little less difficult to identify in real time. One thing I would suggest if you think that there is some way to get a significant edge in investing, is to look at the results of Mark Hulbert's monitoring of newsletters. Virtually all of them rise and fall with the market and almost none are able to beat buy and hold of the Wilshire 5000 over the long term.\""
}
] | [
{
"docid": "20310",
"title": "",
"text": "There is nothing wrong with private greed. Even if your sole purpose is to make money, you still have to provide the means of services or products that the public wants to buy. You are still providing people with things they want/need. And if you're a corrupt business, capitalism wouldn't allow you to fare well, or at least for long. You couldn't not continue to provide society with goods and services in pure capitalism if your aim is simply to be a profiteer. The problem is corporatism. When you merge private and government greed, you get problems. This quote from Keynes is just plain ignorant on his part."
},
{
"docid": "470861",
"title": "",
"text": "You shouldn't be picking stocks in the first place. From New York Magazine, tweeted by Ezra Klein: New evidence for that reality comes from Goldman Sachs, via Bloomberg News. The investment bank analyzed the holdings of 854 funds with $2.1 trillion in equity positions. It found, first of all, that all those “sophisticated investors” would have been better off stashing their money in basic, hands-off index funds or mutual funds last year — both of them had higher average returns than hedge funds did. The average hedge fund returned 3 percent last year, versus 14 percent for the Standard & Poor’s 500. Mutual funds do worse than index funds. Tangentially-related to the question of whether Wall Street types deserve their compensation packages is the yearly phenomenon in which actively managed mutual funds underperform the market. Between 2004 and 2008, 66.21% of domestic funds did worse than the S&P Composite 1500. In 2008, 64.23% underperformed. In other words, if you had a fund manager and his employees bringing their skill and knowledge to bear on your portfolio, you probably lost money as compared to the market as a whole. That's not to say you lost money in all cases. Just in most. The math is really simple on this one. Stock picking is fun, but undiversified and brings you competing with Wall Streeters with math Ph.Ds. and twenty-thousand-dollars-a-year Bloomberg terminals. What do you know about Apple's new iPhone that they don't? You should compare your emotional reaction to losing 40% in two days to your reaction to gaining 40% in two days... then compare both of those to losing 6% and gaining 6%, respectively. Picking stocks is not financially wise. Period."
},
{
"docid": "47985",
"title": "",
"text": "\"Index funds do leech a \"\"free ride\"\" on the coattails of active traders. Consider what would happen if literally everyone bought index funds. For a company there would be no motivation to excel. Get listed; all the index funds are forced to buy your stock; now sit on your derriere playing Freecell, or otherwise scam/loot the company. Go bankrupt. Rinse wash repeat. This \"\"who cares who John Galt is\"\" philosophy would kill the economy dead. Somebody has to actually buy stocks based on research, analysis and value. Company managers need to actively fear, respect and court those people. They don't need to be mutual-fund managers, but they do need to be somebody. Maybe activist investors like Warren Buffett will suffice. Maybe retirement fund or endowment managers like CalPERS or Harvard can do this. Better be somebody! I'm all for index funds... Just saying only a fraction of the market's capital can be in index funds before it starts into a tragedy of the commons.\""
},
{
"docid": "407672",
"title": "",
"text": "Both, I own and utalize a ton of Google products but anything outside their advertising or data is lacking long term vision and listless. Reminds of a kid getting bored with their toy in 15 minutes. Makes me fearful for their 20 year+ dominance if their advertisement business slowly gets more competition. They won't be going anywhere, but I don't think they will continue to take over the world."
},
{
"docid": "664",
"title": "",
"text": "Calling banks 'evil' seems sensationalist. I think it's better to say that their reward-punishment tradeoff is skewed very heavily partly driven by governments being held hostage to fear of bank runs and other doomsday scenarios. Also, if you think about it, finance has never ever been a clean industry (and I say this as someone whose entire career has been in this industry). Every culture that I know anything about has had issues with the ethics of money lenders throughout history (Middle East, Med. Europe, China, India)."
},
{
"docid": "161153",
"title": "",
"text": "Over the past five years, QFVOX has returned 13.67%, compared to the index fund SPY that has returned 50.39%. SEVAX has lost 23.96%. AKREX has returned 81.82%. In two of your three examples, you would have done much better in an index fund with a very low expense ratio as suggested. While one can never, as you see, make a generalization, in almost every case, most investors will do better, and often much better, with an index fund with a low expense ratio. My source was Google Finance."
},
{
"docid": "159471",
"title": "",
"text": "Why don't you look at the actual funds and etfs in question rather than seeking a general conclusion about all pairs of funds and etfs? For example, Vanguard's total stock market index fund (VTSAX) and ETF (VTI). Comparing the two on yahoo finance I find no difference over the last 5 years visually. For a different pair of funds you may find something very slightly different. In many cases the index fund and ETF will not have the same benchmark and fees so comparisons get a little more cloudy. I recall a while ago there was an article that was pointing out that at the time emerging market ETF's had higher fees than corresponding index funds. For this reason I think you should examine your question on a case-by-case basis. Index fund and ETF returns are all publicly available so you don't have to guess."
},
{
"docid": "491678",
"title": "",
"text": "Have a beef with your proof... measuring at the county level is misleading. Baltimore county has some wealthy areas. It goes all the way up to the state line. There's plenty of more affluent pockets included in that. Same is true for Detroit, Wayne county includes many affluent areas. Rural counties however tend to be isolated and more uniform. If you're looking in Owsley Kentucky (poorest county per that article)... it's not really near anything resembling a major commerce area and there's no pockets of higher-value homes hidden anywhere like you find around major metro areas..."
},
{
"docid": "317803",
"title": "",
"text": "\"Maria, there are a few questions I think you must consider when considering this problem. Do fundamental or technical strategies provide meaningful information? Are the signals they produce actionable? In my experience, and many quantitative traders will probably say similar things, technical analysis is unlikely to provide anything meaningful. Of course you may find phenomena when looking back on data and a particular indicator, but this is often after the fact. One cannot action-ably trade these observations. On the other hand, it does seem that fundamentals can play a crucial role in the overall (typically long run) dynamics of stock movement. Here are two examples, Technical: suppose we follow stock X and buy every time the price crosses above the 30 day moving average. There is one obvious issue with this strategy - why does this signal have significance? If the method is designed arbitrarily then the answer is that it does not have significance. Moreover, much of the research supports that stocks move close to a geometric brownian motion with jumps. This supports the implication that the system is meaningless - if the probability of up or down is always close to 50/50 then why would an average based on the price be predictive? Fundamental: Suppose we buy stocks with the best P/E ratios (defined by some cutoff). This makes sense from a logical perspective and may have some long run merit. However, there is always a chance that an internal blowup or some macro event creates a large loss. A blended approach: for sake of balance perhaps we consider fundamentals as a good long-term indication of growth (what quants might call drift). We then restrict ourselves to equities in a particular index - say the S&P500. We compare the growth of these stocks vs. their P/E ratios and possibly do some regression. A natural strategy would be to sell those which have exceeded the expected return given the P/E ratio and buy those which have underperformed. Since all equities we are considering are in the same index, they are most likely somewhat correlated (especially when traded in baskets). If we sell 10 equities that are deemed \"\"too high\"\" and buy 10 which are \"\"too low\"\" we will be taking a neutral position and betting on convergence of the spread to the market average growth. We have this constructed a hedged position using a fundamental metric (and some helpful statistics). This method can be categorized as a type of index arbitrage and is done (roughly) in a similar fashion. If you dig through some data (yahoo finance is great) over the past 5 years on just the S&P500 I'm sure you'll find plenty of signals (and perhaps profitable if you calibrate with specific numbers). Sorry for the long and rambling style but I wanted to hit a few key points and show a clever methods of using fundamentals.\""
},
{
"docid": "470687",
"title": "",
"text": "There are at least a couple of ways you could view this to my mind: Make an Excel spreadsheet and use the IRR function to compute the rate of return you are having based on money being added. Re-invested distributions in a mutual fund aren't really an additional investment as the Net Asset Value of the fund will drop by the amount of the distribution aside from market fluctuation. This is presuming you want a raw percentage that could be tricky to compare to other funds without doing more than a bit of work in a way. Look at what is the fund's returns compared to both the category and the index it is tracking. The tracking error is likely worth noting as some index funds could lag the index by a sizable margin and thus may not be that great. At the same time there may exist cases where an index fund isn't quite measuring up that well. The Small-Growth Indexing Anomaly would be the William Bernstein article from 2001 that has some facts and figures for this that may be useful."
},
{
"docid": "452122",
"title": "",
"text": "More importantly, index funds are denominated in specific currencies. You can't buy or sell an index, so it can be dimensionless. Anything you actually do to track the index involves real amounts of real money."
},
{
"docid": "217731",
"title": "",
"text": "Yeah, having a $1B profit is a necessity. If only we could increase company profit to $1.5B by lowering taxes, those $500M would trickle down for sure. Company execs and shareholders are just greedy enough to pocket all the profits for themselves at the current tax level, but with a lower tax level they would share the additional proceeds fairly with those on the bottom. Right now we have: Profit - taxes = greed --> nothing left for increased wages While we could have: Profit - (taxes / 2) > greed --> money left for increasing wages"
},
{
"docid": "190126",
"title": "",
"text": "\"> don't think Hillary would've delivered the same results (or Bernie,... First, absolutely not under Bernie. Just his nomination or him being the president would kill the economy. As for Hillary, I did not vote for her, neither most American, not because she would do bad with the economy (but Trump would do better than her, for sure.) Just one example about Hillary: she cheated on debate questions that she got from fake-news CNN. If my son cheated on a test like that, he would be expelled from school. No other would-be president did such a s thing or even consider to do such a thing. Meanwhile, Trump, not even a politician, handled the debate questions very very well. So you want me to vote for Hillary who has zero morals, zero accomplishments in the past (she's just a \"\"wife of...\"\"), mishandle top secret e-mail(s), rigging DNC elections against Bernie, etc? FYI, I am a democrat and I voted for Obama twice, Al Gore (idiot!) and Kerry (bigger idiot). I prefer to vote for a democrat, but not when the DNC and the Candidate is corrupt to the core, evil, killers, cheaters, etc. And you also believe anything from CNN after they cheat with Hillary on debate questions? So you wrote, and I wrote back: >>>How can it be fake news when we're looking at government generated economic data? >> Because government economic data shows the economy improved under Trump! > So yes, it's doing better than a year ago. You see? First you claim, based on fake news, that economy under Trump is not doing good, and then, quickly, the story changes.\""
},
{
"docid": "469599",
"title": "",
"text": "The Investopedia article you linked to is a good start. Its key takeaway is that you should always consider risk-adjusted return when evaluating your portfolio. In general, investors seeking a higher level of return must face a higher likelihood of taking a loss (risk). Different types of stocks (large vs small; international vs US; different industry sectors) have different levels of historical risk and return. Not to mention stocks vs bonds or other financial instruments... So, it's key to make an apples-to-apples comparison against an appropriate benchmark. A benchmark will tell you how your portfolio is doing versus a comparable portfolio. An index, such as the S&P 500, is often used, because it tells you how your portfolio is doing compared against simply passively investing in a diversified basket of securities. First, I would start with analyzing your portfolio to understand its asset allocation. You can use a tool like the Morningstar X-Ray to do this. You may be happy with the asset allocation, or this tool may inform you to adjust your portfolio to meet your long-term goals. The next step will be to choose a benchmark. Given that you are investing primarily in non-US securities, you may want to pick a globally diversified index such as the Dow Jones Global Index. Depending on the region and stock characteristics you are investing in, you may want to pick a more specialized index, such as the ones listed here in this WSJ list. With your benchmark set, you can then see how your portfolio's returns compare to the index over time. IRR and ROI are helpful metrics in general, especially for corporate finance, but the comparison-based approach gives you a better picture of your portfolio's performance. You can still calculate your personal IRR, and make sure to include factors such as tax treatment and investment expenses that may not be fully reflected by just looking at benchmarks. Also, you can calculate the metrics listed in the Investopedia article, such as the Sharpe ratio, to give you another view on the risk-adjusted return."
},
{
"docid": "197527",
"title": "",
"text": "\"For any isolated equity market, its beta will less resemble the betas of all other interconnected equity markets. For interconnected markets, beta is not well-dispersed, especially during a world expansion because richer nations have more wealth thus a dominant influence over smaller nations' equity markets causing a convergence. If the world is in recession, or a country is in recession, all betas or the recessing country's beta will start to diverge, respectively. If the world's economies diverge, their equity markets' betas will too. If a country is having financial difficulty, its beta too will diverge. Beta is correlation against a ratio of variance, so variance or \"\"volatiliy\"\" is only half of that equation. Correlation or \"\"direction\"\" is the other half. The ratio of variance will give the magnitude of beta, and correlation will give the sign or \"\"direction\"\". Therefore, interconnected emerging equity markets should have higher beta magnitudes because they are more variant but should generally over time have signs that more closely resemble the rest. A disconnected emerging equity market will improbably have average betas both by magnitude and direction.\""
},
{
"docid": "20776",
"title": "",
"text": ">when he's already admitted that he has all the money he'll ever need Sounds like he should sell or close the company. >and what he's doing now is fear mongering his own employees so that he doesn't have to pay slightly higher taxes See I can already shoot down your explanation, because it's not just higher taxes, its increased business tax liability, increased business insurance liability. All of which deincentivize not incentivize. If you started out making 80% of a billion dollar gross profit, then 70% , then 60%, then 50%, then 40% and with proposed changes to liability you're now looking at 30% of a billion. How long would you continue? The guy is 70+ years. He probably continues because it is his passion. But at what point is the stress and return on his time and input not worth it? That's the topic. Not greed. Is it greedy that whether he made 80% or even only 10% of a billion? You may say yes, but as a decision maker he must constantly weigh whether or not it is worth it. >He didn't get successful in a vacuum, he got successful in a system which helped fund his success because 42 years ago the people who were where he is today were taxed more so he could get where he is today. But his opinions aren't what I'm mad about, I'm mad because he is greedy and a bully and a liar and a hypocrite of almost incomprehensible proportions. Obama said he didnt build it, but he'll damn well close or sell the company if he wants. Rhetoric is cute until thousands of employees are out of jobs because the owner didn't feel it was worth it to continue the business."
},
{
"docid": "292865",
"title": "",
"text": "What you should compare is SPX, SPY NAV, and ES fair value. Like others have said is SPX is the index that others attempt to track. SPY tracks it, but it can get a tiny bit out of line as explained here by @Brick . That's why they publish NAV or net asset value. It's what the price should be. For SPY this will be very close because of all the participants. The MER is a factor, but more important is something called tracking error, which takes into account MER plus things like trading expenses plus revenue from securities lending. SPY (the few times I've checked) has a smaller tracking error than the MER. It's not much of a factor in pricing differences. ES is the price you'll pay today to get SPX delivered in the future (but settled in cash). You have to take into account dividends and interest, this is called fair value. You can find this usually every morning so you can compare what the futures are saying about the underlying index. http://www.cnbc.com/pre-markets/ The most likely difference is you're looking at different times of the day or different open/close calculations."
},
{
"docid": "148721",
"title": "",
"text": "\"Funds which track the same index may have different nominal prices. From an investors point of view, this is not important. What is important is that when the underlying index moves by a given percentage, the price of the tracking funds also move by an equal percentage. In other words, if the S&P500 rises by 5%, then the price of those funds tracking the S&P500 will also rise by 5%. Therefore, investing a given amount in any of the tracking funds will produce the same profit or loss, regardless of the nominal prices at which the individual funds are trading. To see this, use the \"\"compare\"\" function available on the popular online charting services. For example, in Google finance call up a chart of the S&P500 index, then use the compare textbox to enter the codes for the various ETFs tracking the S&P500. You will see that they all track the S&P500 equally so that your relative returns will be equal from each of the tracking funds. Any small difference in total returns will be attributable to management fees and expenses, which is why low fees are so important in passive investing.\""
},
{
"docid": "457873",
"title": "",
"text": "One thing to keep in mind when calculating P/E on an index is that the E (earnings) can be very close to zero. For example, if you had a stock trading at $100 and the earnings per share was $.01, this would result in a P/E of 10,000, which would dominate the P/E you calculate for the index. Of course negative earnings also skew results. One way to get around this would be to calculate the average price of the index and the earnings per share of the index separately, and then divide the average price of the index by the average earnings per share of the index. Different sources calculate these numbers in different ways. Some throw out negative P/Es (or earnings per share) and some don't. Some calculate the price and earnings per share separate and some don't, etc... You'll need to understand how they are calculating the number in order to compare it to PEs of individual companies."
}
] |
4863 | How to calculate new price for bond if yield increases | [
{
"docid": "87398",
"title": "",
"text": "I am currently trying out some variations (moving terms around ...) of the formula for the present value of money The relationship between yield and price is much simpler than that. If you pay £1015 for a bond and its current yield is 4.69%, that means you will receive in income each year: 4.69% * £1015 = £47.60 The income from the bond is defined by its coupon rate and its face value, not the market value. So that bond will continue to pay £47.60 each year, regardless of the market price. The market price will go up or down according to the market as a whole, and the credit rating of the issuer. If the issuer is likely to default, the market price goes down and the yield goes up. If similar companies start offering bonds with higher yields, the market price goes down to make the bond competitive in the market, again raising yield. So if the yield goes up to 4.87%, what is the price such that 4.87% of that price is £47.60? £47.60 / 4.87% = £977.48 Another way to think of it: if the yield goes up from 4.69% to 4.87%, then yield has increased by a factor of: 4.87% / 4.69% = 1.0384 Consequently, market price must decrease by the same factor: £1015 / 1.0384 = £977.48"
}
] | [
{
"docid": "222979",
"title": "",
"text": "1) Explicitly, how a company's share price in the secondary market affects the company's operations. (Simply: How does it matter to a company that its share price drops?) I have a vague idea of the answer, but I'd like to see someone cover it in detail. 2) Negative yield curves, or bonds/bills with negative yields Thanks!"
},
{
"docid": "551893",
"title": "",
"text": "A stock is an ownership interest in a company. There can be multiple classes of shares, but to simplify, assuming only one class of shares, a company issues some number of shares, let's say 1,000,000 shares and you can buy shares of the company. If you own 1,000 shares in this example, you would own one one-thousandth of the company. Public companies have their shares traded on the open market and the price varies as demand for the stock comes and goes relative to people willing to sell their shares. You typically buy stock in a company because you believe the company is going to prosper into the future and thus the value of its stock should rise in the open market. A bond is an indebted interest in a company. A company issues bonds to borrow money at an interest rate specified in the bond issuance and makes periodic payments of principal and interest. You buy bonds in a company to lend the company money at an interest rate specified in the bond because you believe the company will be able to repay the debt per the terms of the bond. The value of a bond as traded on the open exchange varies as the prevailing interest rates vary. If you buy a bond for $1,000 yielding 5% interest and interest rates go up to 10%, the value of your bond in the open market goes down so that the payment terms of 5% on $1,000 matches hypothetical terms of 10% on a lesser principal amount. Whatever lesser principal amount at the new rate would lead to the same payment terms determines the new market value. Alternatively, if interest rates go down, the current value of your bond increases on the open market to make it appear as if it is yielding a lower rate. Regardless of the market value, the company continues to pay interest on the original debt per its terms, so you can always hold onto a bond and get the original promised interest as long as the company does not go bankrupt. So in summary, bonds tend to be a safer investment that offers less potential return. However, this is not always the case, since if interest rates skyrocket, your bond's value will plummet, although you could just hold onto them and get the low rate originally promised."
},
{
"docid": "139015",
"title": "",
"text": "The spot curve (or yield curve) demonstrates the different yields at which bonds of differing maturities are being purchased. When the yield curve is upward sloping, longer maturity bonds are being purchased at higher yields. When it's downward sloping, longer maturity bonds are purchased at lower yields. Keep in mind that yield is inversely related to price, so that a high-yield bond will be at a lower price and vice versa. The spot curve can also be used to determine the forward curve. This is based on the concept that an investor, given two options with identical cash flows, will be indifferent in what to purchase (i.e. their prices should be equal). To learn more about this, stay here in /r/finance. To learn anything about your actual question, try /r/personalfinance."
},
{
"docid": "587032",
"title": "",
"text": "\"The simple answer is that, even though mortgages can go for 10, 15, 20 and 30 year terms in the U.S., they're typically backed by bonds sold to investors that mature in 10 years, which is the standard term for most bonds. These bonds, in the open market, are compared by investors with the 10-year Treasury note, which is the gold standard for low-risk investment; the U.S. Government has a solid history of always paying its bills (though this reputation is being tested in recent years with fights over the debt ceiling and government budgets). The savvy investor, therefore, knows that he or she can make at least the yield from the 10-year T-note in that time frame, with virtually zero risk. Anything else on the market is seen as being a higher risk, and so investors demand higher yields (by making lower bids, forcing the issuer to issue more bonds to get the money it needs up front). Mortgage-backed securities are usually in the next tier above T-debt in terms of risk; when backed by prime-rate mortgages they're typically AAA-rated, making them available to \"\"institutional investors\"\" like banks, mutual funds, etc. This forms a balancing act; mortgage-backed securities issuers typically can't get the yield of a T-note, because no matter how low their risk, T-debt is lower (because one bank doesn't have the power to tax the entire U.S. population). But, they're almost as good because they're still very stable, low-risk debt. This bond price, and the resulting yield, is in turn the baseline for a long-term loan by the bank to an individual. The bank, watching the market and its other bond packages, knows what it can get for a package of bonds backed by your mortgage (and others with similar credit scores). It will therefore take this number, add a couple of percentage points to make some money for itself and its stockholders (how much the bank can add is tacitly controlled by other market forces; you're allowed to shop around for the lowest rate you can get, which limits any one bank's ability to jack up rates), and this is the rate you see advertised and - hopefully - what shows up on your paperwork after you apply.\""
},
{
"docid": "379445",
"title": "",
"text": "\"The fundamental concept of the time value of money is that money now is worth more than the same amount of money later, because of what you can do with money between now and later. If I gave you a choice between $1000 right now and $1000 in six months, if you had any sense whatsoever you would ask for the money now. That's because, in the six months, you could use the thousand dollars in ways that would improve your net worth between now and six months from now; paying down debt, making investments in your home or business, saving for retirement by investing in interest-bearing instruments like stocks, bonds, mutual funds, etc. There's absolutely no advantage and every disadvantage to waiting 6 months to receive the same amount of money that you could get now. However, if I gave you a choice between $1000 now and $1100 in six months, that might be a harder question; you will get more money later, so the question becomes, how much can you improve your net worth in six months given $1000 now? If it's more than $100, you still want the money now, but if nothing you can do will make more than $100, or if there is a high element of risk to what you can do that will make $100 that might in fact cause you to lose money, then you might take the increased, guaranteed money later. There are two fundamental formulas used to calculate the time value of money; the \"\"future value\"\" and the \"\"present value\"\" formulas. They're basically the same formula, rearranged to solve for different values. The future value formula answers the question, \"\"how much money will I have if I invest a certain amount now, at a given rate of return, for a specified time\"\"?. The formula is FV = PV * (1+R)N, where FV is the future value (how much you'll have later), PV is the present value (how much you'll have now), R is the periodic rate of return (the percentage that your money will grow in each unit period of time, say a month or a year), and N is the number of unit periods of time in the overall time span. Now, you asked what \"\"compounding\"\" is. The theory is very simple; if you put an amount of money (the \"\"principal\"\") into an investment that pays you a rate of return (interest), and don't touch the account (in effect reinvesting the interest you earn in the account back into the same account), then after the first period during which interest is calculated and paid, you'll earn interest on not just the original principal, but the amount of interest already earned. This allows your future value to grow faster than if you were paid \"\"simple interest\"\", where interest is only ever paid on the principal (for instance, if you withdrew the amount of interest you earned each time it was paid). That's accounted for in the future value formula using the exponent term; if you're earning 8% a year on your investment, then after 1 year you'll have 108% of your original investment, then after two years you'll have 1.082 = 116.64% (instead of just 116% which you'd get with simple interest). That .64% advantage to compounding doesn't sound like much of an advantage, but stay tuned; after ten years you'll have 215.89% (instead of 180%) of your original investment, after 20 you'll have 466.10% (instead of 260%) and after 30 your money will have grown by over 1000% as opposed to a measly 340% you'd get with simple interest. The present value formula is based on the same fundamental formula, but it's \"\"solved\"\" for the PV term and assumes you'll know the FV amount. The present value formula answers questions like \"\"how much money would I have to invest now in order to have X dollars at a specific future time?\"\". That formula is PV = FV / (1+R)N where all the terms mean the same thing, except that R in this form is typically called the \"\"discount rate\"\", because its purpose here is to lower (discount) a future amount of money to show what it's worth to you now. Now, the discount rate (or yield rate) used in these calculations isn't always the actual yield rate that the investment promises or has been shown to have over time. Investors will calculate the discount rate for a stock or other investment based on the risks they see in the company's financial numbers or in the market as a whole. The models used by professional investors to quantify risk are rather complex (the people who come up with them for the big investment banks are called \"\"quants\"\", and the typical quant graduates with an advanced math degree and is hired out of college with a six-figure salary), but it's typically enough for the average investor to understand that there is an inherent risk in any investment, and the longer the time period, the higher the chance that something bad will happen that reduces the return on your investment. This is why the 30-year Treasury note carries a higher interest rate than the 10-year T-note, which carries higher interest than the 6-month, 1-year and 5-year T-bills. In most cases, you as an individual investor (or even an institutional investor like a hedge fund manager for an investment bank) cannot control the rate of return on an investment. The actual yield is determined by the market as a whole, in the form of people buying and selling the investments at a price that, coupled with the investment's payouts, determines the yield. The risk/return numbers are instead used to make a \"\"buy/don't buy\"\" decision on a particular investment. If the amount of risk you foresee in an investment would require you to be earning 10% to justify it, but in fact the investment only pays 6%, then don't buy it. If however, you'd be willing to accept 4% on the same investment given your perceived level of risk, then you should buy.\""
},
{
"docid": "43219",
"title": "",
"text": "\"I mean, it's only a difference of an order of magnitude, really. Until you consider the following: 1) Only a fraction of the $800B Muni bonds market is new issue. 2) True spreads on Muni bonds are hard enough to calculate as is because they're all OTC. 3)The author quotes that the particular bid was for an 87K/year return on a notional of $300M. That's a spread of a whopping 3 basis points that the bank took extra over \"\"true value\"\". 4) Intraday vol for almost any financial instrument is more than 3 basis points. 5) So that's what he's making this big deal over? THREE basis points? I don't even know the length of my penis to within three basis points, and I challenge you to find anyone who could name the yield on the 10Y Treasury within 3 basis points.\""
},
{
"docid": "14061",
"title": "",
"text": "From InvestingAnswers, the price of a bond is equal to the present value of its future cash flows, as shown in the following formula: Where: By induction, this is equivalent to: or, using more familiar formulae, it is equivalent to the formula for the present value of an ordinary annuity to represent the coupon payments, plus a term for the discounted value at maturity: For example, a 10 year semiannual bond with coupon payment 10%, priced at 1095 with maturity value 1000. Solving for r yields 0.0428332 or 4.28% semi-annually. (8.75% per annum) The solution can be found by plotting or using a solver, which many pocket calculators have. Plot of p as a function of r, intersecting with p = 1095 when r = 0.0428 Checking on Investopedia"
},
{
"docid": "189006",
"title": "",
"text": "\"First, a clarification. No assets are immune to inflation, apart from inflation-indexed securities like TIPS or inflation-indexed gilts (well, if held to maturity, these are at least close). Inflation causes a decline in the future purchasing power of a given dollar1 amount, and it certainly doesn't just affect government bonds, either. Regardless of whether you hold equity, bonds, derivatives, etc., the real value of those assets is declining because of inflation, all else being equal. For example, if I invest $100 in an asset that pays a 10% rate of return over the next year, and I sell my entire position at the end of the year, I have $110 in nominal terms. Inflation affects the real value of this asset regardless of its asset class because those $110 aren't worth as much in a year as they are today, assuming inflation is positive. An easy way to incorporate inflation into your calculations of rate of return is to simply subtract the rate of inflation from your rate of return. Using the previous example with inflation of 3%, you could estimate that although the nominal value of your investment at the end of one year is $110, the real value is $100*(1 + 10% - 3%) = $107. In other words, you only gained $7 of purchasing power, even though you gained $10 in nominal terms. This back-of-the-envelope calculation works for securities that don't pay fixed returns as well. Consider an example retirement portfolio. Say I make a one-time investment of $50,000 today in a portfolio that pays, on average, 8% annually. I plan to retire in 30 years, without making any further contributions (yes, this is an over-simplified example). I calculate that my portfolio will have a value of 50000 * (1 + 0.08)^30, or $503,132. That looks like a nice amount, but how much is it really worth? I don't care how many dollars I have; I care about what I can buy with those dollars. If I use the same rough estimate of the effect of inflation and use a 8% - 3% = 5% rate of return instead, I get an estimate of what I'll have at retirement, in today's dollars. That allows me to make an easy comparison to my current standard of living, and see if my portfolio is up to scratch. Repeating the calculation with 5% instead of 8% yields 50000 * (1 + 0.05)^30, or $21,6097. As you can see, the amount is significantly different. If I'm accustomed to living off $50,000 a year now, my calculation that doesn't take inflation into account tells me that I'll have over 10 years of living expenses at retirement. The new calculation tells me I'll only have a little over 4 years. Now that I've clarified the basics of inflation, I'll respond to the rest of the answer. I want to know if I need to be making sure my investments span multiple currencies to protect against a single country's currency failing. As others have pointed out, currency doesn't inflate; prices denominated in that currency inflate. Also, a currency failing is significantly different from a prices denominated in a currency inflating. If you're worried about prices inflating and decreasing the purchasing power of your dollars (which usually occurs in modern economies) then it's a good idea to look for investments and asset allocations that, over time, have outpaced the rate of inflation and that even with the effects of inflation, still give you a high enough rate of return to meet your investment goals in real, inflation-adjusted terms. If you have legitimate reason to worry about your currency failing, perhaps because your country doesn't maintain stable monetary or fiscal policies, there are a few things you can do. First, define what you mean by \"\"failing.\"\" Do you mean ceasing to exist, or simply falling in unit purchasing power because of inflation? If it's the latter, see the previous paragraph. If the former, investing in other currencies abroad may be a good idea. Questions about currencies actually failing are quite general, however, and (in my opinion) require significant economic analysis before deciding on a course of action/hedging. I would ask the same question about my home's value against an inflated currency as well. Would it keep the same real value. Your home may or may not keep the same real value over time. In some time periods, average home prices have risen at rates significantly higher than the rate of inflation, in which case on paper, their real value has increased. However, if you need to make substantial investments in your home to keep its price rising at the same rate as inflation, you may actually be losing money because your total investment is higher than what you paid for the house initially. Of course, if you own your home and don't have plans to move, you may not be concerned if its value isn't keeping up with inflation at all times. You're deriving additional satisfaction/utility from it, mainly because it's a place for you to live, and you spend money maintaining it in order to maintain your physical standard of living, not just its price at some future sale date. 1) I use dollars as an example. This applies to all currencies.\""
},
{
"docid": "142822",
"title": "",
"text": "> How would you value a bond? Very basic approach is TVM. This should have been taught in your first year accounting class. http://en.wikipedia.org/wiki/Time_value_of_money > How do you value an option? Using the Black–Scholes options pricing model. BS opt pricing model is one (typically the entry level for teaching option pricing) stochastic model you can use. It has limitations due to certain assumptions made (such as constant vol) but you're correct, you can value an option with it. > How would you construct a yield curve? Draw a graph with maturity on the X-axis and yield on the Y-axis. So that's how to draw an xy plane... yes you're correct. That doesn't answer how to actually create a yield curve. The most simplest approach of creating one is to bootstrap the curve using the spot and forwards."
},
{
"docid": "111033",
"title": "",
"text": "\"Bonds are valued based on all of this, using the concept of the \"\"time value of money\"\". Simply stated, money now is worth more than money later, because of what you can do with money between now and later. Case in point: let's say the par value of a bond is $100, and will mature 10 years from this date (these are common terms for most bonds, though the U.S. Treasury has a variety of bonds with varying par values and maturation periods), with a 0% coupon rate (nothing's paid out prior to maturity). If the company or government issuing the bonds needs one million dollars, and the people buying the bonds are expecting a 5% rate of return on their investment, then each bond would only sell for about $62, and the bond issuer would have to sell a par value of $1.62 million in bonds to get its $1m now. These numbers are based on equations that calculate the \"\"future value\"\" of an investment made now, and conversely the \"\"present value\"\" of a future return. Back to that time value of money concept, money now (that you're paying to buy the bond) is worth more than money later (that you'll get back at maturity), so you will expect to be returned more than you invested to account for this time difference. The percentage of rate of return is known as the \"\"yield\"\" or the \"\"discount rate\"\" depending on what you're calculating, what else you take into consideration when defining the rate (like inflation), and whom you talk to. Now, that $1.62m in par value may be hard for the bond issuer to swallow. The issuer is effectively paying interest on interest over the lifetime of the bond. Instead, many issuers choose to issue \"\"coupon bonds\"\", which have a \"\"coupon rate\"\" determining the amount of a \"\"coupon payment\"\". This can be equated pretty closely with you making interest-only payments on a credit card balance; each period in which interest is compounded, you pay the amount of interest that has accrued, to avoid this compounding effect. From an accounting standpoint, the coupon rate lowers the amount of real monies paid; the same $1m in bonds, maturing in 10 years with a 5% expected rate of return, but with a 5% coupon rate, now only requires payments totalling $1.5m, and that half-million in interest is paid $50k at a time annually (or $25k semi-annually). But, from a finance standpoint, because the payments made in the first few years are worth more than the payments made closer to and at maturity, the present value of all these coupon payments (plus the maturity payout) is higher than if the full payout happened at maturity, and so the future value of the total investment is higher. Coupon rates on bonds thus allow a bond issuer to plan a bond package in less complicated terms. If you as a small business need $1m for a project, which you will repay in 10 years, and during that time you are willing to tolerate a 5% interest rate on the outstanding money, then that's exactly how you issue the bonds; $1 million worth, to mature in 10 years and a 5% coupon rate. Now, whether the market is willing to accept that rate is up to the market. Right now, they'd be over the moon with that rate, and would be willing to buy the bonds for more than their face value, because the present value would then match the yield they're willing to accept (as in any market system, you as the seller will sell to the highest bidder to get the best price available). If however, they think you are a bad bet, they'll want an even higher rate of return, and so the present value of all coupon and maturity payments will be less than the par value, and so will the purchase price.\""
},
{
"docid": "256663",
"title": "",
"text": "Bonds can increase in price, if the demand is high and offer solid yield if the demand is low. For instance, Russian bond prices a year ago contracted big in price (ie: fell), but were paying 18% and made a solid buy. Now that the demand has risen, the price is up with the yield for those early investors the same, though newer investors are receiving less yield (about 9ish percent) and paying higher prices. I've rarely seen banks pay more variable interest than short term treasuries and the same holds true for long term CDs and long term treasuries. This isn't to say it's impossible, just rare. Also variable is different than a set term; if you buy a 10 year treasury at 18%, that means you get 18% for 10 years, even if interest rates fall four years later. Think about the people buying 30 year US treasuries during 1980-1985. Yowza. So if you have a very large amount of money you will store it in bonds as its much less likely that the US treasury will go bankrupt than your bank. Less likely? I don't know about your bank, but my bank doesn't owe $19 trillion."
},
{
"docid": "290562",
"title": "",
"text": "Edited to incorporate the comments elsewhere of @Atkins Assuming, (apparently incorrectly) that duration is time to maturity: First, note that the question does not mention the coupon rate, the size of the regular payments that the bond holder will get each year. So let's calculate that. Consider the cash flow described. You pay out 1015 at the start of Year #1, to buy the bond. At the end of Years #1 to #5, you receive a coupon payment of X. Also at the end of Year #5, you receive the face value of the bond, 1000. And you are told that the pay out equals the money received, using a time value of money of 4.69% So, if we use the date of maturity of the bond as our valuation date, we have the equation: Maturity + Future Value of coupons = Future value of Bond Purchase price 1000 + X *( (1 + .0469)^5-1)/0.0469 = 1015 * 1.0469^5 Solving this for X, we obtain 50.33; the coupon rate is 5.033%. You will receive 50.33 at the end of each of the five years. Now, we can take this fixed schedule of payments, and apply the new yield rate to the same formula above; only now, the unknown is the price paid for the bond, Y. 1000 + 50.33 * ((1 + 0.0487)^5 - 1) / .0487 = Y * 1.0487^5 Solving this equation for Y, we obtain: Y = 1007.08"
},
{
"docid": "368848",
"title": "",
"text": "What you're referring to is the yield. The issue with these sorts of calculations is that the dividend isn't guaranteed until it's declared. It may have paid the quarterly dividend like clockwork for the last decade, that does not guarantee it will pay this quarter. Regarding question number 2. Yield is generally an after the fact calculation. Dividends are paid out of current or retained earnings. If the company becomes hot and the stock price doubles, but earnings are relatively similar, the dividend will not be doubled to maintain the prior yield; the yield will instead be halved because the dividend per share was made more expensive to attain due to the increased share price. As for the calculation, obviously your yield will likely vary from the yield published on services like Google and Yahoo finance. The variation is strictly based on the price you paid for the share. Dividend per share is a declared amount. Assuming a $10 share paying a quarterly dividend of $0.25 your yield is: Now figure that you paid $8.75 for the share. Now the way dividends are allocated to shareholders depends on dates published when the dividend is declared. The day you purchase the share, the day your transaction clears etc are all vital to being paid a particular dividend. Here's a link to the SEC with related information: https://www.sec.gov/answers/dividen.htm I suppose it goes without saying but, historical dividend payments should not be your sole evaluation criteria. Personally, I would be extremely wary of a company paying a 40% dividend ($1 quarterly dividend on a $10 stock), it's very possible that in your example bar corp is a more sound investment. Additionally, this has really nothing to do with P/E (price/earnings) ratios."
},
{
"docid": "182249",
"title": "",
"text": "No, the interest payments you receive do not change. To help avoid confusion, it is better to call those payments the coupons of the bond. Each treasury note or bond is issued with a certain coupon that remains fixed throughout its whole life. However, as the general level of bank interest rates change maybe because the FED is moving its deposit rate for banks, the value of the treasury bond will change. At maturity it will always be worth its face value, but at any time before that its price will depend on the general level of interest rates in the country. Because of the way a bond is structured, it is usually possible to convert the bond's price into a yield, which is usually a percentage like 3% or sometwhere near the current level of general interest rates. But don't be confused, this yield is just an alternative way of stating the current price of the treasury bond, and it changes as the prices of the bond changes. It is not the coupon that is changing, but the yield."
},
{
"docid": "521233",
"title": "",
"text": "\"The short answer is that banking is complicated, but the bank really doesn't need your money because it can get it from the Fed almost free, it can only use 90% of the money you give the bank, it can only make money on that 90% from very low-risk and thus low-return investments, and as it has to show a profit to its shareholders it will take whatever cut it needs to off the top of the returns. All of these things combine to make savings account interest roughly .05% in the US right now. The longer answer: All FDIC-insured banks (which the US requires all \"\"depositor\"\" banks to be) are subject to regulation by the Federal Reserve. The very first rule that all banks must comply with is that depositor money cannot be invested in things the Fed terms \"\"risky\"\". This limits banks from investing your money in things that have high returns, like stocks, commodities and hedges, because along with the high possible returns come high risk. Banks typically can only invest your savings in T-debt and in certain Fed-approved AAA bonds, which have very low risk and so very little return. The investment of bank assets into risky market funds was a major contributor to the financial crisis; with the repeal of the Glass-Steagall Act, banks had been allowed to integrate their FDIC-insured depositor business with their \"\"investment banking\"\" business (not FDIC insured). While still not allowed to bet on \"\"risky\"\" investments with deposits, banks were using their own money (retained profits, corporate equity/bond money) to bet heavily in the markets, and were investing depositor funds in faulty AAA-rated investment objects like CDOs. When the housing market crashed, banks had to pull out of the investment market and cash in hedges like credit-default swaps to cover the depositor losses, which sent a tidal wave through the rest of the market. Banks really can't even loan your money out to people who walk in, like you'd think they would and which they traditionally used to do; that's how the savings and loan crisis happened, when speculators took out huge loans to invest, lost the cash, declared bankruptcy and left the S&Ls (and ultimately the FDIC) on the hook for depositors' money. So, the upshot of all this is that the bank simply won't give you more on your money than it is allowed to make on it. In addition, there are several tools that the Fed has to regulate economic activity, and three big ones play a part. First is the \"\"Federal Funds Rate\"\"; this is the interest rate that the Fed charges on loans made to other banks (which is a primary source of day-to-day liquidity for these banks). Money paid as interest to the Fed is effectively removed from the economy and is a way to reduce the money supply. Right now the FFR is .25% (that's one quarter of one percent) which is effectively zero; borrow a billion dollars ($1,000,000,000) from the Fed for one month and you'll pay them a scant $208,333. Banks lend to other banks at a rate based on the FFR, called the Interbank Rate (usually adding some fraction of a percent so the lending bank makes money on the loan). This means that the banks can get money from the Fed and from other banks very cheaply, which means they don't have to offer high interest rates on savings to entice individual depositors to save their money with the bank. Second is \"\"quantitative easing\"\", which just means the Fed buys government bonds and pays for them with \"\"new\"\" money. This happens all the time; remember those interest charges on bank loans? To keep the money supply stable, the Fed must buy T-debt at least in the amount of the interest being charged, otherwise the money leaves the economy and is not available to circulate. The Fed usually buys a little more than it collects in order to gradually increase the money supply, which allows the economy to grow while controlling inflation (having \"\"too much money\"\" and so making money worth less than what it can buy). What's new is that the Fed is increasing the money supply by a very large amount, by buying bonds far in excess of the (low) rates it's charging, and at fixed prices determined by the yield the Fed wants to induce in the markets. In the first place, with the Fed buying so many, there are fewer for institutions and other investors to buy. This increases the demand, driving down yields as investors besides the Fed are willing to pay a similar price, and remember that T-debt is one of the main things banks are allowed to invest your deposits in. Inflation isn't a concern right now despite the large amount of new money being injected, because the current economy is so lackluster right now that the new cash is just being sat upon by corporations and being used by consumers to pay down debt, instead of what the Fed and Government want us to do (hire, update equipment, buy houses and American cars, etc). In addition, the \"\"spot market price\"\" for a T-bond, or any investment security, is generally what the last guy paid. By buying Treasury debt gradually at a fixed price, the Fed can smooth out \"\"jitters\"\" in the spot price that speculators may try to induce by making low \"\"buy offers\"\" on T-debt to increase yields. Lastly, the Fed can tell banks that they must keep a certain amount of their deposits in \"\"reserve\"\", basically by keeping them in a combination of cash in the vault, and in accounts with the Fed itself. This has a dual purpose; higher reserve rates allow a bank to weather a \"\"run\"\" (more people than usual wanting their money) and thus reduces risk of failure. An increased reserves amount also reduces the amount of money circulating in the economy, because obviously if the banks have to keep a percentage of assets in cash, they can't invest that cash. Banks are currently required to keep 10% of \"\"deposited assets\"\" (the sum of all checking and savings accounts, but not CDs) in cash. This compounds the other problems with banks' investing; not only are they not getting a great return on your savings, they can only use 90% of your savings to get it.\""
},
{
"docid": "88575",
"title": "",
"text": "\"A mutual fund's return or yield has nothing to do with what you receive from the mutual fund. The annual percentage return is simply the percentage increase (or decrease!) of the value of one share of the mutual fund from January 1 till December 31. The cash value of any distributions (dividend income, short-term capital gains, long-term capital gains) might be reported separately or might be included in the annual return. What you receive from the mutual fund is the distributions which you have the option of taking in cash (and spending on whatever you like, or investing elsewhere) or of re-investing into the fund without ever actually touching the money. Regardless of whether you take a distribution as cash or re-invest it in the mutual fund, that amount is taxable income in most jurisdictions. In the US, long-term capital gains are taxed at different (lower) rates than ordinary income, and I believe that long-term capital gains from mutual funds are not taxed at all in India. You are not taxed on the increase in the value of your investment caused by an increase in the share price over the year nor do you get deduct the \"\"loss\"\" if the share price declined over the year. It is only when you sell the mutual fund shares (back to the mutual fund company) that you have to pay taxes on the capital gains (if you sold for a higher price) or deduct the capital loss (if you sold for a lower price) than the purchase price of the shares. Be aware that different shares in the sale might have different purchase prices because they were bought at different times, and thus have different gains and losses. So, how do you calculate your personal return from the mutual fund investment? If you have a money management program or a spreadsheet program, it can calculate your return for you. If you have online access to your mutual fund account on its website, it will most likely have a tool called something like \"\"Personal rate of return\"\" and this will provide you with the same calculations without your having to type in all the data by hand. Finally, If you want to do it personally by hand, I am sure that someone will soon post an answer writing out the gory details.\""
},
{
"docid": "285649",
"title": "",
"text": "Even front office is boring. Pick up the phone call 10 guys for a price on a bond haggle with them... Build some excel tool to calculate some price relationship that you came up with, test it very fast in R. Calculate 20 things before making a few trades. Find trade confirmations that are not being matched properly, chase down the UBS back office fuckers in INDIA!!!. (I know its back office that needs to ensure their matched, however at the end of the day we are responsible for our trades). You know what's even more fun? When you have an internal AUDIT!!! Prepare 30 pages of documentation on every stupid process/procedure/piece of code you ever wrote, knowing nobody will read it. Prettying up excel spreadsheets because you don't want management to see how ugly your work can be. I've spent days playing with the format painter and even arguing with guys on my team over what FONT looks better, and why every word should be formatted the same as auditors will never look at our code/procedures, but why is bond in ARIAL and yield in COMIC SANS. Read a 200 page bond guide to all the major european corporate bonds by each of the investment banks.... So you're familiar with all the stuff you're trading where 150 of them are so illiquid you need to hold them for about 3 months to collect enough accrued just to break even on the bid-offer spread. I can go on...."
},
{
"docid": "471632",
"title": "",
"text": "My question is (ok a lot of questions) how viral are these borrowing cost increases? Will other European countries need to raise bond yields to sell bonds? Will the US? Will the US be lending Spain part of the $125b bailout money and raise borrowing costs?"
},
{
"docid": "107097",
"title": "",
"text": "QE is artificial demand for bonds, but as always when there are more buyers than sellers the price of anything goes up. When QE ends the price of bonds will fall because everyone will know that the biggest buyer in the market is no longer there. So price of bonds will fall. And therefore the interest rate on new bonds must increase to match the total return available to buyers in the secondary market."
}
] |
4863 | How to calculate new price for bond if yield increases | [
{
"docid": "198465",
"title": "",
"text": "The duration of a bond tells you the sensitivity of its price to its yield. There are various ways of defining it (see here for example), and it would have been preferable to have a more precise statement of the type of duration we should assume in answering this question. However, my best guess (given that the duration is stated without units) is that this is a modified duration. This is defined as the percentage decrease in the bond price for a 1% increase in the yield. So, change in price = -price x duration (as %) x change in yield (in %) For your duration of 5, this means that the bond price decreases by a relative 5% for every 1% absolute increase in its yield. Using the actual yield change in your question, 0.18%, we find: change in price = -1015 x 5% x (4.87 - 4.69) = -9.135 So the new price will be 1015 - 9.135 = £1005.865"
}
] | [
{
"docid": "431386",
"title": "",
"text": "\"TL;DR: If your currently held bond's bid yield is smaller than another bonds' ask yield. You can swap your bond for bigger returns. Let's imagine you buy a long bond for $12000 (face value of $10000) and it has 6% coupon. The cash flows will have an internal return rate of 4.37%, this is the published \"\"ask yield\"\" in 2014 of the bond. After six years, prices have fallen, inflation and yields went up. So you can sell it for only $10000. If you would do it, the IRR will be only 2.55%, so there will be less return, than if you keep it. But if you would \"\"undo\"\" the transaction, then the future cash flows would yield 6.38%. This is the \"\"bid yield\"\" in 2020 of the bond. If you can find an offer that yields more than 6.38%, you have better returns if you sell your bond and invest that $10000 in the other bond. But as other answers pointed it out, you rarely have this opportunity as the market is very effective. (Assuming everything else is equal.)\""
},
{
"docid": "88575",
"title": "",
"text": "\"A mutual fund's return or yield has nothing to do with what you receive from the mutual fund. The annual percentage return is simply the percentage increase (or decrease!) of the value of one share of the mutual fund from January 1 till December 31. The cash value of any distributions (dividend income, short-term capital gains, long-term capital gains) might be reported separately or might be included in the annual return. What you receive from the mutual fund is the distributions which you have the option of taking in cash (and spending on whatever you like, or investing elsewhere) or of re-investing into the fund without ever actually touching the money. Regardless of whether you take a distribution as cash or re-invest it in the mutual fund, that amount is taxable income in most jurisdictions. In the US, long-term capital gains are taxed at different (lower) rates than ordinary income, and I believe that long-term capital gains from mutual funds are not taxed at all in India. You are not taxed on the increase in the value of your investment caused by an increase in the share price over the year nor do you get deduct the \"\"loss\"\" if the share price declined over the year. It is only when you sell the mutual fund shares (back to the mutual fund company) that you have to pay taxes on the capital gains (if you sold for a higher price) or deduct the capital loss (if you sold for a lower price) than the purchase price of the shares. Be aware that different shares in the sale might have different purchase prices because they were bought at different times, and thus have different gains and losses. So, how do you calculate your personal return from the mutual fund investment? If you have a money management program or a spreadsheet program, it can calculate your return for you. If you have online access to your mutual fund account on its website, it will most likely have a tool called something like \"\"Personal rate of return\"\" and this will provide you with the same calculations without your having to type in all the data by hand. Finally, If you want to do it personally by hand, I am sure that someone will soon post an answer writing out the gory details.\""
},
{
"docid": "453480",
"title": "",
"text": "\"When we calculate the realized yield of a bond, we assume the coupons are invested at an interest rate. I assume it is some kind of vehicle that guarantees a return, thinking it is government bond, savings account or something. Investing in a benchmark bond index might be risky though for this \"\"interest rate\"\".\""
},
{
"docid": "231268",
"title": "",
"text": "Companies do not support their stock. Once the security is out on the wild (market), its price fluctuates according to what investors think they are worth. Support is a whole different concept, financially speaking: Support or support level refers to the price level below which, historically, a stock has had difficulty falling. It is the level at which buyers tend to enter the stock. So it is the lowest assumed price for that stock. Once it reaches its price, buyers will rush to the stock, raising its price. The company wants to keep the stock price at acceptable levels, as it can be seen as the general view of the company's health. Also several employees/executives in the company have stock or stock options, so it is in their interest to keep their stock price up. A bond that goes down in value may indicate a believe the bond issuer (government in this case) won't honor the bond when it matures. As for bonds, there is a wealth of reading in this site: Can someone explain how government bonds work? Who sets the prices on government bonds? Basic understanding of bonds, values, rates and yields"
},
{
"docid": "285064",
"title": "",
"text": "Fundamentally interest rates reflect the time preference people place on money and the things money can buy. If I have a high time preference then I prefer money in my hand versus money promised to me at some date in the future. Thus, I will only loan my money to someone if they offer me an incentive which would be an amount of money to be received in the future that is larger than the amount of money I’m giving the debtor in the present (i.e. the interest rate). Many factors go into my time preference determination. My demand for cash (i.e. my cash balance), the credit rating of the borrower, the length of the loan, and my expectation of the change in currency value are just a few of the factors that affect what interest rate I will loan money. The first loan I make will have a lower interest rate than the last loan, ceteris paribus. This is because my supply of cash diminishes with each loan which makes my remaining cash more valuable and a higher interest rate will be needed to entice me to make additional loans. This is the theory behind why interest rates will rise when QE3 or QEinfinity ever stops. QE is where the Federal Reserve cartel prints new money to purchase bonds from cartel banks. If QE slows or ends the supply of money will stop increasing which will make cash more valuable and higher interest rates will be needed to entice creditors to loan money. Note that increasing the stock of money does not necessarily result in lower interest rates. As stated earlier, the change in value of the currency also affects the interest rate lenders are willing to accept. If the Federal Reserve cartel deposited $1 million everyday into every US citizen’s bank account it wouldn’t take long before lenders demanded very high interest rates as compensation for the decrease in the value of the currency. Does the Federal Reserve cartel affect interest rates? Yes, in two ways. First, as mentioned before, it prints new money that is loaned to the government. It either purchases the bonds directly or purchases the bonds from cartel banks which give them cash to purchase more government bonds. This keeps demand high for government bonds which lowers the yield on government bonds (yields move inverse to the price of the bond). The Federal Reserve cartel also can provide an unlimited amount of funds at the Federal Funds rate to the cartel member banks. Banks can borrow at this rate and then proceed to make loans at a higher rate and pocket the difference. Remember, however, that the Federal Reserve cartel is not the only market participant. Other bond holders, such as foreign governments and pension funds, buy and sell US bonds. At some point they could demand higher rates. The Federal Reserve cartel, which currently holds close to 17% of US public debt, could attempt to keep rates low by printing new money to buy all existing US bonds to prevent the yield on bonds from going up. At that point, however, holding US dollars becomes very dangerous as it is apparent the Federal Reserve cartel is just a money printing machine for the US government. That’s when most people begin to dump dollars en masse."
},
{
"docid": "316132",
"title": "",
"text": "\"Of course it can. This is a time value of money calculation. If I knew the maturity date, or current yield to maturity I'd be able to calculate the other number and advise how much rates need to rise to cause the value to drop from 18 to 17. For a 10 year bond, a rise today of .1% will cause the bond to drop about 1% in value. This is a back of napkin calculation, finance calculators offer precision. edit - when I calculate present value with 34 years to go, and 5.832% yield to maturity, I get $14.55. At 5.932, the value drops to $14.09, a drop of 3.1%. Edit - Geo asked me to show calculations. Here it goes - A) The simplest way to calculate present value for a zero coupon bond is to take the rate 5.832%, convert it to 1.05832 and divide into the face value, $100. I offer this as the \"\"four function calculator\"\" approach, so one enters $100 divided by 1.05832 and repeat for the number of years left. A bit of precision is lost if there's a fractional year involved, but it's close. The bid/ask will be wider than this error introduced. B) Next - If you've never read my open declaration of love for my Texas Instruments BA-35 calculator, here it is, again. One enters N=34 (for the years) FV = 100, Rate = 5.832, and then CPT PV. It will give the result, $14.56. C) Here is how to do it in Excel - The numbers in lines 1-3 are self evident, the equation in cell B4 is =-PV(B3/100,B1,0,B2) - please note there are tiny differences in the way to calculate in excel vs a calculator. Excel wants the rate to be .05832, so I divided by 100 in the equation cell. That's the best 3 ways I know to calculate present value. Geo, if you've not noticed, the time value of money is near and dear to me. It comes into play for bonds, mortgages, and many aspect of investing. The equations get more complex if there are payments each year, but both the BA-35 and excel are up to it.\""
},
{
"docid": "78332",
"title": "",
"text": "In most circumstances prices do not change on a daily basis on most goods and services, and just because inflation is high does not mean all prices of every good and service has to increase over the short term. Prices are determined by costs of doing business, manufacturing costs and wage growth, and by competition. For example, if one product has very little competition and costs to produce it have gone up, then the seller might increase prices by 10% to cover their cost of buying the goods off the manufacturer, whilst another product may have plenty of competition, the seller has sourced a new manufacturer from overseas with lower manufacturing costs, they might lower their selling costs by 5% to better compete and increase their sales. Inflation figures are calculated from a set basket of goods and services, and if inflation increases it does not mean that all prices in that basket have gone up, only that the aggregate for the whole basket of goods and services has gone up since the last inflation figures were calculated."
},
{
"docid": "137262",
"title": "",
"text": "Public Securities Association Standard Prepayment Model is what the acronym psa stands for. My understanding is that it allows for adjustments in monthly pre-payment amounts, which will then affect the yield of the bond. Not really sure what the most important bond measure would be... but if I had to guess I'd say its the mechanical bond price/ bond yield relationship. Yields go down, prices go up and vice versa."
},
{
"docid": "538064",
"title": "",
"text": "> The purpose of buying these bonds was not to step in due to the absence of a market. Rather, the purpose was to deliberately bid up the price of these bonds (ahead of the market), causing their price to rise and yields (interest rates) to drop. There are some important things you need to understand about bubbles and how they form. When interest rates are artificially low and down payments aren't required for many loans, do you agree this is a recipe for a bubble?"
},
{
"docid": "475418",
"title": "",
"text": "\"Great question! A Yield Curve is a plot of the yields for different maturities of debt. This can be for any debt, but the most common used when discussing yield curves is the debt of the Federal Government. The yield curve is observed by its slope. A curve with a positive slope (up and to the right) or a steepening curve, i.e. one that's becoming more positively sloped or less negatively sloped, may indicate several different situations. The Kansas City Federal Reserve has a nice paper that summarizes various economic theories about the yield curve, and even though it's a bit dated, the theories are still valid. I'll summarize the major points here. A positively sloped yield curve can indicate expectations of inflation in the future. The longer a security has before it matures, the more opportunities it has to be affected by changes in inflation, so if investors expect inflation to occur in the future, they may demand higher yields on longer-term securities to compensate them for the additional inflationary risk. A steepening yield curve may indicate that investors are increasing their expectations of future inflation. A positively sloped yield curve may also reflect expectations of deprecation in the dollar. The publication linked before states that depreciation of the dollar may have increased the perceived risk of future exchange rate changes and discouraged purchases of long-term Treasury securities by Japanese and other foreign investors, forcing the yields on these securities higher. Supply shocks, e.g. decreases in oil prices that lead to decreased production, may cause the yield curve to steepen because they affect short-term inflation expectations significantly more than long-term inflation. For example, a decrease in oil prices may decrease short-term inflation expectations, so short-term nominal interest rates decline. Investors usually assume that long-term inflation is governed more by fundamental macroeconomic factors than short-term factors like commodity price swings, so this price shock may lead short-term yields to decrease but leave long-term relatively unaffected, thus steepening the yield curve. Even if inflation expectations remain unchanged, the yield curve can still change. The supply of and demand for money affects the \"\"required real rate,\"\" i.e. the price of credit, loans, etc. The supply comes from private savings, money coming from abroad, and growth in the money supply, while demand comes from private investors and the government. The paper summarizes the effects on real rates by saying Lower private saving, declines in the real money supply, and reduced capital inflows decrease the supply of funds and raise the required real rate. A larger government deficit and stronger private investment raise the required real rate by increasing the demand for funds. The upward pressure on future real interest rates contributes to the yield curve's positive slope, and a steepening yield curve could indicate an increasing government deficit, declines in private savings, or reduced capital coming in from abroad (for example, because of a recession in Europe that reduces their demand for US imports). an easing of monetary policy when is economy is already producing near its capacity ... would initially expand the real money supply, lowering required short-term real interest rates. With long-term real interest rates unchanged, the yield curve would steepen. Lower interest rates in turn would stimulate domestic spending, putting upward pressure on prices. This upward price pressure would probably increase expected inflation, and as the first bullet point describes, this can cause long-term nominal interest rates to rise. The combination of the decline in short-term rates and the rise in long-term rates steepens the yield curve. Similarly, an inverted yield curve or a positively sloped yield curve that is becoming less steep may indicate the reverse of some or all of the above situations. For example, a rise in oil prices may increase expectations of short-term inflation, so investors demand higher interest rates on short-term debt. Because long-term inflation expectations are governed more by fundamental macroeconomic factors than short-term swings in commodity prices, long-term expectations may not rise nearly as much as short term expectations, which leads to a yield curve that is becoming less steep or even negatively sloped. Forecasting based on the curve slope is not an exact science, just one of many indicators used. Note - Yield Curve was not yet defined here and was key to my answer for What is the \"\"Bernanke Twist\"\" and \"\"Operation Twist\"\"? What exactly does it do? So I took the liberty of ask/answer.\""
},
{
"docid": "582553",
"title": "",
"text": "Very rarely would an investor be happy with a 4% yield independent of anything else that might happen in the future. For example, if in 3 years for some reason or other inflation explodes and 30 year bond yields go up to 15% across the board, they would be kicking themselves for having locked it up for 30 years at 4%. However, if instead of doing that the investor put their money in a 3 year bond at 3% say, they would have the opportunity to reinvest in the new rate environment, which might offer higher or lower yields. This eventually leads fixed income investors to have a bond portfolio in which they manage the average maturity of their bond portfolio to be somewhere between the two extremes of investing it all in super short term/ low yield money market rates vs. super long term bonds. As they constantly monitor and manage their maturing investments, it inevitably leads them to managing interest rate risk as they decide where to reinvest their incremental coupons by looking at the shape of the yield curve at the time and determining what kind of risk/reward tradeoffs they would have to make."
},
{
"docid": "537603",
"title": "",
"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."
},
{
"docid": "480887",
"title": "",
"text": "In theory, yes, it makes sense to sell your current bonds in pursuit of higher yields. In practice, there are a lot of smart people out there who own bonds, and the market is very efficient, so you won't see opportunities to trade new bonds for old bonds with better yields from the same issuer. If you do find someone willing to buy your old bond for a higher amount, it probably points to a change in the contract that the new bonds were issued under. (see Argentina for an example)"
},
{
"docid": "111033",
"title": "",
"text": "\"Bonds are valued based on all of this, using the concept of the \"\"time value of money\"\". Simply stated, money now is worth more than money later, because of what you can do with money between now and later. Case in point: let's say the par value of a bond is $100, and will mature 10 years from this date (these are common terms for most bonds, though the U.S. Treasury has a variety of bonds with varying par values and maturation periods), with a 0% coupon rate (nothing's paid out prior to maturity). If the company or government issuing the bonds needs one million dollars, and the people buying the bonds are expecting a 5% rate of return on their investment, then each bond would only sell for about $62, and the bond issuer would have to sell a par value of $1.62 million in bonds to get its $1m now. These numbers are based on equations that calculate the \"\"future value\"\" of an investment made now, and conversely the \"\"present value\"\" of a future return. Back to that time value of money concept, money now (that you're paying to buy the bond) is worth more than money later (that you'll get back at maturity), so you will expect to be returned more than you invested to account for this time difference. The percentage of rate of return is known as the \"\"yield\"\" or the \"\"discount rate\"\" depending on what you're calculating, what else you take into consideration when defining the rate (like inflation), and whom you talk to. Now, that $1.62m in par value may be hard for the bond issuer to swallow. The issuer is effectively paying interest on interest over the lifetime of the bond. Instead, many issuers choose to issue \"\"coupon bonds\"\", which have a \"\"coupon rate\"\" determining the amount of a \"\"coupon payment\"\". This can be equated pretty closely with you making interest-only payments on a credit card balance; each period in which interest is compounded, you pay the amount of interest that has accrued, to avoid this compounding effect. From an accounting standpoint, the coupon rate lowers the amount of real monies paid; the same $1m in bonds, maturing in 10 years with a 5% expected rate of return, but with a 5% coupon rate, now only requires payments totalling $1.5m, and that half-million in interest is paid $50k at a time annually (or $25k semi-annually). But, from a finance standpoint, because the payments made in the first few years are worth more than the payments made closer to and at maturity, the present value of all these coupon payments (plus the maturity payout) is higher than if the full payout happened at maturity, and so the future value of the total investment is higher. Coupon rates on bonds thus allow a bond issuer to plan a bond package in less complicated terms. If you as a small business need $1m for a project, which you will repay in 10 years, and during that time you are willing to tolerate a 5% interest rate on the outstanding money, then that's exactly how you issue the bonds; $1 million worth, to mature in 10 years and a 5% coupon rate. Now, whether the market is willing to accept that rate is up to the market. Right now, they'd be over the moon with that rate, and would be willing to buy the bonds for more than their face value, because the present value would then match the yield they're willing to accept (as in any market system, you as the seller will sell to the highest bidder to get the best price available). If however, they think you are a bad bet, they'll want an even higher rate of return, and so the present value of all coupon and maturity payments will be less than the par value, and so will the purchase price.\""
},
{
"docid": "494053",
"title": "",
"text": "Bond prices move inversely to their yields. So when you sell bonds and create a supply side deluge, bond prices will fall. Since bond prices are falling, yields go up. (The dollar amount that the bond pays out is the same. It's simply that since the bond price has fallen, that dollar amount paid out expressed in percentage terms of the bond price has risen)."
},
{
"docid": "415738",
"title": "",
"text": "In this case the market interest rate is the discount rate that sets equal the market price (current value) of the bond to its present value. To find the market interest rate which is also referred to as promised yield YTM you would have solve for the interest rate in the bond price formula A market price of bond is the sum of discounted coupons and the terminal value of the bond. Most spreadsheet programs and calculators have a RATE function that makes possible finding this market interest rate. First see this for finding a coupon paying bond price The coupon payments are discounted so is the par value of the bond and sum of such discounts is the market price of the bond. The TVM functions in Excel and calculators make this possible using the following equation Let us take your data, 9% $100,000 coupon with 5 years remaining to maturity with market interest rate of 10%. Bonds issued in the US mostly pay two coupons per year. Thus we are finding the present value of 10 coupons each worth $4500 and par value of $100,000. The semi-annual market interest rate is 10%/2 or 5% The negative sign indicate money going out of hand Now solving for RATE is only possible using numerical methods and the RATE function is programmed using Newton-Raphson method to find one of the roots of the bond price equation. This rate will be the periodic rate in this case semi-annual rate which you have to multiply by 2 to get the annual rate. Do remember there is a difference between annual nominal rate and an annualized effective rate. To find the market interest rate If you don't have Excel or a financial calculator then you may opt to use my version of these financial functions in this JavaScript library tadJS"
},
{
"docid": "189006",
"title": "",
"text": "\"First, a clarification. No assets are immune to inflation, apart from inflation-indexed securities like TIPS or inflation-indexed gilts (well, if held to maturity, these are at least close). Inflation causes a decline in the future purchasing power of a given dollar1 amount, and it certainly doesn't just affect government bonds, either. Regardless of whether you hold equity, bonds, derivatives, etc., the real value of those assets is declining because of inflation, all else being equal. For example, if I invest $100 in an asset that pays a 10% rate of return over the next year, and I sell my entire position at the end of the year, I have $110 in nominal terms. Inflation affects the real value of this asset regardless of its asset class because those $110 aren't worth as much in a year as they are today, assuming inflation is positive. An easy way to incorporate inflation into your calculations of rate of return is to simply subtract the rate of inflation from your rate of return. Using the previous example with inflation of 3%, you could estimate that although the nominal value of your investment at the end of one year is $110, the real value is $100*(1 + 10% - 3%) = $107. In other words, you only gained $7 of purchasing power, even though you gained $10 in nominal terms. This back-of-the-envelope calculation works for securities that don't pay fixed returns as well. Consider an example retirement portfolio. Say I make a one-time investment of $50,000 today in a portfolio that pays, on average, 8% annually. I plan to retire in 30 years, without making any further contributions (yes, this is an over-simplified example). I calculate that my portfolio will have a value of 50000 * (1 + 0.08)^30, or $503,132. That looks like a nice amount, but how much is it really worth? I don't care how many dollars I have; I care about what I can buy with those dollars. If I use the same rough estimate of the effect of inflation and use a 8% - 3% = 5% rate of return instead, I get an estimate of what I'll have at retirement, in today's dollars. That allows me to make an easy comparison to my current standard of living, and see if my portfolio is up to scratch. Repeating the calculation with 5% instead of 8% yields 50000 * (1 + 0.05)^30, or $21,6097. As you can see, the amount is significantly different. If I'm accustomed to living off $50,000 a year now, my calculation that doesn't take inflation into account tells me that I'll have over 10 years of living expenses at retirement. The new calculation tells me I'll only have a little over 4 years. Now that I've clarified the basics of inflation, I'll respond to the rest of the answer. I want to know if I need to be making sure my investments span multiple currencies to protect against a single country's currency failing. As others have pointed out, currency doesn't inflate; prices denominated in that currency inflate. Also, a currency failing is significantly different from a prices denominated in a currency inflating. If you're worried about prices inflating and decreasing the purchasing power of your dollars (which usually occurs in modern economies) then it's a good idea to look for investments and asset allocations that, over time, have outpaced the rate of inflation and that even with the effects of inflation, still give you a high enough rate of return to meet your investment goals in real, inflation-adjusted terms. If you have legitimate reason to worry about your currency failing, perhaps because your country doesn't maintain stable monetary or fiscal policies, there are a few things you can do. First, define what you mean by \"\"failing.\"\" Do you mean ceasing to exist, or simply falling in unit purchasing power because of inflation? If it's the latter, see the previous paragraph. If the former, investing in other currencies abroad may be a good idea. Questions about currencies actually failing are quite general, however, and (in my opinion) require significant economic analysis before deciding on a course of action/hedging. I would ask the same question about my home's value against an inflated currency as well. Would it keep the same real value. Your home may or may not keep the same real value over time. In some time periods, average home prices have risen at rates significantly higher than the rate of inflation, in which case on paper, their real value has increased. However, if you need to make substantial investments in your home to keep its price rising at the same rate as inflation, you may actually be losing money because your total investment is higher than what you paid for the house initially. Of course, if you own your home and don't have plans to move, you may not be concerned if its value isn't keeping up with inflation at all times. You're deriving additional satisfaction/utility from it, mainly because it's a place for you to live, and you spend money maintaining it in order to maintain your physical standard of living, not just its price at some future sale date. 1) I use dollars as an example. This applies to all currencies.\""
},
{
"docid": "290562",
"title": "",
"text": "Edited to incorporate the comments elsewhere of @Atkins Assuming, (apparently incorrectly) that duration is time to maturity: First, note that the question does not mention the coupon rate, the size of the regular payments that the bond holder will get each year. So let's calculate that. Consider the cash flow described. You pay out 1015 at the start of Year #1, to buy the bond. At the end of Years #1 to #5, you receive a coupon payment of X. Also at the end of Year #5, you receive the face value of the bond, 1000. And you are told that the pay out equals the money received, using a time value of money of 4.69% So, if we use the date of maturity of the bond as our valuation date, we have the equation: Maturity + Future Value of coupons = Future value of Bond Purchase price 1000 + X *( (1 + .0469)^5-1)/0.0469 = 1015 * 1.0469^5 Solving this for X, we obtain 50.33; the coupon rate is 5.033%. You will receive 50.33 at the end of each of the five years. Now, we can take this fixed schedule of payments, and apply the new yield rate to the same formula above; only now, the unknown is the price paid for the bond, Y. 1000 + 50.33 * ((1 + 0.0487)^5 - 1) / .0487 = Y * 1.0487^5 Solving this equation for Y, we obtain: Y = 1007.08"
},
{
"docid": "587032",
"title": "",
"text": "\"The simple answer is that, even though mortgages can go for 10, 15, 20 and 30 year terms in the U.S., they're typically backed by bonds sold to investors that mature in 10 years, which is the standard term for most bonds. These bonds, in the open market, are compared by investors with the 10-year Treasury note, which is the gold standard for low-risk investment; the U.S. Government has a solid history of always paying its bills (though this reputation is being tested in recent years with fights over the debt ceiling and government budgets). The savvy investor, therefore, knows that he or she can make at least the yield from the 10-year T-note in that time frame, with virtually zero risk. Anything else on the market is seen as being a higher risk, and so investors demand higher yields (by making lower bids, forcing the issuer to issue more bonds to get the money it needs up front). Mortgage-backed securities are usually in the next tier above T-debt in terms of risk; when backed by prime-rate mortgages they're typically AAA-rated, making them available to \"\"institutional investors\"\" like banks, mutual funds, etc. This forms a balancing act; mortgage-backed securities issuers typically can't get the yield of a T-note, because no matter how low their risk, T-debt is lower (because one bank doesn't have the power to tax the entire U.S. population). But, they're almost as good because they're still very stable, low-risk debt. This bond price, and the resulting yield, is in turn the baseline for a long-term loan by the bank to an individual. The bank, watching the market and its other bond packages, knows what it can get for a package of bonds backed by your mortgage (and others with similar credit scores). It will therefore take this number, add a couple of percentage points to make some money for itself and its stockholders (how much the bank can add is tacitly controlled by other market forces; you're allowed to shop around for the lowest rate you can get, which limits any one bank's ability to jack up rates), and this is the rate you see advertised and - hopefully - what shows up on your paperwork after you apply.\""
}
] |
4863 | How to calculate new price for bond if yield increases | [
{
"docid": "290562",
"title": "",
"text": "Edited to incorporate the comments elsewhere of @Atkins Assuming, (apparently incorrectly) that duration is time to maturity: First, note that the question does not mention the coupon rate, the size of the regular payments that the bond holder will get each year. So let's calculate that. Consider the cash flow described. You pay out 1015 at the start of Year #1, to buy the bond. At the end of Years #1 to #5, you receive a coupon payment of X. Also at the end of Year #5, you receive the face value of the bond, 1000. And you are told that the pay out equals the money received, using a time value of money of 4.69% So, if we use the date of maturity of the bond as our valuation date, we have the equation: Maturity + Future Value of coupons = Future value of Bond Purchase price 1000 + X *( (1 + .0469)^5-1)/0.0469 = 1015 * 1.0469^5 Solving this for X, we obtain 50.33; the coupon rate is 5.033%. You will receive 50.33 at the end of each of the five years. Now, we can take this fixed schedule of payments, and apply the new yield rate to the same formula above; only now, the unknown is the price paid for the bond, Y. 1000 + 50.33 * ((1 + 0.0487)^5 - 1) / .0487 = Y * 1.0487^5 Solving this equation for Y, we obtain: Y = 1007.08"
}
] | [
{
"docid": "368848",
"title": "",
"text": "What you're referring to is the yield. The issue with these sorts of calculations is that the dividend isn't guaranteed until it's declared. It may have paid the quarterly dividend like clockwork for the last decade, that does not guarantee it will pay this quarter. Regarding question number 2. Yield is generally an after the fact calculation. Dividends are paid out of current or retained earnings. If the company becomes hot and the stock price doubles, but earnings are relatively similar, the dividend will not be doubled to maintain the prior yield; the yield will instead be halved because the dividend per share was made more expensive to attain due to the increased share price. As for the calculation, obviously your yield will likely vary from the yield published on services like Google and Yahoo finance. The variation is strictly based on the price you paid for the share. Dividend per share is a declared amount. Assuming a $10 share paying a quarterly dividend of $0.25 your yield is: Now figure that you paid $8.75 for the share. Now the way dividends are allocated to shareholders depends on dates published when the dividend is declared. The day you purchase the share, the day your transaction clears etc are all vital to being paid a particular dividend. Here's a link to the SEC with related information: https://www.sec.gov/answers/dividen.htm I suppose it goes without saying but, historical dividend payments should not be your sole evaluation criteria. Personally, I would be extremely wary of a company paying a 40% dividend ($1 quarterly dividend on a $10 stock), it's very possible that in your example bar corp is a more sound investment. Additionally, this has really nothing to do with P/E (price/earnings) ratios."
},
{
"docid": "182055",
"title": "",
"text": "This directly relates to the ideas behind the yield curve. For a detailed explanation of the yield curve, see the linked answer that Joe and I wrote; in short, the yield curve is a plot of the yield on Treasury securities against their maturities. If short-term Treasuries are paying higher yields than long-term debt, the yield curve has a negative slope. There are a lot of factors that could cause the yield curve to become negatively sloped, or at least less steep, but in this case, oil prices and the effective federal funds rate may have played a significant role. I'll quote from the section of the linked answer that describes the effect of oil prices first: a rise in oil prices may increase expectations of short-term inflation, so investors demand higher interest rates on short-term debt. Because long-term inflation expectations are governed more by fundamental macroeconomic factors than short-term swings in commodity prices, long-term expectations may not rise nearly as much as short term expectations, which leads to a yield curve that is becoming less steep or even negatively sloped. As the graph shows, oil prices increased dramatically, so this increase may have increased expectations of short-term inflation expectations substantially. The other answer describes an easing of monetary policy, e.g. a decrease in the effective federal funds rate (FFR), as a factor that could increase the slope of the yield curve. However, a tightening of monetary policy, e.g. an increase in the FFR, could decrease the slope of the yield curve because a higher FFR leads investors to demand a higher rate of return on shorter-term securities. Longer-term Treasuries aren't as affected by short-term monetary policy, so when short-term yields increase more than long-term yields, the yield curve becomes less steep and/or negatively sloped. The second graph shows the effective federal funds rate for the period in question, and once again, the increase is significant. Finally, look at a graph of inflation for the relevant period. Intuitively, the steady increase in inflation from 1975 onward may have increased investors expectations of short-term inflation, therefore increasing short-term yields more than long-term yields (as described above and in the other answer). These reasons aren't set in stone, and just looking at graphs isn't a substitute for an actual analysis of the data, but logically, it seems plausible that the positive shock to oil prices, increases in the effective federal funds rate, and increases in inflation and expectations of inflation contributed at least partially to the inversion of the yield curve. Keep in mind that these factors are all interconnected as well, so the situation is certainly more complex. If you approve of this answer, be sure to vote up the other answer about the yield curve too."
},
{
"docid": "137262",
"title": "",
"text": "Public Securities Association Standard Prepayment Model is what the acronym psa stands for. My understanding is that it allows for adjustments in monthly pre-payment amounts, which will then affect the yield of the bond. Not really sure what the most important bond measure would be... but if I had to guess I'd say its the mechanical bond price/ bond yield relationship. Yields go down, prices go up and vice versa."
},
{
"docid": "141174",
"title": "",
"text": "Smallest risk of default would depend on where Alice and Bob live I suppose, but lets assume they are in a lower yielding nation where default is not a big concern. Remember for instance that Greece was a lower yielding nation at one point and that the US has defaulted before. Let's start with Bob because he is easier to analyze. Yield curves inversions generally pre-date recessions which is generally not so good for Bob as rates tend to drop during recessions and he will be at the short end of the curve so his bonds will be less sensitive. However, he will generally get higher yields in good times to make up for this, but these higher yields come with a price in that he is generally much more sensitive to yield changes and can get much larger swings in portfolio value. First off as JB mentioned Alice would likely own inflation-linked (IL) bonds. Which behave fairly differently from Bob's bonds. However, to keep this simple lets say they live in a place without IL bonds or IL bonds are not a consideration. Then generally Alice has lower yielding bonds in good times but may do very well when the fed steps in during a crisis. So, who wins in the long run? Likely Christi who owns a mix of a broad index of stocks and bonds in a risk mix where she wouldn't have to sell in downturns. Especially, as Christi wouldn't have to pay the trading costs of moving her whole portfolio between long and short bonds. Between Bob and Alice however Bob would likely win in the long run as the markets generally reward risk taking in the long run. Still inflation (even without the IL bonds) and general rate trends (long-term rates are historically low right now) could have Bob losing for uncomfortably long periods."
},
{
"docid": "222979",
"title": "",
"text": "1) Explicitly, how a company's share price in the secondary market affects the company's operations. (Simply: How does it matter to a company that its share price drops?) I have a vague idea of the answer, but I'd like to see someone cover it in detail. 2) Negative yield curves, or bonds/bills with negative yields Thanks!"
},
{
"docid": "402112",
"title": "",
"text": "a smaller spread indicates a flat yield curve, which means banks and investors are uncertain about future economic conditions (like the current environment). When the spread widens and the curve becomes upward sloping (considered a normal yield curve), investors expect future growth and minimal inflation. Longer term rates increase as investors demand a higher yield in return for lending their money for a longer period of time. Increase demand for credit (industries expanding) also drive up longer term rates. A negative spread indicates an inverted yield curve and investors believe the economy is overheating and interest rates will fall. Investors pull money out of the stock market and into long term bonds (raising the price, lowering the yield) while companies stop borrowing, reducing the demand for credit and lower the cost, or interest rate, on a loan. Keep in mind central banks determine short term rates, so inverted curves are rare in the sense the market perceives uncertainty and rushes to safety (bonds) before the central bank reacts and lowers short term rates."
},
{
"docid": "245117",
"title": "",
"text": "The dividend yield can be used to compare a stock to other forms of investments that generate income to the investor - such as bonds. I could purchase a stock that pays out a certain dividend yield or purchase a bond that pays out a certain interest. Of course, there are many other variables to consider in addition to yield when making this type of investment decision. The dividend yield can be an important consideration if you are looking to invest in stocks for an income stream in addition to investing in stocks for gain by a rising stock price. The reason to use Dividend/market price is that it changes the dividend from a flat number such as $1 to a percentage of the stock price, which thus allows it to be more directly compared with bonds and such which return a percentage yeild."
},
{
"docid": "499344",
"title": "",
"text": "\"The correlation I heard most about in economics/finance was that stock prices and bond yields were negatively correlated; as the stock market does better, bond yields fall (company's doing well as evidenced by stocks, so it's a good credit risk, so YTM of its bonds on the market goes down). The correlation, if any, between the stock and futures market should be visible in the actual price histories. Index prices may be useful, but what's more likely is that various future prices have correlation with various companies' stocks. Where the future reflects the price of a raw material that is a significant cost of goods sold for a company, you'll see these two move inversely to each other in the short term. I think that if there is a causative relationship here, its that futures prices influence stock prices, not the other way around. The futures market generally represents the cost side of a consumer goods producer's bottom line. The stock market represents its profits. As futures go up, profit expectations go down, putting pressure on stock prices. Industries that deal in services, or in other types of goods, can still be affected because a rise in the cost of something consumers need will cause them to spend less on other things which affects margins in those other areas. So, in the short and medium term, when the futures market goes up the stock market sees a dip, and vice versa. However, companies adapt; they can put upward pressure on prices for their goods to restore their desired margins, usually by slowly increasing them to prevent sticker shock (though elasticity of demand plays a part; the more we need something no matter what it costs, the faster prices can increase). To maintain costs, they can make things cheaper using less expensive materials (more plastic, less steel). They can restructure production processes (translated: move factories offshore, or at least to \"\"right-to-work\"\" states with less union strength) to save costs elsewhere. All of these reduce costs and thus increase profits, but take time to implement. Many of these things reduce direct costs, reducing demand for the commodity and causing the futures prices to go back down. So, over the long term, these differences even out, and it's down to the things that affect the entire market (inflation, consumer/investor confidence, monetary policy).\""
},
{
"docid": "495600",
"title": "",
"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.\""
},
{
"docid": "340791",
"title": "",
"text": "\"It appears that the company in question is raising money to invest in expanding its operations (specifically lithium production but that is off topic for here). The stock price was rising on the back of (perceived) increases in demand for the company's products but in order to fulfil demand they need to either invest in higher production or increase prices. They chose to increase production by investing. To invest they needed to raise capital and so are going through the motions to do that. The key question as to what will happen with their stock price after this is broken down into two parts: short term and long term: In the short term the price is driven by the expectation of future profits (see below) and the behavioural expectations from an increase in interest in the stock caused by the fact that it is in the news. People who had never heard of the stock or thought of investing in the company have suddenly discovered it and been told that it is doing well and so \"\"want a piece of it\"\". This will exacerbate the effect of the news (broadly positive or negative) and will drive the price in the short run. The effect of extra leverage (assuming that they raise capital by writing bonds) also immediately increases the total value of the company so will increase the price somewhat. The short term price changes usually pare back after a few months as the shine goes off and people take profits. For investing in the long run you need to consider how the increase in capital will be used and how demand and supply will change. Since the company is using the money to invest in factors of production (i.e. making more product) it is the return on capital (or investment) employed (ROCE) that will inform the fundamentals underlying the stock price. The higher the ROCE, the more valuable the capital raised is in the future and the more profits and the company as a whole will grow. A questing to ask yourself is whether they can employ the extra capital at the same ROCE as they currently produce. It is possible that by investing in new, more productive equipment they can raise their ROCE but also possible that, because the lithium mines (or whatever) can only get so big and can only get so much access to the seams extra capital will not be as productive as existing capital so ROCE will fall for the new capital.\""
},
{
"docid": "285176",
"title": "",
"text": "The assumption that bonds have been issued with a negative coupon is not correct, or at least is has not occurred thus far. We'll look at this future possibility in the final paragraph. For now, lets look at the current bond market. The issuance of government bonds which carry a negative gross redemption yield is the result of governments issuing bonds at an issue price which exceed the nominal/redemption price and any coupon yield receivable over the life of the bond. I can find no instances of bonds with a negative coupon, though many have tiny positive coupon yields. The short seller of a bond with a negative gross redemption yield will be liable to pay the buyer the interest amount determined by the coupon. If the short seller has borrowed the bonds in order to sell them, then the short seller will receive the interest due from the lender to offset the interest paid to the buyer. If the short seller has not borrowed the bonds, but has sold them using some sort of synthetic contract such as a Contract for Difference, then the short seller will pay the coupon without receiving any offsetting payment. I thought this was an interesting question and it will be interesting to see if, at some time in the future, governments do ever issue bonds with a negative coupon. To date, this does not appear to have happened. So what would happen if we assume that a government issues a bond with a negative coupon. The buyer of the bond would be required to pay the equivalent yield to the government according to the bond contract specification. If an investor sells short such a bond, they would then become entitled to receive the interest from the buyer. If they have borrowed the bonds in order to sell them short, then they would pay any interest received back to the lender - this chain should eventually end with the ultimate owner/lender paying the government their dues. If they have sold short using a synthetic contract, then presumably they would keep the interest from themselves."
},
{
"docid": "598177",
"title": "",
"text": "sorry I disagree, they buy government bonds currently held by private banks (who hold them for account holders), this increased demand for government bonds means that the yield on them decreases, this means the government can then borrow at a lower rate (providing the QE isn't offset by a fall in private demand for bonds as they may be seen as unrewarding in terms of the risk taken), private investors will then turn to other investments offering a greater return, this will then increase the capital stock available and expand output, thus increasing employment"
},
{
"docid": "379445",
"title": "",
"text": "\"The fundamental concept of the time value of money is that money now is worth more than the same amount of money later, because of what you can do with money between now and later. If I gave you a choice between $1000 right now and $1000 in six months, if you had any sense whatsoever you would ask for the money now. That's because, in the six months, you could use the thousand dollars in ways that would improve your net worth between now and six months from now; paying down debt, making investments in your home or business, saving for retirement by investing in interest-bearing instruments like stocks, bonds, mutual funds, etc. There's absolutely no advantage and every disadvantage to waiting 6 months to receive the same amount of money that you could get now. However, if I gave you a choice between $1000 now and $1100 in six months, that might be a harder question; you will get more money later, so the question becomes, how much can you improve your net worth in six months given $1000 now? If it's more than $100, you still want the money now, but if nothing you can do will make more than $100, or if there is a high element of risk to what you can do that will make $100 that might in fact cause you to lose money, then you might take the increased, guaranteed money later. There are two fundamental formulas used to calculate the time value of money; the \"\"future value\"\" and the \"\"present value\"\" formulas. They're basically the same formula, rearranged to solve for different values. The future value formula answers the question, \"\"how much money will I have if I invest a certain amount now, at a given rate of return, for a specified time\"\"?. The formula is FV = PV * (1+R)N, where FV is the future value (how much you'll have later), PV is the present value (how much you'll have now), R is the periodic rate of return (the percentage that your money will grow in each unit period of time, say a month or a year), and N is the number of unit periods of time in the overall time span. Now, you asked what \"\"compounding\"\" is. The theory is very simple; if you put an amount of money (the \"\"principal\"\") into an investment that pays you a rate of return (interest), and don't touch the account (in effect reinvesting the interest you earn in the account back into the same account), then after the first period during which interest is calculated and paid, you'll earn interest on not just the original principal, but the amount of interest already earned. This allows your future value to grow faster than if you were paid \"\"simple interest\"\", where interest is only ever paid on the principal (for instance, if you withdrew the amount of interest you earned each time it was paid). That's accounted for in the future value formula using the exponent term; if you're earning 8% a year on your investment, then after 1 year you'll have 108% of your original investment, then after two years you'll have 1.082 = 116.64% (instead of just 116% which you'd get with simple interest). That .64% advantage to compounding doesn't sound like much of an advantage, but stay tuned; after ten years you'll have 215.89% (instead of 180%) of your original investment, after 20 you'll have 466.10% (instead of 260%) and after 30 your money will have grown by over 1000% as opposed to a measly 340% you'd get with simple interest. The present value formula is based on the same fundamental formula, but it's \"\"solved\"\" for the PV term and assumes you'll know the FV amount. The present value formula answers questions like \"\"how much money would I have to invest now in order to have X dollars at a specific future time?\"\". That formula is PV = FV / (1+R)N where all the terms mean the same thing, except that R in this form is typically called the \"\"discount rate\"\", because its purpose here is to lower (discount) a future amount of money to show what it's worth to you now. Now, the discount rate (or yield rate) used in these calculations isn't always the actual yield rate that the investment promises or has been shown to have over time. Investors will calculate the discount rate for a stock or other investment based on the risks they see in the company's financial numbers or in the market as a whole. The models used by professional investors to quantify risk are rather complex (the people who come up with them for the big investment banks are called \"\"quants\"\", and the typical quant graduates with an advanced math degree and is hired out of college with a six-figure salary), but it's typically enough for the average investor to understand that there is an inherent risk in any investment, and the longer the time period, the higher the chance that something bad will happen that reduces the return on your investment. This is why the 30-year Treasury note carries a higher interest rate than the 10-year T-note, which carries higher interest than the 6-month, 1-year and 5-year T-bills. In most cases, you as an individual investor (or even an institutional investor like a hedge fund manager for an investment bank) cannot control the rate of return on an investment. The actual yield is determined by the market as a whole, in the form of people buying and selling the investments at a price that, coupled with the investment's payouts, determines the yield. The risk/return numbers are instead used to make a \"\"buy/don't buy\"\" decision on a particular investment. If the amount of risk you foresee in an investment would require you to be earning 10% to justify it, but in fact the investment only pays 6%, then don't buy it. If however, you'd be willing to accept 4% on the same investment given your perceived level of risk, then you should buy.\""
},
{
"docid": "142822",
"title": "",
"text": "> How would you value a bond? Very basic approach is TVM. This should have been taught in your first year accounting class. http://en.wikipedia.org/wiki/Time_value_of_money > How do you value an option? Using the Black–Scholes options pricing model. BS opt pricing model is one (typically the entry level for teaching option pricing) stochastic model you can use. It has limitations due to certain assumptions made (such as constant vol) but you're correct, you can value an option with it. > How would you construct a yield curve? Draw a graph with maturity on the X-axis and yield on the Y-axis. So that's how to draw an xy plane... yes you're correct. That doesn't answer how to actually create a yield curve. The most simplest approach of creating one is to bootstrap the curve using the spot and forwards."
},
{
"docid": "139015",
"title": "",
"text": "The spot curve (or yield curve) demonstrates the different yields at which bonds of differing maturities are being purchased. When the yield curve is upward sloping, longer maturity bonds are being purchased at higher yields. When it's downward sloping, longer maturity bonds are purchased at lower yields. Keep in mind that yield is inversely related to price, so that a high-yield bond will be at a lower price and vice versa. The spot curve can also be used to determine the forward curve. This is based on the concept that an investor, given two options with identical cash flows, will be indifferent in what to purchase (i.e. their prices should be equal). To learn more about this, stay here in /r/finance. To learn anything about your actual question, try /r/personalfinance."
},
{
"docid": "462697",
"title": "",
"text": "\"that would imply that a 30Y US Treasury bond only yields 2.78%, which is nonsensically low. Those are annualized yields. It would be more precise to say that \"\"a 30Y US Treasury bond yields 2.78% per year (annualized) over 30 years\"\", but that terminology is implied in bond markets. So if you invest $1,000 in a 30-year T-bond, you will earn roughly 2.78% in interest per year. Also note that yield is calculated as if it compounded, meaning that investing in a 30-year T-bind will give you a return that is equivalent to putting it in a savings account that earns 1.39% interest (half of 2.78%) every 6 months and compounds, meaning you earn interest on top of interest. The trade-off for these low yields is you have virtually no default risk. Unlike a company that could go bankrupt and not pay back the bond, the US Government is virtually certain to pay off these bonds because it can print or borrow more money to pay off the debts. In addition, bonds in general (and especially treasuries) have very low market risk, meaning that their value fluctuates much less that equities, even indicies. S&P 500 indices may move anywhere between -40% and 50% in any given year, while T-bonds' range of movement is much lower, between -10% and 30% historically).\""
},
{
"docid": "473936",
"title": "",
"text": "Ditto Bill and I upvoted his answer. But let me add a bit. If everyone knew exactly what the risk was for every investment, then prices would be bid up or down until every stock (or bond or derivative or whatever) was valued at exactly risk times potential profit. (Or more precisely, integral of risk times potential profit.) If company A was 100% guaranteed to make $1 million profit this year, while company B had 50% change to make a $2 million profit and 50% to make $0, and every investor in the world knew that, then I'd expect the total price of all shares of the two stocks to stabilize at the same value. The catch to that, though, is that no one really knows the risk. The risk isn't like, we're going to roll a die and if it comes up even the company makes $1 million and if it comes up odd the company makes $0, so we could calculate the exact probability. The risk comes from lack of information. Will consumers want to buy this new product? How many? What are they willing to pay? How capable is the new CEO? Etc. It's very hard to calculate probabilities on these things. How can you precisely calculate the probability that unforeseen events will occur? So in real life prices are muddled. The risk/reward ratio should be roughly sort of approximately linear, but that's about the most one can say."
},
{
"docid": "498645",
"title": "",
"text": "\"Bonds might not be simple, but in general there are only a few variables that need to be understood: bid, coupon (interest) rate, maturity, and yield. Bond tables clearly lay those out, and if you're talking about government bonds a lot of things (like convertibles) don't apply (although default is still a concern). This might be overly simplistic, but I view ETF's primarily as an easy way to bring somewhat esoteric instruments (like grain futures) into the easily available markets of Nasdaq and the NYSE. That they got \"\"enhanced\"\" with leveraged funds and the such is interesting, but perhaps not the original intent of the instrument. Complicating your situation a bit more is the fee that gets tacked onto the ETF. Even Vanguard government bond funds hang out north of 0.1%. That's not huge, but it's not particularly appealing either considering that (unlike rounding up live cattle futures), it's not that much work to buy US government bonds, so the expense might not seem worth it to someone who's comfortable purchasing the securities directly. I'd be interested to see someone else's view on this, but in general I'd say that if you know what you want and know how to buy it, the government bond ETF becomes a lot less relevant as the liquidity offered (including the actual \"\"ease of transacting\"\") seem to to be the biggest factors in favor. From Investopedia's description: The bond ETF is an exciting new addition to the bond market, offering an excellent alternative to self-directed investors who, looking for ease of trading and increased price transparency, want to practice indexing or active bond trading. However, bond ETFs are suitable for particular strategies. If, for instance, you are looking to create a specific income stream, bond ETFs may not be for you. Be sure to compare your alternatives before investing.\""
},
{
"docid": "112659",
"title": "",
"text": "Yes, if you want income and are willing to commit to hold a bond to maturity, you can hold the bond, get the scheduled payments, and get your principal returned at the end. US Savings Bonds are non-marketable (you cannot trade them, but can redeem early) bonds designed for this purpose. The value of a marketable bond will vary over its lifetime as interest rates change and the bond matures. If you buy a 30 year US Treasury bond at par value (100) on September 1, 2011, it yielded 3.51%. If rates fall, the value of your bond will increase over 100. If rates rise, the value will decrease below 100. How much the value changes depends on the type of bond and the demand for it. But if your goal is to buy and hold, you don't need to worry about it."
}
] |
4865 | Why are historical prices of stocks different on different websites? Which one should I believe? | [
{
"docid": "100485",
"title": "",
"text": "On Monday, the 27th of June 2011, the XIV ETF underwent a 10:1 share split. The Yahoo Finance data correctly shows the historic price data adjusted for this split. The Google Finance data does not make the adjustment to the historical data, so it looks like the prices on Google Finance prior to 27 June 2011 are being quoted at 10 times what they should be. Coincidentally, the underlying VIX index saw a sudden surge on the Friday (24 June) and continued on the Monday (27 June), the date that the split took effect. This would have magnified the bearish moves seen in the historic price data on the XIV ETF. Here is a link to an article detailing the confusion this particular share split caused amongst investors. It appears that Google Finance was not the only one to bugger it up. Some brokers failed to adjust their data causing a lots of confusion amongst clients with XIV holdings at the time. This is a recurring problem on Google Finance, where the historic price data often (though not always) fails to account for share splits."
}
] | [
{
"docid": "228774",
"title": "",
"text": "Most of this advice applies to the UK, where I work in motor insurance pricing for a large personal lines insurer, but a lot of it is more general. A loyal customer is usually an overpaying customer. The guiding priciple most financial services companies go by is that there's no point rewarding loyalty except to create it where none exists, i.e. by giving massive discounts to desirable new customers. Shop around every time your policy comes up for renewal, and whenever your circumstances change. Never allow your policy to automatically renew - you may be charged a higher premium by default if you do! Phone up your current insurer and haggle to see if they can beat the best quote you find - their agents will usually be able offer a discount. If applicable in your country, use price comparison websites. Use at least two - different insurers sometimes offer different rates on different sites, competing harder on some than on others, especially if the price comparison website happens to be owned by one of the insurance companies that quotes on it. One example of this is http://www.confused.com, which is owned by RSA group, a major insurer. If there are no price comparison websites for your country, try purchasing your policy through a broker. They'll get quotes from a panel of insurers and offer you the cheapest. They can be especially helpful if you have a problematic driving history, e.g. drink-driving convictions, as many mainstream insurers will decline to quote for such people. Other suggestions Chris Rea's answer is a good starting point, but I would disagree about cutting back on cover. In the UK at least, many insurers often charge an equal or greater amount for lower levels of cover, because the people who choose these policies tend to be worse risks. Re switching vehicles - a cheap old car will not necessarily be much cheaper to insure than a new expensive one, as you can still injure people with it or crash into other people's cars, and the newer car will probably have better safety features. However, a less powerful and smaller vehicle typically poses less of a threat to others and will therefore be cheaper to insure. Another tactic not mentioned so far is 'reverse fronting'. 'Fronting', where the main driver poses as an additional driver and nominates a less risky driver as the main driver, is illegal, but the reverse - adding a less risky driver as an additional driver - is legal and can sometimes reduce premiums. This is because only one of you can drive the car at any one time, and sometimes it'll be the less risky one. So, especially if you're male and aged < 25, see if adding your safest parent as a named driver makes a difference. If you have the choice of storing your car on a driveway or on the street, get quotes for both and see which is cheaper. If you live in an area where burglary is commonplace, thieves are more likely to steal cars left on driveways, as they can break into the owner's home and steal the keys. If not, the driveway is better, as it reduces the risk of a collision. If you have previously driven another vehicle (e.g. motorbike or moped), or if you've been insured as an additional driver on someone else's car, call up insurers directly and ask if they can offer you a no-claims bonus for this. Quotes from price comparison websites tend to limit you to the numbers of years of no-claims you've accrued as a main driver, and may not reflect your full available no-claims bonus. Extreme measures Some insurers give you the option to install a tracking device in your car that can tell them various things, e.g. Some people may be uncomfortable sharing this much information with their insurer, but for particularly risky drivers (I'm looking at you, males < 25) it can sometimes result in a substantial saving. One insurer that offers this is http://www.insurethebox.com/. Finally, if every insurer you can find is quoting in excess of £10,000 for a year's cover, you may find it cheaper instead to purchase a vintage agricultural vehicle and get it covered on a specialist farmer's policy: http://www.metro.co.uk/news/864501-teen-quoted-17k-for-car-insurance-resorts-to-driving-tractor"
},
{
"docid": "121595",
"title": "",
"text": "In less than two decades, more than half of all publicly traded companies have disappeared. There were 7,355 U.S. stocks in November 1997, according to the Center for Research in Security Prices at the University of Chicago’s Booth School of Business. Nowadays, there are fewer than 3,600. A close look at the data helps explain why stock pickers have been underperforming. And the shrinking number of companies should make all investors more skeptical about the market-beating claims of recently trendy strategies. Back in November 1997, there were more than 2,500 small stocks and nearly 4,000 tiny “microcap” stocks, according to CRSP. At the end of 2016, fewer than 1,200 small and just under 1,900 microcap stocks were left. Most of those companies melted away between 2000 and 2012, but the numbers so far show no signs of recovering. Several factors explain the shrinking number of stocks, analysts say, including the regulatory red tape that discourages smaller companies from going and staying public; the flood of venture-capital funding that enables young companies to stay private longer; and the rise of private-equity funds, whose buyouts take shares off the public market. For stock pickers, differentiating among the remaining choices is “an even harder game” than it was when the market consisted of twice as many companies, says Michael Mauboussin, an investment strategist at Credit Suisse in New York who wrote a report this spring titled “The Incredible Shrinking Universe of Stocks.” That’s because the surviving companies tend to be “fewer, bigger, older, more profitable and easier to analyze,” he says — making stock picking much more competitive. Consider small-stock funds. Often, they compare themselves to the Russell 2000, an index of the U.S. stocks ranked 1,001 through 3,000 by total market value. “Twenty years ago, there were over 4,000 stocks smaller” than the inclusion cutoff for the Russell 2000, says Lubos Pastor, a finance professor at the University of Chicago. “That number is down to less than 1,000 today.” So fund managers have far fewer stocks to choose from if they venture outside the index — the very area where the best bargains might be found. More money chasing fewer stocks could lead some fund managers to buy indiscriminately, regardless of value. Eric Cinnamond is a veteran portfolio manager with a solid record of investing in small stocks. Last year, he took the drastic step of shutting down his roughly $400 million mutual fund, Aston/River Road Independent Value, and giving his investors their money back. “Prices got so crazy in small caps, I fired myself,” he says. “My portfolio was 90% in cash at the end, because I couldn’t find anything to buy. If I’d kept investing, I was sure I’d lose people their money.” He adds, “It was the hardest thing I’ve ever done professionally, but I didn’t feel I had a choice. I knew my companies were overvalued.” Mr. Cinnamond hopes to return to the market when, in his view, values become attractive again. He doesn’t expect recent conditions to be permanent. The evaporation of thousands of companies may have one enduring result, however — and it could catch many investors by surprise. Most research on historical returns, points out Mr. Mauboussin, is based on the days when the stock market had twice as many companies as it does today. “Was the population of companies so different then,” he asks, “that the inferences we draw from it might no longer be valid?” So-called factor investing, also known as systematic or smart-beta investing, picks hundreds or thousands of stocks at a time based on common sources of risk and return. Among them: how big companies are, how much their shares fluctuate, how expensive their shares are relative to asset value and so on. But the historical outperformance of many such factors may have been driven largely by the tiniest companies — exactly those that have disappeared from the market in droves. Before concluding that small stocks or cheap “value” stocks will outrace the market as impressively as they did in the past, you should pause to consider how they will perform without the tailwinds from thousands of tiny stocks that no longer exist. The stock market has more than tripled in the past eight years, so the eclipse of so many companies hasn’t been a catastrophe. But it does imply that investing in some of the market’s trendiest strategies might be less profitable in the future than they looked in the past."
},
{
"docid": "450184",
"title": "",
"text": "\"Depends. The short answer is yes; HSBC, for instance, based in New York, is listed on both the LSE and NYSE. Toyota's listed on the TSE and NYSE. There are many ways to do this; both of the above examples are the result of a corporation owning a subsidiary in a foreign country by the same name (a holding company), which sells its own stock on the local market. The home corporation owns the majority holdings of the subsidiary, and issues its own stock on its \"\"home country's\"\" exchange. It is also possible for the same company to list shares of the same \"\"pool\"\" of stock on two different exchanges (the foreign exchange usually lists the stock in the corporation's home currency and the share prices are near-identical), or for a company to sell different portions of itself on different exchanges. However, these are much rarer; for tax liability and other cost purposes it's usually easier to keep American monies in America and Japanese monies in Japan by setting up two \"\"copies\"\" of yourself with one owning the other, and move money around between companies as necessary. Shares of one issue of one company's stock, on one exchange, are the same price regardless of where in the world you place a buy order from. However, that doesn't necessarily mean you'll pay the same actual value of currency for the stock. First off, you buy the stock in the listed currency, which means buying dollars (or Yen or Euros or GBP) with both a fluctuating exchange rate between currencies and a broker's fee (one of those cost savings that make it a good idea to charter subsidiaries; could you imagine millions a day in car sales moving from American dealers to Toyota of Japan, converted from USD to Yen, with a FOREX commission to be paid?). Second, you'll pay the stock broker a commission, and he may charge different rates for different exchanges that are cheaper or more costly for him to do business in (he might need a trader on the floor at each exchange or contract with a foreign broker for a cut of the commission).\""
},
{
"docid": "461215",
"title": "",
"text": "I think you need a lesson on Banking 101. > I mean siphoning funds assuming that you're going to be running a HFT shop or prop trading or using models to predict when something is most profitable, which is beneficial to your wallet but not really to society. I am confused, maybe your logic will clarify this concept for me. Say, I have invested in a mutual fund which has done really well and I have made returns of over 120% in 15yrs. Is this considered stealing as well?? According to you it would be. Maybe others were more patriotic and invested their savings in Treasury bonds which probably earned them say 28% in the past 12 years. How is this different from someone working as prop shop trader (You should generalize it as a trader not just quants). Sometimes they take losses other times they make profits. Most just manage to make a living. If not they find another career (Which I think a cynical man like you ought to be doing too). If you truly understand the industry structure and believe in it, you will realize it's just another profession. If you're truly disgusted by this profession, maybe ask yourself why does society tolerate over priced attorneys, over priced doctors, high end real estate, expensive designer clothing stores.. many other examples to cite here. To bring things closer to your life in perspective, the $10 t-shirt you're wearing was probably prepared by people like my cousins in India who work for wages of $110 a month. Should I call you a thief for stealing from her?"
},
{
"docid": "110716",
"title": "",
"text": "There are various exchanges around the world that handle spot precious metal trading; for the most part these are also the primary spot foreign exchange markets, like EBS, Thomson Reuters, Currenex (website seems to be down), etc. You can trade on these markets through brokers just like you can trade on stock markets. However, the vast majority of traders on these exchanges do not intend to hold any bullion ownership at the end of the day; they want to buy as much as they sell each day. A minority of traders do intend to hold metal positions for longer periods, but I doubt any of them intend to actually go collect bullion from the exchange. I don't think it's even possible. Really the only way to get bullion is to pay a service fee to a dealer like you mentioned. But on an exchange like the ones above you have to pay three different fees: So in the end you can't even get the spot price on the exchanges where the spot prices are determined. You might even come out ahead by going to a dealer. You should try to find a reputable dealer, and go in knowing the latest trade prices. An honest dealer will have a website showing you the current trade prices, so you know that they expect you to know the prices when you come in. For example, here's a well-known dealer in Chicago that happily shows you the spot prices from KITCO so you can decide whether their service fee is worth it or not."
},
{
"docid": "323660",
"title": "",
"text": "\"I don't know really is the best investment strategy. People think that they have to know everything to make money. But realistically, out of the hundreds of thousands of publicly traded securities, you really can only invest in a tiny number of them. Of the course of a week, you literally have more than a million \"\"buy\"\" or \"\"don't buy\"\" decisions, because the prices of those securities fluctuate every day. Simply due to the fact that there are so many securities, you cannot know what everything is going to do. You have to say \"\"I don't know\"\". Also, when you do understand something, it is usually fairly priced. So will you make money on it? \"\"I don't know\"\". Only very rarely will you find something that you actually understand well and it is significantly undervalued. You can be looking at a company a day for two years before you find it. But people get trigger happy. They bet on 51%/49% odds when they should only bet on 90%/10% odds or higher. If you are forced to bet on everything, it makes sense that you bet on everything you believe is greater than 50% chance of winning. But since you cannot bet on everything, you should only bet on the highest quality bets, those with greater than 90% chance of winning. To find such a bet, you may have to shuffle through 100 different companies and only make 2-3 bets. You are looking for something that is at least 2 standard deviations away from the mean. People are not good at doing a lot of work, most of which yields nothing, to find one big payoff. They are wired to only look at the present, so they take the best bet they can see at the moment, which is often barely above 50% (and with any misjudgment, it may actually be well below 50%). And people are not good at understanding compound/geometric growth. You can keep multipling 10% gains (1.10 * 1.10 * 1.10 ...), but that can all be wiped out by multiplying by one zero, which is why taking a 51%/49% bet is so dangerous (even though technically it is an advantageous one). They forget to adjust for the geometric aspect of compounding. A 99%/1% bet is one you should take, but if you are allowed to repeat it and you keep going all-in, you will eventually lose and have $0, which is the same as if you took a single all-in bet that has 0% chance of winning. As Buffett says, if you are only allowed to make 20 investments over a lifetime, you will most likely do better because it prevents you from making many of these mistakes.\""
},
{
"docid": "529996",
"title": "",
"text": "This is a great question for understanding how futures work, first let's start with your assumptions The most interesting thing here is that neither of these things really matters for the price of the futures. This may seem odd as a futures contract sounds like you are betting on the future price of the index, but remember that the current price already includes the expectations of future earnings as well! There is actually a fairly simple formula for the price of a futures contract (note the link is for forward contracts which are very similar but slightly more simple to understand). Note, that if you are given the current price of the underlying the futures price depends essentially only on the interest rate and the dividends paid during the length of the futures contract. In this case the dividend rate for the S&P500 is higher than the prevailing interest rate so the futures price is lower than the current price. It is slightly more complicated than this as you can see from the formula, but that is essentially how it works. Note, this is why people use futures contracts to mimic other exposures. As the price of the future moves (pretty much) in lockstep with the underlying and sometimes using futures to hedge exposures can be cheaper than buying etfs or using swaps. Edit: Example of the effect of dividends on futures prices For simplicity, let's imagine we are looking at a futures position on a stock that has only one dividend (D) in the near term and that this dividend happens to be scheduled for the day before the futures' delivery date. To make it even more simple lets say the price of the stock is fairly constant around a price P and interest rates are near zero. After the dividend, we would expect the price of the stock to be P' ~ P - D as if you buy the stock after the dividend you wouldn't get that dividend but you still expect to get the rest of the value from additional future cash flows of the company. However, if we buy the futures contract we will eventually own the stock but only after the dividend happens. Since we don't get that dividend cash that the owners of the stock will get we certainly wouldn't want to pay as much as we would pay for the stock (P). We should instead pay about P' the (expected) value of owning the stock after that date. So, in the end, we expect the stock price in the future (P') to be the futures' price today (P') and that should make us feel a lot more comfortable about what we our buying. Neither owning the stock or future is really necessarily favorable in the end you are just buying slightly different future expected cash flows and should expect to pay slightly different prices."
},
{
"docid": "519297",
"title": "",
"text": "\"This refers to the faulty idea that the stock market will behave differently than it has in the past. For example, in the late 1990s, internet stocks rose to ridiculous heights in price, to be followed soon after with the Dot-Com Bubble crash. In the future, it's likely that there will be another such bubble with another hot stock - we just don't know what kind. Saying that \"\"this time it will be different\"\" could mean that you expect this bubble not to burst when, historically, that is never the case.\""
},
{
"docid": "457584",
"title": "",
"text": "\"The reason that UltraLong funds and the like are bad isn't because of the leverage ratio. It's because they're compounded daily, and the product of all the doubled daily returns is not mathematically equivalent to the double the long-term return. I'd consider providing big fancy equations using uppercase pi as the 'product of elements in a sequence' operator and other calculus fanciness, but that would be overkill, I don't think I can do TeX here, and I don't know the relevant TeX anyway. Anyway. From the economics theory perspective, the ideal leverage ratio is 1X - that is, unlevered, straight investment. Consider: Using leverage costs money. You know that, surely. If someone could borrow money at N% and invest at an expected N+X%, where X > 0, then they would. They would borrow all the money they could and buy all the S&P500 they could. But when they bought all that S&P500, they'd eventually run out of people who were willing to sell it for that cheap. That would mean the excess return would be smaller. Eventually you'd get to a point where the excess return is... zero? .... well, no, empirically, we can see that it's definitely not zero, and that in the real world that stocks do return more than bonds. Why? Because stocks are riskier than bonds. The difference in expected return between an index like the S&P500 and a US Treasury bond is due to the relative riskiness of the S&P500, which isn't guaranteed by the US Government to return your principal. Any money that you make off of leverage comes from assuming some sort of a risk. Now, assuming risk can be a profitable thing to do, but there are also a lot of people out there with higher risk tolerance than you, like insurance companies and billionaires, so the market isn't exactly short of people willing to take risks, and you shouldn't expect the returns of \"\"assuming risk\"\" in the general case to be qualitatively awesome. Now, it's true that investing in an unlevered fashion is risky also. But that's not an excuse to go leveraged anyway; it's a reason to hold back. In fact, regular stocks are sufficiently risky that most people probably shouldn't be holding a 100% stock portfolio. They should be tempering that risk with bonds, instead, and increasing the size of their bond holdings over time. The appropriate time to use leverage is when you have information which limits your risk. You have done research, and have reason to believe that you understand the future of an individual stock/index better than the rest of the stock market does. You calculate that the potential for achieving returns with leverage outweighs the risks. Then you dump your money into the leveraged position. (In exchange for this, the market receives information about anticipated future returns of this instrument, because of the price movement which occurs as a result of someone putting his money where his mouth is.) If you're just looking to dump money into broad market indicies in a leveraged fashion, you're doing it wrong. There is no free money. (Ed. Which is not to say there's not money. There's lots of money. But if you go looking for the free kind, you won't find it, and may end up with money that you thought was free but was actually quite expensive.) Edit. Okay, so you don't like my answer. I'm not surprised. I'm giving you a real answer instead of a \"\"make free money\"\" answer. Okay. Here's your \"\"how to make free money\"\" answer. Assume you are using a constant leverage ratio over the length of time you've invested your money, and you don't get to just jump into and out of the market (that's market-timing, not leverage) so you have to stay invested. You're going to have a scenario which falls into one of these categories: The S&P500 historically rises over time. The average rate of return probably exceeds the average interest rate. So the ideal leverage ratio is infinite. Of course, this is a stupid answer in real life because you can't pull that off. Your risk tolerance is too low and you will have trouble finding a lender willing to lend you unsecured money, and you'll probably lose all your money in a crash sooner or later. Ultimately it's a stupid answer because you're asking the wrong question. You should probably ask a better question: \"\"when I use leverage to gain additional exposure to risk, am I being properly compensated for assuming that risk?\"\"\""
},
{
"docid": "70185",
"title": "",
"text": "I found a possible data source. It offers fundamentals i.e. the accounting ratios you listed (P/E, dividend yield, price/book) for international stock indexes. International equity indices based on EAFE definitions are maintained by Professor French of French-Fama fame, at Dartmouth's Tuck Business School website. Specifics of methodology, and countries covered is available here. MSCI is the data source. Historical time interval for most countries is from 1975 onward. (Singapore was one of the countries included). Obtaining historical ratios for international stock indices is not easily found for free. Your question didn't specify free though. If that is not a constraint, you may wish to check the MSCI Barra international stock indices also."
},
{
"docid": "283074",
"title": "",
"text": "In answer to your last formulation, no. In a perfectly efficient market, different investors still have different risk tolerances (or utility functions). They're maximizing expected utility, not expected value. The portfolios that maximize expected utility for different risk preferences are different, and thus generally have different expected values. (Look up mean-variance utility for a simple-ish example.) Suppose you have log utility for money, u(x) = log(x), and your choice is to invest all of your money in either the risk-free bond or in the risky bond. In the risky bond, you have a positive probability of losing everything, achieving utility u(0) = -\\infty. Your expected utility after purchase of the risky bond is: Pr(default)*u(default) + (1-Pr(default))*u(nominalValue). Since u(default)= -\\infty, your expected utility is also negative infinity, and you would never make this investment. Instead you would purchase the risk-free bond. But another person might have linear utility, u(x) = x, and he would be indifferent between the risk-free and risky bonds at the prices you mention above and might therefore purchase some. (In fact you probably would have bid up the price of the risk-free bond, so that the other investor strictly prefers the risky one.) So two different investors' portfolios will have different expected returns, in general, because of their different risk preferences. Risk-averse investors get lower expected value. This should be very intuitive from portfolio theory in general: stocks have higher expected returns, but more variance. Risk-tolerant people can accept more stocks and more variance, risk-averse people purchase less stocks and more bonds. The more general question about risk premia requires an equilibrium price analysis, which requires assumptions about the distribution of risk preferences among other things. Maybe John Cochrane's book would help with that---I don't know anything about financial economics. I would think that in the setup above, if you have positive quantities of these two investor types, the risk-free bond will become more expensive, so that the risky one offers a higher expected return. This is the general thing that happens in portfolio theory. Anyway. I'm not a financial economist or anything. Here's a standard introduction to expected utility theory: http://web.stanford.edu/~jdlevin/Econ%20202/Uncertainty.pdf"
},
{
"docid": "306561",
"title": "",
"text": "\"The case you are looking at is rather special, because the Chinese government for the longest time did not allow foreigners to invest in Chinese stocks. The ADRs explained in @DStanley's answer are a way around that restriction; recently there are some limited official ways, In general, it is perfectly normal for a stock to appear on different exchanges, in different currencies, and it's all the \"\"real\"\" stock. Because remember: a stock exchange is really nothing more than a fancy place for people to buy and sell stocks. There is absolutely no reason why a specific stock should only be traded in one place. Companies that have decided to be publically tradeable generally want to be traded in as many exchanges as possible, because it makes the stock more liquid, which helps their shareholders. Individual exchanges have different requirements for a stock to be listed for trading there, some may even do it without the company's explicit approval.\""
},
{
"docid": "589127",
"title": "",
"text": "\"There are more than a few different ways to consider why someone may have a transaction in the stock market: Employee stock options - If part of my compensation comes from having options that vest over time, I may well sell shares at various points because I don't want so much of my new worth tied up in one company stock. Thus, some transactions may happen from people cashing out stock options. Shorting stocks - This is where one would sell borrowed stock that then gets replaced later. Thus, one could reverse the traditional buy and sell order in which case the buy is done to close the position rather than open one. Convertible debt - Some companies may have debt that come with warrants or options that allow the holder to acquire shares at a specific price. This would be similar to 1 in some ways though the holder may be a mutual fund or company in some cases. There is also some people that may seek high-yield stocks and want an income stream from the stock while others may just want capital appreciation and like stocks that may not pay dividends(Berkshire Hathaway being the classic example here). Others may be traders believing the stock will move one way or another in the short-term and want to profit from that. So, thus the stock market isn't necessarily as simple as you state initially. A terrorist attack may impact stocks in a couple ways to consider: Liquidity - In the case of the attacks of 9/11, the stock market was closed for a number of days which meant people couldn't trade to convert shares to cash or cash to shares. Thus, some people may pull out of the market out of fear of their money being \"\"locked up\"\" when they need to access it. If someone is retired and expects to get $x/quarter from their stocks and it appears that that may be in jeopardy, it could cause one to shift their asset allocation. Future profits - Some companies may have costs to rebuild offices and other losses that could put a temporary dent in profits. If there is a company that makes widgets and the factory is attacked, the company may have to stop making widgets for a while which would impact earnings, no? There can also be the perception that an attack is \"\"just the beginning\"\" and one could extrapolate out more attacks that may affect broader areas. Sometimes what recently happens with the stock market is expected to continue that can be dangerous as some people may believe the market has to continue like the recent past as that is how they think the future will be.\""
},
{
"docid": "557961",
"title": "",
"text": "\"Firstly, if a stock costs $50 this second, the bid/ask would have to be 49/50. If the bid/ask were 49/51, the stock would cost $51 this second. What you're likely referring to is the last trade, not the cost. The last trading price is history and doesn't apply to future transactions. To make it simple, let's define a simple order book. Say there is a bid to buy 100 at $49, 200 at $48, 500 at $47. If you place a market order to sell 100 shares, it should all get filled at $49. If you had placed a market order to sell 200 shares instead, half should get filled at $49 and half at $48. This is, of course, assuming no one else places an order before you get yours submitted. If someone beats you to the 100 share lot, then your order could get filled at lower than what you thought you'd get. If your internet connection is slow or there is a lot of latency in the data from the exchange, then things like this could happen. Also, there are many ECNs in addition to the exchanges which may have different order books. There are also trades which, for some reason, get delayed and show up later in the \"\"time and sales\"\" window. But to answer the question of why someone would want to sell low... the only reason I could think is they desire to drive the price down.\""
},
{
"docid": "446214",
"title": "",
"text": "\"What is a bond price? A bond is an asset, and like any tradeable asset it has a price. If I hold $10K face value of a certain GM bond, then I would be willing to sell it at some price, which may be more or less than $10K. Whoever is willing to sell it for the lowest amount determines the price. The price is determined by the market, just as all prices are. It's what you can sell a bond for. Bond prices may be quoted in various funny ways, like as a discount or premium relative to the face value or as a premium over a treasury, but at the end it all should be converted to how much you have to pay today. In this case, it's how much you would pay today to get a set of future coupon and principal payments. What is Yield to Maturity? A bond is a contract entitling you to a certain set of predefined cash flows. If you take that set of cash flows and discount them using a single rate at all maturities such that the discounted value is equal to the price, the single rate you have identified is the YTM. Mathematically, this is the same as finding the IRR (internal rate of return) of some set of cash flows. In this case the cash flows are the coupons and principal repayment. Other bond concepts. Note that the other aspects of a bond, like maturity, coupon rate, and face value, are immutably written into the bond contract. All they do is define what payments the bond entitles the owner to. They don't say how much someone would pay today in order to be entitled to those payments. One can't know how much a future payment is worth without discounting. If you know the appropriate discount rate at every relevant maturity, you could calculate the fair price of a bond. That's the other direction. YTM looks at the market price and associated cash flows and imputes what single discount rate would make that price fair. What is YTM good for? Recall what I said about IRR above. Why would anyone want to know what discount rate equates the cash flows of a project to its cost? Because it's an easy way to summarize how profitable the project is expected to be. YTM is a quick way to summarize the yield one would get on a bond if they were to buy it today and hold to maturity. If one bond has a higher YTM than another, than heuristically we believe it pays out more and should be associated with greater risk if the market is working properly. It can be used to compare bonds or to look at how changes in bond prices are affecting expected yields. Ask yourself, how would you compare two different bonds with different maturities and coupon rates? Which one is riskier or more profitable? The simplest way to summarize this information is with the yield to maturity. YTM is used frequently enough that when you just say a bond's \"\"yield,\"\" people will assume you are talking about its yield to maturity. What is YTM not good for? One thing to be wary of is using YTM as a discount rate. It looks like a discount rate but it works for that bond and that bond only. In reality each individual coupon payment has a true discount rate, and the discount rate at each horizon is different from each other horizon. Those are true discount rates that can be applied to any cash flow of similar risk to get the right price. We can think of YTM as some kind of average of those discount rates that produces the correct price for that bond only. You should never use it for discounting something else.\""
},
{
"docid": "464297",
"title": "",
"text": "If you have money and may need to access it at any time, you should put it in a savings account. It won't return much interest, but it will return some and it is easily accessible. If you have all your emergency savings that you need (at least six months of income), buy index-based mutual funds. These should invest in a broad range of securities including both stocks and bonds (three dollars in stocks for every dollar in bonds) so as to be robust in the face of market shifts. You should not buy individual stocks unless you have enough money to buy a lot of them in different industries. Thirty different stocks is a minimum for a diversified portfolio, and you really should be looking at more like a hundred. There's also considerable research effort required to verify that the stocks are good buys. For most people, this is too much work. For most people, broad-based index funds are better purchases. You don't have as much upside, but you also are much less likely to find yourself holding worthless paper. If you do buy stocks, look for ones where you know something about them. For example, if you've been to a restaurant chain with a recent IPO that really wowed you with their food and service, consider investing. But do your research, so that you don't get caught buying after everyone else has already overbid the price. The time to buy is right before everyone else notices how great they are, not after. Some people benefit from joining investment clubs with others with similar incomes and goals. That way you can share some of the research duties. Also, you can get other opinions before buying, which can restrain risky impulse buys. Just to reiterate, I would recommend sticking to mutual funds and saving accounts for most investors. Only make the move into individual stocks if you're willing to be serious about it. There's considerable work involved. And don't forget diversification. You want to have stocks that benefit regardless of what the overall economy does. Some stocks should benefit from lower oil prices while others benefit from higher prices. You want to have both types so as not to be caught flat-footed when prices move. There are much more experienced people trying to guess market directions. If your strategy relies on outperforming them, it has a high chance of failure. Index-based mutual funds allow you to share the diversification burden with others. Since the market almost always goes up in the long term, a fund that mimics the market is much safer than any individual security can be. Maintaining a three to one balance in stocks to bonds also helps as they tend to move in opposite directions. I.e. stocks tend to be good when bonds are weak and vice versa."
},
{
"docid": "88575",
"title": "",
"text": "\"A mutual fund's return or yield has nothing to do with what you receive from the mutual fund. The annual percentage return is simply the percentage increase (or decrease!) of the value of one share of the mutual fund from January 1 till December 31. The cash value of any distributions (dividend income, short-term capital gains, long-term capital gains) might be reported separately or might be included in the annual return. What you receive from the mutual fund is the distributions which you have the option of taking in cash (and spending on whatever you like, or investing elsewhere) or of re-investing into the fund without ever actually touching the money. Regardless of whether you take a distribution as cash or re-invest it in the mutual fund, that amount is taxable income in most jurisdictions. In the US, long-term capital gains are taxed at different (lower) rates than ordinary income, and I believe that long-term capital gains from mutual funds are not taxed at all in India. You are not taxed on the increase in the value of your investment caused by an increase in the share price over the year nor do you get deduct the \"\"loss\"\" if the share price declined over the year. It is only when you sell the mutual fund shares (back to the mutual fund company) that you have to pay taxes on the capital gains (if you sold for a higher price) or deduct the capital loss (if you sold for a lower price) than the purchase price of the shares. Be aware that different shares in the sale might have different purchase prices because they were bought at different times, and thus have different gains and losses. So, how do you calculate your personal return from the mutual fund investment? If you have a money management program or a spreadsheet program, it can calculate your return for you. If you have online access to your mutual fund account on its website, it will most likely have a tool called something like \"\"Personal rate of return\"\" and this will provide you with the same calculations without your having to type in all the data by hand. Finally, If you want to do it personally by hand, I am sure that someone will soon post an answer writing out the gory details.\""
},
{
"docid": "121765",
"title": "",
"text": "The short answer: it depends. The long answer.. Off the top of my head, there are quite a number of factors that an analyst may look at when analyzing a stock, to come up with a recommendation. Some example factors to look at include: The list goes on. Quite literally, any and all factors are fair game for a recommendation. So, the question isn't really what analysts do with financial data, it is what do analysts do with financial data that meets your investment needs? As an example, if you have two analysts, one who is focused on growth stocks, and one who is focused on dividend growth, they may have completely different views on a company. If both analysts were to analyze Apple (AAPL) 5 years ago, the dividend analyst would likely say SELL or at the most HOLD, because back then Apple did not have a dividend. However, an analyst focused on growth would likely have said BUY, because Apple appeared to be on a clear upward trend in terms of growth. Likewise, if you have analysts who are focused on shorting stocks, and ones who are focused on deep value investing, the sell analyst may be selling SELL because they are confident the stock will go down in price, so you can make money on the short position. Conversely, the deep value investor may be saying BUY, because they believe that based on the companies strong balance sheet, and recent shake-ups in management the stock will eventually turn around. Two completely different views for the same company: the analyst focused on shorting is looking to make money by capitalizing on falling share price, while the analyst focused on deep value is looking for unloved companies in a tailspin whom s/he believe will turn around, the thesis being that if you dollar-cost-average as the price drops, when it corrects, you'll reap the rewards. That all said, to answer the question about what analysts look for: So really, you should be looking for analysts who align with your investment style, and use those recommendations as a starting point for your own purchases. Personally, I am a dividend investor, so I have passed many BUY recommendations from analysts and my former broker because those were based on growth stories. That does not mean that the analysts, my former broker, or myself, are wrong. But we were all incorrect given the context of how I invest, and what they recommend."
},
{
"docid": "548673",
"title": "",
"text": "\"I have heard that investing more money into an investment which has gone down is generally a bad idea*. \"\"Throwing good money after bad\"\" so to speak. Is investing more money into a stock, you already have a stake in, which has gone up in price; a good idea? Other things being equal, deciding whether to buy more stocks or shares in a company you're already invested in should be made in the same way you would evaluate any investment decision and -- broadly speaking -- should not be influenced by whether an existing holding has gone up or down in value. For instance, given the current price of the stock, prevailing market conditions, and knowledge about the company, if you think there is a reasonable chance that the price will rise in the time-period you are interested in, then you may want to buy (more) stock. If you think there is a reasonable chance the price will fall, then you probably won't want to buy (more) stock. Note: it may be that the past performance of a company is factored into your decision to buy (e.g was a recent downturn merely a \"\"blip\"\", and long-term prospects remain good; or have recent steady rises exhausted the potential for growth for the time being). And while this past performance will have played a part in whether any existing holding went up or down in value, it should only be the past performance -- not whether or not you've gained or lost money -- that affects the new decision. For instance: let us suppose (for reasons that seemed valid at the time) you bought your original holding at £10/share, the price has dropped to £2/share, but you (now) believe both prices were/are \"\"wrong\"\" and that the \"\"true price\"\" should be around £5/share. If you feel there is a good chance of this being achieved then buying shares at £2, anticipating they'll rally to £5, may be sound. But you should be doing this because you think the price will rise to £5, and not because it will offset the loses in your original holding. (You may also want to take stock and evaluate why you thought it a good idea to buy at £10... if you were overly optimistic then, you should probably be asking yourself whether your current decisions (in this or any share) are \"\"sound\"\"). There is one area where an existing holding does come into play: as both jamesqf and Victor rightly point out, keeping a \"\"balanced\"\" portfolio -- without putting \"\"all your eggs in one basket\"\" -- is generally sound advice. So when considering the purchase of additional stock in a company you are already invested in, remember to look at the combined total (old and new) when evaluating how the (potential) purchase will affect your overall portfolio.\""
}
] |
4920 | Does financing a portfolio on margin affect the variance of a portfolio? | [
{
"docid": "306815",
"title": "",
"text": "Yes, more leverage increases the variance of your individual portfolio (variance of your personal net worth). The simple way to think about it is that if you only own only 50% of your risky assets, then you can own twice as many risky assets. That means they will move around twice as much (in absolute terms). Expected returns and risk (if risk is variance) both go up. If you lend rather than borrow, then you might have only half your net worth in risky assets, and then your expected returns and variation in returns will go down. Note, the practice of using leverage differs from portfolio theory in a couple important ways."
}
] | [
{
"docid": "171420",
"title": "",
"text": "\"I struggled with this one at first. It's easiest if you temporarily ignore the mathematical machinery of martingales and go back to the derivation that Black and Scholes provide in their 1973 paper. They basically show that when you construct a portfolio consisting of a long position in the option (the one being priced) and a short position on the replicating portfolio (consisting of shares of stock and cash in the risk-free bank account), then that portfolio will be entirely risk-less, and hence will earn the risk-free rate of interest. This makes intuitive sense if you think about it - every change in the value of the option is going to be countered by an opposite change in the replicating portfolio; by no arbitrage, that composite portfolio (the option + the replicating portfolio) must therefore earn the risk-free rate. The fact that the composite portfolio earns the risk-free rate provides the connection to martingale pricing. Recall that a martingale is basically* a stochastic process that has no drift, only volatility. Here, it's useful to think of the drift as being the \"\"risk premium\"\" or \"\"return\"\" of a particular asset (like the stock). What martingale pricing theory says is that to find the price of the option we (1) discount the value of the replicating portfolio by the cash bond (the numeraire asset), and (2) turn the stochastic process of the risky asset in the replicating portfolio into a martingale. This move intuitively makes sense because the Black-Scholes derivation shows that the replicating portfolio + the option must earn the risk-free rate, but if you divide the value of the Black-Scholes replicating portfolio by the numeraire asset, you're going to cancel out that risk-free rate -- e.g. have a Martingale. (I'm not a mathematician, so please correct me if I've mucked something up in my explanation). *I say basically because there are some technical conditions that need to be fulfilled, but that's generally true.\""
},
{
"docid": "70072",
"title": "",
"text": "\"Yes, the \"\"based on\"\" claim appears to be true – but the Nobel laureate did not personally design that specific investment portfolio ;-) It looks like the Gone Fishin' Portfolio is made up of a selection of low-fee stock and bond index funds, diversified by geography and market-capitalization, and regularly rebalanced. Excerpt from another article, dated 2003: The Gone Fishin’ Portfolio [circa 2003] Vanguard Total Stock Market Index (VTSMX) – 15% Vanguard Small-Cap Index (NAESX) – 15% Vanguard European Stock Index (VEURX) – 10% Vanguard Pacific Stock Index (VPACX) – 10% Vanguard Emerging Markets Index (VEIEX) – 10% Vanguard Short-term Bond Index (VFSTX) – 10% Vanguard High-Yield Corporates Fund (VWEHX) – 10% Vanguard Inflation-Protected Securities Fund (VIPSX) – 10% Vanguard REIT Index (VGSIX) – 5% Vanguard Precious Metals Fund (VGPMX) – 5% That does appear to me to be an example of a portfolio based on Modern Portfolio Theory (MPT), \"\"which tries to maximize portfolio expected return for a given amount of portfolio risk\"\" (per Wikipedia). MPT was introduced by Harry Markowitz, who did go on to share the 1990 Nobel Memorial Prize in Economic Sciences. (Note: That is the economics equivalent of the original Nobel Prize.) You'll find more information at NobelPrize.org - The Prize in Economics 1990 - Press Release. Finally, for what it's worth, it isn't rocket science to build a similar portfolio. While I don't want to knock the Gone Fishin' Portfolio (I like most of its parts), there are many similar portfolios out there based on the same concepts. For instance, I'm reminded of a similar (though simpler) portfolio called the Couch Potato Portfolio, made popular by MoneySense magazine up here in Canada. p.s. This other question about asset allocation is related and informative.\""
},
{
"docid": "513502",
"title": "",
"text": "\"Thank you for the in-depth, detailed explanation; it's refreshing to see a concise, non verbose explanation on reddit. I have a couple of questions, if that's alright. Firstly, concerning mezzanine investors. Based on my understanding from Google, these people invest after a venture has been partially financed (can I use venture like that in a financial context, or does it refer specifically to venture capital?) so they would receive a smaller return, yes? Is mezzanine investing particularly profitable? It sounds like you'd need a wide portfolio. Secondly, why is dilution so important further down the road? Is it to do with valuation? Finally, at what point would a company aim to meet an IPO? Is it case specific, or is there a general understanding of the \"\"best time\"\"? Thank you so much for answering my questions.\""
},
{
"docid": "206118",
"title": "",
"text": "Most of the “recommendations” are just total market allocations. Within domestic stocks, the performance rotates. Sometimes large cap outperform, sometimes small cap outperform. You can see the chart here (examine year by year): https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1428692400000&chddm=99646&chls=IntervalBasedLine&cmpto=NYSEARCA:VO;NYSEARCA:VB&cmptdms=0;0&q=NYSEARCA:VV&ntsp=0&ei=_sIqVbHYB4HDrgGA-oGoDA Conventional wisdom is to buy the entire market. If large cap currently make up 80% of the market, you would allocate 80% of domestic stocks to large cap. Same case with International Stocks (Developed). If Japan and UK make up the largest market internationally, then so be it. Similar case with domestic bonds, it is usually total bond market allocation in the beginning. Then there is the question of when you want to withdraw the money. If you are withdrawing in a couple years, you do not want to expose too much to currency risks, thus you would allocate less to international markets. If you are investing for retirement, you will get the total world market. Then there is the question of risk tolerance. Bonds are somewhat negatively correlated with Stocks. When stock dips by 5% in a month, bonds might go up by 2%. Under normal circumstances they both go upward. Bond/Stock allocation ratio is by age I’m sure you knew that already. Then there is the case of Modern portfolio theory. There will be slight adjustments to the ETF weights if it is found that adjusting them would give a smaller portfolio variance, while sacrificing small gains. You can try it yourself using Excel solver. There is a strategy called Sector Rotation. Google it and you will find examples of overweighting the winners periodically. It is difficult to time the rotation, but Healthcare has somehow consistently outperformed. Nonetheless, those “recommendations” you mentioned are likely to be market allocations again. The “Robo-advisors” list out every asset allocation in detail to make you feel overwhelmed and resort to using their service. In extreme cases, they can even break down the holdings to 2/3/4 digit Standard Industrial Classification codes, or break down the bond duration etc. Some “Robo-advisors” would suggest you as many ETF as possible to increase trade commissions (if it isn’t commission free). For example, suggesting you to buy VB, VO, VV instead a VTI."
},
{
"docid": "450949",
"title": "",
"text": "\"Standard deviation from Wikipedia : In statistics and probability theory, the standard deviation (represented by the Greek letter sigma, σ) shows how much variation or dispersion from the average exists.1 A low standard deviation indicates that the data points tend to be very close to the mean (also called expected value); a high standard deviation indicates that the data points are spread out over a large range of values. In the case of stock returns, a lower value would indicate less volatility while a higher value would mean more volatility, which could be interpreted as high much change does the stock's price go through over time. Mean would be interpreted as if all the figures had to be the same, what would they be? So if a stock returns 10% each year for 3 years in a row, then 10% would be the mean or average return. Now, it is worth noting that there are more than a few calculations that may be done to derive a mean. First, there is the straight forward sum and division by the number of elements idea. For example, if the returns by year were 0%, 10%, and 20% then one may take the sum of 30% and divide by 3 to get a simple mean of 10%. However, some people would rather look at a Compound Annual Growth Rate which in this case would mean multiplying the returns together so 1*(1+.1)*(1+.2)=1.1*1.2=1.32 or 32% since there is some compounding here. Now, instead of dividing a cubic root is taken to get approximately 9.7% average annual return that is a bit lower yet if you compound it over 3 years it will get up to 32% as 10% compounded over 3 years would be 33.1% as (1.1)^3=1.331. Sharpe Ratio from Investopedia: A ratio developed by Nobel laureate William F. Sharpe to measure risk-adjusted performance. The Sharpe ratio is calculated by subtracting the risk-free rate - such as that of the 10-year U.S. Treasury bond - from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns. Thus, this is a way to think about given the volatility how much better did the portfolio do than the 10 year bond. R-squared, Alpha and Beta: These are all around the idea of \"\"linear regression\"\" modelling. The idea is to take some standard like say the \"\"S & P 500\"\" in the case of US stocks and see how well does the portfolio follow this and what if one were to use a linear model are the multipliers and addition components to it. R-squared can be thought of it as a measure as to how good is the fit on a scale of 0 to 1. An S & P 500 index fund may well have an R-squared of 1.00 or 0.99 to the index as it will track it extremely closely while other investments may not follow that well at all. Part of modern portfolio theory would be to have asset classes that move independently of each other and thus would have a lower R-squared so that the movement of the index doesn't indicate how an investment will do. Now, as for alpha and beta, do you remember the formula for a line in slope-intercept form, where y is the portfolio's return and x is the index's return: y=mx+b In this situation m is beta which is the multiple of the return, and b is the alpha or how much additional return one gets without the multiple. Going back to an index fund example, m will be near 1 and b will be near 0 and there isn't anything being done and so the portfolio's return computed based on the index's return is simply y=x. Other mutual funds may try to have a high alpha as this is seen as the risk-free return as there isn't the ups and downs of the market here. Other mutual funds may go for a high beta so that there is volatility for investors to handle.\""
},
{
"docid": "282376",
"title": "",
"text": "First of all, I think I'll clear off some confusion in the topic. The Sterling Ratio is a very simple investment portfolio measurement that fits nicely to the topic of personal finance, although not so much to a foreign exchange trading system. The Sterling Ratio is mainly used in the context of hedge funds to measure its risk-reward ratio for long term investments. To do so, it has been adapted to the following in order to appear more like the Sharpe Ratio: I Suppose this is why you question the Average Largest Draw-down. I'll come back to that later. It's original definition, suggested by the company Deane Sterling Jones, is a little different and perhaps the one you should use if you want to measure your trading system's long term risk-reward ratio, which is as followed: Note: Average Annual Draw-down has to be negative on the above-mentioned formula. This one is very simple to calculate and the one to use if you want to measure any portfolio's long-term results, such an example of a 5 or 10 years period and calculate the average of each years largest drawdown. To answer @Dheer's comment, this specific measurement can also be used in personal investments portfolio, which is considered a topic related to personal finance. Back to the first one, which answers your question. It's used in most cases in investment strategies, such as hedging, not trading systems. By hedging I mean that in these cases long term investments are made in anti-correlated securities to obtain a diversified portfolio with a very stable growth. This one is calculated normally annually because you rely on the Annual Risk-Free Rate. Having that in mind I think you can guess that the Average Largest Drawdown is the average between the Largest/Maximum Drawdown from each security in the portfolio. And this doesn't make sense in a trading system. Example: If you have invested in 5 different securities where we calculated the Largest Draw-down for each, such as represented in the following array: MaxDD[5] = { 0.12, 0.23, 0.06, 0.36, 0.09 }, in this case your Average Largest Draw-down is the average(MaxDD) that equals 0.172 or 17,2% If your portfolio's annual return is 15% and the Risk-free Rate is 10%, your Sterling Ratio SR = (0.15 - 0.10)/0.172, which result to 0.29. The higher the rate better is the risk-reward ratio of your portfolio. I suggest in your case to only use the original Sterling Ratio to calculate your long-term risk-reward, in any other case I suggest looking at the Sharpe and Sortino ratios instead."
},
{
"docid": "197241",
"title": "",
"text": "Do developing country equities have a higher return and/or lower risk than emerging market equities? Generally in finance you get payed more for taking risk. Riskier stocks over the long run return more than less risky bonds, for instance. Developing market equity is expected to give less return over the long run as it is generally less risky than emerging market equity. One way to see that is the amount you pay for one rupee/lira/dollar/euro worth of company earnings is fewer rupees/lira and more dollars/euros. when measured in the emerging market's currency? This makes this question interesting. Risky emerging currencies like the rupee tend to devalue over time against less risky currencies euro/dollars/yen like where most international investment ends up, but the results are rather wild. Think how badly Brazil has done recently and how relatively well the rupee has been doing. This adds to the returns (roughly based on interest rates) of foreign stocks from the point of view of a emerging market investor on average but has really wild variations. Do you have data for this over a long timeframe (decades), ideally for multiple countries? Not really, unfortunately. Good data for emerging markets is a fairly new phenomenon and even where it does exist decades ago it would have been very hard to invest like we can now so it likely is not comparable. Does foreign equity pay more or less when measured in rupees (or other emerging market currency)? Probably less on average (theoretically and empirically) all things included though the evidence is not strong, but there is a massive amount of risk in a portfolio that is 85% in a single emerging market currency. Think about if you were a Brazilian and needed to retire now and 85% of your portfolio was in the Real. International goods like gas would be really expensive and your local currency portfolio would seem paltry right now. If you want to bet on emerging markets in the long run I would suggest that you at least spread the risk over many emerging markets and add a good chunk developed to the mix. As for investing goals, it's just to maximize my return in INR, or maximize my risk-adjusted return. That is up to you, but the goal I generally recommend is making sure you are comfortable in retirement. This usually involves looking for returns are high in the long run, but not having a ton of risk in a single currency or a single market. There are reasons to believe a little bias toward your homeland is good as fees tend to be lower on local investments and local investments tend to track closer to your retirement costs, but too much can be very dangerous even for countries with stronger currencies, say Greece."
},
{
"docid": "28425",
"title": "",
"text": "A strategy of rebalancing assumes that the business cycle will continue, that all bull and bear markets end eventually. Imagine that you maintained a 50% split between a US Treasury bond mutual fund (VUSTX) and an S&P 500 stock mutual fund (VFINX) beginning with a $10,000 investment in each on January 1, 2008, then on the first of each year you rebalanced your portfolio on the first of January (we can pretend the markets are open that day). The following table illustrates the values in each of those funds with the rebalancing transactions: This second table shows what that same money would look like without any rebalancing over those years: Obviously this is cherry-picking for the biggest drop we've recently experienced, but even if you skipped 2008 and 2009, the increase for a rebalanced portfolio from 2010-2017 is 85% verses 54% for the portfolio that is not being rebalanced in the same period. This is also a plenty conservative portfolio. You can see that a 100% stock portfolio dropped 40% in 2008, but the combined portfolio only dropped 18%. A 100% stock portfolio has gained 175% since 2009, compared to 105% for the balanced portfolio, but it's common to trade gains for safety as you get closer to retirement. You didn't ask about a 100% stock portfolio in your initial question. These results would be repeated in many other portfolio allocations because some asset classes outperform others one year, then underperform the next. You sell after the years it outperforms, then you buy after years that it underperforms."
},
{
"docid": "461435",
"title": "",
"text": "Well, a proper answer needs a few more details: 1) What's your marginal tax bracket? (A CD is just plain silly for someone in a high tax bracket and in a high tax state) 2) What's your state of residence? 3) Do you have a 401k to draw on for a house loan in case of badly timed volatility? 4) What does will the rest of our investment portfolio look like in case of a sudden rise in interest rates? Depending on the answers to those questions, the mix of investments could be anywhere from: Tell me more about bracket/state/other investment mix and I can suggest something."
},
{
"docid": "280763",
"title": "",
"text": "I’m going to answer this because: Accounting books only reflect the dollar value of inventories. Which means if you look at the balance sheet of McDonalds, you will not see how many bags of French fries are remaining at their storage facility, you will only see the total value at cost basis. Your requirement for noting the number of shares purchased is not part of the double entry accounting system. When you transfer $10000 from bank to broker, the entries would be: The bank’s name and the broker’s name will not appear on the balance sheet. When you purchase 50 shares at $40 per share, the accounting system does not care about the number of shares or the price. All it cares is the $2000 total cost and the commission of $10. You have two choices, either place $10 to an expense account, or incorporate it into the total cost (making it $2010). The entries for the second method would be: Now your balance sheet would reflect: What happens if the price increases from $40 per share to $50 per share tomorrow? Do nothing. Your balance sheet will show the cost of $2010 until the shares are sold or the accounting period ends. It will not show the market value of $2500. Instead, the Portfolio Tracker would show $2500. The most basic tracker is https://www.google.com/finance/portfolio . Later if you finally sell the shares at $50 per share with $10 commission: Again, the number of shares will not be reflected anywhere in the accounting system. Only the total proceeds from the sale matters."
},
{
"docid": "539539",
"title": "",
"text": "I disagree strongly with chasing expenses. Don't chase pennies until your are comfortable with an allocation that makes sense to you. Focus on building a diversified portfolio. Look at all of the funds, and put them in a portfolio in a tool like Google finance. Screen out funds with 1-3 stars. Search around on this site for questions about portfolios -- there's good advice there. If you're still not comfortable, look for a fee-based advisor."
},
{
"docid": "25029",
"title": "",
"text": "\"Technically, no. According to the dictionary, a folio is a single sheet, and a portfolio is a folder or case for keeping your folios. In finance, your collection of investments is called your portfolio, probably because your broker (before the digital age) would keep the records of what each of his clients held in separate portfolios. However, I have seen the word folio used as a short colloquialism for portfolio, and if you google \"\"investment folio\"\" you will see it used this way, mainly in trademarked names of financial firms.\""
},
{
"docid": "548673",
"title": "",
"text": "\"I have heard that investing more money into an investment which has gone down is generally a bad idea*. \"\"Throwing good money after bad\"\" so to speak. Is investing more money into a stock, you already have a stake in, which has gone up in price; a good idea? Other things being equal, deciding whether to buy more stocks or shares in a company you're already invested in should be made in the same way you would evaluate any investment decision and -- broadly speaking -- should not be influenced by whether an existing holding has gone up or down in value. For instance, given the current price of the stock, prevailing market conditions, and knowledge about the company, if you think there is a reasonable chance that the price will rise in the time-period you are interested in, then you may want to buy (more) stock. If you think there is a reasonable chance the price will fall, then you probably won't want to buy (more) stock. Note: it may be that the past performance of a company is factored into your decision to buy (e.g was a recent downturn merely a \"\"blip\"\", and long-term prospects remain good; or have recent steady rises exhausted the potential for growth for the time being). And while this past performance will have played a part in whether any existing holding went up or down in value, it should only be the past performance -- not whether or not you've gained or lost money -- that affects the new decision. For instance: let us suppose (for reasons that seemed valid at the time) you bought your original holding at £10/share, the price has dropped to £2/share, but you (now) believe both prices were/are \"\"wrong\"\" and that the \"\"true price\"\" should be around £5/share. If you feel there is a good chance of this being achieved then buying shares at £2, anticipating they'll rally to £5, may be sound. But you should be doing this because you think the price will rise to £5, and not because it will offset the loses in your original holding. (You may also want to take stock and evaluate why you thought it a good idea to buy at £10... if you were overly optimistic then, you should probably be asking yourself whether your current decisions (in this or any share) are \"\"sound\"\"). There is one area where an existing holding does come into play: as both jamesqf and Victor rightly point out, keeping a \"\"balanced\"\" portfolio -- without putting \"\"all your eggs in one basket\"\" -- is generally sound advice. So when considering the purchase of additional stock in a company you are already invested in, remember to look at the combined total (old and new) when evaluating how the (potential) purchase will affect your overall portfolio.\""
},
{
"docid": "79111",
"title": "",
"text": "In the short term the market is a popularity contest In the short run which in value investing time can extend even to many years, an equity is subject to the vicissitudes of the whims by every scale of panic and elation. This can be seen by examining the daily chart of any large cap equity in the US. Even such large holdings can be affected by any set of fear and greed in the market and in the subset of traders trading the equity. Quantitatively, this statement means that equities experience high variance in the short rurn. in the long term [the stock market] is a weighing machine In the long run which in value investing time can extend to even multiple decades, an equity is more or less subject only to the variance of the underlying value. This can be seen by examining the annual chart of even the smallest cap equities over decades. An equity over such time periods is almost exclusively affected by its changes in value. Quantitatively, this statement means that equities experience low variance in the long run."
},
{
"docid": "459419",
"title": "",
"text": "The loan you will just have to get by applying to a bunch of banks or hiring someone (a broker) to line up bank financing on your behalf for a point on the loan. FHA is for your first house that you live in and allows you to get 97.5% loan to cost financing. That isn't for investment properties. However, FHA loans do exist for multifamily properties under section 207/223F. Your corporations should be SPEs so they don't affect each other. In the end, its up to you if you think it makes sense for all the single family homes to be in one portfolio. May make it easier to refi if you put all the properties in a cross collateralized pool for the bank to lend against. There is also no requirement for how long a corporation has been in existence for a loan. The loan has a claim on the property so it's pretty safe. So long as you haven't committed fraud before, they won't care about credit history."
},
{
"docid": "87379",
"title": "",
"text": "\"@farnsy has provided a good answer. I'm only addressing my comment about the data quality. The portfolio optimization technique you employed is very sensitive to the inputs. In particular, it relies entirely on the mean and (co)variance assumptions (i.e. the first two moments) and the results could change drastically with very small amount of change in the inputs. To see that, you can make up some inputs for the solver you have, and try adjusting the inputs a little bit and see the results. Therefore if you decide to take this approach, data quality is very crucial. EDIT: What I meant by \"\"data quality\"\" I have no experience with this website but this should be easy to spot check. The answer is usually \"\"yes\"\" for liquid assets. Illiquid assets can often be priced at a level with no volume, and the bid-ask spread could be huge. Should I close my eyes on the fact that these cryptocurencies aren't perfectly priced in my currency and use another one (such as the dollar) You seem to have concern about data quality in at least the price quoted in your currency and are thinking about using data quoted in USD, but would it be any better? The law of one price tells us that there shouldn't be any discrepancy between prices in different currencies (otherwise there would be arbitrage). In addition, (when compared to traditional assets) cryptocurrency price data has a shorter data history, and with lower liquidity in the market. The short history means you have less data to infer the characteristics of the price behavior. Low liquidity means the volatility may well be underestimated. So we have an input-sensitive technique combined with not-so-perfect data. I wouldn't allocate my money solely based on the result of this exercise. EDIT: I have quite some reservation about doing portfolio optimization for cryptocurrency. Personally I'm not a fan of the technique as is. The optimization has an underlying assumption that returns follow a certain distribution, and correlation is fixed. I don't know if you can make such assumption for cryptocurrencies. From what I read about BTC for example, it seems to have a high risk exposure concerning Chinese monetary policy. For that kind of assets perhaps a fundamental analysis approach is a better one. Also if you would like to learn more about portfolio optimization, try quant.SE\""
},
{
"docid": "495473",
"title": "",
"text": "\"an account balance is your total in the account. The word balance means \"\"to be equal\"\". The use in finance stem from accounting. However you do not need to know why its called a balance to understand that a balance is equal to something. IE: your \"\"account balance\"\" is your total account weather its savings, electric bill, or investment portfolio. A position in your investment portfolio is what you are invested in. IE: If I went 100 shares long(I bought) Apple then I have a 100 share position in Apple. Your position is added to your account balance within your investment portfolio.\""
},
{
"docid": "164555",
"title": "",
"text": "In simple terms : Equity Loan is money borrowed from the bank to buy assets which can be houses , shares etc Protected equity loan is commonly used in shares where you have a portfolio of shares and you set the minimum value the portfolio can fall to . Anything less than there may result in a sell off of the share to protect you from further capital losses. This is a very brief explaination , which does not fully cover what Equity Loan && Protected Equity Loan really mean"
},
{
"docid": "220834",
"title": "",
"text": "Any time you are optimizing a portfolio, the right horizon to use for computing the statistics you will use for optimization (expected return, covariance, etc.) will be the same as your rebalance/trading frequency. If you expect your trading strategy to trade once a day, you should use daily data for optimization. Ditto for monthly or quarterly. If at all possible you should use statistics across the board that are computed at the same frequency as your trading. Regarding currency pricing, I see no reason you can't take the reported prices and convert them to whatever currency you want using that day's foriegn exchange rate. Foreign exchange rates are available for free at the Fed and elsewhere. Converting prices from one currency to another is not rocket science. Since you are contemplating putting actual money behind this, note that using data to compute statistics is less reliable for lower statistical moments. The mean (expected return) is the first moment, so using historical returns is extremely unreliable at predicting future returns. The variances and covariances are second moments, they are better. Skewness and kurtosis, yet better. The fact that the expected return can't reliably be estimated from past returns is the major downfall of the Markowitz method (resulting portfolios are often very crazy and will depend critically on the data period you use to set them up). There are approaches to fixing this, such as Black-Litterman's (1992) method, but they get complicated fast."
}
] |
4920 | Does financing a portfolio on margin affect the variance of a portfolio? | [
{
"docid": "228341",
"title": "",
"text": "\"Financing a portfolio with debt (on margin) leads to higher variance. That's the WHOLE POINT. Let's say it's 50-50. On the downside, with 100% equity, you can never lose more than your whole equity. But if you have assets of 100, of which 50% is equity and 50% is debt, your losses can be greater than 50%, which is to say more than the value of your equity. The reverse is true. You can make money at TWICE the rate if the market goes up. But \"\"you pay your money and you take your chances\"\" (Punch, 1846).\""
}
] | [
{
"docid": "578597",
"title": "",
"text": "You apparently assume that pouring money into a landlord's pocket is a bad thing. Not necessarily. Whether it makes sense to purchase your own home or to live in a rental property varies based on the market prices and rents of properties. In the long term, real estate prices closely follow inflation. However, in some areas it may be possible that real estate prices have increased by more than inflation in the past, say, 10 years. This may mean that some (stupid) people assume that real estate prices continue to appreciate at this rate in the future. The price of real estates when compared to rents may become unrealistically high so that the rental yield becomes low, and the only reasonable way of obtaining money from real estate investments is price appreciation continuing. No, it will not continue forever. Furthermore, an individual real estate is a very poorly diversified investment. And a very risky investment, too: a mold problem can destroy the entire value of your investment, if you invest in only one property. Real estates are commonly said to be less risky than stocks, but this applies only to large real estate portfolios when compared with large stock portfolios. It is easier to build a large stock portfolio with a small amount of money to invest when compared to building a large real estate portfolio. Thus, I would consider this: how much return are you going to get (by not needing to pay rent, but needing to pay some minor maintenance costs) when purchasing your own home? How much does the home cost? What is the annual return on the investment? Is it larger than smaller when compared to investing the same amount of money in the stock market? As I said, an individual house is a more risky investment than a well-diversified stock portfolio. Thus, if a well-diversified stock portfolio yields 8% annually, I would demand 10% return from an individual house before considering to move my money from stocks to a house."
},
{
"docid": "469599",
"title": "",
"text": "The Investopedia article you linked to is a good start. Its key takeaway is that you should always consider risk-adjusted return when evaluating your portfolio. In general, investors seeking a higher level of return must face a higher likelihood of taking a loss (risk). Different types of stocks (large vs small; international vs US; different industry sectors) have different levels of historical risk and return. Not to mention stocks vs bonds or other financial instruments... So, it's key to make an apples-to-apples comparison against an appropriate benchmark. A benchmark will tell you how your portfolio is doing versus a comparable portfolio. An index, such as the S&P 500, is often used, because it tells you how your portfolio is doing compared against simply passively investing in a diversified basket of securities. First, I would start with analyzing your portfolio to understand its asset allocation. You can use a tool like the Morningstar X-Ray to do this. You may be happy with the asset allocation, or this tool may inform you to adjust your portfolio to meet your long-term goals. The next step will be to choose a benchmark. Given that you are investing primarily in non-US securities, you may want to pick a globally diversified index such as the Dow Jones Global Index. Depending on the region and stock characteristics you are investing in, you may want to pick a more specialized index, such as the ones listed here in this WSJ list. With your benchmark set, you can then see how your portfolio's returns compare to the index over time. IRR and ROI are helpful metrics in general, especially for corporate finance, but the comparison-based approach gives you a better picture of your portfolio's performance. You can still calculate your personal IRR, and make sure to include factors such as tax treatment and investment expenses that may not be fully reflected by just looking at benchmarks. Also, you can calculate the metrics listed in the Investopedia article, such as the Sharpe ratio, to give you another view on the risk-adjusted return."
},
{
"docid": "25029",
"title": "",
"text": "\"Technically, no. According to the dictionary, a folio is a single sheet, and a portfolio is a folder or case for keeping your folios. In finance, your collection of investments is called your portfolio, probably because your broker (before the digital age) would keep the records of what each of his clients held in separate portfolios. However, I have seen the word folio used as a short colloquialism for portfolio, and if you google \"\"investment folio\"\" you will see it used this way, mainly in trademarked names of financial firms.\""
},
{
"docid": "131117",
"title": "",
"text": "Disclaimer: I don't work in the finance industry, and simply took a few classes in corporate finance and management during my undergrad. It depends on what type of investing you're talking about. If you're talking about building a portfolio of securities, then CAPM is the basis for most valuation models. Generally, CAPM will have you discount based on your best available risk-free rate (usually t-bills or some other fixed income source with a reliable backer). Even after your valuation, the basic theory of risk management for an investment portfolio is still to maintain a diverse basket of poorly correlated products. If you're talking about corporate finance where a firm is considering an investment such as a new project, then a determining a WACC and using it as a discount rate for your cash flow is a basic strategy. This is a basic strategy, but there are better ones depending on the specifics of the investment. This is where evaluating exposures is important. To hedge counterparty risk, you might discount by the estimated probability of non-payment or buy trade insurance. To hedge currency risk, you might buy forwards, options, or look into a money market hedge. To hedge political risks like repatriation or changes in tax laws or regulation you might buy political risk insurance. To hedge exposure to a particular commodity price, you can trade futures."
},
{
"docid": "280763",
"title": "",
"text": "I’m going to answer this because: Accounting books only reflect the dollar value of inventories. Which means if you look at the balance sheet of McDonalds, you will not see how many bags of French fries are remaining at their storage facility, you will only see the total value at cost basis. Your requirement for noting the number of shares purchased is not part of the double entry accounting system. When you transfer $10000 from bank to broker, the entries would be: The bank’s name and the broker’s name will not appear on the balance sheet. When you purchase 50 shares at $40 per share, the accounting system does not care about the number of shares or the price. All it cares is the $2000 total cost and the commission of $10. You have two choices, either place $10 to an expense account, or incorporate it into the total cost (making it $2010). The entries for the second method would be: Now your balance sheet would reflect: What happens if the price increases from $40 per share to $50 per share tomorrow? Do nothing. Your balance sheet will show the cost of $2010 until the shares are sold or the accounting period ends. It will not show the market value of $2500. Instead, the Portfolio Tracker would show $2500. The most basic tracker is https://www.google.com/finance/portfolio . Later if you finally sell the shares at $50 per share with $10 commission: Again, the number of shares will not be reflected anywhere in the accounting system. Only the total proceeds from the sale matters."
},
{
"docid": "593879",
"title": "",
"text": "\"A diversified portfolio (such as a 60% stocks / 40% bonds balanced fund) is much more predictable and reliable than an all-stocks portfolio, and the returns are perfectly adequate. The extra returns on 100% stocks vs. 60% are 1.2% per year (historically) according to https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations To get those average higher stock returns, you need to be thinking 20-30 years (even 10 years is too short-term). Over the 20-30 years, you must never panic and go to cash, or you will destroy the higher returns. You must never get discouraged and stop saving, or you will destroy the higher returns. You have to avoid the panic and discouragement despite the likelihood that some 10-year period in your 20-30 years the stock market will go nowhere. You also must never have an emergency or other reason to withdraw money early. If you look at \"\"dry periods\"\" in stocks, like 2000 to 2011, a 60/40 portfolio made significant money and stocks went nowhere. A diversified portfolio means that price volatility makes you money (due to rebalancing) while a 100% stocks portfolio means that price volatility is just a lot of stress with no benefit. It's somewhat possible, probably, to predict dry periods in stocks; if I remember the statistics, about 50% of the variability in the market price 10 years out can be explained by normalized market valuation (normalized = adjusted for business cycle and abnormal profit margins). Some funds such as http://hussmanfunds.com/ are completely based on this, though a lot of money managers consider it. With a balanced portfolio and rebalancing, though, you don't have to worry about it very much. In my view, the proper goal is not to beat the market, nor match the market, nor is it to earn the absolute highest possible returns. Instead, the goal is to have the highest chance of financing your non-financial goals (such as retirement, or buying a house). To maximize your chances of supporting your life goals with your financial decisions, predictability is more important than maximized returns. Your results are primarily determined by your savings rate - which realistic investment returns will never compensate for if it's too low. You can certainly make a 40-year projection in which 1.2% difference in returns makes a big difference. But you have to remember that a projection in which value steadily and predictably compounds is not the same as real life, where you could have emergency or emotional factors, where the market will move erratically and might have a big plunge at just the wrong time (end of the 40 years), and so on. If your plan \"\"relies\"\" on the extra 1.2% returns then it's not a reasonable plan anyhow, in my opinion, since you can't count on them. So why suffer the stress and extra risk created by an all-stocks portfolio?\""
},
{
"docid": "305758",
"title": "",
"text": "I use Yahoo Finance to plot my portfolio value over time. Yahoo Finance uses SigFig to link accounts (I've linked to Fidelity), which then allows you to see you exact portfolio and see a plot of its historical value. I'm not sure what other websites SigFig will allow you to sync with, but it is worth a try. Here is what the plot I have looks like, although this is slightly out of date, but still gives you an idea of what to expect."
},
{
"docid": "40424",
"title": "",
"text": "\"A \"\"Fund\"\" is generally speaking a collection of similar financial products, which are bundled into a single investment, so that you as an individual can buy a portion of the Fund rather than buying 50 portions of various products. e.g. a \"\"Bond Fund\"\" may be a collection of various corporate bonds that are bundled together. The performance of the Fund would be the aggregate of each individual item. Generally speaking Funds are like pre-packaged \"\"diversification\"\". Rather than take time (and fees) to buy 50 different stocks on the same stock index, you could buy an \"\"Index Fund\"\" which represents the values of all of those stocks. A \"\"Portfolio\"\" is your individual package of investments. ie: the 20k you have in bonds + the 5k you have in shares, + the 50k you have in \"\"Funds\"\" + the 100k rental property you own. You might split the definition further buy saying \"\"My 401(k) portfolio & my taxable portfolio & my real estate portfolio\"\"(etc.), to denote how those items are invested. The implication of \"\"Portfolio\"\" is that you have considered how all of your investments work together; ie: your 5k in stocks is not so risky, because it is only 5k out of your entire 185k portfolio, which includes some low risk bonds and funds. Another way of looking at it, is that a Fund is a special type of Portfolio. That is, a Fund is a portfolio, that someone will sell to someone else (see Daniel's answer below). For example: Imagine you had $5,000 invested in IBM shares, and also had $5,000 invested in Apple shares. Call this your portfolio. But you also want to sell your portfolio, so let's also call it a 'fund'. Then you sell half of your 'fund' to a friend. So your friend (let's call him Maurice) pays you $4,000, to invest in your 'Fund'. Maurice gives you $4k, and in return, you given him a note that says \"\"Maurice owns 40% of atp9's Fund\"\". The following month, IBM pays you $100 in dividends. But, Maurice owns 40% of those dividends. So you give him a cheque for $40 (some funds automatically reinvest dividends for their clients instead of paying them out immediately). Then you sell your Apple shares for $6,000 (a gain of $1,000 since you bought them). But Maurice owns 40% of that 6k, so you give him $2,400 (or perhaps, instead of giving him the money immediately, you reinvest it within the fund, and buy $6k of Microsoft shares). Why would you set up this Fund? Because Maurice will pay you a fee equal to, let's say, 1% of his total investment. Your job is now to invest the money in the Fund, in a way that aligns with what you told Maurice when he signed the contract. ie: maybe it's a tech fund, and you can only invest in big Tech companies. Maybe it's an Index fund, and your investment needs to exactly match a specific portion of the New York Stock Exchange. Maybe it's a bond fund, and you can only invest in corporate bonds. So to reiterate, a portfolio is a collection of investments (think of an artist's portfolio, being a collection of their work). Usually, people refer to their own 'portfolio', of personal investments. A fund is someone's portfolio, that other people can invest in. This allows an individual investor to give some of their decision making over to a Fund manager. In addition to relying on expertise of others, this allows the investor to save on transaction costs, because they can have a well-diversified portfolio (see what I did there?) while only buying into one or a few funds.\""
},
{
"docid": "138790",
"title": "",
"text": "Google Finance portfolios take into account splits and cash deposits/withdrawals."
},
{
"docid": "41625",
"title": "",
"text": "\"Oddly enough, in the USA, there are enough cost and tax savings between buy-and-hold of a static portfolio and buying into a fund that a few brokerages have sprung up around the concept, such as FolioFN, to make it easier for small investors to manage numerous small holdings via fractional shares and no commission window trades. A static buy-and-hold portfolio of stocks can be had for a few dollars per trade. Buying into a fund involves various annual and one time fees that are quoted as percentages of the investment. Even 1-2% can be a lot, especially if it is every year. Typically, a US mutual fund must send out a 1099 tax form to each investor, stating that investors share of the dividends and capital gains for each year. The true impact of this is not obvious until you get a tax bill for gains that you did not enjoy, which can happen when you buy into a fund late in the year that has realized capital gains. What fund investors sometimes fail to appreciate is that they are taxed both on their own holding period of fund shares and the fund's capital gains distributions determined by the fund's holding period of its investments. For example, if ABC tech fund bought Google stock several years ago for $100/share, and sold it for $500/share in the same year you bought into the ABC fund, then you will receive a \"\"capital gains distribution\"\" on your 1099 that will include some dollar amount, which is considered your share of that long-term profit for tax purposes. The amount is not customized for your holding period, capital gains are distributed pro-rata among all current fund shareholders as of the ex-distribution date. Morningstar tracks this as Potential Capital Gains Exposure and so there is a way to check this possibility before investing. Funds who have unsold losers in their portfolio are also affected by these same rules, have been called \"\"free rides\"\" because those funds, if they find some winners, will have losers that they can sell simultaneously with the winners to remain tax neutral. See \"\"On the Lookout for Tax Traps and Free Riders\"\", Morningstar, pdf In contrast, buying-and-holding a portfolio does not attract any capital gains taxes until the stocks in the portfolio are sold at a profit. A fund often is actively managed. That is, experts will alter the portfolio from time to time or advise the fund to buy or sell particular investments. Note however, that even the experts are required to tell you that \"\"past performance is no guarantee of future results.\"\"\""
},
{
"docid": "495473",
"title": "",
"text": "\"an account balance is your total in the account. The word balance means \"\"to be equal\"\". The use in finance stem from accounting. However you do not need to know why its called a balance to understand that a balance is equal to something. IE: your \"\"account balance\"\" is your total account weather its savings, electric bill, or investment portfolio. A position in your investment portfolio is what you are invested in. IE: If I went 100 shares long(I bought) Apple then I have a 100 share position in Apple. Your position is added to your account balance within your investment portfolio.\""
},
{
"docid": "113786",
"title": "",
"text": "\"There are two umbrellas in investing: active management and passive management. Passive management is based on the idea \"\"you can't beat the market.\"\" Passive investors believe in the efficient markets hypothesis: \"\"the market interprets all information about an asset, so price is equal to underlying value\"\". Another idea in this field is that there's a minimum risk associated with any given return. You can't increase your expected return without assuming more risk. To see it graphically: As expected return goes up, so does risk. If we stat with a portfolio of 100 bonds, then remove 30 bonds and add 30 stocks, we'll have a portfolio that's 70% bonds/30% stocks. Turns out that this makes expected return increase and lower risk because of diversification. Markowitz showed that you could reduce the overall portfolio risk by adding a riskier, but uncorrelated, asset! Basically, if your entire portfolio is US stocks, then you'll lose money whenever US stocks fall. But, if you have half US stocks, quarter US bonds, and quarter European stocks, then even if the US market tanks, half your portfolio will be unaffected (theoretically). Adding different types of uncorrelated assets can reduce risk and increase returns. Let's tie this all together. We should get a variety of stocks to reduce our risk, and we can't beat the market by security selection. Ideally, we ought to buy nearly every stock in the market so that So what's our solution? Why, the exchange traded fund (ETF) of course! An ETF is basically a bunch of stocks that trade as a single ticker symbol. For example, consider the SPDR S&P 500 (SPY). You can purchase a unit of \"\"SPY\"\" and it will move up/down proportional to the S&P 500. This gives us diversification among stocks, to prevent any significant downside while limiting our upside. How do we diversify across asset classes? Luckily, we can purchase ETF's for almost anything: Gold ETF's (commodities), US bond ETF's (domestic bonds), International stock ETFs, Intl. bonds ETFs, etc. So, we can buy ETF's to give us exposure to various asset classes, thus diversifying among asset classes and within each asset class. Determining what % of our portfolio to put in any given asset class is known as asset allocation and some people say up to 90% of portfolio returns can be determined by asset allocation. That pretty much sums up passive management. The idea is to buy ETFs across asset classes and just leave them. You can readjust your portfolio holdings periodically, but otherwise there is no rapid trading. Now the other umbrella is active management. The unifying idea is that you can generate superior returns by stock selection. Active investors reject the idea of efficient markets. A classic and time proven strategy is value investing. After the collapse of 07/08, bank stocks greatly fell, but all the other stocks fell with them. Some stocks worth $100 were selling for $50. Value investors quickly snapped up these stocks because they had a margin of safety. Even if the stock didn't go back to 100, it could go up to $80 or $90 eventually, and investors profit. The main ideas in value investing are: have a big margin of safety, look at a company's fundamentals (earnings, book value, etc), and see if it promises adequate return. Coke has tremendous earnings and it's a great company, but it's so large that you're never going to make 20% profits on it annually, because it just can't grow that fast. Another field of active investing is technical analysis. As opposed to the \"\"fundamental analysis\"\" of value investing, technical analysis involves looking at charts for patterns, and looking at stock history to determine future paths. Things like resistance points and trend lines also play a role. Technical analysts believe that stocks are just ticker symbols and that you can use guidelines to predict where they're headed. Another type of active investing is day trading. This basically involves buying and selling stocks every hour or every minute or just at a rapid pace. Day traders don't hold onto investments for very long, and are always trying to predict the market in the short term and take advantage of it. Many individual investors are also day traders. The other question is, how do you choose a strategy? The short answer is: pick whatever works for you. The long answer is: Day trading and technical analysis is a lot of luck. If there are consistent systems for trading , then people are keeping them secret, because there is no book that you can read and become a consistent trader. High frequency trading (HFT) is an area where people basically mint money, but it s more technology and less actual investing, and would not be categorized as day trading. Benjamin Graham once said: In the short run, the market is a voting machine but in the long run it is a weighing machine. Value investing will work because there's evidence for it throughout history, but you need a certain temperament for it and most people don't have that. Furthermore, it takes a lot of time to adequately study stocks, and people with day jobs can't devote that kind of time. So there you have it. This is my opinion and by no means definitive, but I hope you have a starting point to continue your study. I included the theory in the beginning because there are too many monkeys on CNBC and the news who just don't understand fundamental economics and finance, and there's no sense in applying a theory until you can understand why it works and when it doesn't.\""
},
{
"docid": "461435",
"title": "",
"text": "Well, a proper answer needs a few more details: 1) What's your marginal tax bracket? (A CD is just plain silly for someone in a high tax bracket and in a high tax state) 2) What's your state of residence? 3) Do you have a 401k to draw on for a house loan in case of badly timed volatility? 4) What does will the rest of our investment portfolio look like in case of a sudden rise in interest rates? Depending on the answers to those questions, the mix of investments could be anywhere from: Tell me more about bracket/state/other investment mix and I can suggest something."
},
{
"docid": "481401",
"title": "",
"text": "Personal finance is a fairly broad area. Which part might you be starting with? From the very basics, make sure you understand your current cashflow: are you bank balances going up or down? Next, make a budget. There's plenty of information to get started here, and it doesn't require a fancy piece of software. This will make sure you have a deeper understanding of where your money is going, and what is it being saved for. Is it just piling up, or is it allocated for specific purchases (i.e. that new car, house, college tuition, retirement, or even a vacation or a rainy day)? As part of the budgeting/cashflow exercise, make sure you have any outstanding debts covered. Are your credit card balances under control? Do you have other outstanding loans (education, auto, mortgage, other)? Normally, you'd address these in order from highest to lowest interest rate. Your budget should address any immediate mandatory expenses (rent, utilities, food) and long term existing debts. Then comes discretionary spending and savings (especially until you have a decent emergency fund). How much can you afford to spend on discretionary purchases? How much do you want to be able to spend? If the want is greater than the can, what steps can you take to rememdy that? With savings you can have a whole new set of planning to consider. How much do you leave in the bank? Do you keep some amount in a CD ladder? How much goes into retirement savings accounts (401k, Roth vs. Traditional IRA), college savings accounts, or a plain brokerage account? How do you balance your overall portfolio (there is a wealth of information on portfolio management)? What level of risk are you comfortable with? What level of risk should you consider, given your age and goals? How involved do you want to be with your portfolio, or do you want someone else to manage it? Silver Dragon's answer contains some good starting points for portfolio management and investing. Definitely spend some time learning the basics of investing and portfolio management even if you decide to solicit professional expertise; understanding what they're doing can help to determine earlier whether your interests are being treated as a priority."
},
{
"docid": "206118",
"title": "",
"text": "Most of the “recommendations” are just total market allocations. Within domestic stocks, the performance rotates. Sometimes large cap outperform, sometimes small cap outperform. You can see the chart here (examine year by year): https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1428692400000&chddm=99646&chls=IntervalBasedLine&cmpto=NYSEARCA:VO;NYSEARCA:VB&cmptdms=0;0&q=NYSEARCA:VV&ntsp=0&ei=_sIqVbHYB4HDrgGA-oGoDA Conventional wisdom is to buy the entire market. If large cap currently make up 80% of the market, you would allocate 80% of domestic stocks to large cap. Same case with International Stocks (Developed). If Japan and UK make up the largest market internationally, then so be it. Similar case with domestic bonds, it is usually total bond market allocation in the beginning. Then there is the question of when you want to withdraw the money. If you are withdrawing in a couple years, you do not want to expose too much to currency risks, thus you would allocate less to international markets. If you are investing for retirement, you will get the total world market. Then there is the question of risk tolerance. Bonds are somewhat negatively correlated with Stocks. When stock dips by 5% in a month, bonds might go up by 2%. Under normal circumstances they both go upward. Bond/Stock allocation ratio is by age I’m sure you knew that already. Then there is the case of Modern portfolio theory. There will be slight adjustments to the ETF weights if it is found that adjusting them would give a smaller portfolio variance, while sacrificing small gains. You can try it yourself using Excel solver. There is a strategy called Sector Rotation. Google it and you will find examples of overweighting the winners periodically. It is difficult to time the rotation, but Healthcare has somehow consistently outperformed. Nonetheless, those “recommendations” you mentioned are likely to be market allocations again. The “Robo-advisors” list out every asset allocation in detail to make you feel overwhelmed and resort to using their service. In extreme cases, they can even break down the holdings to 2/3/4 digit Standard Industrial Classification codes, or break down the bond duration etc. Some “Robo-advisors” would suggest you as many ETF as possible to increase trade commissions (if it isn’t commission free). For example, suggesting you to buy VB, VO, VV instead a VTI."
},
{
"docid": "164555",
"title": "",
"text": "In simple terms : Equity Loan is money borrowed from the bank to buy assets which can be houses , shares etc Protected equity loan is commonly used in shares where you have a portfolio of shares and you set the minimum value the portfolio can fall to . Anything less than there may result in a sell off of the share to protect you from further capital losses. This is a very brief explaination , which does not fully cover what Equity Loan && Protected Equity Loan really mean"
},
{
"docid": "596436",
"title": "",
"text": "I was wondering if someone could recommend a textbook I'm taking a course right now in foundations of finance and we're dealing with subjects such as utility functions, risk aversion, prudence, temperance, Arrow-Debreau securities, portfolio theory, and more I'm finding the textbook we're using (Intermediate Finance, Danthine & Donaldson) a bit hard to understand"
},
{
"docid": "517391",
"title": "",
"text": "Why would it not make more sense to invest in a handful of these heavyweights instead of also having to carry the weight of the other 450 (some of which are mostly just baggage)? First, a cap-weighted index fund will invest more heavily in larger cap companies, so the 'baggage' you speak of does take up a smaller percentage of the portfolio's value (not that cap always equates to better performance). There are also equal-weighted index funds where each company in the index is given equal weight in the portfolio. If you could accurately pick winners and losers, then of course you could beat index funds, but on average they've performed well enough that there's little incentive for the average investor to look elsewhere. A handful of stocks opens you up to more risk, an Enron in your handful would be pretty devastating if it comprised a large percentage of your portfolio. Additionally, since you pay a fee on each transaction ($5 in your example), you have to out-perform a low-fee index fund significantly, or be investing a very large amount of money to come out ahead. You get diversification and low-fees with an index fund."
},
{
"docid": "124762",
"title": "",
"text": "he general advice I get is that the younger you are the more higher risk investments you should include in your portfolio. I will be frank. This is a rule of thumb given out by many lay people and low-level financial advisors, but not by true experts in finance. It is little more than an old wive's tale and does not come from solid theory nor empirical work. Finance theory says the following: the riskiness of your portfolio should (inversely) correspond to your risk aversion. Period. It says nothing about your age. Some people become more risk-averse as they get older, but not everyone. In fact, for many people it probably makes sense to increase the riskiness of their portfolio as they age because the uncertainty about both wealth (social security, the value of your house, the value of your human capital) and costs (how many kids you will have, the rate of inflation, where you will live) go down as you age so your overall level of risk falls over time without a corresponding mechanical increase in risk aversion. In fact, if you start from the assumption that people's aversion is to not having enough money at retirement, you get the result that people should invest in relatively safe securities until the probability of not having enough to cover their minimum needs gets small, then they invest in highly risky securities with any money above this threshold. This latter result sounds reasonable in your case. At this point it appears unlikely that you will be unable to meet your minimum needs--I'm assuming here that you are able to appreciate the warnings about underfunded pensions in other answers and still feel comfortable. With any money above and beyond what you consider to be prudent preparation for retirement, you should hold a risky (but still fully diversified) portfolio. Don't reduce the risk of that portion of your portfolio as you age unless you find your personal risk aversion increasing."
}
] |
4920 | Does financing a portfolio on margin affect the variance of a portfolio? | [
{
"docid": "82294",
"title": "",
"text": "Variance of a single asset is defined as follows: σ2 = Σi(Xi - μ)2 where Xi's represent all the possible final market values of your asset and μ represents the mean of all such market values. The portfolio's variance is defined as σp2 = Σiwi2σi2 where, σp is the portfolio's variance, and wi stands for the weight of the ith asset. Now, if you include the borrowing in your portfolio, that would classify as technically shorting at the borrowing rate. Thus, this weight would (by the virtue of being negative) increase all other weights. Moreover, the variance of this is likely to be zero (assuming fixed borrowing rates). Thus, weights of risky assets rise and the investor's portfolio's variance will go up. Also see, CML at wikipedia."
}
] | [
{
"docid": "171420",
"title": "",
"text": "\"I struggled with this one at first. It's easiest if you temporarily ignore the mathematical machinery of martingales and go back to the derivation that Black and Scholes provide in their 1973 paper. They basically show that when you construct a portfolio consisting of a long position in the option (the one being priced) and a short position on the replicating portfolio (consisting of shares of stock and cash in the risk-free bank account), then that portfolio will be entirely risk-less, and hence will earn the risk-free rate of interest. This makes intuitive sense if you think about it - every change in the value of the option is going to be countered by an opposite change in the replicating portfolio; by no arbitrage, that composite portfolio (the option + the replicating portfolio) must therefore earn the risk-free rate. The fact that the composite portfolio earns the risk-free rate provides the connection to martingale pricing. Recall that a martingale is basically* a stochastic process that has no drift, only volatility. Here, it's useful to think of the drift as being the \"\"risk premium\"\" or \"\"return\"\" of a particular asset (like the stock). What martingale pricing theory says is that to find the price of the option we (1) discount the value of the replicating portfolio by the cash bond (the numeraire asset), and (2) turn the stochastic process of the risky asset in the replicating portfolio into a martingale. This move intuitively makes sense because the Black-Scholes derivation shows that the replicating portfolio + the option must earn the risk-free rate, but if you divide the value of the Black-Scholes replicating portfolio by the numeraire asset, you're going to cancel out that risk-free rate -- e.g. have a Martingale. (I'm not a mathematician, so please correct me if I've mucked something up in my explanation). *I say basically because there are some technical conditions that need to be fulfilled, but that's generally true.\""
},
{
"docid": "395481",
"title": "",
"text": "If you do not need it for a day or a week or something like that, an easy thing to do to get the beta of a security is to use wolframalpha. Here is a sample query: BETA for AAPL Calculating beta is an important metric, but it is not a be all end all, as there are ways to hedge the beta of your portfolio. So relying on beta is only useful if it is done in conjunction with something else. A high beta security just means that overall the security acts as the market does with some multiplier effect. For a secure portfolio you want beta as close to zero as possible for capital preservation while trying to find ways to exploit alpha."
},
{
"docid": "436904",
"title": "",
"text": "This is Ellie Lan, investment analyst at Betterment. To answer your question, American investors are drawn to use the S&P 500 (SPY) as a benchmark to measure the performance of Betterment portfolios, particularly because it’s familiar and it’s the index always reported in the news. However, going all in to invest in SPY is not a good investment strategy—and even using it to compare your own diversified investments is misleading. We outline some of the pitfalls of this approach in this article: Why the S&P 500 Is a Bad Benchmark. An “algo-advisor” service like Betterment is a preferable approach and provides a number of advantages over simply investing in ETFs (SPY or others like VOO or IVV) that track the S&P 500. So, why invest with Betterment rather than in the S&P 500? Let’s first look at the issue of diversification. SPY only exposes investors to stocks in the U.S. large cap market. This may feel acceptable because of home bias, which is the tendency to invest disproportionately in domestic equities relative to foreign equities, regardless of their home country. However, investing in one geography and one asset class is riskier than global diversification because inflation risk, exchange-rate risk, and interest-rate risk will likely affect all U.S. stocks to a similar degree in the event of a U.S. downturn. In contrast, a well-diversified portfolio invests in a balance between bonds and stocks, and the ratio of bonds to stocks is dependent upon the investment horizon as well as the individual's goals. By constructing a portfolio from stock and bond ETFs across the world, Betterment reduces your portfolio’s sensitivity to swings. And the diversification goes beyond mere asset class and geography. For example, Betterment’s basket of bond ETFs have varying durations (e.g., short-term Treasuries have an effective duration of less than six months vs. U.S. corporate bonds, which have an effective duration of just more than 8 years) and credit quality. The level of diversification further helps you manage risk. Dan Egan, Betterment’s Director of Behavioral Finance and Investing, examined the increase in returns by moving from a U.S.-only portfolio to a globally diversified portfolio. On a risk-adjusted basis, the Betterment portfolio has historically outperformed a simple DIY investor portfolio by as much as 1.8% per year, attributed solely to diversification. Now, let’s assume that the investor at hand (Investor A) is a sophisticated investor who understands the importance of diversification. Additionally, let’s assume that he understands the optimal allocation for his age, risk appetite, and investment horizon. Investor A will still benefit from investing with Betterment. Automating his portfolio management with Betterment helps to insulate Investor A from the ’behavior gap,’ or the tendency for investors to sacrifice returns due to bad timing. Studies show that individual investors lose, on average, anywhere between 1.2% to 4.3% due to the behavior gap, and this gap can be as high as 6.5% for the most active investors. Compared to the average investor, Betterment customers have a behavior gap that is 1.25% lower. How? Betterment has implemented smart design to discourage market timing and short-sighted decision making. For example, Betterment’s Tax Impact Preview feature allows users to view the tax hit of a withdrawal or allocation change before a decision is made. Currently, Betterment is the only automated investment service to offer this capability. This function allows you to see a detailed estimate of the expected gains or losses broken down by short- and long-term, making it possible for investors to make better decisions about whether short-term gains should be deferred to the long-term. Now, for the sake of comparison, let’s assume that we have an even more sophisticated investor (Investor B), who understands the pitfalls of the behavior gap and is somehow able to avoid it. Betterment is still a better tool for Investor B because it offers a suite of tax-efficient features, including tax loss harvesting, smarter cost-basis accounting, municipal bonds, smart dividend reinvesting, and more. Each of these strategies can be automatically deployed inside the portfolio—Investor B need not do a thing. Each of these strategies can boost returns by lowering tax exposure. To return to your initial question—why not simply invest in the S&P 500? Investing is a long-term proposition, particularly when saving for retirement or other goals with a time horizon of several decades. To be a successful long-term investor means employing the core principles of diversification, tax management, and behavior management. While the S&P might look like a ‘hot’ investment one year, there are always reversals of fortune. The goal with long-term passive investing—the kind of investing that Betterment offers—is to help you reach your investing goals as efficiently as possible. Lastly, Betterment offers best-in-industry advice about where to save and how much to save for no fee."
},
{
"docid": "513502",
"title": "",
"text": "\"Thank you for the in-depth, detailed explanation; it's refreshing to see a concise, non verbose explanation on reddit. I have a couple of questions, if that's alright. Firstly, concerning mezzanine investors. Based on my understanding from Google, these people invest after a venture has been partially financed (can I use venture like that in a financial context, or does it refer specifically to venture capital?) so they would receive a smaller return, yes? Is mezzanine investing particularly profitable? It sounds like you'd need a wide portfolio. Secondly, why is dilution so important further down the road? Is it to do with valuation? Finally, at what point would a company aim to meet an IPO? Is it case specific, or is there a general understanding of the \"\"best time\"\"? Thank you so much for answering my questions.\""
},
{
"docid": "463451",
"title": "",
"text": "10% is way high unless you really dedicate time to managing your investments. Commodities should be a part of the speculative/aggressive portion of your portfolio, and you should be prepared to lose most or all of that portion of your portfolio. Metals aren't unique enough to justify a specific allocation -- they tend to perform well in a bad economic climate, and should be evaluated periodically. The fallacy in the arguments of gold/silver advocates is that metals have some sort of intrinsic value that protects you. I'm 32, and remember when silver was $3/oz, so I don't know how valid that assertion is. (Also recall the 25% price drop when the CBOE changed silver's margin requirements.)"
},
{
"docid": "593879",
"title": "",
"text": "\"A diversified portfolio (such as a 60% stocks / 40% bonds balanced fund) is much more predictable and reliable than an all-stocks portfolio, and the returns are perfectly adequate. The extra returns on 100% stocks vs. 60% are 1.2% per year (historically) according to https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations To get those average higher stock returns, you need to be thinking 20-30 years (even 10 years is too short-term). Over the 20-30 years, you must never panic and go to cash, or you will destroy the higher returns. You must never get discouraged and stop saving, or you will destroy the higher returns. You have to avoid the panic and discouragement despite the likelihood that some 10-year period in your 20-30 years the stock market will go nowhere. You also must never have an emergency or other reason to withdraw money early. If you look at \"\"dry periods\"\" in stocks, like 2000 to 2011, a 60/40 portfolio made significant money and stocks went nowhere. A diversified portfolio means that price volatility makes you money (due to rebalancing) while a 100% stocks portfolio means that price volatility is just a lot of stress with no benefit. It's somewhat possible, probably, to predict dry periods in stocks; if I remember the statistics, about 50% of the variability in the market price 10 years out can be explained by normalized market valuation (normalized = adjusted for business cycle and abnormal profit margins). Some funds such as http://hussmanfunds.com/ are completely based on this, though a lot of money managers consider it. With a balanced portfolio and rebalancing, though, you don't have to worry about it very much. In my view, the proper goal is not to beat the market, nor match the market, nor is it to earn the absolute highest possible returns. Instead, the goal is to have the highest chance of financing your non-financial goals (such as retirement, or buying a house). To maximize your chances of supporting your life goals with your financial decisions, predictability is more important than maximized returns. Your results are primarily determined by your savings rate - which realistic investment returns will never compensate for if it's too low. You can certainly make a 40-year projection in which 1.2% difference in returns makes a big difference. But you have to remember that a projection in which value steadily and predictably compounds is not the same as real life, where you could have emergency or emotional factors, where the market will move erratically and might have a big plunge at just the wrong time (end of the 40 years), and so on. If your plan \"\"relies\"\" on the extra 1.2% returns then it's not a reasonable plan anyhow, in my opinion, since you can't count on them. So why suffer the stress and extra risk created by an all-stocks portfolio?\""
},
{
"docid": "308764",
"title": "",
"text": "Good question. There are plenty of investors who think they can simply rely on intuition, and although luck is always present it is not enough to construct a proper portfolio. First of all there are two basic types of portfolio management: Passive and Active. The majority of abnormal gains are made with active portfolio management although passive managers are less likely to suffer loses. Both types must be created with some kind of qualitative and quantitative research, but an active portfolio requires constant adjustments (Market Timing) to preserve the desired levels of risk and return. The topic is extremely broad and every manager has his own preferred methods of quantitative analysis. I will try to list here some most common, in my opinion, ways of stock-picking and portfolio management. Roy's Criterion: The best portfolio is that with the lowest probability that the return will be below a specified level. This is achieved by maximising the number of standard deviations between the return on the portfolio and minimum specified level: Max k = (Rp-Rl)/Sp Where (Rp) - return on portfolio, (Rl) - specified minimum return, (Sp) - standard deviation of portfolio return. Kataoka's Criterion: Maximise the minimum return (Rl) subject to constraint that the chance of a return below (Rl) is less than or equal to a specified value (a). Maximise (Rl) Subject to Prob (Rp < Rl) =< a For example, assume that the specified value is 20% - this will be met provided (Rl) is at least 0.84 standard deviations below (Rp). Therefore the best portfolio is the one that maximises (Rl) where: Rl = Rp-0.84*Sp Telser's Criterion: Maximise expected return subject to the constraint that the chance of a return below the specified minimum is less than or equal to some specified minimum (a) Maximise (Rp) subject to Prob (Rp < Rl) =< a Assuming same data as previously: Rl =< Rp-0.84*Sp and select the portfolio with highest expected return. Security Selection Now let's look at some methods of security selection. This is important when a manager believes some shares are mispriced. The required return on security 'i' is given by: Ri = Rf+(Rm-Rf)Bi Where (Rf) - is a risk-free rate, (Rm) - return on the market, (Bi) - security's beta. The difference between the required return and the actual return expected is known as the security's alpha (Ai). Ai = Rai - Ri, where (Rai) is actual return on security 'i'. Stock Picking One way of stock-picking is to select portfolios of securities with positive alphas. Alpha of a portfolio is simply the weighted average of the alphas of the securities in the portfolio. Ap = {(n*Ai) Where ({) is sigma (sorry for such weird typing, haven't figured out yet how to type proper-looking formulas), (n) - share of 'i'th security in portfolio. So another way of stock-picking is ranking securities by their excess return to beta (ERB): ERB = (Ri - Rf)/Bi The greater the ERB the more desirable the security and the greater the proportion it will make up of the portfolio. Thus portfolios produced by this technique will have greater proportion of some securities than the market portfolio and lower proportions of other securities. The number of securities depends on a cut-off rate (C*) for the ERB, defined so that all securities with ERB>C* are included in portfolio while if ERB The cut-off rate for a portfolio containing the first 'j' securities is given by (i'm inserting an image cut from Word below): Here comes the tricky part: Basically what you do is first calculate ERB for each security, then calculate Cj for each security mix (gradually adding new securities one by one and recalculating Cj each time). Then you select an optimum portfolio by comparing Cj of each mix to ERB's of it's securities. Let me show you a simple example: Say you have securities A,B,C and D you calculated ERB's: ERB(a)=6, ERB(b)=6.5, ERB(c)=5, ERB(d)=4 also you calculated: C(a)=4.1, C(ab)=4.8, C(abc)=4.9, C(abcd)=4.5. Then you check: ERB(a),ERB(b),ERB(c) are greater than C(a), but C(a) only contains security A so C(a) is not an optimum mix. ERB(a),ERB(b),ERB(c) are greater than C(ab), but C(ab) only contains securities A and B ERB(a),ERB(b),ERB(c) are greater than C(abc), and C(abc) contains A B and C so it is an optimum. ERB(d) is lower than C(abcd) so C(abcd) is not an optimum portfolio. Finally the most important part: Below is a formula to find the share of each security in the portfolio: Here you simply plug in already obtained values for each security to find it's proportion in your portfolio. I hope this somehow answers your question, however there is a lot more than this to consider if you decide to manage your portfolio yourself. Some of the most important areas are: Market Timing Hedging Stocks vs Bonds Good luck with your investments! And remember, the safest portfolio is the one that replicates the Global Market. The cut-off rate for a portfolio containing the first 'j' securities is given by (i'm inserting an image cut from Word below): Here comes the tricky part: Basically what you do is first calculate ERB for each security, then calculate Cj for each security mix (gradually adding new securities one by one and recalculating Cj each time). Then you select an optimum portfolio by comparing Cj of each mix to ERB's of it's securities. Let me show you a simple example: Say you have securities A,B,C and D you calculated ERB's: ERB(a)=6, ERB(b)=6.5, ERB(c)=5, ERB(d)=4 also you calculated: C(a)=4.1, C(ab)=4.8, C(abc)=4.9, C(abcd)=4.5. Then you check: ERB(a),ERB(b),ERB(c) are greater than C(a), but C(a) only contains security A so C(a) is not an optimum mix. ERB(a),ERB(b),ERB(c) are greater than C(ab), but C(ab) only contains securities A and B ERB(a),ERB(b),ERB(c) are greater than C(abc), and C(abc) contains A B and C so it is an optimum. ERB(d) is lower than C(abcd) so C(abcd) is not an optimum portfolio. Finally the most important part: Below is a formula to find the share of each security in the portfolio: Here you simply plug in already obtained values for each security to find it's proportion in your portfolio. I hope this somehow answers your question, however there is a lot more than this to consider if you decide to manage your portfolio yourself. Some of the most important areas are: Good luck with your investments! And remember, the safest portfolio is the one that replicates the Global Market."
},
{
"docid": "278718",
"title": "",
"text": "If you are looking for an advisor to just build a portfolio and then manage it, a robo-advisor can be beneficial (especially if the alternative is doing it your self, assuming that you are not well versed in the markets). The primary risk with one is that it does not build a portfolio that accurately represents your needs and risk tolerance. Some firms base the number of questions they ask you on sign up based not on what is needed to get a good profile, but on how many before people decide that it is too much hassle and bail. That usually results in poorer profiles. Also a live advisor may be better at really getting at your risk tolerance. Many of day our risk tolerance is one thing but in reality we are not so risk tolerant. Once the profile is built. The algorithms maintain your portfolio on a day by day basis. If rebalancing opportunities occur they take advantage of it. The primary benefit of a robo-advisor is lower fees or smaller minimum account balances. The downside is the lack of human interaction and financial advise outside of putting together a portfolio."
},
{
"docid": "166227",
"title": "",
"text": "First off, you should phone your broker and ask them just to be 100% certain. You will be exercised on the short option that was in the money. It is irrelevant that your portfolio does not contain AAPL stock. You will simply be charged the amount it costs to purchase the shares that you owe. I believe your broker would just take this money from your margin/cash account, they would not have let you put the position on if your account could not cover it. I can't see how you having a long dated 2017 call matters. You would still be long this call once assignment of the short call was settled."
},
{
"docid": "280763",
"title": "",
"text": "I’m going to answer this because: Accounting books only reflect the dollar value of inventories. Which means if you look at the balance sheet of McDonalds, you will not see how many bags of French fries are remaining at their storage facility, you will only see the total value at cost basis. Your requirement for noting the number of shares purchased is not part of the double entry accounting system. When you transfer $10000 from bank to broker, the entries would be: The bank’s name and the broker’s name will not appear on the balance sheet. When you purchase 50 shares at $40 per share, the accounting system does not care about the number of shares or the price. All it cares is the $2000 total cost and the commission of $10. You have two choices, either place $10 to an expense account, or incorporate it into the total cost (making it $2010). The entries for the second method would be: Now your balance sheet would reflect: What happens if the price increases from $40 per share to $50 per share tomorrow? Do nothing. Your balance sheet will show the cost of $2010 until the shares are sold or the accounting period ends. It will not show the market value of $2500. Instead, the Portfolio Tracker would show $2500. The most basic tracker is https://www.google.com/finance/portfolio . Later if you finally sell the shares at $50 per share with $10 commission: Again, the number of shares will not be reflected anywhere in the accounting system. Only the total proceeds from the sale matters."
},
{
"docid": "291830",
"title": "",
"text": "\"You're right, the asset allocation is one fundamental thing you want to get right in your portfolio. I agree 110%. If you really want to understand asset allocation, I suggest any and all of the following three books, all by the same author, William J. Bernstein. They are excellent – and yes I've read each. From a theory perspective, and being about asset allocation specifically, the Intelligent Asset Allocator is a good choice. Whereas, the next two books are more accessible and more complete, covering topics including investor psychology, history, financial products you can use to implement a strategy, etc. Got the time? Read them all. I finished reading his latest book, The Investor's Manifesto, two weeks ago. Here are some choice quotes from Chapter 3, \"\"The Nature of the Portfolio\"\", that address some of the points you've asked about. All emphasis below is mine. Page 74: The good news is [the asset allocation process] is not really that hard: The investor only makes two important decisions: Page 76: Rather, younger investors should own a higher portion of stocks because they have the ability to apply their regular savings to the markets at depressed prices. More precisely, young investors possess more \"\"human capital\"\" than financial capital; that is, their total future earnings dwarf their savings and investments. From a financial perspective, human capital looks like a bond whose coupons escalate with inflation. Page 78: The most important asset allocation decision is the overall stock/bind mix; start with age = bond allocation rule of thumb. [i.e. because the younger you are, you already have bond-like income from anticipated employment earnings; the older you get, the less bond-like income you have in your future, so buy more bonds in your portfolio.] He also mentions adjusting that with respect to one's risk tolerance. If you can't take the ups-and-downs of the market, adjust the stock portion down (up to 20% less); if you can stomach the risk without a problem, adjust the stock portion up (up to 20% more). Page 86: [in reference to a specific example where two assets that zig and zag are purchased in a 50/50 split and adjusted back to targets] This process, called \"\"rebalancing,\"\" provides the investor with an automatic buy-low/sell-high bias that over the long run usually – but not always – improves returns. Page 87: The essence of portfolio construction is the combination of asset classes that move in different directions at least some of the time. Finally, this gem on pages 88 and 89: Is there a way of scientifically picking the very best future allocation, which offers the maximum return for the minimum risk? No, but people still try. [... continues with description of Markowitz's \"\"mean-variance analysis\"\" technique...] It took investment professionals quite a while to realize that limitation of mean-variance analysis, and other \"\"black box\"\" techniques for allocating assets. I could go on quoting relevant pieces ... he even goes into much detail on constructing an asset allocation suitable for a large portfolio containing a variety of different stock asset classes, but I suggest you read the book :-)\""
},
{
"docid": "40424",
"title": "",
"text": "\"A \"\"Fund\"\" is generally speaking a collection of similar financial products, which are bundled into a single investment, so that you as an individual can buy a portion of the Fund rather than buying 50 portions of various products. e.g. a \"\"Bond Fund\"\" may be a collection of various corporate bonds that are bundled together. The performance of the Fund would be the aggregate of each individual item. Generally speaking Funds are like pre-packaged \"\"diversification\"\". Rather than take time (and fees) to buy 50 different stocks on the same stock index, you could buy an \"\"Index Fund\"\" which represents the values of all of those stocks. A \"\"Portfolio\"\" is your individual package of investments. ie: the 20k you have in bonds + the 5k you have in shares, + the 50k you have in \"\"Funds\"\" + the 100k rental property you own. You might split the definition further buy saying \"\"My 401(k) portfolio & my taxable portfolio & my real estate portfolio\"\"(etc.), to denote how those items are invested. The implication of \"\"Portfolio\"\" is that you have considered how all of your investments work together; ie: your 5k in stocks is not so risky, because it is only 5k out of your entire 185k portfolio, which includes some low risk bonds and funds. Another way of looking at it, is that a Fund is a special type of Portfolio. That is, a Fund is a portfolio, that someone will sell to someone else (see Daniel's answer below). For example: Imagine you had $5,000 invested in IBM shares, and also had $5,000 invested in Apple shares. Call this your portfolio. But you also want to sell your portfolio, so let's also call it a 'fund'. Then you sell half of your 'fund' to a friend. So your friend (let's call him Maurice) pays you $4,000, to invest in your 'Fund'. Maurice gives you $4k, and in return, you given him a note that says \"\"Maurice owns 40% of atp9's Fund\"\". The following month, IBM pays you $100 in dividends. But, Maurice owns 40% of those dividends. So you give him a cheque for $40 (some funds automatically reinvest dividends for their clients instead of paying them out immediately). Then you sell your Apple shares for $6,000 (a gain of $1,000 since you bought them). But Maurice owns 40% of that 6k, so you give him $2,400 (or perhaps, instead of giving him the money immediately, you reinvest it within the fund, and buy $6k of Microsoft shares). Why would you set up this Fund? Because Maurice will pay you a fee equal to, let's say, 1% of his total investment. Your job is now to invest the money in the Fund, in a way that aligns with what you told Maurice when he signed the contract. ie: maybe it's a tech fund, and you can only invest in big Tech companies. Maybe it's an Index fund, and your investment needs to exactly match a specific portion of the New York Stock Exchange. Maybe it's a bond fund, and you can only invest in corporate bonds. So to reiterate, a portfolio is a collection of investments (think of an artist's portfolio, being a collection of their work). Usually, people refer to their own 'portfolio', of personal investments. A fund is someone's portfolio, that other people can invest in. This allows an individual investor to give some of their decision making over to a Fund manager. In addition to relying on expertise of others, this allows the investor to save on transaction costs, because they can have a well-diversified portfolio (see what I did there?) while only buying into one or a few funds.\""
},
{
"docid": "138790",
"title": "",
"text": "Google Finance portfolios take into account splits and cash deposits/withdrawals."
},
{
"docid": "192652",
"title": "",
"text": "If you spent your whole life earning the same portfolio that amounts $20,000, the variance and volatility of watching your life savings drop to $10,000 overnight has a greater consequence than for someone who is young. This is why riskier portfolios aren't advised for older people closer to or within retirement age, the obvious complementary group being younger people who could lose more with lesser permanent consequence. Your high risk investment choices have nothing to do with your ability to manage other people's money, unless you fail to make a noteworthy investment return, then your high risk approach will be the death knell to your fund managing aspirations."
},
{
"docid": "164555",
"title": "",
"text": "In simple terms : Equity Loan is money borrowed from the bank to buy assets which can be houses , shares etc Protected equity loan is commonly used in shares where you have a portfolio of shares and you set the minimum value the portfolio can fall to . Anything less than there may result in a sell off of the share to protect you from further capital losses. This is a very brief explaination , which does not fully cover what Equity Loan && Protected Equity Loan really mean"
},
{
"docid": "7748",
"title": "",
"text": "\"For your first question, the general guidelines I've seen recommended are as follows: As to your second question, portfolio management is something you should familiarize yourself with. If you trust it to other people, don't be surprised when they make \"\"mistakes\"\". Remember, they get paid regardless of whether you make money. Consider how much any degree of risk will affect you. When starting out, your contributions make up most of the growth of your accounts; now is the time when you can most afford to take higher risk for higher payouts (still limiting your risk as much as possible, of course). A 10% loss on a portfolio of $50k can be replaced with a good year's contributions. Once your portfolio has grown to a much larger sum, it will be time to dial back the risk and focus on preserving your capital. When choosing investments, always treat your porfolio as a whole - including non-retirement assets (other investment accounts, savings, even your house). Don't put too many eggs from every account into the same basket, or you'll find that 30% of your porfolio is a single investment. Also consider that some investments have different tax consequences, and you can leverage the properties of each account to offset that.\""
},
{
"docid": "495473",
"title": "",
"text": "\"an account balance is your total in the account. The word balance means \"\"to be equal\"\". The use in finance stem from accounting. However you do not need to know why its called a balance to understand that a balance is equal to something. IE: your \"\"account balance\"\" is your total account weather its savings, electric bill, or investment portfolio. A position in your investment portfolio is what you are invested in. IE: If I went 100 shares long(I bought) Apple then I have a 100 share position in Apple. Your position is added to your account balance within your investment portfolio.\""
},
{
"docid": "480811",
"title": "",
"text": "Knowing the answer to this question is generally not as useful as it may seem. The stock's current price is the consensus of thousands of people who are looking at the many relevant factors (dividend rate, growth prospects, volatility, risk, industry, etc.) that determine its value. A stock's price is the market's valuation of the cash flows it entitles you to in the future. Researching a stock's value means trying to figure out if there is something relevant to these cash flows that the market doesn't know about or has misjudged. Pretty much anything we can list for you here that will affect a stock's price is something the market knows about, so it's not likely to help you know if something is mispriced. Therefore it's not useful to you. If you are not a true expert on how important the relevant factors are and how the market is reacting to them currently (and often even if you are), then you are essentially guessing. How likely are you to catch something that the thousands of other investors have missed and how likely are you to miss something that other investors have understood? I don't view gambling as inherently evil, but you should be clear and honest with yourself about what you are doing if you are trying to outperform the market. As people become knowledgeable about and experienced with finance, they try less and less to be the one to find an undervalued stock in their personal portfolio. Instead they seek to hold a fully diversified portfolio with low transactions costs and build wealth in the long term without wasting time and money on the guessing game. My suggestion for you is to transition as quickly as you can to behave like someone who knows a lot about finance."
},
{
"docid": "471668",
"title": "",
"text": "\"The S&P 500 index from 1974 to present certainly looks exponential to me (1974 is the earliest data Google has). If you read Jeremy Siegel's book there are 200 year stock graphs and the exponential nature of returns on stocks is even more evident. This graph only shows the index value and does not include the dividends that the index has been paying all these years. There is no doubt stocks have grown exponentially (aka have grown with compound interest) for the past several decades and compounded returns is definitely not a \"\"myth\"\". The CAGR on the S&P 500 index from 1974 to present has been 7.54%: (1,783 / 97.27) ^ (1 / 40) - 1 Here is another way to think about compounded investment growth: when you use cash flow from investments (dividends, capital gains) to purchase more investments with a positive growth rate, the investment portfolio will grow exponentially. If you own a $100 stock that pays 10% dividends per year and spend the dividends every year without reinvesting them, then the investment portfolio will still be worth $100 after 40 years. If the dividends are reinvested, the investment portfolio will be worth $4,525 after 40 years from the many years of exponential growth: 100*(1 + 10%)^40\""
}
] |
4942 | find stock composition of a publicly traded fund | [
{
"docid": "357685",
"title": "",
"text": "The big websites, Yahoo and the like, only give the 10 biggest positions of any fund. Download the annual report of the fund, go to page 18, you will find the positions on the 31st of December. However the actual positions could be different. The same applies to all funds. You need the annual report."
}
] | [
{
"docid": "407564",
"title": "",
"text": "> Walmart only concerns its self with the needs of shareholders. All publicly traded companies concern themselves with the needs of the shareholders, they are the people that own the company, thats how publicly traded companies work... Why do you get upvoted in /r/business for saying such silly things?"
},
{
"docid": "165998",
"title": "",
"text": "No of course not, they are privately held, have no relationship with publicly held financial institutions, do not mine and sell your information to publicly held corporations, do not play revolving door of board members, the board members own no stocks, fired and retired board members will never get on another board, they never lobby congress on behalf of extracting more money from the public, and never engage in insider trading for sure. Nothing at all to do with Wall Street."
},
{
"docid": "473798",
"title": "",
"text": "\"Going private does not mean that the company buys its own shares, only that the freely traded shares are bought up by a private entity (this can be management => \"\"management buy-out\"\" or it can be a private investor). The stock is then not traded publicly and the company gets rid of a whole slew of compliance obligations. In your stated example the company would essentially convert all its stock to treasury stock, which does not pay dividends and has no voting rights. From what I gather from some googling this would actually imply that the company would liquidate itself since it now has no capital anymore. Not sure on this though, an accountant might be able to help here...\""
},
{
"docid": "592484",
"title": "",
"text": "\"Such data is typically only available from paid sources due to the amount of research involved in determining the identity of delisted securities, surviving entities in merger scenarios, company name changes, symbol changes, listing venue changes, research of all capital events such as splits, and to ensure that the data coverage is complete. Many stocks that are delisted from a major exchange due to financial difficulties are still publicly tradeable companies with their continuing to trade as \"\"OTC\"\" shares. Some large companies even have periods where they traded for a period of their history as OTC. This happened to NYSE:NAV (Navistar) from Feb 2007 to July 2008, where they were delisted due to accounting statement inaccuracies and auditor difficulties. In the case of Macromedia, it was listed on NASDAQ 13 Dec 1993 and had its final day of trading on 2 Dec 2005. It had one stock split (2:1) with ex-date of 16 Oct 1995 and no dividends were ever paid. Other companies are harder to find. For example, the bankrupt General Motors (was NYSE:GM) became Motoros Liquidation Corp (OTC:MTLQQ) and traded that way for almost 21 months before finally delisting. In mergers, there are in two (or more) entities - one surviving entity and one (or more) delisted entity. In demergers/spinoffs there are two (or more) entities - one that continues the capital structure of the original company and the other newly formed spun-off entity. Just using the names of the companies is no indication of its history. For example, due to monopoly considerations, AT&T were forced to spinoff multiple companies in 1984 and effectively became 75% smaller. One of the companies they spunoff was Southwestern Bell Corporation, which became SBC Communications in 1995. In 2005 SBC took over its former parent company and immediately changed its name to AT&T. So now we have two AT&Ts - one that was delisted in 2005 and another that exists to this day. Disclosure: I am a co-owner of Norgate Data (Premium Data), a data vendor in this area.\""
},
{
"docid": "33157",
"title": "",
"text": "\"I am a tax lawyer and ALL the RESPONSES ABOVE are 1/2 Correct but also 1/2 Wrong and in tax law this means 100% WRONG (BECAUSE ANY PART INCORRECT UNDER TAX LAW will get YOU A HUGE PENALY and/or PRISON TIME by way of the IRS! So in ESSENCE ALL the above answers are WRONG! Let me enlighten you to the correct answer in 5 parts, as people that do not practice tax law may understand (but you still probably will not understand, if you are NOT a Lawyer). 1) All public companies are corporations (shown by Ltd.), 2) only Shareholders of Public companies (ie, traded on the NYSE stock market) are never liable for debts of a bankrupt company, due to the concept of limited liability. 2) now Banks may ask a sole proprietorship (who wants to incorp. for example) to give collateral, such as owners stocks/bonds or his/her house, but then of course the loanee can tell the Bank No Thanks and find a lender that may charge higher interest rates but lend money to his company with little to NO collateral. 3) Of course not all companies are publicly traded and these are called private companies. 4)\"\"limited liability\"\" has nothing to do directly with subsequent shareholders (the above answer is inaccurate!), it RELATES rather to INITIAL OWNERS INVESTMENT in their company, limiting the amount of owner loss if the company goes bankrupt. 5) Share Face-value is usually never related to this as shares are sold at market value in real life instances (above or below face-value), or the most money Investments Banks or owners can fetch for the shares they sell (not what the stock's face-value is set at upon issuance). Never forget, stocks are sold in our Capitalistic System to whomever pays the most, as it is that Buyer who gets to purchase the stock!\""
},
{
"docid": "48569",
"title": "",
"text": "Most businesses want to grow, and there are a variety of ways to raise the money needed to hire new employees and otherwise invest in the business to increase the rate of that growth. You as a stock holder should hope that management is choosing the least expensive option for growth. Some of the options are debt, selling equity to venture capitalists, or selling equity on the open market (going public). If they choose debt, they pay interest on that debt. If they choose to sell equity to venture capitalists, then your shares get diluted, but hopefully the growth makes up for some of that dilution. If they choose to go public, dilution is still a concern, but the terms are usually a little more favorable for the company selling because the market is so liquid. In the US, current regulations for publicly traded companies cost somewhere in the neighborhood of $1M/year, so that's the rule of thumb for considering whether going public makes sense when calculating the cost of fundraising, but as mentioned, regulations make it less advantageous for executives who choose to sell their shares after the company goes public. (They can't sell when good spot prices appear.) Going public is often considered the next step for a company that has grown past the initial venture funding phase, but if cash-flow is good, plenty of companies decide to just reinvest profits and skip the equity markets altogether."
},
{
"docid": "387188",
"title": "",
"text": "\"As an investor, I try to interpret the suits as an attempt to in some way influence the actions of the company - and not, usually, as a serious legal threat (or as likely to lead to serious legal consequences). My (shallow) understanding (as a non-lawyer) is that the requirements for a lawsuit to be filed as class-action suit are (relatively speaking) easier to meet when the company is publicly traded - the shareholders are more easily described as a \"\"class\"\". So it's more common for lawsuits that involve stock holders for large, publicly traded companies to be registered as class action suits. Class action suits include a requirement for some advertising and notifications (so all members of the class become aware of the suit, and can decide whether to participate). So, these types of suits can be started with various goals in mind, goals which might be achieved without the suit ever going anywhere - including to gain some publicity for a particular point of view, or to put pressure on the company to perform particular actions. In most cases, though, they are the result of misunderstandings between the various parties with an interest in how the company is run - shareholders, directors and/or executive officers. For most cases, the result of the suit is a more in depth sharing of information between the parties involved, and possibly a change in the plans/actions of the company; the legal technicalities differ from case to case, and, often, the legal consequences are minor.\""
},
{
"docid": "599651",
"title": "",
"text": "Points are index based. Simple take the total value of the stocks that compose the index, and set it equal to an arbitrary number. (Say 100 or 1000) This becomes your base. Each day, you recalculate the value of the index basket, and relate it to the base. So if our index on day 0 was 100, and the value of the basket went up 1%, the new index would be 101 points. For the example given, the percentage change would be (133.32 -133.68 ) / 133.68 * 100% = -0.27% Keep in mind that an index basket will change in composition over time. Assets are added and removed as the composition of the market changes. For example, the TSX index no longer includes Nortel, a stock that at one time made up a significant portion of the index. I'm not sure if a percentage drop in an index is really a meaningful statistic because of that. It is however, a good way of looking at an individual instrument."
},
{
"docid": "87331",
"title": "",
"text": "As far as I know, the AMT implications are the same for a privately held company as for one that is publicly traded. When I was given my ISO package, it came with a big package of articles on AMT to encourage me to exercise as close to the strike price as possible. Remember that the further the actual price at the time of purchase is from the strike price, the more the likely liability for AMT. That is an argument for buying early. Your company should have a common metric for determining the price of the stock that is vetted by outside sources and stable from year to year that is used in a similar way to the publicly traded value when determining AMT liability. During acquisitions stock options often, from what I know of my industry, at least, become options in the new company's stock. This won't always happen, but its possible that your options will simply translate. This can be valuable, because the price of stock during acquisition may triple or quadruple (unless the acquisition is helping out a very troubled company). As long as you are confident that the company will one day be acquired rather than fold and you are able to hold the stock until that one day comes, or you'll be able to sell it back at a likely gain, other than tying up the money I don't see much of a downside to investing now."
},
{
"docid": "328754",
"title": "",
"text": "\"Switching to only 401k or only SPY? Both bad ideas. Read on. You need multiple savings vehicles. 401k, Roth IRA, emergency fund. You can/should add others for long term savings goals and wealth building. Though you could combine the non-tax-advantaged accounts and keep track of your minimum (representing the emergency fund). SPY is ETF version of SPDR index mutual fund tracking the S&P 500 index. Index funds buy weighted amounts of members of their index by an algorithm to ensure that the total holdings of the fund model the index that they track. They use market capitalization and share prices and other factors to automatically rebalance. Individual investors do not directly affect the composition or makeup of the S&P500, at least not visibly. Technically, very large trades might have a visible effect on the index makeup, but I suspect the size of the trade would be in the billions. An Electronically Traded Fund is sold by the share and represents one equal share of the underlying fund, as divided equally amongst all the shareholders. You put dollars into a fund, you buy shares of an ETF. In the case of an index ETF, it allows you to \"\"buy\"\" a fractional share of the underlying index such as the S&P 500. For SPY, 10 SPY shares represent one S&P basket. Targeted retirement plan funds combine asset allocation into one fund. They are a one stop shop for a diversified allocation. Beware the fees though. Always beware the fees. Fidelity offers a huge assortment of plans. You should look into what is available for you after you decide how you will proceed. More later. SPY is a ETF, think of it as a share of stock. You can go to a bank, broker, or what have you and set up an account and buy shares of it. Then you have x shares of SPY which is the ETF version of SPDR which is an index mutual fund. If the company is matching the first 10% of your income on a 1:1 basis, that would be the best I've heard of in the past two decades, even with the 10 year vesting requirement. If this is them matching 1 dollar in 10 that you contribute to 401k, it may be the worst I've ever heard of, especially with 10 year vesting. Typical is 3-5% match, 3-5 year vesting. Bottom line, that match is free money. And the tax advantage should not be ignored, even if there is no match. Research: I applaud your interest. The investments you make now will have the greatest impact on your retirement. Here's a scenario: If you can figure out how to live on 50% of your take home pay (100k * 0.90 * 0.60 * 0.5 / 12) (salary with first 10% in 401k at roughly 60% after taxes, social security, medicare, etc. halved and divided by 12 for a monthly amount), you'll have 2250 a month to live on. Since you're 28 and single, it's far easier for you to do than someone who is 50 and married with kids. That leaves you with 2250 a month to max out 401k and Roth and invest the rest in wealth building. After four or five years the amount your investments are earning will begin to be noticeable. After ten years or so, they will eclipse your contributions. At that point you could theoretically live of the income. This works with any percentage rate, and the higher your savings rate is, the lower your cost of living amount is, and the faster you'll hit an investment income rate that matches your cost of living amount. At least that's the early retirement concept. The key, as far as I can tell, is living frugally, identifying and negating wasteful spending, and getting the savings rate high without forcing yourself into cheap behavior. Reading financial independence blog posts tells me that once they learn to live frugally, they enjoy it. It's a lot of work, and planning, but if you want to be financially independent, you are definitely in a good position to consider it. Other notes:\""
},
{
"docid": "276983",
"title": "",
"text": "You haven't looked very far if you didn't find index tracking exchange-traded funds (ETFs) on the Toronto Stock Exchange. There are at least a half dozen major exchange-traded fund families that I'm aware of, including Canadian-listed offerings from some of the larger ETF providers from the U.S. The Toronto Stock Exchange (TSX) maintains a list of ETF providers that have products listed on the TSX."
},
{
"docid": "82113",
"title": "",
"text": "Sure they can (most publicly traded banks at least) - and they do it a lot. Many banks have a proprietary trading desk, or Prop desk, where traders are buying and selling shares of publicly traded companies on behalf of the bank, with the bank's own money. This is as opposed to regular trading desks where the banks trade on behalf of their customers."
},
{
"docid": "32198",
"title": "",
"text": "Except they aren't a publicly traded company so their stock price is based on investment valuation. Uber's value may or may not increase due to his resignation, but this sub is so full of armchair experts getting upvoted for half-truths that sound logical."
},
{
"docid": "387141",
"title": "",
"text": "Well, Taking a short position directly in real estate is impossible because it's not a fungible asset, so the only way to do it is to trade in its derivatives - Investment Fund Stock, indexes and commodities correlated to the real estate market (for example, materials related to construction). It's hard to find those because real estate funds usually don't issue securities and rely on investment made directly with them. Another factor should be that those who actually do have issued securities aren't usually popular enough for dealers and Market Makers to invest in it, who make it possible to take a short position in exchange for some spread. So what you can do is, you can go through all the existing real estate funds and find out if any of them has a broker that let's you short it, in other words which one of them has securities in the financial market you can buy or sell. One other option is looking for real estate/property derivatives, like this particular example. Personally, I would try to computationally find other securities that may in some way correlate with the real estate market, even if they look a bit far fetched to be related like commodities and stock from companies in construction and real estate management, etc. and trade those because these have in most of the cases more liquidity. Hope this answers your question!"
},
{
"docid": "367960",
"title": "",
"text": "\"I think you are asking about actively managed funds vs. indexes and possibly also vs. diversified funds like target date funds. This is also related to the question of mutual fund vs. ETF. First, a fund can be either actively managed or it can attempt to track an index. An actively managed fund has a fund manager who tries to find the best stocks to invest in within some constraints, like \"\"this fund invests in large cap US companies\"\". An index fund tries to match as closely as possible the performance of an index like the S&P 500. A fund may also try to offer a portfolio that is suitable for someone to put their entire account into. For example, a target date fund is a fund that may invest in a mix of stocks, bonds and foreign stock in a proportion that would be appropriate to someone expecting to retire in a certain year. These are not what people tend to think of as the canonical examples of mutual funds, even though they share the same legal structure and investment mechanisms. Secondly, a fund can either be a traditional mutual fund or it can be an exchange traded fund (ETF). To invest in a traditional mutual fund, you send money to the fund, and they give you a number of shares equal to what that money would have bought of the net asset value (NAV) of the fund at the end of trading on the day they receive your deposit, possibly minus a sales charge. To invest in an ETF, you buy shares of the ETF on the stock market like any other stock. Under the covers, an ETF does have something similar to the mechanism of depositing money to get shares, but only big traders can use that, and it's not used for investing, but only for people who are making a market in the stock (if lots of people are buying VTI, Big Dealer Co will get 100,000 shares from Vanguard so that they can sell them on the market the next day). Historically and traditionally, ETFs are associated with an indexing strategy, while if not specifically mentioned, people assume that traditional mutual funds are actively managed. Many ETFs, notably all the Vanguard ETFs, are actually just a different way to hold the same underlying fund. The best way to understand this is to read the prospectus for a mutual fund and an ETF. It's all there in reasonably plain English.\""
},
{
"docid": "502091",
"title": "",
"text": "It is a publicly traded company. My interest is more in their motivation for instituting the new policy. *I* expect the stock to go up, I'm not being told that by someone else. Thanks for looking out though :)"
},
{
"docid": "25817",
"title": "",
"text": "\"They do but you're missing some calculations needed to gain an understanding. Intro To Stock Index Weighting Methods notes in part: Market cap is the most common weighting method used by an index. Market cap or market capitalization is the standard way to measure the size of the company. You might have heard of large, mid, or small cap stocks? Large cap stocks carry a higher weighting in this index. And most of the major indices, like the S&P 500, use the market cap weighting method. Stocks are weighted by the proportion of their market cap to the total market cap of all the stocks in the index. As a stock’s price and market cap rises, it gains a bigger weighting in the index. In turn the opposite, lower stock price and market cap, pushes its weighting down in the index. Pros Proponents argue that large companies have a bigger effect on the economy and are more widely owned. So they should have a bigger representation when measuring the performance of the market. Which is true. Cons It doesn’t make sense as an investment strategy. According to a market cap weighted index, investors would buy more of a stock as its price rises and sell the stock as the price falls. This is the exact opposite of the buy low, sell high mentality investors should use. Eventually, you would have more money in overpriced stocks and less in underpriced stocks. Yet most index funds follow this weighting method. Thus, there was likely a point in time where the S & P 500's initial sum was equated to a specific value though this is the part you may be missing here. Also, how do you handle when constituents change over time? For example, suppose in the S & P 500 that a $100,000,000 company is taken out and replaced with a $10,000,000,000 company that shouldn't suddenly make the index jump by a bunch of points because the underlying security was swapped or would you be cool with there being jumps when companies change or shares outstanding are rebalanced? Consider carefully how you answer that question. In terms of histories, Dow Jones Industrial Average and S & P 500 Index would be covered on Wikipedia where from the latter link: The \"\"Composite Index\"\",[13] as the S&P 500 was first called when it introduced its first stock index in 1923, began tracking a small number of stocks. Three years later in 1926, the Composite Index expanded to 90 stocks and then in 1957 it expanded to its current 500.[13] Standard & Poor's, a company that doles out financial information and analysis, was founded in 1860 by Henry Varnum Poor. In 1941 Poor's Publishing (Henry Varnum Poor's original company) merged with Standard Statistics (founded in 1906 as the Standard Statistics Bureau) and therein assumed the name Standard and Poor's Corporation. The S&P 500 index in its present form began on March 4, 1957. Technology has allowed the index to be calculated and disseminated in real time. The S&P 500 is widely used as a measure of the general level of stock prices, as it includes both growth stocks and value stocks. In September 1962, Ultronic Systems Corp. entered into an agreement with Standard and Poor's. Under the terms of this agreement, Ultronics computed the S&P 500 Stock Composite Index, the 425 Stock Industrial Index, the 50 Stock Utility Index, and the 25 Stock Rail Index. Throughout the market day these statistics were furnished to Standard & Poor's. In addition, Ultronics also computed and reported the 94 S&P sub-indexes.[14] There are also articles like Business Insider that have this graphic that may be interesting: S & P changes over the years The makeup of the S&P 500 is constantly changing notes in part: \"\"In most years 25 to 30 stocks in the S&P 500 are replaced,\"\" said David Blitzer, S&P's Chairman of the Index Committee. And while there are strict guidelines for what companies are added, the final decision and timing of that decision depends on what's going through the heads of a handful of people employed by Dow Jones.\""
},
{
"docid": "344372",
"title": "",
"text": "I like C. Ross and MrChrister's advice to not be heavily weighted in one stock over the long run, especially the stock of your employer. I'll add this: One thing you really ought to find out – and this is where your tax advisor is likely able to help – is whether your company's stock options plan use qualified incentive stock options (ISO) or non-qualified stock options (NQO or NSO). See Wikipedia - Incentive stock option for details. From my understanding, only if your plan is a qualified (or statutory) ISO and you hold the shares for at least 1 year of the date of exercise and 2 years from the date of the option grant could your gain be considered a long-term capital gain. As opposed to: if your options are non-qualified, then your gain may be considered ordinary income no matter how long you wait – in which case there's no tax benefit to waiting to cash out. In terms of hedging the risk if you do choose to hold long, here are some ideas: Sell just enough stock at exercise (i.e. taking some tax hit up front) to at least recover your principal, so your original money is no longer at risk, or If your company has publicly listed options – which is unlikely, if they are very small – then you could purchase put options to insure against losses in your stock. Try a symbol lookup at the CBOE. Note: Hedging with put options is an advanced strategy and I suggest you learn more and seek advice from a pro if you want to consider this route. You'll also need to find out if there are restrictions on trading your employer's public stock or options – many companies have restrictions or black-out periods on employee trading, especially for people who have inside knowledge."
},
{
"docid": "38655",
"title": "",
"text": "\"You will have to check SEC forms to know this in full. A publicly-traded company will have an amount of publicly tradable shares which can be easily found on their financial reports. But. that is not the only type of equity-like financial instrument that such a company can issue. A previous reply mentions \"\"follow-on\"\" public offering. However, a company may initiate a private equity offering without disclosing ahead of time, sometimes with warrants, or long-lasting options to purchase (new) stock.\""
}
] |
4946 | Something looks off about Mitsubishi financial data | [
{
"docid": "121690",
"title": "",
"text": "All but certainly, Mitsubishi is selling so cheaply because of the fuel scandal. It has been providing false fuel efficiency data for decades. As a result, it may face significant penalties and may have lost the trust of consumers, who will now be less likely to purchase a Mitsubishi vehicle. Nissan is taking a controlling stake in Mitsubishi. This is important news for the company, too. The stock price reflects the consensus of investors on how significant these issues are. It's quite possible the stock will recover over the next few years, in which case it's a bargain at the moment. On the other hand, it's quite possible the company will never recover."
}
] | [
{
"docid": "426607",
"title": "",
"text": "\">My article on businessweek.com was headlined, “American Families Are Poorer Than in 1989.” (It shouldn’t have said “are,” by the way, because the data only went through 2010.) The guy deserves some kudos for stating the above (the rare bare honestly about the \"\"are\"\" being inappropriate\\*). And really he deserves kudos for the entire clarifying article (even if the conclusion is a vague \"\"we don't know\"\" -- which is also a rarely honest statement. And of course the term \"\"richer\"\" (or \"\"wealthier\"\") is a relative one, subject to a variety of interpretations. Back in 1962 someone may have *felt* extremely wealthy if they owned the only \"\"air conditioner\"\" on the block; but are they then more wealthy or less wealthy now when they have central air... but so does everyone else. Or per example, the \"\"jokes\"\" in the Wall Street 2 sequel -- one of the things that made the Gordon Gekko of the original movie \"\"wealthy\"\" was his cell phone, because it was an expensive and rare luxury -- but today of course his original cell phone is a useless and clunky \"\"brick\"\"; and meanwhile just about everyone else (including the \"\"riff raff\"\") owns smart-phones with internet access (something the old Gordon Gekko couldn't have even *dreamed* of owning, no matter how much money he had). So \"\"wealth\"\" is a difficult thing to nail down. --- \\* Soapbox: It's a rare exception to the one thing that never ceases to piss me off -- when people make \"\"expert\"\" statements in the present tense, based on data that (of necessity) is not, indeed cannot be strictly \"\"current\"\". (For example, when some loudmouth \"\"scientist\"\" states that the Earth IS warming... when of course that cannot be known as the statement is concerning a \"\"trend\"\" and is entirely based on NON-real-time aggregates; the best an *honest* scientist would say is that \"\"based on the past x years of data we know the Earth *has been* warming\"\"... not \"\"is\"\"; the current status is never certain since the previous trend may have already \"\"peaked\"\" -- absent a real-time data stream, one cannot know.)\""
},
{
"docid": "339106",
"title": "",
"text": "You aren't getting a straight answer because nobody knows why those regulations are the way they are. Everyone has to give this information to open the brokerage account or for any access to the US financial system whether it is with a bank account, or a brokerage account. Everyone also typically gives this information to their employer to be employed at all for IRS regulations. The SEC isn't going to do anything with the data, unless you do something illegal related to the stock market, then they will know who you are. The IRS isn't going to do anything with the data, unless you are noncompliant in paying taxes, then they will know who you are."
},
{
"docid": "471885",
"title": "",
"text": "I'm personally not sold on Facebook. It collects vast amounts of data, sure, but to what purpose? I am probably missing something. I presume they intend to monetize this data for marketing activities, but is that really *that* valuable? Large budget marketing teams already have more data about their customers than they can effectively analyze. Yet, they **still** miss with products. More data is not going to make up for the quality of personnel."
},
{
"docid": "290434",
"title": "",
"text": "\"If by \"\"investment\"\" you mean something that pays you money that you can spend, then no. But if you view \"\"investment\"\" as something that improves your balance sheet / net worth by reducing debt and reducing how much money you're throwing away in interest each month, then the answer is definitely yes, paying down debt is a good investment to improve your overall financial condition. However, your home mortgage might not be the first place to start looking for pay-downs to save money. Credit cards typically have much higher interest rates than mortgages, so you would save more money by working on eliminating your credit card debt first. I believe Suze Orman said something like: If you found an investment that paid you 25% interest, would you take it? Of course you would! Paying down high interest debt reduces the amount of interest you have to pay next month. Your same amount of income will be able to go farther, do more because you'll be paying less in interest. Pay off your credit card debt first (and keep it off), then pay down your mortgage. A few hundred dollars in extra principal paid in the first few years of a 30 year mortgage can remove years of interest payments from the mortgage term. Whether you plan to keep your home for decades or you plan to move in 10 years, having less debt puts you in a stronger financial position.\""
},
{
"docid": "517313",
"title": "",
"text": "\"Place your savings into safe interest-bearing accounts. Take out the loans. Keep constant track of your net worth. Having 100,000$ and 80,000$ in interest free debt is better than having 20,000$. You can always convert money + debt into less money and less debt, but you cannot always convert less money and less debt into more money and more debt. Now, there are risks; that is why you want an interest-bearing account to place your savings in to offset the debt. This minimizes the risk. It also reduces the return. It is arguable that you should be at your most financially risky at a young age. I'd argue that your future earnings are your by far largest asset at this point, and as a high school student going into college those future earnings have extremely high variability. Your financial situation is extremely unpredictable; being conservative about your high-leverage student-loan + education investments is probably justified. The fact you can manage arbitrage here means you should; and if you are careful, you can eliminate risk and get almost risk-free profit from the maneuver. If your money is in less than perfectly safe accounts, you are now doing leveraged investing and magnifying the risk and return of said investments. If your money must be spent on college or you'll be financially punished, then you may want to consider pulling it out before the last possible legal point just in case something goes wrong. Apparently 529 plans may not treat \"\"paying off student loans\"\" as a valid way to spend the money. You may need to talk to a lawyer or accountant about the legality of using these plans to pay off student loans, and the tax/penalties involved.\""
},
{
"docid": "171135",
"title": "",
"text": "\"You are probably going to hate my answer, but... If there was an easy way to ID stocks like FB that were going to do what FB did, then those stocks wouldn't exist and do that because they would be priced higher at the IPO. The fact is there is always some doubt, no one knows the future, and sometimes value only becomes clear with time. Everyone wants to buy a stock before it rises right? It will only be worth a rise if it makes more profit though, and once it is established as making more profit the price will be already up, because why wouldn't it be? That means to buy a real winner you have to buy before it is completely obvious to everyone that it is going to make more profit in the future, and that means stock prices trade at speculative prices, based on expected future performance, not current or past performance. Now I'm not saying past and future performance has nothing in common, but there is a reason that a thousand financially oriented websites quote a disclaimer like \"\"past performance is not necessarily a guide to future performance\"\". Now maybe this is sort of obvious, but looking at your image, excluding things like market capital that you've not restricted, the PE ratio is based on CURRENT price and PAST earnings, the dividend yield is based on PAST publications of what the dividend will be and CURRENT price, the price to book is based on PAST publication of the company balance sheet and CURRENT price, the EPS is based on PAST earnings and the published number of shares, and the ROI and net profit margin in based on published PAST profits and earnings and costs and number of shares. So it must be understood that every criteria chosen is PAST data that analysts have been looking at for a lot longer than you have with a lot more additional information and experience with it. The only information that is even CURRENT is the price. Thus, my ultimate conclusive point is, you can't based your stock picks on criteria like this because it's based on past information and current stock price, and the current stock price is based on the markets opinion of relative future performance. The only way to make a good stock pick is understand the business, understand its market, and possibly understand world economics as it pertains to that market and business. You can use various criteria as an initial filter to find companies and investigate them, but which criteria you use is entirely your preference. You might invest only in profitable companies (ones that make money and probably pay regular dividends), thus excluding something like an oil exploration company, which will just lose money, and lose it, and lose some more, forever... unless it hits the jackpot, in which case you might suddenly find yourself sitting on a huge profit. It's a question of risk and preference. Regarding your concern for false data. Google defines the Return on investment (TTM) (%) as: Trailing twelve month Income after taxes divided by the average (Total Long-Term Debt + Long-Term Liabilities + Shareholders Equity), expressed as a percentage. If you really think they have it wrong you could contact them, but it's probably correct for whatever past data or last annual financial results it's based on.\""
},
{
"docid": "334810",
"title": "",
"text": "\"You can't get your credit score for free, just the report with the information the score is based on. If you got credit reports through annualcreditreport.com, the Score tab would typically contain an advertisement for purchasing your score. If you have an ad-blocker enabled, that might be blocked, explaining the blank page. Try turning off any browser extensions that alter how pages are shown. The accounts page/tab/section should show something like \"\"0 open accounts\"\" or similar, to indicate that it is loading data. Your lack of credit history probably does mean you don't have a credit score, so it's probably not worth paying anything to find that out. The focus should be on the accuracy of the underlying report, since you can do something about that. Should I be worried? I'd say no on that. You'll have an easier time getting credit (and better terms) in the future if you start now with some account, even if it's a secured credit card you don't use much, because the age of the oldest and average accounts are factors in credit scoring models.\""
},
{
"docid": "95490",
"title": "",
"text": "So a major problem with looking at historical stock data on these graphs is that they set the stock price based off of current market volumn. If I was to say look at Majesco Entertainment (COOL) in june of 2016. It would say that the stock as trading between $5-6. In reality it was between .50-$1. But in august there was a 6:1 reverse split. So June's value based on todays current share count would be about $5-6 per one share. 1988 for home depot must have been a really bad year for them, and because of all the splits they've had over the years already screws that estimate of what one share is worth. There's a lot of variance in 1988, but you have to be looking at only 1988. 87 and 89 really screws the the chart's scale."
},
{
"docid": "554706",
"title": "",
"text": "Having more money than you know what to do with is a good problem to have. :) Congratulations on your early retirement! I'd say this is a good time to start learning about investing, because nobody will look after your money as well as you will. Fund managers and financial advisers may mean well, but they are just salespeople, paid commissions to promote their employers' products. Not that there's anything wrong with that; it's just that their interests are not aligned with yours. They get paid the same, whether you make or lose money. If you want to live off your investments you must invest in your financial education."
},
{
"docid": "28119",
"title": "",
"text": "Here are a few things I've already done, and others reading this for their own use may want to try. It is very easy to find a pattern in any set of data. It is difficult to find a pattern that holds true in different data pulled from the same population. Using similar logic, don't look for a pattern in the data from the entire population. If you do, you won't have anything to test it against. If you don't have anything to test it against, it is difficult to tell the difference between a pattern that has a cause (and will likely continue) and a pattern that comes from random noise (which has no reason to continue). If you lose money in bad years, that's okay. Just make sure that the gains in good years are collectively greater than the losses in bad years. If you put $10 in and lose 50%, you then need a 100% gain just to get back up to $10. A Black Swan event (popularized by Nassim Taleb, if memory serves) is something that is unpredictable but will almost certainly happen at some point. For example, a significant natural disaster will almost certainly impact the United States (or any other large country) in the next year or two. However, at the moment we have very little idea what that disaster will be or where it will hit. By the same token, there will be Black Swan events in the financial market. I do not know what they will be or when they will happen, but I do know that they will happen. When building a system, make sure that it can survive those Black Swan events (stay above the death line, for any fellow Jim Collins fans). Recreate your work from scratch. Going through your work again will make you reevaluate your initial assumptions in the context of the final system. If you can recreate it with a different medium (i.e. paper and pen instead of a computer), this will also help you catch mistakes."
},
{
"docid": "455239",
"title": "",
"text": "> I think all taxes are theft, no matter who they come from. That is a matter of opinion. Obviously, I disagree with that sentiment. Do you have a reason behind it? > Again, you haven't really substantiated any claim about your financial situation. I have scanned in a tax summary sheet from my CPA. I took off all the personal identifying data. I would be happy to share it with you, but I am not sure how to attach it to posts like this. Any ideas? > Additionally, I'm sure someone of your financial stature would have enough time to go on Reddit. I am an owner, if I want to sit at my work desk and reddit - as I am doing right now - I can do that. Not what I typically do, but I just got off travel, and trying to get back into it. Plus, I am procrasting a little bit, because we have some big projects coming up! I am still human! > Literally take your pick and we can begin Okay, I will pick a topic that I am more familiar with - Defense R&D. My position is that, while there are many companies that do R&D in the world of defense, there is also much innovation that comes from the government itself. GPS is one such technology. And while there are many very innovative companies that have built onto and done some amazing things with this technology, if it weren't for government investment and R&D, it wouldn't exist. > And yes, even people who advocate only higher taxes for the rich will end up with higher taxes for me (I.e. Bernie Sanders) What part of Bernie's proposal leads you to believe that?"
},
{
"docid": "564338",
"title": "",
"text": "http://www.pacificrubiales.com/investor-relations/reports.html does have financial reports on their website for the example you list. There is the potential for some data to not be easily imported into a format that Yahoo! Finance uses would be my guess for why some data may be missing though an alternative explanation for some companies would be that they may not have been around for a long enough time period to report this information,e.g. if the company is a spin-off of an existing company."
},
{
"docid": "204825",
"title": "",
"text": "\"Much of what you're asking will not be disclosed for obvious security reasons, so don't be surprised when call center people say they \"\"don't know\"\". They may actually not know, but even if they did, they'd be fired if they were to say anything. Nothing could be a touchier subject than online security for the financial institutions. I don't know of reliable sources for the data you're asking about, and I don't know the banks or other firms would release it. For a bank to talk about its incidence rates of fraud would be unusual, because none of these institutions wants to appear \"\"less safe\"\" than their competitors. If there's any information out there then it's going to be pretty vague. None of these institutions wants the \"\"bad guys\"\" to know what their degree of success is against one bank versus any other. I hope that makes sense. The smaller banks usually piggyback their data on the networks of the larger financial institutions, so they are as secure (as a general rule) as the larger banks' networks they're running on. Also, your transactions on your credit cards are not generally handled directly by your bank anyway, unless it's one of the big heavyweights like Chase or Bank of America. All transactions run through merchant processors, who act as intermediaries between merchants and the banks, and those guys are pretty damned good at security. I've met some of the programmers, and they're impressive to me (I've been a programmer for 35 years and can't put a finger on these guys!). Most banks require that you must provide proof of identity when opening an account, and that ID must me the standards of the \"\"USA Real ID Act\"\". Here's an excerpt from the Department of Homeland Security website on what Real ID is: Passed by Congress in 2005, the REAL ID Act enacted the 9/11 Commission’s recommendation that the Federal Government “set standards for the issuance of sources of identification, such as driver's licenses.” The Act established minimum security standards for state-issued driver’s licenses and identification cards and prohibits Federal agencies from accepting for official purposes licenses and identification cards from states that do not meet these standards. States have made considerable progress in meeting this key recommendation of the 9/11 Commission and every state has a more secure driver’s license today than before the passage of the Act. In order for banks to qualify for FDIC protection, they must comply with the Real ID standards when opening accounts. As with any business (especially online), the most effective way to minimize fraud is vigilant monitoring of data. Banks and other online financial entities have become very adept at pattern analysis and simply knowing where and what to look for when dealing with their customers. There are certainly sophisticated measures which are kept carefully out of the public eye for doing this, and obviously they're good at it. They have to be, right? There's no way to completely eliminate fraud -- too much incentive exists for the \"\"bad guys\"\" to not constantly search for new ways to run their schemes, and the good guys will always be at the disadvantage, because there's no way to anticipate everything anyone might come up with. Just look at online viruses and malware. Your antivirus software can only deal with what it knows about, and the bad guys are always coming up with some new variant that gets past the filters until the antivirus maker learns of it and comes up with a way to deal with it. Your question's a good one to ponder, and I wouldn't want to be the chief of internet security for a bank or online institution, because I'd lay awake at night pondering when the call's going to come that we finally ran out of luck! (grin) I hope this was helpful. Good luck!\""
},
{
"docid": "76856",
"title": "",
"text": "\"Mint.com uses something called OFX (Open Financial Exchange) to get the information in your bank account. If someone accessed your mint account they would not be able to perform any transactions with your bank. All they would be able to do is view the same information you do, which some of it could be personal <- that's up to you. Generally the weakest point in security is with the user. An \"\"attacker\"\" is far more likely to get your account information from you then he is from the site your registered with. Why you're the weakest point: When you enter your account information, your password is never saved exactly how you enter it. It's passed through what is called a \"\"one way function\"\", these functions are easy to compute one way but given the end-result is EXTREMELY difficult to compute in reverse. So in a database if someone looked up your password they would see it something like this \"\"31435008693ce6976f45dedc5532e2c1\"\". When you log in to an account your password is sent through this function and then the result is checked against what is saved in the database, if they match you are granted access. The way an attacker would go about getting your password is by entering values into the function and checking the values against yours, this is known as a brute force attack. For our example (31435008693ce6976f45dedc5532e2c1) it would take someone 5 million years to decry-pt using a basic brute force attack. I used \"\"thisismypassword\"\" as my example password, it's 12 characters long. This is why most sites urge you to create long passwords with a mix of numbers, uppercase, lowercase and symbols. This is a very basic explanation of security and both sides have better tools then the one explained but this gives you an idea of how security works for sites like these. You're far more likely to get a virus or a key logger steal your information. I do use Mint. Edit: From the Mint FAQ: Do you store my bank login information on your servers? Your bank login credentials are stored securely in a separate database using multi-layered hardware and software encryption. We only store the information needed to save you the trouble of updating, syncing or uploading financial information manually. Edit 2: From OFX About Security Open Financial Exchange (OFX) is a unified specification for the electronic exchange of financial data between financial institutions, businesses and consumers via the Internet. This is how mint is able to communicate with even your small local bank. FINAL EDIT: ( This answers everything ) For passwords to Mint itself, we compute a secure hash of the user's chosen password and store only the hash (the hash is also salted - see http://en.wikipedia.org/wiki/Sal... ). Hashing is a one-way function and cannot be reversed. It is not possible to ever see or recover the password itself. When the user tries to login, we compute the hash of the password they are attempting to use and compare it to the hashed value on record. (This is a standard technique which every site should use). For banking credentials, we generally must use reversible encryption for which we have special procedures and secure hardware kept in our secure and guarded datacenter. The decryption keys never leave the hardware device (which is built to destroy the key material if the tamper protection is attacked). This device will only decrypt after it is activated by a quorum of other keys, each of which is stored on a smartcard and also encrypted by a password known to only one person. Furthermore the device requires a time-limited cryptographically-signed permission token for each decryption. The system (which I designed and patented) also has facilities for secure remote auditing of each decryption. Source: David K Michaels, VP Engineering, Mint.com - http://www.quora.com/How-do-mint-com-and-similar-websites-avoid-storing-passwords-in-plain-text\""
},
{
"docid": "306913",
"title": "",
"text": "\"Not insulting your part of Scotland, but that is exactly what happened in Detroit and the surrounding area. It used to be one of the richest (IIRC *the* richest) metro area in the US. Now look at it. Those who say the unions had nothing to do with it just have to look at what is happening. The US has states called \"\"Right to work\"\" states, this is where union membership is not mandatory. Caterpillar is based in Illinois, but just moved a factory from Japan back to the US. Illinois wasnt even in the running for it. They were all southern states that are right to work. You also have to look where foreign manufacturers build things. Toyota, Honda, VW, BMW, Mitsubishi, etc., etc., all manufacture in Southern \"\"right to work\"\" states. They still have unions, but they have less power because a lot of people chose not to be in them and pay the dues. In my opinion, the people working at the new CAT factory are probably happy the plant moved from Japan to their town. Also, all of the people working at all of those plants are glad to have their jobs instead of being unemployed. I see these massive union protections Northern states and European countries have as a negative. I think the fact manufacturers almost exclusively choose \"\"right to work\"\" states for new factories only reinforces this.\""
},
{
"docid": "473949",
"title": "",
"text": "\"Many of my friends said I should invest my money on stocks or something else, instead of put them in the bank forever. I do not know anything about finance, so my questions are: First let me say that your friends may have the best intentions, but don't trust them. It has been my experience that friends tell you what they would do if they had your money, and not what they would actually do with their money. Now, I don't mean that they would be malicious, or that they are out to get you. What I do mean, is why would you take advise from someone about what they would do with 100k when they don't have 100k. I am in your financial situation (more or less), and I have friends that make more then I do, and have no savings. Or that will tell you to get an IRA -so-and-so but don't have the means (discipline) to do so. Do not listen to your friends on matters of money. That's just good all around advise. Is my financial status OK? If not, how can I improve it? Any financial situation with no or really low debt is OK. I would say 5% of annual income in unsecured debt, or 2-3 years in annual income in secured debt is a good place to be. That is a really hard mark to hit (it seems). You have hit it. So your good, right now. You may want to \"\"plan for the future\"\". Immediate goals that I always tell people, are 6 months of income stuck in a liquid savings account, then start building a solid investment situation, and a decent retirement plan. This protects you from short term situations like loss of job, while doing something for the future. Is now a right time for me to see a financial advisor? Is it worthy? How would she/he help me? Rather it's worth it or not to use a financial adviser is going to be totally opinion based. Personally I think they are worth it. Others do not. I see it like this. Unless you want to spend all your time looking up money stuff, the adviser is going to have a better grasp of \"\"money stuff\"\" then you, because they do spend all their time doing it. That being said there is one really important thing to consider. That is going to be how you pay the adviser. The following are my observations. You will need to make up your own mind. Free Avoid like the plague. These advisers are usually provided by the bank and make their money off commission or kickbacks. That means they will advise you of the product that makes them the most money. Not you. Flat Rate These are not a bad option, but they don't have any real incentive to make you money. Usually, they do a decent job of making you money, but again, it's usually better for them to advise you on products that make them money. Per Hour These are my favorite. They charge per hour. Usually they are a small shop, and will walk you through all the advise. They advise what's best for you, because they have to sit there and explain their choices. They can be hard to find, but are generally the best option in my opinion. % of Money These are like the flat rate advisers to me. They get a percentage of the money you give them to \"\"manage\"\". Because they already have your money they are more likely to recommend products that are in their interest. That said, there not all bad. % or Profit These are the best (see notes later). They get a percentage of the money they make for you. They have the most interest in making you money. They only get part of what you get, so there going to make sure you get the biggest pie, so they can get a bigger slice. Notes In the real world, all advisers are likely to get kickbacks on products they recommend. Make sure to keep an eye for that. Also most advisers will use 2-3 of the methods listed above for billing. Something like z% of profit +$x per hour is what I like to see. You will have to look around and see what is available. Just remember that you are paying someone to make you money (or to advise you on how to make money) so long as what they take leaves you with some profit your in a better situation then your are now. And that's the real goal.\""
},
{
"docid": "12681",
"title": "",
"text": "Anytime someone mentions a specific year something will happen on economics they lose credibility in my book. That said, it does look like government has run itself off a financial cliff. Its like Looney Tunes, once we look down we will fall"
},
{
"docid": "20372",
"title": "",
"text": "\"Alright, I will go through bullet point by bullet point and try to best figure out what you will be doing in layman's terms. Please bear in mind that I do not work for a hedge fund, but rather a much larger entity, so a lot of the work you will be doing is pre-populated: >Roles = In this role, the individual will be the main point of contact for the client on all things related to understanding their trading profit & loss and how their valuations have been sourced. In addition, the Product Controller will work with internal partner areas to ensure all required processes have been performed to verify the valuation accuracy of the client’s portfolio. From my understanding you will act as the middle man between the client and the analyst. As such here is how a real interaction may go: Client X calls, you answer - \"\"Hello, iDade's office, how can I assist you?\"\" Client X asks, \"\"Hey iDadeMarshall I was curious what my capital gains were on my FB purchase?\"\" iDade: \"\"Ok, let me pull up your account, just a moment. It seems as though your current capital are $30,000 (*LOL*) on your FB purchase.\"\" Client X: \"\"Hmm, well do I have any significant loses that I may be able to sell off to off-set the tax on the capital gains?\"\" iDade: \"\"Why yes you do, it seems AAPL has taken a mighty tumble, would you like to sell a position to assist you in offsetting?\"\" Client X: \"\"Why that would be great. Thanks for your help.\"\" The conversation could go on, and that is a pretty deep conversation for the level you are going in, but I have had conversations like these before. The second part of the bullet just means that you will be checking and rechecking the grunt work of the analyst, and in some places actually performing the grunt work. The work will most likely be along the lines of finding returns for different time periods. Popular desired time periods are inception, ytd, qtd, 1yr, 2yr, etc. Remember all of these time periods are not good stand alone; they must be compared to a relevant benchmark. For instance, you would not want to compare the Barclays Intermediate Ag to an equity portfolio. The most common benchmark for an equity portfolio is going to be the S&P 500, but you have to look at where the portfolio is focused. If it is a SCV you may want to look more towards something like the IJS (iShares S&P SmallCap 600 Value Index). In the end always remember that any number you come up with is always relative to a benchmark. A plain return number is useless. >Knowledge/Skills = Knowledge of cash and derivative products across various markets • Knowledge of pricing and valuation • Knowledge of profit and loss reporting and related attribution analysis Pretty much they just want to make sure that if a client asks about a forward/future contract as well as any swap/option that you understand what they are. This bullet points screams “I KNOW WHAT I AM DOING EVEN THOUGH NOBODY KNOWS WHAT IS GOING ON IN THE ECONOMY.” Be up on your current events have a personal conjecture about what you feel is going to happen moving forward, but do not convey it. If you know that the unemployment was the main driver behind today’s poor market then you will be good for the day, because that will suffice for any call in that relates to “why is the market down?” One of my favorite quotes about the current economy is as follows: “Anyone around here, who isn't confused about what’s going on, doesn't understand.\"\" As scary as it is, that is the honest truth. Nobody knows what is about to happen and if anyone tells you they do, they are lying and you need to run away, quickly. I am assuming you know how to calculate profit and loss – I don’t really know of a *special* way to twist the numbers around. >Major Duties = Managing the daily P&L process for one or more client trading desks o Daily review of Quality Control checks o Working with trading desk(s) on P&L differences/inquiries o Working with offshore Product Control Team (India) on QC process o Delivering a final daily (and month-end) P&L statement to the client • Understanding and explaining the key drivers behind the P&L movements • Preparing/Managing monthly (or more frequently as required) price verification process and associated reporting • Updating and maintaining pricing policy for each financial type that is included in the consultant’s P&L reporting • Ad/hoc projects to meet and enhance client deliverables All this means is that you will be sending out the due diligence to the client and you will ensure you are using the proper closing price and include any deposits/withdrawals during the month into your calculation. The main point is knowing the reasons the price moved throughout the day/month. KEEP UP on current events and make sure that you understand a vast knowledge of economic data. For what your day-to-day activity may be, I can walk you through it. Let’s say you get in at 8am. You will get in at 8, read economic data/recent news articles until about 10; from there you will update client A-F P/L worksheet until about noon. You will eat a quick lunch until about 1230 and continue on the grind of E-M until about 4. From 4-5 you will reread what happened at the end of the day and an overall economic activity report for the day. You may stay until 8 or 9 (if you are in a banking hub/NYC), but a lot of the older guys will leave at this time. This is your time to shine. Stay as late as you can and pump out as much work as you can. As for your interview, they may ask you what will be a good play for the next 6 months to a year – you should respond with common themes in the market. The most common theme is the dividend growth play. A ton of people are not predicting large amount of growth for the next 5-10 years, I believe I read something earlier that JPM lowered their growth forecasts by about 30% recently, so dividends IS the play. Dividend payers are generally well established companies (blue chip) that have a strong foothold in their respective industry/sector. There are a ton of funds sprouting out everywhere to follow this trend (you could throw out a few funds for brownie points, I’ll give you some – MADVX and VDIGX are pretty common). I hope this helps and let me know if anything wasn’t clear (wrote it pretty quickly). I am off to have a drink or two or three, I’ll check this in the morning though.\""
},
{
"docid": "45457",
"title": "",
"text": "You need to pay off the entire balance of 7450 as soon as possible. This should be your primary financial goal at this point above anything else. A basic structure that you can follow is this: Is the £1500 balance with the 39.9% interest rate the obvious starting point here? Yes, that is fine. But all the cards and overdraft debts need to be treated with the same urgency! What are the prospects for improving my credit score in say the next 6-12 months enough to get a 0% balance transfer or loan for consolidation? This should not be a primary concern of yours if you want to move on with your financial life. Debt consolidation will not help you achieve the goals you have described (home ownership, financial stability). If you follow the advice here, by the time you get to the point of being eligible, you may not see enough savings in interest to make it worth the hassle. Focus on the hard stuff and pay off the balances. Is that realistic, or am I looking at a longer term struggle? You are looking at a significant struggle. If it was easy you would not be asking this question! The length of time will be determined by your choices: how aggressively you will cut your lifestyle, take on extra jobs, and place additional payments on your debt. By being that extreme, you will actually start to see progress, which will be encouraging. If you go in half-committed, your progress will show as much and it will be demotivating. Much of your success will hinge on your mental and emotional toughness to push through the hard work of delaying pleasure and paying off these balances. That is just my personal experience, so you can take it or leave it. :) The credit score will take care of itself if you follow this method, so don't worry about it. Good Luck!"
}
] |
4955 | How to calculate the value of a bond that is priced to yield X% | [
{
"docid": "581318",
"title": "",
"text": "The idea is correct; the details are a little off. You need to apply it to the actual cash flow the bond would create. The best advice I can give you is to draw a time-line diagram. Then you would see that you receive £35 in 6 months, £35 in 12 months, £35 in 18 months, and £1035 in 24 months. Use the method you've presented in your question and the interest rate you've calculated, 3% per 6 months, to discount each payment the specified amount, and you're done. PS: If there were more coupons, say a 20 year quarterly bond, it would speed things up to use the Present Value of an Annuity formula to discount all the coupons in one step..."
}
] | [
{
"docid": "488015",
"title": "",
"text": "\"IMHO It is definitively not too early to start learning and thinking about personal finances and also about investing. If you like to try stock market games, make sure to use one that includes a realistic fee structure simulation as well - otherwise there'll be a very unpleasant awakening when switching to reality... I'd like to stress the need for low fees with the brokerage account! Sit down and calculate how much fees different brokers take for a \"\"portfolio\"\" of say, 1 ETF, 1 bond, 1 share of about $500 or $1000 each (e.g. order fee, annual fee, fee for paying out interest/dividend). In my experience, it is good if you can manage to make the first small investing steps before starting your career. Real jobs tend to need lots of time (particularly at the beginning), so time to learn investing is extremely scarce right at the time when you for the first time in your life earn money that could/should be invested. I'm talking of very slowly starting with a single purchase of say an ETF, a single bond next time you have saved up a suitable amount of toy money, then maybe a single share (and essentially not doing anything with them in order to avoid further fees). While such a \"\"portfolio\"\" is terrible with respect to diversification and relative fees*, this gives you the possibility to learn the procedures, to see how the fees cut in, what to do wrt taxes etc. This is why I speak about toy money and why I consider this money an investment in education. * An order fee of, say, $10 on a $500 position are terrible 4% (2 x $10) for buying + selling - depending on your local taxes, that would be several years of dividend yield for say some arbitrary Dow Jones ETF. Nevertheless, purchase + sale together are less than 3 cinema tickets.\""
},
{
"docid": "269550",
"title": "",
"text": "Buy a fund of bonds, there are plenty and are registered on your stockbroker account as 'funds' rather than shares. Otherwise, to the individual investor, they can be considered as the same thing. Funds (of bonds, rather than funds that contain property or shares or other investments) are often high yield, low volatility. You buy the fund, and let the manager work it for you. He buys bonds in accordance to the specification of the fund (ie some funds will say 'European only', or 'global high yield' etc) and he will buy and sell the bonds regularly. You never hold to maturity as this is handled for you - in many cases, the manager will be buying and selling bonds all the time in order to give you a stable fund that returns you a dividend. Private investors can buy bonds directly, but its not common. Should you do it? Up to you. Bonds return, the company issuing a corporate bond will do so at a fixed price with a fixed yield. At the end of the term, they return the principal. So a 20-year bond with a 5% yield will return someone who invests £10k, £500 a year and at the end of the 20 years will return the £10k. The corporate doesn't care who holds the bond, so you can happily sell it to someone else, probably for £10km give or take. People say to invest in bonds because they do not move much in value. In financially difficult times, this means bonds are more attractive to investors as they are a safe place to hold money while stocks drop, but in good times the opposite applies, no-one wants a fund returning 5% when they think they can get 20% growth from a stock."
},
{
"docid": "64130",
"title": "",
"text": "\"Even though the article doesn't actually use the word \"\"discount\"\", I think the corresponding word you are looking for is \"\"premium\"\". The words are used quite frequently even outside of the context of negative rates. In general, bonds are issued with coupons close to the prevailing level of interest rates, i.e. their price is close to par (100 dollar price). Suppose yields go up the next day, then the price moves inversely to yields, and that bond will now trade at a \"\"discount to par\"\" (less than 100 dollar price). And vice versa, if yields went down, prices go up, and the bond is now at a \"\"premium to par\"\" (greater than 100 dollar price)\""
},
{
"docid": "189006",
"title": "",
"text": "\"First, a clarification. No assets are immune to inflation, apart from inflation-indexed securities like TIPS or inflation-indexed gilts (well, if held to maturity, these are at least close). Inflation causes a decline in the future purchasing power of a given dollar1 amount, and it certainly doesn't just affect government bonds, either. Regardless of whether you hold equity, bonds, derivatives, etc., the real value of those assets is declining because of inflation, all else being equal. For example, if I invest $100 in an asset that pays a 10% rate of return over the next year, and I sell my entire position at the end of the year, I have $110 in nominal terms. Inflation affects the real value of this asset regardless of its asset class because those $110 aren't worth as much in a year as they are today, assuming inflation is positive. An easy way to incorporate inflation into your calculations of rate of return is to simply subtract the rate of inflation from your rate of return. Using the previous example with inflation of 3%, you could estimate that although the nominal value of your investment at the end of one year is $110, the real value is $100*(1 + 10% - 3%) = $107. In other words, you only gained $7 of purchasing power, even though you gained $10 in nominal terms. This back-of-the-envelope calculation works for securities that don't pay fixed returns as well. Consider an example retirement portfolio. Say I make a one-time investment of $50,000 today in a portfolio that pays, on average, 8% annually. I plan to retire in 30 years, without making any further contributions (yes, this is an over-simplified example). I calculate that my portfolio will have a value of 50000 * (1 + 0.08)^30, or $503,132. That looks like a nice amount, but how much is it really worth? I don't care how many dollars I have; I care about what I can buy with those dollars. If I use the same rough estimate of the effect of inflation and use a 8% - 3% = 5% rate of return instead, I get an estimate of what I'll have at retirement, in today's dollars. That allows me to make an easy comparison to my current standard of living, and see if my portfolio is up to scratch. Repeating the calculation with 5% instead of 8% yields 50000 * (1 + 0.05)^30, or $21,6097. As you can see, the amount is significantly different. If I'm accustomed to living off $50,000 a year now, my calculation that doesn't take inflation into account tells me that I'll have over 10 years of living expenses at retirement. The new calculation tells me I'll only have a little over 4 years. Now that I've clarified the basics of inflation, I'll respond to the rest of the answer. I want to know if I need to be making sure my investments span multiple currencies to protect against a single country's currency failing. As others have pointed out, currency doesn't inflate; prices denominated in that currency inflate. Also, a currency failing is significantly different from a prices denominated in a currency inflating. If you're worried about prices inflating and decreasing the purchasing power of your dollars (which usually occurs in modern economies) then it's a good idea to look for investments and asset allocations that, over time, have outpaced the rate of inflation and that even with the effects of inflation, still give you a high enough rate of return to meet your investment goals in real, inflation-adjusted terms. If you have legitimate reason to worry about your currency failing, perhaps because your country doesn't maintain stable monetary or fiscal policies, there are a few things you can do. First, define what you mean by \"\"failing.\"\" Do you mean ceasing to exist, or simply falling in unit purchasing power because of inflation? If it's the latter, see the previous paragraph. If the former, investing in other currencies abroad may be a good idea. Questions about currencies actually failing are quite general, however, and (in my opinion) require significant economic analysis before deciding on a course of action/hedging. I would ask the same question about my home's value against an inflated currency as well. Would it keep the same real value. Your home may or may not keep the same real value over time. In some time periods, average home prices have risen at rates significantly higher than the rate of inflation, in which case on paper, their real value has increased. However, if you need to make substantial investments in your home to keep its price rising at the same rate as inflation, you may actually be losing money because your total investment is higher than what you paid for the house initially. Of course, if you own your home and don't have plans to move, you may not be concerned if its value isn't keeping up with inflation at all times. You're deriving additional satisfaction/utility from it, mainly because it's a place for you to live, and you spend money maintaining it in order to maintain your physical standard of living, not just its price at some future sale date. 1) I use dollars as an example. This applies to all currencies.\""
},
{
"docid": "431386",
"title": "",
"text": "\"TL;DR: If your currently held bond's bid yield is smaller than another bonds' ask yield. You can swap your bond for bigger returns. Let's imagine you buy a long bond for $12000 (face value of $10000) and it has 6% coupon. The cash flows will have an internal return rate of 4.37%, this is the published \"\"ask yield\"\" in 2014 of the bond. After six years, prices have fallen, inflation and yields went up. So you can sell it for only $10000. If you would do it, the IRR will be only 2.55%, so there will be less return, than if you keep it. But if you would \"\"undo\"\" the transaction, then the future cash flows would yield 6.38%. This is the \"\"bid yield\"\" in 2020 of the bond. If you can find an offer that yields more than 6.38%, you have better returns if you sell your bond and invest that $10000 in the other bond. But as other answers pointed it out, you rarely have this opportunity as the market is very effective. (Assuming everything else is equal.)\""
},
{
"docid": "306679",
"title": "",
"text": "\"First note that CIBC issued these bonds with a zero coupon, so they do not pay any interest. They were purchased by the market participants at a small premium, paying an average of 100.054 for a nominal value of 100. This equates to a negative annual \"\"redemption\"\" yield of 0.009% - i.e., if held until maturity, then the holder will witness a negative annual return of 0.009%. You ask \"\"why does this make sense?\"\". Clearly it makes no sense for a private individual to purchase these bonds since they will be better off simply holding cash. To understand why there is a demand for these bonds we need to look elsewhere. The European bond market is currently suffering a dwindling supply owing to the ECBs bond buying programme (i.e., quantitative easing). The ECB is purchasing EUR 80 billion per month of Eurozone sovereign debt. This means that the quantity of high grade bonds available for purchase is shrinking fast. Against this backdrop we have all of those European institutions and financial corporations who are legally obliged to purchase bonds to be held as assets against their obligations. These are mostly national and private pension funds as well as insurance companies and fund managers. In this sort of environment, the price of high quality bonds is quickly bid up to the point where we see negative yields. In this environment companies like CIBC can borrow by issuing bonds with a zero coupon and the market is willing to pay a small premium over their nominal value. TL/DR The situation is further complicated by the subdued inflation outlook for the Eurozone, with a very real possibility of deflation. Should a prolonged period of deflation materialise, then negative redemption yield bonds may provide a positive real return.\""
},
{
"docid": "285176",
"title": "",
"text": "The assumption that bonds have been issued with a negative coupon is not correct, or at least is has not occurred thus far. We'll look at this future possibility in the final paragraph. For now, lets look at the current bond market. The issuance of government bonds which carry a negative gross redemption yield is the result of governments issuing bonds at an issue price which exceed the nominal/redemption price and any coupon yield receivable over the life of the bond. I can find no instances of bonds with a negative coupon, though many have tiny positive coupon yields. The short seller of a bond with a negative gross redemption yield will be liable to pay the buyer the interest amount determined by the coupon. If the short seller has borrowed the bonds in order to sell them, then the short seller will receive the interest due from the lender to offset the interest paid to the buyer. If the short seller has not borrowed the bonds, but has sold them using some sort of synthetic contract such as a Contract for Difference, then the short seller will pay the coupon without receiving any offsetting payment. I thought this was an interesting question and it will be interesting to see if, at some time in the future, governments do ever issue bonds with a negative coupon. To date, this does not appear to have happened. So what would happen if we assume that a government issues a bond with a negative coupon. The buyer of the bond would be required to pay the equivalent yield to the government according to the bond contract specification. If an investor sells short such a bond, they would then become entitled to receive the interest from the buyer. If they have borrowed the bonds in order to sell them short, then they would pay any interest received back to the lender - this chain should eventually end with the ultimate owner/lender paying the government their dues. If they have sold short using a synthetic contract, then presumably they would keep the interest from themselves."
},
{
"docid": "388391",
"title": "",
"text": "\"So \"\"Operation Twist\"\" is actually a pretty simple concept. Here's the break down: The Fed sells short-term treasury bonds that it already holds on its books. Short-term treasury bonds refer to - bonds that mature in less than three years. Then: Uses that money to buy long term treasury bonds. Long-term treasury bonds refer to - bonds that mature in six to 30 years The reason: The fed buys these longer-term treasuries to lower longer-term interest rates and encourage more borrowing and spending. Diving deeper into how it works: So the Fed can easily determine short-term rates by using the Federal funds rate this rate has a direct effect on the following: However this does not play a direct role in influencing the rate of long-term loans (what you might pay on a 30-year fixed mortgage). Instead, long-term rates are determined by investors who buy and sell bonds in the bond market, which changes daily. These bond yields fluctuate depending on the health of the economy and inflation. However, the Fed funds rate does play an indirect role in these rates. So now that we know a little more about what effects what rate, why does lower long-term rates in treasuries influence my 30yr fixed mortgage? Well when you are looking for a loan you are entering a market and competing against other people, by people I mean anyone looking for money (e.g: my grandmother, companies, or the US government). The bank that lends you money has to decide weather the deal you are offering them is better then another deal on the market. If the risk of lending to one person is the same as the risk of lending to another, the bank will make whichever loan yields the higher interest rate. The U.S. government is considered a very safe borrower, so much so that government bonds are considered almost “risk free”, but because of the lower risk the rate of return is lower. So now the bank has to factor in this risk and make its decision weather to lend you money, or the government. So, if the government were to go to the market and buy its own long-term bonds it is adding demand in the market causing the price of the bond to rise in effect lowering the interest rate (when price goes up, yield goes down). So when you go back and ask for a loan it has to re-evaluate and decide \"\"Is it worth giving this money to Joe McFreeBeer instead and collecting a higher yield?\"\" (After all, Joe McFreeBeer is a nice guy). Here's an example: Lets say the US has a rating of 10 out of 10 and its bonds pay a 2% yield. Now lets say for each lower mark in rating the bank will lend at a minimum of 1% higher and your rating is 8 of 10. So if you go to market, the lowest rate you can get will be 4%. Now lets say price rises on the US treasury and causes the rate to go down by 1%. In this scenario you will now be able to get a loan for 3% and someone with a rating of 7 of 10 would be able to get that 4% loan. Here's some more info and explinations: Why is the Government Buying Long-Term Bonds? What Is 'Operation Twist'? A Q&A on US Fed Program Federal Reserve for Beginners Federal Open Market Committee\""
},
{
"docid": "565226",
"title": "",
"text": "It depends. Very generally when yields go up stocks go down and when yields go down stocks go up (as has been happening lately). If we look at the yield of the 10 year bond it reflects future expectations for interest rates. If the rate today is very low but expectations are that the short term rates will go up that would be reflected in a higher yield simply because no one would buy the longer term bond if they could simply wait out and get a better return on shoter term investments. If expectations are that the rate is going down you get what's called an inverted yield curve. The inverted yield curve is usually a sign of economic trouble ahead. Yields are also influenced by inflation expectations as @rhaskett is alluding in his answer. So. If the stock market crashes because the economy is doing poorly and if interest rates are relatively high then people would expect the rates to go down and therefore bonds will go up! However, if there's rampant inflation and the rates are going up we can expect stocks and bonds to move in opposite directions. Another interpretation of that is that one would expect stock prices to track inflation pretty well because company revenue is going to go up with inflation. If we're just talking about a bump in the road correction in a healthy economy I wouldn't expect that to have much of an immediate effect though bonds might go down a little bit in the short term but possibly even more in the long term as interest rates eventually head higher. Another scenario is a very low interest rate environment (as today) with a stock market crash and not a lot of room for yields to go further down. Both stocks and bonds are influenced by current interest rates, interest rate expectations, current inflation, inflation expectations and stock price expectation. Add noise and stir."
},
{
"docid": "538898",
"title": "",
"text": "The Fed sets the overnight borrowing costs by setting its overnight target rate. The markets determine the rates at which the treasury can borrow through the issuance of bonds. The Fed's actions will certainly influence the price of very short term bonds, but the Fed's influence on anything other than very short term bonds in the current environment is very muted. Currently, the most influential factor keeping bond prices high and yields low is the high demand for US treasuries coming from overseas governments and institutions. This is being caused by two factors : sluggish growth in overseas economies and the ongoing strength of the US dollar. With many European government bonds offering negative redemption yields, income investors see US yields as relatively attractive. Those non-US economies which do not have negative bond yields either have near zero yields or large currency risks or both. Political issues such as the survival of the Euro also weigh heavily on market perceptions of the current attractiveness of the US dollar. Italian banks may be about to deliver a shock to the Eurozone, and the Spanish and French banks may not be far behind. Another factor is the continued threat of deflation. Growth is slowing around the world which negatively effects demand. Commodity prices remain depressed. Low growth and recession outside of the US translate into a prolonged period of near zero interest rates elsewhere together with renewed QE programmes in Europe, Japan, and possibly elsewhere. This makes the US look relatively attractive and so there is huge demand for US dollars and bonds. Any significant move in US interest rates risks driving to dollar ever higher which would be very negative for the future earning of US companies which rely on exports and foreign income. All of this makes the market believe that the Fed's hands are tied and low bond yields are here for the foreseeable future. Of course, even in the US growth is relatively slow and vulnerable to a loss of steam following a move in interest rates."
},
{
"docid": "141174",
"title": "",
"text": "Smallest risk of default would depend on where Alice and Bob live I suppose, but lets assume they are in a lower yielding nation where default is not a big concern. Remember for instance that Greece was a lower yielding nation at one point and that the US has defaulted before. Let's start with Bob because he is easier to analyze. Yield curves inversions generally pre-date recessions which is generally not so good for Bob as rates tend to drop during recessions and he will be at the short end of the curve so his bonds will be less sensitive. However, he will generally get higher yields in good times to make up for this, but these higher yields come with a price in that he is generally much more sensitive to yield changes and can get much larger swings in portfolio value. First off as JB mentioned Alice would likely own inflation-linked (IL) bonds. Which behave fairly differently from Bob's bonds. However, to keep this simple lets say they live in a place without IL bonds or IL bonds are not a consideration. Then generally Alice has lower yielding bonds in good times but may do very well when the fed steps in during a crisis. So, who wins in the long run? Likely Christi who owns a mix of a broad index of stocks and bonds in a risk mix where she wouldn't have to sell in downturns. Especially, as Christi wouldn't have to pay the trading costs of moving her whole portfolio between long and short bonds. Between Bob and Alice however Bob would likely win in the long run as the markets generally reward risk taking in the long run. Still inflation (even without the IL bonds) and general rate trends (long-term rates are historically low right now) could have Bob losing for uncomfortably long periods."
},
{
"docid": "517279",
"title": "",
"text": "\"If the time horizon is not indicated, this is just a \"\"fair price\"\". The price of the stock, which corresponds with the fair value of the whole company. The value, which the whole business is worth, taking into consideration its net income, current bonds yield, level of risk of the business, perspective of the business etc.. The analyst thinks the price will sooner or later hit the target level (if the price is high, investors will exit stocks, if the price is cheap, investors will jump in), but no one knows, how much time will it take.\""
},
{
"docid": "590453",
"title": "",
"text": "If you're into math, do this thought experiment: Consider the outcome X of a random walk process (a stock doesn't behave this way, but for understanding the question you asked, this is useful): On the first day, X=some integer X1. On each subsequent day, X goes up or down by 1 with probability 1/2. Let's think of buying a call option on X. A European option with a strike price of S that expires on day N, if held until that day and then exercised if profitable, would yield a value Y = min(X[N]-S, 0). This has an expected value E[Y] that you could actually calculate. (should be related to the binomial distribution, but my probability & statistics hat isn't working too well today) The market value V[k] of that option on day #k, where 1 < k < N, should be V[k] = E[Y]|X[k], which you can also actually calculate. On day #N, V[N] = Y. (the value is known) An American option, if held until day #k and then exercised if profitable, would yield a value Y[k] = min(X[k]-S, 0). For the moment, forget about selling the option on the market. (so, the choices are either exercise it on some day #k, or letting it expire) Let's say it's day k=N-1. If X[N-1] >= S+1 (in the money), then you have two choices: exercise today, or exercise tomorrow if profitable. The expected value is the same. (Both are equal to X[N-1]-S). So you might as well exercise it and make use of your money elsewhere. If X[N-1] <= S-1 (out of the money), the expected value is 0, whether you exercise today, when you know it's worthless, or if you wait until tomorrow, when the best case is if X[N-1]=S-1 and X[N] goes up to S, so the option is still worthless. But if X[N-1] = S (at the money), here's where it gets interesting. If you exercise today, it's worth 0. If wait until tomorrow, there's a 1/2 chance it's worth 0 (X[N]=S-1), and a 1/2 chance it's worth 1 (X[N]=S+1). Aha! So the expected value is 1/2. Therefore you should wait until tomorrow. Now let's say it's day k=N-2. Similar situation, but more choices: If X[N-2] >= S+2, you can either sell it today, in which case you know the value = X[N-2]-S, or you can wait until tomorrow, when the expected value is also X[N-2]-S. Again, you might as well exercise it now. If X[N-2] <= S-2, you know the option is worthless. If X[N-2] = S-1, it's worth 0 today, whereas if you wait until tomorrow, it's either worth an expected value of 1/2 if it goes up (X[N-1]=S), or 0 if it goes down, for a net expected value of 1/4, so you should wait. If X[N-2] = S, it's worth 0 today, whereas tomorrow it's either worth an expected value of 1 if it goes up, or 0 if it goes down -> net expected value of 1/2, so you should wait. If X[N-2] = S+1, it's worth 1 today, whereas tomorrow it's either worth an expected value of 2 if it goes up, or 1/2 if it goes down (X[N-1]=S) -> net expected value of 1.25, so you should wait. If it's day k=N-3, and X[N-3] >= S+3 then E[Y] = X[N-3]-S and you should exercise it now; or if X[N-3] <= S-3 then E[Y]=0. But if X[N-3] = S+2 then there's an expected value E[Y] of (3+1.25)/2 = 2.125 if you wait until tomorrow, vs. exercising it now with a value of 2; if X[N-3] = S+1 then E[Y] = (2+0.5)/2 = 1.25, vs. exercise value of 1; if X[N-3] = S then E[Y] = (1+0.5)/2 = 0.75 vs. exercise value of 0; if X[N-3] = S-1 then E[Y] = (0.5 + 0)/2 = 0.25, vs. exercise value of 0; if X[N-3] = S-2 then E[Y] = (0.25 + 0)/2 = 0.125, vs. exercise value of 0. (In all 5 cases, wait until tomorrow.) You can keep this up; the recursion formula is E[Y]|X[k]=S+d = {(E[Y]|X[k+1]=S+d+1)/2 + (E[Y]|X[k+1]=S+d-1) for N-k > d > -(N-k), when you should wait and see} or {0 for d <= -(N-k), when it doesn't matter and the option is worthless} or {d for d >= N-k, when you should exercise the option now}. The market value of the option on day #k should be the same as the expected value to someone who can either exercise it or wait. It should be possible to show that the expected value of an American option on X is greater than the expected value of a European option on X. The intuitive reason is that if the option is in the money by a large enough amount that it is not possible to be out of the money, the option should be exercised early (or sold), something a European option doesn't allow, whereas if it is nearly at the money, the option should be held, whereas if it is out of the money by a large enough amount that it is not possible to be in the money, the option is definitely worthless. As far as real securities go, they're not random walks (or at least, the probabilities are time-varying and more complex), but there should be analogous situations. And if there's ever a high probability a stock will go down, it's time to exercise/sell an in-the-money American option, whereas you can't do that with a European option. edit: ...what do you know: the computation I gave above for the random walk isn't too different conceptually from the Binomial options pricing model."
},
{
"docid": "211308",
"title": "",
"text": "Say you buy a bond that currently costs $950, and matures in one year, at $1000 face value. It has one coupon ($50 interest payment) left. The coupon, $50, is 50/950 or 5.26%, but you get the face value, $1000, for an additional $50 return. This is why the yield to maturity is higher than current yield. If the maturity were in two years, the coupons still provide 5.26%, and the extra 1000/950 is another 5.26% over 2 years, or (approx) 2.6%/yr compounded, for a total YTM of 7.86%. This is a back-of envelope calculation, the real way to calculate is with a finance calculator. Entering PV (present value) FV (future value) PMT (coupon payment(s)) and N (number of periods). With no calculator or spreadsheet, my estimate will be pretty close."
},
{
"docid": "483123",
"title": "",
"text": "\"The question is: how do you quantify investment risk? As Michael S says, one approach is to treat investment returns as a random variable. Bill Goetzmann (Yale finance professor) told me that if you accept that markets are efficient or that the price of an asset reflects it's underlying value, then changes in price represent changes in value, so standard deviation naturally becomes the appropriate measure for riskiness of an asset. Essentially, the more volatile an asset, the riskier it is. There is another school of thought that comes from Ben Graham and Warren Buffett, which says that volatility is not inherently risky. Rather, risk should be defined as the permanent loss of capital, so the riskiness of an asset is the probability of a permanent loss of capital invested. This is easy to do in casino games, based on basic probability such as roulette or slots. But what has been done with the various kinds of investment risks? My point is saying that certain bonds are \"\"low risk\"\" isn't good enough; I'd like some numbers--or at least a range of numbers--and therefore one could calculate expected payoff (in the statistics sense). Or can it not be done--and if not, why not? Investing is more art than science. In theory, a Triple-A bond rating means the asset is riskless or nearly riskless, but we saw that this was obviously wrong since several of the AAA mortgage backed securities (MBS) went under prior to the recent US recession. More recently, the current threat of default suggests that bond ratings are not entirely accurate, since US Treasuries are considered riskless assets. Investors often use bond ratings to evaluate investments - a bond is considered investment grade if it's BBB- or higher. To adequately price bonds and evaluate risk, there are too many factors to simply refer to a chart because things like the issuer, credit quality, liquidity risk, systematic risk, and unsystematic risk all play a factor. Another factor you have to consider is the overall portfolio. Markowitz showed that adding a riskier asset can actually lower the overall risk of a portfolio because of diversification. This is all under the assumption that risk = variance, which I think is bunk. I'm aware that Wall Street is nothing like roulette, but then again there must be some math and heavy economics behind calculating risk for individual investors. This is, after all, what \"\"quants\"\" are paid to do, in part. Is it all voodoo? I suspect some of it is, but not all of it. Quants are often involved in high frequency trading as well, but that's another note. There are complicated risk management products, such as the Aladdin system by BlackRock, which incorporate modern portfolio theory (Markowitz, Fama, Sharpe, Samuelson, etc) and financial formulas to manage risk. Crouhy's Risk Management covers some of the concepts applied. I also tend to think that when people point to the last x number of years of stock market performance, that is of less value than they expect. Even going back to 1900 provides \"\"only\"\" 110 years of data, and in my view, complex systems need more data than those 40,500 data points. 10,000 years' worth of data, ok, but not 110. Any books or articles that address these issues, or your own informed views, would be helfpul. I fully agree with you here. A lot of work is done in the Santa Fe Institute to study \"\"complex adaptive systems,\"\" and we don't have any big, clear theory as of yet. Conventional risk management is based on the ideas of modern portfolio theory, but a lot of that is seen to be wrong. Behavioral finance is introducing new ideas on how investors behave and why the old models are wrong, which is why I cannot suggest you study risk management and risk models because I and many skilled investors consider them to be largely wrong. There are many good books on investing, the best of which is Benjamin Graham's The Intelligent Investor. Although not a book on risk solely, it provides a different viewpoint on how to invest and covers how to protect investments via a \"\"Margin of Safety.\"\" Lastly, I'd recommend Against the Gods by Peter Bernstein, which covers the history of risk and risk analysis. It's not solely a finance book but rather a fascinating historical view of risk, and it helps but many things in context. Hope it helps!\""
},
{
"docid": "484016",
"title": "",
"text": "Well I just had my interview about 2 weeks ago and some of these questions DID come up. So these are a start, but also you should just pay attention carefully to your finance course literature. Things like price/yield relations of bonds. How does maturity affect their price sensitivity? What does dividend issuance do to the value of an equity's stock? As to your next summer internship... I find it a little weird that you'd be involved in VC. No offense, but those people usually have many years of background in an industry before they start giving seed money to prospective companies. Maybe some specifics on what you'd actually be doing for a VC firm could help me help you."
},
{
"docid": "272093",
"title": "",
"text": "\"Yes, the \"\"effective\"\" and \"\"market\"\" rates are interchangeable. The present value formula will help make it possible to determine the effective interest rate. Since the bond's par value, duration, and par interest rate is known, the coupon payment can be extracted. Now, knowing the price the bond sold in the market, the duration, and the coupon payment, the effective market interest rate can be extracted. This involves solving large polynomials. A less accurate way of determining the interest rate is using a yield shorthand. To extract the market interest rate with good precision and acceptable accuracy, the annual coupon derived can be divided by the market price of the bond.\""
},
{
"docid": "296420",
"title": "",
"text": "It depends a lot on your investment period and the quality of the bonds that you want to invest. For example, if you want to invest until the maturity of the bonds, and the bonds are very safe (i.e. they are not expected to default), it does not matter that the interest rate rise. That is because at the maturity of the bond it will converge to its maturity value which will be independent of the change of the interest rates (although on the middle of the life the price of the bond will go down, but the coupon should remain constant -unless is a floating coupon bond-). An option could be to invest in an ETF with short term bonds (e.g. 1 year) with AAA credit rating (high quality, so very low default rate). It won't yield much, but is more than 0% if you hold it until maturity."
},
{
"docid": "222979",
"title": "",
"text": "1) Explicitly, how a company's share price in the secondary market affects the company's operations. (Simply: How does it matter to a company that its share price drops?) I have a vague idea of the answer, but I'd like to see someone cover it in detail. 2) Negative yield curves, or bonds/bills with negative yields Thanks!"
}
] |
4962 | Net Cash Flows from Selling the Bond and Investing | [
{
"docid": "158363",
"title": "",
"text": "Borrow the overpriced bond promising to repay the lender $1000 in one year. Sell the bond immediately for $960. Put $952.38 in the bank where the it will gain enough to be worth $1000 in one year. You have +$7.62 immediate cash flow. In one year repay the bond lender with the $1000 from the bank."
}
] | [
{
"docid": "118232",
"title": "",
"text": "\"Note that we do not comment on specific stocks here, and have no place doing so. If your question is only about that specific stock then it is off topic. I have not tried to answer that part below. The key to valuation is predicting the net present value of all of a company's cash flows; i.e. of their future profits and losses. Through a number of methods to long to explain here investment banks and hedge funds work out what they expect the company's cash flows to be and trade so that these future profits, losses etc. are priced into the stock price. Since future cash flows, profits or whatever you want to call them are priced in, the price of a stock shouldn't move at all on an earnings statement. This begs the question \"\"why do some stock prices move violently when they announce earnings?\"\" The models that the institutional investors use are not perfect and cannot take into account everything. An unexpected craze for a product or a supply chain agreement breaking down on not being as good as it seems will not be factored into this pricing and so the price will move based on the degree to which expectation is missed or exceeded. Since penny socks are speculative their value is based far more on the long term expected cash flows and less on the short run cash flows. This goes a long way to explaining why some of the highest market capitalisation penny stocks are those making consistent losses. This means that they can be far less susceptible to price movements after an earnings announcement even if it is well out of the consensus range. Higher (potential) future value comes with the higher risks of penny stocks which discounts current value. In the end if people's expectation of the company's performance reflects reality then the profitability is priced in and there will be no price movement. If the actuality is outside of the expected range then there will be a price movement.\""
},
{
"docid": "169240",
"title": "",
"text": "You can keep the cash in your account as long as you want, but you have to pay a tax on what's called capital gains. To quote from Wikipedia: A capital gain is a profit that results from investments into a capital asset, such as stocks, bonds or real estate, which exceeds the purchase price. It is the difference between a higher selling price and a lower purchase price, resulting in a financial gain for the investor.[1] Conversely, a capital loss arises if the proceeds from the sale of a capital asset are less than the purchase price. Thus, buying/selling stock counts as investment income which would be a capital gain/loss. When you are filing taxes, you have to report net capital gain/loss. So you don't pay taxes on an individual stock sale or purchase - you pay tax on the sum of all your transactions. Note: You do not pay any tax if you have a net capital loss. Taxes are only on capital gains. The amount you are taxed depends on your tax bracket and your holding period. A short term capital gain is gain on an investment held for less than one year. These gains are taxed at your ordinary income tax rate. A long term capital gain is gain on an investment held for more than one year. These gains are taxed at a special rate: If your income tax rate is 10 or 15%, then long term gains are taxed at 0% i.e. no tax, otherwise the tax rate is 15%. So you're not taxed on specific stock sales - you're taxed on your total gain. There is no tax for a capital loss, and investors sometimes take profits from good investments and take losses from bad investments to lower their total capital gain so they won't be taxed as much. The tax rate is expected to change in 2013, but the current ratios could be extended. Until then, however, the rate is as is. Of course, this all applies if you live in the United States. Other countries have different measures. Hope it helps! Wikipedia has a great chart to refer to: http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States."
},
{
"docid": "526329",
"title": "",
"text": "\"MD-Tech answered: The answer is in your question: derivatives are contracts so are enforced in the same way as any other contract. If the counterparty refuses to pay immediately they will, in the first instance be billed by any intermediary (Prime Broker etc.) that facilitated the contract. If they still refuse to pay the contract may stipulate that a broker can \"\"net off\"\" any outstanding payments against it or pay out using deposited cash or posted margins. The contract will usually include the broker as an interested party and so they can, but don't need to, report a default (such that this is) to credit agencies (in some jurisdictions they are required to by law). Any parties to the trade and the courts may use a debt collection agency to collect payments or seize assets to cover payment. If there is no broker or the counterparty still has not paid the bill then the parties involved (the party to the trade and any intermediaries) can sue for breach of contract. If they win (which would be expected) the counterparty will be made to pay by the legal system including, but not limited to, seizure of assets, enforced bankruptcy, and prison terms for any contempts of court rulings. All of this holds for governments who refuse to pay derivatives losses (as Argentina did in the early 20th century) but in that case it may escalate as far as war. It has never done so for derivatives contracts as far as I know but other breaches of contract between countries have resulted in armed conflict. As well as the \"\"hard\"\" results of failing to pay there are soft implications including a guaranteed fall in credit ratings that will result in parties refusing to do business with the counterparty and a separate loss of reputation that will reduce business even further. Potential employees and funders will be unwilling to become involved with such a party and suppliers will be unwilling to supply on credit. The end result in almost every way would be bankruptcy and prison sentences for the party or their senior employees. Most jurisdictions allow for board members at companies in material breach of contract to be banned from running any company for a set period as well. edit: netting off cash flows netting off is a process whereby all of a party's cash flows, positive and negative, are used to pay each other off so that only the net change is reflected in account balances, for example: company 1 cash flows netting off the total outgoings are 3M + 500k = 3.5M and total incomings are 1.2M + 1.1M + 1.2M = 3.5M so the incoming cash flows can be used to pay the outgoing cash flows leaving a net payment into company1's account of 0.\""
},
{
"docid": "214480",
"title": "",
"text": "Never trust a single source to give you a fair price, especially if they are not in competition, moreso if they know that's the case. I would want to get a quote from at least one other broker in terms of what they feel they can sell the bonds for. (and let them know they are not the only one you are getting a quote from) To start with you need information, such as when is the last time a bond like the ones you have traded and what did it sell for. Also sources for where you can sell the bonds and more info on the entire subject. SIFMA (The Securities Industry and Financial Markets Association) has a pretty helpful website called InvestingInBonds.com. I find it has a wealth of information, and is relatively free of bias. On the Municipal Markets at a Glance page you can get history for various bonds if you have the CUSIP (pronounced 'que-sip') numbers for the bonds. If these bonds are as good as the advisor is telling you they are, then they should be selling for a premium, and the recent sales history would reflect that. I'd find one or two other potential sellers, and get prices from each of them, compare that against recent history and go with whichever one seems to be offering you the best deal. In terms of choosing someone, and how to go about selling bonds, the same website has some excellent information and guidance on buying and selling bonds and How to Choose an Investment Professional which includes how to check up on them to see if they have ever faced disciplinary action, etc.. I would also consider any gains you might have to declare if you sell these for more than face value, and if that would be taxable etc. I would also question your 'too safe' judgement. Just because something is 'safe' I would not necessarily throw it out. You need to look at the return relative to the risk, and if you are not investing in a tax sheltered account, the affect of taxes on your net return. If these are earning a really good return, for fairly low risk, they might be worth keeping, especially if in today's market you need to take substantially more risk to get a comparable return. Taking more risk to get nearly the same return isn't very wise, since an aspect of the risk is perhaps not getting any return, or losing money. In a volatile market there can be a substantial benefit to having a lower risk 'foundation' that you build upon with more risky investments, in order to provide some risk diversity in your portfolio. You might want to consider for example how these bonds have done over the last 13 years, compared to a similar investment in the type of 'less safe' vehicles you are considering. Perhaps you'd be better off just holding these to maturity instead of gambling on something with a lot more risk that could go south on you."
},
{
"docid": "68640",
"title": "",
"text": "What does your cash flow look like? If you can comfortably afford to pay the extra cost and ride out the mortgage, it can be a nice investment. Better if you can manage the property yourself and are somewhat handy. Realize you should be able to raise rents over time so that it is cash flow even eventually. If cash flow is tight, sell it and re-fi your current place"
},
{
"docid": "134110",
"title": "",
"text": "So, the price-earnings ratio is price over earnings, easy enough. But obviously earnings are not static. In the case of a growing company, the earnings will be higher in the future. There will be extra earnings, above and beyond what the stock has right now. You should consider the future earnings in your estimate of what the company is worth now. One snag: Those extra earnings are future money. Future-money is an interesting thing, it's actually worth less than present-money- because of things like inflation, but also opportunity cost. So if you bought $100 in money that you'll have 20 years from now, you'd expect to pay less than $100. (The US government can sell you that money. It's called a Series EE Savings Bond and it would cost you $50. I think. Don't quote me on that, though, ask the Treasury.) So you can't compare future money with present-money directly, and you can't just add those dollars to the earnings . You need to compute a discount. That's what discounted cash-flow analysis is about: figuring out the future cash flow, and then discounting the future figuring out what it's worth now. The actual way you use the discount rate in your formula is a little scarier than simple division, though, because it involves discounting each year's earnings (in this case, someone has asserted a discount of 11% a year, and five years of earnings growth of 10%). Wikipedia gives us the formula for the value of the future cash flow: essentially adding all the future cash flows together, and then discounting them by a (compounded) rate. Please forgive me for not filling this formula out; I'm here for theory, not math. :)"
},
{
"docid": "248758",
"title": "",
"text": "\"The answer is in your question: derivatives are contracts so are enforced in the same way as any other contract. If the counterparty refuses to pay immediately they will, in the first instance be billed by any intermediary (Prime Broker etc.) that facilitated the contract. If they still refuse to pay the contract may stipulate that a broker can \"\"net off\"\" any outstanding payments against it or pay out using deposited cash or posted margins. The contract will usually include the broker as an interested party and so they can, but don't need to, report a default (such that this is) to credit agencies (in some jurisdictions they are required to by law). Any parties to the trade and the courts may use a debt collection agency to collect payments or seize assets to cover payment. If there is no broker or the counterparty still has not paid the bill then the parties involved (the party to the trade and any intermediaries) can sue for breach of contract. If they win (which would be expected) the counterparty will be made to pay by the legal system including, but not limited to, seizure of assets, enforced bankruptcy, and prison terms for any contempts of court rulings. All of this holds for governments who refuse to pay derivatives losses (as Argentina did in the early 20th century) but in that case it may escalate as far as war. It has never done so for derivatives contracts as far as I know but other breaches of contract between countries have resulted in armed conflict. As well as the \"\"hard\"\" results of failing to pay there are soft implications including a guaranteed fall in credit ratings that will result in parties refusing to do business with the counterparty and a separate loss of reputation that will reduce business even further. Potential employees and funders will be unwilling to become involved with such a party and suppliers will be unwilling to supply on credit. The end result in almost every way would be bankruptcy and prison sentences for the party or their senior employees. Most jurisdictions allow for board members at companies in material breach of contract to be banned from running any company for a set period as well. edit: netting off cash flows netting off is a process whereby all of a party's cash flows, positive and negative, are used to pay each other off so that only the net change is reflected in account balances, for example: company 1 cash flows netting off the total outgoings are 3M + 500k = 3.5M and total incomings are 1.2M + 1.1M + 1.2M = 3.5M so the incoming cash flows can be used to pay the outgoing cash flows leaving a net payment into company1's account of 0.\""
},
{
"docid": "110367",
"title": "",
"text": "I'm an Aussie and I purchased 5 of these properties from 2008 to 2010. I was looking for positive cash flow on properties for not too much upfront investment. The USA property market made sense because of the high Aussie $$ at the time, the depressed property market in the US and the expensive market here. I used an investment web-site that allowed me to screen properties by yield and after eliminating outliers, went for the city with the highest consistent yield performance. I settled on Toledo, Ohio as it had the highest yields and was severely impacted by the housing crisis. I bought my first property for $18K US which was a little over $17K AUD. The property was a duplex in great condition in a reasonable location. Monthly rentals $US900 and rents guaranteed and direct deposited into my bank account every month by section 8. Taxes $900 a year and $450 a year for water. Total return around $US8,000. My second property was a short sale in a reasonable area. The asking was $US8K and was a single family in good condition already tenanted. I went through the steps with the bank and after a few months, was the proud owner of another tenanted, positive cash flow property returning $600 a month gross. Taxes of $600 a year and water about the same. $US6K NET a year on a property that cost $AUD8K Third and fourth were two single family dwellings in good areas. These both cost $US14K each and returned $US700 a month each. $US28K for two properties that gross around $US15K a year. My fifth property was a tax foreclosure of a guy with 2 kids whose wife had left him and whose friend had stolen the money to repay the property taxes. He was basically on the bones of his butt and was staring down the barrel of being homeless with two kids. The property was in great condition in a reasonable part of town. The property cost me $4K. I signed up the previous owner in a land contract to buy his house back for $US30K. Payments over 10 years at 7% came out to around $US333 per month. I made him an offer whereby if he acted as my property manager, i would forgo the land contract payments and pay him a percentage of the rents in exchange for his services. I would also pay for any work he did on the properties. He jumped at it. Seven years later, we're still working together and he keeps the properties humming. Right now the AUD is around 80c US and looks like falling to around 65c by June 2015. Rental income in Aussie $$ is around $2750 every month. This month (Jan 2015) I have transferred my property manager's house back to him with a quit claim deed and sold the remaining houses for $US100K After taxes and commission I expect to receive in the vicinity of AUD$120K Which is pretty good for a $AUD53K investment. I've also received around $30K in rent a year. I'm of the belief I should be buying when everybody else is selling and selling when everybody else is buying. I'm on the look-out for my next positive cash flow investment and I'm thinking maybe an emerging market smashed by the oil shock. I wish you all happiness and success in your investment. Take care. VR"
},
{
"docid": "551029",
"title": "",
"text": "It is difficult to reconcile historical balance sheets with historical cash flow statements because there are adjustments that are not always clearly disclosed. Practitioners consider activity on historical cash flow statements but generally don't invest time reconciling historical accounts, instead focusing on balancing projected balance sheets / cash flow statements. If you had non-public internal books, you could reconcile the figures (presuming they are accurate). In regards to Mike Haskel's comment, there's also a section pertaining to operating capital, not just effects on net income."
},
{
"docid": "389750",
"title": "",
"text": "I'm a bond trader and we stayed away from this Tesla deal. Tesla is cash flow negative which is a terrible sign for a bond investor and is still relatively young and changing constantly. When assessing fixed income investments you want steady predictable cash flows and positive credit metrics. Tesla has none of that despite the run up in the stock. Even after taking all of these things into consideration the yields aren't even very high reflecting a compression in the amount of spread to treasuries investors are asking for taking on the risk in this kind of name. It speaks to an overvalued high yield market in general. Ford on the other hand is a mature business with much more favorable credit metrics (debt interest coverage, consistent management, a credit history of borrowing and repaying their loans, etc.). All of these things are reflected in the yield that investors require when buying bonds."
},
{
"docid": "482077",
"title": "",
"text": "\"leverage amplifies gains and losses, when returns are positive leverage makes them more positive, but when returns are negative leverage makes them more negative. since most investments have a positive return in \"\"the long run\"\", leverage is generally considered a good idea for long term illiquid investments like real estate. that said, to quote keynes: in the long run we are all dead. in the case of real estate specifically, negative returns generally happen when house prices drop. assuming you have no intention of ever selling the properties, you can still end up with negative returns if rents fall, mortgage rates increase or tax rates rise (all of which tend to correlate with falling property values). also, if cash flow becomes negative, you may be forced to sell during a down market, thereby amplifying the loss. besides loss scenarios, leverage can turn a small gain into a loss because leverage has a price (interest) that is subtracted from any amplified gains (and added to any amplified losses). to give a specific example: if you realize a 0.1% gain on x$ when unleveraged, you could end up with a 17% loss if leveraged 90% at 2% interest. (gains-interest)/investment=(0.001*x-0.02*0.9*x)/(x/10)=-0.017*10=-0.17=17% loss one reason leveraged investments are popular (particularly with real estate), is that the investor can file bankruptcy to \"\"erase\"\" a large negative net worth. this means the down side of a leveraged investment is limited for the highly leveraged investor. this leads to a \"\"get rich or start over\"\" mentality common among the self-made millionaire (and failed entrepreneurs). unfortunately, this dynamic also leads to serious problems for the banking sector in the event of a large nation-wide devaluation of real estate prices.\""
},
{
"docid": "220486",
"title": "",
"text": "\"You cannot actually buy an index in the true sense of the word. An index is created and maintained by a company like Standard and Poor's who licenses the use of the index to firms like Vanguard. The S&P 500 is an example of an index. The S&P 500 \"\"index includes 500 leading companies\"\", many finical companies sell products which track to this index. The two most popular products which track to indexes are Mutual Funds (as called Index Funds and Index Mutual Funds) and Exchange Traded Funds (as called ETFs). Each Index Mutual Fund or ETF has an index which it tracks against, meaning they hold securities which make up a sample of the index (some indexes like bond indexes are very hard to hold everything that makes them up). Looking at the Vanguard S&P 500 Index Mutual Fund (ticker VFINX) we see that it tracks against the S&P 500 index. Looking at its holdings we see the 500-ish stocks that it holds along with a small amount of bonds and cash to handle cash flow for people buying and sell shares. If we look at the Vanguard S&P 500 ETF (ticker VOO) we see that it also tracks against the S&P 500 index. Looking at its holdings we see they are very similar to the similar Index Mutual Fund. Other companies like T. Rowe Price have similar offering. Look at the T. Rowe Price Equity Index 500 Fund (ticker PREIX) its holdings in stocks are the same as the similar Vanguard fund and like the Vanguard fund it also holds a small amount of bonds and cash to handle cash flow. The only real difference between different products which track against the same index is in the expense ratio (fees for managing the fund) and in the small differences in the execution of the funds. For the most part execution of the funds do not really matter to most people (it has a very small effect), what matters is the expense (the fees paid to own the fund). If we just compare the expense ratio of the Vanguard and T. Rowe Price funds we see (as of 27 Feb 2016) Vanguard has an expense ratio of 0.17% for it Index Mutual Fund and 0.05% for its ETF, while T. Rowe Price has an expense ratio of 0.27%. These are just the fees for the funds themselves, there are also account maintenance fees (which normally go down as the amount of money you have invested at a firm go up) and in the case of ETFs execution cost (cost to trade the shares along with the difference between the bid and ask on the shares). If you are just starting out I would say going with the Index Mutual Fund would easier and most likely would cost less over-all if you are buying a small amount of shares every month. When choosing a company look at the expense ratio on the funds and the account maintenance fees (along with the account minimals). Vanguard is well known for having low fees and they in fact were the first to offer Index Mutual Funds. For more info on the S&P 500 index see also this Investopedia entry on the S&P 500 index. Do not worry if this is all a bit confusing it is to most people (myself included) at first.\""
},
{
"docid": "466315",
"title": "",
"text": "Why does the rising price of a bond pushes it's yield down? The bond price and its yield are linked; if one goes up, the other must go down. This is because the cash flows from the bond are fixed, predetermined. The market price of the bond fluctuates. Now what if people are suddenly willing to pay more for the same fixed payments? It must mean that the return, i.e. the yield, will be lower. Here we see that risk associated with the bonds in question has skyrocketed, and thus bonds' returns has skyrocketed, too. Am I right? The default risk has increased, yes. Now, I assume that bonds' price is determined by the market (issued by a state, traded at the market). Is that correct? Correct, as long as you are talking about the market price. Then who determines bonds' yields? I mean, isn't it fixed? Or - in the FT quote above - they are talking about the yields for the new bonds issued that particular month? The yield is not fixed - the cash flows are. Yield is the internal rate of return. See my answer above to your first question."
},
{
"docid": "344283",
"title": "",
"text": "\"While @JB's \"\"yes\"\" is correct, a few more points to consider: There is no tax penalty for withdrawing any time from a taxable investment, that is, one not using specific tax protections like 401k/IRA or ESA or HSA. But you do pay tax on any income or gain distributions you receive from a taxable investment in a fund (except interest on tax-exempt aka \"\"municipal\"\" bonds), and any net capital gains you realize when selling (or technically redeeming for non-ETF funds). Just like you do for dividends and interest and gains on non-fund taxable investments. Many funds have a sales charge or \"\"load\"\" which means you will very likely lose money if you sell quickly typically within at least several months and usually a year or more, and even some no-load funds, to discourage rapid trading that makes their management more difficult (and costly), have a \"\"contingent sales charge\"\" if you sell after less than a stated period like 3 months or 6 months. For funds that largely or entirely invest in equities or longer term bonds, the share value/price is practically certain to fluctuate up and down, and if you sell during a \"\"down\"\" period you will lose money; if \"\"liquid\"\" means you want to take out money anytime without waiting for the market to move, you might want funds focussing on short-term bonds, especially government bonds, and \"\"money market\"\" funds which hold only very short bonds (usually duration under 90 days), which have much more stable prices (but lower returns over the longer term).\""
},
{
"docid": "189298",
"title": "",
"text": "> Does it make sense to calculate the IRR based on the outstanding value of the project, or just use the cash flows paid out? What is the outstanding value of the project based on? I'm guessing it is the PV of net cash flow? The timing of each cash outflow (i.e. investment) is crucial to calculating a proper IRR because of time value of money. Putting in $x each year for 49 years will give you a different figure from putting in $49x in the first year and zero for the next 48 years because a larger figure is tied up for a longer time period."
},
{
"docid": "369816",
"title": "",
"text": "i cannot directly tell from the provided information if it is already included in Net A/R but if there is a balance sheet you can check yourself if the Total Cash Flow matches the difference between cash position year 0&1 and see if it is net or still to be included."
},
{
"docid": "432828",
"title": "",
"text": "\"This would inevitably lead to a few gatekeepers from which everyone trusts the bonds (ibm GE etc), and millions of small businesses which will have absolutely no access to capital. Once this happens, you will quickly end up with a shadow banking system, where companies like GE switch from making stuff to basically being banks, giving loans to other small businesses with no access to capital, etc. This is basically done in China in a slightly different way, but, the core state-owned enterprises have near unlimited access to capital, and they use this advantage to invest in, and buy up, any and all interesting companies, simply because they're the only organizations that can essentially \"\"print\"\" money. (Whether you agree with it being printing money or not, the fact is GE / IBM would be able to issue bonds almost whenever they want, similar to the Treasury's monthly bond auctions, and other firms simply unable to.) So... then you have a few key companies with nearly unlimited right to \"\"print\"\" (used loosely) cash. They use this advantage to push on other businesses, buy them up, or control them in many ways. And then they use this position to eventually take over anything that looks interesting. What you're imagining as being an open market where everyone's bonds have full information will quickly devolve into information overload, and people choosing the well known brands as their trusted source. Once that happens, the whole idea falls apart, and those few firms will find a way to control not only the money supply, but also who gets to use their money. You will also have situations where some mom-and-pop takes John-LLC bonds as payment for dinner, and when they try to give John-LLC bonds to their suppliers, their suppliers say 'no thanks, we only deal in IBM bonds.\"\" Mom-and-pop will find themselves stuck with paper that nobody wants to accept. And mom-and-pop will quickly find themselves in a cash flow crisis, as they have tons of paper, but none of their suppliers will accept that paper. The only way to get out of this situation would be to convince IBM or GE to give Mom-and-pop some GE bonds in exchange for the John-LLC they have that nobody will accept. Of course, GE and IBM being in the enviable position as some of the few trusted money printers can refuse to accept John-LLC bonds except at a severe discount. \"\"We know John gave you John-LLC bonds to pay for his dinner worth $100, but, we'll only give you $40 worth of GE bonds for it.\"\" Mom-and-pop will quickly be fucked and go out of business due to having no \"\"hard currency\"\" (aka trusted currency) that they can use to purchase their raw materials. Demand for GE bonds will skyrocket as everyone seeks a safe-haven (a trusted currency almost everyone will accept), adn GE will find the entire market begging them to print bonds even at no interest just so that the money supply can increase to hold the full amount of trade occurring in the territory. This is then no different from the Fed during the recession a few years ago (and up until now) where they sell tons of bonds at rock-bottom interest rates simly because all the world is looking for a safe place to put their cash. The difference, of course, is that GE / IBM can take all this money and issue themselves HUGE bonuses, either on the cash directly or on the profit they've amassed by being the only trusted money issuer, whereas government officials can not.\""
},
{
"docid": "249320",
"title": "",
"text": "While there are many very good and detailed answers to this question, there is one key term from finance that none of them used and that is Net Present Value. While this is a term generally associate with debt and assets, it also can be applied to the valuation models of a company's share price. The price of the share of a stock in a company represents the Net Present Value of all future cash flows of that company divided by the total number of shares outstanding. This is also the reason behind why the payment of dividends will cause the share price valuation to be less than its valuation if the company did not pay a dividend. That/those future outflows are factored into the NPV calculation, actually performed or implied, and results in a current valuation that is less than it would have been had that capital been retained. Unlike with a fixed income security, or even a variable rate debenture, it is difficult to predict what the future cashflows of a company will be, and how investors chose to value things as intangible as brand recognition, market penetration, and executive competence are often far more subjective that using 10 year libor rates to plug into a present value calculation for a floating rate bond of similar tenor. Opinion enters into the calculus and this is why you end up having a greater degree of price variance than you see in the fixed income markets. You have had situations where companies such as Amazon.com, Google, and Facebook had highly valued shares before they they ever posted a profit. That is because the analysis of the value of their intellectual properties or business models would, overtime provide a future value that was equivalent to their stock price at that time."
},
{
"docid": "337993",
"title": "",
"text": "\"This answer is about the USA. Each time you sell a security (a stock or a bond) or some other asset, you are expected to pay tax on the net gain. It doesn't matter whether you use a broker or mutual fund to make the sale. You still owe the tax. Net capital gain is defined this way: Gross sale prices less (broker fees for selling + cost of buying the asset) The cost of buying the asset is called the \"\"basis price.\"\" You, or your broker, needs to keep track of the basis price for each share. This is easy when you're just getting started investing. It stays easy if you're careful about your record keeping. You owe the capital gains tax whenever you sell an asset, whether or not you reinvest the proceeds in something else. If your capital gains are modest, you can pay all the taxes at the end of the year. If they are larger -- for example if they exceed your wage earnings -- you should pay quarterly estimated tax. The tax authorities ding you for a penalty if you wait to pay five- or six-figure tax bills without paying quarterly estimates. You pay NET capital gains tax. If one asset loses money and another makes money, you pay on your gains minus your losses. If you have more losses than gains in a particular year, you can carry forward up to $3,000 (I think). You can't carry forward tens of thousands in capital losses. Long term and short term gains are treated separately. IRS Schedule B has places to plug in all those numbers, and the tax programs (Turbo etc) do too. Dividend payments are also taxable when they are paid. Those aren't capital gains. They go on Schedule D along with interest payments. The same is true for a mutual fund. If the fund has Ford shares in it, and Ford pays $0.70 per share in March, that's a dividend payment. If the fund managers decide to sell Ford and buy Tesla in June, the selling of Ford shares will be a cap-gains taxable event for you. The good news: the mutual fund managers send you a statement sometime in February or March of each year telling what you should put on your tax forms. This is great. They add it all up for you. They give you a nice consolidated tax statement covering everything: dividends, their buying and selling activity on your behalf, and any selling they did when you withdrew money from the fund for any purpose. Some investment accounts like 401(k) accounts are tax free. You don't pay any tax on those accounts -- capital gains, dividends, interest -- until you withdraw the money to live on after you retire. Then that money is taxed as if it were wage income. If you want an easy and fairly reliable way to invest, and don't want to do a lot of tax-form scrambling, choose a couple of different mutual funds, put money into them, and leave it there. They'll send you consolidated tax statements once a year. Download them into your tax program and you're done. You mentioned \"\"riding out bad times in cash.\"\" No, no, NOT a good idea. That investment strategy almost guarantees you will sell when the market is going down and buy when it's going up. That's \"\"sell low, buy high.\"\" It's a loser. Not even Warren Buffett can call the top of the market and the bottom. Ned Johnson (Fidelity's founder) DEFINITELY can't.\""
}
] |
4962 | Net Cash Flows from Selling the Bond and Investing | [
{
"docid": "599925",
"title": "",
"text": "Investopedia has a good explanation of the term shorting which is what this is. In the simplest of terms, someone is borrowing the bond and selling it with the intent to replace the security and any dividends or coupons in the end. The idea is that if a bond is overvalued, one may be able to buy it back later for a cheaper price and pocket the difference. There are various rules about this including margin requirements to maintain since there is the risk of the security going up in price enough that someone may be forced into a buy to cover in the form of a margin call. If one can sell the bond at $960 now and then buy it back later for $952.38 then one could pocket the difference. Part of what you aren't seeing is what are other bonds doing in terms of their prices over time here. The key point here is that brokers may lend out securities and accrue interest on loaned securities for another point here."
}
] | [
{
"docid": "416839",
"title": "",
"text": "Most funds keep a certain amount in cash at all times to satisfy outflows. Net inflows will simply be added to the cash balance while net outflows subtract. When the cash gets too low for the manager's comfort level (depends on the typical pattern of net inflows and outflows, as well as anticipated flows based on recent performance), the manager will sell some of his least favorite holdings, and when the cash gets too high he will buy some new holdings or add to his favorite existing holdings. A passive fund works similarly, except the buys/sells are structured to minimize tracking error."
},
{
"docid": "306671",
"title": "",
"text": "Accounting profits and cash flow are two different things. Say for example that I sell you a widget and you pay me today. I deliver the widget to you in February. In accounting terms, the revenue isn't recorded until Feb even though I have the cash in October. There's also a lot of non-cash items that affect accounting income (depreciation, amortization, etc.) In a small, growing company, cash is the most important thing. Many startups know what their burn rate (how much net cash their out flowing each month) and runway (how many months they can survive with their given burn rate until they are literally out of cash) more intimately than their accounting profit. As for what qualifies as a startup, that's something that is debated in the startup world fairly often. I think the best take is from Paul Graham. http://paulgraham.com/growth.html"
},
{
"docid": "389750",
"title": "",
"text": "I'm a bond trader and we stayed away from this Tesla deal. Tesla is cash flow negative which is a terrible sign for a bond investor and is still relatively young and changing constantly. When assessing fixed income investments you want steady predictable cash flows and positive credit metrics. Tesla has none of that despite the run up in the stock. Even after taking all of these things into consideration the yields aren't even very high reflecting a compression in the amount of spread to treasuries investors are asking for taking on the risk in this kind of name. It speaks to an overvalued high yield market in general. Ford on the other hand is a mature business with much more favorable credit metrics (debt interest coverage, consistent management, a credit history of borrowing and repaying their loans, etc.). All of these things are reflected in the yield that investors require when buying bonds."
},
{
"docid": "466315",
"title": "",
"text": "Why does the rising price of a bond pushes it's yield down? The bond price and its yield are linked; if one goes up, the other must go down. This is because the cash flows from the bond are fixed, predetermined. The market price of the bond fluctuates. Now what if people are suddenly willing to pay more for the same fixed payments? It must mean that the return, i.e. the yield, will be lower. Here we see that risk associated with the bonds in question has skyrocketed, and thus bonds' returns has skyrocketed, too. Am I right? The default risk has increased, yes. Now, I assume that bonds' price is determined by the market (issued by a state, traded at the market). Is that correct? Correct, as long as you are talking about the market price. Then who determines bonds' yields? I mean, isn't it fixed? Or - in the FT quote above - they are talking about the yields for the new bonds issued that particular month? The yield is not fixed - the cash flows are. Yield is the internal rate of return. See my answer above to your first question."
},
{
"docid": "526329",
"title": "",
"text": "\"MD-Tech answered: The answer is in your question: derivatives are contracts so are enforced in the same way as any other contract. If the counterparty refuses to pay immediately they will, in the first instance be billed by any intermediary (Prime Broker etc.) that facilitated the contract. If they still refuse to pay the contract may stipulate that a broker can \"\"net off\"\" any outstanding payments against it or pay out using deposited cash or posted margins. The contract will usually include the broker as an interested party and so they can, but don't need to, report a default (such that this is) to credit agencies (in some jurisdictions they are required to by law). Any parties to the trade and the courts may use a debt collection agency to collect payments or seize assets to cover payment. If there is no broker or the counterparty still has not paid the bill then the parties involved (the party to the trade and any intermediaries) can sue for breach of contract. If they win (which would be expected) the counterparty will be made to pay by the legal system including, but not limited to, seizure of assets, enforced bankruptcy, and prison terms for any contempts of court rulings. All of this holds for governments who refuse to pay derivatives losses (as Argentina did in the early 20th century) but in that case it may escalate as far as war. It has never done so for derivatives contracts as far as I know but other breaches of contract between countries have resulted in armed conflict. As well as the \"\"hard\"\" results of failing to pay there are soft implications including a guaranteed fall in credit ratings that will result in parties refusing to do business with the counterparty and a separate loss of reputation that will reduce business even further. Potential employees and funders will be unwilling to become involved with such a party and suppliers will be unwilling to supply on credit. The end result in almost every way would be bankruptcy and prison sentences for the party or their senior employees. Most jurisdictions allow for board members at companies in material breach of contract to be banned from running any company for a set period as well. edit: netting off cash flows netting off is a process whereby all of a party's cash flows, positive and negative, are used to pay each other off so that only the net change is reflected in account balances, for example: company 1 cash flows netting off the total outgoings are 3M + 500k = 3.5M and total incomings are 1.2M + 1.1M + 1.2M = 3.5M so the incoming cash flows can be used to pay the outgoing cash flows leaving a net payment into company1's account of 0.\""
},
{
"docid": "248758",
"title": "",
"text": "\"The answer is in your question: derivatives are contracts so are enforced in the same way as any other contract. If the counterparty refuses to pay immediately they will, in the first instance be billed by any intermediary (Prime Broker etc.) that facilitated the contract. If they still refuse to pay the contract may stipulate that a broker can \"\"net off\"\" any outstanding payments against it or pay out using deposited cash or posted margins. The contract will usually include the broker as an interested party and so they can, but don't need to, report a default (such that this is) to credit agencies (in some jurisdictions they are required to by law). Any parties to the trade and the courts may use a debt collection agency to collect payments or seize assets to cover payment. If there is no broker or the counterparty still has not paid the bill then the parties involved (the party to the trade and any intermediaries) can sue for breach of contract. If they win (which would be expected) the counterparty will be made to pay by the legal system including, but not limited to, seizure of assets, enforced bankruptcy, and prison terms for any contempts of court rulings. All of this holds for governments who refuse to pay derivatives losses (as Argentina did in the early 20th century) but in that case it may escalate as far as war. It has never done so for derivatives contracts as far as I know but other breaches of contract between countries have resulted in armed conflict. As well as the \"\"hard\"\" results of failing to pay there are soft implications including a guaranteed fall in credit ratings that will result in parties refusing to do business with the counterparty and a separate loss of reputation that will reduce business even further. Potential employees and funders will be unwilling to become involved with such a party and suppliers will be unwilling to supply on credit. The end result in almost every way would be bankruptcy and prison sentences for the party or their senior employees. Most jurisdictions allow for board members at companies in material breach of contract to be banned from running any company for a set period as well. edit: netting off cash flows netting off is a process whereby all of a party's cash flows, positive and negative, are used to pay each other off so that only the net change is reflected in account balances, for example: company 1 cash flows netting off the total outgoings are 3M + 500k = 3.5M and total incomings are 1.2M + 1.1M + 1.2M = 3.5M so the incoming cash flows can be used to pay the outgoing cash flows leaving a net payment into company1's account of 0.\""
},
{
"docid": "407372",
"title": "",
"text": "\"QUICK ANSWER What @Mike Haskel wrote is generally correct that the indirect method for cash flow statement reporting, which most US companies use, can sometimes produce different results that don't clearly reconcile with balance sheet shifts. With regards to accounts receivables, this is especially so when there is a major increase or decrease in the company's allowances for doubtful accounts. In this case, there is more to the company's balance sheet and cash flow statements differences per its accounts receivables than its allowances for doubtful accounts seems responsible for. As explained below, the difference, $1.25bn, is likely owing more to currency shifts and how they are accounted for than to other factors. = = = = = = = = = = DIRTY DETAILS Microsoft Corp. generally sells to high-quality / high-credit buyers; mostly PC, server and other devices manufacturers and licensees. It hence made doubtful accounts provisions of $16mn for its $86,833mn (0.018%) of 2014 sales and wrote off $51mn of its carrying balance during the year. Its accounting for \"\"Other comprehensive income\"\" captures the primary differences of many accounts; specifically in this case, the \"\"foreign currency translation\"\" figure that comprises many balance sheet accounts and net out against shareholders' equity (i.e. those assets and liabilities bypass the income statement). The footnotes include this explanation: Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are recorded to other comprehensive income (“OCI”) What all this means is that those two balance sheet figures are computed by translating all the accounts with foreign currency balances (in this case, accounts receivables) into the reporting currency, US dollars (USD), at the date of the balance sheets, June 30 of the years 2013 and 2014. The change in accounts receivables cash flow figure is computed by first determining the average exchange rates for all the currencies it uses to conduct business and applying them respectively to the changes in each non-USD accounts receivables during the periods. For this reason, almost all multinational companies that report using indirect cash flow statements will have discrepancies between the changes in their reported working capital changes during a period and the dates of their balance sheet and it's usually because of currency shifts during the period.\""
},
{
"docid": "563405",
"title": "",
"text": "Your autograph analogy seems relevant to me. But it is not just speculation. In the long run, investing in stocks is like investing in the economy. In the long run, the economy is expected to grow , hence stock prices are expected to go up. Now in theory: the price of any financial instrument is equal to the net present value today of all the future cash flows from the instrument. So if company's earnings improve, shareholders hope that the earnings will trickle down to them either in form of dividends or in form of capital gain. So they buy the stock, creating demand for it. I can try to explain more if this did not make any sense. :)"
},
{
"docid": "449941",
"title": "",
"text": "\"These are meaningless statistics on multiple levels: 1. These value rises are as of 2016. This does not indicate any sort of significant trend in the rise in value of these bags over time. Did they lose 30% in 2015? Will value stagnate in 2018? 2. Even if a trend were established (it is not), it doesn't suggest any sort of future movements whatsoever, as past price movements don't ensure future movements. 3. The fundamental idea of \"\"investing\"\" in an accessory is questionable at best. While collectors will buy things like cars and art, and some will sit on them as stores of value, the economics of generating future returns on these items is not so logically sound as with stocks or bonds. These collectors items do not generate future value in a way that produces cash flows. An individual has to purely hope that somebody is willing to pay more for it in the future; the item does not fundamentally necessitate higher payment. This is the fundamental problem also with \"\"investing\"\" in commodities, and why a fundamentalist like Buffet would never do it. You bet on a commodity move (hopefully with information that you believe the market to be incorrectly synthesizing); you don't really \"\"invest\"\" in one. What makes a stock or bond (a company) different is that a company can be thought of as a black box that prints more money than it is fed. We feed money into a company as investors; the company uses that money to buy assets (e.g. Machines, inventory) at book value; the assets are made to work in tandem to produce goods/services that have more value than the sum of their parts; those goods/services are sold at the now higher value for a profit, and cash flows are returned to investors for an annual return on your investment (sometimes dividends aren't paid, but are reinvested with the expectation that reinvestment will lead to far larger dividends in the future). As such, the money investors feed into a company is turned into more money at the other end, and thus the company has produced more value than it's inputs alone. It has done so through the combination of resources (assets) in a way that makes their value greater than the sum of their parts. A company fundamentally is a logical investment (barring doubts about management's ability to create this value). It is like a black box that prints more money over time than you feed it. Purses do not; gold does not; oil does not. Don't invest in purses. Collect then if you love them, but don't bank on a payday.\""
},
{
"docid": "108770",
"title": "",
"text": "\"A bit strange but okay. The way I would think about this is again that you need to determine for what purpose you're computing this, in much the same way you would if you were to build out the model. The IPO valuation is not going to be relevant to the accretion/dilution analysis unless you're trying to determine whether the transaction was net accretive at exit. But that's a weird analysis to do. For longer holding periods like that you're more likely to look at IRR, not EPS. EPS is something investors look at over the short to medium term to get a sense of whether the company is making good acquisition decisions. And to do that short-to-medium term analysis, they look at earnings. Damodaran would say this is a shitty way of looking at things and that you should probably be looking at some measure of ROIC instead, and I tend to agree, but I don't get paid to think like an investor, I get paid to sell shit to them (if only in indirect fashion). The short answer to your question is that no, you should not incorporate what you are calling liquidation value when determining accretion/dilution, but only because the market typically computes accretion/dilution on a 3-year basis tops. I've never put together a book or seen a press release in my admittedly short time in finance that says \"\"the transaction is estimated to be X% accretive within 4 years\"\" - that just seems like an absurd timeline. Final point is just that from an accounting perspective, a gain on a sale of an asset is not going to get booked in either EBITDA or OCF, so just mechanically there's no way for the IPO value to flow into your accretion/dilution analysis there, even if you are looking at EBITDA/shares. You could figure the gain on sale into some kind of adjusted EBITDA/shares version of EPS, but this is neither something I've ever seen nor something that really makes sense in the context of using EPS as a standardized metric across the market. Typically we take OUT non-recurring shit in EPS, we don't add it in. Adding something like this in would be much more appropriate to measuring the success of an acquisition/investing vehicle like a private equity fund, not a standalone operating company that reports operational earnings in addition to cash flow from investing. And as I suggest above, that's an analysis for which the IRR metric is more ideally situated. And just a semantic thing - we typically wouldn't call the exit value a \"\"liquidation value\"\". That term is usually reserved for dissolution of a corporate entity and selling off its physical or intangible assets in piecemeal fashion (i.e. not accounting for operational synergies across the business). IPO value is actually just going to be a measure of market value of equity.\""
},
{
"docid": "156194",
"title": "",
"text": "Cap rate includes any interest on the mortgage and not the repayments of the mortgage. Cap rate represents the net income which is the gross rent minus all costs, including the interest on the loan. Mortgage repayments form part of your cash flow calculations not your return calculations. ROI is a calculation which works out your net income over the initial investment you made, which is you downpayment plus costs and not the value of the property."
},
{
"docid": "583234",
"title": "",
"text": "It is. The outstanding value is the net cash flow, but it will always be higher than cash outflow due to a constant growth rate/expected return. I was slightly confused when my manager told me to find the IRR before and after cash inflows (the whole life of the investment). Especially as IRR after cash inflows is higher than the former."
},
{
"docid": "189298",
"title": "",
"text": "> Does it make sense to calculate the IRR based on the outstanding value of the project, or just use the cash flows paid out? What is the outstanding value of the project based on? I'm guessing it is the PV of net cash flow? The timing of each cash outflow (i.e. investment) is crucial to calculating a proper IRR because of time value of money. Putting in $x each year for 49 years will give you a different figure from putting in $49x in the first year and zero for the next 48 years because a larger figure is tied up for a longer time period."
},
{
"docid": "110367",
"title": "",
"text": "I'm an Aussie and I purchased 5 of these properties from 2008 to 2010. I was looking for positive cash flow on properties for not too much upfront investment. The USA property market made sense because of the high Aussie $$ at the time, the depressed property market in the US and the expensive market here. I used an investment web-site that allowed me to screen properties by yield and after eliminating outliers, went for the city with the highest consistent yield performance. I settled on Toledo, Ohio as it had the highest yields and was severely impacted by the housing crisis. I bought my first property for $18K US which was a little over $17K AUD. The property was a duplex in great condition in a reasonable location. Monthly rentals $US900 and rents guaranteed and direct deposited into my bank account every month by section 8. Taxes $900 a year and $450 a year for water. Total return around $US8,000. My second property was a short sale in a reasonable area. The asking was $US8K and was a single family in good condition already tenanted. I went through the steps with the bank and after a few months, was the proud owner of another tenanted, positive cash flow property returning $600 a month gross. Taxes of $600 a year and water about the same. $US6K NET a year on a property that cost $AUD8K Third and fourth were two single family dwellings in good areas. These both cost $US14K each and returned $US700 a month each. $US28K for two properties that gross around $US15K a year. My fifth property was a tax foreclosure of a guy with 2 kids whose wife had left him and whose friend had stolen the money to repay the property taxes. He was basically on the bones of his butt and was staring down the barrel of being homeless with two kids. The property was in great condition in a reasonable part of town. The property cost me $4K. I signed up the previous owner in a land contract to buy his house back for $US30K. Payments over 10 years at 7% came out to around $US333 per month. I made him an offer whereby if he acted as my property manager, i would forgo the land contract payments and pay him a percentage of the rents in exchange for his services. I would also pay for any work he did on the properties. He jumped at it. Seven years later, we're still working together and he keeps the properties humming. Right now the AUD is around 80c US and looks like falling to around 65c by June 2015. Rental income in Aussie $$ is around $2750 every month. This month (Jan 2015) I have transferred my property manager's house back to him with a quit claim deed and sold the remaining houses for $US100K After taxes and commission I expect to receive in the vicinity of AUD$120K Which is pretty good for a $AUD53K investment. I've also received around $30K in rent a year. I'm of the belief I should be buying when everybody else is selling and selling when everybody else is buying. I'm on the look-out for my next positive cash flow investment and I'm thinking maybe an emerging market smashed by the oil shock. I wish you all happiness and success in your investment. Take care. VR"
},
{
"docid": "432828",
"title": "",
"text": "\"This would inevitably lead to a few gatekeepers from which everyone trusts the bonds (ibm GE etc), and millions of small businesses which will have absolutely no access to capital. Once this happens, you will quickly end up with a shadow banking system, where companies like GE switch from making stuff to basically being banks, giving loans to other small businesses with no access to capital, etc. This is basically done in China in a slightly different way, but, the core state-owned enterprises have near unlimited access to capital, and they use this advantage to invest in, and buy up, any and all interesting companies, simply because they're the only organizations that can essentially \"\"print\"\" money. (Whether you agree with it being printing money or not, the fact is GE / IBM would be able to issue bonds almost whenever they want, similar to the Treasury's monthly bond auctions, and other firms simply unable to.) So... then you have a few key companies with nearly unlimited right to \"\"print\"\" (used loosely) cash. They use this advantage to push on other businesses, buy them up, or control them in many ways. And then they use this position to eventually take over anything that looks interesting. What you're imagining as being an open market where everyone's bonds have full information will quickly devolve into information overload, and people choosing the well known brands as their trusted source. Once that happens, the whole idea falls apart, and those few firms will find a way to control not only the money supply, but also who gets to use their money. You will also have situations where some mom-and-pop takes John-LLC bonds as payment for dinner, and when they try to give John-LLC bonds to their suppliers, their suppliers say 'no thanks, we only deal in IBM bonds.\"\" Mom-and-pop will find themselves stuck with paper that nobody wants to accept. And mom-and-pop will quickly find themselves in a cash flow crisis, as they have tons of paper, but none of their suppliers will accept that paper. The only way to get out of this situation would be to convince IBM or GE to give Mom-and-pop some GE bonds in exchange for the John-LLC they have that nobody will accept. Of course, GE and IBM being in the enviable position as some of the few trusted money printers can refuse to accept John-LLC bonds except at a severe discount. \"\"We know John gave you John-LLC bonds to pay for his dinner worth $100, but, we'll only give you $40 worth of GE bonds for it.\"\" Mom-and-pop will quickly be fucked and go out of business due to having no \"\"hard currency\"\" (aka trusted currency) that they can use to purchase their raw materials. Demand for GE bonds will skyrocket as everyone seeks a safe-haven (a trusted currency almost everyone will accept), adn GE will find the entire market begging them to print bonds even at no interest just so that the money supply can increase to hold the full amount of trade occurring in the territory. This is then no different from the Fed during the recession a few years ago (and up until now) where they sell tons of bonds at rock-bottom interest rates simly because all the world is looking for a safe place to put their cash. The difference, of course, is that GE / IBM can take all this money and issue themselves HUGE bonuses, either on the cash directly or on the profit they've amassed by being the only trusted money issuer, whereas government officials can not.\""
},
{
"docid": "12329",
"title": "",
"text": "Your mortgage represents a negative cash flow of $X for N months. The typical mortgage prepayment doesn't reduce your next payment, but does reduce the length of the mortgage. If you look at the amortization table of a 30 year loan, you might see a payment of $1000 but only $50 going to principal. So if on day one you send an extra $51 or so to the bank, you find that in 30 years you just saved that $1000 payment. In effect, it was a long term bond or CD, yielding the post tax rate of the mortgage. Say your loan were 7%. At 7%, money doubles every 10 years or so. 30 years is 3 doubles or 8X. If I were to offer you $1000 and ask for $7500 in 30 years, you might accept it, with an agreement to buy me out if you refinanced. For me, that would be an investment. Just like buying a bond. In fact, there is a real return, as you see the cash flow at the end. The payments 'not made' are your payback. Those who insist it's not an investment are correct in the strict sense of the word's definition, but pedantic for the fact in practice, the prepayment is a choice to be considered alongside other investment choices. When I have a mortgage, I am the mortgagor, the bank, the mortgagee. Same as a company issuing a bond, the Bank holds my bond and I'm making payments to them. They hold my bond as an investment. There is no question of that. In fact, they package these and sell them as CMOs, groups of mortgages. A pre-payment is me buying back the last coupon on my mortgage. I fail to see the distinction between me 'buying back' $10K in future coupons on my own loan or me investing $10K in someone else's loans. The real question for me is whether this makes sense when rates are so low. At 4%, I'd say it's a matter of prioritizing any high rate debt and any other investments that might yield more. But even so, it's an investment yielding 4%. Over the years, I've developed the priorities of where to put new money - The priorities are debatable. I have my opinion, and my reasons to back them up. In general, it's a balance between risk and return. In my opinion, there's something wrong with ignoring a dollar for dollar match on the 401(k) in most circumstances. Others seem to prefer being 100% debt free before saving at all. There's a balance that might be different for each individual. As I started, the mortgage is a fixed return, with no chance to just get it back if needed. If your cash savings is pretty high, and the choice is a .001% CD or prepay a 4% mortgage, I'd use some funds to pay it down. But not to the point you have no liquid reserves."
},
{
"docid": "187110",
"title": "",
"text": "This is a very common misconception. I've been studying equities and credits for a while now, and the simplest way to explain the difference is this: - Credit is about stable cash flows. Your investment in a bond has almost (read: almost) nothing to do with growth rate. It has everything to do with how stable the cash flows are and interest coverage. - Equity is about growth. No wonder companies with highly irregular cash flows (e.g., every single young tech company in the history of tech companies) can have the most in-demand equity while few bond investors would touch them with a ten foot pole."
},
{
"docid": "369816",
"title": "",
"text": "i cannot directly tell from the provided information if it is already included in Net A/R but if there is a balance sheet you can check yourself if the Total Cash Flow matches the difference between cash position year 0&1 and see if it is net or still to be included."
},
{
"docid": "343693",
"title": "",
"text": "\"The answer to your question depends very much on your definition of \"\"long-term\"\". Because let's make something clear: an investment horizon of three to six months is not long term. And you need to consider the length of time from when an \"\"emergency\"\" develops until you will need to tap into the money. Emergencies almost by definition are unplanned. When talking about investment risk, the real word that should be used is volatility. Stocks aren't inherently riskier than bonds issued by the same company. They are likely to be a more volatile instrument, however. This means that while stocks can easily gain 15-20 percent or more in a year if you are lucky (as a holder), they can also easily lose just as much (which is good if you are looking to buy, unless the loss is precipitated by significantly weaker fundamentals such as earning lookout). Most of the time stocks rebound and regain lost valuation, but this can take some time. If you have to sell during that period, then you lose money. The purpose of an emergency fund is generally to be liquid, easily accessible without penalties, stable in value, and provide a cushion against potentially large, unplanned expenses. If you live on your own, have good insurance, rent your home, don't have any major household (or other) items that might break and require immediate replacement or repair, then just looking at your emergency fund in terms of months of normal outlay makes sense. If you own your home, have dependents, lack insurance and have major possessions which you need, then you need to factor those risks into deciding how large an emergency fund you might need, and perhaps consider not just normal outlays but also some exceptional situations. What if the refrigerator and water heater breaks down at the same time that something breaks a few windows, for example? What if you also need to make an emergency trip near the same time because a relative becomes seriously ill? Notice that the purpose of the emergency fund is specifically not to generate significant interest or dividend income. Since it needs to be stable in value (not depreciate) and liquid, an emergency fund will tend towards lower-risk and thus lower-yield investments, the extreme being cash or the for many more practical option of a savings account. Account forms geared toward retirement savings tend to not be particularly liquid. Sure, you can usually swap out one investment vehicle for another, but you can't easily withdraw your money without significant penalties if at all. Bonds are generally more stable in value than stocks, which is a good thing for a longer-term portion of an emergency fund. Just make sure that you are able to withdraw the money with short notice without significant penalties, and pick bonds issued by stable companies (or a fund of investment-grade bonds). However, in the present investment climate, this means that you are looking at returns not significantly better than those of a high-yield savings account while taking on a certain amount of additional risk. Bonds today can easily have a place if you have to pick some form of investment vehicle, but if you have the option of keeping the cash in a high-yield savings account, that might actually be a better option. Any stock market investments should be seen as investments rather than a safety net. Hopefully they will grow over time, but it is perfectly possible that they will lose value. If what triggers your financial emergency is anything more than local, it is certainly possible to have that same trigger cause a decline in the stock market. Money that you need for regular expenses, even unplanned ones, should not be in investments. Thus, you first decide how large an emergency fund you need based on your particular situation. Then, you build up that amount of money in a savings vehicle rather than an investment vehicle. Once you have the emergency fund in savings, then by all means continue to put the same amount of money into investments instead. Just make sure to, if you tap into the emergency fund, replenish it as quickly as possible.\""
}
] |
4968 | Reasons behind a large price movement of a penny stock without any recent news releases? | [
{
"docid": "387022",
"title": "",
"text": "\"Yes, in my humble opinion, it can be \"\"safe\"\" to assume that — but not in the sense that your assumption is necessarily or likely correct. Rather, it can be \"\"safe\"\" in the respect that assuming the worst — even if wrong! — could save you from a likely painful and unsuccessful speculation in the highly volatile stock of a tiny company with no revenue, no profits, next to no assets, and continued challenges to its existence: \"\"There is material uncertainty about whether the Company will be able to obtain the required financing. This material uncertainty casts significant doubt about the Company’s ability to continue as a going concern.\"\" As a penny stock, they are in good company. Still, there are a variety of other reasons why such a stock might have gone up, or down, and no one [here] can say for sure. Even if there was a news item, any price reaction to news could just amount to speculation on the part of others having enough money to move the stock. There are better investments out there, and cheaper thrills, than most penny stocks.\""
}
] | [
{
"docid": "393496",
"title": "",
"text": "\"As I understand it, Implied Volatility represents the expected gyrations of an options contract over it's lifetime. No, it represents that expected movement of the underlying stock, not the option itself. Yes, the value of the option will move roughly in the same direction the value of the stock, but that's not what IV is measuring. I even tried staring at the math behind the Options pricing model to see if that could make more sense for me but that didn't help. That formula is correct for the Black-Scholes model - and it is not possible (or at least no one has done it yet) to solve for s to create a closed-form equation for implied volatility. What most systems do to calculate implied volatility is plug in different values of s (standard deviation) until a value for the option is found that matches the quoted market value ($12.00 in this example). That's why it's called \"\"implied\"\" volatility - the value is implied from market prices, not calculated directly. The thing that sticks out to me is that the \"\"last\"\" quoted price of $12 is outside of the bid-ask spread of $9.20 to $10.40, which tells me that the underlying stock has dropped significantly since the last actual trade. If the Implied Vol is calculated based on the last executed trade, then whatever algorithm they used to solve for a volatility that match that price couldn't find a solution, which then choose to show as a 0% volatility. In reality, the volatility is somewhere between the two neighbors of 56% and 97%, but with such a short time until expiry, there should be very little chance of the stock dropping below $27.50, and the value of the option should be somewhere around its intrinsic value (strike - stock price) of $9.18.\""
},
{
"docid": "24856",
"title": "",
"text": "\"In general, there should be a \"\"liquidity premium\"\" which means that less-liquid stocks should be cheaper. That's because to buy such a stock, you should demand a higher rate of return to compensate for the liquidity risk (the possibility that you won't be able to sell easily). Lower initial price = higher eventual rate of return. That's what's meant when Investopedia says the security would be cheaper (on average). Is liquidity good? It depends. Here's what illiquidity is. Imagine you own a rare piece of art. Say there are 10 people in the world who collect this type of art, and would appreciate what you own. That's an illiquid asset, because when you want to sell, maybe those 10 people aren't buying - maybe they don't want your particular piece, or they all happen to be short on funds. Or maybe worse, only one of them is buying, so they have all the negotiating leverage. You'll have to lower your price if you're really in a hurry to sell. Maybe if you lower your price enough, you can get one of the 10 buyers interested, even if none were initially. An illiquid asset is bad for sellers. Illiquid means there aren't enough buyers for you to get a bidding war going at the time of your choosing. You'll potentially have to wait around for buyers to turn up, or for a stock, maybe you'd have to sell a little bit at a time as buyers want the shares. Illiquid can be bad for buyers, too, if the buyer is for some reason in a hurry; maybe nobody is selling at any given time. But, usually buyers don't have to be in a hurry. An exception may be if you short sell something illiquid (brokers often won't let you do this, btw). In that case you could be a forced buyer and this could be very bad on an illiquid security. If there are only one or two sellers out there, they now have the negotiating leverage and they can ask whatever price they want. Illiquidity is very bad when mixed with margin or short sales because of the potential for forced trades at inopportune times. There are plenty of obscure penny stocks where there might be only one or two trades per day, or fewer. The spread is going to be high on these because the bids at a given time will just be lowball offers from buyers who aren't really all that interested, unless you want to give your stock away, in which case they'll take it. And the asks are going to be from sellers who want to get a decent price, but maybe there aren't really any buyers willing to pay, so the ask is just sitting there with no takers. The bids and asks may be limit orders that have been sitting open for 3 weeks and forgotten about. Contrast with a liquid asset. For example, a popular-model used car in good condition would be a lot more liquid than a rare piece of art, though not nearly as liquid as most stocks. You can probably find several people that want to buy it living nearby, and you're not going to have to drop the price to get a buyer to show up. You might even get those buyers in a bidding war. From illiquid penny stocks, there's a continuum all the way up to the most heavily-traded stocks such as those in the S&P500. With these at a given moment there will be thousands of buyers and sellers, so the spread is going to close down to nearly zero. If you think about it, just statistically, if there are thousands of bids and thousands of asks, then the closest bid-ask pair is going to be close together. That's a narrow spread. While if there are 3 bids and 2 asks on some illiquid penny stock, they might be dollars away from each other, and the number of shares desired might not match up. You can see how liquidity is good in some situations and not in others. An illiquid asset gives you more opportunity to get a good deal because there aren't a lot of other buyers and sellers around and there's some opportunity to \"\"negotiate\"\" within the wide spread. For some assets maybe you can literally negotiate by talking to the other party, though obviously not when trading stocks on an exchange. But an illiquid asset also means you might get a bad deal, especially if you need to sell quickly and the only buyers around are making lowball offers. So the time to buy illiquid assets is when you can take your time on both buying and selling, and will have no reason for a forced trade on a particular timeline. This usually means no debt is involved, since creditors (including your margin broker) can force you to trade. It also means you don't need to spend the money anytime soon, since if you suddenly needed the money you'd have a forced trade on your hands. If you have the time, then you put a price out there that's very good for you, and you wait for someone to show up and give you that price - this is how you get a good deal. One more note, another use of the term liquid is to refer to assets with low or zero volatility, such as money market funds. An asset with a lot of volatility around its intrinsic or true value is effectively illiquid even if there's high trade volume, in that any given point in time might not be a good time to sell, because the price isn't at the right level. Anyway, the general definition of a liquid investment is one that you'd be comfortable cashing out of at a moment's notice. In this sense, most stocks are not all that liquid, despite high trading volume. In different contexts people may use \"\"liquid\"\" in this sense or to mean a low bid-ask spread.\""
},
{
"docid": "536196",
"title": "",
"text": "Don't ever quantify a stock's preference/performance just based on the dividend it is paying out Volatility defined by movements in the the stock's price, affected by factors embedded in the stock e.g. the corporation, the business it is in, the economy, the management etc etc. Apple wasn't paying dividends but people were still buying into it. Same with Amazon, Berkshire, Google. These companies create value by investing their earnings back into their company and this is reflected in their share prices. Their earnings create more value in this way for the stockholders. The holding structures of these companies also help them in their motives. Supposedly $100 invested in either stocks. For keeping things easy, you invested at the same time in both, single annual dividend and prices more or less remain constant. Company A: $5/share at 20% annual dividend yield. Dividend = $20 Company B: $10/share at 20% annual dividend yield Dividend = $20 You receive the same dividend in both cases. Volatility willn't affect you unless you are trading, or the stock market tanks, or some very bad news comes out of either company or on the economy. Volatility in the long term averages out, except in specific outlier cases e.g. Lehman bankruptcy and the financial crash which are rare but do happen. In general case the %price movements in both stocks would more or less follow the markets (not exactly though) except when relevant news for either corporations come out."
},
{
"docid": "20372",
"title": "",
"text": "\"Alright, I will go through bullet point by bullet point and try to best figure out what you will be doing in layman's terms. Please bear in mind that I do not work for a hedge fund, but rather a much larger entity, so a lot of the work you will be doing is pre-populated: >Roles = In this role, the individual will be the main point of contact for the client on all things related to understanding their trading profit & loss and how their valuations have been sourced. In addition, the Product Controller will work with internal partner areas to ensure all required processes have been performed to verify the valuation accuracy of the client’s portfolio. From my understanding you will act as the middle man between the client and the analyst. As such here is how a real interaction may go: Client X calls, you answer - \"\"Hello, iDade's office, how can I assist you?\"\" Client X asks, \"\"Hey iDadeMarshall I was curious what my capital gains were on my FB purchase?\"\" iDade: \"\"Ok, let me pull up your account, just a moment. It seems as though your current capital are $30,000 (*LOL*) on your FB purchase.\"\" Client X: \"\"Hmm, well do I have any significant loses that I may be able to sell off to off-set the tax on the capital gains?\"\" iDade: \"\"Why yes you do, it seems AAPL has taken a mighty tumble, would you like to sell a position to assist you in offsetting?\"\" Client X: \"\"Why that would be great. Thanks for your help.\"\" The conversation could go on, and that is a pretty deep conversation for the level you are going in, but I have had conversations like these before. The second part of the bullet just means that you will be checking and rechecking the grunt work of the analyst, and in some places actually performing the grunt work. The work will most likely be along the lines of finding returns for different time periods. Popular desired time periods are inception, ytd, qtd, 1yr, 2yr, etc. Remember all of these time periods are not good stand alone; they must be compared to a relevant benchmark. For instance, you would not want to compare the Barclays Intermediate Ag to an equity portfolio. The most common benchmark for an equity portfolio is going to be the S&P 500, but you have to look at where the portfolio is focused. If it is a SCV you may want to look more towards something like the IJS (iShares S&P SmallCap 600 Value Index). In the end always remember that any number you come up with is always relative to a benchmark. A plain return number is useless. >Knowledge/Skills = Knowledge of cash and derivative products across various markets • Knowledge of pricing and valuation • Knowledge of profit and loss reporting and related attribution analysis Pretty much they just want to make sure that if a client asks about a forward/future contract as well as any swap/option that you understand what they are. This bullet points screams “I KNOW WHAT I AM DOING EVEN THOUGH NOBODY KNOWS WHAT IS GOING ON IN THE ECONOMY.” Be up on your current events have a personal conjecture about what you feel is going to happen moving forward, but do not convey it. If you know that the unemployment was the main driver behind today’s poor market then you will be good for the day, because that will suffice for any call in that relates to “why is the market down?” One of my favorite quotes about the current economy is as follows: “Anyone around here, who isn't confused about what’s going on, doesn't understand.\"\" As scary as it is, that is the honest truth. Nobody knows what is about to happen and if anyone tells you they do, they are lying and you need to run away, quickly. I am assuming you know how to calculate profit and loss – I don’t really know of a *special* way to twist the numbers around. >Major Duties = Managing the daily P&L process for one or more client trading desks o Daily review of Quality Control checks o Working with trading desk(s) on P&L differences/inquiries o Working with offshore Product Control Team (India) on QC process o Delivering a final daily (and month-end) P&L statement to the client • Understanding and explaining the key drivers behind the P&L movements • Preparing/Managing monthly (or more frequently as required) price verification process and associated reporting • Updating and maintaining pricing policy for each financial type that is included in the consultant’s P&L reporting • Ad/hoc projects to meet and enhance client deliverables All this means is that you will be sending out the due diligence to the client and you will ensure you are using the proper closing price and include any deposits/withdrawals during the month into your calculation. The main point is knowing the reasons the price moved throughout the day/month. KEEP UP on current events and make sure that you understand a vast knowledge of economic data. For what your day-to-day activity may be, I can walk you through it. Let’s say you get in at 8am. You will get in at 8, read economic data/recent news articles until about 10; from there you will update client A-F P/L worksheet until about noon. You will eat a quick lunch until about 1230 and continue on the grind of E-M until about 4. From 4-5 you will reread what happened at the end of the day and an overall economic activity report for the day. You may stay until 8 or 9 (if you are in a banking hub/NYC), but a lot of the older guys will leave at this time. This is your time to shine. Stay as late as you can and pump out as much work as you can. As for your interview, they may ask you what will be a good play for the next 6 months to a year – you should respond with common themes in the market. The most common theme is the dividend growth play. A ton of people are not predicting large amount of growth for the next 5-10 years, I believe I read something earlier that JPM lowered their growth forecasts by about 30% recently, so dividends IS the play. Dividend payers are generally well established companies (blue chip) that have a strong foothold in their respective industry/sector. There are a ton of funds sprouting out everywhere to follow this trend (you could throw out a few funds for brownie points, I’ll give you some – MADVX and VDIGX are pretty common). I hope this helps and let me know if anything wasn’t clear (wrote it pretty quickly). I am off to have a drink or two or three, I’ll check this in the morning though.\""
},
{
"docid": "325566",
"title": "",
"text": "\"Is investing a good idea with a low amount of money? Yes. I'll take the angle that you CAN invest in penny stocks. There's nothing wrong with that. The (oversimplified) suggestion I would make is to answer the question about your risk aversion. This is the four quadrant (e.g., http://njaes.rutgers.edu:8080/money/riskquiz/) you are introduced to when you first sit down to open your brokerage (stocks) or employer retirement account (401K). Along with a release of liability in the language of \"\"past performance is not an indicator...\"\" (which you will not truly understand until you experience a market crash). The reason I say this is because if you are 100% risk averse, then it is clear which vehicles you want to have in your tool belt; t-bills, CDs, money market, and plain vanilla savings. Absolutely nothing wrong with this. Don't let anyone make you feel otherwise with remarks like \"\"your money is not working for you sitting there\"\". It's extremely important to be absolutely honest with yourself in doing this assessment, too. For example, I thought I was a risk taker except when the market tumbled, I reacted exactly how a knee-jerk investor would. Also, I feel it's not easy to know just how honest you are with yourself as we are humans, and not impartial machines. So the recommendation I would give is to make a strong correlation to casino gambling. In other words, conventional advice is to only take \"\"play money\"\" to the casino. This because you assume you WILL lose it. Then you can enjoy yourself at the casino knowing this is capital that you are okay throwing in the trash. I would strongly caution you to only ever invest capital in the stock market that you characterize as play money. I'm convinced financial advisors, fund managers, friends will disagree. Still, I feel this is the only way you will be completely okay when the market fluctuates -- you won't lose sleep. IF you choose this approach, then you can start investing any time. That five drachma you were going to throw away on lottery tickets? transfer it into your Roth IRA. That twenty yen that you were going to ante in your weekly poker night? transfer it into your index fund. You already got past the investors remorse of (losing) that money. IF you truly accept that amount as play money, then you CAN put it into penny stocks. I'll get lots of criticism here. However, I maintain that once you are truly okay with throwing that cash away (like you would drop it into a slot machine), then it's the same whether you lose it one way or in another investment vehicle.\""
},
{
"docid": "276960",
"title": "",
"text": "I'll just add this: In the best hedge funds and proprietary trading funds, stock selection is approached very scientifically in order to minimize losses/maximize gains. Researchers think of a trading idea and carefully test it to see which methods of stock selection work and how well, and finally they combine them. Every day researchers update their models based on the past performance of each indicator. All this is just too much work to be done manually. Firms use machine learning methods to understand markets. They try to figure out what is normal, what did not happen correctly at a specific time, what will happen in future. For instance, they use deep learning networks to look at unlabeled data, and figure out what is normal and what is not. These networks can analyze an unstructured haystack of noise, and separate out the signal. This is very relevant to finance and markets because finding the patterns and anomalies in market data has been the bread and butter of traders for decades. Deep learning networks give us applications like feature learning. By 'features,' I'm referring to certain attributes in data that indicate an event. By anticipating them, we can help predict future price movements. New technology is allowing us to break new ground in managing risk, to be a-typical and manage risk in ever-improving ways. It's the responsibility of every trader, whether working for themselves or others, to take advantage of this technology to improve the collective investing experience. I care very deeply about this. I have many close friends, in the finance world and without, who have lost large amounts of money to poor trade tools and lack of transparency."
},
{
"docid": "576624",
"title": "",
"text": "As said by others, buying shares of a company will not support it directly. But let's think about two example companies: Company A, which has 90 % stocks owned by supporters, and Company B, which has only 1 % of stocks owned by supporters. Both companies release bad news, for example profits have decreased. In Company B, most investors might want to sell their stock quickly and the price will plummet. In Company A, the supporters continue believing in the company and will not want to sell it. The price will drop less (usually, but it can drop even more if the sellers of Company A are very desperate to get rid of the stock). So, why is it important for the company to have a high stock price? In the short-term, it's not important. One example is that the company can release more stocks and receive more financing by doing that. Other reasons are listed here: http://www.investopedia.com/articles/basics/03/020703.asp"
},
{
"docid": "569627",
"title": "",
"text": "Volumes are used to predict momentum of movement, not the direction of it. Large trading volumes generally tend to create a price breakout in either positive or negative direction. Especially in relatively illiquid stocks (like small caps), sudden volume surges can create sharp price fluctuations."
},
{
"docid": "421039",
"title": "",
"text": "Unissued capital is only a token restriction. When a company is incorporated a maximum number of shares is specified in the legal documentation. Most companies will make this an extremely large number so they never face that limitation. See here. You wouldn't necessarily expect the stock price to change. The reason a company issues new stock is as a way to raise capital. Although new stock is issued, the cash raised by the sale becomes an Asset on the company's balance sheet. There's a good worked example in this Wikipedia article. Following a rights issue the Liabilities of the company will increase to account for the increase in owner's equity, but the Assets will also increase by the same amount with the cash received. Whether the stock price changes will depend upon what price the stock is issued at and on the market's opinions about the company's growth potential now it has new capital to invest. If the new stock is issued at the same price as the current market price, there's no particular reason to expect the share price to change. Again Wikipedia has more detail. When new stock is issued it is usually offered to existing shareholders first, in proportion to their current holding. If the shareholder decides to purchase the new stock in full then their position won't be diluted. If they opt not to buy the new stock, they will now own a smaller percentage of the company as their stocks will make up a smaller part of the now larger number of shares."
},
{
"docid": "584633",
"title": "",
"text": "It seems that you're interested in an asset which you can hold that would go up when the gold price went down. It seems like a good place to start would be an index fund, which invests in the general stock market. When the gold market falls, this would mainly affect gold mining companies. These do not make up a sizable portion of any index fund, which is invested broadly in the market. Unfortunately, in order to act on this, you would also have to believe that the stock market was a good investment. To test this theory, I looked at an ETF index fund which tracks the S&P 500, and compared it to an ETF which invests in gold. I found that the daily price movements of the stock market were positively correlated with the price of gold. This result was statistically significant. The weekly price movements of the stock market were also correlated with the price of gold. This result was also statistically significant. When the holding period was stretched to one month, there was still a positive relationship between the stock market's price moves and the price of gold. This result was not statistically significant. When the holding period was stretched to one year, there was a negative relationship between the price changes in the stock market and the price of gold. This result was not statistically significant, either."
},
{
"docid": "165163",
"title": "",
"text": "\"As others have pointed out, there are often many factors that are contributing to a stock's movement other than the latest news. In particular, the overall market sentiment and price movement very often is the primary driver in any stock's change on a given day. But in this case, I'd say your anecdotal observation is correct: All else equal, announcements of layoffs tend to drive stock prices upwards. Here's why: To the public, layoffs are almost always a sign that a company is willing to do whatever is needed to fix an already known and serious problem. Mass layoffs are brutally hard decisions. Even at companies that go through cycles of them pretty regularly, they're still painful every time. There's a strong personal drain on the chain of executives that has to decide who loses their livelihood. And even if you think most execs don't care (and I think you'd be wrong) it's still incredibly distracting. The process takes many weeks, during which productivity plummets. And it's demoralizing to everyone when it happens. So companies very rarely do it until they think they have to. By that point, they are likely struggling with some very publicly known problems - usually contracting (or negative) margins. So, the market's view of the company at the time just before layoffs occur is almost always, \"\"this company has problems, but is unable or unwilling to solve them.\"\". Layoffs signal that both of those possibilities are incorrect. They suggest that the company believes that layoffs will fix the problem, and that they're willing to make hard calls to do so. And that's why they usually drive prices up.\""
},
{
"docid": "445943",
"title": "",
"text": "\"Supply and Demand, pure and simple! There are two basic forms of this - a change in the quantity demanded/supplied at any given price, and a true change in the amount of demand/supply itself. Please note that this can be distinct from the underlying change in the value of the company and/or its expected future cash flows, which are a function of both financial performance and future expectations. If more people want the stock that are willing to sell it at a given price at a given point in time, sellers will begin to offer the stocks at higher prices until the market is no longer willing to bear the new price, and vice versa. This will reduce the quantity of stocks demanded by buyers until the quantity demanded and the quantity supplied once again reach an equilibrium, at which point a transaction occurs. Because people are motivated to buy and sell for different reasons at different times, and because people have different opinions on a constant flow of new information, prices change frequently. This is one of the reasons why executives of a recent IPO don't typically sell all of their stock at once. In addition to legal restrictions and the message this would send to the market, if they flooded the market with additional quantities of stock supplied, all else being equal, since there is no corresponding increase in the quantity demanded, the price would drop significantly. Sometimes, the demand itself for a company's stock shifts. Unlike a simple change in price driven by quantity supplied versus quantity demanded, this is a more fundamental shift. For example, let's suppose that the current demand for rare earth metals is driven by their commercial applications in consumer electronics. Now if new devices are developed that no longer require these metals, the demand for them will fall, regardless of the actions of individual buyers and sellers in the market. Another example is when the \"\"rules of the game\"\" for an industry change dramatically. Markets are behavioral. In this sense prices are most directly driven by human behavior, which hopefully is based on well-informed opinions and facts. This is why sometimes the price keeps going up when financial performance decreases, and why sometimes it does not rise even while performance is improving. This is also why some companies' stock continues to rise even when they lose huge sums of money year after year. The key to understanding these scenarios is the opinions and expectations that buyers and sellers have of that information, which is expressed in their market behavior.\""
},
{
"docid": "295786",
"title": "",
"text": "\"My prediction: They are purposefully suppressing the price. Chinese crypto-exchanges will be temporarily closed at the end of this month. The Communist party leaders and PBoC insiders will have access to cheap bitcoin. After they are sufficiently happy with their bitcoin acquisition, they release a new statement that says exchanges can re-open. The supply has been significantly reduced because of insiders attaining bitcoin behind the scenes during the \"\"shut down\"\". Because of the low supply, the price skyrockets to $10k. They all make significant sums of money. So do you want to be on the sidelines during this, or do you want to join in on the fun? I know what I'll be doing :)\""
},
{
"docid": "471978",
"title": "",
"text": "\"You might consider learning how the \"\"matching\"\" or \"\"pairing\"\" system in the market operates. The actual exchange only happens when both a buyer and a seller overlap their respect quotes. Sometimes orders \"\"go to market\"\" for a particular volume. Eg get me 10,000 Microsoft shares now. which means that the price starts at the current lowest seller, and works up the price list until the volume is met. Like all market it trades, it has it's advantages, and it's dangers. If you are confident Microsoft is going to bull, you want those shares now, confident you'll recoup the cost. Where if you put in a priced order, you might get only none or some shares. Same as when you sell. If you see the price (which is the price of the last completed \"\"successful\"\" trade. and think \"\"I'm going to sell 1000 shares\"\". then you give the order to the market (or broker), and then the same as what happened as before. the highest bidder gets as much as they asked for, if there's still shares left over, they go to the next bidder, and so on down the price... and the last completed \"\"successful\"\" trade is when your last sale is made at the lowest price of your batch. If you're selling, and selling 100,000 shares. And the highest bidder wants 1,000,000 shares you'll only see the price drop to that guys bid. Why will it drop (off the quoted price?). Because the quoted price is the LAST sale, clearly if there's someone still with an open bid on the market...then either he wants more shares than were available (the price stays same), or his bid wasn't as high as the last bid (so when you sale goes through, it will be at the price he's offering). Which is why being able to see the price queues is important on large traders. It is also why it can be important put stops and limits on your trades, een through you can still get gapped if you're unlucky. However putting prices (\"\"Open Orders\"\" vs \"\"(at)Market Orders\"\") can mean that you're sitting there waiting for a bounce/spike while the action is all going on without you). safer but not as much gain (maybe ;) ) that's the excitement of the market, for every option there's advantages...and risks... (eg missing out) There are also issues with stock movement, shadowing, and stop hunting, which can influence the price. But the stuff in the long paragraphs is the technical reasons.\""
},
{
"docid": "389562",
"title": "",
"text": "If the period is consistent for company X, but occurs in a different month as Company Y, it might be linked to the release of their annual report, or the payment of their annual dividend. Companies don't have to end their fiscal year near the end of the Calendar year, therefore these end of year events could occur in any month. The annual report could cause investors to react to the hard numbers of the report compared to what wall street experts have been predicting. The payment of an annual dividend will also cause a direct drop in the price of the stock when the payment is made. There will also be some movement in prices as the payment date approaches."
},
{
"docid": "352485",
"title": "",
"text": "The answer is that other than a small number of applications (the approx. 10% of gold production that goes to 'industrial uses') gold does not have intrinsic value beyond being pretty and rare (and useful for making jewelry.) There are a number of 'industrial' applications and uses for gold (see other answers for a list) but the volume consumed this way is fairly small, especially relative to the capacity to mine new gold and reclaim existing gold. If you removed investment, and jewelry usage (especially culturally driven jewelry usage) then there's no way the remaining uses for industry and dentistry could sustain the price levels we currently see for gold. Furthermore, and perhaps more importantly, the best data I can find for this shows the total number of tons consumed for industrial uses has been shrinking for several years now, and that was prior to recent price increases, so it is difficult to tie that reduced demand to increasing prices. And one might postulate in a 'collapsed society' you seem to be referring to in your question, that a lot of the recent industrial demand (e.g. the '50 cents of gold in each cellphone') could quite possibly disappear entirely. The argument many people use for gold having value is usually 'been used as money for thousands of years'. But this confuses gold having a value of its own with the reasons why something makes a useful currency. Gold has a large number of characteristics that make it an ideal currency, and of all the elements available it is perhaps the best physical element to serve as a currency. BUT just as with a dollar bill, just because it is a good currency, does NOT give it an intrinsic value. Any currency is only worth what someone will trade you for it. The value is set by the economy etc., not the medium used as a currency. So yes, people will probably always use gold as money, but that doesn't make the money worth anything, it's just a medium of exchange. Incidentally two other things should be noted. The first is that you have a problem when the medium itself used for a currency becomes worth more than the face value. Hence why we stopped using silver in coins, and there were concerns over pennies due to the price of copper. This leads to the second point, which is that currently, gold is TOO RARE to suffice as a world currency, hence why all countries went off the gold standard years ago. The size of national and global economies was growing faster than the supply of gold, and hence it was becoming impossible to have enough gold to back all the currencies (inflation concerns aside)."
},
{
"docid": "260836",
"title": "",
"text": "There is a misunderstanding somewhere that your question didn't illuminate. You should have lost $0.04 as you say. Assuming the prices are correct the missing $0.02 aren't covered by a reasonable interpretations of the Robinhood fees schedule. For US-listed stocks: $0 plus SEC fees: 0.00221% of principal ($22.10 per $1,000,000 of principal) plus Trading Activity Fee: $0.000119/share rounded to nearest penny plus short/long term capital gains taxes The total fee rate is 0.002329% or 0.00002329*the price of the trade. With you trades totaling around $11, the fee would be ~0.000256 or ~1/40 of a penny. The answer is probably that they charge $0.01 for any fraction of a penny. It's difficult to explain as anything other than avarice, so I won't try."
},
{
"docid": "558617",
"title": "",
"text": "Note that the formula for Price to Book ratio is: Stock Price / {[Total Assets - (Intangible Assets + Liabilities)] / Stock Outstanding} http://www.investopedia.com/terms/p/price-to-bookratio.asp http://www.investopedia.com/articles/fundamental/03/112603.asp There's a number of factors that could lead to a lower than 1. The primary reason, imho, could be the company is in a state of retiring stock with debt. The company is selling penny stocks (only to get people more interested in it's later development) which are inherently undervalued. There may be other reasons, but definitely check out both articles."
},
{
"docid": "143334",
"title": "",
"text": "You should not trade based on what news is just released, if you try you will be too slow to react most of the time. In many cases the news is already priced into the stock during the anticipation of the news being released. Other times as soon as the news is released the price will gap up or down in response to the news. Some times when you think that the news is good, like new record profits have been achieved, but the share price goes down instead of up. This may be due to the expectation of the record profits by analysts to be 20% more than last year, but the company only achieves 10% more than last year. So the news is actually seen as bad because, even though record profits, it hasn't met expectations. The same can happen in the other direction, a company may make a loss and the share price goes up. This may be because it was expected to make a 50% loss but only made a 20% loss due to cost cutting, so this is seen as a good thing and the price can shoot up, especially if it had been beaten down for months. An other example is when the Federal Reserve in the USA put up interest rates earlier this month. Some may have seen this as bad news and expected share prices to fall, but instead prices rallied. This was actually seen as good news, firstly because it had been expected for a long time, and secondly and more importantly because a small rise in interest rates after many years of near zero rates is a sign of the economy finally starting to improve. If the economy is improving, that means more people will have jobs, more people will be spending more money, companies will start to make higher revenues and start to expand, which means higher profits and higher share prices. A better way to trade is to have a written trading plan and use technical analysis to develop a set of buy and sell criteria that you follow to the tea. Then back test your trading plan through various market conditions to make sure you get a positive expectancy."
}
] |
4981 | Where can I find open source portfolio management software? | [
{
"docid": "45218",
"title": "",
"text": "Take a look at this: http://code.google.com/p/stock-portfolio-manager/ It is an open source project aimed to manage your stock portfolio."
}
] | [
{
"docid": "205280",
"title": "",
"text": "\"According to what little information is available currently, this fund is most akin to an actively managed exchange traded fund rather than an investment trust. An investment trust is an actively managed, closed-end fund that is tradeable on the stock market. \"\"Closed-end\"\" means that there are a fixed number of shares available for trading, so if you wish to buy or sell shares in a closed-end fund you need to find someone willing to sell or buy shares. \"\"Actively managed\"\" means that the assets are selected by the fund managers in the belief that they will perform well. This is in contrast to a \"\"passively managed\"\" fund which simply tracks an underlying index. The closed-end nature of investment trusts means that the share price is not well correlated to the value of the underlying assets. Indeed, almost all UK investment trusts trade at a significant discount to their net asset value. This reflects their historic poor performance and relatively weak liquidity. Of course there are some exceptions to this. Examples of open-end funds are unit trust (US = mutual funds) and ETFs (exchange traded funds). They are \"\"open-end\"\" funds in the sense that the number of shares/units available will change according to demand. Most importantly, the price of a share/unit will be strongly correlated to the net asset value of the underlying portfolio. In general, for an open-end fund, if the net asset value of the fund is X and there are Y shares/units outstanding, then the price of a share/unit will be X/Y. Historic data shows that passively managed funds (index trackers) \"\"always\"\" outperform actively managed funds in the long term. One of the big issues with actively managed funds is they have relatively high management fees. The Peoples Trust will be charging about 1% with a promise that this should come down over time. Compare this to a fee of 0.05% on a large, major market index tracking ETF. Further, the 1% headline fee being touted by Peoples Trust is a somewhat misleading, since they are paying their employees bonuses with shares in the fund. This will cause dilution of the net asset value per share and can be read as addition management fees by proxy. Since competent fund managers will demand high incomes, bonus shares could easily double the management fees, depending on the size of the fund. In summary, history has shown that the promises of active fund managers rarely (if ever) come to fruition. Personally, I would not consider this to be an attractive investment and would look more towards a passively managed major market index ETF with low management fees.\""
},
{
"docid": "303680",
"title": "",
"text": "Designed for both centralized and distributed development teams, SCM Anywhere Standalone, SQL Server-based software configuration management (SCM) software, helps development teams deliver software products faster and promotes team collaboration through centralized control of source code files, team activities, work item status and bug reports."
},
{
"docid": "421987",
"title": "",
"text": "Since then I had gotten a job at a supermarket stocking shelves, but recently got fired because I kept zoning out at work This is not a good sign for day trading, where you spend all day monitoring investments. If you start focusing on the interesting math problem and ignoring your portfolio, you can easily lose money. Not so big a problem for missed buy opportunities, but this could be fatal for missed sale opportunities. Realize that in day trading, if you miss the uptick, you can get caught in a stock that is now going down. And I agree with those who say that you aren't capitalized well enough to get started. You need significantly more capital so that you can buy a diversified portfolio (diversification is your limitation, not hedging). Let's say that you make money on two out of three stocks on average. What are the chances that you will lose money on three stocks in a row? One in twenty-seven. What if that happens on your first three stocks? What if your odds at starting are really one in three to make money? Then you'll lose money more than half the time on each of your first three stocks. The odds don't favor you. If you really think that finance would interest you, consider signing up for an internship at an investment management firm or hedge fund. Rather than being the person who monitors stocks for changes, you would be the person doing mathematical analysis on stock information. Focusing on the math problem over other things is then what you are supposed to be doing. If you are good at that, you should be able to turn that into a permanent job. If not, then go back to school somewhere. You may not like your schooling options, but they may be better than your work options at this time. Note that most internships will be easier to get if you imply that you are only taking a break from schooling. Avoid outright lying, but saying things like needing to find the right fit should work. You may even want to start applying to schools now. Then you can truthfully say that you are involved in the application process. Be open about your interest in the mathematics of finance. Serious math minds can be difficult to find at those firms. Given your finances, it is not practical to become a day trader. If you want proof, pick a stock that is less than $100. Found it? Write down its current price and the date and time. You just bought that stock. Now sell it for a profit. Ignore historical data. Just monitor the current price. Missed the uptick? Too bad. That's reality. Once you've sold it, pick another stock that you can afford. Don't forget to mark your price down for the trading commission. A quick search suggests that $7 a trade is a cheap price. Realize that you make two trades on each stock (buy and sell), so that's $14 that you need to make on every stock. Keep doing that until you've run out of money. Realize that that is what you are proposing to do. If you can make enough money doing that to replace a minimum wage job, then we're all wrong. Borrow a $100 from your mom and go to town. But as others have said, it is far more realistic to do this with a starting stake of $100,000 where you can invest in multiple stocks at once and spread your $7 trading fee over a hundred shares. Starting with $100, you are more likely to run out of money within ten stocks."
},
{
"docid": "220032",
"title": "",
"text": "So My question is. Is my credit score going to be hit? Yes it will affect your credit. Not as much as missing payments on the debt, which remains even if the credit line is closed, and not as much as missing payments on other bills... If so what can I do about it? Not very much. Nothing worth the time it would take. Like you mentioned, reopening the account or opening another would likely require a credit check and the inquiry will add another negative factor. In this situation, consider the impact on your credit as fact and the best way to correct it is to move forward and pay all your bills on time. This is the number one key to improving credit score. So, right now, the key task is finding a new job. This will enable you to make all payments on time. If you pay on time and do not overspend, your credit score will be fine. Can I contact the creditors to appeal the decision and get them to not affect my score at the very least? I know they won't restore the account without another credit check). Is there anything that can be done directly with the credit score companies? Depending on how they characterize the closing of the account, it may be mostly a neutral event that has a negative impact than a negative event. By negative events, I'm referring to bankruptcy, charge offs, and collections. So the best way to recover is to keep credit utilization below 30% and pay all your bills and debt payments on time. (You seem to be asking how to replace this line of credit to help you through your unemployment.) As for the missing credit line and your current finances, you have to find a way forward. Opening new credit account while you're not employed is going to be very difficult, if not impossible. You might find yourself in a situation where you need to take whatever part time gig you can find in order to make ends meet until your job search is complete. Grocery store, fast food, wait staff, delivery driver, etc. And once you get past this period of unemployment, you'll need to catch up on all bills, then you'll want to build your emergency fund. You don't mention one, but eating, paying rent/mortgage, keeping current on bills, and paying debt payments are the reasons behind the emergency fund, and the reason you need it in a liquid account. Source: I'm a veteran of decades of bad choices when it comes to money, of being unemployed for periods of time, of overusing credit cards, and generally being irresponsible with my income and savings. I've done all those things and am now paying the price. In order to rebuild my credit, and provide for my retirement, I'm having to work very hard to save. My focus being financial health, not credit score, I've brought my bottom line from approximately 25k in the red up to about 5k in the red. The first step was getting my payments under control. I have also been watching my credit score. Two years of on time mortgage payments, gradual growth of score. Paid off student loans, uptick in score. Opened new credit card with 0% intro rate to consolidate a couple of store line of credit accounts. Transferred those balances. Big uptick. Next month when utilization on that card hits 90%, downtick that took back a year's worth of gains. However, financially, I'm not losing 50-100 a month to interest. TLDR; At certain times, you have to ignore the credit score and focus on the important things. This is one of those times for you. Find a job. Get back on your feet. Then look into living debt free, or working to achieve financial independence."
},
{
"docid": "384983",
"title": "",
"text": "\"You mentioned three concepts: (1) trading (2) diversification (3) buy and hold. Trading with any frequency is for people who want to manage their investments as a hobby or profession. You do not seem to be in that category. Diversification is a critical element of any investment strategy. No matter what you do, you should be diversified. All the way would be best (this means owning at least some of every asset out there). The usual way to do this is to own a mutual or index fund. Or several. These funds own hundreds or thousands of stocks, so that buying the fund instantly diversifies you. Buy and hold is the only reasonable approach to a portfolio for someone who is not interested in spending a lot of time managing it. There's no reason to think a buy-and-hold portfolio will underperform a typical traded portfolio, nor that the gains will come later. It's the assets in the portfolio that determine how aggressive/risky it is, not the frequency with which it is traded. This isn't really a site for specific recommendations, but I'll provide a quick idea: Buy a couple of index funds that cover the whole universe of investments. Index funds have low expenses and are the cheapest/easiest way to diversify. Buy a \"\"total stock market\"\" fund and a \"\"total bond fund\"\" in a ratio that you like. If you want, also buy an \"\"international fund.\"\" If you want specific tickers and ratios, another forum would be better(or just ask your broker or 401(k) provider). The bogleheads forum is one that I respect where people are very happy to give and debate specific recommendations. At the end of the day, responsibly managing your investment portfolio is not rocket science and shouldn't occupy a lot of time or worry. Just choose a few funds with low expenses that cover all the assets you are really interested in, put your money in them in a reasonable-ish ratio (no one knows that the best ratio is) and then forget about it.\""
},
{
"docid": "276400",
"title": "",
"text": ">Oh definitely, you just need to be willing to work in Bismarck ND, or various parts of the rustbelt. And it's not that you're getting paid especially high, it's that everything is so insanely cheap (for the most part). That's not what I mean though, it's easy to find locations where cost of living is cheap, its difficult (but possible) to find locations where the average salary for your field isn't reflected in that lower cost of living. For example New Hampshire, the property costs are fairly low - you can find a great house for 250k-300k - but the average salary of a software developer is still high, and not just relatively, it would be considered high in New York as well. I've found houses in New Hampshire that stay on the market for $350k that would be nabbed up in a weekend for 1M easily in my current location, and the average salary is comparable so just imagine what that implies in terms of quality of life."
},
{
"docid": "189275",
"title": "",
"text": "\"I'm familiar with and have traded U.S.-listed LEAPS and I've always used the CBOE quotes page you linked to. So, I too was surprised I couldn't find 3M (MMM) LEAPS quotes at that page, even after checking the \"\"List all options, LEAPS, Credit Options & Weeklys if avail.\"\" radio button. Used to work! Fortunately, I was able to get access to the full chain of option quotes from the CBOE's other quotes page: Go to the \"\"Quotes & Data\"\" menu, then select Delayed Quotes - NEW! Here's how: I think the new interface is terrible: it's too many steps to get to the information desired. I preferred the all-in-one table of the Delayed Quotes Classic page, the one you linked to. As to why that classic page isn't yielding the full chain, I can only suggest it is a recently introduced bug (software defect). I certainly was able to get LEAPS quotes from that page before. On Yahoo! Finance option quotes: I don't know why their chain is incomplete – I can't see the logic, for instance, as to why MMM Jan 2012 60 calls are missing. I thought at first it may be lack of volume or open interest, but nope. Anyway, I don't trust Yahoo! to provide accurate, reliable quotes anyway, having seen too many errors and missing data in particular in the feed of Canadian stocks, which I also trade. I rely on the exchange's quotes, and my broker's real-time quotes. I check Yahoo! only for convenience sake, and when it actually matters I go to the other more reliable sources. For what it's worth, though, you can also get full chain option quotes at NASDAQ. See here for the 3M (MMM) example then click on the \"\"Jan 12\"\" link near the top. However, I would consider CBOE's quotes more definitive, since they are the options exchange.\""
},
{
"docid": "291578",
"title": "",
"text": "\"Rolling an old 401k into a new 401k is generally only for ease of management. For example, how many bank accounts do you really want? As long as the funds are reasonably allocated I've found it can be a useful \"\"mind game\"\" to leave it separate. Sometimes it's desirable to ignore an account and let it grow, and it is a nice surprise when finally adding all the account balances together. In other words, I keep thinking I've got X (the amount of my biggest or current 401k), which affects/helps my habits and desire to save. When I add them all together I'm shocked to find out I've got Y (the total of all accounts). Personally, I've had big paperwork problems transferring an old 403b (same type process as 401k) even when I had an adviser helping me move it. In the end it was worth moving it, because I'm having the adviser manage it. I'm actually writing this answer specifically because I recently moved a big 401k into a Traditional IRA. A rep from the brokerage, representing my previous employer, kept calling me to find out how they could help (I didn't brush him off). I found that using an IRA provided me with the opportunity to do self-guided investments in funds or even individual stocks, well beyond the limited selection of the old company's 401k. It was useful/interesting to me to invest in low-fee vehicles such as index funds (ie: the Buffett recommendation), and I'll find some stocks as well. Oh and when the old company 401k has certain funds being discontinued, I didn't want to notice the mandated changes years later. So, I'd suggest you consider management and flexibility of the 401k or equivalent, and any of your special personal circumstances/goals. If you end up with a few retirement accounts, I suggest you use an account aggregating website to see or follow your net worth. I know many who, based on various concerns and their portfolio, find an acceptable website to use.\""
},
{
"docid": "186902",
"title": "",
"text": "I hope your company spends a little more on your web site than NantWorks or Five3Genomics. From the looks of their late-90's-style website I would never guess that NantWorks was worth more than $10 million, and the Five3Genomics site looks like any number of open source software development sites from the last decade."
},
{
"docid": "331008",
"title": "",
"text": "\"I would like to first point out that there is nothing special about a self-managed investment portfolio as compared to one managed by someone else. With some exceptions, you can put together exactly the same investment portfolio yourself as a professional investor could put together for you. Not uncommonly, too, at a lower cost (and remember that cost is among the, if not the, best indicator(s) of how your investment portfolio will perform over time). Diversification is the concept of not \"\"putting all your eggs in one basket\"\". The idea here is that there are things that happen together because they have a common cause, and by spreading your investments in ways such that not all of your investments have the same underlying risks, you reduce your overall risk. The technical term for risk is generally volatility, meaning how much (in this case the price of) something fluctuates over a given period of time. A stock that falls 30% one month and then climbs 40% the next month is more volatile than one that falls 3% the first month and climbs 4% the second month. The former is riskier because if for some reason you need to sell when it is down, you lose a larger portion of your original investment with the former stock than with the latter. Diversification, thus, is reducing commonality between your investments, generally but not necessarily in an attempt to reduce the risk of all investments moving in the same direction by the same amount at the same time. You can diversify in various ways: Do you see where I am going with this? A well-diversed portfolio will tend to have a mix of equity in your own country and a variety of other countries, spread out over different types of equity (company stock, corporate bonds, government bonds, ...), in different sectors of the economy, in countries with differing growth patterns. It may contain uncommon classes of investments such as precious metals. A poorly diversified portfolio will likely be restricted to either some particular geographical area, type of equity or investment, focus on some particular sector of the economy (such as medicine or vehicle manufacturers), or so on. The poorly diversified portfolio can do better in the short term, if you time it just right and happen to pick exactly the right thing to buy or sell. This is incredibly hard to do, as you are basically working against everyone who gets paid to do that kind of work full time, plus computer-algorithm-based trading which is programmed to look for any exploitable patterns. It is virtually impossible to do for any real length of time. Thus, the well-diversified portfolio tends to do better over time.\""
},
{
"docid": "235082",
"title": "",
"text": "\"Profitability is not magical. It's not a mystical thing that requires a 4 or 8 year degree in business to understand. Twitter will never make money. You cannot make money with Social Media. All of the steps necessary to make social media profitable are the same steps which will drive your users to other platforms that remain free. Twitter is already losing users to a new software called \"\"Mastodon\"\" which is not controlled by any single corporation, it's open source and anyone can operate their own federated server. It allows much larger 'posts' which enables people to have actual, valuable conversations on it, instead of brain-vomiting. Twitter's largest mistake is probably their reluctance to abandon the 140 character limit 3 or 4 years ago when they should have. But it's too late now. It would take a miracle to save them. Social Media as a marketplace is saturated. there's 4 or 5 sites you've heard of and 5000 you haven't and they're all free. How can anyone make money in that market? You can't. And if all of the social media sites suddenly became subscription based, users would stop using them, they'd set up their own blogs using services like Wordpress.com or self-hosting them with software like WordPress.org or Ghost, and they'd use free open source software based on protocols like RSS or ATOM which have been around for a very long time to achieve the same sort of \"\"Friends and follower\"\" networks that Social Media giants want you to believe require their service. Social Media has always been a bad business model, and it will always be a bad business model. Facebook has only found success because of their puppet companies and side-projects, the social media part of their business remains unprofitable.\""
},
{
"docid": "214173",
"title": "",
"text": "\"Hello! First of all, I think it's great you're asking the community for help. Asking for help when you need it is a sign of strength and self-awareness of your own limitations (which we all have, even the smartest business people ask questions, in fact they ask the most questions). I'm wrapping up year 2 of doing what you're trying to do and am finally seeing real traction. I am a bit older than you and started out on my own 7 years after grad school, but I have learned a lot and don't mind sharing. Here's some things you might find useful. * Never work for free (working for \"\"equity\"\" or working for \"\"exposure\"\" is working for free). People who offer you this because you're just starting out are parasites looking to sell your talents but not pay for them. The only thing you can take away from attempts to do this is that your talents are in demand, which is good! * Never sell yourself short: would you rather do 10 websites for a $1000 each or do 1 website for $10000? You'll be doing a lot of projects in the middle, but one very important thing to bear in mind is that one $10000 website is a lot less work and may make you the same amount of money (or more) overall. * In the beginning, maybe you think you need to build a portfolio. But you'd be surprised how many prospects don't care what's in your portfolio and in fact never look at the portfolio, which leads me to the most important bit of advice: * Learn to sell yourself. YOU are your company's first and main product. Learn to sell yourself (as the smart kid, future Fortune 500 CEO who stays up all night getting things done, etc) * Always aim high in your proposals. You'd be surprised how many people don't negotiate at all. That being said, always put something in your proposal that is a good idea but it beyond what their asking for. If they ask you to come down in price, remove this feature and come down a little bit. * Develop an ability to read how interested a prospect is in your services before you spring the price on them. At your age, I was waiting tables. This helped me to be able to read a customer to determine which waiter they wanted me to be: the attentive one, the high class one, the friend, or the quiet servile. Consider taking on a side job to help you develop this skill. * As I said above, some prospects will sign on the line without negotiating. You might even take two proposals with you into a meeting with a prospect, one priced high and one low, and present the version that matches their interests. Go high if they need something \"\"right now\"\". * Remember you are your company's first product. This means also that your time is the company's first commodity. Be open to other things. I have a background in mathematics and am most capable as a software developer and a web developer. But I also help other companies sell and support physical products not at all related to technology. Because it's highly profitable, I do it. * When you're a one person business selling your time at the highest price is the name of the game. But growing your business will require the help of others. I found it helpful to first network with other like minded people and split project money according to skill level and time commitment on a per project basis. This will allow you to take on bigger projects. * But growing the company will eventually require you to hire (or contract) someone at a far lower pay rate than what you're bringing in. The laws of supply and demand require you to do this as a business person if you're to grow the business (so that the business has money beyond what you're being paid). This is where the extra money comes from: selling the time of others at a higher price than you're paying them. Be conscious of this. Everyone you work with is not going to be your friend. * Make your website awesome. It doesn't have to be a work of art, but let it reflect the seriousness with which you approach your customers' projects. Make sure there are no grammatical errors. Find a website of someone highly successful who's doing what you're doing and emulate it. You don't have to have a portfolio starting out. Your website is your first portfolio item, and if it's awesome, prospects will think you'll do the same for them. Good luck! I'm sure I'm not the only one here who thinks your early developed entrepreneurship is going to take you far.\""
},
{
"docid": "546379",
"title": "",
"text": "Google Finance and Yahoo Finance have been transitioning their API (data interface) over the last 3 months. They are currently unreliable. If you're just interested in historical price data, I would recommend either Quandl or Tiingo (I am not affiliated with either, but I use them as data sources). Both have the same historical data (open, close, high, low, dividends, etc.) on a daily closing for thousands of Ticker symbols. Each service requires you to register and get a unique token. For basic historical data, there is no charge. I've been using both for many months and the data quality has been excellent and API (at least for python) is very easy! If you have an inclination for python software development, you can read about the drama with Google and Yahoo finance at the pandas-datareader group at https://github.com/pydata/pandas-datareader."
},
{
"docid": "577585",
"title": "",
"text": "Pivots Points are significant levels technical analysts can use to determine directional movement, support and resistance. Pivot Points use the prior period's high, low and close to formulate future support and resistance. In this regard, Pivot Points are predictive or leading indicators. There are at least five different versions of Pivot Points. I will focus on Standard Pivot Points here as they are the simplest. If you are looking to trade off daily charts you would work out your Pivot Points from the prior month's data. For example, Pivot Points for first trading day of February would be based on the high, low and close for January. They remain the same for the entire month of February. New Pivot Points would then be calculated on the first trading day of March using the high, low and close for February. To work out the Standard Pivot Points you use the High, Low and Close from the previous period (i.e. for daily charts it would be from the previous month) in the following formulas: You will now have 5 horizontal lines: P, R1, R2, S1 and S2 which will set the general tone for price action over the next month. A move above the Pivot Point P suggests strength with a target to the first resistance R1. A break above first resistance shows even more strength with a target to the second resistance level R2. The converse is true on the downside. A move below the Pivot Point P suggests weakness with a target to the first support level S1. A break below the first support level shows even more weakness with a target to the second support level S2. The second resistance and support levels (R2 & S2) can also be used to identify potentially overbought and oversold situations. A move above the second resistance level R2 would show strength, but it would also indicate an overbought situation that could give way to a pullback. Similarly, a move below the second support level S2 would show weakness, but would also suggest a short-term oversold condition that could give way to a bounce. This could be used together with a momentum indicator such as RSI or Stochastic to confirm overbought or oversold conditions. Pivot Points offer a methodology to determine price direction and then set support and resistance levels, however, it is important to confirm Pivot Point signals with other technical analysis indicators, such as candle stick reversal patterns, stochastic and general Support and Resistance Levels in the price action. These pivot points can be handy but I actually haven’t used them for trade setups and entries myself. I prefer to use candle sticks together with stochastic to determine potential turning points and then take out trades based on these. You can then use the Pivot Points Resistance and Support levels to help you estimate profit targets or areas to start becoming cautious and start tightening your stops. Say, for example, you have gone long from a signal you got a few days ago, you are now in profit and the price is now approaching R2 whilst the Stochastic is approaching overbought, you might want to start tightening your stop loss as you might expect some weakness in the price in the near future. If prices continue up you keep increasing your profits, if prices do reverse then you keep the majority of your existing profits. This would become part of your trade management. If you are after finding potential market turning points and take out trades based on these, then I would suggest using candlestick charting reversal patterns for your trade setups. The patterns I like to use most in my trading can be described as either the Hammer or One White Soldier for Bullish reversals and Shooting Star or One Black Crow for Bearish reversals. Below are diagrams of where to place your entries and exits on both Bullish and Bearish reversal patterns. Bullish Reversal Pattern So after some period of weakness in the price you would look for a bullish day where the price closes above the previous day’s high, you place your buy order here just before market close and place your initial stop just below the low of the day. You would apply this either for an uptrending stock where the price has retracted from or near the trendline or Moving Average, or a ranging stock where price is bouncing off the support line. The trade is reinforced if the Stochastic is in or near the oversold and crossing back upwards, volume on the up day is higher than volume on the down days, and the market as a whole is moving up as well. The benefit with this entry is that you are in early so you capture any bullish move up at the open of the next day, such as gaps. The drawbacks are that you need to be in front of your screen before market close to get your price close to the market close and you may get whipsawed if prices reverse at the open of the next day, thus being stopped out with a small loss. As the price moves up you would move your stop loss to just below the low of each day. Alternative Bullish Reversal Entry An alternative, entry would be to wait for after market close and then start your analysis (easier to do after market close than whilst the market is open and less emotions involved). Place a stop buy order to buy at the open of next trading day just above the high of the bullish green candle. Your stop is placed exactly the same, just below the low of the green bullish candle. The benefits of this alternative entry include you avoid the trade if the price reverses at the open of next day, thus avoiding a potential small loss (in other words you wait for further confirmation on the next trading day), and you avoid trading during market open hours where your emotions can get the better of you. I prefer to do my trading after market close so prefer this alternative. The drawback with this alternative is that you may miss out on bullish news prior to and at the next open, so miss out on some potential profits if prices do gap up at the open. This may also increase your loss on the trade if the prices gaps up then reverses and hits your stop on the same day. However, if you choose this method, then you will just need to incorporate this into your trading plan as potential slippage. Bearish Reversal Pattern So after some short period of strength in the price you would look for a bearish day where the price closes below the previous day’s low, you place your sell short order here just before market close and place your initial stop just above the high of the day. You would apply this either for an downtrending stock where the price has retracted from or near the trendline or Moving Average, or a ranging stock where price is bouncing off the resistance line. The trade is reinforced if the Stochastic is in or near the overbought and crossing back downwards, volume on the up day is higher than volume on the up days, and the market as a whole is moving down as well. The benefit with this entry is that you are in early so you capture any bearish move down at the open of the next day, such as gaps. The drawbacks are that you need to be in front of your screen before market close to get your price close to the market close and you may get whipsawed if prices reverse at the open of the next day, thus being stopped out with a small loss. As the price moves down you would move your stop loss to just above the high of each day. Alternative Bearish Reversal Entry An alternative, entry would be to wait for after market close and then start your analysis (easier to do after market close than whilst the market is open and less emotions involved). Place a stop sell short order to sell at the open of next trading day just below the low of the bearish red candle. Your stop is placed exactly the same, just above the high of the red bearish candle. The benefits of this alternative entry include you avoid the trade if the price reverses at the open of next day, thus avoiding a potential small loss (in other words you wait for further confirmation on the next trading day), and you avoid trading during market open hours where your emotions can get the better of you. I prefer to do my trading after market close so prefer this alternative. The drawback with this alternative is that you may miss out on bearish news prior to and at the next open, so miss out on some potential profits if prices do gap down at the open. This may also increase your loss on the trade if the prices gaps down then reverses and hits your stop on the same day. However, if you choose this method, then you will just need to incorporate this into your trading plan as potential slippage. You could also trade other candle stick patterns is similar ways. And with the long entries you can also use them to get into the market with longer term trend following strategies, you would usually just use a larger stop for longer term trading. To determine the size of your order you would use the price difference between your entry and your stop. You should not be risking more than 1% of your trading capital on any one trade. So if your trading capital is $20,000 your risk per trade should be $200. If you were looking to place your buy at 5.00 and had your initial stop at $4.60, you would divide $200 by $0.40 to get 500 stocks to buy. Using this form of money management you keep your losses down to a maximum of $200 (some trades may be a bit higher due to some slippage which you should allow for in your trading plan), which becomes your R-multiple. Your aim is to have your average win at 3R or higher (3 x your average loss), which will give you a positive expectancy even with a win ratio under 50%. Once you have written down your trading rules you can search stock charts for potential setups. When you find one you can backtest the chart for similar setup over the past few years. For each setup in the past jot down the prices you would have entered at, where you would have set your stop, work out your R, and go day by day, moving your stop as you go, and see where you would have been stopped out. Work out your profit or loss in terms of R for each setup and then add them up. If you get a positive R multiple, then this may be a good stock to trade on this setup. If you get a negative R multiple, then maybe give this stock a miss and look for the next setup. You can setup watch-lists of stocks that perform well for both long setups and short setups, and then trade these stocks when you get a new signal. It can take some time starting off, but once you have got your watch-lists for a particular setup, you just need to keep monitoring those stocks. You can create other watch-lists for other type of setups you have backtested as well."
},
{
"docid": "398297",
"title": "",
"text": "In addition to the answer by Craig Banach: Sometimes brands are owned by publicly traded companies which have a very diverse product portfolio. In case of Microsoft their stock price and dividend will not be controlled solely by that one product they make but also by their many other products (plus a billion other factors which can influence a stock price). So when you want to bet specifically on the success of Windows Phone then betting on the Microsoft Corporation as a whole might not achieve that goal. However, you can also try to find companies whose success depends indirectly on the success of the product. That can be suppliers (someone who makes a specific part which is only used for Windows phones), companies which make Windows Phone specific accessories or software developers who make applications which specifically target the Windows Phone ecosystem. When the product portfolio of these companies is far narrower than that of Microsoft they might be more dependent on the success of Windows Phone than Microsoft themselves. But as always, keep in mind that the success of their products is not the only factor which decides the stock value of a company. The stock market is far more complex than that."
},
{
"docid": "212481",
"title": "",
"text": "depends IB is a huge area, are they quant traders, portfolio construction researchers, ML researchers, data engineers,analysts, software engineers? One year in $150k is unlikely however if a trader, quant trader or quant researcher, software engineer certainly possible. $1m by 30 good luck I own a recruitment business for IB's, HF's, its not common to earn $1m at a bank, certainly not these days, buyside again very difficult but more likely. I work with directors/MD's predominantly and Barclays for sure will not pay that by there 30, they have some MD's on million dollar sums but they are not common. They have a hell of a long road before they get there, at Barclays he could be canned in 2 years regardless of his performance. Citi VP's are capped at $180k base if you perform exceptionally matching bonus realistically between 30-50%of base, though this can vary. Depending on the role typically goes like this: associate - 2 or 3 years, then VP 3- 5 years, director 7-10 years MD 12-15 years + depending on area, role, bank you join. Each area is different. If you go into finance research your area it's highly competitive, if you cannot explain your enthusiasm for finance and why you want to do it beside money you will find it hard. School is not that important JP hires shit tonnes from Baruch and Lafayette College its about your GPA. Learn to code Python, KDB+/Q, C++ and Matlab are decent languages that are universally used. EDIT - Citi also pay higher than Barclays generally across the board."
},
{
"docid": "51218",
"title": "",
"text": "\"There is a white paper on \"\"The weekend effect of equity options\"\" it is a good paper and shows that (for the most part) option values do lose money from Friday to Monday. Which makes sense because it is getting closer to expiration. Of course this not something that can be counted on 100%. If there is some bad news and the stock opens down on a Monday the puts would have increased and the calls decreased in value. Article Summary (from the authors): \"\"We find that returns on options on individual equities display markedly lower returns over weekends (Friday close to Monday close) relative to any other day of the week. These patterns are observed both in unhedged and delta-hedged positions, indicating that the effect is not the result of a weekend effect in the underlying securities. We find even stronger weekend effects in implied volatilities, but only after an adjustment to quote implied volatilities in terms of trading days rather than calendar days.\"\" \"\"Our results hold for puts and calls over a wide range of maturities and strike prices, for both equally weighted portfolios and for portfolios weighted by the market value of open interest, and also for samples that include only the most liquid options in the market. We find no evidence of a weekly seasonal in bid-ask spreads, trading volume, or open interest that could drive the effect. We also find little evidence that weekend returns are driven by higher levels of risk over the weekend. \"\"The effect is particularly strong over expiration weekends, and it is also present to a lesser degree over mid-week holidays. Finally, the effect is stronger when the TED spread and market volatility are high, which we interpret as providing support for a limits to arbitrage explanation for the persistence of the effect.\"\" - Christopher S. Jones & Joshua Shemes You can read more about this at this link for Memphis.edu\""
},
{
"docid": "124180",
"title": "",
"text": "\"Hard pulls you give your explicit permission to run do affect your credit. Soft pulls do not. While hard pulls affect your score, they don't affect it much. Maybe a couple few point for a little while. In your daily activities, it is inconsequential. If you are prepping to get a mortgage, you should be mindful. Similar type hard pulls in a certain time window will only count once, because it is assume you are shopping. For example, mortgage shopping will result in a lot of hard pulls, but if they are all done in a fortnight, they only count against once. (I believe the time window is actually a month, but I have always had two weeks in my head as the safe window.) The reason soft pulls don't matter is because businesses typically won't make credit decisions based on them. A soft pull is so a business can find a list of people to make offers to, but that doesn't mean they ACTUALLY qualify. Only the information in a hard pull will tell them that. I don't know, but I suspect it is more along the lines of \"\"give me everybody who is between 600 and 800 and lives in zip code 12344\"\" not \"\"what is series0ne's credit score?\"\" A hard pull will lower your score because of a scenario where you open up many many lines of credit in a short period of time. The credit scoring models assume (I am guessing) that you are going to implode. You are either attempting to cover obligations you can't handle, or you are about to create a bunch of obligations you can't handle. Credit should be used as a convenient method of payment, not a source of wealth. As such, each credit line you open in a short time lowers the score. You are disincentivized to continue opening lines, and lenders at the end of your credit line opening spree will see you as riskier than the first.\""
},
{
"docid": "41625",
"title": "",
"text": "\"Oddly enough, in the USA, there are enough cost and tax savings between buy-and-hold of a static portfolio and buying into a fund that a few brokerages have sprung up around the concept, such as FolioFN, to make it easier for small investors to manage numerous small holdings via fractional shares and no commission window trades. A static buy-and-hold portfolio of stocks can be had for a few dollars per trade. Buying into a fund involves various annual and one time fees that are quoted as percentages of the investment. Even 1-2% can be a lot, especially if it is every year. Typically, a US mutual fund must send out a 1099 tax form to each investor, stating that investors share of the dividends and capital gains for each year. The true impact of this is not obvious until you get a tax bill for gains that you did not enjoy, which can happen when you buy into a fund late in the year that has realized capital gains. What fund investors sometimes fail to appreciate is that they are taxed both on their own holding period of fund shares and the fund's capital gains distributions determined by the fund's holding period of its investments. For example, if ABC tech fund bought Google stock several years ago for $100/share, and sold it for $500/share in the same year you bought into the ABC fund, then you will receive a \"\"capital gains distribution\"\" on your 1099 that will include some dollar amount, which is considered your share of that long-term profit for tax purposes. The amount is not customized for your holding period, capital gains are distributed pro-rata among all current fund shareholders as of the ex-distribution date. Morningstar tracks this as Potential Capital Gains Exposure and so there is a way to check this possibility before investing. Funds who have unsold losers in their portfolio are also affected by these same rules, have been called \"\"free rides\"\" because those funds, if they find some winners, will have losers that they can sell simultaneously with the winners to remain tax neutral. See \"\"On the Lookout for Tax Traps and Free Riders\"\", Morningstar, pdf In contrast, buying-and-holding a portfolio does not attract any capital gains taxes until the stocks in the portfolio are sold at a profit. A fund often is actively managed. That is, experts will alter the portfolio from time to time or advise the fund to buy or sell particular investments. Note however, that even the experts are required to tell you that \"\"past performance is no guarantee of future results.\"\"\""
}
] |
4981 | Where can I find open source portfolio management software? | [
{
"docid": "247894",
"title": "",
"text": "Have you looked into GnuCash? It lets you track your stock purchases, and grabs price updates. It's designed for double-entry accounting, but I think it could fit your use case."
}
] | [
{
"docid": "311736",
"title": "",
"text": "You're asking for opinions here, which is kindof against the rules, but I'll give it a try. 1) Does emergency funds and saving money(eg.Money plan to buy a house) should be in same Saving Account? 2) or should each specific saving plan set up in particular Saving Account? No, it doesn't. It's a matter of convenience. I personally find it more convinient to have different stashes for different purposes, but it means extra overhead of keeping an eye on one more account. Fortunately, with on-line access, mint.com and spreadsheets, it's not that big of an overhead. 3) If saved in same Saving Account, how could I manage easily which percentage is planned for which? Excel spreadsheet comes to mind. Banks may have some tools too, for example Wells Fargo (where I'll be closing my account soon), has a nice on-line goals manager that allows you to keep track of your savings per assigned goals (they allow one goal per savings account, but you can have multiple accounts for multiple goals, and it will show the goals and progress pretty nicely). 4) If not saved in same Saving Account, the interest earned would be smaller because they all clutter across multiple Saving Accounts? In some banks interest rates are tiered. But in most on-line savings accounts they're not, and you get the same high rate from the first $1 deposited. So if in the bank where you keep the money they only pay a decent rate if you deposit some big lump of money - just open an account elsewhere. Places to check: American Express FSB, ING Direct, E*Trade savings, Capital One, Ally, and many more."
},
{
"docid": "145334",
"title": "",
"text": "littleadv's answer gives a concise summary of the system as it stands now, but much more changed than just the portion of the mandatory contribution that was diverted to the private plan. In broad terms, the balances of your accounts and your future benefit won't change. It's only the source of these benefits that's changing. The Bloomberg article describes the changes this way: The state will take over the amount of bonds that pension funds held as of end of Sept. 3 and turn them into pension liabilities in the state-run social security system... The state will assume control of 51.5 percent of pension-fund assets, including bonds guaranteed by the government and “other non-stock assets” After the change, Polish workers that held bonds in the private portion of their retirement portfolios will instead have more payments from the state-run pension system. The balances of your retirement portfolio and your future benefits shouldn't change, but the reality may depend on how the state pension system is managed and any future changes the government implements. The effect this change will have on future benefits isn't clear, because the change may simply delay the problem of high levels of outstanding sovereign debt, not solve it. The government stated that because increasing numbers of workers invested their money in private pension funds, less money went into the government's fund, which forced them to issue sovereign debt in order to cover the shortfall in their current pension liabilities. The government's recent cancellation of government bonds in the hands of private pensions will decrease their overall outstanding debt, but in exchange, the government is increasing its future pension liabilities. Years down the road, the government may find that they need to issue more sovereign debt to cover the increased pension liabilities they're taking on today. In other words, they may find themselves back in the same situation years down the road, and it's difficult to predict what changes they might make at that time."
},
{
"docid": "88856",
"title": "",
"text": "**Free software** Free software or libre software is computer software distributed under terms that allow the software users to run the software for any purpose as well as to study, change, and distribute the software and any adapted versions. Free software is a matter of liberty, not price: users, individually or collectively, are free to do what they want with it, including the freedom to redistribute the software free of charge, or to sell it, or charge for related services such as support or warranty for profit. The right to study and modify software entails availability of the software source code to its users. While this right is often called 'access to source code', the Free Software Foundation recommends to avoid using the word 'access' in this context because it is misleading and may make people believe that they may have a copy of the source code unconditionally. *** ^[ [^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"
},
{
"docid": "436437",
"title": "",
"text": "The software you provided as an example won't teach you much about investing. The most important things of investing are: These are the only free lunches in investing. Allocation tells you how much expected return (and also how much risk) your portfolio has. Diversification is the only way to reduce risk without reducing return; however, just note that there is market risk that cannot be eliminated with diversification. Every penny you save on costs and taxes is important, as it's guaranteed return. If you were to develop e.g. software that calculates the expected return of a portfolio when given allocation as an input, it could teach you something about investing. Similarly, software that calculates the average costs of your mutual fund portfolio would teach you something about investing. But sadly, these kinds of software are uncommon."
},
{
"docid": "591461",
"title": "",
"text": "\"I recommend you take a look at this lecture (really, the whole series is enlightening), from Swenson. He identifies 3 sources of returns: diversification, timing and selection. He appears to discard timing and selection as impossible. A student kinda calls him out on this. Diversification reduces risk, not increase returns. It turns out they did time the market, by shorting .com's before the bubble, and real estate just before the downturn. In 1990, Yale started a \"\"Absolute Return\"\" unit and allocated like 15 percent to it, mostly by selling US equities, that specializes in these sorts of hedging moves. As for why you might employ managers for specific areas, consider that the expense ratio Wall Street charges you or me still represent a very nice salary when applied to the billions in Yale's portfolio. So they hire internally to reduce expenses, and I'm sure they're kept busy. They also need people to sell off assets to maintain ratios, and figuring out which ones to sell might take specialized knowledge. Finally, in some areas, you functionally cannot invest without management. For example, Yale has a substantial allocation in private equity, and by definition that doesn't trade on the open market. The other thing you should consider is that for all its diversification, Yale lost 25 percent of their portfolio in 2009. For a technique that's supposed to reduce volatility, they seem to have a large range of returns over the past five years.\""
},
{
"docid": "529790",
"title": "",
"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."
},
{
"docid": "239484",
"title": "",
"text": "The short answer is that there are no great personal finance programs out there any more. In the past, I found Microsoft Money to be slick and feature rich but unfortunately it has been discontinued a few years ago. Your choices now are Quicken and Mint along with the several open-source programs that have been listed by others. In the past, I found the open source programs to be both clunky and not feature-complete for my every day use. It's possible they have improved significantly since I had last looked at them. The biggest limitation I saw with them is weakness of integration with financial service providers (banks, credit card companies, brokerage accounts, etc.) Let's start with Mint. Mint is a web-based tool (owned by the same company as Quicken) whose main feature is its ability to connect to nearly every financial institution you're likely to use. Mint aggregates that data for you and presents it on the homepage. This makes it very easy to see your net worth and changes to it over time, spending trends, track your progress on budgets and long-term goals, etc. Mint allows you to do all of this with little or no data entry. It has support for your investments but does not allow for deep analysis of them. Quicken is a desktop program. It is extremely feature rich in terms of supporting different types of accounts, transactions, reports, reconciliation, etc. One could use Quicken to do everything that I just described about Mint, but the power of Quicken is in its more manual features. For example, while Mint is centred on showing you your status, Quicken allows you to enter transactions in real-time (as you're writing a check, initiating a transfer, etc) and later reconciles them with data from your financial institutions. Link Mint, Quicken has good integration with financial companies so you can generally get away with as little or as much data entry as you want. For example, you can manually enter large checks and transfers (and later match to automatically-downloaded data) but allow small entries like credit card purchases to download automatically. Bottom line, if you're just looking to keep track of where you are at, try Mint. It's very simple and free. If you need more power and want to manage your finances on a more transactional level, try Quicken (though I believe they do not have a trial version, I don't understand why). The learning curve is steep although probably gentler than that of GnuCash. Last note on why Mint.com is free: it's the usual ad-supported model, plus Mint sells aggregated consumer behaviour reports to other institutions (since Mint has everyone's transactions, it can identify consumer trends). If you're not comfortable with that, or with the idea of giving a website passwords to all your financial accounts, you will find Quicken easier to accept. Hope this helps."
},
{
"docid": "546150",
"title": "",
"text": "I have managed two IRA accounts; one I inherited from my wife's 401K and my own's 457B. I managed actively my wife's 401 at Tradestation which doesn't restrict on Options except level 5 as naked puts and calls. I moved half of my 457B funds to TDAmeritrade, the only broker authorized by my employer, to open a Self Directed account. However, my 457 plan disallows me from using a Cash-secured Puts, only Covered Calls. For those who does not know investing, I resent the contention that participants to these IRAs should not be messing around with their IRA funds. For years, I left my 401k/457B funds with my current fund custodian, Great West Financial. I checked it's current values once or twice a year. These last years, the market dived in the last 2 quarters of 2015 and another dive early January and February of 2016. I lost a total of $40K leaving my portfolio with my current custodian choosing all 30 products they offer, 90% of them are ETFs and the rest are bonds. If you don't know investing, better leave it with the pros - right? But no one can predict the future of the market. Even the pros are at the mercy of the market. So, I you know how to invest and choose your stocks, I don't think your plan administrator has to limit you on how you manage your funds. For example, if you are not allowed to place a Cash-Secured Puts and you just Buy the stocks or EFT at market or even limit order, you buy the securities at their market value. If you sell a Cash-secured puts against the stocks/ETF you are interested in buying, you will receive a credit in fraction of a dollar in a specific time frame. In average, your cost to owning a stock/ETF is lesser if you buy it at market or even a limit order. Most of the participants of the IRA funds rely too much on their portfolio manager because they don't know how to manage. If you try to educate yourself at a minimum, you will have a good understanding of how your IRA funds are tied up to the market. If you know how to trade in bear market compared to bull market, then you are good at managing your investments. When I started contributing to my employer's deferred comp account (457B) as a public employee, I have no idea of how my portfolio works. Year after year as I looked at my investment, I was happy because it continued to grow. Without scrutinizing how much it grew yearly, and my regular payroll contribution, I am happy even it only grew 2% per year. And at this age that I am ready to retire at 60, I started taking investment classes and attended pre-retirement seminars. Then I knew that it was not totally a good decision to leave your retirement funds in the hands of the portfolio manager since they don't really care if it tanked out on some years as long at overall it grew to a meager 1%-4% because they managers are pretty conservative on picking the equities they invest. You can generalize that maybe 90% of IRA investors don't know about investing and have poor decision making actions which securities/ETF to buy and hold. For those who would like to remain as one, that is fine. But for those who spent time and money to study and know how to invest, I don't think the plan manager can limit the participants ability to manage their own portfolio especially if the funds have no matching from the employer like mine. All I can say to all who have IRA or any retirement accounts, educate yourself early because if you leave it all to your portfolio managers, you lost a lot. Don't believe much in what those commercial fund managers also show in their presentation just to move your funds for them to manage. Be proactive. If you start learning how to invest now when you are young, JUST DO IT!"
},
{
"docid": "421987",
"title": "",
"text": "Since then I had gotten a job at a supermarket stocking shelves, but recently got fired because I kept zoning out at work This is not a good sign for day trading, where you spend all day monitoring investments. If you start focusing on the interesting math problem and ignoring your portfolio, you can easily lose money. Not so big a problem for missed buy opportunities, but this could be fatal for missed sale opportunities. Realize that in day trading, if you miss the uptick, you can get caught in a stock that is now going down. And I agree with those who say that you aren't capitalized well enough to get started. You need significantly more capital so that you can buy a diversified portfolio (diversification is your limitation, not hedging). Let's say that you make money on two out of three stocks on average. What are the chances that you will lose money on three stocks in a row? One in twenty-seven. What if that happens on your first three stocks? What if your odds at starting are really one in three to make money? Then you'll lose money more than half the time on each of your first three stocks. The odds don't favor you. If you really think that finance would interest you, consider signing up for an internship at an investment management firm or hedge fund. Rather than being the person who monitors stocks for changes, you would be the person doing mathematical analysis on stock information. Focusing on the math problem over other things is then what you are supposed to be doing. If you are good at that, you should be able to turn that into a permanent job. If not, then go back to school somewhere. You may not like your schooling options, but they may be better than your work options at this time. Note that most internships will be easier to get if you imply that you are only taking a break from schooling. Avoid outright lying, but saying things like needing to find the right fit should work. You may even want to start applying to schools now. Then you can truthfully say that you are involved in the application process. Be open about your interest in the mathematics of finance. Serious math minds can be difficult to find at those firms. Given your finances, it is not practical to become a day trader. If you want proof, pick a stock that is less than $100. Found it? Write down its current price and the date and time. You just bought that stock. Now sell it for a profit. Ignore historical data. Just monitor the current price. Missed the uptick? Too bad. That's reality. Once you've sold it, pick another stock that you can afford. Don't forget to mark your price down for the trading commission. A quick search suggests that $7 a trade is a cheap price. Realize that you make two trades on each stock (buy and sell), so that's $14 that you need to make on every stock. Keep doing that until you've run out of money. Realize that that is what you are proposing to do. If you can make enough money doing that to replace a minimum wage job, then we're all wrong. Borrow a $100 from your mom and go to town. But as others have said, it is far more realistic to do this with a starting stake of $100,000 where you can invest in multiple stocks at once and spread your $7 trading fee over a hundred shares. Starting with $100, you are more likely to run out of money within ten stocks."
},
{
"docid": "211045",
"title": "",
"text": "Politics is certainly part of the equation, in two ways that I can think of. These don't necessarily reflect my views; just trying to explain as I see it. First, there are a lot of interests in having the current, convoluted tax system entrenched. ProPublica did a piece talking about the question you're asking, and Intuit, makers of the popular tax software TurboTax, is mentioned as someone who lobbied heavily to keep the kind of system you describe out. It's spun as increasing the size and cost of government (which, I guess, is true - someone has to do the work if you aren't filing) while opening up possibilities for error, but the piece portrays the companies as being more interested in preserving the status quo. Second, plenty of people don't like the idea that taxation is done automatically, out of sight and out of mind. An issue that illustrates this is airline pricing. Consumers don't like seeing a $19 fare advertisement and then finding out that they'll actually have to pay $50 after the taxes are added. However, those in the airline industry and those who are generally against taxes don't like the idea that a tax can be added without the consumer really knowing that the government was responsible for the price increase. You sometimes see this with gasoline prices, where taxes are built into the price per gallon. My home state of Pennsylvania recently raised the gas tax without anyone really noticing since the overall price was dropping dramatically at the time. Contrast that to Pittsburgh-area bars who were able to very specifically pin an alcohol tax on its creator. Point being, direct deposits with automatic deductions already take most of the thinking out of taxation. Those in that situation really only think about their income in terms of the amount that shows in their bank account. For some, that time of filing taxes is the one time a year where you actually get to reflect on the amount of money you're paying the government for its services. The more automatic taxation is and the less that the public thinks about it, the easier it is for the government to raise it without people noticing."
},
{
"docid": "546379",
"title": "",
"text": "Google Finance and Yahoo Finance have been transitioning their API (data interface) over the last 3 months. They are currently unreliable. If you're just interested in historical price data, I would recommend either Quandl or Tiingo (I am not affiliated with either, but I use them as data sources). Both have the same historical data (open, close, high, low, dividends, etc.) on a daily closing for thousands of Ticker symbols. Each service requires you to register and get a unique token. For basic historical data, there is no charge. I've been using both for many months and the data quality has been excellent and API (at least for python) is very easy! If you have an inclination for python software development, you can read about the drama with Google and Yahoo finance at the pandas-datareader group at https://github.com/pydata/pandas-datareader."
},
{
"docid": "214173",
"title": "",
"text": "\"Hello! First of all, I think it's great you're asking the community for help. Asking for help when you need it is a sign of strength and self-awareness of your own limitations (which we all have, even the smartest business people ask questions, in fact they ask the most questions). I'm wrapping up year 2 of doing what you're trying to do and am finally seeing real traction. I am a bit older than you and started out on my own 7 years after grad school, but I have learned a lot and don't mind sharing. Here's some things you might find useful. * Never work for free (working for \"\"equity\"\" or working for \"\"exposure\"\" is working for free). People who offer you this because you're just starting out are parasites looking to sell your talents but not pay for them. The only thing you can take away from attempts to do this is that your talents are in demand, which is good! * Never sell yourself short: would you rather do 10 websites for a $1000 each or do 1 website for $10000? You'll be doing a lot of projects in the middle, but one very important thing to bear in mind is that one $10000 website is a lot less work and may make you the same amount of money (or more) overall. * In the beginning, maybe you think you need to build a portfolio. But you'd be surprised how many prospects don't care what's in your portfolio and in fact never look at the portfolio, which leads me to the most important bit of advice: * Learn to sell yourself. YOU are your company's first and main product. Learn to sell yourself (as the smart kid, future Fortune 500 CEO who stays up all night getting things done, etc) * Always aim high in your proposals. You'd be surprised how many people don't negotiate at all. That being said, always put something in your proposal that is a good idea but it beyond what their asking for. If they ask you to come down in price, remove this feature and come down a little bit. * Develop an ability to read how interested a prospect is in your services before you spring the price on them. At your age, I was waiting tables. This helped me to be able to read a customer to determine which waiter they wanted me to be: the attentive one, the high class one, the friend, or the quiet servile. Consider taking on a side job to help you develop this skill. * As I said above, some prospects will sign on the line without negotiating. You might even take two proposals with you into a meeting with a prospect, one priced high and one low, and present the version that matches their interests. Go high if they need something \"\"right now\"\". * Remember you are your company's first product. This means also that your time is the company's first commodity. Be open to other things. I have a background in mathematics and am most capable as a software developer and a web developer. But I also help other companies sell and support physical products not at all related to technology. Because it's highly profitable, I do it. * When you're a one person business selling your time at the highest price is the name of the game. But growing your business will require the help of others. I found it helpful to first network with other like minded people and split project money according to skill level and time commitment on a per project basis. This will allow you to take on bigger projects. * But growing the company will eventually require you to hire (or contract) someone at a far lower pay rate than what you're bringing in. The laws of supply and demand require you to do this as a business person if you're to grow the business (so that the business has money beyond what you're being paid). This is where the extra money comes from: selling the time of others at a higher price than you're paying them. Be conscious of this. Everyone you work with is not going to be your friend. * Make your website awesome. It doesn't have to be a work of art, but let it reflect the seriousness with which you approach your customers' projects. Make sure there are no grammatical errors. Find a website of someone highly successful who's doing what you're doing and emulate it. You don't have to have a portfolio starting out. Your website is your first portfolio item, and if it's awesome, prospects will think you'll do the same for them. Good luck! I'm sure I'm not the only one here who thinks your early developed entrepreneurship is going to take you far.\""
},
{
"docid": "10089",
"title": "",
"text": "Congratulations on deciding to save for retirement. Since you cite Dave Ramsey as the source of your 15% number, what does he have to say about where to invest the money? If you want to have instantaneous penalty-free access to your retirement money, all you need to do is set up one or more ordinary accounts that you think of as your retirement money. Just be careful not to put the money into CDs since Federal law requires a penalty of three months interest if you cash in the CD before its maturity date (penalty!) or put the money into those pesky mutual funds that charge a redemption fee (penalty!) if you take the money out within x months of investing it where x can be anywhere from 3 to 24 or more. In Federal tax law (and in most state tax laws as well) a retirement account has special privileges accorded to it in that the interest, dividends, capital gains, etc earned on the money in your retirement account are not taxed in the year earned (as they would be in a non-retirement account), but the tax is either deferred till you withdraw money from the account (Traditional IRAs, 401ks etc) or is waived completely (Roth IRAs, Roth 401ks etc). In return for this special treatment, penalties are imposed (in addition to tax) if you withdraw money from your retirement account before age 59.5 which presumably is on the distant horizon for you. (There are some exceptions (including first-time home buying and extraordinary medical expenses) to this rule that I won't bother going into). But You are not required to invest your retirement money into such a specially privileged retirement account. It is perfectly legal to keep your retirement money in an ordinary savings account if you wish, and pay taxes on the interest each year. You can invest your retirement money into municipal bonds whose interest is free of Federal tax (and usually free of state tax as well if the municipality is located in your state of residence) if you like. You can keep your retirement money in a sock under your mattress if you like, or buy a collectible item (e.g. a painting) with it (this is not permitted in an IRA), etc. In short, if you are concerned about the penalties imposed by retirement accounts on early withdrawals, forgo the benefits of these accounts and put your retirement money elsewhere where there is no penalty for instant access. If you use a money management program such as Mint or Quicken, all you need to do is name one or more accounts or a portfolio as MyRetirementMoney and voila, it is done. But those accounts/portfolios don't have to be retirement accounts in the sense of tax law; they can be anything at all."
},
{
"docid": "93882",
"title": "",
"text": "\"I hope a wall of text with citations qualifies as \"\"relatively easy.\"\" Many of these studies are worth quoting at length. Long story short, a great deal of research has found that actively-managed funds underperform market indexes and passively-managed funds because of their high turnover and higher fees, among other factors. Longer answer: Chris is right in stating that survivorship bias presents a problem for such research; however, there are several academic papers that address the survivorship problem, as well as the wider subject of active vs. passive performance. I'll try to provide a brief summary of some of the relevant literature. The seminal paper that started the debate is Michael Jensen's 1968 paper titled \"\"The Performance of Mutual Funds in the Period 1945-1964\"\". This is the paper where Jensen's alpha, the ubiquitous measure of the performance of mutual fund managers, was first defined. Using a dataset of 115 mutual fund managers, Jensen finds that The evidence on mutual fund performance indicates not only that these 115 mutual funds were on average not able to predict security prices well enough to outperform a buy-the-market-and-hold policy, but also that there is very little evidence that any individual fund was able to do significantly better than that which we expected from mere random chance. Although this paper doesn't address problems of survivorship, it's notable because, among other points, it found that managers who actively picked stocks performed worse even when fund expenses were ignored. Since actively-managed funds tend to have higher expenses than passive funds, the actual picture looks even worse for actively managed funds. A more recent paper on the subject, which draws similar conclusions, is Martin Gruber's 1996 paper \"\"Another puzzle: The growth in actively managed mutual funds\"\". Gruber calls it \"\"a puzzle\"\" that investors still invest in actively-managed funds, given that their performance on average has been inferior to that of index funds. He addresses survivorship bias by tracking funds across the entire sample, including through mergers. Since most mutual funds that disappear are merged into existing funds, he assumes that investors in a fund that disappear choose to continue investing their money in the fund that resulted from the merger. Using this assumption and standard measures of mutual fund performance, Gruber finds that mutual funds underperform an appropriately weighted average of the indices by about 65 basis points per year. Expense ratios for my sample averaged 113 basis points a year. These numbers suggest that active management adds value, but that mutual funds charge the investor more than the value added. Another nice paper is Mark Carhart's 1997 paper \"\"On persistence in mutual fund performance\"\" uses a sample free of survivorship bias because it includes \"\"all known equity funds over this period.\"\" It's worth quoting parts of this paper in full: I demonstrate that expenses have at least a one-for-one negative impact on fund performance, and that turnover also negatively impacts performance. ... Trading reduces performance by approximately 0.95% of the trade's market value. In reference to expense ratios and other fees, Carhart finds that The investment costs of expense ratios, transaction costs, and load fees all have a direct, negative impact on performance. The study also finds that funds with abnormally high returns last year usually have higher-than-expected returns next year, but not in the following years, because of momentum effects. Lest you think the news is all bad, Russ Wermer's 2000 study \"\"Mutual fund performance: An empirical decomposition into stock‐picking talent, style, transactions costs, and expenses\"\" provides an interesting result. He finds that many actively-managed mutual funds hold stocks that outperform the market, even though the net return of the funds themselves underperforms passive funds and the market itself. On a net-return level, the funds underperform broad market indexes by one percent a year. Of the 2.3% difference between the returns on stock holdings and the net returns of the funds, 0.7% per year is due to the lower average returns of the nonstock holdings of the funds during the period (relative to stocks). The remaining 1.6% per year is split almost evenly between the expense ratios and the transaction costs of the funds. The final paper I'll cite is a 2008 paper by Fama and French (of the Fama-French model covered in business schools) titled, appropriately, \"\"Mutual Fund Performance\"\". The paper is pretty technical, and somewhat above my level at this time of night, but the authors state one of their conclusions bluntly quite early on: After costs (that is, in terms of net returns to investors) active investment is a negative sum game. Emphasis mine. In short, expense ratios, transaction costs, and other fees quickly diminish the returns to active investment. They find that The [value-weight] portfolio of mutual funds that invest primarily in U.S. equities is close to the market portfolio, and estimated before fees and expenses, its alpha is close to zero. Since the [value-weight] portfolio of funds produces an α close to zero in gross returns, the alpha estimated on the net returns to investors is negative by about the amount of fees and expenses. This implies that the higher the fees, the farther alpha decreases below zero. Since actively-managed mutual funds tend to have higher expense ratios than passively-managed index funds, it's safe to say that their net return to the investor is worse than a market index itself. I don't know of any free datasets that would allow you to research this, but one highly-regarded commercial dataset is the CRSP Survivor-Bias-Free US Mutual Fund Database from the Center for Research in Security Prices at the University of Chicago. In financial research, CRSP is one of the \"\"gold standards\"\" for historical market data, so if you can access that data (perhaps for a firm or academic institution, if you're affiliated with one that has access), it's one way you could run some numbers yourself.\""
},
{
"docid": "51218",
"title": "",
"text": "\"There is a white paper on \"\"The weekend effect of equity options\"\" it is a good paper and shows that (for the most part) option values do lose money from Friday to Monday. Which makes sense because it is getting closer to expiration. Of course this not something that can be counted on 100%. If there is some bad news and the stock opens down on a Monday the puts would have increased and the calls decreased in value. Article Summary (from the authors): \"\"We find that returns on options on individual equities display markedly lower returns over weekends (Friday close to Monday close) relative to any other day of the week. These patterns are observed both in unhedged and delta-hedged positions, indicating that the effect is not the result of a weekend effect in the underlying securities. We find even stronger weekend effects in implied volatilities, but only after an adjustment to quote implied volatilities in terms of trading days rather than calendar days.\"\" \"\"Our results hold for puts and calls over a wide range of maturities and strike prices, for both equally weighted portfolios and for portfolios weighted by the market value of open interest, and also for samples that include only the most liquid options in the market. We find no evidence of a weekly seasonal in bid-ask spreads, trading volume, or open interest that could drive the effect. We also find little evidence that weekend returns are driven by higher levels of risk over the weekend. \"\"The effect is particularly strong over expiration weekends, and it is also present to a lesser degree over mid-week holidays. Finally, the effect is stronger when the TED spread and market volatility are high, which we interpret as providing support for a limits to arbitrage explanation for the persistence of the effect.\"\" - Christopher S. Jones & Joshua Shemes You can read more about this at this link for Memphis.edu\""
},
{
"docid": "465876",
"title": "",
"text": "What do you want to do with your degree? Corporate finance? Investment banking? Wealth management? It all depends on that. Having said that here are some ideas that are useful in a wide variety of scenarios: 1. Accounting, accounting, accounting. Whether you are at an I-Bank or a mid-cap consumer goods company, knowing as much accounting as possible can be hugely helpful. Ive interviewed for jobs at all kinds of companies and one thing that always works on interviewers is showing them you have intimate knowledge of accounting rules. 2. Excel/information system courses. Knowing Excel inside and out and/or some of the more widely used information systems out there can give you a nice little bump in interviews 3. Statistics. Statistics teaches you how to think. Even if you never run a regression again in your life, some of the general principles you learn in stats are absolutely priceless. Not just for work but for *life*. Knowing why you need to control for variables, why samples work, etc. can be a hugely helpful thing not just at work but in dealing with life decisions and sorting through information. Some people here are telling you to learn how to program. That's useful if you want to be a quant or if you want to keep the door open to potentially moving into a quant/data analytics job in the future and that's about it. Companies hire software engineers to do the coding. If you intend to work as an investment banker or a wealth manager, for example, Java wont help you a lick. Let the engineers worry about writing the code. Focus on the stuff that actually moves your career forward and dont try to be everything. If you absolutely want to do something software-related then learn SQL. At least in some shops (particularly corporate finance jobs) you might from time to time be able to use it to query some database or another, although again at most companies there are entire armies of well-paid people providing the necessary interfaces and tools to prevent you from having to do that."
},
{
"docid": "457897",
"title": "",
"text": "Running a sandwich shop and, say, a software consulting service are quite different things. I had two employees at one point, following the kind of thinking in the article. But I found what that meant was that I had to spend more time being a manager and salesperson and much less time doing the work I enjoyed. To make it viable I would have had to scale up to the point where I had at least one salesperson and maybe a manager, which would have required more income-producing staff to support them. Instead, I scaled back to just myself, and have been very happy with that decision. The article also underestimates what can be made in consulting or IT contracting. Rates well above $100/hr are common for people with expertise (as opposed to commodity providers), and billing at least 40 hours a week is not usually a problem. It's certainly true that a one-man operation is much more likely to put a ceiling on your earnings, but (a) that ceiling can be a lot higher than the article suggests, and (b) depending on the business, breaking that ceiling and earning much more is certainly possible in some businesses, for example where you have the opportunity to sell your work in product form rather than hourly."
},
{
"docid": "365465",
"title": "",
"text": "\"Very simple. You open an account with a broker who will do the trades for you. Then you give the broker orders to buy and sell (and the money to pay for the purchases). That's it. In the old days, you would call on the phone (remember, in all the movies, \"\"Sell, sell!!!!\"\"? That's how), now every decent broker has an online trading platform. If you don't want to have \"\"additional value\"\" and just trade - there are many online discount brokers (ETrade, ScotTrade, TD Ameritrade, and others) who offer pretty cheap trades and provide decent services and access to information. For more fees, you can also get advices and professional management where an investment manager will make the decisions for you (if you have several millions to invest, that is). After you open an account and login, you'll find a big green (usually) button which says \"\"BUY\"\". Stocks are traded on exchanges. For example the NYSE and the NASDAQ are the most common US exchanges (there's another one called \"\"pink sheets\"\", but its a different kind of animal), there are also stock exchanges in Europe (notably London, Frankfurt, Paris, Moscow) and Asia (notably Hong Kong, Shanghai, Tokyo). Many trading platforms (ETrade, that I use, for example) allow investing on some of those as well.\""
},
{
"docid": "291578",
"title": "",
"text": "\"Rolling an old 401k into a new 401k is generally only for ease of management. For example, how many bank accounts do you really want? As long as the funds are reasonably allocated I've found it can be a useful \"\"mind game\"\" to leave it separate. Sometimes it's desirable to ignore an account and let it grow, and it is a nice surprise when finally adding all the account balances together. In other words, I keep thinking I've got X (the amount of my biggest or current 401k), which affects/helps my habits and desire to save. When I add them all together I'm shocked to find out I've got Y (the total of all accounts). Personally, I've had big paperwork problems transferring an old 403b (same type process as 401k) even when I had an adviser helping me move it. In the end it was worth moving it, because I'm having the adviser manage it. I'm actually writing this answer specifically because I recently moved a big 401k into a Traditional IRA. A rep from the brokerage, representing my previous employer, kept calling me to find out how they could help (I didn't brush him off). I found that using an IRA provided me with the opportunity to do self-guided investments in funds or even individual stocks, well beyond the limited selection of the old company's 401k. It was useful/interesting to me to invest in low-fee vehicles such as index funds (ie: the Buffett recommendation), and I'll find some stocks as well. Oh and when the old company 401k has certain funds being discontinued, I didn't want to notice the mandated changes years later. So, I'd suggest you consider management and flexibility of the 401k or equivalent, and any of your special personal circumstances/goals. If you end up with a few retirement accounts, I suggest you use an account aggregating website to see or follow your net worth. I know many who, based on various concerns and their portfolio, find an acceptable website to use.\""
}
] |
4981 | Where can I find open source portfolio management software? | [
{
"docid": "102684",
"title": "",
"text": "\"I've just recently launched an open source wealth management platform - wealthbot.io ... \"\"Webo\"\" is mostly targeted at RIA's to help the manage multiple portfolios, etc. Take a look at the demo at demo.wealthbot.io, you'll also find links to github, etc. there. It's a rather involved project, but if you are looking for use cases of rebalancing, portfolio accounting, custodian integration, tax loss harvesting, and many other features available at some of the popular robo-advisors, you might find it interesting.\""
}
] | [
{
"docid": "549364",
"title": "",
"text": "\"As you alluded to in your question, there is not one answer that will be true for all mutual funds. In fact, I would argue the question is not specific to mutual funds but can be applied to almost anyone who must make an investment decision: a mutual fund manager, hedge fund manager, or an individual investor. Even though money going into a company 401(k) retirement savings plan is typically automatically allocated to different funds as we have specified, this is generally not the case for other investment accounts. For example, I also have a Roth IRA in which I have some money from each paycheck direct deposited and it's up to me to decide whether to leave that money in cash or to invest it somewhere else. Every time you invest more money into a mutual fund, the fund manager has the same decision to make. There are two commonly used mutual fund figures that relate to your question: turnover rate, and cash reserves. Turnover rate measures the percent of a fund's portfolio that changes every year. For example, a turnover rate of 100% indicates that a fund replaces every asset it held at the beginning of the year with something else at the end of the year – funds with turnover rates greater than 100% average a holding period for a given asset of less than one year, and funds with turnover rates less than 100% average a holding period for a given asset of more than one year. Cash reserves simply measure the amount of money funds choose to keep as cash instead of investing in other assets. Another important distinction to make is between actively managed funds and passively managed funds. Passively managed funds are often referred to as \"\"index funds\"\" and have as their goal only to match the returns of a given index or some other benchmark. Actively managed funds on the other hand try to beat the market by exploiting so-called market inefficiencies; e.g. buying undervalued assets, selling overvalued assets, \"\"timing\"\" the market, etc. To answer your question for a specific fund, I would encourage you to look at the fund's prospectus. I take as one example of a passively managed fund the Vanguard 500 Index Fund (VFINX), a mutual fund that was created to track the S&P 500. In its prospectus, the fund states that, \"\"to track its target index as closely as possible, the Fund attempts to remain fully invested in stocks\"\". Furthermore, the prospectus states that \"\"the fund's daily cash balance may be invested in one or more Vanguard CMT Funds, which are very low-cost money market funds.\"\" Therefore, we would expect both this fund's turnover rate and cash reserves to be extremely low. When we look at its portfolio composition, we see this is true – it is currently at a 4.8% turnover rate and holds 0.0% in short term reserves. Therefore, we can assume this fund is regularly purchasing shares (similar to a dollar cost averaging strategy) instead of holding on to cash and purchasing shares together at a specific time. For actively managed funds, the picture will tend to look a little different. For example, if we look at the Magellan Fund's portfolio composition, we can see it has a turnover rate of 42%, and holds around .95% in cash/short term reserves. In this case, we can safely guess that trading activity may not be as regular as a passively managed fund, as an active manager attempts to time the market. You may find mutual funds that have much higher cash reserves – perhaps 10% or even more. Granted, it is impossible to know the exact trading strategy of a mutual fund, and for good reason – if we knew for example, that a fund purchases shares every day at 2:30PM in order to realign with the S&P 500, then sellers of S&P components could up the prices at that time to exploit the mutual fund's trade strategy. Large traders are constantly trying to find ways to conceal their actual trading activity in order to avoid these exact problems. Finally, I feel obligated to note that it is important to keep in mind that trade frequency is linked to transactions costs – in general, the more frequently an investment manager (whether it be you or a mutual fund manager) executes trades, the more that manager will lose in transactions costs.\""
},
{
"docid": "369424",
"title": "",
"text": "\"The official source is the most recent Form 13F that Berkshire Hathaway, which is filed with the Securities & Exchange Commission on a quarterly basis . You can find it through the SEC filing search engine, using BRKA as the ticker symbol. and then looking for the filings marked 13-FR or 13-FR/A (the \"\"/A\"\" indicates an amended filing). As you can see by looking at the 13-F filed for the quarter ending September 30 , the document isn't pretty or necessarily easy to read, hence the popularity of sites such as those that Chad linked to. It is, though, the truly official source from which websites tracking the Berkshire Hathaway portfolio derive their information.\""
},
{
"docid": "303680",
"title": "",
"text": "Designed for both centralized and distributed development teams, SCM Anywhere Standalone, SQL Server-based software configuration management (SCM) software, helps development teams deliver software products faster and promotes team collaboration through centralized control of source code files, team activities, work item status and bug reports."
},
{
"docid": "78342",
"title": "",
"text": "\"What do I mean by infrastructure? Well, if you're doing algorithmic trading, you have to have something monitoring data and making decisions on its own, presumably. How do you set that up? There are many ways, and some are better than others. First is a problem of scale. If you're a newbie starting out with some small set of equity tick data, perhaps just trades for instance, you can whip together something that can handle that pretty easily. Check out http://www.marketdatapeaks.com/ though. That's your messaging rates you have to deal with once you go full data feeds direct from all the exchanges. 6.65 million messages/events per second. That's a lot. And if you fall behind, you lose your lunch. Building a robust system that allows you to easily backtest and deploy strategies is crucial as well. The speed at which you're able to conduct the backtest matters a lot. Doing that rapidly, and accurately is not easy. For a broad market-data handling algo design (and now, clearly, for very specific things you can design one that'll handle stuff better for that one corner case, but this is for general algo trading), optimally you have some sort of setup where you have a: [feed handlers] -> [tickerplant] -> [mkt data subscribers/CEP] -> [order management system] -> [broker] in this setup you have feed handlers that are taking the raw exchange feeds and pushing them to a consolidated tickerplant, where CEP subscribers can come through and sub to the data they want (perhaps I just want ES futures on one, and only want to arb CMCSA and CMCSK on another -- you dont want each CEP subscriber getting your full feed for all tickers all the time, its a waste). so more or less, each independent strategy is its own subscriber to the tickerplant, taking whatever data it wants and only that data (could be \"\"give me all the trades and quotes for all nasdaq stocks, but not book depth\"\" for instance). your CEP does whatever maths it has to do to figure out trading decisions, and when it does, it sends it to your order management system which does your risk checks, etc (\"\"do you have enough money to place this trade?\"\" \"\"do you already have a position in this?\"\" \"\"are you trading against yourself?\"\" ... million other things). your OMS knows how to talk to your broker/directly to the exchange depending on your setup. Assuming all your risk checks pass, off the order goes to the exchange, and it deals with the fill msgs, etc. Now, as far as speed is concerned - try to do all of this at 6.5 million events/second. It's hard. Some strats/cep subscribers will run faster than others, some are slower, some need to keep a full book to work while some work on just trades. Your OMS depending on if youre using only market data sources may need to keep its own book to place orders on behalf of your subscribers if they lack information about various markets (think all the twitter trading bots these days for instance), etc. If you look back at the above setup as well, you'll notice some interesting things. [tickerplant] -> [cep subscriber] portion can stay the same for live trading or backtesting. This is huge. The only thing that changes here for backtesting is that if you're trying to backtest, you can take historical data (query it out of your hopefully column-store database) and push it into your tickerplant rather than having it come from a live feed through the feed handler. Your tickerplant and cep subscriber will never know the difference, so you can use the same exact code for backtesting as you can for live. On the other end, you obviously cant send historical orders to your live broker, so you need to code a simulated OMS that does the backtest simulation (another huge piece of software to code that is hard to do well). But, for backtesting, your setup is staying largely the same except those two end pieces. This means that testing/deving/deploying strats can be pretty rapid, and uses the same code base for live and historical, which helps you eliminate bugs and have to code everything twice. Backtesting design: [historical mkt data db] -> [tickerplant] -> [mkt data subscribers/CEP] -> [order management system simulator/backtester] These are just a few of the many problems that you hit when trying to dev good infra. There are like a million more. Point was simply, it's complicated. And C++ is a good lang. I use a wide variety of languages depending on exactly whats going on and how fast the code needs to be. With a proper tickerplant design, youre using some ipc protocol so a subscriber can be coded in any language. Check out http://www.zeromq.org/ -- thats an excellent piece of software to use to make a tickerplant out of, think they even have a design for one in the docs if I recall. With that, your CEP subscribers can be in any language - perhaps pure C if you need the speed, perhaps .NET or Java if you dont (check out http://esper.codehaus.org/ for a Java implement of a CEP subscriber, nEsper for the C# port of that I believe). But I use C, C++, C#, python, R, x86 asm for a few very minor things, and a lang or two I can't mention here.\""
},
{
"docid": "276400",
"title": "",
"text": ">Oh definitely, you just need to be willing to work in Bismarck ND, or various parts of the rustbelt. And it's not that you're getting paid especially high, it's that everything is so insanely cheap (for the most part). That's not what I mean though, it's easy to find locations where cost of living is cheap, its difficult (but possible) to find locations where the average salary for your field isn't reflected in that lower cost of living. For example New Hampshire, the property costs are fairly low - you can find a great house for 250k-300k - but the average salary of a software developer is still high, and not just relatively, it would be considered high in New York as well. I've found houses in New Hampshire that stay on the market for $350k that would be nabbed up in a weekend for 1M easily in my current location, and the average salary is comparable so just imagine what that implies in terms of quality of life."
},
{
"docid": "180196",
"title": "",
"text": "Not according to the SEC: A mutual fund is an SEC-registered open-end investment company that pools money from many investors and invests the money in stocks, bonds, short-term money-market instruments, other securities or assets, or some combination of these investments. The combined securities and assets the mutual fund owns are known as its portfolio, which is managed by an SEC-registered investment adviser. Each mutual fund share represents an investor’s proportionate ownership of the mutual fund’s portfolio and the income the portfolio generates. And further down: Mutual funds are open-end funds."
},
{
"docid": "499756",
"title": "",
"text": "You left out the part where I said cities use it as a source of revenue, meaning there are two factors at play. The city limiting the number of medallions drives up their auction price because there's high demand and the cab companies trying to extract enough profit from the medallion to be worth it. The city decides how many medallions to release, just like in NYC they auction off permits for hot dog vendors which are ironically similarly priced. Imagine for a moment they gave vendor licenses to everyone who wanted to open a stand in central park, you wouldn't even be able to see the park. I wouldn't really say it's fair to call it a stranglehold, more of wringing the last drop out of washcloth because you're dying of thirst. Personally, I think the medallion model is bullshit. In that sense, I'm all for a *regulated* free market, where supply and demand find an equilibrium within the rules. In reality, you only find the medallion model in large markets which isn't really representative of the taxi industry as a whole."
},
{
"docid": "285342",
"title": "",
"text": "If you're good with numbers and understand basic principles of accounting, I suggest using GnuCash - free and open-source accounting software which will provide for all your needs and more. If you're not so comfortable with self-service, many tax preparers also provide bookkeeping services. It can cost somewhere from $50/hour, and you should shop around and also look for references. The bookkeeper doesn't have to be the one to do your taxes, but it will probably make it easier on you to have the same person do all of it."
},
{
"docid": "291578",
"title": "",
"text": "\"Rolling an old 401k into a new 401k is generally only for ease of management. For example, how many bank accounts do you really want? As long as the funds are reasonably allocated I've found it can be a useful \"\"mind game\"\" to leave it separate. Sometimes it's desirable to ignore an account and let it grow, and it is a nice surprise when finally adding all the account balances together. In other words, I keep thinking I've got X (the amount of my biggest or current 401k), which affects/helps my habits and desire to save. When I add them all together I'm shocked to find out I've got Y (the total of all accounts). Personally, I've had big paperwork problems transferring an old 403b (same type process as 401k) even when I had an adviser helping me move it. In the end it was worth moving it, because I'm having the adviser manage it. I'm actually writing this answer specifically because I recently moved a big 401k into a Traditional IRA. A rep from the brokerage, representing my previous employer, kept calling me to find out how they could help (I didn't brush him off). I found that using an IRA provided me with the opportunity to do self-guided investments in funds or even individual stocks, well beyond the limited selection of the old company's 401k. It was useful/interesting to me to invest in low-fee vehicles such as index funds (ie: the Buffett recommendation), and I'll find some stocks as well. Oh and when the old company 401k has certain funds being discontinued, I didn't want to notice the mandated changes years later. So, I'd suggest you consider management and flexibility of the 401k or equivalent, and any of your special personal circumstances/goals. If you end up with a few retirement accounts, I suggest you use an account aggregating website to see or follow your net worth. I know many who, based on various concerns and their portfolio, find an acceptable website to use.\""
},
{
"docid": "45970",
"title": "",
"text": "\"Index funds can be a very good way to get into the stock market. It's a lot easier, and cheaper, to buy a few shares of an index fund than it is to buy a few shares in hundreds of different companies. An index fund will also generally charge lower fees than an \"\"actively managed\"\" mutual fund, where the manager tries to pick which stocks to invest for you. While the actively managed fund might give you better returns (by investing in good companies instead of every company in the index) that doesn't always work out, and the fees can eat away at that advantage. (Stocks, on average, are expected to yield an annual return of 4%, after inflation. Consider that when you see an expense ratio of 1%. Index funds should charge you more like 0.1%-0.3% or so, possibly more if it's an exotic index.) The question is what sort of index you're going to invest in. The Standard and Poor's 500 (S&P 500) is a major index, and if you see someone talking about the performance of a mutual fund or investment strategy, there's a good chance they'll compare it to the return of the S&P 500. Moreover, there are a variety of index funds and exchange-traded funds that offer very good expense ratios (e.g. Vanguard's ETF charges ~0.06%, very cheap!). You can also find some funds which try to get you exposure to the entire world stock market, e.g. Vanguard Total World Stock ETF, NYSE:VT). An index fund is probably the ideal way to start a portfolio - easy, and you get a lot of diversification. Later, when you have more money available, you can consider adding individual stocks or investing in specific sectors or regions. (Someone else suggested Brazil/Russia/Indo-China, or BRICs - having some money invested in that region isn't necessarily a bad idea, but putting all or most of your money in that region would be. If BRICs are more of your portfolio then they are of the world economy, your portfolio isn't balanced. Also, while these countries are experiencing a lot of economic growth, that doesn't always mean that the companies that you own stock in are the ones which will benefit; small businesses and new ventures may make up a significant part of that growth.) Bond funds are useful when you want to diversify your portfolio so that it's not all stocks. There's a bunch of portfolio theory built around asset allocation strategies. The idea is that you should try to maintain a target mix of assets, whatever the market's doing. The basic simplified guideline about investing for retirement says that your portfolio should have (your age)% in bonds (e.g. a 30-year-old should have 30% in bonds, a 50-year-old 50%.) This helps maintain a balance between the volatility of your portfolio (the stock market's ups and downs) and the rate of return: you want to earn money when you can, but when it's almost time to spend it, you don't want a sudden stock market crash to wipe it all out. Bonds help preserve that value (but don't have as nice of a return). The other idea behind asset allocation is that if the market changes - e.g. your stocks go up a lot while your bonds stagnate - you rebalance and buy more bonds. If the stock market subsequently crashes, you move some of your bond money back into stocks. This basically means that you buy low and sell high, just by maintaining your asset allocation. This is generally more reliable than trying to \"\"time the market\"\" and move into an asset class before it goes up (and move out before it goes down). Market-timing is just speculation. You get better returns if you guess right, but you get worse returns if you guess wrong. Commodity funds are useful as another way to diversify your portfolio, and can serve as a little bit of protection in case of crisis or inflation. You can buy gold, silver, platinum and palladium ETFs on the stock exchanges. Having a small amount of money in these funds isn't a bad idea, but commodities can be subject to violent price swings! Moreover, a bar of gold doesn't really earn any money (and owning a share of a precious-metals ETF will incur administrative, storage, and insurance costs to boot). A well-run business does earn money. Assuming you're saving for the long haul (retirement or something several decades off) my suggestion for you would be to start by investing most of your money* in index funds to match the total world stock market (with something like the aforementioned NYSE:VT, for instance), a small portion in bonds, and a smaller portion in commodity funds. (For all the negative stuff I've said about market-timing, it's pretty clear that the bond market is very expensive right now, and so are the commodities!) Then, as you do additional research and determine what sort investments are right for you, add new investment money in the places that you think are appropriate - stock funds, bond funds, commodity funds, individual stocks, sector-specific funds, actively managed mutual funds, et cetera - and try to maintain a reasonable asset allocation. Have fun. *(Most of your investment money. You should have a separate fund for emergencies, and don't invest money in stocks if you know you're going need it within the next few years).\""
},
{
"docid": "476632",
"title": "",
"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.\""
},
{
"docid": "214480",
"title": "",
"text": "Never trust a single source to give you a fair price, especially if they are not in competition, moreso if they know that's the case. I would want to get a quote from at least one other broker in terms of what they feel they can sell the bonds for. (and let them know they are not the only one you are getting a quote from) To start with you need information, such as when is the last time a bond like the ones you have traded and what did it sell for. Also sources for where you can sell the bonds and more info on the entire subject. SIFMA (The Securities Industry and Financial Markets Association) has a pretty helpful website called InvestingInBonds.com. I find it has a wealth of information, and is relatively free of bias. On the Municipal Markets at a Glance page you can get history for various bonds if you have the CUSIP (pronounced 'que-sip') numbers for the bonds. If these bonds are as good as the advisor is telling you they are, then they should be selling for a premium, and the recent sales history would reflect that. I'd find one or two other potential sellers, and get prices from each of them, compare that against recent history and go with whichever one seems to be offering you the best deal. In terms of choosing someone, and how to go about selling bonds, the same website has some excellent information and guidance on buying and selling bonds and How to Choose an Investment Professional which includes how to check up on them to see if they have ever faced disciplinary action, etc.. I would also consider any gains you might have to declare if you sell these for more than face value, and if that would be taxable etc. I would also question your 'too safe' judgement. Just because something is 'safe' I would not necessarily throw it out. You need to look at the return relative to the risk, and if you are not investing in a tax sheltered account, the affect of taxes on your net return. If these are earning a really good return, for fairly low risk, they might be worth keeping, especially if in today's market you need to take substantially more risk to get a comparable return. Taking more risk to get nearly the same return isn't very wise, since an aspect of the risk is perhaps not getting any return, or losing money. In a volatile market there can be a substantial benefit to having a lower risk 'foundation' that you build upon with more risky investments, in order to provide some risk diversity in your portfolio. You might want to consider for example how these bonds have done over the last 13 years, compared to a similar investment in the type of 'less safe' vehicles you are considering. Perhaps you'd be better off just holding these to maturity instead of gambling on something with a lot more risk that could go south on you."
},
{
"docid": "17138",
"title": "",
"text": "\"First they failed miserably to meet their Windows 10 adoption goals, and now they've fired a bunch of people to \"\"refocus\"\". Microsoft should abandon the Windows Kernel. They should adopt a variety of *nix, the way Apple did, and then give Windows away as a free Desktop Environment like KDE and Gnome. Then they can focus on their applications. Office, exchange, and so on, which is where their profits have been coming from for the last several years. They could market and sell those apps to people on all platforms, which would probably help their sales. Microsoft is in a dangerous situation. They belong to an old model, before open source took off. Microsoft became huge when computers were out of reach from the general public. They had early access to the machines which gave them an edge. Now everyone is on equal footing and the philosophy of freely sharing software tools to enrich everyone's lives is becoming more popular than the idea of making money from software. If Microsoft can't do something to keep their products \"\"worth buying\"\" in the face of completely capable and free competition, they're going to shrink a lot. For many of us Microsoft's products stop being worthwhile several years ago. They don't currently offer anything that can't be had elsewhere for free, and their products are not really any easier or more stable or reliable than the competition, despite their marketing efforts to convince you otherwise.\""
},
{
"docid": "324661",
"title": "",
"text": "\"Making these difficult portfolio decisions for you is the point of Target-Date Retirement Funds. You pick a date at which you're going to start needing to withdraw the money, and the company managing the fund slowly turns down the aggressiveness of the fund as the target date approaches. Typically you would pick the target date to be around, say, your 65th birthday. Many mutual fund companies offer a variety of funds to suit your needs. Your desire to never \"\"have to recover\"\" indicates that you have not yet done quite enough reading on the subject of investing. (Or possibly that your sources have been misleading you.) A basic understanding of investing includes the knowledge that markets go up and down, and that no portfolio will always go up. Some \"\"recovery\"\" will always be necessary; having a less aggressive portfolio will never shield you completely from losing money, it just makes loss less likely. The important thing is to only invest money that you can afford to lose in the short-term (with the understanding that you'll make it back in the long term). Money that you'll need in the short-term should be kept in the absolute safest investment vehicles, such as a savings account, a money market account, short-term certificates of deposit, or short-term US government bonds.\""
},
{
"docid": "563446",
"title": "",
"text": "Diversification and convenience: Is .15-0.35% fee worth it? It depends on your net worth, amount you invest and value of your time (if you have high net worth and low cost of your time the fee is highier then in case when you have low net worth but high cost of time - so Betterment seems to be a better option to young professional just after college then to someone already retired), your interest in finance, your willpower etc. Is Betterment allocation better then pure SPY? From what I understand about finance theory - yes. EDIT (as requested) I don't have any affiliation with any financial institution as far as I know. I opened it to get used to just investing as oppose to saving and ups and downs of market (and read up on the portfolio management, especially index funds) and I guess it worked well for me. I plan to move out entirely out of it once the cost of the account would be more then paying for a few coffees and move the account to Vanguard, Schwab or something similar. In other accounts (HSA/...) I use simpler portfolio then the Betterment one (US Total, Small Value, Developed, Emerging and Bonds) but there are people who use simpler (search for 3 fund portfolio)."
},
{
"docid": "257757",
"title": "",
"text": "You can get an investment manager through firms like Fidelity or E*Trade to manage your account. It won't be someone dedicated exclusively to you, but you're in the range where they'd take you as a managed account customer. Another option would be to get a financial planner (CFP or something) help you to identify your needs and figure out what your investments portfolio should look like. This is not a whole lot of money, but is definitely enough to have an early retirement if managed and invested properly."
},
{
"docid": "569206",
"title": "",
"text": "\"I would let them get their hands dirty, learn by practicing. Below you can find a simple program to generate your own efficient frontier, just 29 lines' python. Depending on the age, adult could help in the activity but I would not make it too lecturing. With child-parent relationship, I would make it a challenge, no easy money anymore -- let-your-money work-for-you -attitude, create the efficient portfolio! If there are many children, I would do a competition over years' time-span or make many small competitions. Winner is the one whose portfolio is closest to some efficient portfolio such as lowest-variance-portfolio, I have the code to calculate things like that but it is trivial so build on the code below. Because the efficient frontier is a good way to let participants to investigate different returns and risk between assets classes like stocks, bonds and money, I would make the thing more serious. The winner could get his/her designed portfolio (to keep it fair in your budget, you could limit choices to index funds starting with 1EUR investment or to ask bottle-price-participation-fee, bring me a bottle and you are in. No money issue.). Since they probably don't have much money, I would choose free software. Have fun! Step-by-step instructions for your own Efficient Frontier Copy and run the Python script with $ python simple.py > .datSimple Plot the data with $ gnuplot -e \"\"set ylabel 'Return'; set xlabel 'Risk'; set terminal png; set output 'yourEffFrontier.png'; plot '.datSimple'\"\" or any spreadsheet program. Your first \"\"assets\"\" could well be low-risk candies and some easy-to-stale products like bananas -- but beware, notice the PS. Simple Efficient-frontier generator P.s. do not stagnate with collectibles, such as candies and toys, and retailer products, such as mangos, because they are not really good \"\"investments\"\" per se, a bit more like speculation. The retailer gets a huge percentage, for further information consult Bogleheads.org like here about collectible items.\""
},
{
"docid": "324921",
"title": "",
"text": "Tax Deducted at source is applicable to Employee / Employer [contract employee] relations ... it was also made applicable for cases where an Indian company pays for software products [like MS Word etc] as the product is not sold, but is licensed and is treated as Royalty [unlike sale of a consumer product, that you have, say car] ... Hence it depends on how your contract is worded with your India clients, best is have it as a service agreement. Although services are also taxed, however your contract should clearly specify that any tax in India would be borne by your Indian Client ... Cross Country taxation is an advanced area, you will not find good advice free :)"
},
{
"docid": "124180",
"title": "",
"text": "\"Hard pulls you give your explicit permission to run do affect your credit. Soft pulls do not. While hard pulls affect your score, they don't affect it much. Maybe a couple few point for a little while. In your daily activities, it is inconsequential. If you are prepping to get a mortgage, you should be mindful. Similar type hard pulls in a certain time window will only count once, because it is assume you are shopping. For example, mortgage shopping will result in a lot of hard pulls, but if they are all done in a fortnight, they only count against once. (I believe the time window is actually a month, but I have always had two weeks in my head as the safe window.) The reason soft pulls don't matter is because businesses typically won't make credit decisions based on them. A soft pull is so a business can find a list of people to make offers to, but that doesn't mean they ACTUALLY qualify. Only the information in a hard pull will tell them that. I don't know, but I suspect it is more along the lines of \"\"give me everybody who is between 600 and 800 and lives in zip code 12344\"\" not \"\"what is series0ne's credit score?\"\" A hard pull will lower your score because of a scenario where you open up many many lines of credit in a short period of time. The credit scoring models assume (I am guessing) that you are going to implode. You are either attempting to cover obligations you can't handle, or you are about to create a bunch of obligations you can't handle. Credit should be used as a convenient method of payment, not a source of wealth. As such, each credit line you open in a short time lowers the score. You are disincentivized to continue opening lines, and lenders at the end of your credit line opening spree will see you as riskier than the first.\""
}
] |
4999 | Looking for a good source for Financial Statements | [
{
"docid": "314898",
"title": "",
"text": "If you're researching a publicly traded company in the USA, you can search the company filings with the SEC. Clicking 'Filings' should take you here."
}
] | [
{
"docid": "434958",
"title": "",
"text": "\"> Spoken like one who's soul has already been sold. Soul has been sold? It's comical how exaggeratedly apocalyptic your conspiracy theories are just because I'm willing to admit that not everybody at Fox fits into your conspiracy theory. I don't even know what you're trying to say here anyways. Who are you implying bought my soul for what and why would my comment demonstrate that? > Real people know they're being lied to. Yes, and Fox news viewers include many real people... which is why a portion of both viewers and presenters are indeed intelligent, well-meaning people looking for accurate reporting. There are plenty of intelligent and self-aware conservatives who are aware of media bias. Awareness of media bias is in large part why Fox viewers were so happy to have a conservative alternative. All media has bias and many people are more comfortable in the context of certain biases than others. The fact there are also presenters and viewers that don't fit this high integrity, high intelligence and/or high awareness description doesn't justify simplifying those who do out of the picture just to give your narrative a more pure sense of good and evil. It turns out that the real world is not so conveniently simple. There is bad in good. There is good in bad. You're enemy may do good things or work with good people. Your ally may do bad things or work with bad people. All people, parties, governments and businesses have competing interests some of which likely clash with yours and some of which probably align with yours. The real world is complex. > Some people don't understand the extent to which they are being manipulated. This is why MY comment suggest that SOME people are one way and SOME people are another way. There is a big jump between this claim (a \"\"some\"\" statement) and your more extreme suggestions (\"\"all of them\"\" / \"\"none of them\"\" statements). By disagreeing with my comment, you were making a jump to the latter which is not supported by a statement like this and requires stereotyping the world into an unrealistic black and white.\""
},
{
"docid": "333334",
"title": "",
"text": "\"People treat an emergency fund as some kind of ace-in-the-hole when it comes to financial difficulty, but it is only one of many sources of money that you can utilize. What is an emergency? First, you have to define what an emergency is. Is it a lost job? Is it an unplanned event (pregnancy, perhaps)? Is it a medical emergency? Is it the death of you or your spouse? Also, what does it mean to be unplanned? Is being so unhappy with your job that you give a 2-week notice an emergency? Is one month of planning an emergency? Two? Only you can answer these questions for yourself, but they significantly shape your financial strategy. Planning is highly dependent on your cashflow, and, for some people, it may take them a year to build enough savings to enable them to take 3 months off work. For others, they may be able to change their spending to build up enough for 3 months in 1 month. Also, you have to consider the length of the emergency. Job-loss is rarely permanent, but it's rarely short as well. The current average is 30.7 weeks: that's 7 months! Money in an Emergency There are six main places that people get money during a financial emergency: A good emergency strategy takes all six of these into account. Some emergencies may lean more on one source than the other. However, some of these are correlated. For example, in 2008, three things happened: the stock market crashed, unsecured debt dried up, and people faced financial emergency (lost jobs, cut wages). If you were dependent on a stock portfolio and/or a line of credit, you'd be up a creek, because the value of your investments suddenly decreased, and you can't really tap your now significantly limited line of credit. However, if you had a one or more of cash savings, unemployment income, and unemployment insurance, you would probably have been OK. Budgeting for an emergency When you say \"\"financial emergency\"\", most people think job loss. However, the most common cause of bankruptcy in the US is medical debt. Depending on your insurance situation, this could be a serious risk, or it may not be. People say you should have 3x-6x of your monthly income in savings because it's an easy, back-of-the-envelope way to handle most financial emergency risk, but it's not necessarily the most prudent strategy for you. To properly budget for an emergency, you need to fully take into account what emergencies you are likely to face, and what sources of financing you would have access to given the likely factors that led to that emergency. Generally, having a savings account with some amount of liquid cash is an important part of a risk-mitigation strategy. But it's not a panacea for every kind of emergency.\""
},
{
"docid": "11148",
"title": "",
"text": "Reading financial statements is important, in the sense that it gives you a picture of whether revenues and profits are growing or shrinking, and what management thinks the future will look like. The challenge is, there are firms that make computers read filings for them and inform their trading strategy. If the computer thinks the stock price is below the growth model, it's likely to bid the stock up. And since it's automated it's moving it faster than you can open your web browser. Does this mean you shouldn't read them? In a sense, no. The only sensible trading strategy is to assume you hold things for as long as their fundamentals exceed market value. Financial statements are where you find those fundamentals. So you should read them. But your question is, is it worth it for investors? My answer is no; the market generally factors information in quickly and efficiently. You're better off sticking to passive mutual funds than trying to trade. The better reason to learn to read these filings is to get a better sense of your employer, potential employers, competitors and even suppliers. Knowing what your margins are, what your suppliers margins and acquisitions are, and what they're planning can inform your own decision making."
},
{
"docid": "239484",
"title": "",
"text": "The short answer is that there are no great personal finance programs out there any more. In the past, I found Microsoft Money to be slick and feature rich but unfortunately it has been discontinued a few years ago. Your choices now are Quicken and Mint along with the several open-source programs that have been listed by others. In the past, I found the open source programs to be both clunky and not feature-complete for my every day use. It's possible they have improved significantly since I had last looked at them. The biggest limitation I saw with them is weakness of integration with financial service providers (banks, credit card companies, brokerage accounts, etc.) Let's start with Mint. Mint is a web-based tool (owned by the same company as Quicken) whose main feature is its ability to connect to nearly every financial institution you're likely to use. Mint aggregates that data for you and presents it on the homepage. This makes it very easy to see your net worth and changes to it over time, spending trends, track your progress on budgets and long-term goals, etc. Mint allows you to do all of this with little or no data entry. It has support for your investments but does not allow for deep analysis of them. Quicken is a desktop program. It is extremely feature rich in terms of supporting different types of accounts, transactions, reports, reconciliation, etc. One could use Quicken to do everything that I just described about Mint, but the power of Quicken is in its more manual features. For example, while Mint is centred on showing you your status, Quicken allows you to enter transactions in real-time (as you're writing a check, initiating a transfer, etc) and later reconciles them with data from your financial institutions. Link Mint, Quicken has good integration with financial companies so you can generally get away with as little or as much data entry as you want. For example, you can manually enter large checks and transfers (and later match to automatically-downloaded data) but allow small entries like credit card purchases to download automatically. Bottom line, if you're just looking to keep track of where you are at, try Mint. It's very simple and free. If you need more power and want to manage your finances on a more transactional level, try Quicken (though I believe they do not have a trial version, I don't understand why). The learning curve is steep although probably gentler than that of GnuCash. Last note on why Mint.com is free: it's the usual ad-supported model, plus Mint sells aggregated consumer behaviour reports to other institutions (since Mint has everyone's transactions, it can identify consumer trends). If you're not comfortable with that, or with the idea of giving a website passwords to all your financial accounts, you will find Quicken easier to accept. Hope this helps."
},
{
"docid": "448214",
"title": "",
"text": "(1) The value of the MBA is in the network (2) You don't know anything when you come out of an undergrad and an MBA isn't going to help you there. (3) Entry level jobs are not requiring MBAs no matter how much you think they are. Jobs that want 4-5yrs exp want MBAs, but not ones that require 1-2 years. (4) I mentor undergrads from my alma mater - each one of them has landed a financial analyst role and none of them have an MBA. (5) I view the MBA with no experience as a negative not a positive. I got my undergrad 10 years ago my MBA 4 years ago. Further, let's look at some job reqs that support my stance: (1) https://www.tesla.com/careers/job/logistics-financialanalyst-53725?source=Indeed (2) http://schwabjobs.com/ShowJob/Id/1303833/Treasury%20Analyst,%20Corporate%20Finance (3) https://jobs.lever.co/wish/1020acab-423b-44e9-a1d5-9c10515ef7a2?lever-source=Indeed (4) https://www.upstart.com/careers/114362/apply?gh_jid=114362&gh_src=ue0b8m (5) https://jobs.smartrecruiters.com/Ubisoft2/743999656810009-financial-analyst?codes=1-INDEED (6) https://wholefoods.wd5.myworkdayjobs.com/en-US/wholefoods/job/CA-Emeryville---Northern-California-Corporate/Financial-Analyst_Req-20170705304-1?source=Indeed (7) https://chj.tbe.taleo.net/chj04/ats/careers/requisition.jsp?org=NATUS&cws=1&rid=7263&source=Indeed.com This literally took my 3 minutes to find 7 roles that have ZERO mention of MBA anywhere on the job req. You really don't know what you are talking about and you shouldn't be giving bad advice."
},
{
"docid": "374258",
"title": "",
"text": "\"From Wikipedia: Managerial accounting is used primarily by those within a company or organization. Reports can be generated for any period of time such as daily, weekly or monthly. Reports are considered to be \"\"future looking\"\" and have forecasting value to those within the company.** Financial accounting is used primarily by those outside of a company or organization. Financial reports are usually created for a set period of time, such as a fiscal year or period. Financial reports are historically factual and have predictive value to those who wish to make financial decisions or investments in a company. At my university, managerial accounting focused more on the details of how costs were managed in the company, the future of the business, etc. while the courses that were considered financial accounting were more from the point of view of a financial analyst or investor, like you said. The financial accountancy material covered analysis of financial statements and the associated investment decisions, among other things. These areas overlapped in areas like the production of financial statements, since the company also needs to consider how analysts will interpret these statements, and dividend policy, corporate tax accounting, etc. The Wikipedia articles on managerial accounting and financial accounting may provide helpful information as well. Disclaimer: I took an introductory accounting course in university and nothing more, so my knowledge of the course structures, even at my alma mater, is secondhand recollection at best. I'm sure there are more similarities and differences of which I'm unaware, and I would assume that forensic accountants, auditors, etc. dabble in both these areas and others.\""
},
{
"docid": "457917",
"title": "",
"text": "\"> I will need to see sources, but actually they are claiming that it is on every stock, bond or derivative. Let me know when you find a source for this claim. > That is clearly not the same as \"\"I didn't ask to be born\"\" True, however only if you are taking action to change the condition that you are railing against. Just saying \"\"I didn't ask for to be born into this\"\" just rings hollow in my ears. Voting is definitely more productive. Running for office to push the ideas would do even more. Heading out to open land to make your society in your image would definitely prove your point, as long as it works. > I love how you assume that it takes a government to have a stable civilization. I don't assume, we only have some 10,000 years of recorded history to provide some backup for the statement. And not saying that this form of government is perfect, we just have plenty of evidence that no government is less so. > The only infrastructure I truly need to trade stock now is my computer (made by a private business), my electricity (provided to me by another private business), and my internet connection. That is not true. Lets go beyond the invention of internet. It exists, and it provides us with the ability to trade stock, so lets pretend that it always existed so, and ignore the billions of investment in infrastructure and R&D it took to get her (on commercial as well as governments part). So, the inference that you made is all you need to trade is your computer, electricity, and the internet... all provided by commercial entities. No need for government. Yes, and no. How long do you think that electricity would keep pumping if there was no one to regulate how much each district gets to pull? If there was no one to enforce pricing and payment? After all, if the electricity company cuts power to a house, and they just run out to the junction box and hot wire their own connection - who stops them? If there is no government, that how do we keep people paying? And when the electricity company decides that they are going to artificially jack up prices (Enron style), who keep them based in reality? Do we just wait for a violent uprising? > However, \"\"statistics\"\" can't help us in this case. True. Do you have any examples of innovation in highly unregulated markets? I still haven't seen or heard of what the \"\"ideal\"\" market would look like, just lots of rhetoric about the problems with this one. > There are a lot of examples like the f-35 fighter jet that cost American Taxpayers nearly $1.5 trillion. That would be a corporation that won the right to build the next evolution of the fighter jet by under bidding the cost, and having all kinds of cost overruns. Not to mention scope creep from the customer - i.e. Yes, we want it to do everything we asked for in the RFP, but we also want it to cook coffee doing Mach 5. Keep in mind, that the F-35 was a partership between government and commercial, so not a very good example about how \"\"government is bad at stuff\"\" because commercial is also involved (granted also not a good example of how government is good at stuff - there is definitely lots of examples of pork in government). And as for the $6.5 trillion, if I remember correctly it wasn't that it disappeared, it was that it wasn't recorded correctly. Much of that money is not actual money, it was double, triple, quadruple counted because the accounting error wasn't caught early. And there were thousands of people involved in this situation. But again, an example of how government isn't good at everything. Course, I could always point to a topic near and dear to your heart, and talk about how a [single person caused a $16B selloff](http://www.cnbc.com/id/36999483). To put that in perspective, that is $16B caused by one person - much bigger than $25,000 per person. Or how a [single tweet erased $130B](http://business.time.com/2013/04/24/how-does-one-fake-tweet-cause-a-stock-market-crash/) in a days time. The markets are not exactly perfect either. Of course you could always say it is an example about how government is imperfect at regulating either - and we would both be right. The ungoverned civil society is not a new topic, or approach. I just don't think I have seen any examples of one that succeeded. Mankind always seem to coalesce into some form of structure when presented with ungoverned chaos. What that structure looks like is not always good, and not always bad. I think how ours has formed is pretty good, although I do agree it could be better.\""
},
{
"docid": "19354",
"title": "",
"text": "You need to look at the financial statements, talking to the executives, and have some sort of discussion about price. Then you would have to do due-diligence to make sure that they are not hiding stuff. Bear in mind, the company isn't going to go through all of this unless you can convince them that you have the means to complete the transaction."
},
{
"docid": "557820",
"title": "",
"text": "My plan is that one day I can become free of the modern day monetary burdens that most adults carry with them and I can enjoy a short life without these troubles on my mind. If your objective is to achieve financial independence, and to be able to retire early from the workforce, that's a path that has been explored before. So there's plenty of sources that you might want to check. The good news is that you don't need to be an expert on security analysis or go through dozens of text books to invest wisely and enjoy the market returns. This is the Bogleheads philosophy. It's widely accepted by people in academia, and thoroughly tested. Look into it further if you want to see the rationale behind, but, to sum it up: It doesn't matter how expert you are. The idea of beating the market, that an index fund tracks, is about 'outsmarting' the rest of investors. That would be difficult, even if it was a matter of skill, but when it comes to predicting random events we're all equally clueless. *Total Expense Ratio: It gives an idea of how expensive is a given fund in terms of fees. Actively managed funds have higher TER than indexed ones. This doesn't mean there aren't index funds with, unexplainable, high TER out there."
},
{
"docid": "204825",
"title": "",
"text": "\"Much of what you're asking will not be disclosed for obvious security reasons, so don't be surprised when call center people say they \"\"don't know\"\". They may actually not know, but even if they did, they'd be fired if they were to say anything. Nothing could be a touchier subject than online security for the financial institutions. I don't know of reliable sources for the data you're asking about, and I don't know the banks or other firms would release it. For a bank to talk about its incidence rates of fraud would be unusual, because none of these institutions wants to appear \"\"less safe\"\" than their competitors. If there's any information out there then it's going to be pretty vague. None of these institutions wants the \"\"bad guys\"\" to know what their degree of success is against one bank versus any other. I hope that makes sense. The smaller banks usually piggyback their data on the networks of the larger financial institutions, so they are as secure (as a general rule) as the larger banks' networks they're running on. Also, your transactions on your credit cards are not generally handled directly by your bank anyway, unless it's one of the big heavyweights like Chase or Bank of America. All transactions run through merchant processors, who act as intermediaries between merchants and the banks, and those guys are pretty damned good at security. I've met some of the programmers, and they're impressive to me (I've been a programmer for 35 years and can't put a finger on these guys!). Most banks require that you must provide proof of identity when opening an account, and that ID must me the standards of the \"\"USA Real ID Act\"\". Here's an excerpt from the Department of Homeland Security website on what Real ID is: Passed by Congress in 2005, the REAL ID Act enacted the 9/11 Commission’s recommendation that the Federal Government “set standards for the issuance of sources of identification, such as driver's licenses.” The Act established minimum security standards for state-issued driver’s licenses and identification cards and prohibits Federal agencies from accepting for official purposes licenses and identification cards from states that do not meet these standards. States have made considerable progress in meeting this key recommendation of the 9/11 Commission and every state has a more secure driver’s license today than before the passage of the Act. In order for banks to qualify for FDIC protection, they must comply with the Real ID standards when opening accounts. As with any business (especially online), the most effective way to minimize fraud is vigilant monitoring of data. Banks and other online financial entities have become very adept at pattern analysis and simply knowing where and what to look for when dealing with their customers. There are certainly sophisticated measures which are kept carefully out of the public eye for doing this, and obviously they're good at it. They have to be, right? There's no way to completely eliminate fraud -- too much incentive exists for the \"\"bad guys\"\" to not constantly search for new ways to run their schemes, and the good guys will always be at the disadvantage, because there's no way to anticipate everything anyone might come up with. Just look at online viruses and malware. Your antivirus software can only deal with what it knows about, and the bad guys are always coming up with some new variant that gets past the filters until the antivirus maker learns of it and comes up with a way to deal with it. Your question's a good one to ponder, and I wouldn't want to be the chief of internet security for a bank or online institution, because I'd lay awake at night pondering when the call's going to come that we finally ran out of luck! (grin) I hope this was helpful. Good luck!\""
},
{
"docid": "409927",
"title": "",
"text": "\"When you say \"\"promptly paying off the outstanding balance\"\", do you mean you pay it off literally as soon as you have incurred the debt? It is important to actually let the debt post on a statement before you pay it off. If you pay it off before the statement posts then this won't help your credit at all. Once the statement posts you can pay the entire balance off before the due date and you will still pay no interest. Assuming you are allowing the balance to actually post on your statements, you can simply continue to do this and your credit score will improve over time as your account(s) get older and you show that you are reliable. The only other way to improve your credit score is to open more accounts. In the short term this will actually hurt your score, as it will decrease your average age of account and add an inquiry. However in the mid-long term, this will improve your score as having more accounts of a variety of types is better for your score. Having an installment loan such as an auto loan or home loan is good for your score as it is different from a credit card - however you should definitely not engage in one of these unless it makes financial sense for other reasons. Don't add debt just to build your credit score. You could just open more credit cards. Like I said it will hurt your score in the short term but improve it in the mid-long term. Open cards with a variety of benefits so you can use them for different things to get better rewards.\""
},
{
"docid": "201771",
"title": "",
"text": "As @littleadv and @DumbCoder point out in their comments above, Bloomberg Terminal is expensive for individual investors. If you are looking for a free solution I would recommend Yahoo and Google Finance. On the other side, if you need more financial metrics regarding historic statements and consensus estimates, you should look at the iPad solution from Worldcap, which is not free, but significantly cheaper then Bloomberg and Reuters. Disclosure: I am affiliated with WorldCap."
},
{
"docid": "458345",
"title": "",
"text": "Great answers. Here's my two cents: First, don't forget to look at the overall picture, not just the dividend. Study the company's income statement, balance sheet and cash flow statement for the last few years. Make sure they have good earnings potential, and are not carrying too much debt. I know it's dull, but it's better to miss an opportunity than to buy a turkey and watch the dividends and the share price tank. I went through this with BAC (Bank of America) a couple of years ago. They had a 38-year history of rising dividends when I bought them, and the yield was about 8%. Then the banking crisis happened and the dividend went from $2.56/share to $0.04, and the price fell from $40 to $5. (I stuck with it, continuing to buy at lower and lower prices, and eventually sold them all at $12 and managed to break even, but it was not a pleasant experience) Do your homework. :) Still, one of the most reliable ways to judge a company's dividend-paying ability is to look at its dividend history. Once a company has started paying a dividend there is a strong expectation from shareholders that these payments will continue, and the company's management will try very hard to maintain them. (Though sometimes this doesn't work out, e.g. BAC) You should see an uninterrupted stream of non-decreasing payments over a period of at least 5 years (this timeframe is just a rule of thumb). Well-established, profitable companies also tend to increase their dividends over time, which has the added benefit of pushing up their share price. So you're getting increasing dividends and capital gains. Next, look at the company's payout ratio over time, and the actual cost of the dividend. Can the projected earnings cover the dividend cost without going above the payout ratio? If not, then the dividend is likely to get reduced. In the case of CIM, the dividend history is short and erratic. The earnings are also all over the place, so it's hard to predict what will happen next year. The company is up to its eyeballs debt (current ratio is .2), and its earnings have dropped by 20% in the last quarter. They have lost money in two of the last three years, even though earning have jumped dramatically. This is a very young company, and in my opinion it is too early for them to be paying dividends. A very speculative stock, and you are more likely to make money from capital gains than dividends. AAE is a different story. They are profitable, and have a long dividend history, although the dividend was cut in half recently. This may be a good to buy them hoping the dividend comes back once the economy recovers. However, they are trading at over 40 times earnings, which seems expensive, considering their low profit margins. Before investing your money, invest in your education. :) Get some books on interpretation of financial staments, and learn how to read the numbers. It's sort of like looking at the codes in The Matrix, and seeing the blonde in the red dress (or whatever it was). Good luck!"
},
{
"docid": "442241",
"title": "",
"text": "A traditional bank is not likely to give you a loan if you have no source of income. Credit card application forms also ask for your current income level and may reject you based on not having a job. You might want to make a list of income and expenses and look closely at which expenses can be reduced or eliminated. Use 6 months of your actual bills to calculate this list. Also make a list of your assets and liabilities. A sheet that lists income/expenses and assets/liabilities is called a Financial Statement. This is the most basic tool you'll need to get your expenses under control. There are many other options for raising capital to pay for your monthly expenses: Sell off your possessions that you no longer need or can't afford Ask for short term loan help from family and friends Advertise for short term loan help on websites such as Kijiji Start a part-time business doing something that you like and people need. Tutoring, dog-walking, photography, you make the list and pick from it. Look into unemployment insurance. Apply as soon as you are out of work. The folks at the unemployment office are willing to answer all your questions and help you get what you need. Dip into your retirement fund. To reduce your expenses, here are a few things you may not have considered: If you own your home, make an appointment with your bank to discuss renegotiation of your mortgage payments. The bank will be more interested in helping you before you start missing payments than after. Depending on how much equity you have in your home, you may be able to significantly reduce payments by extending the life of the mortgage. Your banker will be impressed if you can bring them a balance sheet that shows your assets, liabilities, income and expenses. As above, for car payments as well. Call your phone, cable, credit card, and internet service providers and tell them you want to cancel your service. This will immediately connect you to Customer Retention. Let them know that you are having a hard time paying your bill and will either have to negotiate a lower payment or cancel the service. This tactic can significantly reduce your payments. When you have your new job, there are some things you can do to make sure this doesn't happen again: Set aside 10% of your income in a savings account. Have it automatically deducted from your income at source if you can. 75% of Americans are 4 weeks away from bankruptcy. You can avoid this by forcing yourself to save enough to manage your household finances for 3 - 6 months, a year is better. If you own your own home, take out a line of credit against it based on the available equity. Your bank can help you with that. It won't cost you anything as long as you don't use it. This is emergency money; do not use it for vacations or car repairs. There will always be little emergencies in life, this line of credit is not for that. Pay off your credit cards and loans, most expensive rate first. Use 10% of your income to do this. When the first one is paid off, use the 10% plus the interest you are now saving to pay off the next most expensive card/loan. Create a budget you can stick to. You can find a great budget calculator here: http://www.gailvazoxlade.com/resources/interactive_budget_worksheet.html Note I have no affiliation with the above-mentioned site, and have a great respect for this woman's ability to teach people about how to handle money."
},
{
"docid": "301998",
"title": "",
"text": "\"I heard today while listening to an accounting podcast that a balance sheet... can be used to determine if a company has enough money to pay its employees. The \"\"money\"\" that you're looking at is specifically cash on the balance sheet. The cash flows document mentioned is just a more-finance-related document that explains how we ended at cash on the balance sheet. ...even looking for a job This is critical, that i don't believe many people look at when searching for a job. Using the ratios listed below can (and many others), one can determine if the business they are applying for will be around in the next five years. Can someone provide me a pair of examples (one good)? My favorite example of a high cash company is Nintendo. Rolling at 570 Billion USD IN CASH ALONE is astonishing. Using the ratios we can see how well they are doing. Can someone provide me a pair of examples (one bad)? Tesla is a good example of the later on being cash poor. Walk me though how to understand such a document? *Note: This question is highly complex and will take months of reading to fully comprehend the components that make up the financial statements. I would recommend that this question be posted completely separate.\""
},
{
"docid": "220772",
"title": "",
"text": "\"The following is only an overview and does not contain all of the in-depth reasons why you should look more deeply. When you look at a stock's financials in depth you are looking for warning signs. These may warn of many things but one important thing to look for is ratio and growth rate manipulation. Using several different accounting methods it is possible to make a final report reflect a PE ratio (or any other ratio) that is inconsistent with the realities of the company's position. Earnings manipulation (in the way that Enron in particular manipulated them) is more widespread than you might think as \"\"earnings smoothing\"\" is a common way of keeping earnings in line (or smooth) in a recession or a boom. The reason that PE ratio looks so good could well be because professional investors have avoided the stock as there appear to be \"\"interesting\"\" (but legal) accounting decisions that are of concern. Another issue that you don't consider is growth. earnings may look good in the current reporting period but may have been stagnant or falling when considered over multiple periods. The low price may indicate falling revenues, earnings and market share that you would not be aware of when taking only your criteria into account. Understanding a firm will also give you an insight into how future news might affect the company. If the company has a lot of debt and market interest rates rise or fall how will that effect their debt, if another company brings out a competing product next week how will it effect the company? How will it effect their bottom line? How much do they rely on a single product line? How likely is it that their flagship product will become obsolete? How would that effect the company? Looking deeply into a company's financial statements will allow you to see any issues in their accounting practices and give you a feel for how they are preforming over time, it will also let you look into their cost of capital and investment decisions. Looking deeply into their products, company structure and how news will effect them will give you an understanding of potential issues that could threaten your investment before they occur. When looking for value you shouldn't just look at part of the value of the company; you wouldn't just look at sales of a single T-shirt range at Wallmart when deciding whether to invest in them. It is exactly the same argument for why you should look at the whole of the company's state when choosing to invest rather than a few small metrics.\""
},
{
"docid": "533507",
"title": "",
"text": "\"> If an employer sent this to me I'd seriously consider that a threat in regards against how I practice my political beliefs. Why? There's no way the boss can know who voted for who, and it doesn't sound like he's threatening to hire people Obama bumper stickers or anything like that. This looks to me more like an attempt to inform his employees about how public policy can affect the company. (Note that I'm not saying his representations of and predictions about Obama's policies are accurate, but if they are, this is a perfectly reasonable statement to make.) > It undermines my right to educate myself. I have no idea what you mean by that. Someone giving you information \"\"undermines your right\"\" to gather information from other sources?\""
},
{
"docid": "26538",
"title": "",
"text": "\"To the average consumer, the financial health of a bank is completely irrelevant. The FDIC's job is to make it that way. Even if a bank does go under, the FDIC is very good at making sure there is little/no interruption in service. Usually, another bank just takes over the asset of the failing bank, and you don't even notice the difference. You might have a ~24 hour window where your local ATM doesn't work. I also really question the \"\"FDIC is broke\"\" statement. The FDIC has access to additional funding beyond the Deposit Insurance Fund mentioned in your link. It also has the ability to borrow from the Treasury. If you look into the FDIC's report a bit closer, the amount in the \"\"Provision for Insurance Losses\"\" is not just money spent on failing banks. It also includes money that has been set aside to cover anticipated failures and litigation. Saying the FDIC is \"\"broke\"\" is like saying I am \"\"broke\"\" because my checking account balance went down after I moved some money into a rainy-day fund. Failure of the FDIC would signal a failure of our financial system and the government that backs it. If the FDIC fails, your petty checking account would be meaningless anyway. The important things would be non-perishable food, clean water, and guns/ammo. That said, it will be interesting to see the latest quarterly report for the FDIC when it is released next week. The article implies things will look a little better for the FDIC, but we'll see.\""
},
{
"docid": "280895",
"title": "",
"text": "no interest expense (no debt in the capital structure) and an income tax benefit is one possible scenario. you determine this through the financial statement by looking for the differences between the E and EBIT in those calculations (interest and taxes). of course, extraordinary items and discontinued operations could also be present, and result in the difference noted."
}
] |
4999 | Looking for a good source for Financial Statements | [
{
"docid": "338803",
"title": "",
"text": "All websites pull Statement data line by line from central databases. They get to choose which line items to pull, and sometimes they get the plus/minus wrong and sometimes the Statements they recreate don't add up. Nothing you can do about it. All the sites have problems. I personally think the best is Morningstar eg http://financials.morningstar.com/income-statement/is.html?t=POT®ion=can&culture=en-US Use these summary sites at the start of your decision process, but later confirm the facts straight from the Edgar or Sedar for Cdn companies http://www.sedar.com/search/search_form_pc_en.htm"
}
] | [
{
"docid": "282115",
"title": "",
"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."
},
{
"docid": "113284",
"title": "",
"text": "In a nutshell, as long as they (Sparkasse) choose to. I work with banks where it happens the moment I submit the transaction (so the next screen already shows the new totals), and I work with banks that make it take 3 days. In the past, Sparkasse and Raifeissenkassen were especially famous to take a looong time ('Wir nehmen mehr als Geld und Zinsen...' - they supposedly work with the money inbetween, as it is gone from the source account but not arrived in the target account yet); that might have changed (or not). Probably Sparkasse has a statement in their fineprint on how long they make it take. I would expect one business day in today's environment, but I didn't look it up."
},
{
"docid": "134995",
"title": "",
"text": "Financial modeling training - if you ever have any interest in private equity, investment banking, leveraged lending, equity analysis, corporate finance roles, FP&A, or commercial banking in general, you will need to confidently work with three statement financial models. There's lots of good resources out there. Some cost more than others."
},
{
"docid": "164328",
"title": "",
"text": "Ummm, yeah, if you'd like to explain to me how Google is performing poorly, that'd be great. I'd like to have that in a post by tomorrow. Total revenue has jumped 51% from last year. Just taking a quick look at their financial statements their revenue has increased 1.9 billion from quarter before, to 14.1 billion. Their cash and cash converts are up about 2.5 billion from the quarter before. Finally, their total equity for the company is up about 3.5 billion from the quarter before. Not bad. If you think this is a bad quarter, I'd love to see what their good quarters are. What's weighing them down is the buying of Motorola for 13.5 billion. But think about it, they have revenues of that in just *one* quarter. And even more have enough cash to buy Motorola in *cash* 3 times over and still have some left over."
},
{
"docid": "289876",
"title": "",
"text": "\"Been to many job interviews, here's my advice: 1) What the hell the company sells, who it sells to and who the competition is. THINK about the company. What do you think they do well, what do you think they need improvement on? It's a public company so a great way to start is look at yahoo finance. You can read headlines, ready the financial statements, etc. http://finance.yahoo.com/q?s=AFG 2) What do you bring to the company? Have 5 ways to talk about how you are a great, smart person by talking about examples. Anybody can say they are smart, dedicated, etc. People want to hear examples; \"\"Past performance = future performance\"\" 3) Ask questions, a million. Goes back to #1. Know the ins and outs of the company and ask a million. Someone who asks a boat load of good questions will show they are interested, did their homework and looking to learn. Don't worry if you think it will show you don't know things...people actually want someone they can teach; not someone who is smarter than they are. (Just to be clear, don't ask about the stock or its price) 4) I have an exclusive interview tip that I will not broadcast to everyone. But if you want it, PM me.\""
},
{
"docid": "475410",
"title": "",
"text": "You can always take deduction for foreign tax paid on Schedule A, or calculate foreign tax credit using form 1116. Credit is usually more beneficial, but in some cases you will be better of with a deduction. However, in very specific cases, you can claim the credit directly on your 1040 without using the form 1116. Look at the 1040 instructions for line 47: Exception. You do not have to complete Form 1116 to take this credit if all of the following apply. All of your foreign source gross income was from interest and dividends and all of that income and the foreign tax paid on it were reported to you on Form 1099-INT, Form 1099-DIV, or Schedule K-1 (or substitute statement). The total of your foreign taxes was not more than $300 (not more than $600 if married filing jointly). You held the stock or bonds on which the dividends or interest were paid for at least 16 days and were not obligated to pay these amounts to someone else. You are not filing Form 4563 or excluding income from sources within Puerto Rico. All of your foreign taxes were: Legally owed and not eligible for a refund or reduced tax rate under a tax treaty, and Paid to countries that are recognized by the United States and do not support terrorism. For more details on these requirements, see the Instructions for Form 1116."
},
{
"docid": "258306",
"title": "",
"text": "Reading and analyzing financial statements is one of the most important tasks of Equity Analysts which look at a company from a fundamental perspective. However, analyzing a company and its financial statements is much more than just reading the absolute dollar figures provided in financial statements: You need to calculate financial ratios which can be compared over multiple periods and companies to be able to gauge the development of a company over time and compare it to its competitors. For instance, for an Equity Analyst, the absolute dollar figures of a company's operating profit is less important than the ratio of the operating profit to revenue, which is called the operating margin. Another very important figure is Free Cash Flow which can be set in relation to sales (= Free Cash Flow / Sales). The following working capital related metrics can be used as a health check for a company and give you early warning signs when they deviate too much: You can either calculate those metrics yourself using a spreadsheet (e.g. Excel) or use a professional solution, e.g. Bloomberg Professional, Reuters Eikon or WorldCap."
},
{
"docid": "280895",
"title": "",
"text": "no interest expense (no debt in the capital structure) and an income tax benefit is one possible scenario. you determine this through the financial statement by looking for the differences between the E and EBIT in those calculations (interest and taxes). of course, extraordinary items and discontinued operations could also be present, and result in the difference noted."
},
{
"docid": "383331",
"title": "",
"text": "Best of luck! Just an FYI, a great deal of finance firms look for people like you. The way you perceive things is completely different from the way someone who is traditionally trained in finance. Look into some peers of DE. Also, Private Equity (PE) firms...mainly the ones dealing with bio/pharma/whatever you specialize in. What are your excel skills like? Make them better! No mouse. Know VLOOKUP, GETPIVOTDATA, etc. Again, not to become redundant, but figure out what you want to do and go from there... If you are good/quick with your math look for trading. There are a lot of books out there on the subject of trading. Liar's Poker by Michael Lewis, will give you an insight to the lifestyle/mantra of traders (during the 80s). If you like digging into numbers/investigating things you may want to look into a more analytical role. To figure out if you like this read some financial statements. Look on SEC.gov, navigate to EDGAR. Look up a 10-k (annual report) and a 10-q (quarterly report). See if you like poking around/figuring out why and how things work. Hit up seekingalpha.com. This is a hodgepodge of people's opinion. Saying why they want to buy/sell a security. Look at the reasons. They will cite certain economic indicators or other signals. Seekingalpha is a place that can show you how financial types think. See how your views differ or align. Or even if you can expand on what they are saying. Investopedia is a great place to learn jargon and other terms. Frequent this place. Key terms: http://www.financialmodelingguide.com/financial-modeling-tips/tips/banking-financial-terms/ This gives short definitions. Investopedia will give you in depth definitions. Are you currently employed as a RandomAcademicDean? Does your college offer free courses to staff? If yes, take some classes FOR FREE! Take an accounting course (skip managerial, stick with financial), an econ course, a finance course. I am going to assume your college offers a class in Econometrics. Talk to one of the professors, if you think this class would be manageable, sign up. They will probably say your should take MACRO and MICRO. This is true, but you have a P.h.D in Chemistry so you have a demonstrated aptitude towards academia. Econometrics, in short, can be considered the science of business. Bottom line: Figure our your interest within the financial realm, act upon it. Play up your knowledge in chemistry (as a quantitative science) and experience as a dean (think management role). tl;dr soak up knowledge. regurgitate when necessary. P.h.D = good. read a lot. Finance is a big world, you will fit in!"
},
{
"docid": "347113",
"title": "",
"text": "How is Floyd bad with money? I'm going to need you to explain that if you're going to make statements like this... This is a guy who owns several businesses, brands, and has an investment portfolio that would make anyone's mouth water. He's incredibly good at making money, so even though he's extravagant and flaunts his money, that doesn't mean he's making bad financial decisions... he can afford to spend it, so why the fuck shouldn't he? You just hate him cuz he's a dick that makes life look easy as fuck... get over yourself"
},
{
"docid": "204825",
"title": "",
"text": "\"Much of what you're asking will not be disclosed for obvious security reasons, so don't be surprised when call center people say they \"\"don't know\"\". They may actually not know, but even if they did, they'd be fired if they were to say anything. Nothing could be a touchier subject than online security for the financial institutions. I don't know of reliable sources for the data you're asking about, and I don't know the banks or other firms would release it. For a bank to talk about its incidence rates of fraud would be unusual, because none of these institutions wants to appear \"\"less safe\"\" than their competitors. If there's any information out there then it's going to be pretty vague. None of these institutions wants the \"\"bad guys\"\" to know what their degree of success is against one bank versus any other. I hope that makes sense. The smaller banks usually piggyback their data on the networks of the larger financial institutions, so they are as secure (as a general rule) as the larger banks' networks they're running on. Also, your transactions on your credit cards are not generally handled directly by your bank anyway, unless it's one of the big heavyweights like Chase or Bank of America. All transactions run through merchant processors, who act as intermediaries between merchants and the banks, and those guys are pretty damned good at security. I've met some of the programmers, and they're impressive to me (I've been a programmer for 35 years and can't put a finger on these guys!). Most banks require that you must provide proof of identity when opening an account, and that ID must me the standards of the \"\"USA Real ID Act\"\". Here's an excerpt from the Department of Homeland Security website on what Real ID is: Passed by Congress in 2005, the REAL ID Act enacted the 9/11 Commission’s recommendation that the Federal Government “set standards for the issuance of sources of identification, such as driver's licenses.” The Act established minimum security standards for state-issued driver’s licenses and identification cards and prohibits Federal agencies from accepting for official purposes licenses and identification cards from states that do not meet these standards. States have made considerable progress in meeting this key recommendation of the 9/11 Commission and every state has a more secure driver’s license today than before the passage of the Act. In order for banks to qualify for FDIC protection, they must comply with the Real ID standards when opening accounts. As with any business (especially online), the most effective way to minimize fraud is vigilant monitoring of data. Banks and other online financial entities have become very adept at pattern analysis and simply knowing where and what to look for when dealing with their customers. There are certainly sophisticated measures which are kept carefully out of the public eye for doing this, and obviously they're good at it. They have to be, right? There's no way to completely eliminate fraud -- too much incentive exists for the \"\"bad guys\"\" to not constantly search for new ways to run their schemes, and the good guys will always be at the disadvantage, because there's no way to anticipate everything anyone might come up with. Just look at online viruses and malware. Your antivirus software can only deal with what it knows about, and the bad guys are always coming up with some new variant that gets past the filters until the antivirus maker learns of it and comes up with a way to deal with it. Your question's a good one to ponder, and I wouldn't want to be the chief of internet security for a bank or online institution, because I'd lay awake at night pondering when the call's going to come that we finally ran out of luck! (grin) I hope this was helpful. Good luck!\""
},
{
"docid": "19354",
"title": "",
"text": "You need to look at the financial statements, talking to the executives, and have some sort of discussion about price. Then you would have to do due-diligence to make sure that they are not hiding stuff. Bear in mind, the company isn't going to go through all of this unless you can convince them that you have the means to complete the transaction."
},
{
"docid": "464769",
"title": "",
"text": "No. The above calculation does not hold good. When financial statements are prepared they are prepared on a going concern basis, i.e. a business will run normally in the foreseeable future. Valuation of assets and liabilities is done according to this principle. When a bankruptcy takes places or a business closes down, immediately the valuation method will change. For assets, the realizable value will be more relevant. For example, if you hold 100 computers, in an normal situation, they will depreciated at the normal rate. Every year, some portion of the cost is written off as depreciation. When you actually go to sell these computers you are likely to realize much less than what is shown in the statement. Similarly, for a building, the actual realizable value may be more. For liabilities, they tend to increase in such situation. Hence just a plain computation can give you a very broad idea but the actual figure may be different."
},
{
"docid": "465971",
"title": "",
"text": "I had the same problem and was looking for a software that would give me easy access to historical financial statements of a company, preferably in a chart. So that I could easily compare earnings per share or other data between competitors. Have a look at Stockdance this might be what you are looking for. Reuters Terminal is way out of my league (price and complexity) and Yahoo and Google Finance just don't offer the features I want, especially on financials. Stockdance offers a sort of stock selection check list on which you can define your own criterion’s. Hence it makes no investment suggestions but let's you implement your own investing strategy."
},
{
"docid": "533507",
"title": "",
"text": "\"> If an employer sent this to me I'd seriously consider that a threat in regards against how I practice my political beliefs. Why? There's no way the boss can know who voted for who, and it doesn't sound like he's threatening to hire people Obama bumper stickers or anything like that. This looks to me more like an attempt to inform his employees about how public policy can affect the company. (Note that I'm not saying his representations of and predictions about Obama's policies are accurate, but if they are, this is a perfectly reasonable statement to make.) > It undermines my right to educate myself. I have no idea what you mean by that. Someone giving you information \"\"undermines your right\"\" to gather information from other sources?\""
},
{
"docid": "538727",
"title": "",
"text": "There are all sorts of topics in finance that take a lot of time to learn. You have valuation (time value of money, capital asset pricing model, dividend discount model, etc.), financial statement analysis (ratio analysis, free cash flow & discounted cash flow, etc.) , capital structure analysis(Modgliani & Miller theories of capital structure, weighted average cost of capital, more CAPM, the likes), and portfolio management (asset allocation, security selection, integrates financial statement analysis + other fields like derivatives, fixed income, forex, and commodity markets) and all sorts. My opinion of Investopedia is that there is a lot of wheat with the chaff. I think articles/entries are just user-submitted and there are good gems in Investopedia but a lot of it only covers very basic concepts. And you often don't know what you don't know, so you might come out with a weak understanding of something. To begin, you need to understand TVM and why it works. Time value of money is a critical concept of finance that I feel many people don't truly grasp and just understand you need some 'rate' to use for this formula. Also, as a prereq, you should understand basics of accrual accounting (debits & credits) and how the accounting system works. Don't need to know things like asset retirement obligations, or anything fancy, just how accounting works and how things affect certain financial statements. After that, I'd jump into CAPM and cost of capital. Cost of capital is also a very misunderstood concept since schools often just give students the 'cost of capital' for math problems when in reality, it's not just an explicit number but more of a 'general feeling' in the environment. Calculating cost of capital is actually often very tricky (market risk premium) and subjective, sometimes it's not (LIBOR based). After that, you can build up on those basic concepts and start to do things like dividend discount models (basic theory underlying asset pricing models) and capital asset pricing models, which builds on the idea of cost of capital. Then go into valuation. Learn how to price equities, bonds, derivatives, etc. For example, you have the dividend discount model with typical equities and perpetuities. Fixed income has things like duration & convexity to measure risk and analyze yield curves. Derivatives, you have the Black-Scholes model and other 'derivatives' (heh) of that formula for calculating prices of options, futures, CDOs, etc. Valuation is essentially taking the idea of TVM to the next logical step. Then you can start delving into financial modelling. Free cash flows, discounted cash flows, ratio analysis, pro forma projections. Start small, use a structured problem that gives you some inputs and just do calculations. Bonuses* would be ideas of capital structure (really not necessary for entry level positions) like the M&M theorems on capital structure (debt vs equity), portfolio management (risk management, asset allocation, hedging, investment strategies like straddles, inverse floaters, etc), and knowledge of financial institutions and banking regulations (Basel accords, depository regulations, the Fed, etc.). Once you gain an understanding of how this works, pick something out there and do a report on it. Then you'll be left with a single 'word problem' that gives you nothing except a problem and tells you to find an answer. You'll have to find all the inputs and give reasons why these inputs are sound and reasonable inputs for this analysis. A big part that people don't understand about projections and analysis is that **inputs don't exist in plain sight**. You have to make a lot of judgment calls when making these assumptions and it takes a lot of technical understanding to make a reasonable assumption--of which the results of your report highly depend on. As a finance student, you get a taste for all of this. I'm gonna say it's going to be hard to learn a lot of substantial info in 2 months, but I'm not exactly sure what big business expects out of their grunts. You'll mostly be doing practical work like desk jockey business, data entry, and other labor-based jobs. If you know what you're talking about, you can probably work up to something more specialized like underwriting or risk management or something else. Source: Finance degree but currently working towards starting a (finance related) company to draw on my programming background as well."
},
{
"docid": "446687",
"title": "",
"text": "The interest payments received in an account depend both upon on how interest is accrued, as well as how it is paid. The annual interest statement indicates how often interest is paid. It does not, however, indicate how that interest is calculated or accrued. Commonly in this type of account in Canada, the interest is calculated monthly based on the lowest balance you had for that month. If you need specifics, you should check with your financial institution, or check the fine print of the account in question. Good Luck"
},
{
"docid": "11148",
"title": "",
"text": "Reading financial statements is important, in the sense that it gives you a picture of whether revenues and profits are growing or shrinking, and what management thinks the future will look like. The challenge is, there are firms that make computers read filings for them and inform their trading strategy. If the computer thinks the stock price is below the growth model, it's likely to bid the stock up. And since it's automated it's moving it faster than you can open your web browser. Does this mean you shouldn't read them? In a sense, no. The only sensible trading strategy is to assume you hold things for as long as their fundamentals exceed market value. Financial statements are where you find those fundamentals. So you should read them. But your question is, is it worth it for investors? My answer is no; the market generally factors information in quickly and efficiently. You're better off sticking to passive mutual funds than trying to trade. The better reason to learn to read these filings is to get a better sense of your employer, potential employers, competitors and even suppliers. Knowing what your margins are, what your suppliers margins and acquisitions are, and what they're planning can inform your own decision making."
},
{
"docid": "30299",
"title": "",
"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.\""
}
] |
4999 | Looking for a good source for Financial Statements | [
{
"docid": "9938",
"title": "",
"text": "The best source of financial statements would be from the company in question. On corporate websites of public listed companies, you can find such financial statements uploaded in the Investor's Relations section of their website. If their company does not have an online presence, another alternative would be to go to the website of the exchange the company is trading in (e.g. NYSE or NASDAQ) for financial data."
}
] | [
{
"docid": "257216",
"title": "",
"text": "\"Better financial analyst on paper or to improve your own ability? In my opinion what makes a good analyst is a thorough understanding of macro and financial statements, intellectual curiosity and ability to think independently. To be able to look at a dataset and come to your own conclusions without outside bias. To not just want to learn \"\"how\"\" but also why. You can't improve if you don't question the status quo. Everyone lists Excel as a skill on their resume but it is amazing how few people really know it. More employable, what I would want to see is experience in Bloomberg, Factset and Thomson Reuters. And how you have utilized the tools. I want to see that you can think independently. Show me you are capable of completing a task just by being given the starting point and the ending point without needed to be told every step in between. As I said previously, everyone claims to be Excel experts, show me that you really do have advanced knowledge.\""
},
{
"docid": "239484",
"title": "",
"text": "The short answer is that there are no great personal finance programs out there any more. In the past, I found Microsoft Money to be slick and feature rich but unfortunately it has been discontinued a few years ago. Your choices now are Quicken and Mint along with the several open-source programs that have been listed by others. In the past, I found the open source programs to be both clunky and not feature-complete for my every day use. It's possible they have improved significantly since I had last looked at them. The biggest limitation I saw with them is weakness of integration with financial service providers (banks, credit card companies, brokerage accounts, etc.) Let's start with Mint. Mint is a web-based tool (owned by the same company as Quicken) whose main feature is its ability to connect to nearly every financial institution you're likely to use. Mint aggregates that data for you and presents it on the homepage. This makes it very easy to see your net worth and changes to it over time, spending trends, track your progress on budgets and long-term goals, etc. Mint allows you to do all of this with little or no data entry. It has support for your investments but does not allow for deep analysis of them. Quicken is a desktop program. It is extremely feature rich in terms of supporting different types of accounts, transactions, reports, reconciliation, etc. One could use Quicken to do everything that I just described about Mint, but the power of Quicken is in its more manual features. For example, while Mint is centred on showing you your status, Quicken allows you to enter transactions in real-time (as you're writing a check, initiating a transfer, etc) and later reconciles them with data from your financial institutions. Link Mint, Quicken has good integration with financial companies so you can generally get away with as little or as much data entry as you want. For example, you can manually enter large checks and transfers (and later match to automatically-downloaded data) but allow small entries like credit card purchases to download automatically. Bottom line, if you're just looking to keep track of where you are at, try Mint. It's very simple and free. If you need more power and want to manage your finances on a more transactional level, try Quicken (though I believe they do not have a trial version, I don't understand why). The learning curve is steep although probably gentler than that of GnuCash. Last note on why Mint.com is free: it's the usual ad-supported model, plus Mint sells aggregated consumer behaviour reports to other institutions (since Mint has everyone's transactions, it can identify consumer trends). If you're not comfortable with that, or with the idea of giving a website passwords to all your financial accounts, you will find Quicken easier to accept. Hope this helps."
},
{
"docid": "475410",
"title": "",
"text": "You can always take deduction for foreign tax paid on Schedule A, or calculate foreign tax credit using form 1116. Credit is usually more beneficial, but in some cases you will be better of with a deduction. However, in very specific cases, you can claim the credit directly on your 1040 without using the form 1116. Look at the 1040 instructions for line 47: Exception. You do not have to complete Form 1116 to take this credit if all of the following apply. All of your foreign source gross income was from interest and dividends and all of that income and the foreign tax paid on it were reported to you on Form 1099-INT, Form 1099-DIV, or Schedule K-1 (or substitute statement). The total of your foreign taxes was not more than $300 (not more than $600 if married filing jointly). You held the stock or bonds on which the dividends or interest were paid for at least 16 days and were not obligated to pay these amounts to someone else. You are not filing Form 4563 or excluding income from sources within Puerto Rico. All of your foreign taxes were: Legally owed and not eligible for a refund or reduced tax rate under a tax treaty, and Paid to countries that are recognized by the United States and do not support terrorism. For more details on these requirements, see the Instructions for Form 1116."
},
{
"docid": "332046",
"title": "",
"text": "If you just took money and banking you should probably be aiming for the sales end of the job. The trading end they're going to want you to know about option spreads (I remember my old Prof said [this](http://en.wikipedia.org/wiki/Black%E2%80%93Scholes) was always good to know for finance interviews), annuities, financial statement analysis, and all that fun stuff. Either way flaunt your other skills and knowledge as well - accounting, technology, blah blah blah"
},
{
"docid": "350680",
"title": "",
"text": "\"The Securities Industry and Financial Markets Association (SIFMA) publishes these and other relevant data on their Statistics page, in the \"\"Treasury & Agency\"\" section. The volume spreadsheet contains annual and monthly data with bins for varying maturities. These data only go back as far as January 2001 (in most cases). SIFMA also publishes treasury issuances with monthly data for bills, notes, bonds, etc. going back as far as January 1980. Most of this information comes from the Daily Treasury Statements, so that's another source of specific information that you could aggregate yourself. Somewhere I have a parser for the historical data (since the Treasury doesn't provide it directly; it's only available as daily text files). I'll post it if I can find it. It's buried somewhere at home, I think.\""
},
{
"docid": "270269",
"title": "",
"text": "Why Stocks go up and Down by William H Pike is a great source if you are looking to interpret statements for stock analysis. This book really starts from the beginning and clearly explains with a running example of a fake company."
},
{
"docid": "473963",
"title": "",
"text": "\"I was wondering how do we calculate the total capital of a company? Which items should I look for in the financial statements? Total capital usually refers to the sum of long-term debt and total shareholder equity; both of these items can be found on the company's balance sheet. This is one of the calculations that's traditionally used when determining a company's return on capital. I'll use the balance sheet from Gilead Sciences' (GILD) 2012 10-K form as an example. Net long-term debt was $7,054,555,000 and total stockholder equity was $9,550,869,000 which should give a grand total of $16,605,424,000 for total capital. (I know you can do the math, but I always find an example helpful if it uses realistic numbers). You may sometimes hear the term \"\"total capital\"\" referring to \"\"total capital stock\"\" or \"\"total capital assets,\"\" in which case it may be referring to physical capital, i.e. assets like inventory, PP&E, etc., instead of financial capital/leverage. And how do I calculate notes payable? Is the same as accounts payable? As the word \"\"payable\"\" suggests, both are liabilities. However, I've always been taught that accounts payable are debts a business owes to its suppliers, while notes payable are debts a business owes to banks and other institutions with which it has signed a formal agreement and which use formal debt instruments, e.g. a loan contract. This definition seems to match various articles I found online. On a balance sheet, you can usually determine notes payable by combining the short-term debt of the company with the current portion of the long-term debt. These pieces comprise the debt that is due within the fiscal year. In the balance sheet for Gilead Sciences, I would only include the $1,169,490,000 categorized as \"\"Current portion of long-term debt and other obligations, net\"\" term, since the other current liabilities don't look like they would involve formal debt contracts. Since the notes payable section of GILD's balance sheet doesn't seem that diverse and therefore might not make the best example, I'll include the most recent balance sheet Monsanto as well.1 Monsanto's balance sheet lists a term called \"\"Short-term debt, including current portion of long-term debt\"\" with a value of $36 million. This looks like almost the exact definition of notes payable. 1. Note that this financial statement is called a Statement of Consolidated Financial Position on Monsanto's 10-K.\""
},
{
"docid": "557820",
"title": "",
"text": "My plan is that one day I can become free of the modern day monetary burdens that most adults carry with them and I can enjoy a short life without these troubles on my mind. If your objective is to achieve financial independence, and to be able to retire early from the workforce, that's a path that has been explored before. So there's plenty of sources that you might want to check. The good news is that you don't need to be an expert on security analysis or go through dozens of text books to invest wisely and enjoy the market returns. This is the Bogleheads philosophy. It's widely accepted by people in academia, and thoroughly tested. Look into it further if you want to see the rationale behind, but, to sum it up: It doesn't matter how expert you are. The idea of beating the market, that an index fund tracks, is about 'outsmarting' the rest of investors. That would be difficult, even if it was a matter of skill, but when it comes to predicting random events we're all equally clueless. *Total Expense Ratio: It gives an idea of how expensive is a given fund in terms of fees. Actively managed funds have higher TER than indexed ones. This doesn't mean there aren't index funds with, unexplainable, high TER out there."
},
{
"docid": "232451",
"title": "",
"text": "You don't need to file or do anything. The bank will report all transfers over 10 000, but chances are slim that it will even be looked at, if you don't do this every week. Worst case, someone will ask you about the source, and you tell them exactly what you wrote above (I had multiple international transfers over 60k and nobody ever asked). You said you paid his tuition, and he is now paying you back, so in case someone asks, you should be able to produce the documentation on the tuition payment - a bill, or your bank statement showing you paid it; and the amount should be matching, so you have proof. Note that if he pays you interest, it is taxable income. You are obligated to list it on your next tax filing."
},
{
"docid": "520165",
"title": "",
"text": "I'd start with learning how to read a company's financial statement and their annual report. I would recommend reading the following: All three books are cheap and readily available. If you really want to enhance your learning, grab a few annual reports from companies' websites to reference as you learn about different aspects of the financial statements."
},
{
"docid": "448969",
"title": "",
"text": "\">I'm begging you, please find me a source on this one I'd love to see their thorough investigation. Sessions has literally said, \"\"I thought those KKK guys were fine until I found out they smoked pot.\"\" You can also see it in his prioritization of drug enforcement policies which have known outcomes disproportionately affecting POC but I bet this argument isnt direct enough to meet your standards. Simultaneously I predict you will say his KKK statements don't mean anything, making any argument with you futile. But we have to try right? [Heres a look from the anti defamation league that shows bannons direct ties to supporting white supremacy in the media.](https://www.adl.org/education/resources/backgrounders/stephen-bannon-five-things-to-know) Either youre ignorant or fanatical, in either case you are fitting in the position of mindless consumer. Pay more attention.\""
},
{
"docid": "347946",
"title": "",
"text": "\"To answer your question briefly: net income is affected by many things inside and outside of management control, and must be supplemented by other elements to gain a clear picture of a company's health. To answer your question in-depth, we must look at the history of financial reporting: Initially, accounting was primarily cash-based. That is, a business records a sale when a customer pays them cash, and records expenses when cash goes out the door. This was not a perfectly accurate system, as cashflow might be quite erratic even if sales are stable (collection times may differ, etc.). To combat problems with cash-based accounting, financial reporting moved to an accrual-based system. An accrual is the recording of an item before it has fully completed in a cash transaction. For example, when you ship goods to a customer and they owe you money, you record the revenue - then you record the future collection of cash as a balance sheet item, rather than an income statement item. Another example: if your landlord charges you rent on December 31st for the past year, then in each month leading up to December, you accrue the expense on the income statement, even though you haven't paid the landlord yet. Accrual-based accounting leaves room for accounting manipulation. Enron is a prime example; among other things, they were accruing revenue for sales that had not occurred. This 'accelerated' their income, by having it recorded years before cash was ever collectible. There are specific guidelines that restrict doing things like this, but management will still attempt to accelerate net income as much as possible under accounting guidelines. Public companies have their financial statements audited by unrelated accounting firms - theoretically, they exist to catch material misstatements in the financial statements. Finally, some items impacting profit do not show up in net income - they show up in \"\"Other Comprehensive Income\"\" (OCI). OCI is meant to show items that occurred in the year, but were outside of management control. For example, changes in the value of foreign subsidiaries, due to fluctuations in currency exchange rates. Or changes in the value of company pension plan, which are impacted by the stock market. However, while OCI is meant to pick up all non-management-caused items, it is a grey area and may not be 100% representative of this idea. So in theory, net income is meant to represent items within management control. However, given the grey area in accounting interpretation, net income may be 'accelerated', and it also may include some items that occurred by some 'random business fluke' outside of company control. Finally, consider that financial statements are prepared months after the last year-end. So a company may show great profit for 2015 when statements come out in March, but perhaps Jan-March results are terrible. In conclusion, net income is an attempt at giving what you want: an accurate representation of the health of a company in terms of what is under management control. However it may be inaccurate due to various factors, from malfeasance to incompetence. That's why other financial measures exist - as another way to answer the same question about a company's health, to see if those answers agree. ex: Say net income is $10M this year, but was only $6M last year - great, it went up by $4M! But now assume that Accounts Receivable shows $7M owed to the company at Dec 31, when last year there was only $1M owed to the company. That might imply that there are problems collecting on that additional revenue (perhaps revenue was recorded prematurely, or perhaps they sold to customers who went bankrupt). Unfortunately there is no single number that you can use to see the whole company - different metrics must be used in conjunction to get a clear picture.\""
},
{
"docid": "464769",
"title": "",
"text": "No. The above calculation does not hold good. When financial statements are prepared they are prepared on a going concern basis, i.e. a business will run normally in the foreseeable future. Valuation of assets and liabilities is done according to this principle. When a bankruptcy takes places or a business closes down, immediately the valuation method will change. For assets, the realizable value will be more relevant. For example, if you hold 100 computers, in an normal situation, they will depreciated at the normal rate. Every year, some portion of the cost is written off as depreciation. When you actually go to sell these computers you are likely to realize much less than what is shown in the statement. Similarly, for a building, the actual realizable value may be more. For liabilities, they tend to increase in such situation. Hence just a plain computation can give you a very broad idea but the actual figure may be different."
},
{
"docid": "550166",
"title": "",
"text": "No, it won't affect your score until your statement is posted. Paying your bill before your statement is posted is actually a good way to keep your credit utilization low. If you're worried about high credit utilization negatively affecting your credit score, consider paying your bill several times a month to ensure that when your final monthly statement is posted, your utilization is still low. When my credit limit was very low while I was in college, I did this almost every month, and I've seen other sites recommend this practice as well. From creditkarma.com: The easiest way [to lower credit utilization] is to make credit card payments more than once a month so that your balance never gets too high. and creditcards.com: Consider making payments to creditors more than once each month. Otherwise, if you put a major expense -- like a new appliance -- on a credit card, even if you plan to pay it off, your FICO score may take a hit. The reason is that credit scores are calculated as a snapshot in time, so if that happens to be right after you charged a new $700 washing machine, your utilization ratio will look worryingly high. Remember, though, that it's best to have some balance on your card when your statement is posted (assuming you pay it off in full each month), because as the chart shows, 0% utilization is about as bad as utilization > 31-40%: Also, remember that credit utilization affects your credit score in real time, so if you have high utilization one month but a lower utilization the next month, the hit to your score will disappear once a statement with low utilization is posted."
},
{
"docid": "506750",
"title": "",
"text": "In short, if your expenses rise with inflation but your income does not, your expenses will eventually exceed your income. As the article on perpetuities says, a perpetuity is an annuity that pays forever. An annuity is a financial arrangement whereby you are paid a fixed sum every so often for a period of time. Hence, a perpetuity is an arrangement whereby you are paid a fixed sum every so often until you die. Since the sum is fixed in nominal dollars (or other currency units), it will become worth less and less in real dollars as time goes on, which is what will erode your financial independence. To adapt the example from the article that you quote: If you buy an annuity that will pay you $101 per month and your expenses are $100 per month, you may seem to be financially independent. However, if inflation is 2% per year, then next year your expenses will be $102, but the annuity will still only pay you $100. At that point you will no longer be financially independent, since the annuity no longer covers your expenses. There are some senses in which the article's statement is inaccurate in practical terms --- e.g., annuities need not always have fixed payments but may be adjusted for inflation, also there aren't many real perpetuities in existence anyway, and plus it doesn't matter whether the source of the income is an annuity or something else --- but that is the gist of what the article is saying."
},
{
"docid": "164328",
"title": "",
"text": "Ummm, yeah, if you'd like to explain to me how Google is performing poorly, that'd be great. I'd like to have that in a post by tomorrow. Total revenue has jumped 51% from last year. Just taking a quick look at their financial statements their revenue has increased 1.9 billion from quarter before, to 14.1 billion. Their cash and cash converts are up about 2.5 billion from the quarter before. Finally, their total equity for the company is up about 3.5 billion from the quarter before. Not bad. If you think this is a bad quarter, I'd love to see what their good quarters are. What's weighing them down is the buying of Motorola for 13.5 billion. But think about it, they have revenues of that in just *one* quarter. And even more have enough cash to buy Motorola in *cash* 3 times over and still have some left over."
},
{
"docid": "18631",
"title": "",
"text": "As much as people on the internet and ZH-like blogs like to harp on auto deliquencies and other narrow metrics as broader statements about how life around us is all a sham, I feel this article does a good job at discussing the mitigants here. Notably: 1) that the sub-prime auto market is rather small, so while delinquencies may rise it won't represent a catalyst for a broader financial crisis. 2) The securitized products Santander and others are putting together are structured in a way to account for these defaults and loss rates, so while the relative uptick in default rates is interesting to note, it doesn't necessarily spell doom in absolute terms. 3) The fact that many auto dealers don't verify income isn't uncommon and in fact an industry standard practice due to point #2 above. The statement these dealers have been lying about incomes and/or is not verifying incomes certainly pulls at the heart strings of the 2008 Housing Crisis, but when discussed within the context of how the auto lending market works, it isn't nearly as scary as those statements would suggest in isolation."
},
{
"docid": "448214",
"title": "",
"text": "(1) The value of the MBA is in the network (2) You don't know anything when you come out of an undergrad and an MBA isn't going to help you there. (3) Entry level jobs are not requiring MBAs no matter how much you think they are. Jobs that want 4-5yrs exp want MBAs, but not ones that require 1-2 years. (4) I mentor undergrads from my alma mater - each one of them has landed a financial analyst role and none of them have an MBA. (5) I view the MBA with no experience as a negative not a positive. I got my undergrad 10 years ago my MBA 4 years ago. Further, let's look at some job reqs that support my stance: (1) https://www.tesla.com/careers/job/logistics-financialanalyst-53725?source=Indeed (2) http://schwabjobs.com/ShowJob/Id/1303833/Treasury%20Analyst,%20Corporate%20Finance (3) https://jobs.lever.co/wish/1020acab-423b-44e9-a1d5-9c10515ef7a2?lever-source=Indeed (4) https://www.upstart.com/careers/114362/apply?gh_jid=114362&gh_src=ue0b8m (5) https://jobs.smartrecruiters.com/Ubisoft2/743999656810009-financial-analyst?codes=1-INDEED (6) https://wholefoods.wd5.myworkdayjobs.com/en-US/wholefoods/job/CA-Emeryville---Northern-California-Corporate/Financial-Analyst_Req-20170705304-1?source=Indeed (7) https://chj.tbe.taleo.net/chj04/ats/careers/requisition.jsp?org=NATUS&cws=1&rid=7263&source=Indeed.com This literally took my 3 minutes to find 7 roles that have ZERO mention of MBA anywhere on the job req. You really don't know what you are talking about and you shouldn't be giving bad advice."
},
{
"docid": "217035",
"title": "",
"text": "Research the company. Obtain and read their current and past financial statements. Find and read news stories about them. Look for patterns and draw conclusions. Or diversify to the point where one company failing doesn't hurt you significantly. Or both."
}
] |
4999 | Looking for a good source for Financial Statements | [
{
"docid": "46211",
"title": "",
"text": "You can access financial statements contained within 10K and 10Q filings using Last10K.com's mobile app: Last10K.com/mobile Disclosure: I work for Last10K.com"
}
] | [
{
"docid": "209218",
"title": "",
"text": "\"If he didn't lie, I don't see the issue. He did not force anyone to buy anything. His opinion was stock X is good, he publicized it and it turned out to be true (at least temporary) - what's wrong with it? It is customary for people who have either fiduciary duty towards the clients or are perceived as independent analysts to disclose their interest and potential conflict of interest, lest they lose the respect of the public as independent and trustworthy sources of financial information. Jackson never had that, express or implied, and never had the duty to provide anybody with impartial financial analysis, so he can say anything he wants. He can invest into the company and promote it and make money from it - isn't it what was called \"\"business\"\" once? Why is it even being questioned?\""
},
{
"docid": "448214",
"title": "",
"text": "(1) The value of the MBA is in the network (2) You don't know anything when you come out of an undergrad and an MBA isn't going to help you there. (3) Entry level jobs are not requiring MBAs no matter how much you think they are. Jobs that want 4-5yrs exp want MBAs, but not ones that require 1-2 years. (4) I mentor undergrads from my alma mater - each one of them has landed a financial analyst role and none of them have an MBA. (5) I view the MBA with no experience as a negative not a positive. I got my undergrad 10 years ago my MBA 4 years ago. Further, let's look at some job reqs that support my stance: (1) https://www.tesla.com/careers/job/logistics-financialanalyst-53725?source=Indeed (2) http://schwabjobs.com/ShowJob/Id/1303833/Treasury%20Analyst,%20Corporate%20Finance (3) https://jobs.lever.co/wish/1020acab-423b-44e9-a1d5-9c10515ef7a2?lever-source=Indeed (4) https://www.upstart.com/careers/114362/apply?gh_jid=114362&gh_src=ue0b8m (5) https://jobs.smartrecruiters.com/Ubisoft2/743999656810009-financial-analyst?codes=1-INDEED (6) https://wholefoods.wd5.myworkdayjobs.com/en-US/wholefoods/job/CA-Emeryville---Northern-California-Corporate/Financial-Analyst_Req-20170705304-1?source=Indeed (7) https://chj.tbe.taleo.net/chj04/ats/careers/requisition.jsp?org=NATUS&cws=1&rid=7263&source=Indeed.com This literally took my 3 minutes to find 7 roles that have ZERO mention of MBA anywhere on the job req. You really don't know what you are talking about and you shouldn't be giving bad advice."
},
{
"docid": "248349",
"title": "",
"text": "\"Yes, especially if you are a value investor. The importance and relevance of financial statements depends on the company. IMO, the statements of a troubled \"\"too big to fail\"\" bank like Citibank or Bank of America are meaningless. In other industries, the statements will help you distinguish the best performers -- if you understand the industry. A great retail example was Bed, Bath and Beyond vs. Linens and Things. Externally, the stores appeared identical -- they carried the same product and even offered the same discounts. Looking at the books would have revealed that Linens and Things carried an enormous amount of debt that fueled rapid growth... debt that killed the company.\""
},
{
"docid": "418938",
"title": "",
"text": "\"If you are dead set in being an analyst, just pic a sector you are interested in, read a bunch of quarterly and annual reports and do some financial analysis on their financial statements. When you send in your resume, state quite clearly that you have no official experience in being an analyst ( in your cover letter ), but also attach your findings/work. Even if it is amateur, you will gain some experience in a certain sector and you will up to scruff, even if they don't care about the sector you picked out, they will see that you have done some work besides just showing up with a degree. It will help differentiate you from the rest of the pack. If you have leisure time and not studying for your CFA, look into the book \"\"Confessions of a Wallstreet Analyst\"\". It talks about the author going to work in Wallstreet during the telecom boom on the late 1990s. It's interesting and you get a sense of what kind of work he actually did. That sort of insight will help you out and hopefully get your on your path to success. Hope this helped!\""
},
{
"docid": "559105",
"title": "",
"text": "If you are refering to company's financial reports and offerings, the required source for companies to disclose the information is the SGX website (www.sgx.com) under the Company Disclosure tab. This includes annual statements for the last 5 years, prospectus for any shares/debentures/buy back/etc which is being offered, IPO offers and shareholders meetings. You may also find it useful to check the Research section of the SGX website where some of the public listed companies have voluntarily allowed independent research firms to monitor their company for a couple of years and produce a research report. If you are referring to filings under the Companies Act, these can be found at the Accounting and Regulatory Authority (ACRA) website (www.acra.gov.sg) and you can also purchase extracts of specific filings under the ACRA iShop. To understand the Singapore public listing system and the steps to public listing, you may find it useful to purchase one of the resource documents available for Singapore law, finance, tax and corporate secretaryship which are sold by CCH (www.cch.com.sg). Specifically for public listing the Singapore Annotated Listing Manual may help. It is common practice for companies here to employ law firms and research firms to do the majority of this research instead of doing it themselves which I one of the reasons this information is online but perhaps not so visible. I hope I have understood your question correctly!"
},
{
"docid": "18631",
"title": "",
"text": "As much as people on the internet and ZH-like blogs like to harp on auto deliquencies and other narrow metrics as broader statements about how life around us is all a sham, I feel this article does a good job at discussing the mitigants here. Notably: 1) that the sub-prime auto market is rather small, so while delinquencies may rise it won't represent a catalyst for a broader financial crisis. 2) The securitized products Santander and others are putting together are structured in a way to account for these defaults and loss rates, so while the relative uptick in default rates is interesting to note, it doesn't necessarily spell doom in absolute terms. 3) The fact that many auto dealers don't verify income isn't uncommon and in fact an industry standard practice due to point #2 above. The statement these dealers have been lying about incomes and/or is not verifying incomes certainly pulls at the heart strings of the 2008 Housing Crisis, but when discussed within the context of how the auto lending market works, it isn't nearly as scary as those statements would suggest in isolation."
},
{
"docid": "30299",
"title": "",
"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.\""
},
{
"docid": "201771",
"title": "",
"text": "As @littleadv and @DumbCoder point out in their comments above, Bloomberg Terminal is expensive for individual investors. If you are looking for a free solution I would recommend Yahoo and Google Finance. On the other side, if you need more financial metrics regarding historic statements and consensus estimates, you should look at the iPad solution from Worldcap, which is not free, but significantly cheaper then Bloomberg and Reuters. Disclosure: I am affiliated with WorldCap."
},
{
"docid": "377444",
"title": "",
"text": "Yes, there are very lucrative opportunities available by using financial news releases. A lot of times other people just aren't looking in less popular markets, or you may observe the news source before other people realize it, or may interpret the news differently than the other market participants. There is also the buy the rumor, sell the news mantra - for positive expected information (opposite for negative expected news), which results in a counterintuitive trading pattern."
},
{
"docid": "276927",
"title": "",
"text": "\"First, don't use Yahoo's mangling of the XBRL data to do financial analysis. Get it from the horse's mouth: http://www.sec.gov/edgar/searchedgar/companysearch.html Search for Facebook, select the latest 10-Q, and look at the income statement on pg. 6 (helpfully linked in the table of contents). This is what humans do. When you do this, you see that Yahoo omitted FB's (admittedly trivial) interest expense. I've seen much worse errors. If you're trying to scrape Yahoo... well do what you must. You'll do better getting the XBRL data straight from EDGAR and mangling it yourself, but there's a learning curve, and if you're trying to compare lots of companies there's a problem of mapping everybody to a common chart of accounts. Second, assuming you're not using FCF as a valuation metric (which has got some problems)... you don't want to exclude interest expense from the calculation of free cash flow. This becomes significant for heavily indebted firms. You might as well just start from net income and adjust from there... which, as it happens, is exactly the approach taken by the normal \"\"indirect\"\" form of the statement of cash flows. That's what this statement is for. Essentially you want to take cash flow from operations and subtract capital expenditures (from the cash flow from investments section). It's not an encouraging sign that Yahoo's lines on the cash flow statement don't sum to the totals. As far as definitions go... working capital is not assets - liabilities, it is current assets - current liabilities. Furthermore, you want to calculate changes in working capital, i.e. the difference in net current assets from the previous quarter. What you're doing here is subtracting the company's accumulated equity capital from a single quarter's operating results, which is why you're getting an insane result that in no way resembles what appears in the statement of cash flows. Also you seem to be using the numbers for the wrong quarter - 2014q4 instead of 2015q3. I can't figure out where you're getting your depreciation number from, but the statement of cash flows shows they booked $486M in depreciation for 2015q3; your number is high. FB doesn't have negative FCF.\""
},
{
"docid": "134995",
"title": "",
"text": "Financial modeling training - if you ever have any interest in private equity, investment banking, leveraged lending, equity analysis, corporate finance roles, FP&A, or commercial banking in general, you will need to confidently work with three statement financial models. There's lots of good resources out there. Some cost more than others."
},
{
"docid": "434958",
"title": "",
"text": "\"> Spoken like one who's soul has already been sold. Soul has been sold? It's comical how exaggeratedly apocalyptic your conspiracy theories are just because I'm willing to admit that not everybody at Fox fits into your conspiracy theory. I don't even know what you're trying to say here anyways. Who are you implying bought my soul for what and why would my comment demonstrate that? > Real people know they're being lied to. Yes, and Fox news viewers include many real people... which is why a portion of both viewers and presenters are indeed intelligent, well-meaning people looking for accurate reporting. There are plenty of intelligent and self-aware conservatives who are aware of media bias. Awareness of media bias is in large part why Fox viewers were so happy to have a conservative alternative. All media has bias and many people are more comfortable in the context of certain biases than others. The fact there are also presenters and viewers that don't fit this high integrity, high intelligence and/or high awareness description doesn't justify simplifying those who do out of the picture just to give your narrative a more pure sense of good and evil. It turns out that the real world is not so conveniently simple. There is bad in good. There is good in bad. You're enemy may do good things or work with good people. Your ally may do bad things or work with bad people. All people, parties, governments and businesses have competing interests some of which likely clash with yours and some of which probably align with yours. The real world is complex. > Some people don't understand the extent to which they are being manipulated. This is why MY comment suggest that SOME people are one way and SOME people are another way. There is a big jump between this claim (a \"\"some\"\" statement) and your more extreme suggestions (\"\"all of them\"\" / \"\"none of them\"\" statements). By disagreeing with my comment, you were making a jump to the latter which is not supported by a statement like this and requires stereotyping the world into an unrealistic black and white.\""
},
{
"docid": "506750",
"title": "",
"text": "In short, if your expenses rise with inflation but your income does not, your expenses will eventually exceed your income. As the article on perpetuities says, a perpetuity is an annuity that pays forever. An annuity is a financial arrangement whereby you are paid a fixed sum every so often for a period of time. Hence, a perpetuity is an arrangement whereby you are paid a fixed sum every so often until you die. Since the sum is fixed in nominal dollars (or other currency units), it will become worth less and less in real dollars as time goes on, which is what will erode your financial independence. To adapt the example from the article that you quote: If you buy an annuity that will pay you $101 per month and your expenses are $100 per month, you may seem to be financially independent. However, if inflation is 2% per year, then next year your expenses will be $102, but the annuity will still only pay you $100. At that point you will no longer be financially independent, since the annuity no longer covers your expenses. There are some senses in which the article's statement is inaccurate in practical terms --- e.g., annuities need not always have fixed payments but may be adjusted for inflation, also there aren't many real perpetuities in existence anyway, and plus it doesn't matter whether the source of the income is an annuity or something else --- but that is the gist of what the article is saying."
},
{
"docid": "305117",
"title": "",
"text": "From my experience you don't need knowledge of accounting to pick good stocks. The type of investing you are referring to is fundamental. This is finding out about the company, this websites should help you start off: http://en.tradehero.mobi/how-to-choose-a-stock-fundamental-analysis/ Investopedia will also be a useful website in techniques. A bit of knowledge in economics will be helpful in understanding how current affairs will affect a market, which will affect stock prices. However you need neither economics or accounting knowledge if you were to learn technical analysis, many doubt the workings of this technique, but in my experience it is easier to learn and practise. For example looking at charts from previous years it shows the last time there was a huge recession the dollar did well and commodities didn't. In this recession we are entering you can see the same thing happening. Read about the different techniques before limiting yourself to just looking at financial statements you may find a better technique suited to you, like these technical analysts: http://etfhq.com/blog/2013/03/02/top-technical-analysts/ Hope this helps."
},
{
"docid": "153605",
"title": "",
"text": "\"I would recommend \"\"The Intelligent Investor\"\" by Benjamin Graham. Though it's not a substitute for the CFAI curriculum, the book does cover a lot of ground. I'd like to take the time to point out that given your lack of experience, the potential employer wont be looking for a very high level of technical expertise. Put in another way, a basic understanding of financial statements might very well suffice. Freshies are generally required to have that along with a good grasp of MS Suite (sans Access).\""
},
{
"docid": "26538",
"title": "",
"text": "\"To the average consumer, the financial health of a bank is completely irrelevant. The FDIC's job is to make it that way. Even if a bank does go under, the FDIC is very good at making sure there is little/no interruption in service. Usually, another bank just takes over the asset of the failing bank, and you don't even notice the difference. You might have a ~24 hour window where your local ATM doesn't work. I also really question the \"\"FDIC is broke\"\" statement. The FDIC has access to additional funding beyond the Deposit Insurance Fund mentioned in your link. It also has the ability to borrow from the Treasury. If you look into the FDIC's report a bit closer, the amount in the \"\"Provision for Insurance Losses\"\" is not just money spent on failing banks. It also includes money that has been set aside to cover anticipated failures and litigation. Saying the FDIC is \"\"broke\"\" is like saying I am \"\"broke\"\" because my checking account balance went down after I moved some money into a rainy-day fund. Failure of the FDIC would signal a failure of our financial system and the government that backs it. If the FDIC fails, your petty checking account would be meaningless anyway. The important things would be non-perishable food, clean water, and guns/ammo. That said, it will be interesting to see the latest quarterly report for the FDIC when it is released next week. The article implies things will look a little better for the FDIC, but we'll see.\""
},
{
"docid": "88972",
"title": "",
"text": "\"The key with analyzing financial statements is that you need to look at all angles of a particular item. ie: Sales has gone up, but has the cost of sales increased by even more, implying narrower margins? Or, interest expense has gone up, but is that because new debt was taken on to pay for expansion? In the specific case you mentioned [buying assets that will create depreciation expense over time], there is a grouping on the cash flow statement called 'Investing', which will state the amount of cash used during the year to invest in the business. This could be a good thing or a bad thing, depending on other factors (and your personal preference regarding dividends being paid to shareholders). In addition, you can see the amount of depreciation expense separately listed on the cash flow statement. This tells you many things. Consider a company with $10M in assets on the balance sheet, but $2M in depreciation expense. This tells you that [in a very loose sense], every 5 years the assets owned by the company will all need to be replaced. Compare that with the Investing section of the cash flow statement - if they are buying $4M of new assets this year, this tells you that on an overall basis, they are likely expanding the business, because the new investments outpace the depreciation. But, is your concern of under-reported earnings a common issue? Typically, keep in mind that the most common bias of a company is to over-report earnings. This is because management compensation (in the form of performance bonuses and stock option valuation) is increased by profitable years. However, in a year where a loss / poor performance is likely, a reverse-bias occurs, to take as much of a loss as possible in that year. This is because if a manager's bonus is already 0 due to poor company performance, having a worse year will not turn the bonus negative. So, by taking all expenses possible today on the financial statements, next year might have less allocated expenses, and therefore the manager might get a bigger bonus impact next year. This is called \"\"Taking a big bath\"\". Note that public companies must meet certain reporting standards, and they are audited by external accounting firms to show that they meet those standards. Of course, there is no guarantee that the auditors will catch all cases of accounting manipulation (see Enron, etc., etc.).\""
},
{
"docid": "163843",
"title": "",
"text": "Financial literacy for individuals is the instruction and comprehension of different money related issues. This subject concentrates on the capacity to manage personal finance matters in a productive way, and it incorporates the information of settling on suitable choices about individual finance, for example, insurance premiums, educational fees, real estate investments, tax planning, retirement saving, budget management and so on. Let's have a look at the importance of Financial Literacy in an Individual's life so that it can become a source of inspiration for you. Inspiration and financial literacy for individuals enable people to end up plainly independent with the goal that they can accomplish budgetary solidness. The individuals who comprehend the subject ought to have the capacity to answer a few inquiries concerning buys, for example, regardless of whether a thing is required, whether it is reasonable, and whether it a benefit or a risk. Financial literacy for individuals shows the practices and states of mind a man has about cash that is connected to his everyday life. Financial literacy demonstrates how an individual settles on monetary choices. This attitude can enable a man to build up a money related guide to distinguish what he procures, what he spends and what he owes. The absence of financial education can prompt owing a lot of obligation and settle on poor monetary choices. For instance, the preferences or drawbacks of settled and variable loan costs are ideas that are less demanding to comprehend and settle on educated choices about in the event that you have monetary proficiency abilities. Monetary proficiency training ought to likewise incorporate hierarchical abilities, consumer rights, innovation and worldwide financial matters in light of the fact that the condition of the worldwide economy incredibly influences the U.S. Economy. As per the saying of one of the renowned actor cum producer, Lucille Bell, 'Keeping busy and making optimism a way of life can restore your faith in yourself'. Yes, the current market trend has proved this inspirational quote to a true extent. Investing money into trading and financial market is a hard nut to crack and it requires a thought-provoking financial inspiration for individuals. To earn handsome money, you need to become smart enough to understand the market behavior, market flows and all the associated ups and downs. Now, you are confused. No, you don't need to hold an MBA degree or become a financial expert to learn lucrative investing skills. Wealth Generators is there for you to make you learn all the essentials techniques required to make your hard earned money provide you with the best output which you can never imagine. Yes, optimism and the smart skills are the two pivotal ways to get success over the curvature of the financial twisting. We are considered to be one stop financial inspirations for individuals who wish to earn money by making smart investments. It all has become possible due to years of research and development of our financial veterans and their innovative attitude in developing financial tools. The amalgamation of the computer, communication technologies and our educational financial tools have lowered the risk of investments. With a commitment and optimistic approach, you can earn good money in no time, if you have proper market knowledge. Our experts have done extensive research and they are always updated with the latest insights of the trading and investment markets. We believe that your solid financial inspiration to save your expenses and turning them into handsome profits can make you a wealthy person. So, if you are really willing it, Wealth Generators is there for you, the ultimate source of your financial inspiration."
},
{
"docid": "280895",
"title": "",
"text": "no interest expense (no debt in the capital structure) and an income tax benefit is one possible scenario. you determine this through the financial statement by looking for the differences between the E and EBIT in those calculations (interest and taxes). of course, extraordinary items and discontinued operations could also be present, and result in the difference noted."
}
] |
5021 | Is there a more flexible stock chart service, e.g. permitting choice of colours when comparing multiple stocks? | [
{
"docid": "589285",
"title": "",
"text": "I don't think there are any web based tools that would allow you to do this. The efforts required to build vs the perceived benefit to users is less. All the web providers want the data display as simple as possible; giving more features at times confuses the average user."
}
] | [
{
"docid": "201391",
"title": "",
"text": "\"I can't find a decent duplicate, so here are some general guidelines: First of all by \"\"stocks\"\" the answers generally mean \"\"equities\"\" which could be either single stocks or mutual funds that consist of stocks. Unless you have lots of experience that can help you discern good stocks from bad, investing in mutual funds reduces the risk considerably. If you want to fine-tune the plan, you can weigh certain categories higher to change your risk/return profile (e.g. equity funds will have higher returns and risk than fixed income (bond) funds, so if you want to take a little more risk you can put more in equity funds and less in fixed income funds). Lastly, don't stress too much over the individual investments. The most important thing is that you get as much company match as you can. You cannot beat the 100% return that comes from a company match. The allocation is mostly insignificant compared to that. Plus you can probably change your allocation later easily and cheaply if you don't like it. Disclaimer: these are _general_ guidelines for 401(k) investing in general and not personal advice.\""
},
{
"docid": "79111",
"title": "",
"text": "In the short term the market is a popularity contest In the short run which in value investing time can extend even to many years, an equity is subject to the vicissitudes of the whims by every scale of panic and elation. This can be seen by examining the daily chart of any large cap equity in the US. Even such large holdings can be affected by any set of fear and greed in the market and in the subset of traders trading the equity. Quantitatively, this statement means that equities experience high variance in the short rurn. in the long term [the stock market] is a weighing machine In the long run which in value investing time can extend to even multiple decades, an equity is more or less subject only to the variance of the underlying value. This can be seen by examining the annual chart of even the smallest cap equities over decades. An equity over such time periods is almost exclusively affected by its changes in value. Quantitatively, this statement means that equities experience low variance in the long run."
},
{
"docid": "504089",
"title": "",
"text": "-I understand. If the option expires and you paid a premium of let's say $20, then you loose it. I will still have to read more obviously. If there are other ways to play the commodities market in a safer way, I am more than willing to look into it. -I understand futures and options on futures are more risky than stocks. What I am getting at is it is less risky COMPARED to regular futures. Compared to the available choices, this seems like the safest. I understand I can loose all the money I invest/speculate with. But loosing $10 (or whatever the price of said commodity options are), is still better than loosing thousands. I agree though I should do my do diligence. -What I am getting at is obviously certain things are correlated with bull or bear markets (gold bear, growth stocks bull). If you can use a combination of assets, you can have some that are winners, while some will be down. I don't expect one asset to be a super asset. -But most the stocks are overvalued, and are overrated. I have found several stocks that I am invested in (MGM Macau, Lippo Mall, and Whiting Trust II). I am also in gold, silver, small Riyal position, and Norwegian Kroner."
},
{
"docid": "461018",
"title": "",
"text": "stocks represent ownership in a company. their price can go up or down depending on how much profit the company makes (or is expected to make). stocks owners are sometimes paid money by the company if the company has extra cash. these payments are called dividends. bonds represent a debt that a company owes. when you buy a bond, then the company owes that debt to you. typically, the company will pay a small amount of money on a regular basis to the bond owner, then a large lump some at some point in the future. assuming the company does not file bankrupcy, and you keep the bond until it becomes worthless, then you know exactly how much money you will get from buying a bond. because bonds have a fixed payout (assuming no bankrupcy), they tend to have lower average returns. on the other hand, while stocks have a higher average return, some stocks never return any money. in the usa, stocks and bonds can be purchased through a brokerage account. examples are etrade, tradeking, or robinhood.com. before purchasing stocks or bonds, you should probably learn a great deal more about other investment concepts such as: diversification, volatility, interest rates, inflation risk, capital gains taxes, (in the usa: ira's, 401k's, the mortgage interest deduction). at the very least, you will need to decide if you want to buy stocks inside an ira or in a regular brokerage account. you will also probably want to buy a low-expense ration etf (e.g. an index fund etf) unless you feel confident in some other choice."
},
{
"docid": "406286",
"title": "",
"text": "The rule that I know is six months of income, stored in readily accessible savings (e.g. a savings or money market account). Others have argued that it should be six months of expenses, which is of course easier to achieve. I would recommend against that, partially because it is easier to achieve. The other issue is that people are more prone to underestimate their expenses than their income. Finally, if you base it on your current expenses, then budget for savings and have money left over, you often increase your expenses. Sometimes obviously (e.g. a new car) and sometimes not (e.g. more restaurants or clubs). Income increases are rarer and easier to see. Either way, you can make that six months shorter or longer. Six months is both feasible and capable of handling difficult emergencies. Six years wouldn't be feasible. One month wouldn't get you through a major emergency. Examples of emergencies: Your savings can be in any of multiple forms. For example, someone was talking about buying real estate and renting it. That's a form of savings, but it can be difficult to do withdrawals. Stocks and bonds are better, but what if your emergency happens when the market is down? Part of how emergency funds operate is that they are readily accessible. Another issue is that a main goal of savings is to cover retirement. So people put them in tax privileged retirement accounts. The downside of that is that the money is not then available for emergencies without paying penalties. You get benefits from retirement accounts but that's in exchange for limitations. It's much easier to spend money than to save it. There are many options and the world makes it easy to do. Emergency funds make people really think about that portion of savings. And thinking about saving before spending helps avoid situations where you shortchange savings. Let's pretend that retirement accounts don't exist (perhaps they don't in your country). Your savings is some mix of stocks and bonds. You have a mortgaged house. You've budgeted enough into stocks and bonds to cover retirement. Now you have a major emergency. As I understand your proposal, you would then take that money out of the stocks and bonds for retirement. But then you no longer have enough for retirement. Going forward, you will have to scrimp to get back on track. An emergency fund says that you should do that scrimping early. Because if you're used to spending any level of money, cutting that is painful. But if you've only ever spent a certain level, not increasing it is much easier. The longer you delay optional expenses, the less important they seem. Scrimping beforehand also helps avoid the situation where the emergency happens at the end of your career. It's one thing to scrimp for fifteen years at fifty. What's your plan if you would have an emergency at sixty-five? Or later? Then you're reducing your living standard at retirement. Now, maybe you save more than necessary. It's not unknown. But it's not typical either. It is far more common to encounter someone who isn't saving enough than too much."
},
{
"docid": "370244",
"title": "",
"text": "Behind the scenes, mutual funds and ETFs are very similar. Both can vary widely in purpose and policies, which is why understanding the prospectus before investing is so important. Since both mutual funds and ETFs cover a wide range of choices, any discussion of management, assets, or expenses when discussing the differences between the two is inaccurate. Mutual funds and ETFs can both be either managed or index-based, high expense or low expense, stock or commodity backed. Method of investing When you invest in a mutual fund, you typically set up an account with the mutual fund company and send your money directly to them. There is often a minimum initial investment required to open your mutual fund account. Mutual funds sometimes, but not always, have a load, which is a fee that you pay either when you put money in or take money out. An ETF is a mutual fund that is traded like a stock. To invest, you need a brokerage account that can buy and sell stocks. When you invest, you pay a transaction fee, just as you would if you purchase a stock. There isn't really a minimum investment required as there is with a traditional mutual fund, but you usually need to purchase whole shares of the ETF. There is inherently no load with ETFs. Tax treatment Mutual funds and ETFs are usually taxed the same. However, capital gain distributions, which are taxable events that occur while you are holding the investment, are more common with mutual funds than they are with ETFs, due to the way that ETFs are structured. (See Fidelity: ETF versus mutual funds: Tax efficiency for more details.) That having been said, in an index fund, capital gain distributions are rare anyway, due to the low turnover of the fund. Conclusion When comparing a mutual fund and ETF with similar objectives and expenses and deciding which to choose, it more often comes down to convenience. If you already have a brokerage account and you are planning on making a one-time investment, an ETF could be more convenient. If, on the other hand, you have more than the minimum initial investment required and you also plan on making additional regular monthly investments, a traditional no-load mutual fund account could be more convenient and less expensive."
},
{
"docid": "247313",
"title": "",
"text": "\"There are two primary reasons shares are sold short: (1) to speculate that a stock's price will decline and (2) to hedge some other related financial exposure. The first is acknowledged by the question. The second reason may be done for taxes (shorting \"\"against the box\"\" was once permitted for tax purposes), for arbitrage positions such as merger arbitrage and situations when an outright sale of stock is not permitted, such as owning restricted stock such as employer-granted shares. Why would a shareholder lend the investor the shares? The investor loaning his stock out to short-sellers earns interest on those shares that the borrower pays. It is not unusual for the annualized cost of borrowing stock to be double digits when there is high demand for heavily shorted shares. This benefit is however not available to all investors.\""
},
{
"docid": "257881",
"title": "",
"text": "\"The general argument put forward by gold lovers isn't that you get the same gold per dollar (or dollars per ounce of gold), but that you get the same consumable product per ounce of gold. In other words the claim is that the inflation-adjusted price of gold is more-or-less constant. See zerohedge.com link for a chart of gold in 2010 GBP all the way from 1265. (\"\"In 2010 GBP\"\" means its an inflation adjusted chart.) As you can see there is plenty of fluctuation in there, but it just so happens that gold is worth about the same now as it was in 1265. See caseyresearch.com link for a series of anecdotes of the buying power of gold and silver going back some 3000 years. What this means to you: If you think the stock market is volatile and want to de-risk your holdings for the next 2 years, gold is just as risky If you want to invest some wealth such that it will be worth more (in real terms) when you take it out in 40 years time than today, the stock market has historically given better returns than gold If you want to put money aside, and it to not lose value, for a few hundred years, then gold might be a sensible place to store your wealth (as per comment from @Michael Kjörling) It might be possible to use gold as a partial hedge against the stock market, as the two supposedly have very low correlation\""
},
{
"docid": "266229",
"title": "",
"text": "\"The HMRC has a dedicated self-help/learning site that is helpful here: It's important to tell HMRC that you are self-employed as soon as possible. If you don't, you may have to pay a penalty. You don't want to pay more to HMRC than you have to as it is a waste of your money. Your business has started when you start to advertise or you have a customer to buy your goods or services. It is at this point that your business is 'trading'. You cannot register before you start trading. For example, if you advertise your business in the local newspaper on 15 January but do not get your first customer until 29 March; in this case, you have been trading since 15 January. You must tell HMRC within six months of the end of the tax year in which you start self-employment. You must therefore register by 5 October. But it's best to register well before this so that you do not forget to do so. The HMRC also has a YouTube channel with help videos, and \"\"Am I Trading or Not?\"\" might be of particular interest to you. Most of the registration is based around the concept of starting to work with the intent to make a profit. By the letter of law and regulations, you should register within six months of the end of the tax year you started to avoid any potential penalty. However note that the situation is different based upon your intent. If you begin making/putting up videos online as a hobby with the hope that you can make something to help you defray the basic costs involved, and the total amount you make is relatively small (say, less than 500 pounds), you will not be classified as \"\"trading\"\" and likely have no need to register with HMRC. As soon as you begin to get in regular payments, maybe a single payment of a significant size, or multiple payments for a similar service/item, you are vastly more likely to need to register. From my reading you would likely be safe to begin putting up videos without registration, but if you begin spending a large portion of your time over an extended period (multiple months) and/or begin getting payments of any notable size then you should likely register with the appropriate services (HMRC, etc). As is the case in both the USA and UK, simple registration is pretty cheap and the costs of little/no income are usually pretty minor. Also note that the HMRC trading and self-employment regulations are unusual compared to many US laws/institutions, in that you are explicitly permitted to begin doing something and only register later. So if you start doing videos for an entire tax year + 5 months and make nothing significant, you'd seemingly be fine to never register at all.\""
},
{
"docid": "13885",
"title": "",
"text": "You could buy shares of an Exchange-Traded Fund (ETF) based on the price of gold, like GLD, IAU, or SGOL. You can invest in this fund through almost any brokerage firm, e.g. Fidelity, Etrade, Scotttrade, TD Ameritrade, Charles Schwab, ShareBuilder, etc. Keep in mind that you'll still have to pay a commission and fees when purchasing an ETF, but it will almost certainly be less than paying the markup or storage fees of buying the physical commodity directly. An ETF trades exactly like a stock, on an exchange, with a ticker symbol as noted above. The commission will apply the same as any stock trade, and the price will reflect some fraction of an ounce of gold, for the GLD, it started as .1oz, but fees have been applied over the years, so it's a bit less. You could also invest in PHYS, which is a closed-end mutual fund that allows investors to trade their shares for 400-ounce gold bars. However, because the fund is closed-end, it may trade at a significant premium or discount compared to the actual price of gold for supply and demand reasons. Also, keep in mind that investing in gold will never be the same as depositing your money in the bank. In the United States, money stored in a bank is FDIC-insured up to $250,000, and there are several banks or financial institutions that deposit money in multiple banks to double or triple the effective insurance limit (Fidelity has an account like this, for example). If you invest in gold and the price plunges, you're left with the fair market value of that gold, not your original deposit. Yes, you're hoping the price of your gold investment will increase to at least match inflation, but you're hoping, i.e. speculating, which isn't the same as depositing your money in an insured bank account. If you want to speculate and invest in something with the hope of outpacing inflation, you're likely better off investing in a low-cost index fund of inflation-protected securities (or the S&P500, over the long term) rather than gold. Just to be clear, I'm using the laymen's definition of a speculator, which is someone who engages in risky financial transactions in an attempt to profit from short or medium term fluctuations This is similar to the definition used in some markets, e.g. futures, but in many cases, economists and places like the CFTC define speculators as anyone who doesn't have a position in the underlying security. For example, a farmer selling corn futures is a hedger, while the trading firm purchasing the contracts is a speculator. The trading firm doesn't necessarily have to be actively trading the contract in the short-run; they merely have no position in the underlying commodity."
},
{
"docid": "536196",
"title": "",
"text": "Don't ever quantify a stock's preference/performance just based on the dividend it is paying out Volatility defined by movements in the the stock's price, affected by factors embedded in the stock e.g. the corporation, the business it is in, the economy, the management etc etc. Apple wasn't paying dividends but people were still buying into it. Same with Amazon, Berkshire, Google. These companies create value by investing their earnings back into their company and this is reflected in their share prices. Their earnings create more value in this way for the stockholders. The holding structures of these companies also help them in their motives. Supposedly $100 invested in either stocks. For keeping things easy, you invested at the same time in both, single annual dividend and prices more or less remain constant. Company A: $5/share at 20% annual dividend yield. Dividend = $20 Company B: $10/share at 20% annual dividend yield Dividend = $20 You receive the same dividend in both cases. Volatility willn't affect you unless you are trading, or the stock market tanks, or some very bad news comes out of either company or on the economy. Volatility in the long term averages out, except in specific outlier cases e.g. Lehman bankruptcy and the financial crash which are rare but do happen. In general case the %price movements in both stocks would more or less follow the markets (not exactly though) except when relevant news for either corporations come out."
},
{
"docid": "314085",
"title": "",
"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.\""
},
{
"docid": "395650",
"title": "",
"text": "A moving average will act as support or resistance to a stock only when the stock is trending. The way it acts as support for instance is similar to a trend-line. Take the daily chart of CBA over the last 6 months: The first chart shows CBA with an uptrend support line. The second chart shows CBA during the same period with 50 day EMA as a support. Both can be used as support for the uptrend. Generally you can used these types of support (or resistance in a downtrend) to determine when to buy a stock and when to sell a stock. If I was looking to buy CBA whilst it was uptrending, one strategy I could use was to wait until it hit or got very close to the support trend-line and then buy as it re-bounces back up. If I already held the stock I could use a break down below the uptrend support line as a stop to exit out of the stock."
},
{
"docid": "45970",
"title": "",
"text": "\"Index funds can be a very good way to get into the stock market. It's a lot easier, and cheaper, to buy a few shares of an index fund than it is to buy a few shares in hundreds of different companies. An index fund will also generally charge lower fees than an \"\"actively managed\"\" mutual fund, where the manager tries to pick which stocks to invest for you. While the actively managed fund might give you better returns (by investing in good companies instead of every company in the index) that doesn't always work out, and the fees can eat away at that advantage. (Stocks, on average, are expected to yield an annual return of 4%, after inflation. Consider that when you see an expense ratio of 1%. Index funds should charge you more like 0.1%-0.3% or so, possibly more if it's an exotic index.) The question is what sort of index you're going to invest in. The Standard and Poor's 500 (S&P 500) is a major index, and if you see someone talking about the performance of a mutual fund or investment strategy, there's a good chance they'll compare it to the return of the S&P 500. Moreover, there are a variety of index funds and exchange-traded funds that offer very good expense ratios (e.g. Vanguard's ETF charges ~0.06%, very cheap!). You can also find some funds which try to get you exposure to the entire world stock market, e.g. Vanguard Total World Stock ETF, NYSE:VT). An index fund is probably the ideal way to start a portfolio - easy, and you get a lot of diversification. Later, when you have more money available, you can consider adding individual stocks or investing in specific sectors or regions. (Someone else suggested Brazil/Russia/Indo-China, or BRICs - having some money invested in that region isn't necessarily a bad idea, but putting all or most of your money in that region would be. If BRICs are more of your portfolio then they are of the world economy, your portfolio isn't balanced. Also, while these countries are experiencing a lot of economic growth, that doesn't always mean that the companies that you own stock in are the ones which will benefit; small businesses and new ventures may make up a significant part of that growth.) Bond funds are useful when you want to diversify your portfolio so that it's not all stocks. There's a bunch of portfolio theory built around asset allocation strategies. The idea is that you should try to maintain a target mix of assets, whatever the market's doing. The basic simplified guideline about investing for retirement says that your portfolio should have (your age)% in bonds (e.g. a 30-year-old should have 30% in bonds, a 50-year-old 50%.) This helps maintain a balance between the volatility of your portfolio (the stock market's ups and downs) and the rate of return: you want to earn money when you can, but when it's almost time to spend it, you don't want a sudden stock market crash to wipe it all out. Bonds help preserve that value (but don't have as nice of a return). The other idea behind asset allocation is that if the market changes - e.g. your stocks go up a lot while your bonds stagnate - you rebalance and buy more bonds. If the stock market subsequently crashes, you move some of your bond money back into stocks. This basically means that you buy low and sell high, just by maintaining your asset allocation. This is generally more reliable than trying to \"\"time the market\"\" and move into an asset class before it goes up (and move out before it goes down). Market-timing is just speculation. You get better returns if you guess right, but you get worse returns if you guess wrong. Commodity funds are useful as another way to diversify your portfolio, and can serve as a little bit of protection in case of crisis or inflation. You can buy gold, silver, platinum and palladium ETFs on the stock exchanges. Having a small amount of money in these funds isn't a bad idea, but commodities can be subject to violent price swings! Moreover, a bar of gold doesn't really earn any money (and owning a share of a precious-metals ETF will incur administrative, storage, and insurance costs to boot). A well-run business does earn money. Assuming you're saving for the long haul (retirement or something several decades off) my suggestion for you would be to start by investing most of your money* in index funds to match the total world stock market (with something like the aforementioned NYSE:VT, for instance), a small portion in bonds, and a smaller portion in commodity funds. (For all the negative stuff I've said about market-timing, it's pretty clear that the bond market is very expensive right now, and so are the commodities!) Then, as you do additional research and determine what sort investments are right for you, add new investment money in the places that you think are appropriate - stock funds, bond funds, commodity funds, individual stocks, sector-specific funds, actively managed mutual funds, et cetera - and try to maintain a reasonable asset allocation. Have fun. *(Most of your investment money. You should have a separate fund for emergencies, and don't invest money in stocks if you know you're going need it within the next few years).\""
},
{
"docid": "377186",
"title": "",
"text": "If you want to invest in the stock market, whether over a shorter period of 1 to 2 years or over a longer period of 10 or 20 years or longer you need to take some precautions and have a written investment plan with a risk management strategy incorporated in your plan. Others have said that 1 to 2 years is too short to invest in the stock market as the stock market can have a correction and fall by 50%. But it doesn't matter if you invest for 1 year or if you invest for 50 years, the stock market can still fall by 50% just before you plan to withdraw your funds. What you need to figure out is a way to get out before the market falls by 40% to 50%. A simple way to do this is to use technical indicators to warn you when a market trend is starting to change and that it is time to get out of the market. Two simple indicators you can use on a market index are the Rate of Change (ROC) indicator and the 100 week Moving Average (MA). Below is a 10 year weekly chart of the S&P500 with these two indicators charted. They show good times to get into the market and good times to get out. If you are using the 100 week MA you would buy in when the price crosses above the MA line and sell when the price crosses below the MA line. If you are using the ROC indicator you would buy in when the ROC indicator crosses above the zero line and sell when the ROC indicator crosses below the zero line. So your investment plan could be to buy an Index ETF representing the S&P500 when the ROC moves above zero and sell when it crosses below zero. You can also place a trailing stop loss of 10% to protect you in case of a sudden fall over a couple of days. You can manage your investments in as little as 10 minutes per week by checking the chart once per week and adjusting your stop loss order. If you want to progressively add to your investment each month you could check the charts and only add any new funds if both the ROC is above zero and sloping upwards. Another option for adding new funds could be if the price is above the MA and moving further away from the MA. All these rules should be incorporated into your investment plan so that you are not basing your decisions based on emotions. There are many other Technical Analysis Indicators you could also learn about to make better educated decisions about your stock market investments. However, what I have provided here is enough for anyone to test over different indexes and time frames and do their own paper trading on to gain some confidence before placing any real money on the table."
},
{
"docid": "513818",
"title": "",
"text": "Stock portfolios have diversifiable risk and undiversifiable risk. The market rewards investors for taking undiversifiable risk (e.g. owning an index of oil producing companies) and does not reward investors for assuming diversifiable risk (e.g. owning a single oil producing company). The market will not provide investors with any extra return for owning a single oil company when they can buy an oil index fund at no additional cost. Similarly, the market will not reward you for owning a small-cap index fund when you can purchase a globally diversified / capitalization diversified index fund at no additional cost. This article provides a more detailed description. The Vanguard Total World Stock Index Fund is a much better staring point for an equity portfolio. You will need to make sure that the asset allocation of your overall portfolio (e.g. stocks, bonds, P2P lending, cash) is consistent with your time horizon (5-10 years)."
},
{
"docid": "41687",
"title": "",
"text": "\"Most markets around the world have been downtrending for the last 6 to 10 months. The definition of a downtrend is lower lows and lower highs, and until you get a higher low and confirmation with a higher high the downtrend will continue. If you look at the weekly charts of most indexes you can determine the longer term trend. If you are more concerned with the medium term trend then you could look at the daily charts. So if your objective is to try and buy individual stocks and try to make some medium to short term profits from them I would start by first looking at the daily charts of the index your stock belongs to. Only buy when the intermediate trend of the market is moving up (higher highs and higher lows). You can do some brief analysis on the stocks your interested in buying, and two things I would add to the short list in your question would be to check if earnings are increasing year after year. The second thing to look at would be to check if the earnings yield is greater than the dividend yield, that way you know that dividends are being paid out from current earnings and not from previous earning or from borrowings. You could then check the daily charts of these individual stocks and make sure they are uptrending also. Buy uptrending stocks in an uptrending market. Before you buy anything write up a trading plan and develop your trading rules. For example if price breaks through the resistance line of a previous high you will buy at the open of the next day. Have your money management and risk management rules in place and stick to your plan. You can also do some backtesting or paper trading to check the validity of your strategy. A good book to read on money and risk management is - \"\"Trade your way to Financial Freedom\"\" by Van Tharp. Your aim should not be to get a winner on every trade but to let your winners run and keep your losses small.\""
},
{
"docid": "27962",
"title": "",
"text": "\"I'd question whether a guaranteed savings instrument underperforming the stock market really is a risk, or not? Rather, you reap what you sow. There's a trade-off, and one makes a choice. If one chooses to invest in a highly conservative, low-risk asset class, then one should expect lower returns from it. That doesn't necessarily mean the return will be lower — stock markets could tank and a CD could look brilliant in hindsight — but one should expect lower returns. This is what we learn from the risk-return spectrum and Modern Portfolio Theory. You've mentioned and discounted inflation risk already, and that would've been one I'd mention with respect to guaranteed savings. Yet, one still accepts inflation risk in choosing the 3% CD, because inflation isn't known in advance. If inflation happened to be 2% after the fact, that just means the risk didn't materialize. But, inflation could have been, say, 4%. Nevertheless, I'll try and describe the phenomenon of significantly underperforming a portfolio with more higher-risk assets. I'd suggest one of: Perhaps we can sum those up as: the risk of \"\"investing illiteracy\"\"? Alternatively, if one were actually fully aware of the risk-reward spectrum and MPT and still chose an excessive amount of low-risk investments (such that one wouldn't be able to attain reasonable investing goals), then I'd probably file the risk under psychological risk, e.g. overly cautious / excessive risk aversion. Yet, the term \"\"psychological risk\"\", with respect to investing, encompasses other situations as well (e.g. chasing high returns.) FWIW, the risk of underperformance also came to mind, but I think that's mostly used to describe the risk of choosing, say, an actively-managed fund (or individual stocks) over a passive benchmark index investment more likely to match market returns.\""
},
{
"docid": "3118",
"title": "",
"text": "Dividends are normally paid in cash, so don't generally affect your portfolio aside from a slight increase to 'cash'. You get a check for them, or your broker would deposit the funds into a money-market account for you. There is sometimes an option to re-invest dividends, See Westyfresh's answer regarding Dividend Re-Investment Plans. As Tom Au described, the dividends are set by the board of directors and announced. Also as he indicated just before the 'record' date, a stock which pays dividends is worth slightly more (reflecting the value of the dividend that will be paid to anyone holding the stock on the record date) and goes down by the dividend amount immediately after that date (since you'd now have to hold the stock till the next record date to get a dividend) In general unless there's a big change in the landscape (such as in late 2008) most companies pay out about the same dividend each time, and changes to this are sometimes seen by some as 'indicators' of company health and such news can result in movement in the stock price. When you look at a basic quote on a ticker symbol there is usually a line for Div/yeild which gives the amount of dividend paid per share, and the relative yeild (as a percentage of the stock price). If a company has been paying dividends, this field will have values in it, if a company does not pay a dividend it will be blank or say NA (depending on where you get the quote). This is the easiest way to see if a company pays a dividend or not. for example if you look at this quote for Google, you can see it pays no dividend Now, in terms of telling when and how much of a dividend has been paid, most financial sites have the option when viewing a stock chart to show the dividend payments. If you expand the chart to show at least a year, you can see when and how much was paid in terms of dividends. For example you can see from this chart that MSFT pays dividends once a quarter, and used to pay out 13 cents, but recently changed to 16 cents. if you were to float your mouse over one of those icons it would also give the date the dividend was paid."
}
] |
5030 | Why pay for end-of-day historical prices? | [
{
"docid": "215540",
"title": "",
"text": "\"There are several reasons to pay for data instead of using Yahoo Finance, although these reasons don't necessarily apply to you if you're only planning to use the data for personal use. Yahoo will throttle you if you attempt to download too much data in a short time period. You can opt to use the Yahoo Query Language (YQL), which does provide another interface to their financial data apart from simply downloading the CSV files. Although the rate limit is higher for YQL, you may still run into it. An API that a paid data provider exposes will likely have higher thresholds. Although the reliability varies throughout the site, Yahoo Finance isn't considered the most reliable of sources. You can't beat free, of course, but at least for research purposes, the Center for Research in Security Prices (CRSP) at UChicago and Wharton is considered the gold standard. On the commercial side, data providers like eSignal, Bloomberg, Reuters also enjoy widespread popularity. Although both the output from YQL and Yahoo's current CSV output are fairly standard, they won't necessarily remain that way. A commercial API is basically a contract with the data provider that they won't change the format without significant prior notice, but it's reasonable to assume that if Yahoo wanted to, they could make minor changes to the format and break many commercial applications. A change in Yahoo's format would likely break many sites or applications too, but their terms of use do state that Yahoo \"\"may change, suspend, or discontinue any aspect of the Yahoo! Finance Modules at any time, including the availability of any Yahoo! Finance Modules. Yahoo! may also impose limits on certain features and services or restrict your access to parts or all of the Yahoo! Finance Modules or the Yahoo! Web site without notice or liability.\"\" If you're designing a commercial application, a paid provider will probably provide technical support for their API. According to Yahoo Finance's license terms, you can't use the data in a commercial application unless you specifically use their \"\"badges\"\" (whatever those are). See here. In this post, a Yahoo employee states: The Finance TOS is fairly specific. Redistribution of data is only allowed if you are using the badges the team has created. Otherwise, you can use YQL or whatever method to obtain data for personal use. The license itself states that you may not: sell, lease, or sublicense the Yahoo! Finance Modules or access thereto or derive income from the use or provision of the Yahoo! Finance Modules, whether for direct commercial or monetary gain or otherwise, without Yahoo!'s prior, express, written permission In short, for personal use, Yahoo Finance is more than adequate. For research or commercial purposes, a data provider is a better option. Furthermore, many commercial applications require more data than Yahoo provides, e.g. tick-by-tick data for equities, derivatives, futures, data on mergers, etc., which a paid data source will likely provide. Yahoo is also known for inaccuracies in its financial statements; I can't find any examples at the moment, but I had a professor who enjoyed pointing out flaws in the 10K's that he had come across. I've always assumed this is because the data were manually entered, although I would assume EDGAR has some method for automatic retrieval. If you want data that are guaranteed to be accurate, or at least have a support contract associated with them so you know who to bother if it isn't, you'll need to pay for it.\""
}
] | [
{
"docid": "347523",
"title": "",
"text": "according to the SEC: Shareholder Reports A mutual fund and a closed-end fund respectively must provide shareholders with annual and semi-annual reports 60 days after the end of the fund’s fiscal year and 60 days after the fund’s fiscal mid-year. These reports contain updated financial information, a list of the fund’s portfolio securities, and other information. The information in the shareholder reports will be current as of the date of the particular report (that is, the last day of the fund’s fiscal year for the annual report, and the last day of the fund’s fiscal mid-year for the semi-annual report). Other Reports A mutual fund and a closed-end fund must file a Form N-Q each quarter and a Form N-PX each year on the SEC’s EDGAR database, although funds are not required to mail these reports to shareholders. Funds disclose portfolio holdings on Form N-Q. Form N-PX identifies specific proposals on which the fund has voted portfolio securities over the past year and discloses how the fund voted on each. This disclosure enables fund shareholders to monitor their funds’ involvement in the governance activities of portfolio companies. which means that sixty days after the end of each quarter they will tell you what they owned 60 days ago. This makes sense; why would they want to tell the world what companies they are buying and selling."
},
{
"docid": "100485",
"title": "",
"text": "On Monday, the 27th of June 2011, the XIV ETF underwent a 10:1 share split. The Yahoo Finance data correctly shows the historic price data adjusted for this split. The Google Finance data does not make the adjustment to the historical data, so it looks like the prices on Google Finance prior to 27 June 2011 are being quoted at 10 times what they should be. Coincidentally, the underlying VIX index saw a sudden surge on the Friday (24 June) and continued on the Monday (27 June), the date that the split took effect. This would have magnified the bearish moves seen in the historic price data on the XIV ETF. Here is a link to an article detailing the confusion this particular share split caused amongst investors. It appears that Google Finance was not the only one to bugger it up. Some brokers failed to adjust their data causing a lots of confusion amongst clients with XIV holdings at the time. This is a recurring problem on Google Finance, where the historic price data often (though not always) fails to account for share splits."
},
{
"docid": "44461",
"title": "",
"text": "\"Yes, you could buy a stock on the day of its IPO. I'm a college student, and I wonder if I can buy stock from a company right after it finishes its IPO? Yes, you can. However, unless you are friends or family of an employee, chances are you'll be paying a higher price than you think as there is generally a fair bit of hype on most IPOs that allows some people to \"\"flip them\"\" which means someone is buying at a higher price. If I am not allowed to buy its stocks immediately after they go on sell, how long do I have to wait? Generally I'd wait until the hype dies down as if you look at most historical IPOs the stock could be bought cheaper later but that's just my perspective. And also who are allowed to buy the stocks at the first minute they are on sell? Anyone but keep in mind that while an IPO may be priced at $x, the initial trades may be a few times that value and the stock may come down over time. Facebook could be an example to consider of a company that had an IPO at one price and then came down for a little while on its chart over the past couple of years.\""
},
{
"docid": "197520",
"title": "",
"text": "\"No one can claim markets are perfectly efficient. The Grossman-Stiglitz paradox explains one reason why it is impossible for the market to be perfectly effecient, and there are plenty of investors that show it is practically possible to consistently beat the market (e.g. \"\"The Superinvestors of Graham-and-Doddsville\"\" or RenTec's Medallion Fund). However, even if you accept as true that prices behave strangely around round numbers, that isn't a refutation of the efficient market hypothesis. The efficient market hypothesis says that price reflect all available information, so the expected price tomorrow is just the price today (not taking into account the time value of money). The efficient market hypothesis says nothing about how prices are distributed. Historically, a random walk has been used, but that is neither a consequence of the EMH nor a required assumption. You could say that prices are more volatile the nearer they are to a round number or new high, but that doesn't necessarily give you an edge in making money off the stock.\""
},
{
"docid": "214946",
"title": "",
"text": "\"Simply put, yes. I bought that call. I was betting the shares would rise in value by Jan 2018, and chose the $130 strike. With a strike nearly a year away, I paid a premium that was all time value as the shares traded at Now the shares are replaced by $128. The time value has gone to zero, and there is no intrinsic \"\"in the money\"\" value. If the shares were bought at $140, the time value stills drops to zero, but the option is closed at $10 in the money. My answer was for a cash deal. In a case where the old shares are replaced by new shares or a combination of shares and money, the options terms are changed to reflect the combination of new assets for old. Update based on disclosure that it's Monsanto we are discussing. Bayer and Monsanto have announced that they signed a definitive agreement under which Bayer will acquire Monsanto for USD 128 per share in an all-cash transaction. Based on Monsanto’s closing share price on May 9, 2016, the day before Bayer’s first written proposal to Monsanto, the offer represents a premium of 44 percent to that price. You can see that the deal has been in the works for some time now. Further research shows they expect the deal to close by \"\"the end of 2017\"\". It's not a done deal. This is why the options are still trading. Now the shares are replaced by $128. The time value has gone to zero, and there is no intrinsic \"\"in the money\"\" value. If the shares were bought at $140, the time value stills drops to zero, but the option is closed at $10 in the money. My answer was for a cash deal. In a case where the old shares are replaced by new shares or a combination of shares and money, the options terms are changed to reflect the combination of new assets for old. Update based on disclosure that it's Monsanto we are discussing. Bayer and Monsanto have announced that they signed a definitive agreement under which Bayer will acquire Monsanto for USD 128 per share in an all-cash transaction. Based on Monsanto’s closing share price on May 9, 2016, the day before Bayer’s first written proposal to Monsanto, the offer represents a premium of 44 percent to that price. You can see that the deal has been in the works for some time now. Further research shows they expect the deal to close by \"\"the end of 2017\"\". It's not a done deal. This is why the options are still trading.\""
},
{
"docid": "149420",
"title": "",
"text": "The shift to trading at the close began in 2008. Traders did not want to be caught off guard by surprise news and there was a lot of volatility during the financial crisis, so they would close their position in the evening. Thats how it began. There are two reasons why it sticks around. First, there has been an increase usage of index funds or passive funds. These funds tend to update their positions at the end of the day. From the WSJ: Another factor behind the shift has been the proliferation of passively managed investments, such as index funds. These funds aim to mimic an index, like the S&P 500, by owning the shares that comprise it. Index funds don’t trade as often as active investors, but when they do, it is typically near the market close, traders say. That is because buying or selling a stock at its closing price better aligns their performance with the index they are trying to emulate. The second reason is simply that volume attracts volume. As a result of whats mentioned above, you have a shift to end of day trading, and the corrolary to that is that there is a liquidity shortage from 10am to 3pm. Thus, if you want to buy or sell a stock, but there are few buyers or sellers around, you will significant move the price when you enter your order. Obviously this does not affect retail traders, but imagine hedge funds entering or closing a billion dollar position. It can make a huge impact on price. And one way to mitigate that is to wait until there are more market participants to take the other end of your trade, just as at the end of the day. So this is a self-reinforcing trend that has begun in the markets and will likely stick around. http://www.wsj.com/articles/traders-pile-in-at-the-close-1432768080"
},
{
"docid": "28604",
"title": "",
"text": "\"The current stock price you're referring to is actually the price of the last trade. It is a historical price – but during market hours, that's usually mere seconds ago for very liquid stocks. Whereas, the bid and ask are the best potential prices that buyers and sellers are willing to transact at: the bid for the buying side, and the ask for the selling side. But, think of the bid and ask prices you see as \"\"tip of the iceberg\"\" prices. That is: The \"\"Bid: 13.20 x200\"\" is an indication that there are potential buyers bidding $13.20 for up to 200 shares. Their bids are the highest currently bid; and there are others in line behind with lower bid prices. So the \"\"bid\"\" you're seeing is actually the best bid price at that moment. If you entered a \"\"market\"\" order to sell more than 200 shares, part of your order would likely be filled at a lower price. The \"\"Ask: 13.27 x1,000\"\" is an indication that there are potential sellers asking $13.27 for up to 1000 shares. Their ask prices are the lowest currently asked; and there are others in line behind with higher ask prices. So the \"\"ask\"\" you're seeing is the best asking price at that moment. If you entered a \"\"market\"\" order to buy more than 1000 shares, part of your order would likely be filled at a higher price. A transaction takes place when either a potential buyer is willing to pay the asking price, or a potential seller is willing to accept the bid price, or else they meet in the middle if both buyers and sellers change their orders. Note: There are primarily two kinds of stock exchanges. The one I just described is a typical order-driven matched bargain market, and perhaps the kind you're referring to. The other kind is a quote-driven over-the-counter market where there is a market-maker, as JohnFx already mentioned. In those cases, the spread between the bid & ask goes to the market maker as compensation for making a market in a stock. For a liquid stock that is easy for the market maker to turn around and buy/sell to somebody else, the spread is small (narrow). For illiquid stocks that are harder to deal in, the spread is larger (wide) to compensate the market-maker having to potentially carry the stock in inventory for some period of time, during which there's a risk to him if it moves in the wrong direction. Finally ... if you wanted to buy 1000 shares, you could enter a market order, in which case as described above you'll pay $13.27. If you wanted to buy your shares at no more than $13.22 instead, i.e. the so-called \"\"current\"\" price, then you would enter a limit order for 1000 shares at $13.22. And more to the point, your order would become the new highest-bid price (until somebody else accepts your bid for their shares.) Of course, there's no guarantee that with a limit order that you will get filled; your order could expire at the end of the day if nobody accepts your bid.\""
},
{
"docid": "214281",
"title": "",
"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."
},
{
"docid": "180287",
"title": "",
"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."
},
{
"docid": "60728",
"title": "",
"text": "As you mentioned in the title, what you're asking about comes down to volatility. DCA when purchasing stock is one way of dealing with volatility, but it's only profitable if the financial instrument can be sold higher than your sunk costs. Issues to be concerned with: Let's suppose you're buying a stock listed on the NYSE called FOO (this is a completely fake example). Over the last six days, the average value of this stock was exactly $1.00Note 1. Over six trading days you put $100 per day into this stockNote 2: At market close on January 11th, you have 616 shares of FOO. You paid $596.29 for it, so your average cost (before fees) is: $596.29 / 616 = $0.97 per share Let's look at this including your trading fees: ($596.29 + $30) / 616 = $1.01 per share. When the market opens on January 12th, the quote on FOO could be anything. Patents, customer wins, wars, politics, lawsuits, press coverage, etc... could cause the value of FOO to fluctuate. So, let's just roll with the assumption that past performance is consistent: Selling FOO at $0.80 nets: (616 * $0.80 - $5) - ($596.29 + $30) = $123.49 Loss Selling FOO at $1.20 nets: (616 * $1.20 - $5) - ($596.29 + $30) = $107.90 Profit Every day that you keep trading FOO, those numbers get bigger (assuming FOO is a constant value). Also remember, even if FOO never changes its average value and volatility, your recoverable profits shrink with each transaction because you pay $5 in fees for every one. Speaking from experience, it is very easy to paper trade. It is a lot harder when you're looking at the ticker all day when FOO has been $0.80 - $0.90 for the past four days (and you're $300 under water on a $1000 portfolio). Now your mind starts playing nasty games with you. If you decide to try this, let me give you some free advice: Unless you have some research (such as support / resistance information) or data on why FOO is a good buy at this price, let's be honest: you're gambling with DCA, not trading. END NOTES:"
},
{
"docid": "343803",
"title": "",
"text": "A lot of these answers are strong, but at the end of the day this question really boils down to: Do you want to own things? Duh, yes. It means you have: By this logic, you would expect aggregate stock prices to increase indefinitely. Whether the price you pay for that ownership claim is worth it at any given point in time is a completely different question entirely."
},
{
"docid": "142960",
"title": "",
"text": "To a mortgage lender, it appears that you have a temporary contract (perhaps extending for nine more months) with a agency that supplies workers to companies that need temporary help. You have been placed currently with a company and are making good money, but that job might disappear soon and then you will have no income while your recruiter tries to find you another assignment. How will you make your mortgage payments then? The recruiter agency's contract with your current company probably has clauses to the effect that the company agrees to not offer you a permanent job unless it pays a head-hunter's fee to the recruiter agency. Your contract with the recruiter agency also likely has clauses to the effect that if the company where you have been placed offers you a permanent job, you must pay the recruiter company a fee (typically one or two months of salary) to the recruiter agency as compensation for releasing you from your current contract (unless the company hiring you pays the head-hunter's fee). This is why the company where you are working right now wants to wait until after your contract with the recruiter company ends before making you an offer of permanent employment. Be aware that sometimes such clauses extend out to three months after the ending date of your contract with the recruiter company. As far as the condo is concerned, unless there is a specific one that you absolutely must have because it has an ocean view or other desirable properties, you may well find that another condo in the same complex is available some months from now. If you are lucky, it may well have an acceptable ocean view. If you are even luckier, it may be the condo that you absolutely must have which has remained unsold all that time -- as you said, the economy is crappy -- and you will be able to buy it for a lower price from an owner getting desperate to make a sale. To answer your question: is there any way around this? My recommendation is to simply wait out the end of your recruiter agency contract and get a permanent job with the company where you have been placed. Then there are no issues. If not, get your company to make a written offer of a permanent job starting nine months from now and hope that this (together with your current employment) impresses your bank into lending you money. This might not work, though. In the early 1970s, one of my friends was offered a job at a large aerospace company which lost a major contract in the interim period between offer and joining. My friend showed up for work on the day he was supposed to start, and instead of being processed through HR etc, his job was terminated on the spot, he was paid one day's salary, and shown the door. Times were crappy then too. If this does not work, get your company to offer you a permanent job right away, pay off the recruiter company yourself, and then go to the bank."
},
{
"docid": "91045",
"title": "",
"text": "There are many different reasons to buy property and it's important to make a distinction between commercial and residential property. Historically owning property has been part of the American dream, for multiple reasons. But to answer your questions, value is not based on the age of the building (however it can be in a historic district). In addition the price of something and it's value may or may not be directly related for each individual buyer/owner (because that becomes subjective). Some buildings can lose there value as time passes, but the depends on multiple factors (area, condition of the building, overall economy, etc.) so it's not that easy to give a specific answer to a general question. Before you buy property amongst many things it's important to determine why you want to buy this property (what will be it's principal use for you). That will help you determine if you should buy an old or new property, but that pales in comparison to if the property will maintain and gain in value. Also if your looking for an investment look into REIT (Real Estate Investment Trust). These can be great. Why? Because you don't actually have to carry the mortgage. Which makes that ideal for people who want to own property but not have to deal with the everyday ins-and-outs of the responsibility of ownership....like rising cost. It's important to note that the cost of purchase and cost of ownership are two different things but invariably linked when buying anything in the material strata of our world. You can find publicly traded REITs on the major stock exchanges. Hope that helps."
},
{
"docid": "533132",
"title": "",
"text": "\"All else being equal, you should look for more volatile (riskier) stocks. Technically, it was all time value - the entire value of an \"\"out of the money\"\" option is time value. What's confusing is that time value is affected by numerous variables, only one of which is time. The reason volatility is the one to look at is that all the rest are likely already intuitive to you, or are too minor an influence to worry about: Current risk-free interest rates and a stock's dividend payout during the life of the option affect the value of the call, but are usually minor infulences. (Higher interest rates makes call values higher, and higher dividend yield makes call values lower.) Longer time to expiration will increase the value of the call, but you're pretty likely already focused on that. The strike price's proximity to the current price affects the call's value - agreeing to sell a stock 5% above current levels will pay more than agreeing to sell it 10% above current levels - but again, this is likely obvious to you. Volatility, or the percent by which the stock is likely to move up or down on a given day, is almost certainly the variable that's not already obvious. Stocks that jump all over the place have higher volatility than those that move more predictably. The reason that options (calls and puts) cost more on higher volatility names is that options' payout is asymmetrical. In the case of calls, the option holder gets all the upside, but none of the downside, other than what they paid for the opotion. If one stock goes up or down $5 every day, and another goes up or down $20 every day and you could pay some fixed amount to get that stock's upside, but not have any exposure to its downside, other than that fixed amount, you'd pay more for the one that pays you $20 or $0 than you would for the one that pays you $5 or $0. That's why higher volatility (meaning larger daily moves) makes optimum prices higher.\""
},
{
"docid": "391515",
"title": "",
"text": "\"Note that the series you are showing is the historical spot index (what you would pay to be long the index today), not the history of the futures quotes. It's like looking at the current price of a stock or commodity (like oil) versus the futures price. The prompt futures quote will be different that the spot quote. If you graphed the history of the prompt future you might notice the discontinuity more. How do you determine when to roll from one contract to the other? Many data providers will give you a time series for the \"\"prompt\"\" contract history, which will automatically roll to the next expiring contract for you. Some even provide 2nd prompt, etc. time series. If that is not available, you'd have to query multiple futures contracts and interleave them based on the expiry rules, which should be publicly available. Also is there not a price difference from the contract which is expiring and the one that is being rolled forward to? Yes, since the time to delivery is extended by ~30 days when you roll to the next contract. but yet there are no sudden price discontinuities in the charts. Well, there are, but it could be indistinguishable from the normal volatility of the time series.\""
},
{
"docid": "543312",
"title": "",
"text": "\"Option pricing models used by exchanges to calculate settlement prices (premiums) use a volatility measure usually describes as the current actual volatility. This is a historic volatility measure based on standard deviation across a given time period - usually 30 to 90 days. During a trading session, an investor can use the readily available information for a given option to infer the \"\"implied volatility\"\". Presumably you know the option pricing model (Black-Scholes). It is easy to calculate the other variables used in the pricing model - the time value, the strike price, the spot price, the \"\"risk free\"\" interest rate, and anything else I may have forgotten right now. Plug all of these into the model and solve for volatility. This give the \"\"implied volatility\"\", so named because it has been inferred from the current price (bid or offer). Of course, there is no guarantee that the calculated (implied) volatility will match the volatility used by the exchange in their calculation of fair price at settlement on the day (or on the previous day's settlement). Comparing the implied volatility from the previous day's settlement price to the implied volatility of the current price (bid or offer) may give you some measure of the fairness of the quoted price (if there is no perceived change in future volatility). What such a comparison will do is to give you a measure of the degree to which the current market's perception of future volatility has changed over the course of the trading day. So, specific to your question, you do not want to use an annualised measure. The best you can do is compare the implied volatility in the current price to the implied volatility of the previous day's settlement price while at the same time making a subjective judgement about how you see volatility changing in the future and how this has been reflected in the current price.\""
},
{
"docid": "121595",
"title": "",
"text": "In less than two decades, more than half of all publicly traded companies have disappeared. There were 7,355 U.S. stocks in November 1997, according to the Center for Research in Security Prices at the University of Chicago’s Booth School of Business. Nowadays, there are fewer than 3,600. A close look at the data helps explain why stock pickers have been underperforming. And the shrinking number of companies should make all investors more skeptical about the market-beating claims of recently trendy strategies. Back in November 1997, there were more than 2,500 small stocks and nearly 4,000 tiny “microcap” stocks, according to CRSP. At the end of 2016, fewer than 1,200 small and just under 1,900 microcap stocks were left. Most of those companies melted away between 2000 and 2012, but the numbers so far show no signs of recovering. Several factors explain the shrinking number of stocks, analysts say, including the regulatory red tape that discourages smaller companies from going and staying public; the flood of venture-capital funding that enables young companies to stay private longer; and the rise of private-equity funds, whose buyouts take shares off the public market. For stock pickers, differentiating among the remaining choices is “an even harder game” than it was when the market consisted of twice as many companies, says Michael Mauboussin, an investment strategist at Credit Suisse in New York who wrote a report this spring titled “The Incredible Shrinking Universe of Stocks.” That’s because the surviving companies tend to be “fewer, bigger, older, more profitable and easier to analyze,” he says — making stock picking much more competitive. Consider small-stock funds. Often, they compare themselves to the Russell 2000, an index of the U.S. stocks ranked 1,001 through 3,000 by total market value. “Twenty years ago, there were over 4,000 stocks smaller” than the inclusion cutoff for the Russell 2000, says Lubos Pastor, a finance professor at the University of Chicago. “That number is down to less than 1,000 today.” So fund managers have far fewer stocks to choose from if they venture outside the index — the very area where the best bargains might be found. More money chasing fewer stocks could lead some fund managers to buy indiscriminately, regardless of value. Eric Cinnamond is a veteran portfolio manager with a solid record of investing in small stocks. Last year, he took the drastic step of shutting down his roughly $400 million mutual fund, Aston/River Road Independent Value, and giving his investors their money back. “Prices got so crazy in small caps, I fired myself,” he says. “My portfolio was 90% in cash at the end, because I couldn’t find anything to buy. If I’d kept investing, I was sure I’d lose people their money.” He adds, “It was the hardest thing I’ve ever done professionally, but I didn’t feel I had a choice. I knew my companies were overvalued.” Mr. Cinnamond hopes to return to the market when, in his view, values become attractive again. He doesn’t expect recent conditions to be permanent. The evaporation of thousands of companies may have one enduring result, however — and it could catch many investors by surprise. Most research on historical returns, points out Mr. Mauboussin, is based on the days when the stock market had twice as many companies as it does today. “Was the population of companies so different then,” he asks, “that the inferences we draw from it might no longer be valid?” So-called factor investing, also known as systematic or smart-beta investing, picks hundreds or thousands of stocks at a time based on common sources of risk and return. Among them: how big companies are, how much their shares fluctuate, how expensive their shares are relative to asset value and so on. But the historical outperformance of many such factors may have been driven largely by the tiniest companies — exactly those that have disappeared from the market in droves. Before concluding that small stocks or cheap “value” stocks will outrace the market as impressively as they did in the past, you should pause to consider how they will perform without the tailwinds from thousands of tiny stocks that no longer exist. The stock market has more than tripled in the past eight years, so the eclipse of so many companies hasn’t been a catastrophe. But it does imply that investing in some of the market’s trendiest strategies might be less profitable in the future than they looked in the past."
},
{
"docid": "499154",
"title": "",
"text": "\"The offering price is what the company will raise by selling the shares at that price. However, this isn't usually what the general public sees as often there will be shows to drive up demand so that there will be buyers for the stock. That demand is what you see on the first day when the general public can start buying the stock. If one is an employee, relative or friend of someone that is offered, \"\"Friends and Family\"\" shares they may be able to buy at the offering price. Pricing of IPO from Wikipedia states around the idea of pricing: A company planning an IPO typically appoints a lead manager, known as a bookrunner, to help it arrive at an appropriate price at which the shares should be issued. There are two primary ways in which the price of an IPO can be determined. Either the company, with the help of its lead managers, fixes a price (\"\"fixed price method\"\"), or the price can be determined through analysis of confidential investor demand data compiled by the bookrunner (\"\"book building\"\"). Historically, some IPOs both globally and in the United States have been underpriced. The effect of \"\"initial underpricing\"\" an IPO is to generate additional interest in the stock when it first becomes publicly traded. Flipping, or quickly selling shares for a profit, can lead to significant gains for investors who have been allocated shares of the IPO at the offering price. However, underpricing an IPO results in lost potential capital for the issuer. One extreme example is theglobe.com IPO which helped fuel the IPO \"\"mania\"\" of the late 90's internet era. Underwritten by Bear Stearns on November 13, 1998, the IPO was priced at $9 per share. The share price quickly increased 1000% after the opening of trading, to a high of $97. Selling pressure from institutional flipping eventually drove the stock back down, and it closed the day at $63. Although the company did raise about $30 million from the offering it is estimated that with the level of demand for the offering and the volume of trading that took place the company might have left upwards of $200 million on the table. The danger of overpricing is also an important consideration. If a stock is offered to the public at a higher price than the market will pay, the underwriters may have trouble meeting their commitments to sell shares. Even if they sell all of the issued shares, the stock may fall in value on the first day of trading. If so, the stock may lose its marketability and hence even more of its value. This could result in losses for investors, many of whom being the most favored clients of the underwriters. Perhaps the best known example of this is the Facebook IPO in 2012. Underwriters, therefore, take many factors into consideration when pricing an IPO, and attempt to reach an offering price that is low enough to stimulate interest in the stock, but high enough to raise an adequate amount of capital for the company. The process of determining an optimal price usually involves the underwriters (\"\"syndicate\"\") arranging share purchase commitments from leading institutional investors. Some researchers (e.g. Geoffrey C., and C. Swift, 2009) believe that the underpricing of IPOs is less a deliberate act on the part of issuers and/or underwriters, than the result of an over-reaction on the part of investors (Friesen & Swift, 2009). One potential method for determining underpricing is through the use of IPO Underpricing Algorithms. This may be useful for seeing the difference in that \"\"theglobe.com\"\" example where the offering price is $9/share yet the stock traded much higher than that initially.\""
},
{
"docid": "13732",
"title": "",
"text": "\"Also, in the next sentence, what is buyers commission? Is it referring to the share holder? Or potential share holder? And why does the buyer get commission? The buyer doesn't get a commission. The buyer pays a commission. So normally a buyer would say, \"\"I want to buy a hundred shares at $20.\"\" The broker would then charge the buyer a commission. Assuming 4%, the commission would be So the total cost to the buyer is $2080 and the seller receives $2000. The buyer paid a commission of $80 as the buyer's commission. In the case of an IPO, the seller often pays the commission. So the buyer might pay $2000 for a hundred shares which have a 7% commission. The brokering agent (or agents may share) pockets a commission of $140. Total paid to the seller is $1860. Some might argue that the buyer pays either way, as the seller receives money in the transaction. That's a reasonable outlook. A better way to say this might be that typical trades bill the buyer directly for commission while IPO purchases bill the seller. In the typical trade, the buyer negotiates the commission with the broker. In an IPO, the seller does (with the underwriter). Another issue with an IPO is that there are more parties getting commission than just one. As a general rule, you still call your broker to purchase the stock. The broker still expects a commission. But the IPO underwriter also expects a commission. So the 7% commission might be split between the IPO underwriter (works for the selling company) and the broker (works for the buyer). The broker has more work to do than normal. They have to put in the buyer's purchase request and manage the price negotiation. In most purchases, you just say something like \"\"I want to offer $20 a share\"\" or \"\"I want to purchase at the market price.\"\" In an IPO, they may increase the price, asking for $25 a share. And they may do that multiple times. Your broker has to come back to you each time and get a new authorization at the higher price. And you still might not get the number of shares that you requested. Beyond all this, you may still be better off buying an IPO than waiting until the next day. Sure, you pay more commission, but you also may be buying at a lower price. If the IPO price is $20 but the price climbs to $30, you would have been better off paying the IPO price even with the higher commission. However, if the IPO price is $20 and the price falls to $19.20, you'd be better off buying at $19.20 after the IPO. Even though in that case, you'd pay the 4% commission on top of the $19.20, so about $19.97. I think that the overall point of the passage is that the IPO underwriter makes the most money by convincing you to pay as high an IPO price as possible. And once they do that, they're out of the picture. Your broker will still be your broker later. So the IPO underwriter has a lot of incentive to encourage you to participate in the IPO instead of waiting until the next day. The broker doesn't care much either way. They want you to buy and sell something. The IPO or something else. They don't care much as to what. The underwriter may overprice the stock, as that maximizes their return. If they can convince enough people to overpay, they don't care that the stock falls the day after that. All their marketing effort is to try to achieve that result. They want you to believe that your $20 purchase will go up to $30 the next day. But it might not. These numbers may not be accurate. Obviously the $20 stock price is made up. But the 4% and 7% numbers may also be inaccurate. Modern online brokers are very competitive and may charge a flat fee rather than a percentage. The book may be giving you older numbers that were correct in 1983 (or whatever year). The buyer's commission could also be lower than 4%, as the seller also may be charged a commission. If each pays 2%, that's about 4% total but split between a buyer's commission and a seller's commission.\""
}
] |
5045 | Why are we taxed on revenue and companies on profit? | [
{
"docid": "264554",
"title": "",
"text": "\"I pay taxes on revenue. You do have the ability to deduct expenses, though it's not as comprehensive as what companies can do: These figures apply to everybody, so those that earn more get taxed more on thee additional income in each bracket (meaning the first $100,000 of taxable income is taxed the same for everybody at one rate, the next $100,000 at a different rate, etc.) So you do get to deduct personal expenses and get taxed on \"\"profit\"\" - but since the vast majority of people don't keep detailed records of what they spend, it's much simpler just to use blanket deduction amounts for everyone. Companies have much more detailed systems in place to track and categorize expenses, so it's easier to just tax on net profit. Plus, the corporate tax rate is much higher than the average individual tax rate - would you trade more deductions for a higher tax rate?\""
}
] | [
{
"docid": "260705",
"title": "",
"text": "\"This is a very vague question and could not be fairly answered without knowing additional details, some examples would be: * What is the total revenue of the non-profit? * What are the total expenses of the non-profit? * What is the effectiveness rate to the \"\"cause\"\" of each $1 donated? Non-profit organizations and charities have grown to large scale business operations that are focused on delivering value to their determined cause. The Top 5 largest charities each had total revenues over $3.3 billion in 2012. This included United Way, Goodwill, The Y, and the Salvation Army with the largest being the Y at over $6.2 billion in annual revenue. All of these non-profits bring in enough revenue to be in the Fortune 500 (The 500th company on the list is Newmont Mining Corp at $3.2 billion in revenue). When you consider the scale of these operations I think you need to acquire an experienced CEO that has a career history of leading large and many times multi-national organization. These CEOs command high salaries because of their talent and expertise. I believe when they are passionate about a cause they're willing to take a discount, but you have to understand the term discount proportionately. I made a quick table below just to provide some context and show reference points of several Fortune 500 companies in comparison to The Y, the largest non-profit in total revenue. You can quickly see that a salary of $450,000 for an organization of this size would be a significant discount in comparison to the CEO salaries of comparably sized organization in the for profit world. When considering charitable contributions it is entirely valid to consider the CEO's salary, but also consider the potential value add. For example, if that CEO generates a significantly more effective ratio of utilizing donated $ then it may justify the salary. In some scenarios it is fair to say that $450,000 would be a fair and adequate salary for a CEO running a large scale non-profit. Is this the case for every non-profit? Probably not. It should often be thought of as a function of total revenue and effectiveness of the $ donated. Company | 2013 Revenue | 2013 CEO Salary | Ratio ---|----|----|-----| Cummins | $6.3B | $9.4M | .15% EMC Corp | $6.2B | $32.3M | .52% Northeast Utilities | $6.1B | $1.7M | .03% Agilent Technologies | $6.1B | $10.2M | .17% *The Y (YMCA)* | *$6.2B* | *$.45M* | *.007%* Source(s): http://www.thenonprofittimes.com/wp-content/uploads/2013/11/11-1-13_Top100.pdf http://www.salary.com/ http://www.grossing.com/fortune500.htm\""
},
{
"docid": "572654",
"title": "",
"text": "\"This is \"\"incentive financing\"\". Simply put, the car company isn't in the business of making money by buying government bonds. They're in the business of making money by selling cars. If you are \"\"qualified\"\" from a credit standpoint, and want to buy a $20k car on any given Sunday, you'll typically be offered a loan of between 6% and 9%. Let's say this loan is for three years and you can offer $4000 down payment and/or trade. The required monthly payment on the remaining $16k at the high end of 9% is $508.80, which over 3 years means you'll pay $2,316.64 in interest. Now, that may sound like a good chunk of change, and for the ordinary individual, it is, possibly enough that you decide not to buy today. Now, let's say, all other things being equal, that the company is offering 0.9% incentive financing. Same price, same down payment, same loan term. Your payments over 3 years decrease to $450.64, and over the same loan term you would only pay $222.97 in interest. You save over $2,093.67 in interest over three years, which for you is again a decent chunk of change. Theoretically, the car company's losing that same $2,093.67 in interest by offering this deal, and depending on how it's getting the money it lends you (most financial companies are middlemen, getting money from bond-buying investors who expect a rate of return), that could be a real loss and not just opportunity cost. But, that incentive got you to walk in their door, and not their competitor's. It helped convince you to buy the $20,000 car. The gross margin on that car (price minus direct costs) is typically 20% for the dealer, plus another 20% for the manufacturer, so by giving up the $2,000 on the financing side, the dealer and manufacturer just earned themselves 4 times that much. On top of that, by buying that car, you're committing to buy the parts for the car, a side business with even higher margins, of which the car company gets a pretty big chunk. You may even be required to use dealer service while the car's under warranty in order to keep the warranty valid, another cha-ching. When you get right down to it, the loss from the incentive financing is drowned in the gross profits they make from selling the car to you. Now, in reality, it's a fine balance. The percentages I mentioned are gross margins (EBITDASG&A - Earnings Before Interest, Taxes, Depreciation, Amortization, Sales, General and Administrative costs; basically, just revenue minus direct cost of goods sold). Add in all these side costs and you get a net margin of only about 3.5% of revenue, so your $20k car purchase may only make the car company's stakeholders $700 on the sale, plus slightly higher net margins on parts and service over the life of the car. Because incentive financing is typically only offered through the company's own financing subsidiary, the loss isn't in the form of a cost paid, but simply a revenue not realized, but it can still move a car company from net positive to net negative earnings if the program is too successful. This is why not everyone does it, and not all at the same time; if you're selling enough cars without it, why give away money? Typically, these incentives are offered for two reasons; to clear out old cars or excess inventory, or to maintain ground against a competitor's stronger sales numbers. Keeping cars on a lot ready to sell is expensive, and so is not having your brand driving around on the street turning heads and imprinting their name on the minds of potential customers.\""
},
{
"docid": "516818",
"title": "",
"text": "FTA: “Yet this new study notes that subsidies aren’t simply cash being handed to oil companies. Subsidies often come in the form of tax breaks, which is just one of the many ways oil companies receive government handouts.” Tax breaks are not subsidies. The taxpayer pay absolutely nothing to the oil companies when a tax break is applied. The taxpayers are actually net recipients from the drilling activity. If the existence of a tax break is a requirement for oil drilling profitability, then elimination of the tax break would eliminate drilling. The taxpayers are choosing between zero additional tax revenue without tax breaks or some tax revenue with tax breaks so drilling can proceed. The article’s point about export ports being subsidized by the taxpayer is a distraction. The VAST majority of oil produced in the US is consumed in the US. All that oil is drilled, transported, refined, transported again, then sold to consumers in an end-to-end supply chain built on a vast sum of private capital."
},
{
"docid": "173262",
"title": "",
"text": "\"You are comparing two things that are not comparable. The \"\"market size\"\" would be the total annual revenue in one market, in this year. The \"\"market caps\"\" of a company is the number of shares multiplied by the share price. This should be equal to the total profit that the company is going to make through its life time, taking into account that you would get interest on an investment, so future profits have to be counted less accordingly. So if the \"\"market size\"\" is ten million dollars, and a company has four million revenue in that market with one million profit, and everyone thinks that company will continue making that profit for the next fifty years, then surely one million a year for the next 50 years is worth more than ten million. That's if the market stands still. If the \"\"market size\"\" is ten million, and we expect that market size to double for the next three years, then the market size is still ten million, but a company having a 40% share of a market growing at that speed is going to be worth a lot more!\""
},
{
"docid": "441497",
"title": "",
"text": "\"> So raise taxes on individuals and eliminate business taxes? The government still has to pay for things eventually. The big thing the US pays for that other countries don't is our massive, most-expensive-in-the-world military, which can take up roughly half our budget, Yes we should decrease military spending and stop policing the world. The biggest future expenditure will be unfunded obligations which are between $20 to $60 trillion USD. Without reform the US will go bankrupt. The dollar could be hyper-inflated which destroys the value and people's savings. The dollar will lose world reserve currency status. > We defend other countries through alliances like NATO and bilateral agreements. For that, we need a higher tax rate. We can tax individuals or businesses. Let other countries defend themselves unless they absolutely need help. People and businesses can be taxed, but high taxes and regulations are counter-productive. It hurts small business, innovation, job growth and pushes companies to move abroad and outsource. There's alarming record high unemployment in the US: >**[One in Five Families Are on Food Stamps](http://reason.com/24-7/2013/04/25/one-in-five-families-are-on-food-stamps)** The latest available data from the United States Department of Agriculture (USDA) shows that **a record number 23 million households in the United States are now on food stamps.** > The most recent Supplemental Assistance Nutrition Program (SNAP) statistics of **the number of households receiving food stamps shows that 23,087,886 households participated in January 2013 - an increase of 889,154 families from January 2012 when the number of households totaled 22,188,732.** As John F. Kennedy said:. >**“It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now … Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.”** >– John F. Kennedy, Nov. 20, 1962, president’s news conference >**\"\"'Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased – not a reduced – flow of revenues to the federal government.”*** >– John F. Kennedy, Jan. 17, 1963, annual budget message to the Congress, fiscal year 1964 >“In today’s economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarges the federal deficit – why reducing taxes is the best way open to us to increase revenues.”* >– John F. Kennedy, Jan. 21, 1963, annual message to the Congress: “The Economic Report Of The President” [Read more]( http://www.wnd.com/2004/07/25640/#GRyFgRZYqUiKoud6.99)\""
},
{
"docid": "218637",
"title": "",
"text": "Taking every court to case isn't in the best interest of the public either (on a net basis). Often those settlements accept the fine, but dong admit guilt. This can be important in federally regulated industries where guilt would result in automatic suspension of licenses and practice. Those regulations were put in place knowing that most companies would settle. Also, there's valid reason for deducting the settlement! In many businesses lawsuits are ordinary expenses (consumer facing ones with lots and lots of employees). People being up frivolous suits all the time and it's cheaper to settle for a small amount than pay expansive attorneys to go to court. Effectively, it's like an admin expense, we don't tax revenue, we tax profit. Finally, this would seriously clog courts, and jury's can be crazy biased to emotional stories. Yes, some parts could be changed, but it serves a valid purpose."
},
{
"docid": "402437",
"title": "",
"text": "\"> The base value from infrastructure is derived on a per-capita basis. It is a \"\"fixed cost\"\" as opposed to a variable one. In other words, roads are just as useful to me as they are to you regardless of my net worth. A1: Misleading: Infrastructure is useful to those who use it more independently of classifying it as [fixed vs variable](http://en.wikipedia.org/wiki/Fixed_cost). Take the FAA for example. The poor who cannot afford a plane ticket and/or order things via next-day air derive very little benefit from the FAA compared to a person who owns their own aircraft and can fly out at a moments notice knowing full well they can file a flight plan and communicate with a network of airports to ensure their plane will not crash into any other jets. >A tank, a missile, a police officer protects me the same as it does anyone else. A2: But, A person with more net worth has more to lose than a person with low net worth. Therefore, even independent of A1 above, your statement is false. Those examples protect those with more property/net-worth/etc more-so than those with less. > B) As a percentage of income, infrastructure is far more valuable to low-income individuals than high-income individuals It depends on the infrastructure: But there is far more infrastructure protecting the wealthy than the poor. Your example is the stock market. Why should the vast majority of people pay for SEC and rules and regulations to require/enforce honest filings when they cannot afford stock? Who benefits from SEC infrastructure. You and I do. Value to poor as a percentage of income = 0% . Value to rich > 0% . QED. Your roads argument as an example of poor using more infrastructure than the rich is a bad one. The poor are more likely to take public transportation and/or work within 5 miles of their residence. The rich are more likely to have multiple cars, live in gated areas far from work and take long road trips. Staying at home to work is a function of more than just owning stock. There are at-home-parents, IT professionals, programmers, VOIP operators, etc, all working from home and completely independent of road use. > C) The activities of business owners generate massive tax revenues. These far outweigh their personal utility from infrastructure. C1: \"\"personal utility\"\" You are mixing corporate and personal taxes and yet calling out \"\"personal\"\" utility. Unless you are talking about business owners flowing income to personal income (e.g. S-Corp) the mixing of terms is unfortunate because both business and people use infrastructure and both should pay for it. C2: \"\"Far outweigh\"\" Not true: See examples A1 and A2 above. And I'll go one more. Taxes on businesses are on NET revenue not gross revenue (ignoring things like SS and FICA). You probably invest in businesses with dividends and there is an incentive to keep a net revenue that can be distributed to stockholders. But in the private world there is no such motivation. In fact there is an anti-motivation to show profit as low as possible to limit tax liability. This has led to many \"\"hacks\"\" of the tax code/expenses to make sure that businesses end up with negative tax liability or an effective rate that is close to 0. How many poor people can claim negative tax liability? Again 0 > not-zero. >D) Society captures the majority of individual commercial efforts (estimates vary, but typically 85%). In other words, if I generate $10.00 of value as an entrepreneur, I will realistically be able to capture only $1.50 of that. D1: wat? Vague. Not all commercial efforts have a positive impact on the community. Irrelevant since we are talking about use vs cost. etc.\""
},
{
"docid": "294061",
"title": "",
"text": "I get upset everytime I see this. Where a part is made is a small percentage of how much it affects and benefits the us economy. If Ford manufactured each and every car in Mexico it would still have a bigger positive on the us economy than Toyota. Toyota profits, r and d, marketing, design and a bunch of other niche jobs required for the automaker stay overseas in Japan. So does the tax revenue from those jobs and profits. A us ceo will pay more in income taxes than a 1000 factory workers. If we lose the ability to design and engineer products we're screwed. It will never come back. There will always be a cheaper place to make goods. That's the wrong rabbit to chase."
},
{
"docid": "166442",
"title": "",
"text": "Because people are going deeper into debt and filing for bankruptcy more often, there is more risk on behalf of the credit company. Therefore, they limit their risk by lower limits and increasing interest. For every person that goes bankrupt, there might be 10 that pay that new higher interest rate, thereby netting a profit even though they lost out completely on the one customer. The recent legislation limited how and under what circumstance rate are adjusted and raised, but not forbidden. As for the fact that these banks took tax money under the idea (we all thought) I see two points of view. We never should have had the credit we did, so they are correcting and you (like me and millions of others) are suffering for their prior mistakes. It is an honest attempt to correct the system for long term stability even if we suffer in the short term. We gave them tax money, they need to not screw us over. In response to the still frozen credit markets I would suggest penalty taxes to companies that do not lend. Penalties to companies that do not modify mortgages. The second you take government money is the last second a you are entitled to a profit of anything. Furthermore, we the people bought you and we the people get to decide your salary. The bottom line is there is truth in both statements. Things are totally screwed up right now because we ALL made mistakes in the past trying to get a bigger profit or own a bigger house. There are those among us who didn't make a mistake, and those among us who made nothing but mistakes. As a society, we have to pay the piper either way. The best thing you can do now is pay down your debts, live simply and spend your money wisely."
},
{
"docid": "30445",
"title": "",
"text": "Maybe someone can ELI5 for me: If Obama does happen to raise taxes on businesses, those increased taxes are only on profits, as the taxes were only on profit before. So if a small business loses a little more of its profit, why should it have to lay off people? It still meets its overhead and makes some profit right? Is some % of profit required for a company to keep it's current level of staff?"
},
{
"docid": "123170",
"title": "",
"text": "Revenue does not equal income. Income is, more or less, synonymous with profit. It is the amount of money earned after expenses. A corporation is taxed on its revenue after its deductible expenses have been removed, the same as a person is. It's kind of double taxation, but it's kind of the same argument as saying that payroll taxes in addition to income taxes are double taxation. Also of note: taxes on dividends are lower than normal taxes because of this double taxation."
},
{
"docid": "517641",
"title": "",
"text": "It says Amazon has no profits (or very low profits) but the value of the company is very high and growing because of the high revenue. All of the returns to investors are in the form of increased share price which isn't realized or taxed until the shares are sold. This isn't a loophole. Anybody can run a business where they spend most of their revenue on operating costs and run on very slim margins with the goal of growing the revenue."
},
{
"docid": "597650",
"title": "",
"text": "Yes. You are assuming that everything remains equal except for a decrease in revenue. More than likely what you will see happen and what is expected to happen, is a decrease in benefits along with a decrease in revenue. So rather than say, revenue of 1000 and payout of 1000, it would become something more like revenue of 750 and payout of 750, and then maybe further down the road revenue 600 and payout 600. But it is unlikely that we continue to see revenue of 750, and payout of 1000. This is a very, very simple explanation and I'm sure someone could use better numbers but I think it illustrates why we won't see social security go bankrupt"
},
{
"docid": "275902",
"title": "",
"text": "This situation sounds better than most, the company it seems likely to be profitable in the future. As such it is a good candidate to have a successful IPO. With that your stock options are likely to be worth something. How much of that is your share is likely to be very small. The workers that have been their since the beginning, the venture capitalist, and the founders will make the majority of profits from an IPO or sale. Since you and others hired at a similar time as you are assuming almost no risk it is fair that your share of the take is small. Despite being 1/130 employees expect your share of the profits to be much smaller than .77%. How about we go with .01%? Lets also assume that they go public in 2.5 years and that revenues during that time continue to increase by about 25M/year. Profit margins remains the same. So revenues to 112M, profits to 22.5M. Typically the goal for business is to pay no more than 5 times profits, that could be supplanted by other factors, but let's assume that figure. So about 112M from the IPO. So .01% of that is about 11K. That feels about right. Keep in mind there would be underwriting fees, and also I would discount that figure for things that could go wrong. I'd be at about 5K. That would be my expected value figure, 5K. I'd also understand that there is a very small likelihood that I receive that amount. The value received is more likely to be zero, or enough to buy a Ferarri. There might also be some value in getting to know these people. If this fails will their next venture be a success. In my own life, I went to work for a company that looked great on paper that just turned out to be a bust. Great concept, horrible management, and within a couple of years of being hired, the company went bust. I worked like a dog for nothing."
},
{
"docid": "207449",
"title": "",
"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.\""
},
{
"docid": "89190",
"title": "",
"text": "\"I love it - it was the policies under Bush (as much as one can squarely place blame on the president) that results in the crash that nearly destroyed him - the same president he claims he got elected... and yet here were are and he is claiming if Obama is re-elected that he might have to fire people because of his policies (as much as he claims we can squarely place blame on the president) would lead to another loss for his company, that is after they enjoyed this period of recovery that allows him to continue building his massive house o' opulence. Wonderful business sense, \"\"Pay more in taxes?? FUCK those profits altogether! I'll shut down the company and HA HA! That'll show them! Because no one else will swoop in and pick up my massively profitable vacation scam business... you know why? Because taxes - that's why! And socialism! and communism!.... COMMULISM!\"\"\""
},
{
"docid": "286383",
"title": "",
"text": "Because companies (big or small) only pay taxes on *profits* rather than *revenues*. It can't be any other way, really, because of the $5 you pay for the big mac, most of that goes to pay suppliers and employees and only perhaps $0.50 would be profit. But that fact also opens up all sorts of loopholes. For example, a US company can license a patent from a Cayman Islands company, and make yearly payments. Thus, the US company no longer has any profits, and all of that money winds up in the Caymans. That's a trivial example, but there's an entire industry dedicated to doing this shit. I'd be impressed if you could craft any law that banned this without also banning legitimate international commerce."
},
{
"docid": "90073",
"title": "",
"text": "Stock prices reflect future expectations of large groups of people, and may not be directly linked to traditional valuations for a number of reasons (not definitive). For example, a service like Twitter is so popular that even though it has no significant revenue and loses money, people are simply betting that it is deeply embedded enough that it will eventually find some way to make money. You can also see a number of cases of IPOs of various types of companies that do not even have a revenue model at all. Also, if there is rapid sales growth in A but B sales are flat, no one is likely to expect future profit growth in B such that the valuation will remain steady. If sales in A are accelerating, there may be anticipation that future profits will be high. Sometimes there are also other reasons, such as if A owns valuable proprietary assets, that will hold the values up. However, more information about these companies' financials is really needed in order to understand why this would be the case."
},
{
"docid": "58244",
"title": "",
"text": "You're not talking about capitalism, you're talking about hate for the bourgeois which you refer to as parasites, thus making you the proletariat. You don't own a business, you work for one. If you wanted to create a company, you could because you have the freedom to so do, the opportunity to sacrafice (as this guy did) through discipline and determination. But you don't-- you prefer to debate religion and give people advice and make assertions on the internet. Capitalism is an economic system that is based on private ownership of the means of production and the creation of goods or services for profit. (taken right from wikipedia). This guy built a company from the garage of a small house, driving a 12 year old car while his friends drove new cars and enjoyed healthy salaries. Today his company has 7,000 employees and lots of revenue. Who did he exploit? It sounds like he produced a service, for profit. So what is exploitive? The fact that his revenue and profit are larger than most? His net profit is much lower than gross profit because of already high liabilities, not only including various taxes, but as much or more in mandatory insurances, I'd wager the net profit is less than half of the gross profit. If his liability increases, there is less incentive to continue operations. The fact is he created his business and he can do with it what he pleases."
}
] |
5054 | How to stress test an investment plan? | [
{
"docid": "28119",
"title": "",
"text": "Here are a few things I've already done, and others reading this for their own use may want to try. It is very easy to find a pattern in any set of data. It is difficult to find a pattern that holds true in different data pulled from the same population. Using similar logic, don't look for a pattern in the data from the entire population. If you do, you won't have anything to test it against. If you don't have anything to test it against, it is difficult to tell the difference between a pattern that has a cause (and will likely continue) and a pattern that comes from random noise (which has no reason to continue). If you lose money in bad years, that's okay. Just make sure that the gains in good years are collectively greater than the losses in bad years. If you put $10 in and lose 50%, you then need a 100% gain just to get back up to $10. A Black Swan event (popularized by Nassim Taleb, if memory serves) is something that is unpredictable but will almost certainly happen at some point. For example, a significant natural disaster will almost certainly impact the United States (or any other large country) in the next year or two. However, at the moment we have very little idea what that disaster will be or where it will hit. By the same token, there will be Black Swan events in the financial market. I do not know what they will be or when they will happen, but I do know that they will happen. When building a system, make sure that it can survive those Black Swan events (stay above the death line, for any fellow Jim Collins fans). Recreate your work from scratch. Going through your work again will make you reevaluate your initial assumptions in the context of the final system. If you can recreate it with a different medium (i.e. paper and pen instead of a computer), this will also help you catch mistakes."
}
] | [
{
"docid": "502750",
"title": "",
"text": "\"I am currently running 12%. This is including IRA, 401k, HSA, and tax accounts. My LC is not a tax sheltered.The share used to be around 25% but i have been very aggressively putting away alot more into 401k/HSA. My current NAT returns on LC are 14.3%, but not a single loan has seasoned, i am nearing my first full year, and i have had 3 defaults in 150~ loans. My % across grades: A-0 B-6 C-30 D-31 E-20 F-12 G-1 Also to note, i use a very filter and only pick the \"\"best\"\" notes based on my own personally back testing. My 5 year average for stocks and such is around 11%, and YTD is 14%. Which is matching my LC rate. I am not sure which one will hurt more during the next bear markets, LC, or long term investments. Only time will tell. I suppose I plan on keeping my LC between 10-15% of my total investments. I will see how it goes as time goes on and my account gets more seasoned.\""
},
{
"docid": "62869",
"title": "",
"text": "This very topic was the subject of a question on workplace SE https://workplace.stackexchange.com/questions/8996/what-can-relocation-assistance-entail TL/DR; From tax publication 521 - Moving expenses table regarding how to report IF your Form W-2 shows... your entire reimbursement reported as wages in box 1 AND you have... moving expenses THEN... file Form 3903 showing all allowable expenses,* but do not show any reimbursements. There are tax implications Covered in tax publication 521 - Moving expenses and Employers tax guide to Fringe Benefits related to moving expenses. From the Employers View: Moving Expense Reimbursements This exclusion applies to any amount you directly or indirectly give to an employee, (including services furnished in kind) as payment for, or reimbursement of, moving expenses. You must make the reimbursement under rules similar to those described in chapter 11 of Publication 535 for reimbursement of expenses for travel, meals, and entertainment under accountable plans. The exclusion applies only to reimbursement of moving expenses that the employee could deduct if he or she had paid or incurred them without reimbursement. However, it does not apply if the employee actually deducted the expenses in a previous year. Deductible moving expenses. Deductible moving expenses include only the reasonable expenses of: Moving household goods and personal effects from the former home to the new home, and Traveling (including lodging) from the former home to the new home. Deductible moving expenses do not include any expenses for meals and must meet both the distance test and the time test. The distance test is met if the new job location is at least 50 miles farther from the employee's old home than the old job location was. The time test is met if the employee works at least 39 weeks during the first 12 months after arriving in the general area of the new job location. For more information on deductible moving expenses, see Publication 521, Moving Expenses. Employee. For this exclusion, treat the following individuals as employees. A current employee. A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Exception for S corporation shareholders. Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Exclusion from wages. Generally, you can exclude qualifying moving expense reimbursement you provide to an employee from the employee's wages. If you paid the reimbursement directly to the employee, report the amount in box 12 of Form W-2 with the code “P.” Do not report payments to a third party for the employee's moving expenses or the value of moving services you provided in kind. From the employees view: The not be included as income the expenses must be from an accountable plan: Accountable Plans To be an accountable plan, your employer's reimbursement arrangement must require you to meet all three of the following rules. Your expenses must have a business connection – that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. Two examples of this are the reasonable expenses of moving your possessions from your former home to your new home, and traveling from your former home to your new home. You must adequately account to your employer for these expenses within a reasonable period of time. You must return any excess reimbursement or allowance within a reasonable period of time. Also what is interesting is the table regarding how to report IF your Form W-2 shows... your entire reimbursement reported as wages in box 1 AND you have... moving expenses THEN... file Form 3903 showing all allowable expenses,* but do not show any reimbursements."
},
{
"docid": "134109",
"title": "",
"text": "\"401(k) doesn't have a \"\"return rate\"\", because 401(k) is not a type of investment -- it is a vehicle for investment, with certain tax treatments. Just like your money that's not in a 401(k), you can invest it in either the bank, a CD, stocks, mutual funds, bonds, etc., you can similarly (depending on the options given to you by your 401(k) plan) invest the money in the 401(k) in a cash account, buy stocks, mutual funds, etc. Your return is dependent on how you invest your money, not whether it's in a 401(k) or not. Whether it's in a (Roth or Traditional) 401(k) simply affects when and how it gets taxed. (It is true that most 401(k) plans offer little variety in types of investments you can choose; however, this is not a big deal, as chances are that in a few years, you will leave your company, at which point you are able to rollover the 401(k) into an IRA, at which point you will have many, many options for how to invest it.) To make a valid comparison, you should be comparing the same type of investment in both cases. That means, you should assume the same return for both the money outside the 401(k), and the money inside the 401(k), and only consider the taxes and penalties (if you plan to withdraw early).\""
},
{
"docid": "156097",
"title": "",
"text": "Congrats on making it this far debt free. It is rare, but nice to be in the situation that you are in. The important thing here is that you want to remain debt free. That's really what the emergency fund is all about: it keeps you from needing to go into debt should something unexpected happen. You've got 1.5 months worth of expenses saved up, and that's great. If you don't have a family or other responsibilities, that might be enough, but think about this: how are you paying for school, and what would happen if those funds stopped coming in? If you are paying for school out of your own income, what happens if you lose your job? If someone else, perhaps your parents, is paying for school, what happens if they are suddenly no longer able to do so? While you have extra cash, you want to be saving it up for situations like this. If I were you, I would build up that emergency fund until it got to the point where it could pay all your expenses and tuition until graduation. Hopefully, you won't need to touch it, but it will be there if you need it. Since you need to be able to access your money quickly, it is generally recommended to park this money in a savings account, where it is very safe. Mutual funds are a great way to invest, but they are not safe in the short term. Don't stress out about not being able to start retirement investing just yet. Making sure you can finish school debt free is the best investment you can make right now. After you graduate and land a job, you can start investing aggressively."
},
{
"docid": "279601",
"title": "",
"text": "Moving your office to St. Louis? A move, be it local or interstate move, is always stressful because you need to shift an entire office to another place. Planning and co-ordination are necessary steps in such cases and the best way to organize things is to hire professional movers."
},
{
"docid": "241202",
"title": "",
"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."
},
{
"docid": "593475",
"title": "",
"text": "There are more than a few ideas here. Assuming you are in the U.S., here are a few approaches: First, DRIPs: Dividend Reinvestment Plans. DRIP Investing: How To Actually Invest Only A Hundred Dollars Per Month notes: I have received many requests from readers that want to invest in individual stocks, but only have the available funds to put aside $50 to $100 into a particular company. For these investors, keeping costs to a minimum is absolutely crucial. I have often made allusions and references to DRIP Investing, but I have never offered an explanation as to how to logistically set up DRIP accounts. Today, I will attempt to do that. A second option, Sharebuilder, is a broker that will allow for fractional shares. A third option are mutual funds. Though, these often will have minimums but may be waived in some cases if you sign up with an automatic investment plan. List of mutual fund companies to research. Something else to consider here is what kind of account do you want to have? There can be accounts for specific purposes like education, e.g. a college or university fund, or a retirement plan. 529 Plans exist for college savings that may be worth noting so be aware of which kinds of accounts may make sense for what you want here."
},
{
"docid": "57558",
"title": "",
"text": "Completely agree with this, especially with the level 2 comment. Some sections in the Schweser level 2 books are quite scarce, and will need additional research. I just passed level 2 this June, and I have pretty much never used the CFAI materials; they are very long and time consuming, whereas the Schweser resources were much shorter, yet still comprehensive enough. Of course, you are in this to improve yourself and learn as much as you can about the world of finance, so if you are not under time pressure, perhaps it may be better for your long term understanding to learn the content from the CFAI resources. One thing I would stress is to do the Mock exams and topic tests on the CFA website, as this is probably the most important component of your studies. Use these resources to find your weaknesses and fill in the gaps from there. You should skim read those blue boxes which contain worked examples, but personally I found the end of chapter questions to be too easy and a waste of time tbh. Hope that helps a bit; all the best for your studies. TL;DR Schweser materials are more concise and a better option Regardless of what you use, do official CFA mocks & topic tests"
},
{
"docid": "174122",
"title": "",
"text": "Some sample prices for straightforward pay-for-hours-or-deliverables planners: I think I've seen some similar rates elsewhere, too. I'd feel like you might get something perfunctory and boilerplate for too much less than $1000 - how could the person afford to spend much time? - and I'd feel like lots more than $1000 for just a standard straightforward plan might be a ripoff. Basically you're paying $1000 for a day or two of work, you don't want just a couple hours of work, but you don't need a week of work either. Anyway, extracting the general guideline (since prices may vary regionally or over time), you could figure it takes a day or two to do a decent job on a basic complete financial plan without a lot of complexities in it. From there you can decide what's fair, adding or subtracting time if you need less than a complete plan or have complex issues. This is assuming you're paying for time and deliverables, which is not a given. The biggest factor in how much you pay is probably how they charge; a couple of the most common models, (There are other models but these are the ones I've seen most.) The difference between these two models is a lot of money over time. Hourly is going to be much cheaper, because it's a one-time cost instead of ongoing, and unrelated to what you have in assets. However, you won't get investment management, which can be valuable if you aren't the kind to stick to an investment plan or you want someone else to completely take care of it for you. The investment-management planners have the potential to make a lot more money (and are more likely to be in it for the money). Hourly planners don't really have as good a business from a business owner's perspective, but they are cheaper from a customer perspective, as long as you're happy to DIY a bit. One thing I like about hourly planners is that I don't really feel investments are the main place planners can add value, so it makes me nervous to have the compensation based on that. Insurance, estate planning, taxes, etc. are where it's harder for a layperson to know all the ins and outs and DIY. From what I've seen, the cheapest planners are the ones that you can get free or discounted from companies like USAA or Vanguard if you have an account with them. However, they will only recommend products from the company in question, so that's a downside, and you probably won't get to meet them in person. This question may be useful too: What exactly can a financial advisor do for me, and is it worth the money?"
},
{
"docid": "243602",
"title": "",
"text": "\"Im honestly trying to find your arguement for drug testing, other than \"\"this is my business, so its my freedom of choice\"\". I have no objection to that but that the large scale of what drug tests cost to business and our community as a whole is a very bad use of time and resources. The fact that most drugs are flushed out of your system in 3 days, except weed, makes the topic of medical cannabis that much more complex. My arguement is to treat drug use as mental health issue, not continuing to fuel further criminal harm to society. I understand how we test people say after a road accident, which should be a good indicator to whats harming us the most. When was the last time you saw a road sign read \"\"Please dont drink and smoke\"\"? Because we all know how dangerous is to get behind the wheel and not drink, right? You nailed a bunch of points that drug tests dont really work and ultimately fuels the fake war on drugs. I could care less how you would conduct your business, especially if you respected how I handled mine, just please stop fueling the fake war on drugs.\""
},
{
"docid": "128614",
"title": "",
"text": "Even with scenario and stress testing, VaR is still rather useless. Im sure your VaR simulator was a great piece of work but at the end of the day when things go crazy VaR as a model fails when you need it the most. Risk management in the larger banks is reporting while at funds is more active."
},
{
"docid": "34451",
"title": "",
"text": "\">ignores over a decade of rigorous testing because it doesn't support your narrative. FAULTY TESTING. How fucking hard is it for you to get that point through your thick head? The testing is irrelevant because it's possible to get past it. It was not rigorous at all because again, it couldn't test for everything, the drug Armstrong used being one of them. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. Do you finally understand why saying \"\"He passed all the tests\"\" is useless? If he did have positive tests then that would be evidence of guilt, saying there is no positive test is not evidence of innocence, just absence of the evidence of guilt. It would be evidence of innocence if it was absolutely impossible for him to beat the test, but he can beat the test. Get that through your thick fucking head. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. IT IS POSSIBLE TO BEAT THE TEST. It is just fucking mind blowingly retarded of you to continually push the fact that he passed the tests as fact he isn't doping when I have repeatedly told you that the was able to beat the test, and it has been outlined how he did it. So yes you are like a creationist in the sense that you ignore the evidence, said evidence being information on how it is possible for someone to beat the test, and yet you still say \"\"He passed the test\"\" Saying he passed the tests which couldn't check for the drug he was on and therefore he is innocent is like saying \"\"We used a shitty camera to check for microscopic gun shot residue on the murder suspect, the shitty camera couldn't detect any gunshot residue therefore he has no gunshot residue on him and therefore he isn't the murder suspect\"\" Fucking idiot. I really do think you're a troll at this point because the fact that he was able to beat the tests is the basic core of the argument against your claims of \"\"His tests are all clean!\"\" and you still don't seem to understand that.\""
},
{
"docid": "70389",
"title": "",
"text": "Is it safe to invest in a portfolio of dividend stocks yielding 7-9% with the money borrowed at 3-4% from one of these brokerages? Yes and no. It depends on your risk profile! Any investment has its risks of losing your capital, but not investing is a guaranteed risk, as you will be guaranteed to fall behind the rate of inflation. Regarding investing on margin, this can increase your gains but can also increase your loses. Regarding the stock market - when investing in stocks you should not only look at the dividend rate but also the capital gain or loss potential. Remember in regards to investing on margin, if the share price drop too much you can get a margin call no matter how much dividend you are getting. It is no use gaining 9% in dividend yield per year if you are losing 15% or more in capital each year. Also, what is the risk of the dividend rate being cut back or dividends not being paid at all in the future? These are some of the risks you should consider before investing and derive a risk management plan as part of your investment plan before you invest. No investment is totally safe or risk free, but it is less risky than not investing at all, as long as you understand the risks involved and have a risk management plan in place as part of your overall investment plan."
},
{
"docid": "202355",
"title": "",
"text": "\"Is the mortgage debt too high? The rental property is in a hot RE market, so could be easily sold with significant equity. However, they would prefer to keep it. Given the current income, there is no stress. However in absence of any other liquid [cash/near cash] assets, having everything locked into Mortgage is quite high. Even if real estate builds assets, these are highly illiquid investments. Have debt on such investments is risky; if there are no other investments. Essentially everything looks fine now, but if there is an crisis, unwinding mortgage debt is time consuming and if it forces distress sale, it would wipe out any gains. Can they afford another mortgage, and in what amount? (e.g. they are considering $50K for a small cabin, which could be rented out). I guess they can. But should they? Or diversify into other assets like stocks etc. Other than setting cash aside, what would be some good uses of funds to make sure the money would appreciate and outpace inflation and add a nice bonus to retirement? Mutual Funds / Stocks / bullions / 401K or other such retirement plans. They are currently in mid-30's. If there is ONE key strategy or decision they could make today that would help them retire \"\"early\"\" (say, mid-50's), what should it be? This opinion based ... it depends on \"\"what their lifestyle is\"\" and what would they want their \"\"lifestyle\"\" to be when they retire. They should look at saving enough corpus that would give an year on year yield equivalent to the retirement expenses.\""
},
{
"docid": "498075",
"title": "",
"text": "\"The response to this question will be different depending which of the investment philosophies you are using. Value investors look at the situation the company is in and try to determine what the company is worth and what it will be worth in the future. Then they look at the current stock price and decide whether or not the stock is priced at a good deal or not. If the stock price is priced lower than they believe the company is worth, they would want to buy stock, and if the price rises above what they believe to be the true value, they would sell. These types of investors are not looking at the history or trend of what the price has done in the past, only what the current price is and where they believe the price should be in the future. Technical analysis investors do something different. It is their belief that as stock prices go up and down, they generally follow patterns. By looking at a chart of what a stock price has been in the past, they try to predict where it is headed, and buy or sell based on that prediction. In general, value investors are longer-term investors, and technical analysis investors are short-term investors. The advice you are considering makes a lot of sense if you are using technical analysis. If you have a stock that is trending down, your strategy probably tells you to sell; buying more in the hopes of turning things around would be seen as a mistake. It is like the gambler in Vegas who keeps playing a game he is losing, hoping that his luck changes. However, for the value investor, the historical price of a stock, and even the amount you currently have gained or lost in the stock, are essentially ignored. All that matters is whether or not the stock price is above or below the true value determined by the investor. For him, if the stock price falls and he believes the company still has a high value, it could be a signal to buy more. The above advice doesn't really apply for them. Many investors don't follow either of these strategies. They believe that it is too difficult and risky to try to predict the future price of an individual stock. Instead, they invest in many companies all at once using index mutual funds, believing that the stock market as a whole always heads up over a long time frame. Those investors don't care at all if the prices of stock are going up or down. They simply keep investing each month, and hold until they have another use for the money. The above advice isn't useful for them at all. No matter which kind of investing you are doing, the most important thing is to pick a strategy you believe in and follow the plan without emotion. Emotions can cause investors to make mistakes and start buying when their strategy tells them to sell. Instead of trying to follow fortune cookie advice like \"\"Don't throw good money after bad,\"\" choose an investment strategy, make a plan, test it, and follow it, cautiously (after all, it may be a bad plan). For what it is worth, I am the third type of investor listed above. I don't buy individual stocks, and I don't look at the stock prices when investing more each month. Your description of your own strategy as \"\"buy and hold\"\" suggests you might prefer the same approach.\""
},
{
"docid": "344596",
"title": "",
"text": "I got sucked into working with a tech company when I was striving to be an Investment banker in San Francisco. I can't stress enough how much better I have it now working with a great tech company, with great pay, flexible hours and great vacation time. But i'll admit, sometimes it feels like we're in our own little flourishing world."
},
{
"docid": "136138",
"title": "",
"text": "This isn't super specific to your question, but I'd recommend that you invest a ton of time in practice questions (then review the answers to the ones you got wrong). This is a good strategy for most exams, but it's particularly true for the Series 7, as the S7 is notorious for using questions on the actual exam that are almost identical to practice questions. I was amazed at how many questions I recognized almost word-for-word when I took it. I recently took my CFP test, so I'm pretty brushed-up on testing concepts and that sort of thing right now. If you are running into anything in particular, feel free to PM me!"
},
{
"docid": "386803",
"title": "",
"text": "Investing money in the stock market with [Compound Stock Earnings](http://www.compoundstockearnings.com) is a great way to build wealth and plan for the future. However, few people know what the stock market is let alone how to begin investing in it. It is important to understand how companies and stocks work before investing in them."
},
{
"docid": "176334",
"title": "",
"text": "A simple and low-interest loan is probably the least likely to cause acrimony, aside from a direct gift. You seem to be describing an equity stake in their house, where some portion of the appreciation in value accrues to you (relative to your initial investment). An equity stake in their house probably doesn't make much sense. You sound as though you're not going to do any of the work aside from the contribution of money. Equity might make sense as a way to reward you for efforts, such as home design or renovation, that increase the value of the home. You probably don't want to be in a position where you are together improving the property and your payback only comes when she sells for more money. What if you have different ideas of how to do it? She has to live there and may want improvements for her needs rather than for buyers. What if she asks you to pay for a portion of the improvement costs or resents you not offering? What if she doesn't want to sell for some reason, so your money is locked up with her family choices? Renovations can often be stressful, so these decisions may be made at difficult times. Either a gift or a low-interest family loan may be simpler for your needs. You can just set the loan terms you want, say payoff over 10 years or a deferred payment schedule. If she gets in trouble, you could perhaps delay or forgive payments. I don't know the UK tax consequences of a loan of this nature, if any. As a general proposition, it's best to set clear and simple expectations at the beginning, and avoid agreements that require multiple decisions to be made consensually in the future, possibly during a time of stress."
}
] |
5061 | What fiscal scrutiny can be expected from IRS in early retirement? | [
{
"docid": "23747",
"title": "",
"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)\""
}
] | [
{
"docid": "590232",
"title": "",
"text": "To determine how much you can contribute to a regular and roth IRA you have to calculate your compensation: What Is Compensation? Generally, compensation is what you earn from working. For a summary of what compensation does and does not include, see Table 1-1. Compensation includes all of the items discussed next (even if you have more than one type).Wages, salaries, etc. Wages, salaries, tips, professional fees, bonuses, and other amounts you receive for provid-ing personal services are compensation. The IRS treats as compensation any amount properly shown in box 1 (Wages, tips, other compensation) of Form W-2, Wage and Tax Statement, provided that amount is reduced by any amount properly shown in box 11 (Nonqualified plans). Scholarship and fellowship payments are compen-sation for IRA purposes only if shown in box 1 of Form W-2. It a also includes commissions, self-employment income, and alimony an non-taxable combat pay. For most people it is what i in box 1 of the W-2. For the example in the question. If the sum of Box 1's equals $3,200 that is the maximum you can contribute to all your IRAs (regular and Roth). The funds can come from anywhere. It is not related to your net check. The money can be from savings, gifts, parents, grandparents... The IRS doesn't care about the source of the funds, only that you don't over contribute. Of course the calculation is more complex if the person is married, and if they have access to a retirement account."
},
{
"docid": "513392",
"title": "",
"text": "Yes, it really will hurt you to keep pulling your money from your IRA. Your best bet is to set up a payment plan with the IRS, and pay the taxes you owe now, as well as adjust your withholding (with a new W-4 to your payroll department) so that you don't have a large tax liability next year. These tax advantaged plans really are designed to penalize you if you pull the money out early to give you incentive to keep the money for retirement. Your best bet is to make a monthly budget that includes your tax payments for taxes owed this year, as well as higher deductions from your paycheck to properly withhold taxes for next year."
},
{
"docid": "381179",
"title": "",
"text": "Part of the difficulty in this sort of planning is that you are also betting on future tax rates and comparing them with current taxes. If you are in a low tax bracket now, but expect to be in a higher one when you take the money out, it is better to pay the taxes now. If you are in a high tax bracket now, but expect to be in a lower one when you retire/take the money out, then it is better to defer the taxes until then. If you think that future sessions of Congress will decide to tax withdrawals from Roth accounts, then you should contribute to traditional accounts. The problem is that you don't know with certainty what the future will bring. So you have to make educated guesses about what might happen, and what you can do now to protect yourself from it. Ideally, plan so that even if the bad things happen, you will be reasonably comfortable."
},
{
"docid": "192738",
"title": "",
"text": "When you are investing for 40 years, you will have taxable events before retirement. You'll need to pay tax along the way, which will eat away at your gains. For example, in your taxable account, any dividends and capital gain distributions will need taxes paid each year. In your 401(k) or IRA, these are not taxable until retirement. In addition, what happens if you want to change investments before retirement? In your taxable account, taxes on the capital gains will be due at that time, but in a retirement account, you can change investments anytime you like without having to pay taxes early. Finally, when you do pull money out of your 401(k) at retirement, it will be taxed at whatever your tax rate is at retirement. After you retire, your income will probably be lower than when you were working, so your tax rate might be less."
},
{
"docid": "249429",
"title": "",
"text": "\"The entire idea of accountability in America has been in serious decline over the years. Not to get on my high horse and preach, but this issue begins early on with child care and has branched it's way into our economics as well. Kids get 9th place ribbons for races with 9 racers. Young post-college adults are struggling to survive on their own in the real world. CEO's are told to retire early as opposed to stepping down. At the end of the day, everyone wants to credit themselves with a job well done and shift blame to others or outside forces. However, this doesn't mean that there's no position left in the US with 'accountability.' For instance, the Fed Chairman has to be correct on their position or the entire economy can be destroyed in the process. So what do we do instead? Those positions are the ones we blame for what's happening around us. So naturally, their response is to leave as delicately and unnoticed as possible. If you ask me, those people at Equifax should be in jail. Not because of the hack, but because they waited so long to let everyone know. Stepping down and retiring shouldn't mean they get away from it, the same way declaring bankruptcy doesn't mean I get away from my student loans. If people started taking accountability for their own actions, America would be much more healthy in my opinion. But then again, at the end of the day it is just my opinion, so you're free to believe whatever else you like. Cause you know what they say, 'opinions are like a**holes, everyone has one.\"\"\""
},
{
"docid": "10089",
"title": "",
"text": "Congratulations on deciding to save for retirement. Since you cite Dave Ramsey as the source of your 15% number, what does he have to say about where to invest the money? If you want to have instantaneous penalty-free access to your retirement money, all you need to do is set up one or more ordinary accounts that you think of as your retirement money. Just be careful not to put the money into CDs since Federal law requires a penalty of three months interest if you cash in the CD before its maturity date (penalty!) or put the money into those pesky mutual funds that charge a redemption fee (penalty!) if you take the money out within x months of investing it where x can be anywhere from 3 to 24 or more. In Federal tax law (and in most state tax laws as well) a retirement account has special privileges accorded to it in that the interest, dividends, capital gains, etc earned on the money in your retirement account are not taxed in the year earned (as they would be in a non-retirement account), but the tax is either deferred till you withdraw money from the account (Traditional IRAs, 401ks etc) or is waived completely (Roth IRAs, Roth 401ks etc). In return for this special treatment, penalties are imposed (in addition to tax) if you withdraw money from your retirement account before age 59.5 which presumably is on the distant horizon for you. (There are some exceptions (including first-time home buying and extraordinary medical expenses) to this rule that I won't bother going into). But You are not required to invest your retirement money into such a specially privileged retirement account. It is perfectly legal to keep your retirement money in an ordinary savings account if you wish, and pay taxes on the interest each year. You can invest your retirement money into municipal bonds whose interest is free of Federal tax (and usually free of state tax as well if the municipality is located in your state of residence) if you like. You can keep your retirement money in a sock under your mattress if you like, or buy a collectible item (e.g. a painting) with it (this is not permitted in an IRA), etc. In short, if you are concerned about the penalties imposed by retirement accounts on early withdrawals, forgo the benefits of these accounts and put your retirement money elsewhere where there is no penalty for instant access. If you use a money management program such as Mint or Quicken, all you need to do is name one or more accounts or a portfolio as MyRetirementMoney and voila, it is done. But those accounts/portfolios don't have to be retirement accounts in the sense of tax law; they can be anything at all."
},
{
"docid": "133235",
"title": "",
"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.\""
},
{
"docid": "589256",
"title": "",
"text": "\"For some people, it should be a top priority. For others, there are higher priorities. What it should be for you depends on a number of things, including your overall financial situation (both your current finances and how stable you expect them to be over time), your level of financial \"\"education\"\", the costs of your mortgage, the alternative investments available to you, your investing goals, and your tolerance for risk. Your #1 priority should be to ensure that your basic needs (including making the required monthly payment on your mortgage) are met, both now and in the near future, which includes paying off high-interest (i.e. credit card) debt and building up an emergency fund in a savings or money-market account or some other low-risk and liquid account. If you haven't done those things, do not pass Go, do not collect $200, and do not consider making advance payments on your mortgage. Mason Wheeler's statements that the bank can't take your house if you've paid it off are correct, but it's going to be a long time till you get there and they can take it if you're partway to paying it off early and then something bad happens to you and you start missing payments. (If you're not underwater, you should be able to get some of your money back by selling - possibly at a loss - before it gets to the point of foreclosure, but you'll still have to move, which can be costly and unappealing.) So make sure you've got what you need to handle your basic needs even if you hit a rough patch, and make sure you're not financing the paying off of your house by taking a loan from Visa at 27% annually. Once you've gotten through all of those more-important things, you finally get to decide what else to invest your extra money in. Different investments will provide different rewards, both financial and emotional (and Mason Wheeler has clearly demonstrated that he gets a strong emotional payoff from not having a mortgage, which may or may not be how you feel about it). On the financial side of any potential investment, you'll want to consider things like the expected rate of return, the risk it carries (both on its own and whether it balances out or unbalances the overall risk profile of all your investments in total), its expected costs (including its - and your - tax rate and any preferred tax treatment), and any other potential factors (such as an employer match on 401(k) contributions, which are basically free money to you). Then you weigh the pros and cons (financial and emotional) of each option against your imperfect forecast of what the future holds, take your best guess, and then keep adjusting as you go through life and things change. But I want to come back to one of the factors I mentioned in the first paragraph. Which options you should even be considering is in part influenced by the degree to which you understand your finances and the wide variety of options available to you as well as all the subtleties of how different things can make them more or less advantageous than one another. The fact that you're posting this question here indicates that you're still early in the process of learning those things, and although it's great that you're educating yourself on them (and keep doing it!), it means that you're probably not ready to worry about some of the things other posters have talked about, such as Cost of Capital and ROI. So keep reading blog posts and articles online (there's no shortage of them), and keep developing your understanding of the options available to you and their pros and cons, and wait to tackle the full suite of investment options till you fully understand them. However, there's still the question of what to do between now and then. Paying the mortgage down isn't an unreasonable thing for you to do for now, since it's a guaranteed rate of return that also provides some degree of emotional payoff. But I'd say the higher priority should be getting money into a tax-advantaged retirement account (a 401(k)/403(b)/IRA), because the tax-advantaged growth of those accounts makes their long-term return far greater than whatever you're paying on your mortgage, and they provide more benefit (tax-advantaged growth) the earlier you invest in them, so doing that now instead of paying off the house quicker is probably going to be better for you financially, even if it doesn't provide the emotional payoff. If your employer will match your contributions into that account, then it's a no-brainer, but it's probably still a better idea than the mortgage unless the emotional payoff is very very important to you or unless you're nearing retirement age (so the tax-free growth period is small). If you're not sure what to invest in, just choose something that's broad-market and low-cost (total-market index funds are a great choice), and you can diversify into other things as you gain more savvy as an investor; what matters more is that you start investing in something now, not exactly what it is. Disclaimer: I'm not a personal advisor, and this does not constitute investing advice. Understand your choices and make your own decisions.\""
},
{
"docid": "433256",
"title": "",
"text": "You weren't eligible for a 401K in 2010, but you were eligible for an individual IRA. If you had known by April 18th that you had this extra money, you could have deposited (not rolled over) the money, up to the maximum ($5,000 or so, I think), into an IRA account You could do that because you didn't participate (legally) in an employer retirement program. But you didn't learn until early May, so you missed that deadline. I doubt that the IRS has any provisions for waiving that April 18th deadline, but I could be wrong: see the IRS publications. In any case, to answer the question directly - no, you can't roll over the money you're getting back, because it was mistakenly in the 401K plan. It will now become part of your 2011 income, and so you'll owe taxes on it when you file your tax return for the tax year 2011, in early 2012."
},
{
"docid": "485898",
"title": "",
"text": "Getting the first year right for any rental property is key. It is even more complex when you rent a room, or rent via a service like AirBnB. Get professional tax advice. For you the IRS rules are covered in Tax Topic 415 Renting Residential and Vacation Property and IRS pub 527 Residential Rental Property There is a special rule if you use a dwelling unit as a personal residence and rent it for fewer than 15 days. In this case, do not report any of the rental income and do not deduct any expenses as rental expenses. If you reach that reporting threshold the IRS will now expect you to to have to report the income, and address the items such as depreciation. When you go to sell the house you will again have to address depreciation. All of this adds complexity to your tax situation. The best advice is to make sure that in a tax year you don't cross that threshold. When you have a house that is part personal residence, and part rental property some parts of the tax code become complex. You will have to divide all the expenses (mortgage, property tax, insurance) and split it between the two uses. You will also have to take that rental portion of the property and depreciation it. You will need to determine the value of the property before the split and then determine the value of the rental portion at the time of the split. From then on, you will follow the IRS regulations for depreciation of the rental portion until you either convert it back to non-rental or sell the property. When the property is sold the portion of the sales price will be associated with the rental property, and you will need to determine if the rental property is sold for a profit or a loss. You will also have to recapture the depreciation. It is possible that one portion of the property could show a loss, and the other part of the property a gain depending on house prices over the decades. You can expect that AirBnB will collect tax info and send it to the IRS As a US company, we’re required by US law to collect taxpayer information from hosts who appear to have US-sourced income. Virginia will piggyback onto the IRS rules. Local law must be researched because they may limit what type of rentals are allowed. Local law could be state, or county/city/town. Even zoning regulations could apply. Also check any documents from your Home Owners Association, they may address running a business or renting a property. You may need to adjust your insurance policy regarding having tenants. You may also want to look at insurance to protect you if a renter is injured."
},
{
"docid": "108672",
"title": "",
"text": "You can withdraw from CPP as early as 60. However, by doing so, you will permanently reduce the payments. The reduction is calculated based on average life expectancies. If you live for an average amount of time, that means you'll receive approximately the same total amount (after inflation adjustments) whether you start pulling from CPP at 60, 65, or even delay your pension later. People may have pensions through systems other than CPP. This is often true for big business or government work. They may work differently. People who retire at 55 with a pension are not getting their pension through CPP. A person retiring at 55 would need to wait at least five years to draw from the CPP, and ten years before he or she was eligible for a full pension through CPP. Canada also offers Old Age Security (OAS). This is only available once you are 65 years old or older, though this is changing. Starting in 2023, this will gradually change to 67 years or older. See this page for more details. As always, it's worth pointing out that the CPP and OAS will almost certainly not cover your full retirement expenses and you will need supplementary funds."
},
{
"docid": "587768",
"title": "",
"text": "4.7 is a pretty low rate, especially if you are deducting that from your taxes. If you reduce the number by your marginal tax rate to get the real cost of the money you end up with a number that isn't far off from inflation, and also represents a pretty low 'yield' in terms of paying off the loan early. (e.g. if your marginal tax rate is 28%, then the net you are paying in interest after the tax deduction is 4.7 * .72 = 3.384) While I'm all for paying off loans with higher rates (since it's in effect the same as making that much risk free on the money) it doesn't make a lot of sense when you are down at 3.4 unless there is a strong 'security factor' (which really makes a difference to some folks) to be had that really helps you sleep at night. (to be realistic, for some folks close to retirement, there can be a lot to be said for the security of not having to worry about house payments, although you don't seem to be in that situation yet) As others have said, first make sure you have enough liquid 'emergency money' in something like a money market account, or a ladder of short term CD's If you are sure that the sprouts will be going to college, then there's a lot to be said for kicking a decent amount into a 529, Coverdell ESA (Educational Savings Account), uniform gift to minors account, or some combination of those. I'm not sure if any of those plans can be used for a kid that has not been born yet however. I'd recommend http://www.savingforcollege.com as a good starting point to get more information on your various options. As with retirement savings, money put in earlier has a lot more 'power' over the final balance due to compounding interest, so there's a lot to be said for starting early, although depending on what it takes to qualify for the plans there could be such a thing as too early ;-) ). There's nothing wrong with Managed mutual funds as long as the fund objective and investing style is in alignment with your objectives and risk tolerance; The fund is giving you a good return relative to the market as a whole; You are not paying high fees or load charges; You are not losing a lot to taxes. I would always look at the return after expenses when comparing to other options, and if the money is not in a tax deferred account, also look at what sort of tax burden you will be faced with. A fund that trades a lot will generate more short term gains which means more taxes than compared to a more passive fund. Anything lost to taxes is money lost to you so needs to come out of the total return when you calculate that. Sometimes such funds are better off as a choice inside an IRA or 401K, and you can instead use more tax efficient vehicles for money where you have to pay the taxes every year on the gains. The reason a lot of folks like index funds better is that: Given your described age, it's not appropriate now, but in the long run as you get closer to retirement, you may want to start looking at building up some investments that are geared more towards generating income, such as bonds, or depending on taxes where you live, Municipal bonds. In any case, the more money you can set aside for retirement now, both inside and outside of tax deferred accounts, the sooner you will get to the point of the 'critical mass' you need to retire, at that point you can work because you want to, not because you have to."
},
{
"docid": "302512",
"title": "",
"text": "To be clear, a 401K is a vehicle, you make investments WITHIN it, if you choose poorly such as say putting all your money into company stock when working for the next Enron, you can still get hurt badly. So it is important to have diversity and an appropriate risk level based on your age, tolerance for risk, etc. That said, as vehicles go it is outstanding, and the 'always max your 401K' is very very common advice for a large number of investing professionals, CFA's, pundits, etc. That said there are a few priorities to consider here. First priority, if there is some level of company matching, grab that, it's hard to beat that kind of 'return' in almost any other case. Second, since you never want to tap into a 401K (if you can at all avoid it) before you are ready to retire, you should first be sure you have a good 'emergency fund' set aside in the event you lose your job, or some other major catastrophy happens. Many recommend setting aside at least 6 months of basic living expenses. Third, if you have any high interest debt (like credit card debt) pay that stuff down as fast as you can. You'll save a ton of interest (it's pretty much the same as investing the money you use to pay it down, and getting a return equal to the interest rate you are paying, with zero risk.. can't be beat. You'll also end up with a lot better cash flow, and the ability to start saving first and spending out of savings, so you earn interest instead of paying it. Once you have those things out of the way, then it is time to think about fully funding the 401K. and keep in mind, since you don't pay taxes on it, the 'felt effect' to you pocket is about 80% or even less, of what goes into the account, so it's not as painful as you might think, and the hit to your take home may be less than you'd expect. Contributing as much as you can, as early as you can also lets you benefit from the effect of compounding, and has a far larger affect on the balance than money put into the account closer to retirement. So if you can afford to max it out, I surely would advise you to do so."
},
{
"docid": "526334",
"title": "",
"text": "It is not absolutely clear that transitioning all your retirement money from mutual funds, stocks, bonds, CDs etc to an annuity (either now, or just before retirement) is the best decision, especially once you are old enough to have to take Required Minimum Distributions (RMDs). The IRS says in Publication 590 Distributions from individual retirement annuities. If your traditional IRA is an individual retirement annuity, special rules apply to figuring the required minimum distribution. For more information on rules for annuities, see Regulations section 1.401(a)(9)-6. These regulations can be read in many libraries, IRS offices, and online at IRS.gov. I would recommend talking to a tax accountant before going your proposed route."
},
{
"docid": "108845",
"title": "",
"text": "IMHO your thinking is spot on. More than likely, you are years away from retirement, like 22 if you retire somewhat early. Until you get close keep it in aggressive growth. Contribute as much as you can and you probably end up with 3 million in today's dollars. Okay so what if you were retiring in a year or two from now, and you have 3M, and have managed your debt well. You have no loans including no mortgage and an nice emergency fund. How much would you need to live? 60 or 70K year would provide roughly the equivalent of 100K salary (no social security tax, no commute, and no need to save for retirement) and you would not have a mortgage. So what you decide to do is move 250K and move it to bonds so you have enough to live off of for the next 3.5 years or so. That is less than 10% of your nest egg. You have 3.5 years to go through some roller coaster time of the market and you can always cherry pick when to replenish the bond fund. Having a 50% allocation for bonds is not very wise. The 80% probably good for people who have little or no savings like less than 250k and retired. I think you are a very bright individual and have some really good money sense."
},
{
"docid": "489790",
"title": "",
"text": "\"There is no penalty for foreigners but rather a 30% mandatory income tax withholding from distributions from 401(k) plans. You will \"\"get it back\"\" when you file the income tax return for the year and calculate your actual tax liability (including any penalties for a premature distribution from the 401(k) plan). You are, of course, a US citizen and not a foreigner, and thus are what the IRS calls a US person (which includes not just US citizens but permanent immigrants to the US as well as some temporary visa holders), but it is entirely possible that your 401(k) plan does not know this explicitly. This IRS web page tells 401(k) plan administrators Who can I presume is a US person? A retirement plan distribution is presumed to be made to a U.S. person only if the withholding agent: A payment that does not meet these rules is presumed to be made to a foreign person. Your SSN is presumably on file with the 401(k) plan administrator, but perhaps you are retired into a country that does not have an income tax treaty with the US and that's the mailing address that is on file with your 401(k) plan administrator? If so, the 401(k) administrator is merely following the rules and not presuming that you are a US person. So, how can you get around this non-presumption? The IRS document cited above (and the links therein) say that if the 401(k) plan has on file a W-9 form that you submitted to them, and the W-9 form includes your SSN, then the 401(k) plan has valid documentation to associate the distribution as being made to a US person, that is, the 401(k) plan does not need to make any presumptions; that you are a US person has been proved beyond reasonable doubt. So, to answer your question \"\"Will I be penalized when I later start a regular monthly withdrawal from my 401(k)?\"\" Yes, you will likely have mandatory 30% income tax withholding on your regular 401(k) distributions unless you have established that you are a US person to your 401(k) plan by submitting a W-9 form to them.\""
},
{
"docid": "299211",
"title": "",
"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.\""
},
{
"docid": "105468",
"title": "",
"text": "\"One reason is that you can trade in the IRA without incurring incremental taxes along the way. This may be especially important if you intend to shift your portfolio allocation as you approach retirement. For instance, gradually selling stocks and buying bonds can incur taxes if you do it in a taxable account (if you do it while you have other income and thus may face capital gains taxes). Also, if you have mutual funds in a taxable account, they may distribute capital gains to you that you'll owe taxes on, but holding the funds in an IRA will shield you from that. There are also some other side benefits to IRAs because they are considered to \"\"not count\"\" for certain purposes when determining what you're worth. For instance, if you go bankrupt, you could be forced to sell assets in taxable accounts to pay your creditors, whereas IRAs are protected in many cases. Likewise, if you try to get financial aid to pay for college for your kids, money in an IRA won't be counted among your assets in determining your aid eligibility, potentially giving your kids access to more aid money. Finally, an especially prominent benefit is, paradoxically, the early withdrawal penalty. For many people, part of the purpose of an IRA is to \"\"lock away\"\" their money and prevent themselves from accessing it until retirement. Early withdrawal penalties provide a concrete consequence that psychologically deters them from raiding their retirement savings willy-nilly.\""
},
{
"docid": "436897",
"title": "",
"text": "As others have explained defined contribution is when you (or your employer) contributes a specified amount and you reap all the investment returns. Defined benefit is when your employer promises to pay you a specified amount (benefit) and is responsible for making the necessary investments to provide for it. Is one better than the other? We can argue this either way. Defined benefit would seem to be more predictable and assured. The problem being of course that it is entirely reliant upon the employer to have saved enough money to pay that amount. If the employer fails in that responsibility, then the only fallback is government guarantees. And of course the government has limitations on what it can guarantee. For example, from Wikipedia: The maximum pension benefit guaranteed by PBGC is set by law and adjusted yearly. For plans that end in 2016, workers who retire at age 65 can receive up to $5,011.36 per month (or $60,136 per year) under PBGC's insurance program for single-employer plans. Benefit payments starting at ages other than 65 are adjusted actuarially, which means the maximum guaranteed benefit is lower for those who retire early or when there is a benefit for a survivor, and higher for those who retire after age 65. Additionally, the PBGC will not fully guarantee benefit improvements that were adopted within the five-year period prior to a plan's termination or benefits that are not payable over a retiree's lifetime. Other limitations also apply to supplemental benefits in excess of normal retirement benefits, benefit increases within the last five years before a plan's termination, and benefits earned after a plan sponsor's bankruptcy. By contrast, people tend to control their own defined contribution accounts. So they control how much gets invested and where. Defined contribution accounts are always 100% funded. Defined benefit pension plans are often underfunded. They expect the employer to step forward and subsidize them when they run short. This allows the defined benefits to both be cheaper during the employment period and more generous in retirement. But it also means that employers have to subsidize the plans later, when they no longer get a benefit from the relationship with the employee. If you want someone else to make promises to you and aren't worried that they won't keep them, you probably prefer defined benefit. If you want to have personal control over the money, you probably prefer defined contribution. My personal opinion is that defined benefit plans are a curse. They encourage risky behavior and false promises. Defined contribution plans are more honest about what they provide and better match the production of employment with its compensation. Others see defined benefit plans as the gold standard of pensions."
}
] |
5064 | How much should a graduate student attempt to save? | [
{
"docid": "2003",
"title": "",
"text": "\"While I haven't experienced being \"\"grad student poor\"\" myself (I went to grad school at night and worked full-time), I would shoot for 10-20% per month ($150-$300). This depends of course on how much you currently have in savings. If it isn't much, you might want to attempt a higher savings percentage (30-40%). If you can move to a less-expensive place, do that as soon as you can. It's your largest expense; any place you can spend less on than $900 creates instance savings without having to sacrifice what you categorize as living expenses.\""
}
] | [
{
"docid": "135514",
"title": "",
"text": "Yup. SAP and Oracle are customized to each individual company with little to no overlap. Being experienced in one companies SAP setup does not guarantee that one would be familiar with another companies set up. Adding to that, Companies complaints about having people graduate without the skills they need is a load of bullshit. Instead of complaining should have partnered with the schools to make sure that students were learning and gaining experience in the things they actually need."
},
{
"docid": "409854",
"title": "",
"text": "\"You may want to hold onto the $5000 and keep it in savings. Interest rates are for crap, even in \"\"high yield\"\" accounts, so you can rightly not consider it investing. You should be graduating college soon. It would suck if an emergency crops up to prevent you from graduating. I assume that you are going into a high paying career given your nice income from internships. Your best investment is yourself at this point. Completing your education, and obtaining your degree trumps all. You could use that extra 5000 as a hedge/insurance policy/emergency fund to help insure you graduate. Also you are likely to have some moving expenses once you graduate. That 5K could be used to help cover those costs. The worst case is you graduate with no emergencies, you get a nice signing bonus and relocation package, and you still have the $5000. Well you still have until 15 April 2015 to put money in your ROTH for 2014. This holds true for every tax year. Given your current financial status, you are likely to find yourself soon contributing the max to your 401K and ROTH. Once that happens, money beyond that can be invested into mutual funds stocks that are not tax advantaged, real estate, or some other choices. Well then you have some things to think about.\""
},
{
"docid": "164797",
"title": "",
"text": "\"Others are very correct to indicate you NEED to put numbers on it. Exactly how much debt are you talking about? What kind of interest are you paying on it? Put that against your income (on a spreadsheet) and then start charting your monthly expenses. Now add in a \"\"fudge\"\" factor for the unexpected like car repairs or other unknown that appear from time to time. Once you do that you'll be staring straight at \"\"reality\"\" otherwise it's just fiction and guesswork. As Mrs. John isn't working she should be doing everything possible to help you save. Great saving ideas include: Buying in bulk and portioning food in the freezer. Preparing bulk meals like Chili, rice dishes, noodle dishes and thing you can prepare for 1/5th the cost of eating out, portion and freeze meals. Wash dishes in the sink, use cold water (but buy good soap, you'll use much less). Take short showers, save energy everywhere you can. If it's cold, dress warm even at home and if it's warm, undress to the tasteful limits. Minimize heat and AC use. Do you NEED cable and all the channels? So much to view online. You and she may need to find creative ways to earn money, if she's paying off student loans then she has a degree, use it! Can't find a job? Be a consultant, go sell yourself and find some work. It's out there but may take work to find work. If she's disabled than look into government subsidies to assist. If not, then find work that needs to be done and go do it. Time to get busy!\""
},
{
"docid": "312752",
"title": "",
"text": "> I'm not so sure that performance measurement of students is all that difficult You assume that student performance is a good proxy for teacher performance. One of the bigger influences on student performance is parent engagement (particularly the parent engagement that happens prior to school age, but also the engagement once they're in school). Often these differences run along socioeconomic lines, and schools are generally divided on neighborhood lines with students attending the school closest to their home. If you judge based on student performance, you'll likely assume that the teachers in the richer neighborhoods are better (students perform better on standardized tests, students are more likely to graduate high school and even go on to college, etc). The fact is, there's a lot of good teachers who take the hard jobs because even a little improvement can go a long way. Put those same teachers in the richer neighborhoods and you might judge things differently."
},
{
"docid": "340842",
"title": "",
"text": "First of all, I am sorry for your loss. At this time, worrying about money is probably the least of your concerns. It might be tempting to try to pay off all your debts at once, and while that would be satisfying, it would be a poor investment of your inheritance. When you have debt, you have to think about how much that debt is costing you to keep open. Since you have 0%APR on your student loan, it does not make sense to pay any more than the minimum payments. You may want to look into getting a personal loan to pay off your other personal debts. The interest rates for a loan will probably be much less than what you are paying currently. This will allow you to put a payment plan together that is affordable. You can also use your inheritance as collateral for the loan. Getting a loan will most likely give you a better credit rating as well. You may also be tempted to get a brand new sports car, but that would also not be a good idea at all. You should shop for a vehicle based on your current income, and not your savings. I believe you can get the same rates for an auto loan for a car up to 3 years old as a brand new car. It would be worth your while to shop for a quality used car from a reputable dealer. If it is a certified used car, you can usually carry the rest of the new car warranty. The biggest return on investment you have now is your employer sponsored 401(k) account. Find out how long it takes for you to become fully vested. Being vested means that you can leave your job and keep all of your employer contributions. If possible, max out, or at least contribute as much as you can afford to that fund to get employee matching. You should also stick with your job until you become fully vested. The money you have in retirement accounts does you no good when you are young. There is a significant penalty for early withdrawal, and that age is currently 59 1/2. Doing the math, it would be around 2052 when you would be able to have access to that money. You should hold onto a certain amount of your money and keep it in a higher interest rate savings account, or a money market account. You say that your living situation will change in the next year as well. Take full advantage of living as cheaply as you can. Don't make any unnecessary purchases, try to brown bag it to lunch instead of eating out, etc. Save as much as you can and put it into a savings account. You can use that money to put a down payment on a house, or for the security and first month's rent. Try not to spend any money from your savings, and try to support yourself as best as you can from your income. Make a budget for yourself and figure out how much you can spend every month. Don't factor in your savings into it. Your savings should be treated as an emergency fund. Since you have just completed school, and this is your first big job out of college, your income will most likely improve with time. It might make sense to job hop a few times to find the right position. You are much more likely to get a higher salary by changing jobs and employers than you are staying in the same one for your entire career. This generally is true, even if you are promoted at the by the same employer. If you do leave your current job, you would lose what your employer contributed if you are not vested. Even if that happened, you would still keep the portion that you contributed."
},
{
"docid": "140307",
"title": "",
"text": "most of the people who lurk in money.se will probably tell you to spend as little as possible on a car, but that is a really personal decision. since you live with your parents, you can probably afford to waste a lot of money on a car. on the other hand, you already have a large income so you don't really have the normal graduate excuses for deferring student loans and retirement savings. for the sake of other people in a less comfortable position, here is a more general algorithm for making the decision:"
},
{
"docid": "598562",
"title": "",
"text": "\"Debt cripples you, it weighs you down and keeps you from living your life the way you want. Debt prevents you from accomplishing your goals, limits your ability to \"\"Do\"\" what you want, \"\"Have\"\" what you want, and \"\"Be\"\" who you want to be, it constricts your opportunities, and constrains your charity. As you said, Graduated in May from school. Student loans are coming due here in January. Bought a new car recently. The added monthly expenses have me concerned that I am budgeting my money correctly. Awesome! Congratulations. You need to develop a plan to repay the student loans. Buying a (new) car before you have planned you budget may have been premature. I currently am spending around 45-50% of my monthly (net)income to cover all my expenses and living. The left over is pretty discretionary, but things like eating dinner outside the house and expenses that are abnormal would come out of this. My question is what percentage is a safe amount to be committing to expenses on a monthly basis? Great! Plan 40-50% for essentials, and decide to spend under 20-30% for lifestyle. Be frugal here and you could allocate 30-40% for financial priorities. Budget - create a budget divided into three broad categories, control your spending and your life. Goals - a Goal is a dream with a plan. Organize your goals into specific items with timelines, and steps to progress to your goals. You should have three classes of goals, what you want to \"\"Have\"\", what you want to \"\"Do\"\", and who you want to \"\"Be\"\"; Ask yourself, what is important to you. Then establish a timeline to achieve each goal. You should place specific goals or steps into three time blocks, Near (under 3-6 months), medium (under 12 months), and Long (under 24 months). It is ok to have longer term plans, but establish steps to get to those goals, and place those steps under one of these three timeframes. Example, Good advice I have heard includes keeping housing costs under 25%, keeping vehicle costs under 10%, and paying off debt quickly. Some advise 10-20% for financial priorities, but I prefer 30-40%. If you put 10% toward retirement (for now), save 10-20%, and pay 10-20% toward debt, you should make good progress on your student loans.\""
},
{
"docid": "319928",
"title": "",
"text": "I switched from engineering into finance, into an entry level position as an analyst on the investment side. I can tell you about my experience and how I did it. Yes, it is incredibly hard to get a position on the buyside. Investment management doesn't scale well with numbers, adding more analysts typically doesn't improve results (i.e. Buffett and Munger made all the investment decisions at Berkshire Hathaway, the most successful investment team is a two man team running more than a hundred billion dollars of assets). So teams are very small. A large amount of money goes through the hands of very few people, so naturally the pay is very big. The recruiters are not lying when they say there are hundreds of applicants chasing each one of those jobs. I tried asking my friends and family, but being a first generation American, most of the people I know are blue-collar types that work with their hands. I had some success tapping into the alumni network, I got many responses with advice but no interviews. It doesn't help that the finance world is currently shrinking and there are talented people losing their jobs. I had the most success attending my schools career fair. If you graduated from one of the top schools, the firms that are recruiting will still show up. Also, check your schools career office. All the top schools I know of have on-campus interviews. They are generally open to alumni. It is summer right now, but on-campus recruiting season will start in the fall. You should be able to get some interviews through your school. Now the most important thing you need to do is to differentiate yourself. What are you doing right now? Are you working in some other area of finance or a different field altogether? I think the best way to do it (and it is how I did it) is to invest your own money. If you are in an interview and you say you invest your own money, you are pretty much guaranteed that you will be explaining one of your investment theses for the next half hour. This is effectively what you will be doing in the real job if you get it. Firms want to hire someone who can start working, they don't want to pay you that big money only to find that you can't do anything for the next year or two before they cut you. So you have to prove that you can do the job. Interns do it by working for cheap for a summer or two. Someone who graduated already can do it by claiming that they do it on the side, and then backing that up by being able to explaining positions intelligently (you will NOT get the job if it looks anything like /r/investing). There is also something hypocritical if you say that you should be paid boatloads of money because you are capable of managing money well (that is what you are claiming by applying to an investment job) and you don't manage your own money and you haven't formulated any investment theses. Students typically won't be able to do this because they don't have any money to invest, so they get their jobs through the internship route."
},
{
"docid": "505151",
"title": "",
"text": "Buddy I know how a student investment club works, my school had a great one but thanks for the explanation. Doesn't change the fact that a valuation by some college kids is meaningless, but you wouldn't understand that because you're still a 20 year old kid with no industry experience. I love that you're bragging about your college to someone who has already graduated and made it into the industry, shows you really have no accomplishments to speak of."
},
{
"docid": "385086",
"title": "",
"text": "\"This was a huge question for me when I graduated high school, should I buy a new or a used car? I opted for buying used. I purchased three cars in the span of 5 years the first two were used. First one was $1500, Honda, reliable for one year than problem after problem made it not worth it to keep. Second car was $2800, Subaru, had no problems for 18 months, then problems started around 130k miles, Headgasket $1800 fix, Fixed it and it still burnt oil. I stopped buying old clunkers after that. Finally I bought a Nissan Sentra for $5500, 30,000 miles, private owner. Over 5 years I found that the difference between your \"\"typical\"\" car for $1500 and the \"\"typical\"\" car you can buy for $5500 is actually a pretty big difference. Things to look for: Low mileage, one owner, recent repairs, search google known issues for the make and model based on the mileage of the car your reviewing, receipts, clean interior, buying from a private owner, getting a deal where they throw in winter tires for free so you already have a set are all things to look for. With that said, buying new is expensive for more than just the ticket price of the car. If you take a loan out you will also need to take out full insurance in order for the bank to loan you the car. This adds a LOT to the price of the car monthly. Depending on your views of insurance and how much you're willing to risk, buying your car outright should be a cheaper alternative over all than buying new. Save save save! Its very probably that the hassles of repair and surprise break downs will frustrate you enough to buy new or newer at some point. But like the previous response said, you worked hard to stay out of debt. I'd say save another grand, buy a decent car for $3000 and continue your wise spending habits! Try to sell your cars for more than you bought them for, look for good deals, buy and sell, work your way up to a newer more reliable car. Good luck.\""
},
{
"docid": "45773",
"title": "",
"text": "Assuming the amount of your car payment and student loan aren't crazy you should be fine. I would suggest starting with a baseline budget listing your monthly income and expenses. Be sure to include miscellaneous expenses like car maintenance, insurance, food, clothes, etc (the common things that sometimes get overlooked in a budget). After all of your necessary expenses (fluff like entertainment doesn't count), if your employer has a 401k with a match I would contribute to that up to the match amount. Next I would save an emergency fund to cover unforseen events such as car repairs, etc. $1000 is not an uncommon amount to see people suggest for this. Next I would knock out your car loan then student loan as fast as possible. This will free up some cash flow which gives you more freedom to do what you want. At this point you save more so you don't have to finance the next car or have a down payment for a home or whatever. Building your savings to be 3-6 months of income is a good idea, this covers things like being laid off or other larger unexpected events. After you get to that point how you handle your budget is pretty open."
},
{
"docid": "580090",
"title": "",
"text": "It'd be interesting to break it out by first-generation college students vs. student's whose parents and immediate family also graduated from college. Oh, also this is looking at students who graduated in '04, and it's well known that the recession hit black people way harder than everyone else (see employment rates). I can see those two things having linked effects."
},
{
"docid": "67045",
"title": "",
"text": "So you want to buy a car but have no money saved up.... That's going to be hard!! I'd suggest you get a part-time job, save up and buy a used car. Even with the minimum wage pay in the U.S., if you are in the U.S., you could save up and buy a car in less than a month. This route would be the quickest way for you to get a car but it would also teach you the responsibility of having one since it appears you have never owned a car before. Now the car will most definitely not be fancy or look like the cars that your peer's parents bought but at least it will get you from point A to point B. I'd look on Craigslist or your local neighborhood for cars that have not moved in a while or have for sale signs. Bring a mechanically inclined friend with you and contact the owner and explain them your situation. There are nice people out there that would give you deep discounts based on the fact that you are a student trying to get by. Now you have to get registration and insurance. There are many insurance companies that give discounts to students as well who have good GPAs and driving records. If you happen to get a car for a good deal, take good car of it. Once you graduate and further your career, you can resell it for a profit. I also would not suggest you get any loans for a car given your situation."
},
{
"docid": "124009",
"title": "",
"text": "Graduating from college is probably one of the most fulfilling triumphs you’ll ever achieve in your entire life. However, that joy also brings bigger responsibilities in life that could affect tax time too. This specific time in your life will have a lot to offer and before the winds of change take you to wherever you dream of, here are some advices from [Southbourne Tax Group](http://www.thesouthbournegroup.com/) to make your taxes easier where you can get a refund during filing time and save money as well. If your modified adjusted gross income is below $80,000 and you’re single, up to $2,500 of the interest portion of your student loan payments can be tax deductible, and below $160,000 for married person filing jointly. Job hunting expenses can be tax deductible too but there are exceptions such as expenses involved in your search for a new job in a new career field and working full-time for the first time. Major tax breaks are expected in case you are moving to a new and different city for your first job. Get a jump start on retirement savings with your company’s 401(k). Each year, you can secure up to $18,000 from your income taxes by contributing on one. If you have a family coverage, you could secure $6,750 from contributing to a health savings account in case you are enrolled in a high-deductible health plan. And if you are single, you can secure up to $3,400. Placing your money into a flexible spending account could keep an added $2,600 out of your taxable income. Getting big deductions for business expenses is possible if you are planning to be a freelancer or to be your own boss as a new college graduate. Southbourne Group also advises saving at least 25% of what you’re earning for the IRS. Research more about lifetime learning credit and understand its importance. You can claim up to $2,000 of a tax credit for post-secondary work at eligible educational institutions. This is possible if your adjusted gross income is below $65,000 as a single filer, or below $131,000 as a married person filing jointly. Saving money has a lot of benefits and one of which is cutting your tax bill. If you’re a married person filing jointly and have an adjusted gross income of less than $62,000, you may qualify for the saver’s credit, while for a single filer, it should be below $31,000. That can reduce your tax bill by up to 50% of the first $2,000 if you’re a single filer, or $4,000 if you’re a married person filing jointly you contribute to an eligible retirement plan. Southbourne Tax Group doesn’t want you to overspend on tax software and getting professional help in this regard. The firm suggests using the free packages from trusted tax software companies if your tax situation is quite simple. Get that professional help at Volunteer Income Tax Assistance program, which can help you meet with a pro at little or no cost."
},
{
"docid": "134063",
"title": "",
"text": "Plus you already have money in a 529 plan that is meant for college expenses (and cannot be used to pay student loans) - use that money for what it's for. I disagree with @DStanley, as a current college student I would say to take out loans. Most of the time I am against loans though. So WHY? There are very few times you will receive loans at 0% interest (for 4+ years). You have money saved currently, but you do not know what the future entails. If you expend all of your money on tuition and your car breaks down, what do you do? You can not used student loans to pay for your broken car.Student loans, as long as they are subsidized, serve as a wonderful risk buffer. You can pay off your loans with summer internships and retain the initial cash you had for additional activities that make college enjoyable, i.e - Fraternity/ Sorority, clubs, dinners, and social nights. Another benefit to taking these loans would assist in building credit, with an additional caveat being to get a credit card. In general, debt/loans/credit cards are non-beneficial. But, you have to establish debt to allow others to know that you can repay. Establishing this credit rating earlier than later is critical to cheaper interest rates on (say) a mortgage. You have made it through, you have watched your expenses, and you can pay your debt. Finish It. If you do it right, you will not have loans when you graduate, you will have a stunning credit rating, and you will have enjoyed college to its fullest potential (remember, you only really go through it once.) But this is contingent on: Good luck, EDIT: I did not realize the implication of this penalty which made me edit the line above to include: (to the extent you can per year) For now, student loan repayment isn't considered a qualified educational expense. This means that if you withdraw from a 529 to pay your debts, you may be subject to income taxes and penalties.Source Furthermore, Currently, taxpayers who use 529 plan money for anything other than qualified education expenses are subject to a 10% federal tax penalty. Source My advice with this new knowledge, save your 529 if you plan on continuing higher education at a more prestigious school. If you do not, use it later in your undergraduate years."
},
{
"docid": "466587",
"title": "",
"text": "\"Fundamentals: Then remember that you want to put 20% or more down in cash, to avoid PMI, and recalculate with thatmajor chunk taken out of your savings. Many banks offer calculators on their websites that can help you run these numbers and figure out how much house a given mortgage can pay for. Remember that the old advice that you should buy the largest house you can afford, or the newer advice about \"\"starter homes\"\", are both questionable in the current market. =========================== Added: If you're willing to settle for a rule-of-thumb first-approximation ballpark estimate: Maximum mortgage payment: Rule of 28. Your monthly mortgage payment should not exceed 28 percent of your gross monthly income (your income before taxes are taken out). Maximum housing cost: Rule of 32. Your total housing payments (including the mortgage, homeowner’s insurance, and private mortgage insurance [PMI], association fees, and property taxes) should not exceed 32 percent of your gross monthly income. Maximum Total Debt Service: Rule of 40. Your total debt payments, including your housing payment, your auto loan or student loan payments, and minimum credit card payments should not exceed 40 percent of your gross monthly income. As I said, many banks offer web-based tools that will run these numbers for you. These are rules that the lending industy uses for a quick initial screen of an application. They do not guarantee that you in particular can afford that large a loan, just that it isn't so bad that they won't even look at it. Note that this is all in terms of mortgage paymennts, which means it's also affected by what interest rate you can get, how long a mortgage you're willing to take, and how much you can afford to pull out of your savings. Also, as noted, if you can't put 20% down from savings the bank will hit you for PMI. Standard reminder: Unless you explect to live in the same place for five years or more, buying a house is questionable financially. There is nothing wrong with renting; depending on local housing stock it may be cheaper. Houses come with ongoung costs and hassles rental -- even renting a house -- doesn't. Buy a house only when it makes sense both financially and in terms of what you actually need to make your life pleasant. Do not buy a house only because you think it's an investment; real estate can be a profitable business, but thinking of a house as simultaneously both your home and an investment is a good way to get yourself into trouble.\""
},
{
"docid": "238288",
"title": "",
"text": "I'm aiming to buy in four and a half years... I'll have about $120k in savings between various accounts and be making $52k a year with no debt and no obligations... no kids, I'll have excellent credit (building it--I didn't want cards while paying off student loans) and still... I'll be lucky to be able to afford a 600 sq foot condo with a $300/mo HOA fee. Fucking SF Bay Area. I can't even afford to live in a Section-8 complex right now. Seriously. What the bloody fucking fuck ($1,500/mo if you're not Section-8... they get discounts). Thank goodness for my dad, he's the only reason I was able to pay off my student loans within two years of getting my current job and the only reason I am able to save so much. Our system is seriously fucked. People making $44k a year should be able to afford an apartment within a hour commute of work in an area where they don't have to dodge bullets or fight rats...."
},
{
"docid": "205772",
"title": "",
"text": "The main problem is that everyone graduates from high-school, almost everyone gets accepted to college and almost nobody who put minimum efforts fails college classes. I know that! I was an adjunct professor and was told I can't fail my students except in extreme cases. In the past, to graduate from high school was a hard accomplishment. Getting accepted to college was a hard accomplishment. Surviving the first year in college was an accomplishment and getting a degree was an accomplishment. Those accomplishments in the past gave you excellent benefits! Benefits of assured respected jobs, income, security, and being the exception. An example: in the past, to be a teller in the bank, you did not have to finish high-school, just be good in basic math. Today: a teller in the bank, one of the lowest paying jobs you can find, requires a Bachelor degree. Does the bachelor degree worth it? **Basically, higher education became an industry, that accept as many people as possible, charge them as much as it can, give degrees to undeserving people, and those degrees are almost worthless. You can't do much with a Bachelor degree!** The solution is to make the standards for high school and college much higher. Everything will fall into place then. Fewer students who are actually interested in studies and are qualified for their studies will mean better teaching, lower costs, and much better benefits for those deserve those benefits. Chances of this happening? Big big zero. Actually, the chances of even lower standards for colleges and schools are 100%. So, for my son, I explained to him to not invest much in an excellent and expensive college for [worthless] degrees. Instead, while he studies, work in the area he is interested in and learn from the masters he works with. My son is 13, but since being 11, he works (yes, he makes money) with some computer system he's interested in. Personally, I worked since I was 13, study and worked all the time, got my Bachelor and Masters, and I am doing extremely well. I get paid for what I know, which Zero of it came from my studies and money I spent in those studies."
},
{
"docid": "298623",
"title": "",
"text": "40% of income going to debt payments being their line is reasonable I guess, BUT maybe it should be higher for educated high earners. For example, currently I'm technically using about 50% of my monthly income because I'm a new graduate with some student debt and I'm trying to pay it off aggressively, in under a year. Despite this, my income is high enough that the remaining 50% is enough to support a decent lifestyle. In a couple of months when I'm paid off I can probably start saving several thousand dollars a month. Do I really have a debt problem?"
}
] |
5064 | How much should a graduate student attempt to save? | [
{
"docid": "192811",
"title": "",
"text": "\"First, don't save anything in a tax sheltered vehicle. You will be paying so little tax that there will be essentially no benefit to making the contributions, and you'll pay tax when they come out. Tax free compounding for 40 years is terrific, but start that after you're earning more than a stipend. Second, most people recommend having a month's expenses readily available for emergencies. For you, that would be $1500. If you put $100 a month aside, it will take over a year to have your emergency fund. It's easy to argue that you should pick a higher pace, so as to have your emergency money in place sooner. However, the \"\"emergencies\"\" usually cited are things like home repair, car repair, needing to replace your car, and so on. Since you are renting your home and don't have a car, these emergencies aren't going to happen to you. Ask yourself, if your home was destroyed, and you had to replace all your clothes and possessions (including furniture), how much would you need? (Keep in mind any insurance you have.) The only emergency expense I can't guess about is health costs, because I live in Canada. I would be tempted to tell you to get a credit card with a $2000 limit and consider that your emergency fund, just because grad student living is so tight to the bone (been there, and 25 years ago I had $1200 a month, so it must be harder for you now.) If you do manage to save up $1500, and you've really been pinching to do that (walking instead of taking the bus, staying on campus hungry instead of popping out to buy food) let up on yourself when you hit the target. Delaying your graduation by a few months because you're not mentally sharp due to hunger or tiredness will be a far bigger economic hit than not having saved $200 a month for 2 or 3 years. The former is 3-6 months of your new salary, the latter 5-7K. You know what you're likely to earn when you graduate, right?\""
}
] | [
{
"docid": "207474",
"title": "",
"text": "Note that this study isn't tracking graduates, just enrollment. Thomas Sowell pointed out that drop-out rates are higher for black Americans in many colleges, and believes that affirmative action is actually to blame - many of these upper tier institutions have lower academic requirements for black Americans applying, so these individuals are, on average, less prepared for that level to college, and drop out. He also felt that these students probably would have been prepared for an institution with lower requirements, and questioned whether it's better to drop out of Harvard or graduate from Brown. If you're saddled with a ton of debt and *also* don't have a degree to show for it, I'd say it's much more likely you're going to have trouble paying it off. I wonder what the figures for black graduates looks like compared to white graduates? If black graduates are at a payoff rate comparable to that of white graduates, I think that would be a fairly telling piece of evidence that it's not, in fact, about race - but about whether or not you graduated at all."
},
{
"docid": "385086",
"title": "",
"text": "\"This was a huge question for me when I graduated high school, should I buy a new or a used car? I opted for buying used. I purchased three cars in the span of 5 years the first two were used. First one was $1500, Honda, reliable for one year than problem after problem made it not worth it to keep. Second car was $2800, Subaru, had no problems for 18 months, then problems started around 130k miles, Headgasket $1800 fix, Fixed it and it still burnt oil. I stopped buying old clunkers after that. Finally I bought a Nissan Sentra for $5500, 30,000 miles, private owner. Over 5 years I found that the difference between your \"\"typical\"\" car for $1500 and the \"\"typical\"\" car you can buy for $5500 is actually a pretty big difference. Things to look for: Low mileage, one owner, recent repairs, search google known issues for the make and model based on the mileage of the car your reviewing, receipts, clean interior, buying from a private owner, getting a deal where they throw in winter tires for free so you already have a set are all things to look for. With that said, buying new is expensive for more than just the ticket price of the car. If you take a loan out you will also need to take out full insurance in order for the bank to loan you the car. This adds a LOT to the price of the car monthly. Depending on your views of insurance and how much you're willing to risk, buying your car outright should be a cheaper alternative over all than buying new. Save save save! Its very probably that the hassles of repair and surprise break downs will frustrate you enough to buy new or newer at some point. But like the previous response said, you worked hard to stay out of debt. I'd say save another grand, buy a decent car for $3000 and continue your wise spending habits! Try to sell your cars for more than you bought them for, look for good deals, buy and sell, work your way up to a newer more reliable car. Good luck.\""
},
{
"docid": "186846",
"title": "",
"text": "\"This answer is an attempt to answer the actual question posed. Please keep in mind that this applies specifically to the Equifax credit model that Mint uses as mentioned in the accepted answer, and that different models may react in different ways (or not at all). As mentioned in the comments, the number of total accounts you have does not have much bearing on your overall credit score. If you click on Mint's \"\"About Total Accounts\"\" link, you get the following statement: Total Accounts has a low impact on your score. Second, the way the Total Accounts score is represented is misleading. This is not a count of the total number of accounts you have open, but rather how many accounts you have in your total history. Mint's header under this metric is flat out wrong: Try to have a good mix of credit lines open. To back up the assertion that this is looking at total accounts in your credit history rather than just those that are open, my Mint report shows 2 open accounts and 7 closed accounts, for a total of 9. Under the Total Accounts metric, I am plotted smack dab in the middle of the \"\"Not Bad\"\" range, right where people with 9 would be plotted. So the proper advice here is to just let it be and only open new accounts as you need them. As you amass credit history, this metric will continue to grow naturally - it should never decrease. You may ask, then, why did your overall score decrease when you paid off your student loans? Most likely because your average age of credit dropped when you closed your loan account. If you're like most people I know, your student loan is one of your oldest accounts, so closing that account will hurt your score - credit age is measured only on your open accounts.\""
},
{
"docid": "409806",
"title": "",
"text": "If we spend 50k on an education that is unused it goes to waste unless the person is doing something that is as productive which sometimes they do but you also have a lot of retail degree holders that would have had a better chance with a less redundant education. College is not needed for a good understanding of civics, this was and should be once again taught in high school and expected of students graduating from a primary education. Just like basic life skills and many other topics that were dropped from schools across the nation. There should not be a price tag on an understanding of civics, we might as well add a poll tax if that is what you are suggesting."
},
{
"docid": "199173",
"title": "",
"text": "Yet, if you are wealthy enough to have already accumulated the bulk of your savings, they're going to treat your capital gains much more favorably than the wage income of the poor shlub who's still trying to make these contributions. I can't wait to see how they attempt to sell this to the average taxpayer."
},
{
"docid": "466587",
"title": "",
"text": "\"Fundamentals: Then remember that you want to put 20% or more down in cash, to avoid PMI, and recalculate with thatmajor chunk taken out of your savings. Many banks offer calculators on their websites that can help you run these numbers and figure out how much house a given mortgage can pay for. Remember that the old advice that you should buy the largest house you can afford, or the newer advice about \"\"starter homes\"\", are both questionable in the current market. =========================== Added: If you're willing to settle for a rule-of-thumb first-approximation ballpark estimate: Maximum mortgage payment: Rule of 28. Your monthly mortgage payment should not exceed 28 percent of your gross monthly income (your income before taxes are taken out). Maximum housing cost: Rule of 32. Your total housing payments (including the mortgage, homeowner’s insurance, and private mortgage insurance [PMI], association fees, and property taxes) should not exceed 32 percent of your gross monthly income. Maximum Total Debt Service: Rule of 40. Your total debt payments, including your housing payment, your auto loan or student loan payments, and minimum credit card payments should not exceed 40 percent of your gross monthly income. As I said, many banks offer web-based tools that will run these numbers for you. These are rules that the lending industy uses for a quick initial screen of an application. They do not guarantee that you in particular can afford that large a loan, just that it isn't so bad that they won't even look at it. Note that this is all in terms of mortgage paymennts, which means it's also affected by what interest rate you can get, how long a mortgage you're willing to take, and how much you can afford to pull out of your savings. Also, as noted, if you can't put 20% down from savings the bank will hit you for PMI. Standard reminder: Unless you explect to live in the same place for five years or more, buying a house is questionable financially. There is nothing wrong with renting; depending on local housing stock it may be cheaper. Houses come with ongoung costs and hassles rental -- even renting a house -- doesn't. Buy a house only when it makes sense both financially and in terms of what you actually need to make your life pleasant. Do not buy a house only because you think it's an investment; real estate can be a profitable business, but thinking of a house as simultaneously both your home and an investment is a good way to get yourself into trouble.\""
},
{
"docid": "313056",
"title": "",
"text": "The methodology leads me to believe the pollsters were setting up a poll for the sole purpose of getting a headline like this. For one, the pollsters eliminated anyone who didn't graduate with a 4-year degree, thus disqualifying anyone who has student loan debt but may have graduated with a lesser degree, or didn't graduate at all. I would assume (probably safely) that people with a 4-year degree are, on average, in a more financially stable situation than those who were disqualified from the poll, and this would be more likely to worry about other things rather than paying student loan debt. For two, the poll was commissioned by LendEDU, a refinancing startup that could use the publicity of student loan anxiety to drive more business. Having a clickbaity article like this on a relatively popular site like the Examiner that links straight to their website is just what a startup would love to have to get free marketing."
},
{
"docid": "43573",
"title": "",
"text": "If stopping the 401k contributions temporarily would get you out of debt faster and also stop you from having to take out more student loans, then stop the contributions right now. You can always put some money into regular savings for emergencies etc - in fact, you should - but given a choice between deferring further contributions to your retirement and deferring the (hopeful) increase in income you get when you graduate, definitely choose the former. That of course also means that you don't take off a few semesters from studying to make money to put into a 401(k)."
},
{
"docid": "574654",
"title": "",
"text": "I would say that, for the most part, money should not be invested in the stock market or real estate. Mostly this money should be kept in savings: I feel like your emergency fund is light. You do not indicate what your expenses are per month, but unless you can live off of 1K/month, that is pretty low. I would bump that to about 15K, but that really depends upon your expenses. You may want to go higher when you consider your real estate investments. What happens if a water heater needs replacement? (41K left) EDIT: As stated you could reduce your expenses, in an emergency, to 2K. At the bare minimum your emergency fund should be 12K. I'd still be likely to have more as you don't have any money in sinking funds or designated savings and the real estate leaves you a bit exposed. In your shoes, I'd have 12K as a general emergency fund. Another 5K in a car fund (I don't mind driving a 5,000 car), 5k in a real estate/home repair fund, and save about 400 per month for yearly insurance and tax costs. Your first point is incorrect, you do have debt in the form of a car lease. That car needs to be replaced, and you might want to upgrade the other car. How much? Perhaps spend 12K on each and sell the existing car for 2K? (19K left). Congratulations on attempting to bootstrap a software company. What kind of cash do you anticipate needing? How about keeping 10K designated for that? (9K left) Assuming that medical school will run you about 50K per year for 4 years how do you propose to pay for it? Assuming that you put away 4K per month for 24 months and have 9K, you will come up about 95K short assuming some interests in your favor. The time frame is too short to invest it, so you are stuck with crappy bank rates."
},
{
"docid": "586626",
"title": "",
"text": "You mention only two debts, mortgage and student loan, but you mention $19K in savings, which suggests that you are a saver, and likely do not have other debts. You did not mention your (net) income and expenses (income statement), but since you have substantial savings, you likely live within your means (income > expenses). Since you mention $38K in retirement, we might conclude you are regularly saving for retirement (are you saving 10% toward retirement)? You did not mention any medical condition or other debts, that might require a large savings, so I would suggest having 6 months savings ($2.5K x 6 = $15K) but should your net expenses be less, you might reduce this ($2K x 6 = $12K). You do not mention any investment you might want to make, but since you did not mention any candidate investments, we can assume you have no (specific) investments you find particularly attractive. You did not mention anything you were saving to purchase that you might want to purchase. You have combined $19K + $50K = $69K savings, and $15K would be a comfortable emergency savings, leaving $54K you could use to reduce mortgage or student loan debt. The mortgage debt interest @4.5%, is higher, so paying that debt off would be like earning 4.5% guaranteed return on your money, tax-free. At your income, your marginal tax rate is low enough that the mortgage interest deduction (if you do itemize) would not reduce this return much (15% if you itemize). The student loan debt interest @2.8%, would be like earning 2.8% guaranteed return on your money, tax-free. Clearly the higher return on your 'investment' in paying off debt would be reducing your mortgage balance (over 50% higher return on investment, compared to the student loan debt). You did not mention any circumstance that might cause the student loan rate to increase, the mortgage rate to increase, nor did you mention any difficulty making both the mortgage and student loan payments, the amounts of either payment, nor the number of years remaining to pay on either. Should you need (or desire) to reduce your payments, you could choose to payoff the student loan to eliminate one payment, and thus decrease your expenses. Or you could choose to pay down the mortgage, and refinance (or refactor) the mortgage to obtain a smaller payment. Another strategy (assuming you have had your house for 5-7 years), might be to pay the mortgage down enough to refinance into a 15 year loan, and (assuming you have a good credit score) obtain a lower (3%) rate. But I am going to suggest you consider a blended approach. Combine the Dave Ramsey Debt Snowball approach with the reduce the interest rate approach. Take the $54K ($57K?) available (after reserving 6 months emergency fund), and split between both. You pay your mortgage down by $27K and your student loan debt down by $27K. Your blended return on investment is (2.8+4.5)/2 = 3.65%, and you have the following Balance Sheet: Assets: Debts: The next steps would be to, There are two great reasons for paying off the student loan debt. One is the Dave Ramsey Debt Snowball approach which is that this is the smaller debt, and thus represents a psychological win, and the other is that student loan debt has special treatment even in bankruptcy."
},
{
"docid": "37070",
"title": "",
"text": "\"There are two issues here: arithmetic and psychology. Scenario 1: You are presently paying an extra $500 per month on your student loan, above the minimum payments. Your credit card company offers a $4000 cash advance at 0% for 8 months. So you take the cash advance, pay it toward the student loan, and then instead of paying the extra $500 per month toward the student loan you use that $500 for 8 months to repay the cash advance. Net result: You pay 0% interest on the loan, and save roughly 8 months times $4000 times the interest on the student loan divided by two. (I say \"\"divided by two\"\" because it's not the difference between $4000 and zero, but between $4000 and the $500 you would have been paying off each month.) Clearly you are better off. If you are NOT presently paying an extra $500 on the student loan -- or even if you are but it is a struggle to come up with the money -- then the question becomes, can you reasonably expect to be able to pay off the credit card before the grace period runs out? Interest rates on credit cards are normally much higher than interest rates on student loans. If you get the cash advance and then can't repay it, after 8 months you are paying a very steep interest rate, and anything you saved on the student loan will quickly be lost. What I mean by \"\"psychological\"\" is that you have to have the discipline to really repay the credit card within the grace period. If you're not very confidant that you can do that, this plan could go bad very quickly. Personally, I've thought about doing things like this many times -- cash advances against credit cards, home equity loans, etc, all give low-interest money that could be used to pay off a higher-interest debt. But it's easy to get into trouble doing things like this. It's easy to say to yourself, Well, I don't need to put ALL the money toward that other debt, I could keep a thousand or so to buy that big screen TV I really need. Or to fail to pay back the low-interest loan on schedule because other things keep coming up that you spend your money on instead, whether frivolous luxuries or true emergencies. And there's always the possibility that something will happen to mess up your finances, from a big car repair bill to losing your job. You don't want to paint yourself into a corner. Finally, maxing out your credit cards hurts your credit rating. The formulas are secret, but I understand that if you use more than half your available credit, that's a minus. How much it hurts you depends on lots of factors.\""
},
{
"docid": "302448",
"title": "",
"text": "$23,000 Student Loans at 4% This represents guaranteed loss. Paying this off quickly is a conservative move, while your other investments may easily surpass 4% return, they are not guaranteed. Should I just keep my money in my savings account since I want to keep my money available? Or are there other options I have that are not necessarily long term may provide better returns? This all depends on your plans, if you're just trying to keep cash in anticipation of the next big dip, you might strike gold, but you could just as easily miss out on significant market gains while waiting. People have a poor track record of predicting market down-turns. If you are concerned about how exposed to market risk you are in your current positions, then you may be more comfortable with a larger cash position. Savings/CDs are low-interest, but much lower risk. If you currently have no savings (you titled the section savings, but they all look like retirement/investment accounts), then I would recommend focusing on that first, getting a healthy emergency fund saved up, and budgeting for your car/house purchases. There's no way to know if you'd be better off investing everything or piling up cash in the short-term. You have to decide how much risk you are comfortable with and act accordingly."
},
{
"docid": "409854",
"title": "",
"text": "\"You may want to hold onto the $5000 and keep it in savings. Interest rates are for crap, even in \"\"high yield\"\" accounts, so you can rightly not consider it investing. You should be graduating college soon. It would suck if an emergency crops up to prevent you from graduating. I assume that you are going into a high paying career given your nice income from internships. Your best investment is yourself at this point. Completing your education, and obtaining your degree trumps all. You could use that extra 5000 as a hedge/insurance policy/emergency fund to help insure you graduate. Also you are likely to have some moving expenses once you graduate. That 5K could be used to help cover those costs. The worst case is you graduate with no emergencies, you get a nice signing bonus and relocation package, and you still have the $5000. Well you still have until 15 April 2015 to put money in your ROTH for 2014. This holds true for every tax year. Given your current financial status, you are likely to find yourself soon contributing the max to your 401K and ROTH. Once that happens, money beyond that can be invested into mutual funds stocks that are not tax advantaged, real estate, or some other choices. Well then you have some things to think about.\""
},
{
"docid": "505151",
"title": "",
"text": "Buddy I know how a student investment club works, my school had a great one but thanks for the explanation. Doesn't change the fact that a valuation by some college kids is meaningless, but you wouldn't understand that because you're still a 20 year old kid with no industry experience. I love that you're bragging about your college to someone who has already graduated and made it into the industry, shows you really have no accomplishments to speak of."
},
{
"docid": "401248",
"title": "",
"text": "\"Spend less. As @jldugger said, shop around for textbooks. Make sure to look for used books: you can sometimes save a lot of money there. Be smart about food money. I could go to our on-campus grill and get a sandwich and a salad for lunch. If I packed both with toppings, the salad could be a 2nd meal for the same day. If you have the option, get a meal plan that is just 1 meal a day, and eat a lot that meal. Don't do the starbucks \"\"pay several dollars for a coffee each day\"\" thing. Small-ish regular expenses add up quickly. Quit smoking (if applicable). Ditch your car if possible. Some colleges are in cities with good public transportation or are small enough that a bike will do. Cars are very expensive. Try to find free activities to do in your free time. Usually college towns are great places to find free fun. Pick-up sports, student concerts/art shows, playing board/card/video games. Make sure to track how you're spending money to look for areas where you could be spending less. There are plenty of tools available to help with this. Some on-campus jobs involve sitting around and occasionally doing something: IE working the checkout desk at the library. A job like this (if you can find one) can effectively pay you for doing our homework. One other very important college-related financial tip is to not take out more loans than you can afford. I've heard a good rule of thumb is not take our more loans than you expect to earn your first year after graduating. Look up average starting salaries for the career you realistically expect to have after you graduate. If you would need to borrow much more than that to get your degree, rethink your plans. Being a slave to a bank for years is a crappy way to spend your life.\""
},
{
"docid": "198251",
"title": "",
"text": "Forgive me as I do not know much about your fine country, but I do know one thing. You can make 5% risk free guaranteed. How, from your link: If you make a voluntary repayment of $500 or more, you will receive a bonus of 5 per cent. This means your account will be credited with an additional 5 per cent of the value of your payment. I'd take 20.900 of that amount saved and pay off her loan tomorrow and increase my net worth by 22.000. I'd also do the same thing for your loan. In fact in someways it is more important to pay off your loan first. As I understand it, you will eventually have to pay your loan back once your income rises above a threshold. Psychologically you make attempt to retard your future income in order to avoid payback. Those decisions may not be made overtly but it is likely they will be made. So by the end of the day (or as soon as possible), I'd have a bank balance of 113,900 and no student loan debt. This amounts to a net increase in net worth of 1900. It is a great, safe, first investment."
},
{
"docid": "140307",
"title": "",
"text": "most of the people who lurk in money.se will probably tell you to spend as little as possible on a car, but that is a really personal decision. since you live with your parents, you can probably afford to waste a lot of money on a car. on the other hand, you already have a large income so you don't really have the normal graduate excuses for deferring student loans and retirement savings. for the sake of other people in a less comfortable position, here is a more general algorithm for making the decision:"
},
{
"docid": "536098",
"title": "",
"text": "\"In the course of one's spending, it's not tough to find things that are going to be that expensive. A median income is in the $50K range in the US. The diamond folk advertise that one should spend 3 month's salary on an engagement ring. Even with a decent income, I spent zero. My wife was practical, not interested in jewelry, and wanted a big house. The money went to the downpayment. The house cost 2.5 years salary at that time. A car, even used, will cost some month's salary. If that $50K earner is saving, has an emergency account, and is on track with their financial long term goals, a week's pay can buy a nice sized TV. A nice vacation can cost a week's pay to a month's pay. Your question is great, although it shows a concern that's typical very early on in one's career. There are related question here about \"\"how can I spend more?\"\" They tend to come from someone living on a student budget that now has an adult's income from a desirable job. The answer is to sit down, list your monthly spending, properly budget a decent portion for savings, and see how much you have for frivolous spending. Keep in mind, it's easier to sock it away now. No house, no kids, etc. When we were first married, we lived on my wife's income (in effect) and socked mine away. The house tightened the budget, as did the kid. In the end, the PS4 is less about the $400 than it is about the rest of your finances.\""
},
{
"docid": "312752",
"title": "",
"text": "> I'm not so sure that performance measurement of students is all that difficult You assume that student performance is a good proxy for teacher performance. One of the bigger influences on student performance is parent engagement (particularly the parent engagement that happens prior to school age, but also the engagement once they're in school). Often these differences run along socioeconomic lines, and schools are generally divided on neighborhood lines with students attending the school closest to their home. If you judge based on student performance, you'll likely assume that the teachers in the richer neighborhoods are better (students perform better on standardized tests, students are more likely to graduate high school and even go on to college, etc). The fact is, there's a lot of good teachers who take the hard jobs because even a little improvement can go a long way. Put those same teachers in the richer neighborhoods and you might judge things differently."
}
] |
5067 | LLC: Where should the funds for initial startup costs come from? | [
{
"docid": "547301",
"title": "",
"text": "\"Like you said, it's important to keep your personal assets and company assets completely separate to maintain the liability protection of the LLC. I'd recommend getting the business bank account right from the beginning. My wife formed an LLC last year (also as a pass-through sole proprietorship for tax purposes), and we were able to get a small business checking account from Savings Institute and Trust that has no fees (at least for the relatively low quantity of transactions we'll be doing). We wrote it a personal check for startup capital, and since then, the LLC has paid all of its own bills out of its checking account (with associated debit card). Getting the account opened took less than an hour of sitting at the bank. Without knowing exactly where you are in Kentucky, I note that Googling \"\"kentucky small business checking\"\" and visiting a few banks' web sites provided several promising options for no-fee business checking.\""
}
] | [
{
"docid": "460325",
"title": "",
"text": "Recommend using quickbooks for account management. If you use the manufacturing and wholesale you can track POs from vendors, estimates, bill payment quotes and invoicing (there's an editor to customize your set up)Also, most accountants are very familiar with this platform so come tax time they'll be able to give you a hand no problem. For accepting payments I highly suggest asking for checks. If you do accept credit cards keep in mind most payment processors charge a percent (1.5-3%) depending on transaction amounts and quantities of transactions. So you'll want to mark up your products by at least that amount. Another area is sales tax. Since you are not the end user you should be able to avoid sales tax on the items you will be selling to customers. You then charge the customer this sales tax. Not sure about NJ but in Texas we are 8.25%. I then pay the state of Texas the taxes collected quarterly. Edit: also make sure you have separate finances for the LLC. Separate checking, separate credit card, separate everything! If you end up using an account that is tied to you personally then you run into the risk of losing the protective nature of an LLC from a legal standpoint. Edit2: by separate I mean using your IRS issued EIN number to open accounts with the LLC name. When you sign anything on behalf of the company make sure to add the name of the company next to it to show the company is making the signature not you. For instance u/sexlessnights Company name, LLC"
},
{
"docid": "232388",
"title": "",
"text": "\"Previous answers have done a great job with the \"\"Should I invest?\"\" question. One thing you may be overlooking is the question \"\"Am I allowed to invest?\"\" For most offerings of stock in a startup, investors are required to be accredited by the SEC's definition. See this helpful quora post for more information on requirements to invest in startups. To be honest, if a startup is looking for investors to put in \"\"a few thousand dollars\"\" each, this would raise my alarm bells. The cost and hassle of the paperwork to (legitimately) issue shares in that small of number would lead me just to use a credit card to keep me going until I was able to raise a larger amount of capital.\""
},
{
"docid": "66356",
"title": "",
"text": "In a sole proprietorship AND an LLC, the expenses can still be deducted against the profits or losses from the operations. The IRS does not even require that a profit seeking activity be incorporated under its own entity, hence why this is also applicable in a sole proprietorship. From what you've said, there is no reason to use a more complicated and costly corporate structure at all. In comparison, a sole proprietorship and single-member LLC will be completely pass through entities to the IRS and all of their earnings go to you. With the LLC you have the option of letting the LLC's earnings remain with the entity itself, or you can just treat it as your own and pay individual income taxes on it. This has nothing to do specifically with a gambling business and is largely a red herring to your profit seeking motives. Gambling in casino games and lotteries already enjoy favorable tax treatment in some regards. Gambling in capital markets also enjoy a myriad of favorable tax laws. A business entity related to this purpose should be able to deduct costs related to this trade (and pass an audit more convincingly than not having formed an LLC and business bank account)"
},
{
"docid": "135411",
"title": "",
"text": "\"I think your question might be coming from a misunderstanding of how corporate structures work - specifically, that a corporation is a legal entity (sort of like a person) that can have its own assets and debts. To make it clear, let's look at your example. We have two founders, Albert and Brian, and they start a corporation called CorpTech. When they start the company, it has no assets - just like you would if you owned nothing and had no bank account. In order to do anything, CorpTech is going to need some money. So Albert and Brian give it some. They can give it as much as they want - they can give it property if they want, too. Usually, people don't just put money into a corporation without some sort of agreement in place, though. In most cases, the agreement says something like \"\"Each member will own a fraction of the company that is in proportion to this initial investment.\"\" The way that is done varies depending on the type of corporation, but in general, if Albert ends up owning 75% and Brian ends up owning 25%, then they probably valued their contributions at 75% and 25% of the total value. These contributions don't have to be money or property, though. They could just be general \"\"know-how,\"\" or \"\"connections,\"\" or \"\"an expectation that they will do some work.\"\" The important thing is that they agree on the value of these contributions and assign ownership of the company according to that agreement. If they don't have an agreement, then the laws of the state that the company is registered in will say how the ownership is assigned. Now, what \"\"ownership\"\" means can be different depending on the context. When it comes to decision-making, you could \"\"own\"\" one percentage of the company in terms of votes, but when it comes to shares of future profits, you could own a different amount. This is why you can have voting and non-voting versions of a company's stock, for example. So this is a critical point - the ownership of a company is independent of the individual contributions to the company. The next part of your question is related to this: what happens when CorpTech sees an opportunity to make an investment? If it has enough cash on hand (because of the initial investment, or through financing, or reinvested profits), then the decision to make the investment is made according to Albert and Brian's ownership agreement, and they spend it. The money doesn't belong to them individually anymore, it belongs to CorpTech, and so CorpTech is spending it. They are just making the decision for CorpTech to spend it. This is why people say the owners are not financially liable beyond their initial investment. If the deal is bad, and they lose the money, the most they can lose is what they initially put in. On the other hand, if CorpTech doesn't have the money, then they have to figure out a way to get it. They might decide to each put in an amount in proportion to their ownership, so that their stake doesn't change. Or, Albert might agree to finance the deal 100% in exchange for a larger share of ownership. Or, he could agree to fund all of it without a larger stake, because Brian is the one who set the deal up. Or, they might take out a loan, and not need to invest any new money. Or, they might find an investor who agrees to put in the needed money in exchange for a a 51% share, in which case Albert and Brian will have to figure out how to split the remaining 49% if they agree to the deal. The details of how all of this would work depend on the structure (LLC, LLP, C-corp, S-corp, etc), but in general, the idea is that the company has assets and debts, and the owners can have voting rights, equity rights, and rights to future profits in any type of split that they want, regardless of what the companies assets and debts are, or what their initial investment was.\""
},
{
"docid": "518402",
"title": "",
"text": "Yes you should take in the expenses being incurred by the mutual fund. This lists down the fees charged by the mutual fund and where expenses can be found in the annual statement of the fund. To calculate fees and expenses. As you might expect, fees and expenses vary from fund to fund. A fund with high costs must perform better than a low-cost fund to generate the same returns for you. Even small differences in fees can translate into large differences in returns over time. You don't pay expenses, so the money is taken from the assets of the fund. So you pay it indirectly. If the expenses are huge, that may point to something i.e. fund managers are enjoying at your expense, money is being used somewhere else rather than being paid as dividends. If the expenses are used in the growth of the fund, that is a positive sign. Else you can expect the fund to be downgraded or upgraded by the credit rating agencies, depending on how the credit rating agencies see the expenses of the fund and other factors. Generally comparison should be done with funds invested in the same sectors, same distribution of assets so that you have a homogeneous comparison to make. Else it would be unwise to compare between a fund invested in oil companies and other in computers. Yes the economy is inter twined, but that is not how a comparison should be done."
},
{
"docid": "412623",
"title": "",
"text": "\"I'm trying to see where you're coming from -- I'm trying real hard. While I think you're entitled to your opinion, I think it's a bit harsh. Is it the most amazing piece of literature I've ever read? No. That aside, she makes some very good points to the whole \"\"Startup\"\" mentality. While there are companies/startups that don't fit in to that mold exactly, a vast majority of them do.\""
},
{
"docid": "80742",
"title": "",
"text": "I don't know Australian law, but I will give my US perspective here. The custom in the US is for officers and directors to be indemnified by the corporation, and that LLCs have an even broader power to indemnify (even to remove the duty of loyalty!). Moreover, directors will typically be able to purchase D&O insurance to protect them from loss in the event of liability. For US corporations (not LLCs), the duty of care (prudence) requires that directors behave responsibly in weighing major decisions, and consult experts and specialists before coming to rash decisions. It usually becomes a court case in the context of a large public company in the midst of an acquisition event. The only people with standing (in the US) are shareholders. If all the other shareholders are directors, then it may be hard for them to blame you. Additionally, if you are concerned about the propriety of your actions, there may be sources to rely on. First, discussion with your fellow directors can be a helpful guide (though will not usually immunize you from any accusation of wrongdoing), and disclosure tends to cure almost any accusation of breaching the duty of loyalty. Second, boards often secure the advice of legal counsel, and sometimes bring on lawyers as members or will outright hire counsel for the board. Third, there may be services that will provide you with generic advice (e.g. UK Companies House and US-based IOD), which might set you at ease a little bit. I don't know the details of Australian law, as I say. But my sense of common law countries is that, like the US, they are primarily concerned about negligence (incompetently or imprudently neglecting to understand the business and make informed decisions), disloyalty (fraudulently engaging in self-interested transactions that either hurt the company or should have been offered to the company), and recklessness (not bothering to seek out information). As long as you are active, informed, engaged, and not engaging in secret deals outside the company (especially deals where either side is competing with the company), then that would be more than sufficient under the US standard. If you are concerned about liability, then inquire into indemnifications by the company (in the US, the company can usually pay all legal costs of directors), insurance, and legal counsel. I imagine your business partners are no more savvy than you are. My impression is you are overreacting to relatively rare and exotic expression of corporate law (at least in the US). But I'll close by repeating that I don't know Australian corporate law."
},
{
"docid": "359814",
"title": "",
"text": "Starting and running a business in the US is actually a lot less complicated than most people think. You mention incorporation, but a corporation (or even an S-Corp) isn't generally the best entity to start a business with . Most likely you are going to want to form an LLC instead this will provide you with liability protection while minimizing your paperwork and taxes. The cost for maintaining an LLC is relatively cheap $50-$1000 a year depending on your state and you can file the paperwork to form it yourself or pay an attorney to do it for you. Generally I would avoid the snake oil salesman that pitch specific out of state LLCs (Nevada, Delaware etc..) unless you have a specific reason or intend on doing business in the state. With the LLC or a Corporation you need to make sure you maintain separate finances. If you use the LLC funds to pay personal expenses you run the risk of loosing the liability protection afforded by the LLC (piercing the corporate veil). With a single member LLC you can file as a pass through entity and your LLC income would pass through to your federal return and taxes aren't any more complicated than putting your business income on your personal return like you do now. If you have employees things get more complex and it is really easiest to use a payroll service to process state and federal tax with holding. Once your business picks up you will want to file quarterly tax payments in order to avoid an under payment penalty. Generally, most taxpayers will avoid the under payment penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. Even if you get hit by the penalty it is only 10% of the amount of tax you didn't pay in time. If you are selling a service such writing one off projects you should be able to avoid having to collect and remit sales tax, but this is going to be very state specific. If you are selling software you will have to deal with sales tax assuming your state has a sales tax. One more thing to look at is some cities require a business license in order to operate a business within city limits so it would also be a good idea to check with your city to find out if you need a business license."
},
{
"docid": "372777",
"title": "",
"text": "\"Yeah, exactly. The difference is that Ferrari is making money. EDIT: to clarify... - Ferrari sells a niche product to a boutique customer-base willing to pay a premium in terms of both price and purchasing difficulty for exclusive, super-premium cars that are manufactured to artisan standards with little or no regard for cost-efficiency or price-to-value ratio, etc. People buying Ferrari are not looking for a \"\"sensible deal\"\", they are people who can afford to pay for something special, rare, and uncompromising. Tesla is in a similar market-position. - Ferrari actually makes money selling their cars. They do a low-volume boutique business, and charge prices that reflect a low volume of artisan-made specialty product. I am sure that certain special-order customers have to wait some time for delivery, but I drive by a Ferrari dealership every day on my way to work that has maybe 50 Ferraris sitting in a lot, that you can drive off with same-day, if you want. You can literally drive up, test-drive, and buy one tomorrow (if you have the scratch). OTOH... - Teslas are cheaper than Ferraris, but they are still deep into the super-premium price category. They are well outside the \"\"value-proposition\"\" customer-base. They are also (perhaps even more than Ferrari), in a market segment without meaningful competition. There are several super-premium 2-seaters in the $100-200k price range, but I suspect most Tesla shoppers are not mostly comparing them against Porsches or Vipers or Benzes. The all-electric supercar market is not a highly competitive one. - There is massive demand for Teslas, as is evidenced by the extremely thin used market, the year-plus-long wait list, and all that in the face of extremely customer-unfriendly sales/distribution and almost zero marketing... That is, people are waiting up in 18-month long lines to buy cars that they can't inspect at a local dealership, have no way to test-drive, and often have never even seen in person, and they are putting down cash deposits to do so, in amounts that could buy some pretty nice sports cars for the deposit alone. Moreover, it's not like Tesla buyers are going to change their minds and get a Chevy Volt or Honda Insight instead (although they might get both). This is any startups wet-dream: - You have a product that is not only already in production, but that you have been shipping for several years-- you *know* the tooling, manufacturing, support, and delivery costs, because you have actually been *doing it* for *years.* - You not only have no issues whatsoever with regards to building a customer-base, you already have paying customers and genuine orders *already booked* through 2014, more than you can keep up with. - You have a product with massive demand and almost non-existent price-pressure. You've got orders booked over a year out at asking price with virtually zero marketing or advertising, most customers buying site-unseen purely based on concept and reputation, and your customers are paying super-premium prices with no direct competitor alternative. This is a goldmine. This is the kind of thing that business-school textbooks tell you never happens. Rational-market theory says it's impossible to have a big-ticket product offering with essentially unlimited demand and zero meaningful competition. Moreover, this is happening in an environment where the business is not only receiving direct gov't subsidies, but where borrowing costs are close to negative in real dollars. A going concern with booked orders and guaranteed revenue through 2014 should, if anything, be *borrowing from banks to buy back equity*, not selling equity to raise capital. If Tesla needs to raise capital, then something is seriously wrong with the underlying business. As in, wrong enough that its current sales are not only un-profitable, but that currently-booked future sales will continue to be un-profitable for the foreseeable future (otherwise they could just borrow). You can plead \"\"startup\"\" when you have a small customer base but a great concept. You can plead \"\"startup\"\" when you first start shipping product in small quantities at low prices. But you can't plead \"\"startup\"\" when you have been shipping a product for years, and when you have customer-orders booked years out, at full asking price, with no meaningful price or product-competition.\""
},
{
"docid": "222726",
"title": "",
"text": "\"What is the right way to handle this? Did you check the forms? Did the form state $0 tax due on the FTB LLC/Corp form (I'm guessing you operate as LLC/Corp, since you're dealing with the Franchise Tax)? The responsibility is ultimately yours. You should cross check all the numbers and verify that they're correct. That said, if the CPA filled the forms incorrectly based on your correct data - then she made a mistake and can be held liable. CPA filing forms from a jurisdiction on the other end of the country without proper research and knowledge may be held negligent if she made a grave mistake. You can file a law suit against the CPA (which will probably trigger her E&O insurance carrier who'll try to settle if there's a good chance for your lawsuit to not be thrown away outright), or complain to the State regulatory agency overseeing CPAs in the State of her license. Or both. Am I wrong for expecting the CPA should have properly filled out and filed my taxes? No, but it doesn't shift the responsibility from you. How can I find out if the CPA has missed anything else? Same as with doctors and lawyers - get a second opinion. Preferably from a CPA licensed in California. You and only you are responsible for your taxes. You may try to pin the penalties and interest on the CPA if she really made a mistake. California is notorious for very high LLC/Corp franchise tax (cost of registering to do business in the State). It's $800 a year. You should have read the forms and the instructions carefully, it is very prominent. It is also very well discussed all over the Internet, any search engine would pop it up for you with a simple \"\"California Franchise Tax for LLC/Corp\"\" search. CA FTB is also very aggressive in assessing and collecting the fee, and the rules of establishing nexus in CA are very broad. From your description it sounds like you were liable for the Franchise tax in CA, since you had a storage facility in CA. You may also be liable for sales taxes for that period.\""
},
{
"docid": "249831",
"title": "",
"text": "\"Ditto mhoran_psprep. I'm not quite sure what you're asking. Where does the money come from? When someone starts a bank, they normally get together a bunch of investors -- perhaps people they know personally, perhaps they sell stock -- to raise initial capital. But most of the money in the bank comes from depositors. Fundamentally, what a bank does is take money from depositors and loan it to borrowers. (Banks also borrow money from other banks and from the government.) They charge the borrowers interest on the loan, and they pay depositors interest on their deposits. The difference between those two interest rates is where the bank gets their profit. Where does the money go when you pay it back? As mhoran_psprep said, some of it goes to pay interest to the depositors; some of it goes to pay the bank's expenses like employee salaries, cost of the building, etc; and some of it goes as profit to the owners or stockholders of the bank. If you're thinking, \"\"Wow, I'm paying back a whole lot more than I borrowed\"\", well, yes. But remember you're borrowing that money for 20 or 30 years. The bank isn't making very much money on the loan each year that you have it -- these days something like 4 or 5% in the U.S., I don't know what the going rates are in other countries.\""
},
{
"docid": "286525",
"title": "",
"text": "There is a LOT of shuffling going on in the financial services industry. I would not immediately say your advisor is acting in bad faith. The DOL fiduciary changes are quite significant for some brokers. Investment Advisors who are fee-based have less of an impact since they are already fiduciaries. That being said, your issue is still the same. How can you get a low-cost solution to your problem? You might want to consider Vanguard, Fidelity, or another mutual fund company that can keep your costs low. However, you should understand that if you are using mutual funds, the fees are paid one way or another. 12b1 fees, commissions, and expenses are all deducted from the fund's gross returns. You have to choose between low cost and paid advice. you cannot get high-quality low-cost advice. Fortunately, there are a lot of new solutions out there, robo-advisors, indexing, asset allocation mutual funds, ETFs, and more. Do a bit of homework and you should be able to come up with a reasonable solution. I hope you found this helpful. Kirk"
},
{
"docid": "157234",
"title": "",
"text": "\"I wouldn't go quite that far. It's dreadfully formatted, and not brilliantly written, I'll give you that. I'd guess it's written by someone who believes they they have a flair for storytelling and the dramatic, and writes as they would talk. Assume Amy Hoy is a slightly melodramatic awkward gal soliloquizing at you, and this all seems a little more tolerable. But I find her points somewhat solid. I think she's presenting from a ideological standpoint where safety and security are paramount, and the risk associated with startups is \"\"too much risk.\"\" But I think the point thats he's making about the poisonous rhetoric associated with \"\"glorious death\"\" and \"\"working for a startup\"\" being very similar is well thought out and quite an interesting perspective. I go to a school whose idea of \"\"business\"\" is \"\"entrepreneurship.\"\" I left their business program because my career goals simply cannot be sustained by entrepreneurship until a very long while into my career, and I found the \"\"here's how to have a startup\"\" focus of the bulk of the courses essentially valueless to me where I am now. Having seen what the author refers to as the \"\"hagiography\"\" of successful startups (great word, by-the-by), I cannot help but recount those courses and the ways we were sold on this ideology. Much was made about how much money was made by successful startups. Much was made of the independence, the power, the *glory*, of winning the startup lotto and making it big. The guys that did it young were revered and lauded as the greatest of our generation. No mention was made of the failures. No mention was made of the failure rate. No mention was made of the costs associated with failure. No mention was made of the people who got fucked as these entrepreneurial saints made their fortunes. Further, the ones that got the most attention were the ones who went back and did it a few more times. Anyone clever, who won big and cashed out and quit while ahead was mentioned as a success, but their retirement or cashing out went unmentioned. Some sort of shameful detail, maybe. The guys that won big and went back and tried again were praised for their determination and vigor. If they set themselves back to square one betting on an unsuccessful attempt, that was unmentioned. VCs were praised as the greatest thing that happened to entrepreneurship. We were given no real warnings about \"\"hey, those contracts can be kinda shady sometimes\"\" or \"\"they want a *big* cut, yo.\"\" Instead, they were the grease to our machine. It was a money making machine. A machine of winners. Of the great men and women of our generation. Of everything that is good about western society. And we are letting our generation down if we don't play. Seriously. I had a prof tear a strip off a kid for asking something along the lines of \"\"but what's wrong with working for a company that already exists and can pay a steady wage?\"\" The prof got started in on how our generation is listless coasters and just fall into things and accomplish little on our own. He moved into how it's merely riding someone else's coattails and it's not really achieving anything for yourself. The tl;dr of what was a fifteen minute in-class excoriation of a student who asked what I thought was a reasonable question was \"\"If you're not signing your own paycheques, you are a huge failure and are contributing nothing of note to society or it's progress.\"\" This particular rant pretty much sealed my withdrawal from the business aspect of my school. If my very goals render me a huge failure in my profs' eyes, I'm not interested in what they have to say or in contributing to their employment at the university. But off that somewhat-personal tangent, the culture of \"\"glory of the startup\"\" that Amy Hoy somewhat ineloquently complains about in her article certainly exists. In the form she's complaining about. Your rebuttal makes sense too - it's not that VC are or aren't a risk, it's not that people don't have the right and the opportunity to take that risk if they see it as a valid opportunity to make money, it's not like it's fair to expect a VC to fund you without seeing a profit in the long run. But you're rebutting her thesis with something that doesn't actually address it. The culture that she's complaining about exists, in my experience. The culture glosses over so much of what you rebutted her article with, that risks exist and that failures exist and that there are a lot of harsh realities associated with the startup world. The culture does, indeed, glorify all the best parts of startup-dom and creates a toughness challenge that renders \"\"no, this may not be a good idea\"\" unfalsifiable because failure are personal while successes are cultural. Successful startups and people who have done very well by them are held up as everything startups are supposed to be and look at how their hard work paid off - and if yours doesn't work, it is entirely that you didn't work hard enough. Someone who has bought in wholesale holds that there are no \"\"bad\"\" startups - any startup can be successful, you just need to bust balls working harder if you fail. Startups are akin to gambling. They're not the roulette of \"\"it's all luck,\"\" but closer to five card stud - skill plays a lot of a role, but there's still luck involved. Startup culture represents all this as far closer to Texas Hold 'Em, where luck in minimized, where skill and diligence play the greatest role. It assumes that everyone going in already knows all the things you brought up in your rebuttal, without ever actually giving them that information. It keeps pimping \"\"just work harder\"\" without really saying \"\"Hey, guys - check the odds you're playing with **and know when to hold and when to fold**.\"\"\""
},
{
"docid": "96110",
"title": "",
"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?"
},
{
"docid": "75195",
"title": "",
"text": "I have a very similar situation doing side IT projects. I set up an LLC for the business, created a separate bank account, and track things separately. I then pay myself from the LLC bank account based on my hours for the consulting job. (I keep a percentage in the LLC account to pay for expenses.) I used to do my taxes myself, but when I created this arrangement, I started having an accountant do them. An LLC will not affect your tax status, but it will protect you from liability and make things more accountable come tax time."
},
{
"docid": "73427",
"title": "",
"text": "Funds earned and spent before opening a dedicated business account should be classified according to their origination. For example, if your business received income, where did that money go? If you took the money personally, it would be considered either a 'distribution' or a 'loan' to you. It is up to you which of the two options you choose. On the flip side, if your business had an expense that you paid personally, that would be considered either a 'contribution of capital' or a 'loan' from you. If you choose to record these transactions as loans, you can offset them together, so you don't need two separate accounts, loan to you and loan from you. When the bank account was opened, the initial deposit came from where? If it came from your personal funds, then it is either a 'contribution of capital' or a 'loan' from you. From the sound of your question, you deposited what remained after the preceding income/expenses. This would, in effect, return the 'loan' account back to zero, if choosing that route. The above would also be how to record any expenses you may pay personally for the business (if any) in the future. Because these transactions were not through a dedicated business bank account, you can't record them in Quickbooks as checks and deposits. Instead, you can use Journal Entries. For any income received, you would debit your capital/loan account and credit your income account. For any expenses, you would debit the appropriate expense account and credit your distribution/loan account. Also, if setting up a loan account, you should choose either Current Asset or Current Liability type. The capital contribution and distribution account should be Equity type. Hope this helps!"
},
{
"docid": "11557",
"title": "",
"text": "Where are you operating your business and how is it structured? DBA, LLC? How do you plan on taxing the business? You can purchase whatever hardware you want and resale at whatever price you want. You may be able to contact a vendor and open a dealer account. This means they'll will give you a price break if you purchase X amount of volume but this may require more upfront capital. Warranty will probably be best to be done under your name. Most manufacture warranties require proof of purchase from an approved vendor. If you're buying and reselling at a higher cost then the original receipt will show your profits. Likewise, you can sale the hardware at cost and make all your money on labor. This would allow you to pass the warranty responsibility to the customer. Depending on the customer’s site you may have to mount your routers, repeaters and access points in hard to reach places. The customer might prefer to call you and have you take care of it from there. The way I would do it structure the installations by square footage and predicted users. The greater the square footage the more hardware you’ll need. Offer a remote support plan at a reasonable rate. For 20/month you will provide tear 1 support which can include troubleshooting dead access points remotely, changing network names, and providing up to X amount of network reports. ( Ubiquiti offers network monitoring for free in their suite. You would just be interpreting this information) For issues that require you to come to site you can charge X amount of dollars per visit plus parts and labor. I would offer on the spot replacement for hardware under warranty for a very small fee and then you can ship off the defective hardware and have it replaced. If you do purchase with amazon I know they offer extended plans on a lot of their electronics. It would be worth considering these plans and adding the cost to the hardware you’re reselling. Most of these plans simply write you a check for defective hardware after you ship them in. I would highly suggest going with a business structure that protects your personal assets such as an LLC. I recommend this because you will be proving a service to other people and you may be blamed for damages. If you are found to be at fault they company takes the hit, not you. edit: Also, you can take advantage of amazon's two day shipping. When a customer contracts you for a job simply ask for 50% deposit and a 4 day notice. When you receive the deposit place the order on amazon for the hardware. This will mean less money out of your pocket."
},
{
"docid": "357717",
"title": "",
"text": "\"Not to detract from the other answers at all (which are each excellent and useful in their own right), but here's my interpretation of the ideas: Equity is the answer to the question \"\"Where is the value of the company coming from?\"\" This might include owner stakes, shareholder stock investments, or outside investments. In the current moment, it can also be defined as \"\"Equity = X + Current Income - Current Expenses\"\" (I'll come back to X). This fits into the standard accounting model of \"\"Assets - Liabilities = Value (Equity)\"\", where Assets includes not only bank accounts, but also warehouse inventory, raw materials, etc.; Liabilities are debts, loans, shortfalls in inventory, etc. Both are abstract categories, whereas Income and Expense are hard dollar amounts. At the end of the year when the books balance, they should all equal out. Equity up until this point has been an abstract concept, and it's not an account in the traditional (gnucash) sense. However, it's common practice for businesses to close the books once a year, and to consolidate outstanding balances. When this happens, Equity ceases to be abstract and becomes a hard value: \"\"How much is the company worth at this moment?\"\", which has a definite, numeric value. When the books are opened fresh for a new business year, the Current Income and Current Expense amounts are zeroed out. In this situation, in order for the big equation to equal out: Assets - Liabilities = X + Income - Expeneses the previous net value of the company must be accounted for. This is where X comes in, the starting (previous year's) equity. This allows the Assets and Liabilities to be non-zero, while the (current) Income and Expenses are both still zeroed out. The account which represents X in gnucash is called \"\"Equity\"\", and encompasses not only initial investments, but also the net increase & decreases from previous years. While the name would more accurately be called \"\"Starting Equity\"\", the only problem caused by the naming convention is the confusion of the concept Equity (X + Income - Expenses) with the account X, named \"\"Equity\"\".\""
},
{
"docid": "400500",
"title": "",
"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."
}
] |
5080 | Is there a standard or best practice way to handle money from an expiring UTMA account? | [
{
"docid": "256055",
"title": "",
"text": "\"I'd first put it in CDs or other short term account. Get through school first, then see where you land. If you have income that allows you to start a Roth IRA, I'd go for that, but keep it safe in case you actually need it back soon. After school, if you don't land a decent job fast, this money might be needed to live on. How long will it last if you take a few months to find work? If you do find a good job, moving, and setting up an apartment has a cost. Once you're there, I'd refer you to the many \"\"getting started\"\" Q&As on this site.\""
}
] | [
{
"docid": "388295",
"title": "",
"text": "\"Banks have a financial, and regulational duty called \"\"Know your customer\"\", established to avoid a number of historical problems occurring again, such as money laundering, terrorism financing, fraud, etc. Thanks to the scale, and scope of the problem (millions of customers, billions of transactions a day), the way they're handling this usually involves fuzzy logics matching, looking for irregular patterns, problem escalation, and other warning signs. When exceeding some pre-set limit, these signal clues are then filtered, and passed on for human inspection. Needless to say, these algorithms are not perfect, although, thanks to financial pressure, they are improving. In order to understand why your trading account has been suspended, it's useful to look at the incentives: false positives -suspending your trade, and assuming you guilty until proven otherwise- could cost them merely your LTV (lifetime value of customer -how much your business brings in as profit); while false negatives -not catching you while engaging in activities listed above- might cost them multi-month investigations, penalties, and court. Ultimately, this isn't against you. I've been with the bank for 15 years and the money in the accounts has been very slowly accumulated via direct-deposit paychecks over that time. From this I gather the most likely explanation, is that you've hit somekind of account threshold, that the average credit-happy customers usually do not exceed, which triggered a routine checkup. How do you deal with it? Practice puppetry! There is only one way to survive angry customers emotionally: you have to realize that they’re not angry at you; they’re angry at your business, and you just happen to be a convenient representative of that business. And since they’re treating you like a puppet, an iconic stand-in for the real business, you need to treat yourself as a puppet, too. Pretend you’re a puppeteer. The customer is yelling at the puppet. They’re not yelling at you. They’re angry with the puppet. Your job is to figure out, “gosh, what can I make the puppet say that will make this person a happy customer?” In an investigation case, go with boredom: The puppet doesn't care, have no feelings, and is eternally patient. Figure out what are the most likely words that will have the matter \"\"mentally resolved\"\" from the investigator's point of view, tell them what they have to hear, and you'll have case closed in no time. Hope this helps.\""
},
{
"docid": "579604",
"title": "",
"text": "I've spoken with a number of expatriates in Canada and Canadian bankers over the past few days. Here's what I've been able to piece together. This was surprising to me. As I understand it, the only sure-fire way to wire transfer funds from an arbitrary bank to another arbitrary bank on a different continent on the first try is by using the IBAN number of the destination account. IBAN seems to be the only account number format that is anywhere close to a worldwide standard. If the destination account does not have an IBAN number (like those in Canada and USA), then you rely on a degree of wisdom on the part of the sending bank(er) to format your numbers (account/institution/transit/etc) in such a way that the transfer successfully reaches the destination account. If any given sending bank has not sent funds to another given non-IBAN bank recently, then there is an element of uncertainty as to how the destination account's numbers have to be entered into the sending bank's system. The de facto practice seems to be to develop the wisdom of what works and what doesn't by attempting to transfer small sums until they succeed. Then the sending bank uses the exact same method to transfer the large sum as they used for the small sum that succeeded. It seems like there are some things you can do pro-actively increase your odds that a wire transfer to a non-IBAN account will succeed. Ultimately you want to provide four different pieces of information that are especially important for non-IBAN wire transfers: All of your numbers in all applicable compositions - Wire transfer number formats are often actually multiple fundamental numbers that are concatenated, prefixed, and suffixed. I suspect that some wire transfer senders actually need to enter the fundamental numbers separately or in different compositions. Suppose the sending bank needs, for example, the institution identifer. The ABA routing number does contain, among other things, the institution identifier. However, you should provide the institution number separately in your wire transfer instructions because the sending bank might need the institution number and will probably have no idea how to extract it from the ABA routing number. For Canada, I think the number you should provide are as follows:"
},
{
"docid": "310032",
"title": "",
"text": "I use two measures to define investment risk: What's the longest period of time over which this investment has had negative returns? What's the worst-case fall in the value of this investment (peak to trough)? I find that the former works best for long-term investments, like retirement. As a concrete example, I have most of my retirement money in equity, since the Sensex has had zero returns over as long as a decade. Since my investment time-frame is longer, equity is risk-free, by this measure. For short-term investments, like money put aside to buy a car next year, the second measure works better. For this purpose, I might choose a debt fund that isn't the safest, and has had a worst-case 8% loss over the past decade. I can afford that loss, putting in more money from my pocket to buy the car, if needed. So, I might choose this fund for this purpose, taking a slight risk to earn higher return. In any case, how much money I need for a car can only be a rough guess, so having 8% less than originally planned may turn out to be enough. Or it may turn out that the entire amount originally planned for is insufficient, in which case a further 8% shortfall may not be a big deal. These two measures I've defined are simple to explain and understand, unlike academic stuff like beta, standard deviation, information ratio or other mumbo-jumbo. And they are simple to apply to a practical problem, as I've illustrated with the two examples above. On the other hand, if someone tells me that the standard deviation of a mutual fund is 15%, I'll have no idea what that means, or how to apply that to my financial situation. All this suffers from the problem of being limited to historical data, and the future may not be like the past. But that affects any risk statistic, and you can't do better unless you have a time machine."
},
{
"docid": "305901",
"title": "",
"text": "\"It's a problem from hell because all solutions have drawbacks/unintended consequences and because they are all pretty complex to implement in practice. Breaking up the big banks so that no bank is enough to bring down the economy with it is the strongest move, but is riddled with problems when you start looking at it practically. How do you determine the \"\"maximum size\"\" a bank should have? Should it be based on assets? Systemic importance (i.e. interconnectedness with other banks)? How do you enforce it? Banks will find ways to offload assets, etc. into special purpose corporations to get around the laws somehow. How do you compensate for the fact that size does help financial efficiency in some ways? Imposing higher capital requirements is the next solution. But that too is not so easy to implement with full success in practice. What should be classified as a low-risk asset? How much capital do you require against a CDO vs a Mexican government bond? How often do you need to revise these standards? At what point does the cost of higher capital requirements start to strangle lending and financial flows? The weaker maneuvers are things like constant government-imposed stress tests, orderly resolution mechanisms, higher standards for internal risk management practices, etc. but those may not be adequate and also have their implementation problems.\""
},
{
"docid": "201736",
"title": "",
"text": "What is a good resource to learn about options trading strategies? Options are a quite advanced investment form, and you'd do well to learn a lot about them before attempting to dive into this fairly illiquid market. Yale's online course in financial markets covers the Options Market and is a good starting point to make sure you've got all the basics. You may be familiar with most of it, but it's a decent refresher on lingo and Black-Scholes. How can I use options to establish some cash flow from long standing investments while minimizing capital gains expenses? This question seems designed to get people to talk about covered calls. Essentially, you sell call contracts: you let people buy things you already have at a price in the future, at their whim. They pay you for this option, though usually not much if the options aren't in the money. You can think of this as trading any return above the call option for a bit of extra cash. I don't invest with taxable accounts, but there are significant tax consequences for options. Because they expire, there will be turnover in your portfolio, and up front income when you take the sell side. So if you trade in options with close expiration dates, you'll probably end up with a lot of short-term capital gains, which are treated as normal income. One strategy is to trade in broad-based stock index options, which have favorable tax treatments. Some people have abused this though to disguise normal income as capital gains, so it could go away. Obviously the easy approach is to just use a tax advantaged account for options trading. An ETF might also be able to handle the turnover on your behalf, for example VIX is a series of options on S&P500 options. A second strategy I've heard of is buying calls and puts at a given strike price. For example, if you bought Dec '13 calls and puts on SPX @ 115 today, it would cost you about $35 dollars. If the price moves more than 35 dollars away from 115 by DEC '13 (in either direction), you've made a profit. If you reflect on that for a bit, you'll see why VIX is considered a volatility index. I guess I should mention that shorting a stock and buying a put option at the market price are very similar, with the exception that your loss is limited to the price of the option. Is there ever an instance where options investing is not speculative? The term 'speculative' is not well defined. For many people, the answer is no. It's very easy to just buy put options and wait for prices to fall, or call options and wait for prices to rise. Moreover, the second strategy above essentially gives you similar performance to a stock without paying full price. These all fall under the headline of increasing a risk portfolio rather than decreasing it, which I figure is a decent definition of speculation. On the other hand, there are ways to use options minimize risk rather than increase it. You can buy underwater options as portfolio insurance, if your portfolio drops below a certain amount, you still have the right to sell it at a higher one. And the Case-Schiller index is run in part, on the hopes that one day there might be a thriving market for real estate options (or futures). When you buy a home or lend money to someone to buy one, you could buy regional Case-Schiller options to protect you if the regional market tanks. But in all of these cases, it's required for someone else to take the opposite trade. Risk isn't reduced, it's traded around. So technically, there is a speculative element to these as well. I think the proper question here is whether speculation is present, but whether speculation can be put to good ends. Without speculators, the already very thin market for options would shrivel faster."
},
{
"docid": "484149",
"title": "",
"text": "mhoran answered the headline question, but you asked - Could someone shed some light on and differentiate between a retirement account and alternative savings plans? Retirement accounts can contain nearly anything that one would consider an investment. (yes, there are exception, not the topic for today). So when one says they have an S&P fund or ETF, and some company issued Bonds, etc, these may or may not be held in a retirement account. In the US, when we say 'retirement account,' it means a bit more than just an account earmarked for that goal. It's an account, 401(k), 403(b), IRA, etc, that has a special tax status. Money can go in pre-tax, and be withdrawn at retirement when you are in a lower tax bracket. The Roth flavor of 401(k) or IRA lets you deposit post-tax money, and 'never' pay tax on it again, if withdrawn under specific conditions. In 2013, a single earner pays 25% federal tax on taxable earnings over $36K. But a retiree with exactly $46K in gross income (who then has $10K in standard deduction plus exemption) has a tax of $4950, less than 11% average rate on that withdrawal. This is the effect of the deductions, 10% and 15% brackets. As with your other question, there's a lot to be said about this topic, no one can answer in one post. That said, the second benefit of the retirement account is the mental partitioning. I have retirement money, not to be touched, emergency money used for the broken down car or appliance replacement, and other funds it doesn't feel bad to tap for spending, vacations, etc. Nothing a good spreadsheet can't handle, but a good way to keep things physically separate as well. (I answered as if you are in US, but the answer works if you rename the retirement accounts, eg, Canada has similar tax structure to the US.)"
},
{
"docid": "575662",
"title": "",
"text": "\"I can sell a PUT on it a bit out of the money, and I seemingly \"\"win\"\" either way: i.e. make money on selling the PUT, and either I get to pick up the stock cheaper if XYZ goes down, or the PUT expires worthless. In 2008, I see a bank stock (pick one) trading at $100. I buy that put from you, a $90 strike, and pay you $5 for the option. The bank blew up, and trades for a dollar. I then buy the $1 share and sell it to you for $90. You made $500 on the sale of the put, but lost $8900 when it went bad. You don't win either way, there is a chart you can construct (or a table) showing your profit or loss for every price of the underlying stock. When selling a put, you need to know what happens if the stock goes to zero since the odds of such an occurrence is non-trivial. A LEAP is already an option. With the new coding scheme for options, I'm not sure there's really any distinction between a LEAP and standard option, the LEAP just starts with a long-till-expiration time. There are no options on LEAPS that I am aware of, as they are options already.\""
},
{
"docid": "267206",
"title": "",
"text": "\"The text of the Uniform Transfers to Minors Act states (Section 14, paragraph a): A custodian may deliver or pay to the minor or expend for the minor's benefit so much of the custodial property as the custodian considers advisable for the use and benefit of the minor, without court order and without regard to (i) the duty or ability of the custodian personally or of any other person to support the minor, or (ii) any other income or property of the minor which may be applicable or available for that purpose. Unfortunately, it is pretty hard to make the case that giving the money to her siblings is for the \"\"use and benefit\"\" of your daughter. However, when your daughter reaches the age of maturity, any money left in the UTMA account becomes hers. She, at that time, could give money to her siblings, if she chooses. Perhaps you and your father could talk to her about your father's wishes for this money, and that would show her that she should do so at that time. If you don't follow these rules, then your daughter or your father could sue you at any point in the future.\""
},
{
"docid": "245705",
"title": "",
"text": "Basically speaking, Japanese bank accounts are identified by three numbers: The four digit Bank number. For example 0005 is Mitsubishi Tokyo UFJ Bank The three digit Branch number. For example 001 = Main branch for Mitsubishi. The account number. This is your account number. Your ATM Cash Card and passbook will have these numbers on it in the format XXXX-YYYY-ZZZZZZZZ. When you use an ATM to send money to someone else (like your landlord) you but in these three numbers or use the search feature instead for the first two. This works the same whether you are talking about Mitsubishi, Mizuho, etc. The only thing to note is that while real banks use locations for the branch number (i.e. Ueno branch, Marunouchi branch, etc.), online only banks like Sony Bank (MoneyKit), Rakuten Bank, SBi, etc. use fake locations like colors, etc. This doesn't matter much though. Japan Post bank is technically not a bank and uses a totally different numbering system, though recently they have come up with a strange formula to convert your JP Bank account number into a normal bank account number so you can send payments to it as shown above). All of this is basically for domestic transfers only, though. If you want to transfer money internationally, there are two basic ways: The official way. Go to your bank overseas, and give them the SWIFT code and account code for your bank (likely the branch code will be necessary as well). The problem here is that they will likely charge a high fee for sending the money, and your bank in Japan may also charge a high fee for receiving it! (In addition to any currency conversion fees). A second problem is that only the very major banks even have SWIFT codes. Use a money transfer service that can handle both Japan and your other country. For example, you can use 2 Paypal accounts (Only in the direction of From Japan To overseas, though!), or you can use something like MoneyBookers Either way IBAN is a European standard and isn't used in Japan. If you just want to spend some money in Japan, the most convenient way is probably a foreign visa debit card. Or, you can use a foreign ATM card in Japan to withdraw cash and then deposit it into your Japanese account."
},
{
"docid": "258227",
"title": "",
"text": "How long is a piece of string? This will depend on many variables. How many trades will you make in a day? What income would you be expecting to make? What expectancy do you need to achieve? Which markets you will choose to trade? Your first step should be to develop a Trading Plan, then develop your trading rules and your risk management. Then you should back test your strategy and then use a virtual account to practice losing on. Because one thing you will get is many losses. You have to learn to take a loss when the market moves against you. And you need to let your profits run and keep your losses small. A good book to start with is Trade Your Way to Financial Freedom by Van Tharp. It will teach you about Expectancy, Money Management, Risk Management and the Phycology of Trading. Two thing I can recommend are: 1) to look into position and trend trading and other types of short term trading instead of day trading. You would usually place your trades after market close together with your stops and avoid being in front of the screen all day trying to chase the market. You need to take your emotion out of your trading if you want to succeed; 2) don't trade penny stocks, trade commodities, FX or standard stocks, but keep away from penny stocks. Just because you can buy them for a penny does not mean they are cheap."
},
{
"docid": "47383",
"title": "",
"text": "The United States is no longer on a gold standard, and the value of its currency is solely founded on the productivity of its economy. So I don't think there's any practical reason for the United States government to explicitly sell off a lot of gold to force the price to crash. In fact I would expect that the price of gold has very little interest for the Fed, or anyone else in a position of economic power in the government. I believe that we still have large reserves of it, but I have no idea what they are intended for, aside from being a relic of the gold standard. Best guess is that they'll be held on to just in case of an international trend back towards the gold standard, although that is unlikely on any time frame we would care about."
},
{
"docid": "200912",
"title": "",
"text": "I found that the Target Date funds for Vanguard have a lower minimum, only $1,000. They are spaced every 5 years from 2010 to 2060. They are available as: General Account, IRA, UGMA/UTMA and Education Saving Account."
},
{
"docid": "70443",
"title": "",
"text": "Intuitive? I doubt it. Derivatives are not the simplest thing to understand. The price is either in the money or it isn't. (by the way, exactly 'at the money' is not 'in the money.') An option that's not in the money has time value only. As the price rises, and the option is more and more in the money, the time value drops. We have a $40 stock. It makes sense to me that a $40 strike price is all just a bet the stock will rise, there's no intrinsic value. The option prices at about $4.00 for one year out, with 25% volatility. But the strike of $30 is at $10.68, with $10 in the money and only .68 in time premium. There's a great calculator on line to tinker with. Volatility is a key component of options trading. Think about it. If a stock rises 5%/yr but rarely goes up any more or less, just steady up, why would you even buy an option that was even 10% out of the money? The only way I can describe this is to look at a bell curve and how there's a 1/6 chance the event will be above one standard deviation. If that standard deviation is small, the chance of hitting the higher strikes is also small. I wrote an article Betting on Apple at 9 to 2 in which I describe how a pair of option trades was set up so that a 35% rise in Apple stock would return 354% and Apple had two years to reach its target. I offer this as an example of options trading not being theory, but something that many are engaged in. What I found curious about the trade was that Apple's volatility was high enough that a 35% move didn't seem like the 4.5 to 1 risk the market said it was. As of today, Apple needs to rise 13% in the next 10 months for the trade to pay off. (Disclosure - the long time to expiration was both good and bad, two years to recover 35% seemed reasonable, but 2 years could bring anything in the macro sense. Another recession, some worldwide event that would impact Apple's market, etc. The average investor will not have the patience for these long term option trades.)"
},
{
"docid": "134761",
"title": "",
"text": "As someone who works for a company that deploys POS systems in Canada, I can tell you that your best bet would be to have a configuration option that lets the client decide what to do. If they have a business practice that would allow for a sale total to be $0.01 or $0.02, they should first evaluate their business practice. If you're building a POS system to deploy in Canada, I'm sure you have access to resources (potential clients) who would already know how they would want to handle this. Ask them."
},
{
"docid": "492346",
"title": "",
"text": "\"This chart concerns an option contract, not a stock. The method of analysis is to assume that the price of an option contract is normally distributed around some mean which is presumably the current price of the underlying asset. As the date of expiration of the contract gets closer the variation around the mean in the possible end price for the contract will decrease. Undoubtedly the publisher has measured typical deviations from the mean as a function of time until expiration from historical data. Based on this data, the program that computes the probability has the following inputs: (1) the mean (current asset price) (2) the time until expiration (3) the expected standard deviation based on (2) With this information the probability distribution that you see is generated (the green hump). This is a \"\"normal\"\" or Gaussian distribution. For a normal distribution the probability of a particular event is equal to the area under the curve to the right of the value line (in the example above the value chosen is 122.49). This area can be computed with the formula: This formula is called the probability density for x, where x is the value (122.49 in the example above). Tau (T) is the reciprocal of the variance (which can be computed from the standard deviation). Mu (μ) is the mean. The main assumption such a calculation makes is that the price of the asset will not change between now and the time of expiration. Obviously that is not true in most cases because the prices of stocks and bonds constantly fluctuate. A secondary assumption is that the distribution of the option price around the mean will a normal (or Gaussian) distribution. This is obviously a crude assumption and common sense would suggest it is not the most accurate distribution. In fact, various studies have shown that the Burr Distribution is actually a more accurate model for the distribution of option contract prices.\""
},
{
"docid": "46291",
"title": "",
"text": "Think of it this way: 1) You buy 1k in call options that will let you buy 100k of stock when they expire in the money in a year. 2) You take the 99k you would have spent on the stock and invest it in a risk free savings account. 3) Assume the person who sold you the call, immediately hedges the position by buying 100k of stock to deliver when the options expire. The amount of money you could make on risk free interest needs to be comparable to the premium you paid the option writer for tying up their capital, or they wouldn't have made the trade. So higher risk free rates would mean a higher call price. NOTE: The numbers are not equal because of the risk in writing the option, but they will move the same direction."
},
{
"docid": "69395",
"title": "",
"text": "\"Your plan already answers your own question in the best possible way: If you want to be able to make the most possible profit from a large downward move in a stock (in this case, a stock that tracks gold), with a limited, defined risk if there is an upward move, the optimal strategy is to buy a put option. There are a few Exchange Traded Funds (ETFs) that track the price of gold. think of them as stocks that behave like gold, essentially. Two good examples that have options are GLD and IAU. (When you talk about gold, you'll hear a lot about futures. Forget them, for now. They do the same essential thing for your purposes, but introduce more complexity than you need.) The way to profit from a downward move without protection against an upward move is by shorting the stock. Shorting stock is like the opposite of buying it. You make the amount of money the stock goes down by, or lose the amount it goes up by. But, since stocks can go up by an infinite amount, your possible loss is unlimited. If you want to profit on a large downward move without an unlimited loss if you're wrong and it goes up, you need something that makes money as the stock drops, but can only lose so much if it goes up. (If you want to be guaranteed to lose nothing, your best investment option is buying US Treasuries, and you're technically still exposed to the risk that US defaults on its debt, although if you're a US resident, you'll likely have bigger problems than your portfolio in that situation.) Buying a put option has the exact asymmetrical exposure you want. You pay a limited premium to buy it, and at expiration you essentially make the full amount that the stock has declined below the strike price, less what you paid for the option. That last part is important - because you pay a premium for the option, if it's down just a little, you might still lose some or all of what you paid for it, which is what you give up in exchange for it limiting your maximum loss. But wait, you might say. When I buy an option, I can lose all of my money, cant I? Yes, you can. Here's the key to understanding the way options limit risk as compared to the corresponding way to get \"\"normal\"\" exposure through getting long, or in your case, short, the stock: If you use the number of options that represent the number of shares you would have bought, you will have much, much less total money at risk. If you spend the same \"\"bag 'o cash\"\" on options as you would have spent on stock, you will have exposure to way more shares, and have the same amount of money at risk as if you bought the stock, but will be much more likely to lose it. The first way limits the total money at risk for a similar level of exposure; the second way gets you exposure to a much larger amount of the stock for the same money, increasing your risk. So the best answer to your described need is already in the question: Buy a put. I'd probably look at GLD to buy it on, simply because it's generally a little more liquid than IAU. And if you're new to options, consider the following: \"\"Paper trade\"\" first. Either just keep track of fake buys and sells on a spreadsheet, or use one of the many online services where you can track investments - they don't know or care if they're real or not. Check out www.888options.com. They are an excellent learning resource that isn't trying to sell you anything - their only reason to exist is to promote options education. If you do put on a trade, don't forget that the most frustrating pitfall with buying options is this: You can be basically right, and still lose some or all of what you invest. This happens two ways, so think about them both before you trade: If the stock goes in the direction you think, but not enough to make back your premium, you can still lose. So you need to make sure you know how far down the stock has to be to make back your premium. At expiration, it's simple: You need it to be below the strike price by more than what you paid for the option. With options, timing is everything. If the stock goes down a ton, or even to zero - free gold! - but only after your option expires, you were essentially right, but lose all your money. So, while you don't want to buy an option that's longer than you need, since the premium is higher, if you're not sure if an expiration is long enough out, it isn't - you need the next one. EDIT to address update: (I'm not sure \"\"not long enough\"\" was the problem here, but...) If the question is just how to ensure there is a limited, defined amount you can lose (even if you want the possible loss to be much less than you can potentially make, the put strategy described already does that - if the stock you use is at $100, and you buy a put with a 100 strike for $5, you can make up to $95. (This occurs if the stock goes to zero, meaning you could buy it for nothing, and sell it for $100, netting $95 after the $5 you paid). But you can only lose $5. So the put strategy covers you. If the goal is to have no real risk of loss, there's no way to have any real gain above what's sometimes called the \"\"risk-free-rate\"\". For simplicity's sake, think of that as what you'd get from US treasuries, as mentioned above. If the goal is to make money whether the stock (or gold) goes either up or down, that's possible, but note that you still have (a fairly high) risk of loss, which occurs if it fails to move either up or down by enough. That strategy, in its most common form, is called a straddle, which basically means you buy a call and a put with the same strike price. Using the same $100 example, you could buy the 100-strike calls for $5, and the 100-strike puts for $5. Now you've spent $10 total, and you make money if the stock is up or down by more than $10 at expiration (over 110, or under 90). But if it's between 90 and 100, you lose money, as one of your options will be worthless, and the other is worth less than the $10 total you paid for them both.\""
},
{
"docid": "227399",
"title": "",
"text": "It depends on the broker, each one's rules may vary. Your broker should be able to answer this question for how they handle such a situation. The broker I used would execute and immediately sell the stock if the option was 25 cents in the money at expiration. If they simply executed and news broke over the weekend (option expiration is always on Friday), the client could wake up Monday to a bad margin call, or worse."
},
{
"docid": "458535",
"title": "",
"text": "I think you have already outlined for yourself most of the pros and cons of each method of giving. It sounds to me like you have some desire to control how the money is spent, or at least reserve the right not to give it to a child who will waste it (according to your definition). If you set up an UTMA/UGMA account, or just give the money directly each year as a birthday gift, you are surrendering control of the money. It's a gift and is no longer yours to direct. If you set up a 529, you at least restrict the money to a particular, useful purpose. Moreover, if you retain ownership of the 529, you can take the money back, albeit with a tax penalty to yourself. If you do hold a 529 in your name, but for a child's benefit, there are a couple of things to consider with respect to future financial aid (this is from recent experience--my in-laws have 529s for our children, both of whom are currently in college). A 529 not owned by the student or the student's parent is not reported as an asset (of the child or the parent) on the Free Application for Federal Student Aid (FAFSA). However, once such a 529 is used to pay college expenses, the amount of those payments does get reported on the following year's FAFSA, and counts as untaxed income for the purposes of figuring the Expected Family Contribution (EFC). Untaxed income is assessed towards the EFC at 50%. In contrast, parental assets are assessed at around 7%, if I recall correctly, and student assets at around 35%. Student-owned 529s are assessed at the rate of parental assets, which is an advantage. If the amount you will set aside is less than the cost of one year of college, you can avoid the disadvantage of the untaxed income assessment by just using the entire 529 for the final year of school, since there will be no FAFSA for the following year. It occurs to me that there is one other way you can give to them that you did not mention, and may make you more comfortable in terms of encouraging some positive behavior. Namely, save the money in a self-owned account, then, when they are old enough to get a job that provides a W-2 showing declared, earned income, you can use the savings to fund a Traditional or Roth IRA for them, up to the limit allowed each year, until the money you set aside is exhausted. The Roth is a better long-term savings vehicle, but the Traditional would carry bigger penalties for early withdrawal and would therefore be less tempting to draw on."
}
] |
5083 | Co-signer deceased | [
{
"docid": "305509",
"title": "",
"text": "Co-signing is not the same as owning. If your elderly lady didn't make any payments on the loan, and isn't on the ownership of the car, and there was no agreement that you would pay her anything, then you do not owe either her or her daughter any money. Also the loan is not affecting the daughter's credit, and the mother's credit is irrelevant (since she is dead). However you should be aware that the finance company will want to know about the demise of the mother, since they can no longer make a claim against her if you default. I would start by approaching the loan company, telling them about the mother's death, and asking to refinance in your name only. If you've really been keeping up the payments well this could be OK with them. If not I would find someone else who is prepared to co-sign a new loan with you, and still refinance. Then just tell the daughter that the loan her mother co-signed for has been discharged, and there is nothing for her to worry about."
}
] | [
{
"docid": "177023",
"title": "",
"text": "Yes. If the deceased owned the policy, the proceeds are considered part of the estate. In the specific case where the estate is worth (this year 2011) more than $5M, there may be estate taxes due and the insurance would be prorated to pay its portion of that estate tax bill. Keep in mind, the estate tax itself is subject to change. I recall when it was a simple $1M exemption, and if I had a $1M policy and just say $100K in assets, there would have been tax due on the $100K. In general, if there's any concern that one's estate would have the potential to owe estate tax, it's best to have the insurance owned by the beneficiary and gift them the premium cost each year."
},
{
"docid": "594964",
"title": "",
"text": "\"Yes. Because you co-signed the loan, you are responsible for the loan just as much as she was. When you co-sign a loan, you are essentially saying \"\"I will pay this loan if the other person can't.\"\"\""
},
{
"docid": "340831",
"title": "",
"text": "At least five of my co-workers are currently re-financing through Amerisave. Four have had a wonderful experience. The fifth has been dealing with a representative who constantly misunderstands him, asks for duplicate paperwork, and is in general fairly annoying to deal with. He is willing to go through the hassle because he found the lowest rates through them. All five co-workers recommend Amerisave despite this one co-worker's difficulties. Another person I know has refinanced through mortgagefool.com twice with good results. In general I think online lenders are like brick and mortar lenders in that some will be good, some will be not-so-good."
},
{
"docid": "362066",
"title": "",
"text": "\"You are not allowed to take a retirement account and move it into the beneficiary's name, an inherited IRA is titled as \"\"Deceased Name for the benefit of Beneficiary name\"\". Breaking the correct titling makes the entire account non-retirement and tax is due on the funds that were not yet taxed. If I am mistaken and titling remained correct, RMDs are not avoidable, they are taken based on your Wife's life expectancy from a table in Pub 590, and the divisor is reduced by one each year. Page 86 is \"\"table 1\"\" and provides the divisor to use. For example, at age 50, your wife's divisor is 34.2 (or 2.924%). Each year it decrements by 1, you do not go back to the table each year. It sounds like the seller's recommendation bordered on misconduct, and the firm behind him can be made to release you from this and refund the likely high fees he took from you. Without more details, it's tough to say. I wish you well. The only beneficiary that just takes possession into his/her own account is the surviving spouse. Others have to do what I first described.\""
},
{
"docid": "333042",
"title": "",
"text": "\"You get to determine who gets help and who doesn't and how much. Even if you are a perfectly benevolent person and have never shown favor to one person over another because of how you felt or any other reason. That does not mean all of your co-workers are just as benevolent. I bet you know at least one \"\"questionable\"\" person related to your office. At least one \"\"favor\"\" for a friend or a co-workers friend.\""
},
{
"docid": "393553",
"title": "",
"text": "There is a difference between an owner and a signer. An owner is the legal owner of the funds. A signer has access to withdraw the funds. In most cases, when a new personal account is opened the name is added as an owner&signer. However, that is not always the case. A person could be an owner, but not a signer, in a custodial arrangement. For example, a minor child may be an owner only on their account with a custodial parent listed as a signer. The minor could not withdraw from the account. A person could be a signer, but not an owner, in a business or estate/trust account. The business or estate would be the owner with individuals listed as signers only. The business employees do not own the funds, they are only allowed to withdraw and disburse the funds on behalf of the company. The creditor can only garnish/withhold funds that are owned by the indebted. If the second person on the account is only a signer, those funds cannot be withheld as part of a judgment against the second person (they don't own those funds). However, simply titling the second person as a signer only is not sufficient. If you share access with the second person and allow them to spend the money for their own benefit, they are no longer just a signer. They have become an owner because you are sharing your funds with them. Think of the business relationship as an example. The employee is a signer so they can withdraw funds and pay business expenses, like the electric bill. If the employee withdrew funds and bought herself a new dress, she is stealing because she does not own those funds. If the second person on the account buys things for themselves, or transfers some of the money into their own account, they are demonstrating that more than a signer-only relationship exists. A true signer-only relationship is where the individual can only withdraw funds on the owner's behalf. For example, the owner is out of town and needs a bill paid, the signer can write a check and pay the bill for the owner. A limited power of attorney may be worth looking into. With a limited POA, the owner can define the scope and expiration of the power of attorney. With this arrangement, the second person becomes an executor of the owner under certain circumstances. For example, you could write a power of attorney that states something like: John Smith is hereby granted the limited power to withdraw funds from account 1234, on deposit at Anytown Bank, for the purpose of paying debts and obligations and otherwise maintain my estate in the event of my incapacitation or inability to attend to my own affairs. This Power of Attorney shall expire on it's fifth anniversary unless renewed. If the person you have granted the power of attorney abuses their access, you could sue them and you would only have to demonstrate that they overstepped the scope of their power."
},
{
"docid": "241751",
"title": "",
"text": "This is based on evidence over the past 35 years which coincides with the largest technology revolution in human history. Those automated jobs were going away even if minimum wage was cut. Our business community is enamored of technology solutions that enrich them in the short term and to hell with the law no term. To keep telling the public this then prevents people demanding a livable wage in fear of no job at all. It keeps working class people complacent with the abuses in their work environment, such as forbidding legal breaks, not paying overtime that is due, last minute schedule changes, unpaid 24 on call status and less than 8 hours between shifts. Fear is the most powerful mute button in the world. Long term, profits will begin to slide slowly as we are seeing in retail right now. It will be blamed on Internet shopping, millennials are minimalists or student loan payments. This doesn't explain deceased shopping by other age groups, but shhh, not suppose to notice. As more and more people are left in poverty or near poverty by lack of wage increases, the number of customers fall. When it hits the middle class and they stop shopping so much, our economy will be in a persistent recession. Layoffs to reduce expenses leads to fewer customers for products leads to decreased profits leads to layoffs.... Automation will, of course, reduce the expenses in the short term, but will also eliminate the market. All the white collar workers that think they are immune will be shocked when it hits their industry, but it only makes sense in myopic business circles to eliminate higher wages workers, too. Sometimes technology is the problem, not the solution. I expect to be banned for saying so."
},
{
"docid": "438524",
"title": "",
"text": "One of the brightest network engineers I've worked with went to get his GED while he worked with me since he was a high school dropout. I dropped out of EE, and have been highly recruited because of my experience. My former manager got his experience in the military, no degree... and another bright co-worker had his degree in film. Sure many of my co-workers have BSEEs, a couple from MIT and Stanford, even had a PhD on my team... but often you'd never be able to tell who had what. So you are exactly right... a witch-hunt because of a music degree is bullshit."
},
{
"docid": "361263",
"title": "",
"text": "\"Cosigning is explicitly a promise that you will make the payments if the primary signer can not. Don't do it unless you are able to handle the cost and trust the other party will \"\"make you whole\"\" when they can... which means don't do it for anyone you would not lend your money to, since it comes out to about the same level of risk. Having agreed, you're sorta stuck with your ex-friend's problem. I recommend talking to a lawyer about the safest way get out of this. It isn't clear you can even sue the ex-friend at this point.\""
},
{
"docid": "18792",
"title": "",
"text": "\"You are confining the way you and the other co-founders are paid for guaranteeing the loan to capital shares. Trying to determine payments by equity distribution is hard. It is a practice that many small companies particularly the ones in their initial stage fall into. I always advise against trying to make payments with equity, weather it is for unpaid salary or for guaranteeing a loan such as your case. Instead of thinking about a super sophisticated algorithm to distribute the new shares between the cofounders and the new investors, given a set of constraints, which will most probably fail to make the satisfactory split, you should simply view the co-founders as debt lenders for the company and the shareholders as a capital contributor. If the co-founders are treated as debt lenders, it will be much easier to determine the risk compensation for guaranteeing the loan because it is now assessed in monetary units and this compensation is equal to the risk premium you see fit \"\"taking into consideration the probability of default \"\". On the other hand, capital contributors will gain capital shares as a percentage of the total value of the company after adding SBA loan.\""
},
{
"docid": "53447",
"title": "",
"text": "Is this a reasonable goal or will it be impossible to get a loan with my almost non-existent income? I know I can put estimated rental revenue as income, but I'm not sure if I would qualify. Banks typically only count rental income after you've been collecting it for two years, and at that point the banks will count 75% of it as income for loan qualification purposes. You'd have to qualify for the mortgage without the potential rental income. Currently that means a 43% debt (including proposed mortgage) to gross income ratio. Even if you qualify, you have to be prepared to handle repairs, HVAC/water-heater could fail on day 1, and tenants have a right to withhold rent if some repairs aren't made. You also have to be able to weather non-payment/eviction of a tenant. You could find a co-signor, maybe go in on a house with a friend, but there are risks and complications that can arise there if a party becomes unable to pay, or deciding how to split equity and expenses. If you had the income/capital to comfortably pull it off without tenants, then that'd be a great situation, college rentals tend to be lucrative (I'd recommend getting tenants with parental co-signers to reduce risk). If you qualify but would be in trouble quickly if one tenant stopped paying, or a major appliance needed to be replaced, then it's probably not worth the risk."
},
{
"docid": "48664",
"title": "",
"text": "Your first question:Does the successor have to pay taxes for the full amount of the inherited TFSA? No, there is no taxes to pay, in most TFSA situations, there is no tax payable. If it was a beneficiary instead of a successor, there would be taxes on revenues generated only, but this is not your case. Your second question: The TFSA of the deceased holder will still increase the contribution room over the years? No, the contribution applies only to the one person alive. Whether he, or she, has one or two TFSA is irrelevant to the contribution limit. Successor holder, Contribution limit."
},
{
"docid": "166087",
"title": "",
"text": "\"ITIN's can be granted for deceased minors via Form W-7: Choose \"\"Dependent of U.S. citizen/resident alien\"\" as the reason for applying. You are required to write \"\"DECEASED\"\" across the top of the form, and you will have to provide a birth certificate and potentially other supporting documentation. The directions are not super clear for this use-case, but I've found that IRS support for ITIN is pretty easy to work with. The directions also have offices/numbers for overseas help, which I'd wager will be better able to assist with your scenario. Edit: I made a poor assumption on answering that the original returns filed were rejected but had been filled out properly, when filing with a deceased dependent without an SSN you typically write 'DIED' in the spot for the dependent's SSN. If the original returns were not filed this way, and accompanied by supporting documentation (record of live birth and record of death), then it may be best to start there, but it sounds like you already got bounced around and had it suggested that the lack of a number was an issue.\""
},
{
"docid": "487179",
"title": "",
"text": "\"You are asking about a common, simple practice of holding the mortgage when selling a house you own outright. Typically called seller financing. Say I am 70 and wish to downsize. The money I sell my house for will likely be in the bank at today's awful rates. Now, a buyer likes my house, and has 20% down, but due to some medical bills for his deceased wife, he and his new wife are struggling to get financing. I offer to let them pay me as if I were the bank. We agree on the rate, I have a lien on the house just as a bank would, and my mortgage with them requires the usual fire, theft, vandalism insurance. When I die, my heirs will get the income, or the buyer can pay in full after I'm gone. In response to comment \"\"how do you do that? What's the paperwork?\"\" Fellow member @littleadv has often posted \"\"You need to hire a professional.\"\" Not because the top members here can't offer great, accurate advice. But because a small mistake on the part of the DIY attempt can be far more costly than the relative cost of a pro. In real estate (where I am an agent) you can skip the agent to hook up buyer/seller, but always use the pro for legal work, in this case a real estate attorney. I'd personally avoid the general family lawyer, going with the specialist here.\""
},
{
"docid": "206109",
"title": "",
"text": "maybe it would turn into an Oligopoly on it's own, but regulation as that pervasive is what I'm trying to avoid here. I advocate Worker Co-ops as the best examples for these firms because they actually allow a sense of welfare taken up by the workers who can self provide with actual trades (and because their co-ownership allows a voluntary loophole in minimum wage laws, you get a real chance to vindicate/prove Adam Smith's theory of flexible prices and wages based on economic activity.). With self-provided welfare, the Government can pull out of both transfer payments as well as financial regulations because these markets have become more differentiated to a diversity of opinions, so Government can step back and focus on its more important role of Researcher and Developer, which it tends to do better at than other roles. Firms can't do this if they are breaking even, like they would in perfect competition."
},
{
"docid": "456466",
"title": "",
"text": "For the pet owners it is very difficult to come out of the loss after the death of your beloved pet. Pet owners needs support in these times and by joining a group of friends can help to overcome the loss in many ways. Also get a cremation urn from Reallyurns to keep the ashes and remind the good times shared with the deceased."
},
{
"docid": "257100",
"title": "",
"text": "You need to redomesticate it. Usually that involves filing Articles of Dissolution with your current jurisdiction of Org and Articles of Incorp or domestication with the new state. Note that there are some states that are not open to redomestication (and Cali always tends to be an oddball). You can probably call up the Secretary of States' offices in both jurisdictions and someone will give you the heads up about what to file. Google search could help. Also a CO lawyer could probably do this for about $1k. Another way around this might be to form a CO LLC and then merge the CA LLC into the surviving CO. In the event of both a redomestication or merger, you want to check your org docs and any and all outside contracts. Redomestication/merger can trigger change of control provisions that may open you up to penalties or termination of those contracts. As always the best legal advice I can give on Reddit would be to find a lawyer for this."
},
{
"docid": "534290",
"title": "",
"text": "Trusts are a way of holding assets with a specific goal in mind. At its simplest, a trust can be used to avoid probate, a sometimes lengthy process in which a will is made public along with the assets bequeathed. A trust allows for fast transfer and no public disclosure. Depending on the current estate tax laws (the death tax) a trust can help preserve an estate exemption. e.g. Say the law reverts back to a $1M exemption. Note, this is $1M per deceased person, not per beneficiary. My wife and I happened to have assets of exactly $2M, and I die tomorrow. Now she has $2M, and when she passes, the estate has that $2M and estate taxes are based on this total, $1M fully taxed. But - If we set up trusts, that first million can be put into trust on my death, the interest and some principal going to the surviving spouse each year, but staying out of the survivor's estate. Second spouse dies, little or no tax due. This is known as a bypass trust. Another example is a spendthrift trust. Say, hypothetically, my sister in law can't save a nickel to save her life. Spends every dime and then some. So the best thing my mother in law can do to provide for her is to leave her estate in trust with specific instructions on how to distribute some percent each year. This is not a tax dodge of any kind, it's strictly to protect the daughter from her own irresponsibility. A medical needs trust is a variant of the above. It can provide income to a disabled person without impacting their government benefits adversely. This scratches the surface, illustrating how trusts can be used, there are more variation on this, but I believe it covers the basics. With the interest in this topic, I'm adding another issue where the trust can be useful. In my article On my Death, Please, Take a Breath I described how an inherited IRA was destroyed by ignorance. The beneficiary, fearing the stock market, withdrew it all and was nailed by taxes. He was on social security and no other income, so by taking small withdrawals each year would have had nearly no tax due. (and could have avoided 'market' risk by selling within the IRA and buying treasuries or CDs.) He didn't need a trust of course, just education. The deceased, his sister, might have used a Trust to manage the IRA and enforce limited withdrawals. Mixing IRAs and trust is complex, but the choice between a $2000 expense to create a trust or the $40K tax bill he got is pretty clear to me. He took pride in having sold out as the market soon tanked, but he could have avoided the tax loss as well. He was confusing the account (In this case an IRA, but it could have been a 401(k) or other retirement account) with the investments it contained. One can, and should, keep the IRA in tact, and simply adjust the allocation according to one's comfort level. Note - Inheritance tax laws change frequently, and my answer above was an attempt to be generic. The current (2014) code allows $5.34M to be left by one decedent with no estate tax."
},
{
"docid": "438516",
"title": "",
"text": "Yes a minor can have a checking account, or a savings account. They can even get a debit card. The money in that bank account belongs to the minor. The account can be established as soon as the are assigned their social security number. If they are a newborn the account is generally set up as a joint account with a parent to facilitate transferring money into the account. For us the money was birthday gifts from relatives. The IRS allows minors to receive small amounts of interest, or other unearned income, tax free. In 2015 that is up to $1,050, if they have no earned income. When bank rates were higher some parent's wanted to put all their saving under their child's name, of course in the eyes of the law the money belonged to the child and was only to be spent for items that benefited the child. Credit cards are another matter because the CARD act in 2009 required lenders to only give credit to those under 21 who had proof of sufficient income, unless there was a co-signer. You do have to be careful when talking about owning a house as minor. They generally can't sign a contract. You could gift the house to the minor, but if it was time to sell it the courts would insist on appointing a legal guardian to represent the interest of the child. That could add significant time to the transaction."
}
] |
5083 | Co-signer deceased | [
{
"docid": "138845",
"title": "",
"text": "\"People act like lawsuits are the end of the world, her suing shouldn't be considered a threat, it should be considered the accurate course of action to resolve contractual obligations. Of course, it would be convenient if she did nothing at all! If you believe her real goal is to \"\"get it off her credit\"\", then have her come refinance with you. This will give you the opportunity to not have her on it and you to get different terms. Of course, if your credit still is poor then this option also exacerbates the inconvenience. None of the options sounds like they will ruin your credit (unless you are scrounging for cash through credit facilities to pay her off). You have several completely benign options available.\""
}
] | [
{
"docid": "334133",
"title": "",
"text": "1. BRK.A is a listed Co so it doesnt face redemption problems on its funds. 2. BRK.A is a listed Co, so the valuation of its holdings is depending on its own auditor w/ little scrutiny, aka, it mark could be more flexible and doesn't hurt its asset book."
},
{
"docid": "135659",
"title": "",
"text": "By in large they are. I've worked in this industry. Inversions work because the US has CFC tax and the highest tax rate in the world, 35%. This means that any money made by the company in any part of the world is subject to US tax less tax paid locally. E.g. Burger king in Dublin pays 12.5% locally and 22.5% to the US. The company inverts to a country that doesn't have CFC then transfers all the non-US companies to the other jurisdiction. Now what also tends to happen is income stripping such as intra-group, inter-company loans with the interest stripping earnings. That or intellectual property. However a company can only do that where the new group is made up of 80% other co and 20% existing co, at a minimum. This doesn't happen too much. Have a look at this article by a top Irish law firm: http://www.arthurcox.com/wp-content/uploads/2014/07/April2014_SpotlightOn.pdf"
},
{
"docid": "75235",
"title": "",
"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)."
},
{
"docid": "362445",
"title": "",
"text": "\"This is the best tl;dr I could make, [original](http://thehill.com/homenews/administration/348374-top-trump-economic-adviser-told-dems-only-morons-pay-the-estate-tax) reduced by 71%. (I'm a bot) ***** > Gary Cohn, the director of the National Economic Council, told a group of Senate Democrats during a meeting earlier this year that &quot;Only morons pay the estate tax,&quot; according to a New York Times report. > President Trump has publicly railed against the estate tax - often referred to as a &quot;Death tax&quot; - and has vowed to fully repeal it. > The estate tax is levied on the transfer of property for deceased individuals with an estate worth more than $5.49 million. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6xuvf3/top_trump_economic_adviser_told_dems_only_morons/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~203616 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*: **tax**^#1 **Cohn**^#2 **percent**^#3 **Trump**^#4 **Times**^#5\""
},
{
"docid": "438524",
"title": "",
"text": "One of the brightest network engineers I've worked with went to get his GED while he worked with me since he was a high school dropout. I dropped out of EE, and have been highly recruited because of my experience. My former manager got his experience in the military, no degree... and another bright co-worker had his degree in film. Sure many of my co-workers have BSEEs, a couple from MIT and Stanford, even had a PhD on my team... but often you'd never be able to tell who had what. So you are exactly right... a witch-hunt because of a music degree is bullshit."
},
{
"docid": "151803",
"title": "",
"text": "\"What's the value of the scholarship, and is it administered by itself or by the university? If by itself, the financial return discussed above drives. If by the university, they create the tuition, so it gets more interesting. If this is something that is administered and backstopped by the university, then keep in mind that while it may be named the \"\"John Doe Memorial Scholarship\"\" with $30000 in it's account under the endowment, the university overall is likely to cut some number of students' tuition in financial aid packages anyway. Let's say they substitute a generic tuition adjustment in past years with this happens-to-be-named \"\"John Doe Memorial Scholarship\"\" moving forward: the university can do this as long as they are not constrained in pricing power by laws and financial aid customs. There's the finance answer, and there's the fact that a university can create a \"\"coupon\"\" indefinitely (Similar in concept to the price discrimination where Proctor and Gamble can launch a new flavor of Tide at a high price to maintain the market position, and flood marketing channels with coupons) Also the university might find it to be an inexpensive benefit to the faculty to create a ceremony around a valued, deceased professor; collecting funds from other professors or staff to partially pay for it at finance price or even a slight loss.\""
},
{
"docid": "45373",
"title": "",
"text": "If you have a deposit account (like a checking account) and a credit card at the same bank, it is common for the bank to have a clause that lets them make automatic payments to the credit card. I've also seen this happen in the case of death where the deceased person had $2,000 in a checking account and owed some on a credit card. Upon death, the bank took the $2,000 and applied it to the credit card without asking."
},
{
"docid": "421652",
"title": "",
"text": "First, if it is in any way a joint account, the debt usually goes to the surviving person. Assets in joint accounts usually have their own instructions on how to disperse the assets; for example, full joint bank accounts usually immediately go to the other name on the account and never become part of the estate. Non-cash assets will likely need to be converted to cash and a fair market valuation shown to the probate court, unless the debts can be paid without using them and they can be transferred to next of kin. If, after that, the deceased has any assets at all, there is usually (varies by state) a legally defined order in which debtor types must be paid. This is handled by probating the estate. There is a period during which you publish a death notice and then wait for debt claims and bills to arrive. Then pay as many as possible based on the priority, and inform the others the holder is deceased and the estate is empty. This sometimes needs to be approved by a judge if the assets are less than the debts. Then disperse remaining assets to next of kin. If there are no assets held by just the deceased, as you get bills you just send a certified copy of the death certificate, tell them there is no estate, then forget about them. A lawyer can really help in determining which need to be paid and to work through probate, which is not simple or cheap. But also note that you can negotiate and sometimes get them to accept less, if there are assets. When my mother died, the doctors treating her zeroed her accounts; the hospitals accepted a much reduced total, but the credit cards wanted 100%."
},
{
"docid": "592406",
"title": "",
"text": "This is why I've come into the view that most companies should be worker co-ops. There are a few key sectors of the economy like health care and banking that probably shouldn't have a profit motive to them. Turn everything else into worker co-ops. That way you, as the workers, do earn that money through your own blood sweat and tears with the added benefits of not having a CEO that makes over 300x as much as you while doing away with wage slavery. Its strange that we say we value democracy in our society, except in our companies which look more like serfdom."
},
{
"docid": "287458",
"title": "",
"text": "What do you see as the advantage of doing this? When you buy a house with a mortgage, the bank gets a lien on the house you are buying, i.e. the house you are buying is the collateral. Why would you need additional or different collateral? As to using the house for your down payment, that would require giving the house to the seller, or selling the house and giving the money to the seller. If the house was 100% yours and you don't have any use for it once you buy the second house, that would be a sensible plan. Indeed that's what most people do when they buy a new house: sell the old one and use the money as down payment on the new one. But in this case, what would happen to the co-owner? Are they going to move to the new house with you? The only viable scenario I see here is that you could get a home equity loan on the first house, and then use that money as the down payment on the second house, and thus perhaps avoid having to pay for mortgage insurance. As DanielAnderson says, the bank would probably require the signature of the co-owner in such a case. If you defaulted on the loan, the bank could then seize the house, sell it, and give the co-owner some share of the money. I sincerely doubt the bank would be interested in an arrangement where if you default, they get half interest in the house but are not allowed to sell it without the co-owner's consent. What would a bank do with half a house? Maybe, possibly they could rent it out, but most banks are not in the rental business. So if you defaulted, the co-owner would get kicked out of the house. I don't know who this co-owner is. Sounds like you'd be putting them in a very awkward position."
},
{
"docid": "151121",
"title": "",
"text": "Bank of America is the worst. Once I had a joint account with another individual that I had funded out of my account to make payroll. When I found out that he had screwed two other people by stealing the payroll money I decided to disburse it myself and transferred it back to my corporate account on which I was the only signer. He went back to the bank and effected a withdrawal from my account to the tune of tens of thousands of dollars, put the money in the joint account and removed me as a signer. The bank wouldn't give me my money back and I never collected from him. Another time I tried to close my sons' accounts which were in inactive status. Every day for a week they told me they could not close the account until it was active, but they were working on making it active. Chase could do this in a minute. I finally went to a branch and loudly informed the manager that maybe the bank was insolvent and that I should call the FDIC to see why they won't release my money. He wanted to take me into his office. I told him loudly, I know all about DDAs, Savings and CDs, I have run deposit operations for a major bank and wrote software to process them. Just put a hold on the account, write me two cashiers check and offset them with a suspense voucher. You do know how to write a suspense voucher don't you? It's just a general ledger entry to a suspense account. Well he was so embarassed he would do anything to get me out of the branch and gave me the cashier's checks. Fuck B of A."
},
{
"docid": "166087",
"title": "",
"text": "\"ITIN's can be granted for deceased minors via Form W-7: Choose \"\"Dependent of U.S. citizen/resident alien\"\" as the reason for applying. You are required to write \"\"DECEASED\"\" across the top of the form, and you will have to provide a birth certificate and potentially other supporting documentation. The directions are not super clear for this use-case, but I've found that IRS support for ITIN is pretty easy to work with. The directions also have offices/numbers for overseas help, which I'd wager will be better able to assist with your scenario. Edit: I made a poor assumption on answering that the original returns filed were rejected but had been filled out properly, when filing with a deceased dependent without an SSN you typically write 'DIED' in the spot for the dependent's SSN. If the original returns were not filed this way, and accompanied by supporting documentation (record of live birth and record of death), then it may be best to start there, but it sounds like you already got bounced around and had it suggested that the lack of a number was an issue.\""
},
{
"docid": "594964",
"title": "",
"text": "\"Yes. Because you co-signed the loan, you are responsible for the loan just as much as she was. When you co-sign a loan, you are essentially saying \"\"I will pay this loan if the other person can't.\"\"\""
},
{
"docid": "358768",
"title": "",
"text": "\"My thoughts on loaning money to friends or family are outlined pretty extensively here, but cosigning on a loan is a different matter. It is almost never a good idea to do this (I say \"\"almost\"\" only because I dislike absolutes). Here are the reasons why: Now, all that said, if my sister or parents were dying of cancer and cosigning a loan was the only way to cure them, I might consider cosigning on a loan with them, if that was the only option. But, I would bet that 99.9% of such cases are not so dire, and your would-be co-borrower will survive with out the co-signing.\""
},
{
"docid": "529435",
"title": "",
"text": "\"This forum is not intended to be a discussion group, but I would like to add a different perspective, especially for @MrChrister, on @littleadv's rhetorical question \"\"... estates are after-tax money, i.e.: income tax has been paid on them, yet the government taxes them again. Why?\"\" For the cash in an estate, yes, that is after-tax money, but consider other assets such as stocks and real estate. Suppose a rich man bought stock in a small computer start-up company at $10 a share about 35 years ago, and that stock is now worth $500 a share. The man dies and his will bequeaths the shares to his son. According to US tax law, the son's basis in the shares is $500 per share, that is, if the son sells the shares, his capital gains are computed as if he had purchased the shares for $500 each. The son pays no taxes on the inheritance he receives. The deceased father's last income tax return (filed by the executor of the father's will) does not list the $490/share gain as a capital gain since the father did not sell the stock (the gain is what is called an unrealized gain), and so there is no income tax due from the father on the $490/share. Now, if there is no estate tax whatsoever, the father's estate tax return pays no tax on that gain of $490 per share either. Would this be considered an equitable system? Should the government not tax the gain at all? It is worth noting that it would be possible for a government to eliminate estate taxes entirely, but instead have tax laws that say that unrealized gains on the deceased's property would be taxed (as capital gains) on the deceased's final tax return.\""
},
{
"docid": "241751",
"title": "",
"text": "This is based on evidence over the past 35 years which coincides with the largest technology revolution in human history. Those automated jobs were going away even if minimum wage was cut. Our business community is enamored of technology solutions that enrich them in the short term and to hell with the law no term. To keep telling the public this then prevents people demanding a livable wage in fear of no job at all. It keeps working class people complacent with the abuses in their work environment, such as forbidding legal breaks, not paying overtime that is due, last minute schedule changes, unpaid 24 on call status and less than 8 hours between shifts. Fear is the most powerful mute button in the world. Long term, profits will begin to slide slowly as we are seeing in retail right now. It will be blamed on Internet shopping, millennials are minimalists or student loan payments. This doesn't explain deceased shopping by other age groups, but shhh, not suppose to notice. As more and more people are left in poverty or near poverty by lack of wage increases, the number of customers fall. When it hits the middle class and they stop shopping so much, our economy will be in a persistent recession. Layoffs to reduce expenses leads to fewer customers for products leads to decreased profits leads to layoffs.... Automation will, of course, reduce the expenses in the short term, but will also eliminate the market. All the white collar workers that think they are immune will be shocked when it hits their industry, but it only makes sense in myopic business circles to eliminate higher wages workers, too. Sometimes technology is the problem, not the solution. I expect to be banned for saying so."
},
{
"docid": "487179",
"title": "",
"text": "\"You are asking about a common, simple practice of holding the mortgage when selling a house you own outright. Typically called seller financing. Say I am 70 and wish to downsize. The money I sell my house for will likely be in the bank at today's awful rates. Now, a buyer likes my house, and has 20% down, but due to some medical bills for his deceased wife, he and his new wife are struggling to get financing. I offer to let them pay me as if I were the bank. We agree on the rate, I have a lien on the house just as a bank would, and my mortgage with them requires the usual fire, theft, vandalism insurance. When I die, my heirs will get the income, or the buyer can pay in full after I'm gone. In response to comment \"\"how do you do that? What's the paperwork?\"\" Fellow member @littleadv has often posted \"\"You need to hire a professional.\"\" Not because the top members here can't offer great, accurate advice. But because a small mistake on the part of the DIY attempt can be far more costly than the relative cost of a pro. In real estate (where I am an agent) you can skip the agent to hook up buyer/seller, but always use the pro for legal work, in this case a real estate attorney. I'd personally avoid the general family lawyer, going with the specialist here.\""
},
{
"docid": "15322",
"title": "",
"text": "As a 19 year old if she can get SSDI instead of SSI her benefit amount will be calculated by her parents' contributions ... if either parent is deceased or over 62 then she qualifies for SSDI instead of SSI and I believe she would receive the full benefit amount. I'd guess that would be something in the $1400+ range. I see no reason why you couldn't get married either way ... at least not from a financial perspective. I'd be worried about being on the hook for her medical expenses. Therapy, meds, hospital visits, side-effects, etc ... that's a good way to spend the rest of your life owing millions."
},
{
"docid": "70885",
"title": "",
"text": "You may not have a good choice until you start that job. $2,000 is awfully low for a car, so it could be very risky. But you may not be able to get a loan until you start the new job. I would talk to a bank or credit union to get an idea of how much, if anything, you could borrow at this time. If you have a letter offering you the job that might help to get a loan. There are dealers who will finance a very cheap used car for anybody, but that kind of deal is likely to be at a very high interest rate and should be avoided. You could wind up with a debt and no car. One other possibility is to have a co-signer, such as a parent or other relative. That could make getting a car loan easy."
}
] |
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