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Dipto084

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fiqa

like 0

[ "426076", "466317" ]

[ "\"Let me do the math. .6% * (not large) = really tiny. Since \"\"not large\"\" = \"\"small\"\" , etc. I suggest that even a small chance that you need to explain this to anyone in the future is a sign to avoid the risk. Yes, there are times that it's illegal. A real estate office may not deposit escrow funds into anything but a segregated escrow account. In your case, even if legal, it messes up 'the books' and can cost you more in grief than the 'tiny amount' saves you in cash.\"", "buy a cashiers check with the cash (a CRT will be nec if over 10 K) and deposit the cashiers check" ]

[ "78626" ]

[ "The expense ratio reduces the return of the ETF; your scenario of paying 100.0015 is that of a load. Most (all?) ETFs can be bought without paying a load (sales charge as a percent of amount invested), and some ETFs can be bought without paying a brokerage fee (fixed or variable charge for a buy transaction just like buying any other stock through the brokerage) because the brokerage has waived it. Your broker might charge fees for both buying and selling shares in an ETF, but in any case, this is quite separate from the expense ratio." ]

[ "584917" ]

[ "When you get into reading Revenue Rulings and Treasury Regulations - I'd suggest hiring a professional to do that for you. Especially since you also need to assure that the new stock does indeed qualify as QSBS. However, from the revenue ruling you quoted it doesn't sound like there's any other requirement other than reporting the subsequent purchase as a loss on your schedule D. I wouldn't know, however, if there are subsequent/superseding revenue rulings on the matter since 1998. Professional tax adviser (EA/CPA licensed in your State) would have the means and the ability to research this and give you a proper advice." ]

[ "208938", "378161", "365197" ]

[ "I don't think you can compare savings accounts and peer-to-peer lending. The former is a liquid way of stashing some money away (IOW you can get at it pretty much any time you want) whereas the latter is extremely illiquid (you only get your money back if and when the loan has been repaid). Also, as mentioned by the other posters, there is a risk attached to p2p lending, even if the borrowers are vetted by the p2p lending platform. You're essentially taking the same risks that a bank would take when writing a couple of personal loans, and that's quite far removed from a safe haven for your cash. If you have enough money to invest (not save, invest) then it might be worth putting a small amount into p2p lending, but it's anything but an alternative to a savings account.", "\"That argument is an argument for investing generally, not peer-to-peer lending per se, and the argument as phrased (\"\"thus you should invest your money at a Peer-to-peer loan platform\"\") is a false dichotomy. That said, as soon as one is investing as opposed to just getting a small but guaranteed return, then risk comes into play. In that sense, any savings account is fundamentally different from any investment, and, in that reading, the two shouldn't be compared as different approaches to \"\"investing\"\". Peer-to-peer lending as an investment could be aptly compared with stock market investing, for one.\"", "Peer to peer lending isn't FDIC insured. You can lose all your investment with peer to peer lending, whereas you will not lose your deposited money in a savings account, even if it doesn't grow very fast." ]

[ "30163" ]

[ "You bought a rental property in 2001. Hopefully you paid fair value else other issues come into play. Say you paid $120K. You said you have been taking depreciation, which for residential real estate is taken over 27.5 years, so you are about halfway through. Since you don't depreciate land, you may have taken a total $50K so far. With no improvements, and no transaction costs, you have $50K in depreciation recapture, taxed at a maximum 25% (or your lower, marginal rate) and a cap gain of the 5-10K you mentioned. Either can be offset by losses you've been carrying forward if you suffered large stock losses at some point." ]

[ "533613", "292490" ]

[ "\"FX trading platforms are not used for exchanging money, they are used for trading currencies. \"\"I know there are cheaper services like transferwise, charging about 0.5 %, but there is little/no control over the exchange rate, you just get the rate at the time of execution.\"\" With FX trading you don't have control of the exchange rate either, just like the share market, FX markets are determined by supply and demand of one currency over an other. So an individual does not have control over the exchange rate but will just get the rate at the time of the trade being executed.\"", "If you wanted to spend money in another country, a specialist credit card would be the most cost-effective way. Near-spot exchange rate, zero-loading, no/low ATM fees. Likewise a pre-paid debit card would also allow for money transfer across borders. If this is the right situation, FOREX trading platforms are overkill to achieve a valid solution." ]

[ "97662", "436437" ]

[ "\"My master's thesis was on using genetic algorithms and candle stick method. If you are familiar, the AI was used to answer questions like \"\"what is a long day\"\", which is not formally defined in most candle stick texts. So in theory unlimited potential for learning including teaching machines to learn. Wall street pays pretty well for such developers, and if you are young and single man Manhattan is pretty sweet place to be. In practicality your formula for building wealth is the same as everyone else's: get out of debt, build an emergency fund, and invest. Initially invest in growth stock mutual funds through a 401K (assuming US).\"", "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." ]

[ "462984", "85447", "272162", "106786", "332435", "553289", "594442" ]

[ "\"Vanguard has a Vanguard FTSE Social Index Fund. Their web page says \"\"Some individuals choose investments based on social and personal beliefs. For this type of investor, we have offered Vanguard FTSE Social Index Fund since 2000. This low-cost fund seeks to track a benchmark of large- and mid-capitalization stocks that have been screened for certain social, human rights, and environmental criteria. In addition to stock market volatility, one of the fund’s other key risks is that this socially conscious approach may produce returns that diverge from those of the broad market.\"\" It looks like it would meet the qualifications you require, plus Vanguard funds usually have very low fees.\"", "One of the best things you can do for this purpose, while getting a modest ROI on a passive investment, is invest in a company that profitably does whatever you want to see more of. For example, you could invest in a for-profit company that sells needed goods to low-income people at lower prices. Something like Wal-Mart, which is one of the most effective anti-poverty engines in the US. You might also say the same of something like Aldi (owner of Aldi stores and Trader Joe's), which is a discount store chain. This is true even though a company like Wal-Mart is seeking to make money first. Its customer base tends to skew heavily towards low-income consumers, and historically to rural and elderly consumers. When Wal-Mart is able to provide food, clothing, appliances and the like to poor people at a lower cost, it is making it marginally less painful to have a low income. Peter Suderman can explain why Wal-Mart is a humanitarian enterprise: Walmart’s customer base is heavily concentrated in the bottom income quintile, which spends heavily on food. The bottom income quintile spends about 25 percent of income on food compared to just 3.5 percent for the top quintile. So the benefits of Walmart’s substantially lower prices to the lowest earning cohort are huge, especially on food. As Suderman points out, this view of Wal-Mart dramatically lowering prices that low-income people pay for food was corroborated by an Obama adviser. That's just one company. You can pick the industry and company that best suits your personal preferences. Alternatively, you could invest in something like Whole Foods, a company with multiple missions to improve the planet and the community, in addition to the more typical mission of being a prosperous retail chain. Of course, as a general proposition, a less than entirely altruistic, charity-inclined investment doesn't need to be targeted at those with low incomes or at saving the planet. You could invest in almost anything you think is good (yachts, yo-yos, violins, energy production, industrial inputs, music performances) and the company will take care of making more of that good thing. You didn't say whether your goal was to help the poor, the planet, arts, sciences, knowledge, community, or whatever. What I understand you to be saying is you are willing to accept a lower ROI in exchange for some warm-fuzzies from your investment. That seems perfectly valid and reasonable to me, but it makes it much more subjective and particular to your tastes. So you'll need to pick something that's meaningful to you. If you're going to trade ROI for positive feelings, then you should pick whatever gives you your optimal blend of emotions and returns. Alternatively, you could invest in something stable and predictable to beat inflation (some sort of index or fund) and then annually use some portion of those profits to simply give to the charity of your choice. Your investment and your charity do not necessarily need to be the same vehicle.", "\"Shariah compliant investments attempt to achieve your \"\"ethical investing\"\" ideals. Many countries around the world have a long list of shariah compliant investments and lots of journalists will go great lengths to reveal when a company is not really shariah compliant. Standard & Poors (S&P), an American financial services company, hosts a Shariah compliant index too, but on the Toronto Stock Exchange in Canada due to the Islamaphobia rampant in the United States. But of course, international companies are indifferent to any single country's social problems, and in your new pastime as an international speculator you will get the same luxury too and exemption from the political spectrum. S&P/TSX 60 information can be found here: http://web.tmxmoney.com/tmx_indices.php?section=tsx&index=%5ETXSI Business sectors prohibited from the Shariah index include: Gambling, Pornography, Tobacco, amongst others. In the United States, the concept has been renamed \"\"B-Corporation\"\" (a play on the federal term C-Corporation and S-Corporation), and has garnered enough of a movement that several states have created these as entities people can actually register them with the state, but these are not recognized as \"\"B-Corporations\"\" to the federal government. Shariah compliant investments will be easier to find worldwide, due to the popularity of the associated religion.\"", "\"I'd suggest you to separate \"\"doing good\"\" from \"\"earning profit\"\". Look at the guys like Warren Buffett and Bill Gates (or Carnegie and Ford for that matters). They understand that you can't reconcile the two goals, so they donate for free what they earned for profit. If you want to make a social impact with your money, you can check the charity programs that have a confirmed record of a positive impact on people's lives. Non-profits that studied such programs publish their results extensively: AidGrade compiles this research and suggests direct donations to the programs that demonstrated best outcomes per dollar invested:\"", "\"FTSE ethical investment index: http://www.ftse.com/products/indices/FTSE4Good \"\"The FTSE4Good Index is a series of ethical investment stock market indices launched in 2001 by the FTSE Group. A number of stock market indices are available, for example covering UK shares, US shares, European markets, and Japan, with inclusion based on a range of corporate social responsibility criteria. Research for the indices is supported by the Ethical Investment Research Services (EIRIS).\"\" - Wikipedia\"", "There isn't going to be one right answer, but LessWrong has some posts on effective altruism you might find helpful. They also link to a TED talk", "\"In the UK, one quirky option in this area (OK, admittedly it's not a passive) is the \"\"Battle Against Cancer Investment Trust\"\" (BACIT). Launched in 2012, it's basically a fund-of-funds where the funds held charge zero management charges or performance fees to the trust, but the trust then donates 1% of NAV to charity each year (half to cancer research, investors decide the other half).\"" ]

[ "162047", "15323", "168972" ]

[ "The prices dropped because the scandal could mean: This some people estimated that the company could lose money, or have smaller profit. Thus each share was worth less money going forward. The mechanism is that in order to sell their shares the current share owners had to settle for lower prices.", "(I live in the UK and along with my wife we both drive Volkswagen cars.) A few factors: VW is widely acknowledged as having some of the best diesel car engines. -Now lot of people are questioning if diesel car will be outlawed. VM management has just said they don’t know what their workers are doing! The USA has made it clear they will create pollution law in a way that benefit their own car makers. (E.g. they don’t care about CO2.) If not diesel cars, then it needs hybrid or electric cars to get good MPG – VM is not seen as a leader in these. Hybrid cars tend to be gas as diesel engines cost too much. VW is no longer looking like a nice safe investment! I think VW will recover, but it may get worse for them before it gets better - trying to call the bottom of a stock is high risk.", "\"The primary reason a scandal like this hurts the company is the \"\"bottom line.\"\" Any legal action means defense costs. In this case the potential of massive fines became reality. And a buyback program. So, if any publicly traded company stacked up $10B in assets, doused it in diesel and set it on fire, their stock would take a dip too. Billions in revenue directed to the expense side of the ledger instead of the profit side. That money should have gone to building the company and dividends.\"" ]

[ "40312" ]

[ "I would personally look at consolidating your debt at a lower interest rate by refinancing your mortgage. I would leave any retirement funds alone unless it was absolutely necessary to touch it with no other avenues available. However, once you have consolidated your debt into the mortgage I would pay more than the minimum amount so that you don't take too long to pay it off. I would put about 50% of the freed-up cash flow back into the repayments, that way you will be paying more debt off quicker and you will have additional cash flow to help your monthly budget. Another good point would be to go through your monthly budget to see if there is any expenses you could reduce or eliminate." ]

[ "570292", "183926" ]

[ "One thing to keep in mind is that with Roth accounts, there are different withdrawal considerations based on your contributions. For example, you can withdraw Roth IRA contributions whenever you want in the future. However this really has nothing to do with your cost basis and purely to do with the contribution amount vs balance.", "Cost basis is irrelevant because the entire distribution is taxed as ordinary income even if the custodian distributes stock or mutual fund shares to you. Such distributions save you the brokerage fees that you would incur had you taken a cash distribution and promptly bought the shares outside the retirement account for yourself but they have no effect on the tax treatment of the distribution: the market value of the shares distributed to you is taxed as ordinary income, and your basis in the newly acquired shares outside the retirement account is the market value of the shares, all prices being as of the date of the distribution." ]

[ "221035" ]

[ "Ashland Global Holdings Inc. (ASH) sold off their ownership in Valvoline Inc. (VVV). Friday, May 12 was the distribution date of the sale; at the end of the day, every stockholder of ASH received 2.745338 shares of VVV stock for each share of ASH held. That is why the value of ASH has dropped significantly on open this morning. Sources:" ]

[ "389004", "438408", "233187", "198090" ]

[ "Pool their money into my own brokerage account and simply split the gains/losses proportional to the amount of money that we've each contributed to the account. I'm wary of this approach due to the tax implications and perhaps other legal issues so I'd appreciate community insight here. You're right to be wary. You might run into gift tax issues, as well as income tax liability and appropriation of earnings. Not a good idea at all. Don't do this. Have them set up their own brokerage account and have them give me the login credentials and I manage the investments for them. This is obviously the best approach from a tracking and tax perspective, but harder for me to manage; to be honest I'm already spending more time than I want to managing my own investments, so option 1 really appeals to me if the drawbacks aren't prohibitive. That would also require you to be a licensed financial adviser, at least to the best of my understanding. Otherwise there's a lot of issues with potential liability (if you make investments that lose money - you might be required to repay the losses). You should do this only with a proper legal and tax advice - from an attorney and/or CPA/EA licensed in your state. There are proper ways to do this (limited partnership or LLC, for example), but you have to cover your ass-ets with proper operating agreements in place that have to be reviewed by legal counsel of each of the members/partners,", "how many transactions per year do you intend? Mixing the funds is an issue for the reasons stated. But. I have a similar situation managing money for others, and the solution was a power of attorney. When I sign into my brokerage account, I see these other accounts and can trade them, but the owners get their own tax reporting.", "There's a sizable community of people and fiscal advisers who advocate not managing the money at all. Set your passive investor friend with automatic bank draft into a simple three/four fund portfolio of low cost index funds and never never ever trade. See https://www.bogleheads.org/RecommendedReading.php You might be able to beat the stock market for a few years, but probably not over the long term. Most mutual fund professionals don't. Playing with your own money is one thing: playing with other people's money is a whole other ball game.", "\"If you want to do #1, then you should form an \"\"investment club.\"\" This is an entity that is recognized by the SEC and the IRS. From the SEC: An investment club is a group of people who pool their money to make investments. Usually, investment clubs are organized as partnerships and, after the members study different investments, the group decides to buy or sell based on a majority vote of the members. Club meetings may be educational and each member may actively participate in investment decisions. https://www.sec.gov/investor/pubs/invclub.htm You should do your own legal research on how to organize, but I believe that a common way is to form a formal partnership, which then provides the legal structure for distributing gains, tax liability, income, and other costs to the members. IRS publication 550 has a section on Investment Clubs from a tax perspective, but I'd definitely recommend get professional help on this in addition to whatever you can read yourself. As for #2, I believe that's illegal unless you're licensed.\"" ]

[ "373862", "15917", "95010", "49782", "236504" ]

[ "Sounds to me like you're describing just how it should work. Ask is at 30, Bid is at 20; you offer a new bid at 25. Either: Depending on liquidity, one or the other may be more likely. This Investorplace article on the subject describes what you're seeing, and recommends the strategy you're describing precisely. Instead of a market order, take advantage of the fact that the options world truly is a marketplace — one where you can possibly get a better price just by asking. How does that work? If you use a limit order (instead of a market order) when opening a position, you can tell your broker how much you are willing to pay to enter a trade. For example, if you enter a limit price of $1.15, you can see whether the market-maker will bite. You will be surprised at how many times you will get your price (i.e., $1.15) instead of the ask price of $1.30. If your order at $1.15 is not filled after a few minutes, you can modify your order and pay the ask price by entering a market order or limit order at the ask price (that is, you can tell your broker to pay no more than $1.30).", "There are people whose strategy revolves around putting orders at the bid and ask and making money off people who cross the spread. If you put an order in between the current bid/ask, people running that type of strategy will usually pick it off, viewing it as a discount to the orders that they already have on the bid/ask. Often these people are trading by computer, so your limit order may get hit so quickly that it appears instantaneous to you. In reality, you were probably hit by a limit order placed specifically to fill against yours.", "There are usually so many different options around for the same stock that some are rarely traded. Especially if the price has moved since the option was issued, nobody might be interested in that particular option at that price anymore. So the asking price might be something that someone asked for ages ago and that is much higher than anyone would reasonably pay today. With a bid of $20 and an ask of $30, nobody is trading, but the value of that option is somewhere between $20 and $30. If the value is below $25, someone will notice your $25 bid and sell.", "I can often get the option at [a] price [between bid and ask] The keyword you use here is quite relevant: often. More realistically, it's going to be sometimes. And that's just how supply and demand should work. The ask is where you know you can buy right away. If you don't wanna buy at ask, you can try and put a higer bid but you can only hope someone will take it before the price moves. If prices are moving up fast, you will have missed a chance if you gambled mid-spread. Having said that, the larger the spread is, the more you should work with limits mid-spread. You don't want to just take ask or bid with illiquid options. Make a calculation of the true value of the option (i.e. using the Black Scholes Model), then set your bid around there. Of course, if not only the option but also the underlying is illiquid, this all gets even more difficult.", "What you have to remember is that Options are derivatives of another asset like stocks for example. The price of the Option is derived from the price of the underlying. If the underlying is a stock for example, as the price of the stock moves up and down during the trading day, so will the Market Maker's fair value for the Option. As Options are usually less liquid than the underlying stock, Market Makers are usually more active in 'Providing a Market' with Options. Thus if you place a limit order half way between the current Bid and Ask and the underlying stock price moves towards your limit order, the Market Maker will do their job and 'Provide a Market' at that price, thus executing your order." ]

[ "37662", "372051", "361689" ]

[ "Traveller's cheques. That's exactly what they were intended for. Their usage has dropped a lot since everyone can use ATMs in foreign countries, but they still exist.", "I assume the same criteria apply for this as your previous question. You want to physically transfer in excess of 50,000 USD multiple times a week and you want the transportation mechanism to be instant or very quick. I don't believe there is any option that won't raise serious red flags with the government entities you cross the boundaries of. Even a cheque, which a person in the comments of OP's question suggests, wouldn't be sufficient due to government regulation requiring banks to put holds on such large amounts.", "There are checks, international wire transfers (SWIFT), depending on country pair remittance services." ]

[ "237571", "227245" ]

[ "Ask around your area. Some stores will exchange because it saves them having to go to the bank to stock up on change. Some stores have machines that will convert the coins for a small percentage fee. Some banks may do this exchange for folks who aren't customers, though that's uncommon. My solution was to open a small account locally specifically as a place to dump my coins into. They'll even run a pile of coins through their counting machine for me, free, so I don't have to make up coin rolls as I did in the past.", "We have machines in several grocery store chains that will take your coins, sort them, and give you two ways to get your money back: I've seen these many places, but, of course, I cannot say for sure if there are any near you." ]

[ "236133" ]

[ "\"I place a trade, a limit order on a thinly traded stock. I want to buy 1000 shares at $10. The current price is $10.50. Someone places a market order for 500 shares. Another trader has a limit order for $10.10 for 400 shares. His order fills, and I get 100 at my price. I wait another day to see if I get any more shares. This is just an example of how it can work. I can place my order as \"\"all or none\"\" if I wish to avoid this.\"" ]

[ "22688" ]

[ "Yes though I'd likely put a caveat on that. If you take short-term investments and extrapolate the results to get an annual result this can be misleading. For example, if a stock goes up 10% in a month, assuming this will continue for the next 11 months may not be a great idea. Thus, beware of how much data do you have in making these calculations. When looking at long-term investments, the compound annual growth rate can be quite useful for comparison." ]

[ "200052" ]

[ "\"There are discount brokers which charge lower fees, which ones are accessible to you will depend on your country. Here's a list for the USA: https://the-international-investor.com/comparison-tables/online-discount-stock-brokers-comparison-table But seriously, as a \"\"low net worth individual\"\", the last thing you should be doing is gamble away that money - and that's what buying junk bonds is: gambling, not investing. They're called \"\"junk bonds\"\" for a reason, namely that the well-considered opinion of most investors is that there is a high probability of the issuer defaulting on them, which means that the invested money is lost.\"" ]

[ "503034", "122908" ]

[ "\"What it means is that you can always come up with alternative framings where the difference between two options is stated as a gain or a loss, but the effect is the same in either case. For instance, if I offer to sell a T-shirt for $10 and offer a cash discount of $1, you pay $10 if buying with a credit card or $9 if buying with cash. If I instead offer the shirt for $9 with a $1 surcharge for credit card use, you still pay $10 if buying with a credit card or $9 if buying with cash. The financial result is the same in either case, but psychologically people may perceive them differently and make different buying decisions. In a tax situation it may be more complicated since exemptions wouldn't directly reduce your tax, but only your taxable income. However, you can still see that, in general, having to pay $X more in tax for not doing some action (e.g., not purchasing health insurance) is the same as being able to pay $X less in tax as a reward for doing the action. Either way, doing the action results in you paying $X less than you would if you didn't do it; the only difference is in which behavior (doing it or not doing it) is framed as the \"\"default\"\" option. Again, these framings may differentially influence people's behavior even when the net result is the same.\"", "\"There's a significant difference between \"\"discount\"\" and \"\"surcharge\"\". For starters - legal difference. If you have a list price of $X - that's the price you're committed to sell regardless of the payment method. So it doesn't matter if I pay with cash or credit - I'll pay $X. However, it costs you more when I pay with credit - so you want to pass that cost on me. You charge me surcharge - an addition to the price. In some States in the US and in some other countries - that is against the law. You cannot add on top of the listed price any amount regardless of the payment method. However, you can say that the list price is $X, which includes the assumed credit card surcharge of $Y. And then you give discount of $Y to anyone not paying with credit card. The list price is still $X, regardless of the payment method. You don't have to give the discount, the discount is your cost of doing business. But that would be legal in some places (not all!) that forbid credit card surcharge. So the main difference from legal perspective is that you're not allowed to add to the list price, but you're allowed to discount from it. Regarding taxes - exemption/deduction is not a penalty for negative. Exemption/deduction is an implementation of a social policy. For example, it is for the public benefit for everyone to own a house. So the Congress comes up with a deduction of mortgage interest. However, you're not penalized if you don't own a house by paying higher taxes. Your tax rate doesn't change. You just don't get to deduct something that you might be able to deduct had you owned a house with a mortgage. This is, again - a discount of a list price, not a surcharge. You're not penalized if you don't have a house or don't have a mortgage, but if you do - you get a break. The author you're quoting claims that bottom line would be the same as if you considered the absence of a deduction as a penalty. But that's not true, because even if you do have a mortgage you may not be able to deduct it because your income is too high, the mortgage is for too much, or your mortgage is not on the primary residence. So mere existence of the mortgage doesn't directly correlate to the existence of the deduction. Similarly with credit card surcharges - you may get a cash discount, but you may get the similar amount of money back even if you use a credit card. Not as a cash discount but rather as rewards, cash-backs or points. However, if there's no cash discount, you won't be getting these if you're paying cash. So again - you're not penalized for having a credit card by not getting a discount, because you may still get it in a different way - and if you don't, you still may end up not getting it. So the quote is a rather simplistic and negative view and more of an opinion than stating a fact.\"" ]

[ "546027" ]

[ "With gold at US$1300 or so, a gram is about $40. For your purposes, you have the choice between the GLD ETF, which represents a bit less than 1/10oz gold equivalent per share, or the physical metal itself. Either choice has a cost: the commission on the buy plus, eventually, the sale of the gold. There may be ongoing fees as well (fund fees, storage, etc.) GLD trades like a stock and you can enter limit orders or any other type of order the broker accepts." ]

[ "120606" ]

[ "Dividends would be a possible factor you are ignoring. If Dell has another quarter or two to pay out dividends that could account for some of the difference there. I don't think there is a confirmed date of when the deal is done yet other than around the end of Dell's second quarter which was in the LA Times link you cited. There is also the potential for the terms of the deal to be revised that is another possibility here. Have you examined other deals where a public company went private to see how the stock performed in the last few months before the deal closed?" ]

[ "434625" ]

[ "\"Here is how I would approach that problem: 1) Find the average ratios of the competitors: 2) Find the earnings and book value per share of Hawaiian 3) Multiply the EPB and BVPS by the average ratios. Note that you get two very different numbers. This illustrates why pricing from ratios is inexact. How you use those answers to estimate a \"\"price\"\" is up to you. You can take the higher of the two, the average, the P/E result since you have more data points, or whatever other method you feel you can justify. There is no \"\"right\"\" answer since no one can accurately predict the future price of any stock.\"" ]

[ "14028", "319434", "141939", "505553" ]

[ "Same argument and answer for investing instead of paying off debt, or borrowing to invest. Risk. What happens if the stocks drop by 10%? Sure, you might come out ahead on average, but a drop in the market could be catastrophic from a cash flow point of view. In addition, federal tax debt is arguably the worst kind. The IRS has the authority to garnish wages and has virtually unlimited resources they can use to collect.", "Your logic is not wrong. But the risk is more significant than you seem to assume. Essentially you are proposing taking a 2.6% loan to buy stocks. Is that a good strategy? On average, probably. But if your stocks crash you might have significant liabilities. In 1929, the Dow Jones dropped 89%. In 1989, >30%. In 2008-9, 54%. This is a huge risk if this is money that you owe in taxes. If you operate the same system year after year the chance of it going horribly wrong increases.", "In addition to the other answers, which cover the risks of what is essentially leveraged investing, I'd like to point out that the 2.6% penalty is a flat rate. If you are responsible for withholding your own taxes then you are paying tax four times a year. So any underpayment on your first quarterly tax payment will have much more time to accrue in the stock market than your last payment, although each underpayment will be penalized by the 2.6%. It may make sense for someone to make full payments on later payments but underpay on earlier ones.", "While the US tax code does not directly impose an obligation to pay estimated taxes, it does impose a penalty on individuals for failure to pay enough taxes either through withholding or estimated tax. USMTG Anyone can choose how s/he wants to pay their taxes but they better deal with any consequences of not paying them instead of just complaining about it like most people do. Most people get the hatred towards the IRS but most complaints are misdirected and should be directed towards Congress who creates and messes around with the US Tax Code. Some people actually do not make estimated payments and pay any possible taxes with their returns knowing that there may be underpayment penalty. For those people, the penalty is relatively small compared to what they can do with the cash over a year's time (i.e. investing or paying down debt). It's their choice!" ]

[ "229246" ]

[ "There are a couple of advantages that I can think of. Since the machines are less complicated because they don't have to handle cash, they are less expensive and require less maintenance. Machines that handle cash require lots of moving parts. Cash machines require lots of employee interaction. The machines need to be stocked with cash each day, and at the end of the day the cash needs to be taken out and counted. With a cashless machine, the computer does all the work." ]

[ "263312", "490997" ]

[ "\"The shares are \"\"imputed income\"\" / payment in kind. You worked in the UK, but are you a \"\"US Person\"\"? If not, you should go back to payroll with this query as this income is taxable in the UK. It is important you find out on what basis they were issued. The company will have answers. Where they aquired at a discount to fair market value ? Where they purchased with a salary deduction as part of a scheme ? Where they acquired by conversion of employee stock options ? If you sell the shares, or are paid dividends, then there will be tax withheld.\"", "Why was I sent both 1042-S and 1099. Which amount is the right amount that has been withheld. Generally, each tax form you get will be about a separate income; for instance, you might get a 1099-DIV for dividends you earned from an investment and then a 1099-B for the profit or loss on selling that investment, in which case you'd report them both to the IRS. In this case, you've also had money withheld as a non-resident alien, which is why you've been issued a 1042-S. So you need to report both amounts to the IRS." ]

[ "225818" ]

[ "You need a source of delisted historical data. Such data is typically only available from paid sources. According to my records 20 Feb 2006 was not a trading day - it was Preisdent's Day and the US exchanges were closed. The prior trading date to this was 17 Feb 2006 where the stock had the following data: Open: 14.40 High 14.46 Low 14.16 Close 14.32 Volume 1339800 (consolidated volume) Source: Symbol NVE-201312 within Premium Data US delisted stocks historical data set available from http://www.premiumdata.net/products/premiumdata/ushistorical.php Disclosure: I am a co-owner of Norgate / Premium Data." ]

[ "580429" ]

[ "It looks like what you're calling a name change was registered as a merger that resulted in an exchange of stock. If that's the case, then what you've been told is correct. You've got one long-term sale and one short-term sale. Based a quick read of the Form 8937 that was filed, it looks like there were multiple entities involved in this event, more than one of which existed prior to it. https://www.mylan.com/-/media/mylancom/files/form%208937%20for%20mylan%20n%20v.pdf" ]

[ "181827", "15728" ]

[ "First: In most cases when you inherit stocks the cost basis is stepped up to the date of the death of the person you inherited them from. So the capital gain/loss is likely reset to zero. The rules vary a bit for joint accounts, but retirement accounts (401k/ROTH) are considered individual accounts by the IRS. The rules on this have changed a lot in recent history, so it may depend on when he died. Update: As JoeTaxpayer pointed out and I confirmed via this site , the gains are NOT stepped up for retirement accounts, so this is a moot point anyway. Further evidence that retirement accounts can be complicated and seeking professional guidance is a good idea. ...[T]here is no step-up in cost basis upon the death of the IRA owner. Most other assets owned by an individual receive a step-up in cost basis upon the death of the person, eliminating all capital gains on those assets up to that point in time. Second: Even if you can deduct an investment (capital) loss, you can only deduct it to offset capital gains on another investments. Also you can only do this up to $3k per year, though you can roll over excess capital losses into future years. Bottom line: I really doubt you are going to be able to claim a deduction. However, due to the complexity of the situation and the amount of money involved. I strongly suggest you talk to a qualified tax adviser and not rely solely on information you gather through this site.", "I trust the 401(k) was a traditional, pre tax account. There was no tax paid, and any withdrawals would be taxable. The account could go to zero, and there's no write off, sorry. I have to ask - were there any withdrawals along the way? What was it invested in that lost 90% of its value? Edit - I'm sorry the OP came and went. It would be great to have closure on some of these issues. Here, I'm thinking as Duff said, malpractice, or perhaps a 401(k) that was 100% in company stock. Seems we'll never know." ]

[ "560776" ]

[ "\"Earned income is what your software is doing, so it is taxable. So you can't really make it tax exempt. You can form a business and claim the revenues from that business as income and deduct expenses it costs you to earn that revenue. If you buy a server to run your software, then that is an acceptable expense to deduct from your revenues. Others can be more questionable and the best thing to do is to consult a CPA. If you are still in the testing stage and the revenues will be small then it should not matter. Worry about the important things, not if you paid the IRS a few hundred to much. Are you in a state/country that allows online gambling? In most states here in the US you are operating on shaky legal ground. Before \"\"Black Friday\"\" I used to earn a nice part-time income playing online poker.\"" ]

[ "83947", "557885" ]

[ "Gold is classified as a collectible so the gain rates are as follows: So you'd report a gain of $100 or $1,000 , depending on which coin you sold.", "For reporting purposes, I would treat the purchase and sale of gold like a purchase and sale of a stock. The place to do so is Schedule D. (And if it's the wrong form, but you reported it, there is might not be a penalty, whereas there is a penalty for NOT reporting.) The long term gain would be at capital gains rates. The short term gain would be at ordinary income rates. And if you have two coins bought at two different times, you get to choose which one to report (as long as you report the OTHER one when you sell the second coin)." ]

[ "364219", "444486" ]

[ "You report each position separately. You do this on form 8949. 7 positions is nothing, it will take you 5 minutes. There's a tip on form 8949 that says this, though: For Part I (short term transactions): Note. You may aggregate all short-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS and for which no adjustments or codes are required. Enter the total directly on Schedule D, line 1a; you are not required to report these transactions on Form 8949 (see instructions). For Part II (long term transactions): Note. You may aggregate all long-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS and for which no adjustments or codes are required. Enter the total directly on Schedule D, line 8a; you are not required to report these transactions on Form 8949 (see instructions). If the 1099B in your case shows basis for each transaction as reported to the IRS - you're in luck, and don't have to type them all in separately.", "\"You can group your like-kind (same symbol, ST/LT) stock positions, just be sure that your totals match the total dollar amounts on the 1099. An inconsistency will possibly result in a letter from IRS to clarify. So, if you sold the 100 shares, and they came from 7 different buys, list it once. The sell price and date is known, and for the buy price, add all the buys and put \"\"Various\"\" for the date. If you have both long term and short term groups as part of those 7 buys, split them into two groups and list them separately.\"" ]

[ "480036", "351109", "552383", "589286", "35518", "450558" ]

[ "These are the basics in order: Max your employer contributions to your 401k if available Pay off any loans Contribute to an IRA Perhaps max out your 401k Look into other investment options (refinance your mortgage, buy stocks) Those are the typical rules, special situations may need specials actions...", "Lets make some assumptions. You are not close to retirement. You have no other debts. You have a job. You have no big need for the money. You should invest that. Do not invest with a bank, they are not as competitive on fees as a brokerage account. You can get specific answers that are different from every person, (so you should dig in and research a lot more if you care (and you should). Personally, I would suggest you open an account with one of the low cost providers. Then, with that new investment account, put your money into a target retirement account. File your statements away and tend to it once a year. (Make sure it is there, that you can access it, that nothing alarming is going on). You certainly have enough to start an investment account. If you want to get more into it, ask a phone adviser what you should open. Finally, before you start investing, make sure you follow the advice of radix07 and have no debt, saving the most you can for retirement. A rule of thumb is your money will double every 72 months. Congratulations, you are a saver. Investing isn't for you as the risk of investing is in conflict with your desire to preserver you money. Open a savings account or high interest checking account with a credit union, online only or local community bank. Shop around no the web for the highest interest. Don't get your hopes up though, the highest rate you see (that doesn't have strings attached) won't be much here late summer of 2012.", "\"Aside from employer 401(k) matches (which may double your money immediately), paying off debts is almost always the best place to start. Paying off a debt early is a zero-risk operation and will earn you N% (where N is your interest rate). Is that a good deal for a zero-risk return? The closest equivalent today (Aug 24, 2012) is that you can earn about 2.68% on 10-year Treasury bonds. Unless you have a really, really good interest rate (or the interest is tax-deductible), paying off your loan will offer an excellent risk-adjusted return, so you should do that. The \"\"really good\"\" interest rate is typically a mortgage or student loans. (Mortgage interest is also tax-deductible, at least for now.) In those cases, you're not going to gain nearly as much by paying the loan early, and the loan is large - larger than the amount you want to have in risk-free investments. You want to invest for returns, as well! So you can save for retirement instead (in a 401(k) or similar account) and take on a little risk.\"", "First thing's first: migrate your savings to an interest-bearing savings account (such as from Ally Bank). While it still lags behind inflation, 0.84% is still better than 0.00%. Short-term CDs are also an option. I've personally thought about experimenting with peer-to-peer lending, but a few thousand in savings isn't all that much in the grand scheme of things, and you don't want it tied up in a risky, speculative loan when you might need it the most. As the others have said, the general savings rules apply too: pay off high-interest debt, divert more money into your 401k (especially if you aren't hitting the match yet), then work on either whittling down other debts or saving more for a big purchase in the future.", "Alright so you have $12,000 and you want to know what to do with it. The main thing here is, you're new to investments. I suggest you don't do anything quick and start learning about the different kinds of investment options that can be available to you with returns you might appreciate. The most important questions to ask yourself is what are your life goals? What kind of financial freedom do you want, and how important is this $12,000 dollars to you in achieving your life goals. My best advice to you and to anyone else who is looking for a place to put their money in big or small amounts when they have earned this money not from an investment but hard work is to find a talented and professional financial advisor. You need to be educated on the options you have, and keep them in lines of what risks you are willing to take and how important that principal investment is to you. Investing your money is not easy at all, and novices tend to lose their money a lot. The same way you would ask a lawyer for law advice, its best to consult a financial planner for advice, or so they can invest that money for you.", "I had some extra money, so I opened American express saving account. At the time which was offering .80%, now .90%. I put most of the money in the saving account. The remainder of my money in a investment account at my local bank. I was in touch once a week with investment, I learned allot how the stock market worked and tax deferment(401k, IRA, IRA Roth). My suggestion is to do test run and see if you like it. Side note, NOT ALL investment are created equal." ]

[ "65179", "473477" ]

[ "\"As others have said: unless you can find someone willing to make a zero-interest loan, the answer is no. If you can figure out how to turn a \"\"0% for first N months\"\" credit card offer onto a leveraged investment or something of that sort -- seems unlikely -- maybe.\"", "\"It is possible and it depends on your strategy. As short selling interest rates are annual and levied monthly at a prorated rate. Interest rates are also low in general, with the exception of hard to borrow stocks. Therefore you can maintain a short position for weeks on end and notice nothing. Months even, if the position itself has already gained in your favor. There is no additional fee for opening the short position. Although some brokers have a \"\"locate\"\" fee, if it is hard to borrow the stock and they need to go find some shares to short. So you can do it as much as you like.\"" ]

[ "323389" ]

[ "\"Ally Bank $0 - from their website (emphasis mine): To receive a wire transfer from a non-U.S. bank: Incoming wire transfers from a non-US bank are processed by our designated receiving bank, JP Morgan Chase Bank, N.A. You'll need to provide the following information to the person or business sending the wire transfer to you: Receiving Bank: JP Morgan Chase Bank, N.A. ABA/Routing Number: 021000021 Address: 1 Chase Manhattan PLZ, New York, NY 10005 SWIFT Code or Bank Identification Code: CHASUS33 Beneficiary Account Number: 802904391 Beneficiary Name: List 'Ally Bank' since the wire is being processed by JP Morgan Chase Bank, N.A. Further Credit: Your Ally Bank Account Number and your name as it appears on your Ally Bank account. Note: We won't charge you to receive a wire transfer into your Ally account. https://www.ally.com/help/search.html?term=SWIFT&console=false&context=Help&domain=www.ally.com&section=Help+%26+FAQs Alliant Credit Union $0 - from their website (emphasis mine): Direct international wire transfers International wire transfers are handled through our correspondent bank for processing. International wires can take up to 10 business days to be credited to the receiving institution. Funds should be wired to: Northern Trust ABA# 071000152 \"\"Note: US Banks do not use SWIFT codes. This ABA # is used in place of SWIFT codes for US Banks.\"\" 50 South La Salle Street, Chicago, IL 60603 For further credit: Alliant Credit Union Account Number 35101804 11545 W. Touhy Avenue, Chicago, IL 60666 For final credit: Member’s name and complete address (No P.O. Box) Member’s 14-digit account number Destination of funds (checking, savings or loan number) Incoming wire transfers: Wire transfers received Monday - Friday, 7:00am - 3:00pm, CT, will be credited to your account the same day. Wire transfers received after 3:00pm, CT, Monday - Friday and on the weekend will be credited the next business day. Fees: We do not charge a fee to receive incoming wire funds. However, the financial institution wiring the funds may charge for this service. http://www.alliantcreditunion.org/help/receiving-a-wire-transfer-to-your-alliant-account\"" ]

[ "228657", "568196", "340828", "12782" ]

[ "You've already hit on the big difference. If you buy a property, you've made a big commitment, for better or worse. If you bought wisely, you'll be very happy. If not, you could go bankrupt. An REIT spreads out the risk, but the reward isn't as great. There's less barrier to entry in buying shares of an REIT than there is in buying an investment property: money, time, maintenance. The answer for you depends on what level of effort you want to put into your investment. If you are all ready to pick up an investment property, make the down payment, get appraisal and inspection, clean up the house, and fill it with tenants, then go for it. Otherwise, research some REITs and buy some shares. (Disclaimer: I have a rental property that's doing pretty well now.)", "REIT's usually invest in larger properties (apartment complexes), individuals usually invest in small properties (single units, duplexes, fourplexes, etc). REIT's also invest in a lot of commercial properties - malls, commercial and business office buildings, etc. These are very different markets. Not to mention the risk spread, geographical spread, research, management and maintenance that someone has to do for REIT and it comes out of the earnings (while your own rentals you can manage yourself, if you want), etc.", "REIT is to property as Mutual Fund is to stock. In others words, a REIT spreads your risk out over a greater number of properties, making the return safer, at the expense of both upside and downside risk. On average, both would average out to be the same. That said, you have a much wider range of outcomes when investing in a single property. As with stocks, over the long haul, unless you think you can somehow beat the market, divirsification is usually considered the better move. Technically, your ROI is the same, but your beta is much better in a REIT.", "Your question may have another clue. You are bullish regarding the real estate market. Is that for your city, your state, your nation or for the whole world? Unless you can identify particular properties or neighborhoods that are expected to be better than the average return for your expected bull market in real estate, you will be taking a huge risk. It would be the same as believing that stocks are about to enter a bull market, but then wanting to put 50% of your wealth on one stock. The YTD for the DOW is ~+7%, yet 13 of the 30 have not reached the average increase including 4 that are down more than 7%. Being bullish about the real estate segment still gives you plenty of opportunities to invest. You can invest directly in the REIT or you can invest in the companies that will grow because of the bullish conditions. If your opinion changes in a few years it is hard to short a single property." ]

[ "458063" ]

[ "\"No, you cannot. ISO are given to you in your capacity as an employee (that's why it is \"\"qualified\"\"), while your IRA is not an employee. You cannot transfer property to the IRA, so you cannot transfer them to the IRA once you paid for them as well. This is different from non-qualified stock options (discussed in this question), which I believe technically can be granted to IRA. But as Joe suggests in his answer there - there may be self-dealing issues and you better talk to a licensed tax adviser (EA/CPA licensed in your State) if this is something you're considering to do.\"" ]

[ "72375" ]

[ "\"I think your best bet here would be HSBC. They will provide the required currencies, credit/debit cards, and very easy to use online banking transfers. This includes an online \"\"Global Account View\"\" which features all of your accounts on a single screen and allows you to \"\"drag and drop\"\" money between accounts. Regarding fees, I suspect you will need to be a \"\"Premier Account\"\" holder in order to avoid any fees imposed on transactions such as money transfers and exchanging money between currencies. In my experience HSBC offers extremely good exchange rates when exchanging \"\"large\"\" amounts of money ( greater than $10,000 / GBP 5,000 ). Exchanging small amounts will carry a larger spread but still much better than most banks offer. In my experience, exchanging GBP 5000 will have a spread of about 0.50-to-0.75 percent, while exchanging more than GBP10,000 will have a spread of as little as 0.10-to-0.20 percent. In order to qualify for a \"\"Premier Account\"\", if my memory of HSBC UK serves me correctly, you will need to have at least GBP 50,000 net across all of your HSBC managed accounts, including stockbroking and other investment accounts. In order to open a banking Swiss account, you will need to travel to Switzerland and apply in person. You cannot open a foreign bank account remotely. With a foreign investment account, I believe you can open accounts remotely. For example, I opened an account with Fidelity Switzerland using my Fidelity UK account directly from the UK, however obviously Fidelity does not provide banking services so this is not of interest to you. The simplest thing to do is to visit your local HSBC branch and discuss it with them in person. Other UK banks, such as Barclays, will also provide such services, but in my experience they are not as competitive on fees.\"" ]

[ "430997" ]

[ "No, you're not missing anything. RSUs are pretty simple when it comes to taxes. They are taxed as compensation at fair market value when they vest, basically equivalent to the company giving you a cash bonus and then using it to buy company stock. The fair market value at vesting then becomes your cost basis. Assuming the value has increased since vesting, selling the shares that vested at least a year ago (to qualify for lower long-term capital gains tax rates) with the highest cost basis with result in the minimum taxes." ]

[ "23414", "275392", "108965", "307095", "282538", "419505", "57387" ]

[ "Here's another way that I look at it: Say you and me were 50-50 partners in a small business. Suppose we wanted to expand our business but that needed money. Someone (let's call him Warren) has the money we need & hence in return for the money we offer Warren an equal stake in the business. i.e. All three of us own 33% stake now. For both you and me our stake reduced from 50% that it was before Warren's entry to only 33% now. While that reduction in our share may seem at first sight a bad deal for us, we both agreed to give Warren his share consciously not out of altruism but because it made business sense to helps us expand. Ergo, what matters is not just your share of the pie but the size of the pie itself! And hence dilution of stake can make sense under certain circumstances. Two small points: (a) This doesn't in any way show the dilution must make sense. Only that it can sometimes make sense (b) Of course, in the case of a large corporation they do not need your personal approval for the dilution. But hey, neither do they ask you when they buy a new plant or start a new product.", "Theoretically, when a company issues more shares, it does not affect the value of your shares. The reason is that when a company issues and sells more shares, the proceeds from the sale of those shares goes back into the company. Using your example, you have 10 out of 100 shares of the company, for a 10% stake. Let's say that the shares are valued at $1,000 each, meaning that the market value of the company is $100,000, and your stake is worth $10,000. Now the company issues 100 more shares at $1,000 each. The company receives $100,000 from new investors, and now the company is worth $200,000. Your stake is now only 5% of the company, but it is still worth $10,000. The authorized share capital is the amount of shares that a company has already planned on selling. When you buy stock in a company, you can look up how many shares exist, so you know what your percent stake in the company is. When a company wants to sell more shares, this is called an increase of authorized share capital. In order to do this, the company generally needs the approval of a majority of the existing shareholders.", "Stock dilution is legal because, in theory, the issuance of new shares shouldn't affect actual shareholder value. The other answers have explained fairly well why this is so. In practice, however, the issuance of new shares can destroy shareholder value. This normally happens when the issuing company: In these cases, the issuance of more shares merely reduces each shareholder's stake in the company without building proportional shareholder value.", "If that company issues another 100 shares, shouldn't 10 of those new 100 shares be mine? Those 100 shares are an asset of the company, and you own 10% of them. When investors buy those new shares, you again own a share of the proceeds, just as you own a share of all the company's assets. A company only issues new share to raise money - it is a borrowing from investors, and in that way can be seen as an alternative to taking on loans. Both share issuing and a loan bring new capital and debt into a company. The difference is that shares don't need to be repaid.", "Alot of these answers have focused on the dilution aspect, but from a purely legal aspect, there are usually corporate bylaws that spell out what kind of vote and percentage of votes is needed to take this type of action. If all other holders of stock voted to do this, so 90% for, and you didn't, so 10% against, it's still legal if that vote meets the threshold for taking the action. As an example of this, I known of a startup where employees got $0/share for their vested shares when the company was sold because the voting stock holders agreed to it. Effectively the purchase amount was just enough to cover debts and preferred stock.", "Stock issuing and dilution is legal because there must be some mechanism for small companies to grow into big companies. A company sees a great investment opportunity. It would be a perfect extension of their activities ... but they cannot afford it. To get the necessary money they can either take out a loan or issue shares. Taking a loan basically means that this is temporary, but the company will go back to being small when the loan is paid back. Issuing new shares basically means that the Board means that this growth is permanent and the company will be big for the foreseeable future. It is utterly necessary that companies have this option for raising cash, and therefore it is legal. As detailed in the other answers, you end up with a smaller percentage of a larger company, usually ending up with more or less the same value.", "\"For new shares to be successfully sold, the price has to be below market price. If you currently own shares of that company, you should always get an option to buy those newly sold shares at that discounted price. The number of options depends on the relative number of shares you hold. Lets say you own 100 out of 1000 shares, currently priced at $10. 100 new shares are to be sold at $9. Since you are holding 10% of all shares, you have the option (i.e. the right) to buy 10 new (cheaper) shares (10% of 100) before anybody else can buy them. Theoretically, the money you save by getting the shares at a discounted price is equal to the money you lose by the share's value being diluted. So, if you're a shareholder and the company is increasing it's capital, you're given the right to \"\"go with it\"\".\"" ]

[ "536554", "17687", "342401" ]

[ "If upper and Bollinger bands either converge ... or diverge ..., does that mean the market is TRENDING? No - Bollinger bands measure volatility, which is an measure of how much variation there is in the price of the instrument. It does not indicate a trend which means that the instrument tends to move in a consistent direction. When Bollinger bands are close together, that means volatility is relatively low, and vice-versa. They can be interpreted as signals that a stock might move in one direction or the other, but they are not a measure of directional movement.", "If upper and bollinger bands either converge (both bands are getting more and more close together) or diverge (both bands are getting more and more away from each other), does that mean the market is TRENDING? The answer is no. The divergence or convergence of BB-upper & lower band does not indicate if the market is trending or not. It only indicated if volatility is increasing or decreasing. Or is market trending only in case if both bands, upper and lower, are parallel and at the same time NOT horizontal? The answer is yes. To understand the reason consider that BB is constructed from a central Moving Average along with standard deviation. Upper Band=MA+2*SD, Lower Band=MA-2*SD. A moving average is a trend following indicator and volatility has nothing to do with trend (as SD only measures the price movement around the mean). Which essentially means BB has trend following qualities. The upper and lower bands remain more or less parallel in between band contraction and expansion. Refer below: You shall see distinctly phases when BB bands are not parallel and are parallel and not horizontal. As mentioned above, when BB bands are expanding or contracting they do not give indication of the trend direction. When they are parallel, close or apart and not horizontal, they provide a good directional bias through the general slope. Though a more effective method to determine trend and its direction is the central MA of BB. Again, refer below: Here you can see that some portion of the bands are parallel and more or less horizontal. The price action would tell you that the stock is now range-bound as opposed to trending. The primary use of the BB bands are to gauge volatility as @misantroop stated. The primary trend direction is usually derived from the central MA.", "Bollinger Bands are placed standard deviations away from the moving average. Therefore if the price is volatile, the bands diverge from the mean. During consolidation the bands would converge. They do not provide a clear indication of whether the price is trending or not." ]

[ "512273", "593852" ]

[ "I will attempt to answer three separate questions here: The standard answer is that an emergency fund should not be in an investment that can lose value. The safest course of action is to put it in a savings account or other very low risk investment somewhere. This question becomes: can a reasonable and low risk investment in Sweden be comparable to or better than a low risk investment in Brazil? Inflation in Brazil has averaged a little less than 6% over the last 10 years with a recent spike up above 8%. A cursory search indicates interest rates on savings accounts in Brazil are outpacing inflation so you might still expect a positive return on money in a savings account there. By contrast, Sweden's inflation rate has been around 1% over the last 10 years and has hovered around 0 or even deflation in recent years. Swedish interest rates for savings accounts right now are very low, nearly 0%. Putting money in a savings account in Sweden would likely hold its value or lose a slight amount of value. Based on this, you might be better off leaving your emergency fund invested in BRL in Brazil. The answer to this a little unclear. The Brazilian stock market has been all over the place in the last 10 years, with a slight downard trend in recent years. In comparison, Sweden's stock market has shown fairly consistent growth in spite of the big dip in 2008. Given this, it seems like the fairest comparison would your current 13% ROI investment in Brazil vs. a fund or ETF that tracks the Swedish stock market index. If we assume a consistent 13% ROI on your investment in Brazil and a consistent inflation rate of 6%, your adjusted ROI there would be around 7% per year. The XACT OMS30 ETF that tracks the Swedish OMS 30 Index has a 10 year annualized return of 9.81%. If you subtract 0.8% inflation, you get an adjusted ROI 9%. Based on this, Sweden may be a safer place for longer term, moderate risk investments right now.", "The key is whether you plan to stay in Sweden forever, or plan to move back to Brazil after completion of 2 years. If you have not decided, best is stay invested in Brazil. Generally markets factor in currency prices so if you move the money into Krona and try and move it back it would in ideal market be more or less same. In reality it may be more or less and can't be predicted." ]

[ "67904", "138985", "377335" ]

[ "How do I report this on our income tax return? You should include it on Line 7 of your Form 1040. Additionally, you should report the extra payment to your employer if it was greater that $20. You can use From 4070 to do this if your employer does not provide you with a form. And finally, you are right, you should Form 4137 to report any tips that you include on your Form 1040 in order to pay the required social security and medicare taxes. Credit is due to glibdud and Nathan L for constructive feedback! Thanks!", "\"Daniel covered the correct way to file on the returns, I'm chiming in specifically to discuss the question of whether it could be a gift. The IRS will classify it as a tip even if the person giving it says it's a gift if a service was rendered before the gift was given. The only way that you could make a case to the IRS that it was a gift is if you have a personal relationship outside of the working environment, and the person giving the gift provides an explanation for the motivation behind the gift. Such explanations as \"\"Happy Birthday\"\" or \"\"Congratulations on graduating\"\" or other special occasions could be gifts. But \"\"you did a good job, and I just want to reward you for your effort\"\" is not a reason someone gives a gift, and the IRS will penalize you if you do not have evidence that it was a gift rather than a tip.\"", "\"Employers are not supposed to give cash gifts to their employees, even if you try to call it a \"\"gift\"\" for tax purposes. Presumably, the reason your wife's employer gave her cash was to be nice and save her taxes on that amount. Her employer already paid tax on that money so that your wife doesn't have to. If she plans to declare it anyway, then she should instead give it back and ask for it to be added to the W2 as an end of year bonus. This way her employer could then deduct the payment and pay her a larger amount of money. (The additional amount would be approximately their tax rate minus about 7.45% for FICA.) In fact, if your wife's tax rate is more than 15% lower than her employer's, then this is actually mathematically best for both parties.\"" ]

[ "399543", "322591", "144030" ]

[ "Does your employer provide a matching contribution to your 401k? If so, contribute enough to the 401k that you can fully take advantage of the 401k match (e.g. if you employer matches 3% of your income, contribute 3% of your income). It's free money, take advantage of it. Next up, max out your Roth IRA. The limit is $5000 currently a year. After maxing your Roth, revisit your 401k. You can contribute up to 16,500 per year. You savings account is a good place to keep a rainy day fund (do you have one?), but it lacks the tax advantages of a Roth IRA or 401k, so it is not really suitable for retirement savings (unless you have maxed out both your 401k and Roth IRA). Once you have take care of getting money into your 401k and Roth IRA accounts, the next step is investing it. The specific investment options available to you will vary depending on who provides your retirement account(s), so these are general guidelines. Generally, you want to invest in higher-risk, higher-return investments when you are young. This includes things like stocks and developing countries. As you get older (>30), you should look at moving some of your investments into things that less volatile. Bond funds are the usual choice. They tend to be safer than stocks (assuming you don't invest in Junk bonds), but your investment grows at a slower rate. Now this doesn't mean you immediately dump all of your stock and buy bonds. Rather, it is a gradual transition over time. As you get older and older, you gradually shift your investments to bond funds. A general rule of thumb I have seen: 100 - (YOUR AGE) = Percentage of your portfolio that should be in stocks Someone that is 30 would have 70% of their portfolio in stock, someone that is 40 would have 60% in stock, etc. As you get closer to retirement (50s-60s), you will want to start looking at investments that are more conservatie than bonds. Start to look at fixed-income and money market funds.", "This is a very open ended question with no concrete answer as it depends on your personal situation. However, for starters I would suggest picking up a copy of The Investment Answer. It's a very light read, less than 100 pages, but it has some amazingly simple yet very concrete advice on investing and answers a lot of common questions (like yours).", "\"There are many questions and good answers here regarding investment choices. The first decision you need to make is how involved do you intend to be in investment activity. If you plan to be actively investing by yourself, you should look for questions here about making investment choices. If you intend to be a more passive investor, look for posts by \"\"Bogleheads\"\", who focus on broad-focused, low cost investments. This is the optimal choice for many people. If you are not comfortable managing investments at all, you need to figure out how to find a competent and reasonably priced financial advisor to meet with and guide your investment strategy. This advice generally costs about 1-2% of your total managed assets annually.\"" ]

[ "157414", "323475", "514171" ]

[ "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.", "First off, putting extra cash toward a mortgage early on, when most of the payments are going to interest, is the BEST time. If you pay an extra $1 on your mortgage today, you will save 30 years worth of interest (assuming a 30 year mortgage). If in 29 years you pay an extra dollar, you will only save 1 year worth of interest. That said, there are lots of things that go into a decision like this. Do you have other debts? How stable is your income? What is the interest rate on your mortgage compared to any other debts you may have or potential investments you might make? How much risk are you willing to take? Etc. Mortgages tend to be very low interest, and, at least in the U.S., the interest on them is tax-deductible, making the effective interest rate even lower. If you have some other loan, you are almost always better to pay the other loan off first. If you don't mind a little risk, you are usually better off to invest your money rather than pay off the mortgage. Suppose your mortgage is 5%. The average return on the stock market is something like 7% (according to my buddy who works for Wells Fargo). So if you put $1000 toward your mortgage, you'd save $50 the first year. (Ignoring compounding for simplicity, changes the exact numbers but not the basic idea.) If you put that same $1000 in the stock market, than if it's a typical year you'd make $70. You could put $50 of that toward paying the interest on your mortgage and you'd have $20 left to go on a wild spending spree. The catch is that the interest on a mortgage is fixed, while the return on an investment is highly variable. In an AVERAGE year the stock market might return 7%, but this year it might return 20% or it might lose 10% or a wide range of other possible numbers. (Well, you might have a variable rate mortgage, but there are still usually some defined limits on how much it can vary.)", "take a look at this graph here: http://mortgagevista.com/#m=1&a=40000&b=4&c=30y&B&oa&ob&oc&od It shows how much it costs to borrow $40k for 30 years. You did not post your mortgage rate or loan term, so I used 4% over 30 years (you can easily update this with your actual details). While this does not show the costs of your total mortgage, it does help you get an idea of just how much the 40k$ in question is costing you in interest. If you hover over the month one year from now you will see that you will have paid around $1587 in interest over the course of the year. If you were to put the full 40k$ toward your mortgage right now, you would avoid having to pay this interest over the next year. The next question I think you would have to ask yourself is if there is anything else you could do with that money that is worth more than the $1587 to you. Is it worth $1587 to keep those funds liquid/available in case you need to use them for something else? Could you find other investments you feel comfortable with that could earn you more than $1587? Is it worth the hassle/risk of investing the funds somewhere else with a better return? If you can't come up with anything better to do with the money then yes, you should probably use the funds (or at least part of them) towards the mortgage." ]

[ "511240", "505673" ]

[ "Probably not. If you were at a small company and asked such a question, you'd get advice and links to erisa or other case law, etc. it's safe to say that a Fortune 500 company such as IBM is going to have their facts in order, and not going to run afoul of the rules in these cases (vesting rules and takeover of other company). I was in a company that cancelled its pension program. Those of us with the required years got the option of a lump sum payout, those with less than 5 years had no vested value and got nothing. One month longer employment, in the case of a particular coworker, would have given him a lump sum worth nearly 6 months pay.", "Unfortunately, the money that is not vested is not yours. It belongs to your employer. They have promised to give it to you after you have been with the company for a certain length of time, but if you aren't still with the company after that time, no matter what the reason, the money never becomes yours. Sorry to hear about this. It would have been nice if your company had waived the vesting requirement like this guy's employer did, but I don't think they are required to do so, unfortunately. If it's a lot of money, you could ask an attorney, but as @JoeTaxpayer said, AT&T and IBM probably know what they are doing." ]

[ "251303", "217035" ]

[ "You can avoid companies that might go bankrupt by not buying the stock of companies with debt. Every quarter, a public company must file financials with the EDGAR system called a 10-Q. This filing includes unaudited financial statements and provides a continuing view of the company's financial position during the year. Any debt the company has acquired will appear on this filing and their annual report. If servicing the debt is costing the company a substantial fraction of their income, then the company is a bankruptcy risk.", "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." ]

[ "105336", "75270" ]

[ "\"The value will certainly fluctuate up and down (but on average gain more than a savings account), but so long as you have enough liquid assets for emergencies, then yes, it's a perfectly good alternative to savings accounts. how risky, in general, are Index Income Funds. How are you defining \"\"risk\"\"? If you mean \"\"probability that I'll lose it all\"\" then it's virtually zero. If you mean \"\"how much the value can fluctuate\"\" then it's certainly not risk-free, but it has less volatility that individual stocks. If you take the S&P 500 as a proxy, you might expect the change in value over any given year to fluctuate between -30% (like 2008) and +40%, with an average change of around 8%. There will be funds that have less volatility, but produce less return, and funds that have more volatility but higher average returns.\"", "Risk. Volatility. Liquidity. Etc. All exist on a spectrum, these are all comparative measures. To the general question, is a mutual fund a good alternative to a savings account? No, but that doesn't mean it is a bad idea for your to allocate some of your assets in to one right now. Mutual funds, even low volatility stock/bond blended mutual funds with low fees still experience some volatility which is infinitely more volatility than a savings account. The point of a savings account is knowing for certain that your money will be there. Certainty lets you plan. Very simplistically, you want to set yourself up with a checking account, a savings account, then investments. This is really about near term planning. You need to buy lunch today, you need to pay your electricity bill today etc, that's checking account activity. You want to sock away money for a vacation, you have an unexpected car repair, these are savings account activities. This is your foundation. How much of a foundation you need will scale with your income and spending. Beyond your basic financial foundation you invest. What you invest in will depend on your willingness to pay attention and learn, and your general risk tolerance. Sure, in this day and age, it is easy to get money back out of an investment account, but you don't want to get in the habit of taping investments for every little thing. Checking: No volatility, completely liquid, no risk Savings: No volatility, very liquid, no principal risk Investments: (Pick your poison) The point is you carefully arrange your near term foundation so you can push up the risk and volatility in your investment endeavors. Your savings account might be spread between a vanilla savings account and some CDs or a money market fund, but never stock (including ETF/Mutual Funds and blended Stock/Bond funds). Should you move your savings account to this mutual fund, no. Should you maybe look at your finances and allocate some of your assets to this mutual fund, sure. Just look at where you stand once a year and adjust your checking and savings to your existing spending. Savings accounts aren't sexy and the yields are awful at the moment but that doesn't mean you go chasing yield. The idea is you want to insulate your investing from your day to day life so you can make unemotional deliberate investment decisions." ]

[ "152709" ]

[ "\"Members of the Federal Reserve System keep track of what money a bank has (if it's not in the vault), who owns what shares of stock, who owns what bond, etc. The part of the Federal Reserve System that tracks stock ownership is the Depository Trust Company (DTC). They have a group of subsidiaries that settle various types of security transactions. DTC is a member of the U.S. Federal Reserve System, a limited-purpose trust company under New York State banking law and a registered clearing agency with the Securities and Exchange Commission. There's lots of information on their website describing this process. DTCC's subsidiary, The Depository Trust Company (DTC), established in 1973, was created to reduce costs and provide clearing and settlement efficiencies by immobilizing securities and making \"\"book-entry\"\" changes to ownership of the securities. DTC provides securities movements for NSCC's net settlements1, and settlement for institutional trades (which typically involve money and securities transfers between custodian banks and broker/dealers), as well as money market instruments. Black pools are trades done where the price is not shared with the market. But the DTC is the one who keeps track of who owns which shares. They have records of all net transactions2. The DTC is the counterparty for transactions. When stock moves from one entity to another the DTC is involved. As the central counterparty for the nation's major exchanges and markets, DTCC clears and settles virtually all broker-to-broker equity 1. This is the link that shows that settlements are reported on a \"\"net basis\"\". 2. If broker A sells 1000 shares of something to broker B at 8 and then five minutes later broker B sells the 1000 shares back to A, you cannot be sure that that total volume will be recorded. No net trading took place and there would be fees to pay for no reason if they reported both trades. Note: In dark pool trading quite often the two parties don't know each other. For shares (book-keeping records) to be exchanged it has to be done through a Clearing House.\"" ]

[ "122030" ]

[ "\"GNUCash won't show 'Credit Card' type accounts in \"\"Process Payment\"\", as of v.2.6.1. A workaround is to create another account of type A/Payable. Then, transfer the operations you want to pay via \"\"Process Payment\"\" to this new account. It should be visible now. A drawback is that you have split your current Credit Card debt, which makes it harder to track. Alternatively you may wish to only use this new account for all your credit card related expenses. Another alternative is processing payments for these purchases manually to keep the 'credit card' accounts consistent.\"" ]

[ "419558", "423012", "448358" ]

[ "When you adjust your investments the following will happen: Initial condition: Modified condition: This means that after this change you will note that the amount of federal tax you pay each month via withholding will go up. You are now contributing less pre-tax, so your taxable income has increased. If you make no other changes, then in April you will either have increased your refund by 6 months x the additional $25 a month, or decreased the amount you owe by the same amount. There is no change in the total 401K balance at the end of the year, other than accounting for how much is held pre-tax vs. Roth post-tax. Keep in mind that employer contributions must be pre-tax. The company could never guess what your tax situation is. They withhold money for taxes based on the form you fill out, but they have no idea of your family's tax situation. If you fail to have enough withheld, you pay the penalty — not the company. *The tax savings are complex because it depends on marital status, your other pre-tax amounts for medical, and how much income your spouse makes, plus your other income and deductions.", "Its easier than that: employer matching contributions are always pre-tax. While your contribution is split between the pre-tax and the Roth post-tax parts, matching contributions are always pre-tax. Quote from the regulations I linked to: For example, matching contributions are not permitted to be allocated to a designated Roth account. So the tax you pay is only on the Roth portion of your contribution. One of the reasons for that is the complexity you're talking about, but not only. Matching is not always vested, and it would be hard to determine what portion to tax and at what rate if matching would be allowed to go to Roth.", "Your 401k IRA will now have three different sub-accounts, the one holding your Traditional (pre-tax) 401k contributions, the one holding your Roth 401k contributions, and the one holding the employer match contributions (which, as has been pointed out to you, cannot be considered to be Roth 401k contributions). That is, it is not true that So my next month's check shows $500+$500 going to the regular 401k, and $82+$82 going to the Roth 401k. Your next month's paystub will show $500 going into the regular 401k, $100 going into the Roth 401k, and if employer matching contributions are listed on the paystub, it will still show $600 going into the employer match. If you have chosen to invest your 401k in mutual funds (or stocks), shares are purchased when the 401k administrator receives the money and are also segregated in the three subaccounts. If you are paid monthly, then you will know on a month-by-month basis how many shares you hold in the three separate subaccounts, and there is no end-of-year modification of how many shares were purchased with Roth 401k contributions versus how many were purchased with pretax contributions or with employer matching funds as you seem to think." ]

[ "296913", "281223" ]

[ "From what I see, it is more like .70 per contract, with a $1 minimum (for options that trade over a dime.) IB does not provide any help, at all, so you have to know what you are doing. I use tradeking, which charges about $6 for a contract, but you can call them for help if needed. There looks to be other fees for IB, like when you cancel an order, but that can be offset by other trades. It is one of the reason the Motley Fool Stock Adviser service has recommended IB for an investment.", "The option commissions with IB for trading in the US market are between $0.25 to $0.70 per contract. However if you are looking to trade in Canada, where you are from, their option commission for Canada are $1.50 per contract (as you mention in your question). Note that each contract is for 100 shares, so if you wanted to trade the equivalent of 1000 shares, you would need to trade 10 contracts, so you would have to multiply the above commissions by 10 to get your final costs. (i.e. $2.50 to $7.00 in the US and $15.00 in Canada)." ]

[ "96697" ]

[ "Technically you should take the quarterly dividend yield as a fraction, add one, take the cube root, and subtract one (and then multiple by the stock price, if you want a dollar amount per share rather than a rate). This is to account for the fact that you could have re-invested the monthly dividends and earned dividends on that reinvestment. However, the difference between this and just dividing by three is going to be negligible over the range of dividend rates that are realistically paid out by ordinary stocks." ]

[ "296750" ]

[ "\"Buried on the IRS web site is the \"\"Fillable Forms Error Search Tool\"\". Rather than including an explanation of errors in the rejection email itself, you're expected to copy and paste the error email into this form, which gives more details about what's wrong. (Don't blame me; I didn't design it.) If I copy your error message in, here's the response I get: There is an error with the “primary taxpayer’s Date of Birth” in Step 2 Section 4. The date of birth that was entered does not match IRS records. Make sure you enter the correct birth date, in the correct format, in the correct space. Scroll down, and enter the current date (“Today’s date”). Today’s date is the day you intend to e-file the return again. Also, if you are making an electronic payment you must re-date that section. E-File your return. You say that you've already checked your birthday, so I don't know as this is particularly helpful. If you're confident that it's correct and in the right place, I think your next step needs to be contacting the IRS directly. They have a link at the bottom of the error lookup response on how to contact them specifically about their solution not working, or you could try contacting your local IRS office or giving them a call.\"" ]

[ "101408" ]

[ "The Money Market is a place where one trades Instruments. The market is similar to that of the Stock Market. The instruments traded in Money Markets include Short Term Debt Instruments as well as FX Swap Instruments and Mortgage & Asset Backed Securities. The FX & Mortgage Securities are not Debt instruments per se. They also include other custom created instruments that are traded. The definition of Short Term debt is any guaranteed instrument with a maturity of less than a year. These instruments are used in various transactions, including retail and the Money Market is not the only place these are traded." ]

[ "244711" ]

[ "You will not get a vote on any issues of the underlying stock. The mutual fund owner/manager will do the voting. In 2004, the Securities and Exchange Commission (SEC) required that fund companies disclose proxy votes, voting guidelines and conflicts of interest in the voting process. All funds must make these disclosures to the SEC through an N-PX filing, which must either be available to shareholders on the fund company's websites or upon request by telephone. You can also find your fund's N-PX filing on the SEC website. -- http://www.investopedia.com/articles/mutualfund/08/acting-in-interest.asp" ]

[ "253614" ]

[ "\"Liquid cash (emergency, rainy day fund) should be safe from a loss in value. Mutual funds don't give you this, especially stock funds. You can find \"\"high yield\"\" savings accounts that are now at around .8% to .9% APY which is much better than .05% and will hopefully go up. Barclays US and American Express are two big banks that normally have the highest rates. Most/all Savings and Money Market accounts should be FDIC insured. Mutual funds are not, though the investment IRA, etc. holding them may be.\"" ]

[ "49235", "127566", "189144", "172814", "53431" ]

[ "\"As others have alluded to but haven't said due to the lack of reputation points to spare, you can take advantage of oil prices by leveraging up and using as much credit and margin as the banks and brokerages (respectively) will lend you. People assume that the correct answer on this forum has to masquerade as conservative financial advice, and this is not advice nor conservative. Futures contracts are readily available, but they are expensive to obtain (like a minimum entry of $4,450). But if this expense is no such object to you then you can then obtain this contract which is actually worth 20x that and experience the price appreciation and depreciation of the whole contract. The concept is similar to a downpayment on a mortgage. You assume \"\"rock bottom\"\" oil prices, but fortunately for you, futures contracts will allow you to quickly change your bets from future price appreciation and allow you to speculate on future price depreciation. So although the union workers will be protesting full time after the drilling company lays them off, you will still be getting wealthier. Long Options. These are the best. The difference with options, amongst other speculation products, is that options require the least amount of capital risk for the greatest reward. With futures, or with trading shares of an ETF (especially on margin), you have to put up a lot of capital, and if the market does not go your desired direction, then will lose a lot. And on margin products you can lose more than you put in. Being long options does not come with these dilemmas. A long march 2015 call option on USO ETF can currently be bought for less than $200 of actual cash (ie. the trading quote will be less than $2.00, but this will cost you less than $200), and will be worth $1000 on a very modest rebound in prices. The most you can lose is the $200 for the contract. Compared to $4450 on the futures, or $100,000 (that you don't have) in the futures market if oil really moves against you, or compared to whatever large amount of cash needed to actually buy shares of an ETF needed to make any decent return. These are the most lucrative (and fun and exhilarating and ) ways to take advantage of rock bottom oil prices, as an individual.\"", "Probably the easiest way for individual investors is oil ETFs. In particular, USO seems to be fairly liquid and available. You should check carefully the bid/ask spreads in this volatile time. There are other oil ETFs and leveraged and inverse oil ETFs exist as well, but one should heed the warnings about leveraged ETFs. Oil futures are another possibility though they can be more complicated and tough to access for an individual investor. Note that futures have a drift associated with them as well. Be careful close or roll any positions before delivery, of course, unless you have a need for a bunch of actual barrels of oil. Finally, you can consider investing in commodities ETFs or Energy stocks or stock ETFs that are strongly related to the price of oil. As Keshlam mentions, care is advised in all these methods. Many people thought oil reached its bottom a few weeks back then OPEC decided to do nothing and the price dropped even further.", "A long call options spread. In this case, a bet that the USO ETF would recover to $35. You can see, I got in when USO was $28, and it's continued to drop, but it has till Jan '17 to recover. The spread is set up to give leverage, when I entered the trade, a 50% recovery would result in a 200% gain, or 3X my bet. An option spread can be bought using any two strikes, and with different payouts depending on how far out of the money the strikes are.", "\"I'm really surprised more people didn't recommend UGA or USO specifically. These have been mentioned in the past on a myriad of sites as ways to hedge against rising prices. I'm sure they would work quite well as an investment opportunity. They are ETF's that invest in nearby futures and constantly roll the position to the next delivery date. This creates a higher than usual expense ratio, I believe, but it could still be a good investment. However, be forewarned that they make you a \"\"partner\"\" by buying the stock so it can mildly complicate your tax return.\"", "I would suggest that oil stocks are going down due to reduced earnings predictions. The market may go too far in selling off oil and oil-related stocks. You may be able to pick up a bargain, but beware that prices may continue to fall in the short to medium term." ]

[ "400196", "122679", "536282", "325426", "374375" ]

[ "Almost all major no-load mutual fund families allow you to do the kind of thing you are talking about, however you may need an initial investment of between $1000 to $3000 depending on the fund. Once you have it however, annual fee's are usually very little, and the fees to buy that companies funds are usually zero if it's a no-load company (Vanguard, TRowPrice, etc) With the larger companies that means you have a pretty large selection of funds, but generally EACH fund has a minimum initial purchase, once that's met then you can buy additional amounts in small quantities without a problem. For someone on a smaller budget, many low cost brokers (ETrade as mentioned by Litteadv, Scottrade as mentioned by myself in another similar question today) allow you to start with smaller initial balances and have a small selection of funds or ETF's that you can trade from without commission. In the case of Scottrade, they have like 15 ETF's that you can trade comission free. Check with the various low cost brokerages such as ETrade, Scottrade, and TDAmeritrade, to see what their policies are, and what if any funds/ETF's they allow you to trade in without commissions. Keep in mind that for Mutual funds, there may still be a fund minimum initial investment that applies, be sure to check if that is the case or not. The lack of any minimum investment makes ETF's a slightly more attractive option for someone who doesn't have the 'buy in' that many funds require.", "For your purposes, I would recommend using direct investment in a no-load mutual fund. I mostly use Vanguard and would recommend them. They just about invented index funds, usually have the lowest (internal) expenses for index and many other funds, if you take electronic instead of paper statements there is no maintenance fee, have no transaction commission, can do periodic automatic investment from a bank account etc. A typical index fund there would require an initial $3000 investment and would have a minimum of $100 for each additional investment. If you can't come up with an initial sum of that size, you might be able to find a broker with a lower minimum and suitable free ETFs trades as others have suggested.", "ETrade allows this without fees (when investing into one of the No-Load/No-Fees funds from their list). The Sharebuilder plan is better when investing into ETF's or stocks, not for mutual funds, their choice (of no-fees funds) is rather limited on Sharebuilder.", "\"Previously (prior to Capital One acquisition -- it's kind of like K-Mart buying Sears) Sharebuilder offered 12 automatic (i.e. pre-scheduled) stock purchases per month if you subscribed to their $12/mo \"\"Advantage\"\" plan. So, 12 trades for $1 a trade. Great deal. Except then they flattened their pricing to everyone's acclaim (that is, everyone except for the non-millionaire casual investors) and jacked it up to $4 per automatic investment. As far as I know, Sharebuilder's 12 no-fee investments for $12/mo was rather unique in the online trading world -- and now it's very sadly extinct. They do have no-fee mutual fund investing, however, for what it's worth.\"", "\"If you are not worried about timing the market and want to buy primarily \"\"blue chip\"\" stocks to hold for a while, consider using Loyal3. They don't charge any commission. The downside is that trades are executed at the end of the day and there's only about 60 companies currently available (but there are some really good ones currently available).\"" ]

[ "301600", "20539" ]

[ "Annuity calculation formulas can be found here. http://en.wikipedia.org/wiki/Annuity_(finance_theory). In addition, as suggested in the comments, there are many sites that have calculators. Having said that, a simple financial mechanism that is followed by many is to invest a portion of the fund in regular income instruments, for example Govt. or corporate bonds that pay a regular coupon/interest and some in diversified instruments like gold, stock etc. The exact proportion is dependent on may factors, like mortality, inflation, lifestyle, health care requirements, other expenses. The regular income provides the day to day expenses on a monthly/yearly basis, while the other instruments hedge against inflation and provide growth.", "\"Note that it isn't always clear that \"\"turning it all into an annuity\"\" is the right answer. Annuities are essentially insurance policies -- you're paying them a share of your income to guarantee a specific payout. If you outlive the actuarial tables, that may be a win. If the market crashes, that may be a win. But I'm increasingly hearing the advice that staying in investments (albeit in a very conservative position) may pay better longer. There are tools which will do monte-carlo modelling based on what the market has done in the past. You give them your estimate of how much in today's dollars would be needed to \"\"maintain your lifestyle\"\", and they'll tell you how much savings you need -- and what form you might want to keep those savings in -- to have good odds of being able to live entirely off the earnings and never touch the capital My employer makes such a tool available to us, and in fact Quicken has a simpler version built into it; it's nice that the two agree.\"" ]

[ "63308" ]

[ "Is anything possible, and if so, how? Because of the circumstances, there is nothing you can do. You do not have the ISIN, nor are you a part-owner of the account. The information you would need is: As always, good luck." ]

[ "179408" ]

[ "A Roth IRA is just an account wrapper. Inside a Roth IRA you can have a plain 0.1% savings account, or a brokerage account, or an annuity or whatever. There's no rate of return for a Roth IRA. That particular calculator seems to assume you'll be wrapping a brokerage account in a Roth IRA and investing in the stock market. Over a long period 6% is probably a reasonable rate of return considering the S&P 500 has returned about 7% over the last decade." ]

[ "1642" ]

[ "\"During Graham's career, gold and currency were the same thing because of the gold standard. Graham did not advise investing in currencies, only in bonds and stocks, the latter only for intelligent speculation. Graham died a couple of years after Nixon closed the gold window, ending the gold standard. Gold may be thought of as a currency even today, as endowments and other investors use it as a store of value or for diversification of risks. However, currency or commodities investing does not seem Graham-like. How could you reliably estimate intrinsic value of a currency or commodity, so that you can have a Graham-like margin of safety after subtracting the intrinsic value from the market value? Saying that gold is \"\"clearly underpriced in today's market\"\" is just hand-waving. A Graham analysis such as \"\"net net\"\" (valuing stocks by their current tangible assets net of all liabilities) is a quantitative analysis of accounting numbers audited by CPAs and offers a true margin of safety.\"" ]

[ "326559", "370086" ]

[ "The link provided by DumbCoder (below) is only relevant to UK resident investors and does not apply if you live in Malaysia. I noticed that in a much older question you asked a similar question about taxes on US stocks, so I'll try and answer both situations here. The answer is almost the same for any country you decide to invest in. As a foreign investor, the country from which you purchase stock cannot charge you tax on either income or capital gains. Taxation is based on residency, so even when you purchase foreign stock its the tax laws of Malaysia (as your country of residence) that matter. At the time of writing, Malaysia does not levy any capital gains tax and there is no income tax charged on dividends so you won't have to declare or pay any tax on your stocks regardless of where you buy them from. The only exception to this is Dividend Withholding Tax, which is a special tax taken by the government of the country you bought the stock from before it is paid to your account. You do not need to declare this tax as it his already been taken by the time you receive your dividend. The rate of DWT that will be withheld is unique to each country. The UK does not have any withholding tax so you will always receive the full dividend on UK stocks. The withholding tax rate for the US is 30%. Other countries vary. For most countries that do charge a withholding tax, it is possible to have this reduced to 15% if there is a double taxation treaty in place between the two countries and all of the following are true: Note: Although the taxation rules of both countries are similar, I am a resident of Singapore not Malaysia so I can't speak from first hand experience, but current Malaysia tax rates are easy to find online. The rest of this information is common to any non-US/UK resident investor (as long as you're not a US person).", "FYI, I am assuming you are an individual investor.. The rates on the website may change, if the government decides so. Anyway it is a UK government website, so it would reflect the changes immediately." ]

[ "250761", "540816" ]

[ "\"Stock prices are set by bidding. In principle, a seller will say, \"\"I want $80.\"\" If he can't find anyone willing to buy at that price, he'll either decide not to sell after all, or he'll lower his price. Likewise, a buyer will say, \"\"I'll pay $70.\"\" If he can't find anyone willing to pay that price, he'll either decide not to buy or he'll increase his price. For most stocks there are many buyers and many sellers all the time, so there's a constant interplay. The typical small investor has VERY little control of the price. You say, \"\"I want to buy 10 shares of XYZ Corporation and my maximum price is $20.\"\" If the current trending price is below $20, your broker will buy it for you. If not, he won't. You normally have some time limit on the order, so if the price falls within your range within that time period, your broker will buy. That is, your choice is basically to buy or not buy, or sell or not sell, at the current price. You have little opportunity to really negotiate a better price. If you have a significant percentage of a company's total stock, different story. In real life, most stocks are being traded constantly, so buyers and sellers both have a pretty good idea of the current price. If the last sale was ten minutes ago for $20, it's unlikely anyone's going to now bid $100. They're going to bid $20.50 or $19.25 or some such. If the last sale was for $20 and your broker really came to the floor and offered to buy for $100, I suppose someone would sell to him very quickly before he realized what an outrageous price this was. I use TD Ameritrade, and on their web site, if I give a price limit on a buy that's more than a small percentage above the last sale, they reject it as an error. I forget the exact number but they won't even accept a bid of $80 if the stock is going for $40. They might accept $41 or $42, something like that.\"", "\"Price is decided by what shares are offered at what prices and who blinks first. The buyer and seller are both trying to find the best offer, for their definition of best, within the constraints then have set on their bid or ask. The seller will sell to the highest bid they can get that they consider acceptable. The buyer will buy from the lowest offer they can get that they consider acceptable. The price -- and whether a sale/purchase happens at all -- depends on what other trades are still available and how long you're willing to wait for one you're happy with, and may be different on one share than another \"\"at the same time\"\" if the purchase couldn't be completed with the single best offer and had to buy from multiple offers. This may have been easier to understand in the days of open outcry pit trading, when you could see just how chaotic the process is... but it all boils down to a high-speed version of seeking the best deal in an old-fashioned marketplace where no prices are fixed and every sale requires (or at least offers the opportunity for) negotiation. \"\"Fred sells it five cents cheaper!\"\" \"\"Then why aren't you buying from him?\"\" \"\"He's out of stock.\"\" \"\"Well, when I don't have any, my price is ten cents cheaper.\"\" \"\"Maybe I won't buy today, or I'll buy elsewhere. \"\"Maybe I won't sell today. Or maybe someone else will pay my price. Sam looks interested...\"\" \"\"Ok, ok. I can offer two cents more.\"\" \"\"Three. Sam looks really interested.\"\" \"\"Two and a half, and throw in an apple for Susie.\"\" \"\"Done.\"\" And the next buyer or seller starts the whole process over again. Open outcry really is just a way of trying to shop around very, very, very fast, and electronic reconciliation speeds it up even more, but it's conceptually the same process -- either seller gets what they're asking, or they adjust and/or the buyer adjusts until they meet, or everyone agrees that there's no agreement and goes home.\"" ]

[ "250195", "240975" ]

[ "In your case, you could very well leave it in something like FFFFX, which for readers is a self balancing fund with a target retirement date of 2040. These funds are a conglomeration of other funds that tend to move more conservatively as time passes. However, I like to put no more than 10% of my portfolio in one fund with exceptions made for balances less than 20K. So If I had 18K it really wouldn't matter if it was in FUSEX a S&P 500 index fund. However by investing in FFFFX you pretty much meet that requirement. So you are golden if that fund meets your goals. For me, I kind of hate bonds and despite being of similar age, I have almost no money invested in bonds.", "First, you should diversify your portfolio. If your entire portfolio is in the Roth IRA, then you should eventually diversify that. However, if you have an IRA and a 401k, then it's perfectly fine for the IRA to be in a single fund. For example, I used my IRA to buy a riskier REIT that my 401k doesn't support. Second, if you only have a small amount currently invested, e.g. $5500, it may make sense to put everything in a single fund until you have enough to get past the low balance fees. It's not uncommon for funds to charge lower fees to someone who has $8000, $10,000, or $12,000 invested. Note that if you deposit $10,000 and the fund loses money, they'll usually charge you the rate for less than $10,000. So try to exceed the minimum with a decent cushion. A balanced fund may make sense as a first fund. That way they handle the diversification for you. A targeted fund is a special kind of balanced fund that changes the balance over time. Some have reported that targeted funds charge higher fees. Commissions on those higher fees may explain why your bank wants you to buy. I personally don't like the asset mixes that I've seen from targeted funds. They often change the stock/bond ratio, which is not really correct. The stock/bond ratio should stay the same. It's the securities (stocks and bonds) to monetary equivalents that should change, and that only starting five to ten years before retirement. Prior to that the only reason to put money into monetary equivalents is to provide time to pick the right securities fund. Retirees should maintain about a five year cushion in monetary equivalents so as not to be forced to sell into a bad market. Long term, I'd prefer low-load index funds. A bond fund and two or three stock funds. You might want to build your balance first though. It doesn't really make sense to have a separate fund until you have enough money to get the best fees. 70-75% stocks and 25-30% bonds (should add to 100%, e.g. 73% and 27%). Balance annually when you make your new deposit." ]

[ "474248", "193081", "341413", "136662", "153679" ]

[ "The Federal Reserve website notes that creditors must accept cash for debts on services already rendered, but that businesses may refuse cash for services not yet rendered unless prohibited by local law. The Treasury website includes examples of businesses limiting what cash they will accept: For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy.", "You have to take legal tender to settle a debt. If your business model doesn't involve the customer incurring a debt that is then settled, you don't have to take cash. For example, in a restaurant where you pay after eating, you can insist on paying cash, because you're settling a debt. But in McDonald's they can refuse your cash at the counter, because you've not received your food yet and so no debt has been incurred.", "\"They don't have to take cash if they reasonably told you in advance they don't take cash, because they made fair effort to prevent you from incurring a debt. They don't have to take cash if the transaction hasn't yet happened (not a debt) or if it can be easily undone at no cost to either party - such as a newspaper subscription they can just stop delivering. Both of these reasons are limited by the rules against discrimination, see below. They don't have to take cash if it's impracticable. For instance a transit bus when fares first went to $1.00, it took years to fund new fareboxes able to take paper money. You don't have to take a mortgage payment in pennies. Liquor stores don't have to take $100 bills. (it requires them to keep too much change in the till, which makes them a robbery target). Trouble arises when it appears there's an ulterior motive for the rule. Suppose a Landlord Jim requires rent to be paid with EFT. Rent-controlled Marcie tells the judge \"\"It's a scheme to oust me, he knows I'm unbanked\"\". Jim counters \"\"No. I got mugged last month because criminals know when I collect cash rents.\"\" It will turn on whether Jim can show good-faith effort to work with his unbanked tenants to find other ways to pay. If Jim does a particularly bad job of this, he could find himself paying Marcie's legal bills! Even worse if the ulterior motive is discrimination. Chet the plumber hates Muslims. Alice the feed supplier hates the Amish. So they decide to take credit cards only, knowing those people's religions don't allow them. Their goose is cooked once they can't show any other reasonable reason to refuse cash.\"", "\"Apartment complexes have had a long history of not accepting cash for payment of rent. This eliminates the problem of robbery and strongly reduces the risks of embezzlement. THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE Article 1, Section 10 of the US Constitution states: No State shall ... make any Thing but gold and silver Coin a Tender in Payment of Debts Previous editions of banknotes stated that the notes were redeemable in gold or in lawful money. The Mint Act of 1792 set gold and silver as legal currency (and that one did not have to accept \"\"base metal coins\"\" for more than $10 which is why coin rolls only go up to $10). The Coinage Act of 1873 dropped silver and made gold the legal standard for currency. In 1933, the \"\"redeemable in gold\"\" was changed by federal statute and the legend you mention was added. Prior to 1933, someone could demand that you pay them in gold and not with a bank note. Legislation in 1933 ended that. This clause in the Constitution leads some political groups to wish to return to a gold standard. I recommend reading the book Greenback as it describes how our currency got the way it did and why that clause appears on currency.\"", "\"A business can refuse cash (paper currency) payment pretty much in all cases provided it's a reasonable policy and/or notified during/in advance of contracting. Details in this link. \"\"all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services.\"\" Even if the payment is being made to settle a debt or other obligation, the creditor may refuse payment if their rationale is reasonable (as determined by the courts).\"" ]

[ "94496", "74041" ]

[ "First of all, there are some differences between the retirement accounts that you mentioned regarding taxes. Traditional IRA and 401(k) accounts allow you to make pre-tax contributions, giving you an immediate tax deduction when you contribute. Roth IRA, Roth 401(k) are funded with after tax money, and a non-retirement account is, of course, also funded with after tax money. So if you are looking for the immediate tax deduction, this is a point in favor of the retirement accounts. Roth IRA & Roth 401(k) accounts allow the investment to grow tax-free, which means that the growth is not taxed, even when taking the investment out at retirement. With Traditional IRA and 401(k) accounts, you need to pay tax on the gains realized in the account when you withdraw the money, just as you do with a non-retirement account. This is a point in favor of the Roth retirement accounts. To answer your question about capital gains, yes, it is true that you do not have a capital gain until an investment is sold. So, discounting the contribution tax deductions of the retirement accounts, if you only bought individual stocks that never paid a dividend, and never sold them until retirement, you are correct that it really wouldn't matter if you had it in a regular brokerage account or in a traditional IRA. However, even people dedicated to buy-and-hold rarely actually buy only individual stocks and hold them for 30 years. There are several different circumstances that will generally happen in the time between now and when you want to withdraw the money in retirement that would be taxable events if you are not in a retirement account: If you sell an investment and buy a different one, the gains would be taxable. If you want to rebalance your holdings, this also involves selling a portion of your investments. For example, if you want to maintain an 80% stock/20% bond ratio, and your stock values have gone up to 90%, you might want to sell some stock and buy bonds. Or if you are getting closer to retirement, you might decide to go with a higher percentage of bonds. This would trigger capital gains. Inside a mutual fund, anytime the management sells investments inside the fund and realizes capital gains, these gains are passed on to the investors, and are taxable. (This happens more often with managed funds than index funds, but still happens occasionally with index funds.) Dividends earned by the investments are taxable. Any of these events in a non-retirement account would trigger taxes that need to be paid immediately, even if you don't withdraw a cent from your account.", "Ben Miller's answer is very thorough, and I up voted it. I believe that the ability to rebalance without tax implications is very import, but there are two aspects of the question that were not covered: The 401K in many cases comes with a company match. Putting enough money into the fund each year to maximize the match, give you free money that is not available in the non-retirement accounts. The presence of that match is to encourage employees to contribute: even if they are tying up their funds until retirement age; and they are into a plan with only a handful of investment options; and they may have higher expenses in the 401K. The question also had a concern about the annual limits for the 401K (18,000) and the IRA (5,500). The use of a retirement account doesn't in any way limit your ability to invest in non-retirement accounts. You can choose to invest from 0 to 23,500 in the retirement accounts and from 0 to unlimited into the non-retirement accounts. Double those amounts if you are married." ]

[ "151817", "563551", "340371" ]

[ "\"Technically, this doesn't seem like a scam, but I don't think the system is beneficial. They use a lot of half-truths to convince you that their product is right for you. Some of the arguments presented and my thoughts. Don't buy term and invest the rest because you can't predict how much you'll earn from the \"\"rest\"\" Also Don't invest in a 401k because you can't predict how much you'll earn They are correct that you won't know exactly how much you'll have due to stock market, but that doesn't mean the stock market is a bad place to put your money. Investing in a 401k is risky because of the harsh 401k withdrawal rules Yes, 401ks have withdrawal rules (can't typically start before 59.5, must start by 70.5) but those rules don't hamper my investing style in any way. Most Term Life Insurance policies don't pay out They are correct again, but their conclusions are wrong. Yes, most people don't die while you have a term insurance policy which is why Term life insurance is relatively cheap. But they aren't arguing you don't need insurance, just that you need their insurance which is \"\"better\"\" You need the Guaranteed growth they offer The chart used to illustrate their guaranteed growth includes non-guaranteed dividends. They invest $10,000 per year for 36 years and end up with $1,000,000. That's a 5% return! I use 10% for my estimate of stock market performance, but let's say it's only 8%. The same $10,000 per year results in over $2 Million dollars. Using 10.5% (average return of the S&P 500 over it's lifetime) the result is a staggering $3.7 MILLION. So if I'm looking at $3.7M vs. $1M, It costs me $2.7 Million dollars to give me the same coverage as my term life policy. That's one expensive Term Life Insurance policy. My personal favorite: Blindly following the advice of Wall Street and financial “gurus” such as Dave Ramsey and Suze Orman got you where you are. Are you happy with the state of your finances? Do you still believe their fairytale, “Buy Term (insurance) and Invest the Difference”? Yes, I sure do believe that fairytale and I'm prospering quite well thank you. :) While I don't think this is a scam, it's outrageously expensive and not a good financial choice.\"", "\"Oddly enough, I started to research the \"\"Bank on Yourself\"\" strategy today as well (even before I'd ran across this question!). I'd heard an ad on the radio for it the other day, and it caught my attention because they claimed that the strategy isn't prone to market fluctuations like the stock market. It seemed in their radio ad that their target market was people who had lost serious money in their 401k's. So I set about doing some research of my own. It seems to me that the website bankonyourself.com gives a very superficial overview of the strategy without truly ever getting to the meat of it. I begin having a few misgivings at the point that I realized I'd read through a decent chunk of their website and yet I still didn't have a clear idea of the mechanism behind it all. I become leery any time I have to commit myself to something before I can be given a full understanding of how it works. It's shady and reeks of someone trying to back you into a corner so they can bludgeon you with their sales pitch until you cry \"\"Mercy!\"\" and agree to their terms just to stop the pain (which I suspect is what happens when they send an agent out to talk to you). There were other red flags that stood out to me, but I don't feel like getting into them. Anyway, through the use of google I was able to find a thread on another forum that was a veritable wealth of knowledge with regard to the mechanism of \"\"Bank on Yourself\"\" how it works. Here is the link: Bank on Yourself/Infinite Banking... There are quite a few users in the thread who have excellent insights into how all of it works. After reading through a large portion of the thread, I came away realizing that this strategy isn't for me. However, it does appear to be a potential choice for certain people depending upon their situation.\"", "\"I haven't read the book and have no intention of reading it. This definitely looks like a forced savings plan with \"\"Whole Life Insurance\"\" as the theme – which is pretty bad for someone who is able to take care of his finances. It would be good for someone who is not very good with his finances and wants to be forced into savings, but then even for those people it would only help a little; there are enough clauses that would make things more bad for him. i.e. one can choose to take a loan, pay only interest etc. No book is going to help you build a savings habit. One has to realize and spend what is essential (it means not buying or doing tons of things) and putting quite a bit away for a rainy day. After this, comes investing wisely...\"" ]

[ "72024", "230355" ]

[ "\"Not all call options that have value at expiration, exercise by purchasing the security (or attempting to, with funds in your account). On ETNs, they often (always?) settle in cash. As an example of an option I'm currently looking at, AVSPY, it settles in cash (please confirm by reading the documentation on this set of options at http://www.nasdaqomxtrader.com/Micro.aspx?id=Alpha, but it is an example of this). There's nothing it can settle into (as you can't purchase the AVSPY index, only options on it). You may quickly look (wikipedia) at the difference between \"\"American Style\"\" options and \"\"European Style\"\" options, for more understanding here. Interestingly I just spoke to my broker about this subject for a trade execution. Before I go into that, let me also quickly refer to Joe's answer: what you buy, you can sell. That's one of the jobs of a market maker, to provide liquidity in a market. So, when you buy a stock, you can sell it. When you buy an option, you can sell it. That's at any time before expiration (although how close you do it before the closing bell on expiration Friday/Saturday is your discretion). When a market maker lists an option price, they list a bid and an ask. If you are willing to sell at the bid price, they need to purchase it (generally speaking). That's why they put a spread between the bid and ask price, but that's another topic not related to your question -- just note the point of them buying at the bid price, and selling at the ask price -- that's what they're saying they'll do. Now, one major difference with options vs. stocks is that options are contracts. So, therefore, we can note just as easily that YOU can sell the option on something (particularly if you own either the underlying, or an option deeper in the money). If you own the underlying instrument/stock, and you sell a CALL option on it, this is a strategy typically referred to as a covered call, considered a \"\"risk reduction\"\" strategy. You forfeit (potential) gains on the upside, for money you receive in selling the option. The point of this discussion is, is simply: what one buys one can sell; what one sells one can buy -- that's how a \"\"market\"\" is supposed to work. And also, not to think that making money in options is buying first, then selling. It may be selling, and either buying back or ideally that option expiring worthless. -- Now, a final example. Let's say you buy a deep in the money call on a stock trading at $150, and you own the $100 calls. At expiration, these have a value of $50. But let's say, you don't have any money in your account, to take ownership of the underlying security (you have to come up with the additional $100 per share you are missing). In that case, need to call your broker and see how they handle it, and it will depend on the type of account you have (e.g. margin or not, IRA, etc). Generally speaking though, the \"\"margin department\"\" makes these decisions, and they look through folks that have options on things that have value, and are expiring, and whether they have the funds in their account to absorb the security they are going to need to own. Exchange-wise, options that have value at expiration, are exercised. But what if the person who has the option, doesn't have the funds to own the whole stock? Well, ideally on Monday they'll buy all the shares with the options you have at the current price, and immediately liquidate the amount you can't afford to own, but they don't have to. I'm mentioning this detail so that it helps you see what's going or needs to go on with exchanges and brokerages and individuals, so you have a broader picture.\"", "Today SPY (The S&P ETF) trades at $128. The option to buy at $140 (this is a Jan '13 call) trades for $5. I buy the call, for $500 as they trade in 100 lots. The S&P skyrockets to 1500 and SPY to $150. The call trades for $11, as it still has a month or two before expiring, so I sell it, and get $1100. The S&P rose 17%, but I doubled my money. If it 'only' rose 9%, to less than $140, I'd lose my investment. No, I don't need to buy the SPY I can sell the call any time before expiration. In fact, most options are not exercised, they are sold between purchase and expiration date." ]

[ "485949" ]

[ "The LLC portion is completely irrelevant. Don't know why you want it. You can create a joint/partnership trading account without the additional complexity of having LLC. What liability are you trying to limit here? Her sisters will file tax returns in the us using the form 1040NR, and only reporting the dividends they received, everything else will be taxed by Vietnam. You'll have to investigate how to file tax returns there as well. That said, you'll need about $500,000 each to invest in the regional centers. So you're talking about 1.5 million of US dollars at least. From a couple of $14K gifts to $1.5M just by trading? I don't see how this is feasible." ]

[ "474512", "348424", "138795", "399198", "127316" ]

[ "\"In the US, and in most other countries, dividends are considered income when paid, and capital gains/losses are considered income/loss when realized. This is called, in accounting, \"\"recognition\"\". We recognize income when cash reaches our pocket, for tax purposes. So for dividends - it is when they're paid, and for gains - when you actually sell. Assuming the price of that fund never changes, you have this math do to when you sell: Of course, the capital loss/gain may change by the time you actually sell and realize it, but assuming the only price change is due to the dividends payout - it's a wash.\"", "You are incorrect in saying that you have a capital gains of $0. You either have no capital gains activity, because you haven't realized it or you have an unrealized capital gains of -$10k. If you were to sell immediately after receiving the dividend you would end up as a wash investment wise - the 10k of dividend offsetting the 10k capital wash. Though due to different tax treatments of money you may be slightly negative with respect to taxes. You are taxed when you receive the money. And you realized that 10k in dividends - even if you didn't want too. In the future if this bothers you. You need to pay attention to the dividend pay out dates for funds. But then just after they payout a dividend and have drain their cash account. The issue is that you unknowingly bought 90k of stock and 10k of cash. This information is laid out in the fund documentation, which you should be reviewing before investing in any new fund.", "\"I'd agree that this can seem a little unfair, but it's an unavoidable consequence of the necessary practicality of paying out dividends periodically (rather than continuously), and differential taxation of income and capital gains. To see more clearly what's going on here, consider buying stock in a company with extremely simple economics: it generates a certain, constant earnings stream equivalent to $10 per share per annum, and redistributes all of that profit as periodic dividends (let's say once annually). Assume there's no intrinsic growth, and that the firm's instrinsic value (which we'll say is $90 per share) is completely neutral to any other market factors. Under these economics, this stock price will show a \"\"sawtooth\"\" evolution, accruing from $90 to $100 over the course of a year, and resetting back down to $90 after each dividend payment. Now, if I am invested in this stock for some period of time, the fair outcome would be that I receive an appropriately time-weighted share of the $10 annual earnings per share, less my tax. If I am invested for an exact calendar year, this works as I'd expect: the stock price on any given day in the year will be the same as it was exactly one year earlier, so I'll realise zero capital gain, but I'll have collected a $10 taxed dividend along the way. On the other hand, what if I am invested for exactly half a year, spanning a dividend payment? I receive a dividend payment of $10 less tax, but I make a capital loss of -$5. Overall, pre-tax, I'm up $5 per share as expected. However, the respective tax treatment of the dividend payment (which is classed as income) and the capital gains is likely to be different. In particular, to benefit from the \"\"negative\"\" taxation of the capital loss I need to have some positive capital gain elsewhere to offset it - if I can't do that, I'm much worse off compared to half the full-year return. Further, even if I can offset against a gain elsewhere the effective taxation rates are likely to be different - but note that this could work for or against me (if my capital gains rate is greater than my income tax rate I'd actually benefit). And if I'm invested for half a year, but not spanning a dividend, I make $5 of pure capital gains, and realise a different effective taxation rate again. In an ideal world I'd agree that the effective taxation rate wouldn't depend on the exact timing of my transactions like this, but in reality it's unavoidable in the interests of practicality. And so long as the rules are clear, I wouldn't say it's unfair per se, it just adds a bit of complexity.\"", "How and why is this considered fair (and/or legal)? Let's use an analogy. The issue is not fairness, it is just the rules. The assets you own and the cash you receive are reported differently. If the rules don't make sense, I suggest you hire an adviser that can teach you and help you get the most out of your investments.", "The issue for you seems to be the sequence of events. Presumably, there will be a gain in the fund. In one year, you have a fund worth $100,000 and the $8500 your netted from the $10,000 dividend. (Dividends are taxed at 15% for most of us. If your taxable income is under $38K single, it's $0) An $8500 net return for the year. Now, if there were no initial dividend, and at the end of a full year, your $100K grew to $110K, and then gave you the $10K dividend, you might not be so unhappy. Even on day 2, you now have a fund worth $90K with a basis of $100K, and the promise of future dividends or cap gains. When you sell, the first $10K of gain from this point will effectively be tax free due to this quick drop. To directly answer the last few sentences, dividends and cap gains are different. And different still, for the way a fund processes them." ]

[ "285126", "525231", "67069", "251813" ]

[ "\"I may be underestimating your knowledge of how exchanges work; if so, I apologize. If not, then I believe the answer is relatively straightforward. Lets say price of a stock at time t1 is 15$ . There are many types of price that an exchange reports to the public (as discussed below); let's say that you're referring to the most recent trade price. That is, the last time a trade executed between a willing buyer and a willing seller was at $15.00. Lets say a significant buy order of 1M shares came in to the market. Here I believe might be a misunderstanding on your part. I think you're assuming that the buy order must necessarily be requesting a price of $15.00 because that was the last published price at time t1. In fact, orders can request any price they want. It's totally okay for someone to request to buy at $10.00. Presumably nobody will want to sell to him, but it's still a perfectly valid buy order. But let's continue under the assumptions that at t1: This makes the bid $14.99 and the ask $15.00. (NYSE also publishes these prices.) There aren't enough people selling that stock. It's quite rare (in major US equities) for anyone to place a buy order that exceeds the total available shares listed for sale at all prices. What I think you mean is that 1M is larger than the amount of currently-listed sell requests at the ask of $15.00. So say of the 1M only 100,000 had a matching sell order and others are waiting. So this means that there were exactly 100,000 shares waiting to be sold at the ask of $15.00, and that all other sellers currently in the market told NYSE they were only willing to sell for a price of $15.01 or higher. If there had been more shares available at $15.00, then NYSE would have matched them. This would be a trigger to the automated system to start increasing the price. Here is another point of misunderstanding, I think. NYSE's automated system does not invent a new, higher price to publish at this point. Instead it simply reports the last trade price (still $15.00), and now that all of the willing sellers at $15.00 have been matched, NYSE also publishes the new ask price of $15.01. It's not that NYSE has decided $15.01 is the new price for the stock; it's that $15.01 is now the lowest price at which anyone (known to NYSE) is willing to sell. If nobody happened to be interested in selling at $15.01 at t1, but there were people interested in selling at $15.02, then the new published ask would be $15.02 instead of $15.01 -- not because NYSE decided it, but just because those happened to be the facts at the time. Similarly, the new bid is most likely now $15.00, assuming the person who placed the order for 1M shares did not cancel the remaining unmatched 900,000 shares of his/her order. That is, $15.00 is now the highest price at which anyone (known to NYSE) is willing to buy. How much time does the automated system wait to increment the price, the frequency of the price change and by what percentage to increment etc. So I think the answer to all these questions is that the automated system does none of these things. It merely publishes information about (a) the last trade price, (b) the price that is currently the lowest price at which anyone has expressed a willingness to sell, and (c) the price that is currently the highest price at which anyone has expressed a willingness to buy. ::edit:: Oh, I forgot to answer your primary question. Can we estimate the impact of a large buy order on the share price? Not only can we estimate the impact, but we can know it explicitly. Because the exchange publishes information on all the orders it knows about, anyone tracking that information can deduce that (in this example) there were exactly 100,000 shares waiting to be purchased at $15.00. So if a \"\"large buy order\"\" of 1M shares comes in at $15.00, then we know that all of the people waiting to sell at $15.00 will be matched, and the new lowest ask price will be $15.01 (or whatever was the next lowest sell price that the exchange had previously published).\"", "\"There are two distinct questions that may be of interest to you. Both questions are relevant for funds that need to buy or sell large orders that you are talking about. The answer depends on your order type and the current market state such as the level 2 order book. Suppose there are no iceberg or hidden orders and the order book (image courtesy of this question) currently is: An unlimited (\"\"at market\"\") buy order for 12,000 shares gets filled immediately: it gets 1,100 shares at 180.03 (1,100@180.03), 9,700 at 180.04 and 1,200 at 180.05. After this order, the lowest ask price becomes 180.05 and the highest bid is obviously still 180.02 (because the previous order was a 'market order'). A limited buy order for 12,000 shares with a price limit of 180.04 gets the first two fills just like the market order: 1,100 shares at 180.03 and 9,700 at 180.04. However, the remainder of the order will establish a new bid price level for 1,200 shares at 180.04. It is possible to enter an unlimited buy order that exhausts the book. However, such a trade would often be considered a mis-trade and either (i) be cancelled by the broker, (ii) be cancelled or undone by the exchange, or (iii) hit the maximum price move a stock is allowed per day (\"\"limit up\"\"). Funds and banks often have to buy or sell large quantities, just like you have described. However they usually do not punch through order book levels as I described before. Instead they would spread out the order over time and buy a smaller quantity several times throughout the day. Simple algorithms attempt to get a price close to the time-weighted average price (TWAP) or volume-weighted average price (VWAP) and would buy a smaller amount every N minutes. Despite splitting the order into smaller pieces the price usually moves against the trader for many reasons. There are many models to estimate the market impact of an order before executing it and many brokers have their own model, for example Deutsche Bank. There is considerable research on \"\"market impact\"\" if you are interested. I understand the general principal that when significant buy orders comes in relative to the sell orders price goes up and when a significant sell order comes in relative to buy orders it goes down. I consider this statement wrong or at least misleading. First, stocks can jump in price without or with very little volume. Consider a company that releases a negative earnings surprise over night. On the next day the stock may open 20% lower without any orders having matched for any price in between. The price moved because the perception of the stocks value changed, not because of buy or sell pressure. Second, buy and sell pressure have an effect on the price because of the underlying reason, and not necessarily/only because of the mechanics of the market. Assume you were prepared to sell HyperNanoTech stock, but suddenly there's a lot of buzz and your colleagues are talking about buying it. Would you still sell it for the same price? I wouldn't. I would try to find out how much they are prepared to buy it for. In other words, buy pressure can be the consequence of successful marketing of the stock and the marketing buzz is what changes the price.\"", "If you look at a trade grid you can see how this happens. If there are enough bids to cover all shares currently on the sell side at a certain price, those shares will be bought and increased price quotes will be shown for the bids and ask. If there are enough bids to cover this price, those will get bought and higher prices will be shown and this process will repeat until the sell side has more power than the buy side. It seems like this process is going on all day long with momentum either on the upside or downside. But I think that much of this bidding and selling is automatic and is being done by large trading firms and high tech computers. I also feel that many of these bids and asks are already programmed to appear once there is a price change. So once one price gets bought, computers will put in higher bids to take over asks. It's like a virtual war between trading firms and their computers. When more money is on the buy side the stock will go up, and vice versa. I sort of feel like this high-frequency trading is detrimental to the markets and doesn't really give everyone a fair shot. Retail investors do not have the resources and knowledge in order to do this sort of high frequency trading. It also seems to go against certain free market principles in my opinion.", "\"Orders large enough to buy down the current Bid and Ask Book are common. This is the essential strategy through which larger traders \"\"Strip\"\" the Bid or Ask in order to excite motion in a direction that is favorable to their interests. Smaller traders will often focus on low float/small cap tickers, as both conditions tend to favor volatility on relatively small volume.\"" ]

[ "264490", "176161" ]

[ "\"The VIX is a mathematical aggregate of the implied volatilities of the S&P 500 Index components. It itself cannot be traded as there currently is no way to only hold a position on an implied volatility alone. Implied volatility can only currently be derived from an option relative to its underlying. Further, the S&P 500 index itself cannot be traded only the attempts to replicate it. For assets that are not tradable, derivatives can be \"\"cash settled\"\" where the value of the underlying is delivered in cash. Cash settlement can be used for underlyings that in fact due trade but are frequently only elected if the underlying is costly to deliver or there is an incentive to circumvent regulation. Currently, only futures that settle on the value of the VIX at the time of delivery trade; in other words, VIX futures holders must deliver on the value of the VIX in cash upon settlement. Options in turn trade on those futures and in turn are also cash settled on the value of the underlying future at expiration. The VXX ETF holds one to two month VIX futures that it trades out of before delivery, so while it is impossible to know exactly what is held in the VXX accounts unless if one had information from an insider or the VXX published such details, one can assume that it holds VIX futures contracts no later than two settlements from the preset. It should be noted that the VXX does not track the VIX over the long run because of the cost to roll the futures and that the futures are more stable than the VIX, so it is a poor substitute for the VIX over time periods longer than one day. \"\"Underlying\"\" now implies any abstract from which a financial product derives its value.\"", "\"To understand the VXX ETF, you need to understand VIX futures, to understand VIX futures you need to understand VIX, to understand VIX you need to understand options pricing formulas such as the \"\"Black Scholes\"\" formula Those are your prerequisites. Learn at your own pace. Short Answer: When you buy VXX you are buying the underlying are front month VIX futures. Limited by the supply of the ETF's NAV (Net Asset Value) units. It is assumed that the ETF manager is actually buying and selling more VIX front month futures to back the underlying ETF. Long Answer: Assume nobody knows what an options contract should be worth. Therefore formulas have been devised to standardize how to price an options contract. The Black-Scholes formula is widely used, one of the variables in this formula is \"\"Implied Volatility\"\", which basically accounts for the mispricing of options when the other variables (Intrinsic Value, delta, gamma, theta...) don't completely explain how much the option is worth. People are willing to pay more for options when the perception is that they will be more profitable, \"\"implied volatility\"\" tracks these changes in an option's demand, where the rest of the black-scholes formula creates a price for an option that will always be the same. Each stock in the market that also trades standardized options will have implied volatility which can be computed from the price of those options. The \"\"Volatility Index\"\" (VIX), looks at the implied volatility of MANY STOCK's options contracts. Specifically the \"\"implied volatility of out the money puts on the S&P 500\"\". If you don't know what that quoted part of the sentence means, then you have at least five other individual questions to ask before you re-read this answer and understand the relevance of these followup questions: Why would people buy out-the-money puts on the S&P 500? Why would people pay more for out-the-money puts on the S&P 500 on some days and pay less for them on other days? This is really the key to the whole puzzle. Anyway, now that we have this data, people wanted to speculate on the future value of the VIX. So VIX futures contracts began trading and with it there came a liquid market. There doesn't need to be anything physical to back a financial product anymore. A lot of people don't trade futures, retail investors have practically only heard of \"\"the stock market\"\". So one investment bank decided to make a fund that only holds VIX futures that expire within a month. (front month futures). They split that fund up into shares and listed it on the stock market, like alchemy the VXX was formed. Volatility studies are fascinating, and get way more complex than this now that the VXX ETF also has liquid options contracts trading on it too, and there are leveraged VIX ETF funds that also trade options\"" ]

[ "371176", "266783" ]

[ "First, you need to understand the difference in discussing types of investments and types of accounts. Certificate of Deposits (CDs), money market accounts, mutual funds, and stocks are all examples of types of investments. 401(k), IRA, Roth IRA, and taxable accounts are all examples of types of accounts. In general, those are separate decisions to make. You can invest in any type of investment inside any type of account. So your question really has two different parts: Tax-advantaged retirement accounts vs. Standard taxable accounts FDIC-insured CDs vs. at-risk investments (such as stock mutual funds) Retirement accounts are special accounts allowed by the federal government that allow you to delay (or, in some cases, completely avoid) paying taxes on your investment. The trade-off for these accounts is that, in general, you cannot access any of the money that you put into these accounts until you get to retirement age without paying a steep penalty. These accounts exist to encourage citizens to save for their own retirement. Examples of retirement accounts include 401(k) and IRAs. Standard taxable accounts have no tax advantages, but no restrictions, either. You can put money in and take money out whenever you like. However, anything that your investment earns is taxable each year. Inside any of these accounts, you can invest in FDIC-insured bank accounts, such as savings accounts or CDs, or you can invest in any number of non-insured investments, including money market accounts, bonds, mutual funds, stocks, precious metals, etc. Something you need to understand about investing in general is that your potential returns are directly related to the amount of risk that you take on. Investing in an insured investment, which is guaranteed by the government to never lose its value, will result in the lowest potential investment returns that you can get. Interest-bearing savings accounts are currently paying less than 1% interest. A CD will get you a slightly higher interest rate in exchange for you agreeing not to withdraw your money for a period of time. However, it takes a long time for your investments to grow with these investments. If you are earning 1%, it takes 72 years for your investment to double. If you are willing to take some risk, you can earn much more with your investments. Bonds are often considered quite safe; with a bond, you loan money to a government or corporation, and they pay you back with interest. The risk comes from the possibility that the government or corporation won't pay you back, so it is important to choose a bond from an entity that you trust. Stocks are shares in for-profit companies. Your potential investment gain is unlimited, but it is risky, as stocks can go down in value, and companies can close. However, it is important to note that if you take the largest 500 stocks together (S&P 500), the average value has consistently gone up over the long term. In the last 35 years, this average value has gone up about 11%. At this rate, your investment would double in less than 7 years. To avoid the risk of picking a losing stock, you can invest in a mutual fund, which is a collection of stocks, bonds, or other investments. The idea is that you can, with one investment, invest in many stocks, essentially earning the average performance of all the stocks. There is still risk, as the market can be down as a whole, but you are insulated from any one stock being bad because you are diversified. If you are investing for something in the long-term future, such as retirement, stock mutual funds provide a good rate of return at an acceptably-low level of risk, in my opinion.", "For the period 1950 to 2009, if you adjust the S&P 500 for inflation and account for dividends, the average annual return comes out to exactly 7.0%. Source. Currently inflation is around 2%. So your 2% APY is a 0% real return where the stock market return is 7%. I.e. on average, stocks have a return that is higher by 7. If you mix in bonds, 70% stocks to 30% bonds, your real returns will drop to around 5.5%, but you are safer in individual years (bonds often have good years when stocks have bad years). We're making a bit of a false dichotomy here. We're talking about returns on stocks in retirement accounts versus returns on CDs in regular accounts. You can buy stocks in regular accounts and it is legally possible to have a CD in a retirement account. So you can get bankruptcy protection and tax advantages with a CD." ]

[ "361013" ]

[ "The net return reported to you (as a percentage) by a mutual fund is the gross return minus the expense ratio. So, if the gross return is X% and the expense ratio is Y%, your account will show a return of (X-Y)%. Be aware that X could be negative too. So, with Y = 1, If X = 10 (as you might get from a stock fund if you believe historical averages will continue), then the net return is 9% and you have lost (Y/X) times 100% = 10% of the gross return. If X = 8 (as you might get from a bond fund if you believe historical averages will continue), then the net return is 7% and you have lost (Y/X) times 100% = 12.5% of the gross return. and so on and so forth. The numbers used are merely examples of the returns that have been obtained historically, though it is worth emphasizing that 10% is an average return, averaged over many decades, from investments in stocks, and to believe that one will get a 10% return year after year is to mislead oneself very badly. I think the point of the illustrations is that expense ratios are important, and should matter a lot to you, but that their impact is proportionately somewhat less if the gross return is high, but very significant if the gross return is low, as in money-market funds. In fact, some money market funds which found that X < Y have even foregone charging the expense ratio fee so as to maintain a fixed $1 per share price. Personally, I would need a lot of persuading to invest in even a stock fund with 1% expense ratio." ]

[ "199544", "272458", "419160", "422119", "353337" ]

[ "Is that basically it? Trading off between withdrawing-anytime vs paying-capital-gain-tax? No. Another significant factor is dividends. In an IRA they incur no immediate tax and can be reinvested. This causes the account value to compound over the years. Historically, this compounding of dividends provides about half of the total return on investments. In a non-IRA account you have to pay taxes each year on all dividends received, whether you reinvest them or not. So outside of an IRA you have a tax drag on both capital gains and dividends.", "\"Here are the few scenarios that may be worth noting in terms of using different types of accounts: Traditional IRA. In this case, the monies would grow tax-deferred and all monies coming out will be taxed as ordinary income. Think of it as everything is in one big black box and the whole thing is coming out to be taxed. Roth IRA. In this case, you could withdraw the contributions anytime without penalty. (Source should one want it for further research.) Past 59.5, the withdrawals are tax-free in my understanding. Thus, one could access some monies earlier than retirement age if one considers all the contributions that are at least 5 years old. Taxable account. In this case, each year there will be distributions to pay taxes as well as anytime one sells shares as that will trigger capital gains. In this case, taxes are worth noting as depending on the index fund one may have various taxes to consider. For example, a bond index fund may have some interest that would be taxed that the IRA could shelter to some extent. While index funds can be a low-cost option, in some cases there may be capital gains each year to keep up with the index. For example, small-cap indices and value indices would have stocks that may \"\"outgrow\"\" the index by either becoming mid-cap or large-cap in the case of small-cap or the value stock's valuation rises enough that it becomes a growth stock that is pulled out of the index. This is why some people may prefer to use tax-advantaged accounts for those funds that may not be as tax-efficient. The Bogleheads have an article on various accounts that can also be useful as dg99's comment referenced. Disclosure: I'm not an accountant or work for the IRS.\"", "The advantage of an IRA (or 401k) is you get taxed effectively one time on your income, whereas you get taxed effectively multiple times on some of the money in a taxable account. You have to consider it from the perspective of time value of money -- the concept that an amount of money now is the same value as a greater amount of money in the future. And in fact, if you put your money in an investment, the principal at the start can be considered the same value as the principal + earnings at the end. In both Traditional and Roth IRA, you pay taxes on the entire value of money once (remember that the principal when depositing is the same value as the principal + earnings when withdrawing). The only difference is when (year deposited or year withdrawn), so the main difference between the two is the tax rate when depositing vs. tax rate when withdrawing. I'll give you an example to demonstrate. We will assume you invest $1000 of pre-tax wages, it grows at 5% per year, there's a 25% flat tax now and in the future, you withdraw it after 20 years, and withdrawals are not subject to any penalty.", "Lots of good answers. I'll try and improve by being more brief. For each option you will pay different taxes: Index Fund: Traditional IRA Roth IRA You can see that the Roth IRA is obviously better than investing in a taxable account. It may not be as obvious that the traditional IRA is better as well. The reason is that in the traditional account you can earn returns on the money that otherwise would have gone to the government today. The government taxes that money at the end, but they don't take all of it. In fact, for a given investment amount X and returns R, the decision of Roth vs Traditional depends only on your tax rate now vs at retirement because X(1-tax)(1+R_1)(1+R_2)...(1+R_n) = X(1+R_1)(1+R_2)...(1+R_n)(1-tax) The left hand side is what you will have at retirement if you do a Roth and the right hand side is what you will have at retirement if you do traditional. Only the tax rate differences between now and retirment matter here. An index fund investment is like the left hand side but has some additional tax terms on your capital gains. It's clearly worse than either.", "\"Whoa. These things are on two dimensions. It's like burger and fries, you can also have chicken sandwich and fries, or burger and onion rings. You can invest in an taxable brokerage account and/or an IRA. And then, within each of those... You can buy index funds and/or anything else. All 4 combinations are possible. If someone says otherwise, take your money and run. They are a shady financial \"\"advisor\"\" who is ripping you off by steering you only into products where they get a commission. Those products are more expensive because the commission comes out of your end. Not to mention any names. E.J. If you want financial advice that is honest, find a financial advisor who you pay for his advice, and who doesn't sell products at all. Or, just ask here. But I would start by listening to Suze Orman, Dave Ramsey, whomever you prefer. And read John Bogle's book. They can tell you all about the difference between money market, bonds, stocks, managed mutual funds (ripoff!) and index funds. IRA accounts, Roth IRA accounts and taxable accounts are all brokerage accounts. Within them, you can buy any security you want, including index funds. The difference is taxation. Suppose you earn $1000 and choose to invest it however Later you withdraw it and it has grown to $3000. Investing in a taxable account, you pay normal income tax on the $1000. When you later withdraw the $3000, you pay a tax on $2000 of income. If you invested more than a year, it is taxed at a much lower \"\"capital gains\"\" tax rate. With a traditional IRA account, you pay zero taxes on the initial $1000. Later, when you take the money out, you pay normal income tax on the full $3000. If you withdrew it before age 59-1/2, you also pay a 10% penalty ($300). With a Roth IRA account, you pay normal income tax on the $1000. When you withdraw the $3000 later, you pay NOTHING in taxes. Provided you followed the rules. You can invest in almost anything inside these accounts: Money market funds. Terrible return. You won't keep up with the market. Bonds. Low return but usually quite safe. Individual stocks. Good luck. Managed mutual funds. You're paying some genius stock picker to select high performing stocks. He has a huge staff of researchers and good social connections. He also charges you 1.5% per year overhead as an \"\"expense ratio\"\", which is a total loss to you. The fact is, he can usually pick stocks better than a monkey throwing darts. But he's not 1.5% better! Index funds. These just shrug and buy every stock on the market. There's no huge staff or genius manager, just some intern making small adjustments every week. As such, the expense ratio is extremely small, like 0.1%. If any of these investments pay dividends, you must pay taxes on them when they're issued, if you're not in an IRA account. This problem gets fixed in ETF's. Index ETF's. These are index funds packaged to behave like stocks. Dividends increase your stock's value instead of being paid out to you, which simplifies your taxes. If you buy index funds outside of an IRA, use these. Too many other options to get into here.\"" ]

[ "204703" ]

[ "The request for your parent's income comes from Form 8615, Tax for Certain Children Who Have Unearned Income. I typically see this form appear as I'm doing my daughter's taxes and start to enter data from stock transactions. In other words, your earned income is your's. But if you are a dependent, or 'can be,' the flow avoids the potentially lucrative results from gifting children appreciated stock, and have them take the gain at their lower, potentially zero cap gain rate. I suggest you grab a coffee and thumb through Pub 929 Tax Rules for Children and Dependents to understand this better. From page 14 of the linked doc - Parent's return information not available. If a child can’t get the required information about his or her parent's tax return, the child (or the child's legal representative) can request the necessary information from the Internal Revenue Service (IRS). How to request. After the end of the tax year, send a signed, written request for the information to the Internal Revenue Service Center where the parent's return will be filed. (The IRS can’t process a request received before the end of the tax year.) It also suggests that you file for an extension for the due date of your return. Include payment for the tax you expect to pay, say by plugging in $200K for parent income as an estimate. My parents' accountant tells them I do not need it. Well, a piece of software told you that you do, and 3 people on line who collectively qualify as experts documented why. (Note, I am not full of myself. This board operates via the wisdom of crowds. Members DStanley, and Ben Miller, commented and edited to help me form a well documented response that would be tough to argue against.)" ]

[ "23387", "376179", "542889" ]

[ "\"You need to have 3 things if you are considering short-term trading (which I absolutely do not recommend): The ability to completely disconnect your emotions from your gains and losses (yes, even your gains but especially your losses). The winning/losing on a daily basis will cause you to start taking unnecessary risk in order to win again. If you can't disconnect your emotions, then this isn't the game for you. The lowest possible trading costs to enter and exit a position. People will talk about 1% trading costs; that rule-of-thumb doesn't apply anymore. Personally, my trading costs are a total 13.9 basis points to enter and exit a $10,000 position and I think it's still too high (that's just a hair above one-eighth of 1% for you non-traders). The ability to \"\"gut-check\"\" and exit a losing position FAST. Don't hesitate and don't hope for it to go up. GTFO. If you are serious about short-term trading then you must close all positions on a daily basis. Don't do margin in today's market as many valuations are high and some industries are not trending as they have in the past. The leverage will kill you. It's not a question of \"\"if\"\", it's a when. You're new. Don't trade anything larger than a $5,000 position, no matter what. Don't hold more than 10% of your portfolio in the same industry. Don't be afraid to sit on 50% cash or more for months at a time. Use money market funds to park cash because they are T+1 settlement and most firms will let you trade the stock without cash as long as you effect the money market trade on the same day since stock settlement is T+3.\"", "Coolness - It's not only a matter of staying calm when being up or down. You must keep yourself from chasing a stock that appears to be running away. Or from betting all your money that something(like say a crash) will happen tomorrow because that would be great for you. Use your head not your heart. Empathy - You need to understand what other speculators, investors, institutions and algorithms are going to do when there is a new development or technical signal. And why. For publicly traded corporations, fundamentals and technical indicators only have the value that people(and their algorithms) choose to assign to them at that particular moment. And every stock has a different population trading it. There is no rule of thumb. Patience - To trade successfully, you must avoid trading at all costs. Heh. If you can't find any good trade to do, don't open positions in order to meet your targets, buy a new smartphone, or to fight boredom. Diligence - If your strategy relies on tight stops, don't make exceptions. If your strategy relies on position sizing, don't close when you are a few points down. Luck - In the end almost every trade can turn against you very badly. You must prepare for the worst and hope for the best. You can't buy luck, or get luckier, but you can attempt to stack probabilities: diversify, buy options to insure your positions, reduce holding time, avoid known volatility events, etc.", "You would appear to be a swing trader, like myself. I have been trading futures and futures options for 29 years, and have both made and lost a lot of money in that time. My trades last hours, to days, to at most a few weeks. From my experience, the most important skills are: 1) Money management - keeping trade size small in relation to total capital. I typically risk 2-3% of my capital on a trade, so a loss is fairly immaterial. 2) Risk management - limit your loss on every trade, either by using stop orders, options, or a combination of these 2. 3) Emotional discipline - be prepared to exit a position, or reverse from long to short, or short to long, on a moment's notice. The market doesn't care where you entered, or whether you make or lose money. Don't let your hunches or the news influence your decisions, but follow the market. 4) Methodology discipline - test your analysis / trade entry method to ensure that it is objective, and has a reasonably good probability of success, then stick with it. Variation will inevitably lead to indecision or emotional reactions. 5) Flexibility - consider trading anything which can make you a profit, but ensure that there is a lot of liquidity. I trade 30 different futures markets, as well as various option writing strategies in these markets. Feel free to reach out if you want to discuss further. I have about 500 (yes, 500) trading e-books as well, on every trading subject you can think of." ]

[ "231719", "63047" ]

[ "Phil's answer is correct. Just to add to his response: Distributions are not taxable events -- you already paid your taxes, so you can take out $50k or $52k and the IRS is not concerned. You can simply write yourself a check for any amount you choose! To answer your specific question: to match your K1 losses and profit exactly, you could take out $50k. But that might leave the business strapped for cash. One way to decide how much to take out is to use your balance sheet. Look at your retained earnings (or just look at the business bank account balance), subtract however much cash you think you need to keep on hand for operations, and write yourself a check for the rest.", "\"Disclaimer: I'm not a tax professional, or an expert on S-Corps. However, I do have my own S-Corp, and my decision process for taking a distribution has nothing (directly) to do with K-1 past or present, or profit and loss. If I have \"\"extra\"\" cash in my S-Corp, I take a distribution. Assuming I do my taxes correctly, the money will be taxed whether I take a distribution or leave it in the business. So it really comes down to how much cash the business requires to continue operating and meeting its expenses.\"" ]

[ "215260" ]

[ "\"You can infer some of the answers to your questions from the BATS exchange's market data page and its associated help page. (I'm pretty sure a page like this exists on each stock exchange's website; BATS just happens to be the one I'm used to looking at.) The Matched Volume section refers to all trades on a given date that took place on \"\"lit\"\" exchanges; that is, where a public protected US stock exchange's matching engine helped a buyer and a seller find each other. Because there are exactly 11 such exchanges in existence, it's easy to show 100% of the matched volume broken down into 11 rows. The FINRA & TRF Volume section refers to all trades on a given date that took place on \"\"non-lit\"\" exchanges. These types of trades include dark pool volume and any other trade that is not required to take place in public but is required to be reported (the R in TRF) to FINRA. There are three venues via which these trades may be reported to FINRA -- NASDAQ's, NYSE's, and FINRA's own ADF. They're all operated under the purview of FINRA, so the fact that they're \"\"located at\"\" NASDAQ or NYSE is a red herring. (For example, from the volume data it's clear that the NASDAQ facility does not only handle NASDAQ-listed (Tape C) securities, nor does the NYSE facility only handle NYSE-listed (Tape A) securities or anything like that.) The number of institutions reporting to each of the TRFs is large -- many more than the 11 public exchanges -- so the TRF data is not broken down further. (Also I think the whole point of the TRFs is to report in secret.) I don't know enough details to say why the NASDTRF has always handled more reporting volume than the other two facilities. Of course, since we can't see inside the TRF reporting anyway, it's sort of a moot point.\"" ]

[ "202913", "218670" ]

[ "Graphs are nothing but a representation of data. Every time a trade is made, a point is plotted on the graph. After points are plotted, they are joined in order to represent the data in a graphical format. Think about it this way. 1.) Walmart shuts at 12 AM. 2.)Walmart is selling almonds at $10 a pound. 3.) Walmart says that the price is going to reduce to $9 effective tomorrow. 4.) You are inside the store buying almonds at 11:59 PM. 5.) Till you make your way up to the counter, it is already 12:01 AM, so the store is technically shut. 6.) However, they allow you to purchase the almonds since you were already in there. 7.) You purchase the almonds at $9 since the day has changed. 8.) So you have made a trade and it will reflect as a point on the graph. 9.) When those points are joined, the curves on the graph will be created. 10.) The data source is Walmart's system as it reflects the sale to you. ( In your case the NYSE exchange records this trade made). Buying a stock is just like buying almonds. There has to be a buyer. There has to be a seller. There has to be a price to which both agree. As soon as all these conditions are met, and the trade is made, it is reflected on the graph. The only difference between the graphs from 9 AM-4 PM, and 4 PM-9 AM is the time. The trade has happened regardless and NYSE(Or any other stock exchange) has recorded it! The graph is just made from that data. Cheers.", "the data source is the same as the live market trading. pre and after market trading are active markets and there are actual buyers and sellers getting their orders matched." ]

[ "230456", "295344", "190619", "348886", "149420" ]

[ "\"Trading at the start of a session is by far higher than at any other time of the day. This is mostly due to markets incorporating news into the prices of stocks. In other words, there are a lot of factors that can affect a stock, 24 hours a day, but the market trades for only 6.5 hours a day. So, a lot of news accumulates during the time when people cannot trade on that news. Then when markets finally open, people are able to finally trade on that news, and there is a lot of \"\"price discovery\"\" going on between market participants. In the last minutes of trading, volumes increase as well. This can often be attributed to certain kinds of traders closing out their position before the end of the day. For example, if you don't want to take the risk a large price movement at the start of the next day affecting you, you would need to completely close your position.\"", "Trading at the start of the day is highest because of news flows that may have come after the close of the previous day. And trading at the end of the day is highest because of expected news flows after closing hours. Moreover, there are many day traders who buy in the morning without making any payment for purchase and such traders have to sell by evening or else they will have to make the payment for the purchases which they have made.", "Is it possible that mutual funds account for a significant portion of this volume. Investors may decide to buy or sell anytime within a 24 hour period, but the transaction only happened at the close of the market. Therefore at 3:59 pm the mutual fund knows if they will be buying or selling stocks that day. As nws pointed out the non-market hours are longer and therefore accumulate more news event. Some financial news is specifically given during the time the market is closed. Therefore the reaction to that news has to either be in the morning when the market opens or in the late afternoon if they are trying to anticipate the news. Also in the US market the early morning trader may be reacting to European market activities.", "Trading volumes are higher at the end of the day as many traders close their open positions. In the morning however, traders incorporate various factors like performance of worldwide markets overnight, any corporate or government announcements, global macro events, etc.", "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" ]

[ "599255", "46099", "335136", "545760", "174227", "99568" ]

[ "Around Oct 03 2010 the SPY closed at 113. Today it is trading at 130. After four months, that means that the S&P is up 15% over that particular 4 month period. You said you need something pretty low maintenance, and you are comparing your returns to the S&P 500 (which as @duffbeer703 points out is a good thing to compare against because of its diversification). To kill two birds with one stone, I would sell your fund that you have and take the proceeds and purchase the ETF SPY. SPY trades like a stock but mirrors the S&P 500's performance. It has extremely low fees (as opposed to what I suspect your BlackRock fund has). You can own it in an Etrade or Fidelity or other low cost broker account. Then you will be extremely low maintenance, fully diversified (among stocks) and you don't have to compare your performance against the S&P :)", "\"You say: To clarify, my account is with BlackRock and the fund is titled \"\"MID CAP GROWTH EQUITY-CLASS A\"\" if that helps. Not totally sure what that means. You should understand what you're investing in. The fund you have could be a fine investment, or a lousy one. If you don't know, then I don't know. The fund has a prospectus that describes what equities the fund has a position in. It will also explain the charter of the fund, which will explain why it's mid-cap growth rather than small-cap value, for example. You should read that a bit. It's almost a sure thing that your father had to acknowledge that he read it before he purchased the shares! Again: Understand your investments.\"", "\"Typically you diversify a portfolio to reduce risk. The S&P 500 is a collection of large-cap stocks; a diversified portfolio today probably contains a mix of large cap, small cap, bonds, international equity and cash. Right now, if you have a bond component, that part of your portfolio isn't performing as well. The idea of diversification is that you \"\"smooth out\"\" the ups and downs of the market and come out ahead in most situations. If you don't have a bond or cash component in your portfolio, you may have picked (or had someone pick for you) lousy funds. Without more detail, that's about all that can be said. EDIT: You provided more detail, so I want to add a little to my answer. Basically, you're in a fund that has high fees (1.58% annually) and performance that trails the mid-cap index. The S&P 500 is a large-cap index (large cap == large company), so a direct comparison is not necessarily meaningful. Since you seem to be new at this, I'd recommend starting out with the Vanguard Total Stock Market Index Fund (VTSMX) or ETF (VTI). This is a nice option because it represents the entire stock market and is cheap... it's a good way to get started without knowing alot. If your broker charges a transaction fee to purchase Vanguard funds and you don't want to change brokers or pay ETF commissions, look for or ask about transaction-fee free \"\"broad market\"\" indexes. The expense ratio should be below 0.50% per year and optimally under 0.20%. If you're not having luck finding investment options, swtich to a discount broker like TD Ameritrade, Schwab, ScottTrade or Fidelity (in no particular order)\"", "Fire your fund manager. There are several passive funds that seek to duplicate the S&P 500 Index returns. They have lower management fees, which will make returns lower than S&P, and they have less risk by following a broadly diversified strategy (versus midcap growing stocks). There's also ETFs, but evidence is growing that they're not as safe as hoped. But here's the deal: the S&P has been on a tear lately. It could be overvalued and what looks like a good investment could start falling again. A possible alternative would be one of the Lifetime funds that seek to perform portfolio adjustment with a retirement decade target; they're fairly new which mostly means nobody knows how they screw you over yet. In theory, this decade structure means the brokerage can execute trading cash for stocks, stocks for bonds, and bonds for cash in house.", "absolutely $SPY ETF is the way to go if your point of comparison is the S&P and you want to do low maintenance.", "\"The majority (about 80%) of mutual funds are underperforming their underlying indexes. This is why ETFs have seen massive capital inflows compared to equity funds, which have seen significant withdrawals in the last years. I would definitively recommend going with an ETF. In addition to pure index based ETFs that (almost) track broad market indexes like the S&P 500 there are quite a few more \"\"quant\"\" oriented ETFs that even outperformed the S&P. I am long the S&P trough iShares ETFs and have dividend paying ETFs and some quant ETFS on top (Invesco Powershares) in my portfolio.\"" ]

[ "59994" ]

[ "The Japanese stock market offers a wide selection of popular ETFs tracking the various indices and sub-indices of the Tokyo Stock Exchange. See this page from the Japan Exchange Group site for a detailed listing of the ETFs being offered on the Tokyo exchange. As you have suggested, one would expect that Japanese investors would be reluctant to track the local market indices because of the relatively poor performance of the Japanese markets over the last couple of decades. However, this does not appear to be the case. In fact, there seems to be a heavy bias towards Tokyo indices as measured by the NAV/Market Cap of listed ETFs. The main Tokyo indices - the broad TOPIX and the large cap Nikkei - dominate investor choice. The big five ETFs tracking the Nikkei 225 have a total net asset value of 8.5Trillion Yen (72Billion USD), while the big four ETFs tracking the TOPIX have a total net asset value of 8.0Trillion Yen (68Billion USD). Compare this to the small net asset values of those Tokyo listed ETFs tracking the S&P500 or the EURO STOXX 50. For example, the largest S&P500 tracker is the Nikko Asset Management S&P500 ETF with net asset value of just 67Million USD and almost zero liquidity. If I remember my stereotypes correctly, it is the Japanese housewife that controls the household budget and investment decisions, and the Japanese housewife is famously conservative and patriotic with their investment choices. Japanese government bonds have yielded next to nothing for as long as I can remember, yet they remain the first choice amongst housewives. The 1.3% yield on a Nikkei 225 ETF looks positively generous by comparison and so will carry some temptations." ]

[ "204541" ]

[ "The value of the company is ill-defined until it actually has some assets and/or product. You give the investors whatever equity stakes you and they negotiate as appropriate for their investment based on how convinced they are by your plan and how badly you need their money." ]

[ "488777", "372196", "96074", "200578" ]

[ "\"I think we'd need to look at actual numbers to see where you're running into trouble. I'm also a little confused by your use of the term \"\"unexpected expenses\"\". You seem to be using that to describe expenses that are quite regular, that occur every X months, and so are totally expected. But assuming this is just some clumsy wording ... Here's the thing: Start out by taking the amount of each expense, divided by the number of months between occurrences. This is the monthly cost of each expense. Add all these up. This is the amount that you should be setting aside every month for these expenses, once you get a \"\"base amount\"\" set up. So to take a simple example: Say you have to pay property taxes of $1200 twice a year. So that's $1200 every 6 months = $200 per month. Also say you have to pay a water bill once every 3 months that's typically $90. So $90 divided by 3 = $30. Assuming that was it, in the long term you'd need to put aside $230 per month to stay even. I say \"\"in the long term\"\" because when you're just starting, you need to put aside an amount sufficient that your balance won't fall below zero. The easiest way to do this is to just set up a chart where you start from zero and add (in this example) $230 each month, and then subtract the amount of the bills when they will hit. Do this for some reasonable time in the future, say one year. Find the biggest negative balance. If you can add this amount to get started, you'll be safe. If not, add this amount divided by the number of months from now until it occurs and make that a temporary addition to your deposits. Check if you now are safely always positive. If not, repeat the process for the next biggest negative. For example, let's say the property tax bills are April and October and the water bills are February, May, August, and November. Then your chart would look like this: The biggest negative is -370 in April. So you have to add $370 in the first 4 months, or $92.50 per month. Let's say $93. That would give: Now you stay at least barely above water for the whole year. You could extend the chart our further, but odds are the exact numbers will change next year and you'll have to recalculate anyway. The more irregular the expenses, the more you will build up just before the big expense hits. But that's the whole point of saving for these, right? If a $1200 bill is coming next week and you don't have close to $1200 saved up in the account, where is the money coming from? If you have enough spare cash that you can just take the $1200 out of what you would have spent on lunch tomorrow, then you don't need this sort of account.\"", "Another way of explaining the puzzling balance: Right after a particular bill is paid, you have $0 saved to pay that bill the next time. Just before the bill is next due, you wisely have the whole amount saved; that's the purpose of the whole process. So, for that bill, on average over time, you'll have one-half that upcoming bill in the account. But the same argument holds for every one of the upcoming bills. So, for a large number of bills, with varying sizes and times between occurrence, the average amount in the account will be approximately one-half of the total amount of all the bills that you're saving for.", "\"If you just had one expense once a year of $1200, you would put in $100 a month. The average balance is going to be $600 in that case - the 0 and $1200 months average to $600, as do the $100 and $1100, the $200 and $1000, and so on. If you had one expense twice a year of $600 and put in $100 per month it will average to $300. You have a mix of 3/6/12 months - does 8 months seem reasonable as an \"\"average\"\" frequency? If so, there should be about a 4 month slush all the time. Now instead of one expense averaged over 12 months, imagine 12 accounts, each needing $100 a month. If you started at zero, you would put in $1200 the first month and immediately spend it. One account would go from +100 (its share of what you put in) to -1100 while the rest are all at +100. Overall your balance would be zero. Then the next month you would again deposit 1200 and spend 1200, bringing one account to -1000, one to -1100, and the rest to +200. You average to zero actually on deposit because some of the \"\"accounts\"\" have negative balances and some have positive. But aren't doing that. You \"\"caught up\"\" the months you were behind. So it would be like putting in $1200 for the first account, $1100 for the second, $1000 for the third and so on - a total of $7800. Then you take out $1200 and go down to 6600. The next month you put in $1200 and take out $1200 but you will always have that $6600 amount in there. All of the accounts will have positive balances - averaging $550 in this example.\"", "\"It totally depends on when your expenses hit and whether you might have a larger stock than necessary. If you run your projections against the monthly save and the intervals of when you'll need the money, you might be able to extract some stock from the account. I recommend making this a bit simpler. I operate this with an \"\"annuals\"\" account which is a complete aggregate of expenses that I know I have several times per year (or once every two years), but are not monthly or part of a weekly non-fixed expense budget cap. Instead of tracking each expense individually and saving for it, create a spreadsheet that lists out all of these expenses, sum them, and then divide by 12. When I first opened this account, I added a one-time deposit to \"\"catchup\"\" to make sure I would never need to pull money from another source for these expenses. As new expenses come into existence that I should plan for annually, I simply add them to this list and adjust the monthly auto-deposit to the account. This also adjusts my single number weekly budget. To make it easy, whenever I see an expense on my annuals list on my amex or debit, I simply initiate a withdrawal from the annuals savings and it will balance out my weekly or monthly budget expenses. The goal of my annuals account is to simply avoid anti-windfalls that are known quantities (insurance, annual eye exam, sprinkler flush, amazon prime, etc) that would throw a wrench in weekly/monthly budget and expense planning. The more variables you can remove from your weekly/monthly, the more regular it becomes and the more likely you will be able to stick to a budget.\"" ]

[ "525094", "402778", "478480" ]

[ "\"RoR for options you bought is fairly easy: (Current Value-Initial Cost)/Initial Cost gives you the actual return. If you want the rate of return, you need to annualize that number: You divide the return you got above by the number of days the investment was in place, and then multiply that number by the number of days in a year. (365 if you're using calendar days, about 255 if you're using trading days.) RoR for options you sold is much more complex: The problem is that RoR is basically calculating the size of your return relative to the capital it tied up to earn it. That's simple when you bought something; the capital tied up is the money you put up. It's more complex on a position like a short option, where the specific transaction in question generates cash when it's put on. The correct way to deal with this is to A) Bundle your strategy (options, stock and collateral) into one RoR where appropriate, and B) include any needed collateral to support the short option in the calculation. So, if you sell a \"\"cash-secured\"\" put, where you have to post the money that you'd need to take delivery of the shares if they were put to you, the initial cost is the total amount you'd need to put the trade on: in this case, it's the cash amount, less the premium you collected for selling the put. That's just one example. But the approach holds more broadly: if you're using covered calls, your original cost is the cost of the stock less the premium generated by the sale of the call.\"", "What Jaydles said. I think of each strategy in terms of Capital at Risk (CaR). It's a good thing to know when considering any position. And then conveniently, the return is always profit / CaR. With covered calls it's pretty easy. Pay $1000 for stock, receive $80 in premium, net CaR is $920. If you own the stock and write calls many times (that expire worthless, or you that you buy back), there are two measurements to consider. First, treat every covered call as a buy-write. Even if you already own the stock, disregard the real cost basis, and calculate from the moment you write the call, using the stock price at that time. The second measure is more complicated, but involves using something like the XIRR function in a spreadsheet. This tracks the series as a whole, even accounting for times where there is no written call outstanding. For the written put, even though your broker may only require 30% collateral in a margin account, mentally treat them as cash-secured. Strike less premium is your true CaR. If the stock goes to zero by expiration, that's what you're on the hook for. You could just compute based on the 30% collateral required, but in my view that confuses cash/collateral needs with true risk. Note: a written put is exactly identical to a covered call at the same strike. If you tend to favor puts over CCs, ask yourself why. Just like a loaded gun, leverage isn't inherently bad, but you sure want to know when you're using it.", "Rate of return is (Current value - initial value) divided by initial value. Buy $10,000 worth of put options and sell them for $15,000, and your rate of return is 0.5, or 50%." ]

[ "522160", "54319" ]

[ "Ideally, one would contribute the maximum amount you're allowed to both the TSP and an IRA. For the 2015 tax year, that would be $18,000 for the TSP and $5,500 for the IRA (if you're 50 or older, then you can add an additional catch up amount of $6,000 to the TSP and $1,000 to the IRA). If, like most people, you cannot contribute the maximum to both, then I would recommend the TSP over an IRA, until you've maximized your TSP. Unquestionably, you should contribute at least enough to the TSP to get the maximum agency match. Beyond that, there is a case to be made to contribute to an IRA for certain investors. Benefits of TSP, compared to IRA: Benefits of IRA, compared to TSP: So, for an investor who wants simplicity, I would recommend just doing the TSP (unless you can invest more, in which case an IRA is a smart choice). For a knowledgeable and motivated investor, it can make sense to also have an IRA to gain access to asset classes not in the TSP's basic index funds.", "The TSP is similar to a 401K. If you were hired as a federal employee on or after 1 January 1987 you are under the FERS retirement program. That means that you are eligible for matching. If they will match your deposits then the TSP, up to the matching limit, is a better choice. Skipping the TSP will mean that you you are leaving money on the table." ]

[ "457795", "11675", "15030", "294573", "54064" ]

[ "The typical deal is you can put 10% of your gross pay into the ESPP. The purchase will occur on the last deposit date, usually a 6 month period, at a 15% discount to the market price. So, the math is something like this: Your return if sold the day it's purchased is not 15%, it's 100/85 or 17.6%. Minor nitpick on my part, I suppose. Also the return is not a 6 month return, as the weekly or bi-weekly deductions are the average between the oldest (6 mo) and the most recent (uh, zero time, maybe a week.) This is closer to 3 months. The annualized rate is actually pretty meaningless since you don't have 4 opportunities to achieve this return, it's important only if the cash flow hit causes you to borrow to support the ESPP purchases. The risk is whether the stock drops the 15% before you can execute the sell to take advantage of the gain. Of course the return is gross, you need to net for taxes. Edit to respond to comment below - When I said meaningless, I meant that you can't take the 17.6%, annualize it to 91.2% per year and think your $1000 will compound to $1912. It's as meaningless as when an investor gets a 10% gain on a stock in one day, and (with 250 trading days per year) decides his $1000 will be worth $2 quadrillion dollars after a year. The 17.6% is significant in that it's available twice per year, for a true 38% return over a year, but if borrowing to help the cash flow, that rate is really over 3 months.", "It would be difficult to answer without knowing specifics about a particular offer. In certain cases, it's definitely great and one could become a millionaire [Google for example]. In other cases one could lose money. In most cases one makes a decent return. As the specifics are not available, in general look out for: Most of these would determine if the plan is good for you to get into.", "Advantage: more money. The financial tradeoff is usually to your benefit: Given these, for having your money locked up for the average length of the vesting periods (some is locked up for 3 months, some is locked up for nearly 0), you get a 10% return. Overall, it's like a 1.5% bonus for the year, assuming you were to sell everything right away. Of course, whether or not you wish to keep the stock depends on how you value MSFT as an investment. The disadvantage lies in a couple parts:", "You should always always enroll in an espp if there is no lockup period and you can finance the contributions at a non-onerous rate. You should also always always sell it right away regardless of your feelings for the company. If you feel you must hold company stock to be a good employee buy some in your 401k which has additional advantages for company stock. (Gains treated as gains and not income on distribution.) If you can't contribute at first, do as much as you can and use your results from the previous offering period to finance a greater contribution the next period. I slowly went from 4% to 10% over 6 offering periods at my plan. The actual apr on a 15% discount plan is ~90% if you are able to sell right when the shares are priced. (Usually not the case, but the risk is small, there usually is a day or two administrative lockup (getting the shares into your account)) even for ESPP's that have no official lockup period. see here for details on the calculation. http://blog.adamnash.com/2006/11/22/your-employee-stock-purchase-plan-espp-is-worth-a-lot-more-than-15/ Just a note For your reference I worked for Motorola for 10 years. A stock that fell pretty dramatically over those 10 years and I always made money on the ESPP and more than once doubled my money. One additional note....Be aware of tax treatment on espp. Specifically be aware that plans generally withhold income tax on gains over the purchase price automatically. I didn't realize this for a couple of years and double taxed myself on those gains. Fortunately I found out my error in time to refile and get the money back, but it was a headache.", "The answer is simple. If your employer is offering you a discount, that is free money. You always take free money, always." ]

[ "463007", "60119", "439402" ]

[ "I don't know about keeping different rollover IRAs separate. But I know that there is a reason to keep rollover IRAs separate from other traditional IRAs -- if you want to roll them back into a 401(k) in the future, some 401(k)s only allow funds that were rolled over from a 401(k) originally.", "Can't see why would you need to track the sources of the original funds. Can't think of a reason not to consolidate, if at all it will only make the management of your IRA more convenient, and may be even cheaper (if the fees depend on the account value...).", "Once upon a time, money rolled over from a 401k or 403b plan into an IRA could not be rolled into another 401k or 403b unless the IRA account was properly titled as a Rollover IRA (instead of Traditional IRA - Roth IRAs were still in the future) and the money kept separate (not commingled) with contributions to Traditional IRAs. Much of that has fallen by the way side as the rules have become more relaxed. Also the desire to roll over money into a 401k plan at one's new job has decreased too -- far too many employer-sponsored retirement plans have large management fees and the investments are rarely the best available: one can generally do better keeping ex-401k money outside a new 401k, though of course new contributions from salary earned at the new employer perforce must be put into the employer's 401k. While consolidating one's IRA accounts at one brokerage or one fund family certainly saves on the paperwork, it is worth keeping in mind that putting all one's eggs in one basket might not be the best idea, especially for those concerned that an employee might, like Matilda, take me money and run Venezuela. Another issue is that while one may have diversified investments at the brokerage or fund family, the entire IRA must have the same set of beneficiaries: one cannot leave the money invested in GM stock (or Fund A) to one person and the money invested in Ford stock (or Fund B) to another if one so desires. Thinking far ahead into the future, if one is interested in making charitable bequests, it is the best strategy tax-wise to make these bequests from tax-deferred monies rather than from post-tax money. Since IRAs pass outside the will, one can keep separate IRA accounts with different companies, with, say, the Vanguard IRA having primary beneficiary United Way and the Fidelity IRA having primary beneficiary the American Cancer Society, etc. to achieve the appropriate charitable bequests." ]

[ "306413", "315972", "4739", "15539" ]

[ "When you sell a house around between 7-10% of the sales price will go to various fees. Mostly to the agents, but also to county fees, city fees, deed tax, and possibly covering closing costs for the buyers. So if you sell a $400k house for the same price you buy, just in fees, you're out $40k. Mortgages are structured so that the frontend is very interest heavy, while at the end you're mostly paying towards principal. So for the first two years you will pay down very little of the principal. Figure around $2500 for the mortgage, and without running the numbers I bet you would pay an average for the first two years of around $1800/month in interest. $43,200. Mortgage interest is tax deductible, so you'll get some of that back. That's also $16,800 in equity you'll have on the house, so you'll get that back out when you sell. Rough numbers, I would be you lose around $50k buying the house and selling for the same price two years later. That doesn't take into account having to do any maintenance. And it assumes you can sell quickly when you want to. Renting is not throwing away money. You don't lose any money. You get a place to live in exchange. You don't build equity, sure, but you don't need to worry about maintenance and other related issues. When you're looking to be somewhere short term renting is generally the best idea.", "You may be in a situation where buying is preferred, especially because you can enter the market in a strong position - with a 20% down payment. If you have the financial ability to assume the risk of owning, you may be better off. I would consider two things. Renting is purchasing a service. You are buying the flexibility to move with minimum hassle and the landlord is assuming the risk of owning the asset (property). They will make money on you, like any service provider. Buying is purchasing an asset. You are buying the underlying asset and assume all the risks associated with it. This is large, unforeseen maintenance, fees, taxes, depreciation, etc... Some of these risks were passed to you as a renter, but some were not. Just like purchasing $400k in stock, if you have to sell when the market is down, you lose big. You win if you can hold. Unlike a stock, real estate will eat your cash in taxes and repairs unless it is rented. If you are willing to be a long-distance landlord, this may work out. Understand that property management fees will eat into your rent income and being long-distance will give more potential for a bad tenant to ruin your property value. These and other factors (e.g. vacancy rate) will increase your risk of loss and should be considered. Some of this will be your preference, since you will spend much more time dealing with buying/selling/property management as opposed to a more clean rental situation. Is this hassle worth the savings? For many, yes; others, no. Finally, I hope this calculator can help clarify some of the financial aspects for you. http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0 Good Luck!", "\"Some pros and cons to renting vs buying: Some advantages of buying: When you rent, the money you pay is gone. When you buy, assuming you don't have the cash to buy outright but get a mortgage, some of the payment goes to interest, but you are building equity. Ultimately you pay off the mortgage and you can then live rent-free. When you buy, you can alter your home to your liking. You can paint in the colors you like, put in the carpet or flooring you like, heck, tear down walls and alter the floor plan (subject to building codes and safety consideration, of course). If you rent, you are usually sharply limited in what alterations you can make. In the U.S., mortgage interest is tax deductible. Rent is not. Property taxes are deductible from your federal income tax. So if you have, say, $1000 mortgage vs $1000 rent, the mortgage is actually cheaper. Advantages of renting: There are a lot of transaction costs involved in buying a house. You have to pay a realtor's commission, various legal fees, usually \"\"loan origination fees\"\" to the bank, etc. Plus the way mortgages are designed, your total payment is the same throughout the life of the loan. But for the first payment you owe interest on the total balance of the loan, while the last payment you only owe interest on a small amount. So early payments are mostly interest. This leads to the conventional advice that you should not buy unless you plan to live in the house for some reasonably long period of time, exact amount varying with whose giving the advice, but I think 3 to 5 years is common. One mitigating factor: Bear in mind that if you buy a house, and then after 2 years sell it, and you discover that the sale price minus purchase price minus closing costs ends up a net minus, say, $20,000, it's not entirely fair to say \"\"zounds! I lost $20,000 by buying\"\". If you had not bought this house, presumably you would have been renting. So the fair comparison is, mortgage payments plus losses on the resale compared to likely rental payments for the same period.\"", "I actually didn't do the math with your numbers, but I recall Sal from Khan Academy did a nice video about your question, challenging the notion that it is always better to buy. https://www.youtube.com/watch?v=YL10H_EcB-E" ]

[ "167753", "46529", "588398" ]

[ "Excess capital is the primary means of navigating around a trade which is moving against you. In a very basic case, consider a long position moving against you. With additional capital you could average in as the price drops or you could write options against your position. If you don't have the capital to handle when (not if) a trade move against you then you're at a significant disadvantage as your only option may be a liquidation.", "It is a general truism but the reasons are that the rules change dramatically when you simply have more capital. Here are some examples, limited to particular kinds of markets: Under $2,000 in capital Nobody is going to offer you a margin account, and if you do get one it isn't with the best broker on commissions and other capabilities. So this means cash only trading, enjoy your 3 business day settlement periods. This means no shorting, confining a trader to only buy and hold strategies, making them more dependent on luck than a more capable trader. This means it is more expensive to buy stock, since you have to put down 100% of the cash to hold a share, whereas someone with more money puts down less capital to hold the exact same number of shares. This means no covered options strategies or spreads, again limiting the market directions where a trader could earn Under $25,000 in capital In the stock market, the pattern day trader rule applies to retail margin accounts with a balance under $25,000 and this severally limits the kinds of trades you are able to take because of the limit in the number of trades you can take in a given time period. Forget managing a multi-leg option position when the market isn't moving your direction. Under $125,000 in capital Worse margin rules. You excluded portfolio margin from your post, but it is a key part of the answer Over $1,000,000 in capital Participate in private placements, regulation D offerings reserved for accredited investors. These days, as buy and hold investments, these generally have more growth potential than publicly traded offerings. Over $5,000,000 in capital You can easily get the compliance and risk manager to turn the other way on margin rules. This is not conjecture, leverage up to infinity, try not to bankrupt yourself and the trading firm.", "You wouldn't want to trade with too small amount of capital - it becomes harder and more expensive to diversify with a small account. Also, the bigger the account the more discounts and special may be offered by your broker (especially if you are a frequent trader). You are also able to trade more often, and have a buffer against a few losses in a row not wiping out your entire account." ]

[ "549270", "269550" ]

[ "For most people, you don't want individual bonds. Unless you are investing very significant amounts of money, you are best off with bond funds (or ETFs). Here in Canada, I chose TDB909, a mutual fund which seeks to roughly track the DEX Universe Bond index. See the Canadian Couch Potato's recommended funds. Now, you live in the U.S. so would most likely want to look at a similar bond fund tracking U.S. bonds. You won't care much about Canadian bonds. In fact, you probably don't want to consider foreign bonds at all, due to currency risk. Most recommendations say you want to stick to your home country for your bond investments. Some people suggest investing in junk bonds, as these are likely to pay a higher rate of return, though with an increased risk of default. You could also do fancy stuff with bond maturities, too. But in general, if you are just looking at an 80/20 split, if you are just looking for fairly simple investments, you really shouldn't. Go for a bond fund that just mirrors a big, low-risk bond index in your home country. I mean, that's the implication when someone recommends a 60/40 split or an 80/20 split. Should you go with a bond mutual fund or with a bond ETF? That's a separate question, and the answer will likely be the same as for stock mutual funds vs stock ETFs, so I'll mostly ignore the question and just say stick with mutual funds unless you are investing at least $50,000 in bonds.", "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." ]

[ "385600" ]

[ "For some ideas on investing priority guidelines, see Oversimplify it for me: the correct order of investing. Congratulations on being debt free! My advice to you is to do what you can to remain debt free. You could certainly invest the money; it will earn much more over the long-term in a stock mutual fund than it would left in a savings account. However, if you need any of this money in the next few years, it would be a shame if it lost money in the short-term. How much do you need to finish grad school? Don't invest that money in the stock market, because you will need it over the next few years. Likewise, think about other expenses that are coming up. Will your car need to be replaced in the next couple of years? Will you have enough income to meet your living expenses while you are in grad school, or will you need some of this to money to help with that? Finally, it would be good to keep some extra as an emergency fund, so you can easily pay for any unexpected expenses that come up. If you can make it through grad school debt free, you will be much better off than if you invest all the money but take out student loans in the process. After you've accounted for all of that, whatever is left of the money could definitely be invested. If your goal is to start a retirement fund, an index mutual fund invested inside a Roth IRA is a great place to start." ]

[ "423083", "41960", "191148" ]

[ "\"I get the sense that this is a \"\"the world is unfair; there's no way I can succeed\"\" question, so let's back up a few steps. Income is the starting point to all of this. That could be a job (or jobs), or running your own business. From there, you can do four things with your income: Obviously Spend and Give do not provide a monetary return - they give a return in other ways, such as quality of life, helping others, etc. Save gives you reserves for future expenses, but it does not provide growth. So that just leaves Invest. You seem to be focused on stock market investments, which you are right, take a very long time to grow, although you can get returns of up to 12% depending on how much volatility you're willing to absorb. But there are other ways to invest. You can invest in yourself by getting a degree or other training to improve your income. You can invest by starting a business, which can dramatically increase your income (in fact, this is the most common path to \"\"millionaire\"\" in the US, and probably in other free markets). You can invest by growing your own existing business. You can invest in someone else's business. You can invest in real estate, that can provide both value appreciation and rental income. So yes, \"\"investment\"\" is a key aspect of wealth building, but it is not limited to just stock market investment. You can also look at reducing expenses in order to have more money to invest. Also keep in mind that investment with higher returns come with higher risk (both in terms of volatility and risk of complete loss), and that borrowing money to invest is almost always unwise, since the interest paid directly reduces the return without reducing the risk.\"", "You're ignoring inflation. Even if we assume the ECB sticks to its 2% inflation target, and your salary only rises in line with inflation, you will be saving considerably more in forty years' time than you are today. In fact, an interest rate of 2% and an inflation rate of 2% make the sums exceptionally easy. You need to save €25,000 per year in 2057 euros to be a millionaire by 2057, which is €11,322 in 2017 euros. Challenging, but achievable. Of course, you'll only be a millionaire in 2057 euros, which will be worth less than half as much as a euro is worth right now.", "If your take-home salary after taxes etc is 35K / year, and you say you will be able to save at most 40% of that, you will need to find something that pays 2.75% to reach one million in 40 years*. However, these numbers can chance dramatically depending on your specific circumstances. If you're just starting your career, 40 years of saving is not impossible. If you're in the middle or nearing the end, you will have dramatically less time to achieve your goals. *40% of 35000 is 14000 saved per year, at an interest of 2.75% compounded annually, you will reach 1000000 after roughly 40 years." ]

[ "423229", "422401", "442727", "488719", "137852" ]

[ "It looks like the advice the rep is giving is based primarily on the sunk cost fallacy; advice based on a fallacy is poor advice. Bob has recognised this trap and is explicitly avoiding it. It is possible that the advice that the rep is trying to give is that Fund #1 is presently undervalued but, if so, that is a good investment irrespective if Bob has lost money there before or even if he has ever had funds in it.", "\"The root of the advice Bob is being given is from the premise that the market is temporarily down. If the market is temporarily down, then the stocks in \"\"Fund #1\"\" are on-sale and likely to go up soon (soon is very subjective). If the market is going to go up soon (again subjective) you are probably better in fictitious Fund #1. This is the valid logic that is being used by the rep. I don't think this is manipulative based on costs. It's really up to Bob whether he agrees with that logic or if he disagrees with that logic and to make his own decision based on that. If this were my account, I would make the decision on where to withdraw based on my target asset allocation. Bob (for good or bad reasons) decided on 2/3 Fund 1 and 1/3 Fund 2. I'd make the withdraw that returns me to my target allocation of 2/3 Fund 1 and 1/3 Fund 2. Depending on performance and contributions, that might be selling Fund 1, selling Fund 2, or selling some of both.\"", "\"Bob should treat both positions as incomplete, and explore a viewpoint which does a better job of separating value from volatility. So we should start by recognizing that what Bob is really doing is trading pieces of paper (say Stocks from Fund #1 or Bonds from Fund #2, to pick historically volatile and non-volatile instruments.*) for pieces of paper (Greenbacks). In the end, this is a trade, and should always be thought of as such. Does Bob value his stocks more than his bonds? Then he should probably draw from Fund #2. If he values his bonds more, he should probably draw from Fund #1. However, both Bob and his financial adviser demonstrate an assumption: that an instrument, whether stock bond or dollar bill, has some intrinsic value (which may raise over time). The issue is whether its perceived value is a good measure of its actual value or not. From this perspective, we can see the stock (Fund #1) as having an actual value that grows quickly (6.5% - 1.85% = 4.65%), and the bond (Fund #2) as having an actual value that grows slower (4.5% - 1.15$ = 3.35$). Now the perceived value of the stocks is highly volatile. The Chairman of the Fed sneezes and a high velocity trader drives a stock up or down at a rate that would give you whiplash. This perspective aligns with the broker's opinion. If the stocks are low, it means their perceived value is artificially low, and selling it would be a mistake because the market is perceiving those pieces of paper as being worth less than they actually are. In this case, Bob wins by keeping the stocks, and selling bonds, because the stocks are perceived as undervalued, and thus are worth keeping until perceptions change. On the other hand, consider the assumption we carefully slid into the argument without any fanfare: the assumption that the actual value of the stock aligns with its historical value. \"\"Past performance does not predict future results.\"\" Its entirely possible that the actual value of the stocks is actually much lower than the historical value, and that it was the perceived value that was artificially higher. It may be continuing to do so... who knows how overvalued the perceived value actually was! In this case, Bob wins by keeping the bonds. In this case, the stocks may have \"\"underperformed\"\" to drive perceptions towards their actual value, and Bob has a great chance to get out from under this market. The reality is somewhere between them. The actual values are moving, and the perceived values are moving, and the world mixes them up enough to make Scratchers lottery tickets look like a decent investment instrument. So what can we do? Bob's broker has a smart idea, he's just not fully explaining it because it is unprofessional to do so. Historically speaking, Bobs who lost a bunch of money in the stock market are poor judges of where the stock market is going next (arguably, you should be talking to the Joes who made a bunch of money. They might have more of a clue.). Humans are emotional beings, and we have an emotional instinct to cut ties when things start to go south. The market preys on emotional thinkers, happily giving them what they want in exchange for taking some of their money. Bob's broker is quoting a well recognized phrase that is a polite way of saying \"\"you are being emotional in your judgement, and here is a phrasing to suggest you should temper that judgement.\"\" Of course the broker may also not know what they're doing! (I've seen arguments that they don't!) Plenty of people listened to their brokers all the way to the great crash of 2008. Brokers are human too, they just put their emotions in different places. So now Bob has no clear voice to listen to. Sounds like a trap! However, there is a solution. Bob should think about more than just simple dollars. Bob should think about the rest of his life, and where he would like the risk to appear. If Bob draws from Fund #1 (liquidating stocks), then Bob has made a choice to realize any losses or gains early... specifically now. He may win, he may lose. However, no matter what, he will have a less volatile portfolio, and thus he can rely on it more in the long run. If Bob draws from Fund #2 (liquidating bonds) instead, then Bob has made a choice not to realize any losses or gains right away. He may win, he may lose. However, whether he wins or loses will not be clear, perhaps until retirement when he needs to draw on that money, and finds Fund #1 is still under-performing, so he has to work a few more years before retirement. There is a magical assumption that the stock market will always continue rewarding risk takers, but no one has quite been able to prove it! Once Bob includes his life perspective in the mix, and doesn't look just at the cold hard dollars on the table, Bob can make a more educated decision. Just to throw more options on the table, Bob might rationally choose to do any one of a number of other options which are not extremes, in order to find a happy medium that best fits Bob's life needs: * I intentionally chose to label Fund #1 as stocks and Fund #2 as bonds, even though this is a terribly crude assumption, because I feel those words have an emotional attachment associated to them which #1 and #2 simply do not. Given that part of the argument is that emotions play a part, it seemed reasonable to dig into underlying emotional biases as part of my wording. Feel free to replace words as you see fit to remove this bias if desired.\"", "I think that Bob has good reasons for his planned spending and should follow his plan, not the dubious advice from an account rep.", "I think the advice Bob is being given is good. Bob shouldn't sell his investments just because their price has gone down. Selling cheap is almost never a good idea. In fact, he should do the opposite: When his investments become cheaper, he should buy more of them, or at least hold on to them. Always remember this rule: Buy low, sell high. This might sound illogical at first, why would someone keep an investment that is losing value? Well, the truth is that Bob doesn't lose or gain any money until he sells. If he holds on to his investments, eventually their value will raise again and offset any temporary losses. But if he sells as soon as his investments go down, he makes the temporary losses permanent. If Bob expects his investments to keep going down in the future, naturally he feels tempted to sell them. But a true investor doesn't try to anticipate what the market will do. Trying to anticipate market fluctuations is speculating, not investing. Quoting Benjamin Graham: The most realistic distinction between the investor and the speculator is found in their attitude toward stock-market movements. The speculator's primary interest lies in anticipating and profiting from market fluctuations. The investor's primary interest lies in acquiring and holding suitable securities at suitable prices. Market movements are important to him in a practical sense, because they alternately create low price levels at which he would be wise to buy and high price levels at which he certainly should refrain from buying and probably would be wise to sell. Assuming that the fund in question is well-managed, I would refrain from selling it until it goes up again." ]

[ "472881" ]

[ "This is not the answer you were hoping for. I recommend that you stay out of it and let your parents do what they want with their money. They are obviously very good savers and very thrifty with their money. At this point, they likely have more money than they need for the rest of their lives, even if it doesn't grow. It sounds like your parents are the kind of people that would worry too much about investing in the stock market. If you invest them heavily in stocks, it will go down at some point, even if only temporarily. There is no need to put your parents through that stress and anxiety. At some point in the (hopefully distant) future, you will likely inherit a sizable sum. At that point, you can invest it in a more intelligent way." ]

[ "55407", "144439" ]

[ "According to pages 6 & 7 of the instructions for form 1040 in 2009 AMT was only temporarily patched for the year. Congress can't politically afford to drastically cut AMT exemptions by 30 to 40%, and may even retroactively change it, if it isn't passed by the end of the year (despite the constitution forbidding ex post facto laws) : What’s New for 2009 ... Alternative minimum tax (AMT) exemption amount increased. The AMT exemption amount has increased to $46,700 ($70,950 if married filing jointly or a qualifying widow(er); $35,475 if married filing separately)... What’s New for 2010 ... Alternative minimum tax (AMT) exemption amount. The AMT exemption amount is scheduled to decrease to $33,750 ($45,000 if married filing jointly or a qualifying widow(er); $22,500 if married filing separately). So, if you are married, and several regular tax deductions push your income below the AMT exemption amount of $45,000, it's quite possible you would be required to pay AMT, even if you didn't last year. There is a work sheet for AMT in the instructions for line 43, but the IRS also provides an AMT calculator. According to page 146 (E-8) of the instructions for form 1040 AMT is paid as: the smallest amount you are allowed to report as your taxable income (Form 1040, line 43). It is also the smallest amount you are allowed to report as your alternative minimum taxable income (AMTI) on Form 6251, line 29. If the [AMT calculation] is larger than your taxable income would otherwise be, enter the amount from column (c) on Form 1040, line 43 [or ...] Form 6251, line 29. As always, congress finds ways to further complicate things by making a few credits and losses deductible against the absolute minimum you're expected to pay taxes on, making the AMT a misnomer.", "Depending on your income, you may owe AMT instead of the taxes from the regular code. Even if you don't do that, you may hit the place where you have to at least check if you owe AMT. As you probably know, AMT was established early on to catch the wealthiest of tax payers who were able to use various loop holes in the code to pay much less tax than one would expect. Over time the limits on AMT have not risen with the rising wage gap, and AMT catches an increasing number of tax payers each year. If the limit is not raised at all for 2010 then it will catch even more people this year. AMT has worked it's way into the upper-middle class fairly solidly, especially if you exercise stock options whose strike price is significantly different than the current sale price." ]

[ "232870", "465597", "540011" ]

[ "\"Iraq is a US vassal/puppet state. I'm not sure what 500 South Vietnamese Dong were worth in 1972, but today the paper currency is worth $10 in mint condition. I'd suggest blackjack or craps as an alternate \"\"investment\"\".\"", "\"Currency, like gold and other commodities, isn't really much of an investment at all. It doesn't actually generate any return. Its value might fluctuate at a different rate than that of the US dollar or Euro, but that's about it. It might have a place as a very small slice of a basket of global currencies, but most US / European households don't actually need that sort of basket; it's really more of a risk-management strategy than an investment strategy and it doesn't really reflect the risks faced by an ordinary family in the US (or Europe or similar). Investments shouldn't generally be particularly \"\"exciting\"\". Generally, \"\"exciting\"\" opportunities mean that you're speculating on the market, not really investing in it. If you have a few thousand dollars you don't need and don't mind losing, you can make some good money speculating some of the time, but you can also just lose it all too. (Maybe there's a little room for excitement if you find amazing deals on ordinary investments at the very bottom of a stock market crash when decent, solid companies are on sale much cheaper than they ordinarily are.)\"", "\"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.\"" ]