45
Well, one sensible thing to do with it is paying down the mortgage to finish it asap - that will give you even more leftover money.
First, you do save (and thus get) 2.8% as per your own information. That is not bad for an investment. Second, though - once paid off you have even MORE money AND the freedom to know you own your home. Heck, you an start putting ...
28
First of all, congratulations on what you've accomplished.
About the only remaining conventional tax-advantaged option is a Health Savings Account (HSA), and that's only available if you have a high-deductible health plan. Deposits into an HSA are pre-tax, and can be used for just about any medical expense.
After that, I would consider a standard non-...
24
In the past, a DRIP made sense for small long-term investors because reinvesting dividends in an average brokerage account wasn't trivial. The brokerage would only let you buy an integer number of shares and it would charge a commission on the trade so unless you were getting a large amount in dividends, it wasn't financially reasonable to immediately ...
18
Traditionally, commissions were a large part of the annual revenues for brokerage firms. As discount brokerage became more popular and as the industry evolved, brokers diversified into other areas.
In recent years before their elimination, commissions were a minor fraction of most brokerages’ revenues. Commissions made up 28% of revenue at TD Ameritrade, ...
15
First off, congratulations on getting mostly debt free and having so much extra!
That said, even though $700 extra sounds like a lot, it isn't. You already have a 1 year emergency fund, so that's good, which wipes out my first suggestion. You also wiped out my next suggestion, which is looking at improvements to your house, such as appliances or other ...
14
Again great job. To me you have really two choices and no matter what you choose you will end up with the second choice eventually.
First choice: Throw more at the mortgage. You may want to do this some of the 700 or all. Doing this, you will eventually pay off the house and will be left only with the second choice.
Second choice: Open up a brokerage ...
8
With a Roth IRA, you can withdraw your contributions at any point without tax consequences. If you have a traditional IRA (or withdraw more than just your contributions from a Roth IRA) then you are correct, early withdrawal can carry penalty. Since the different types of IRA already give you significant flexibility and they have a relatively low annual ...
7
You're correct that the stock market is not an example of compound interest.
You're incorrect, though, that $100 at 10% growth every year for 10 years is $200. It is, in fact, $259.37 due to the fact that there is compound growth due to capital gains and reinvested dividends: every year the previous value grows by 10%.
Thus, at the end of every year, when ...
7
The Roths are post tax money. Deposits go in post tax, grow, and are not taxed at withdrawal. (You know this).
Opening a brokerage account and buying a very low cost index fund would give you long term growth and the tax would be minimal each year, a low rate on the annual dividends received, and long term capital gains on the final sale. One benefit, ...
answered Jan 12 at 0:28
6
If we can't question your premise, the high cost of transactions or the need for 8 ETFs to feel diversified, then I'd suggest making the monthly contributions to one ETF per month. Next month, buy the second ETF, and so on.
Over the long term, the difference between this and buying all 8 every month will be negligible.
Instead of needing to rebalance, ever, ...
answered Dec 24 '20 at 0:24
6
Sort of, but not the way you describe it.
You can't just move assets into a 401(k) - you can only contribute cash from your paycheck (unless this "personal account" is another retirement account, e.g. IRA, and your 401(k) accepts rollovers, but I'm assuming you mean a regular taxable account).
Additionally, you can't just move assets out of the 401(...
6
From The Financial Times quote page
It would seem to me the Yahoo data went bad for some reason. It's quoting pence instead of pounds?
To confirm, I went right to Vanguard and saw -
Which confirms the FT quoting. So, to the 2 comments, yes, bad data, confirmed by 2 sources.
answered Dec 31 '20 at 14:42
5
What I don't understand is how they continue to make money (from the market) once the initial shares have been sold.
As you intuit, they don't, because, of course, the purpose of business is to make money through sales; an IPO is seed capital for growth.
Now the owner wants to raise more money through the market... how?
Issue more shares. A Secondary ...
5
When you file your taxes, the contribution will count as a deduction, so it is effectively pre-tax (talking about federal income taxes, which is the typical understanding of 'pre-tax').
What it doesn't give you back is the payroll tax you paid on the amount - Social Security 6.2% and Medicare 1.45% - those are gone.
In other words: an HSA contribution ...
5
People invest in stocks and bonds, and still buy houses.
The issue for your lender is will you have enough cash or cash equivalents when it is time to go to settlement. They want to make sure that you can handle the down payment, and closing costs, and not end up with zero savings.
Moving $2,000 from your checking/savings to a brokerage account, might not be ...
5
Given that you are in the process of buying, presumably your first home, I would hold off. The mortgage process does not take all that long (typically less than 4 weeks). The money you earn on a small investment will mean nothing to your lifelong bottom line.
Mortgage brokers can be really nitpicky about the strangest things. A coworker, buying his first ...
4
No, because
you can only contribute to a 401(k) via payroll deductions, and
401(k) plans are designed for long term investments, not short term investments (unless you're already retired).
It doesn't matter, though, because money is fungible.
Thus:
within the confines of your 401(k) plan, move that $100 of 401(k) money to a long term investment, and
move $...
4
Now the owner wants to raise more money through the market... how? Can they 'split' one of their shares into more shares and sell them at the new value? Isn't that just creating artificial money out of nothing?
They can indeed issue more shares from nothing.
But note.
The initial shares in your point two are shares issued from nothing.
That's what stock is!
...
3
Just to add one more argument to Justin Cave's great answer: there is no tax advantage of using dividend reinvestment plans (DRIPs) instead of using one's brokerage account own "reinvest dividends" checkbox.
From Wikipedia:
The investor must still pay tax annually on his or her dividend income, whether it is received as cash or reinvested.
3
It may exist but I do not know of any web sites that provide the one, five and ten year return for any stock of your choosing.
You can create a spreadsheet that does this but you'd have to capture historical data as well as the dividend dates and amounts and that would be quite onerous.
In lieu of the above, I think that the best approach would be a DRIP ...
3
All else being equal, earning 4% in a CD is better then "earning" 2.5% by paying extra on the mortgage (every $100 you put towards the mortgage reduces your interest by $2.50, effectively "earning" 2.5%). But you need to take the tax and penalty into consideration.
CD interest is taxable, so if his marginal tax bracket is 29% (as you said ...
3
A share is a the ownership of a fraction of a company.
That said - as the average Joe private investor - you will of course hold only tiny fractions of most companies and won't be able to influence the company like a major investor does. With owning a fraction of the company you are entitled to receive a share of their earnings (called a dividend) and a ...
2
If it's an IRA with RMD restrictions then you'll have to follow distribution guidelines, if any, for those accounts.
For unrestricted accounts, the answer might depend on who the executor of the estate is, if he is being paid for his time, how many beneficiaries there are, and how much time and effort does it take to combine accounts.
Keeping it simple, if ...
2
As is hopefully obvious, investing in the wrong thing, or at the wrong time loses money.
Others have given examples, such as the Nikkei 225 which is down 40% from its peak 30 years ago. You might say this is "not diversified enough". Another example, the first decade of this century, where the S&P had terrible returns. You might say this is &...
2
Just MHO (which should be a comment, but is too long, so I made it a Community Wiki) but a beginner should not invest in individual stocks.
Mutual funds and ETFs (essentially mutual funds that act like stocks)
give you greater diversity, and
they display the 10 year growth, which includes dividends, and takes into account pesky things like stock splits.
...
2
If the two web sites disagree then clearly one of them is wrong.
Given that Gamestop is a heavily shorted stock, FINVIZ is incorrect (GME doesn't even display for at >5% shorted).
2
If the shares are delisted from the NYSE, you will continue to own them. The question is, where will they be listed and what access will you have to those markets?
If the legislation allows OTC BB trading, it won't be as bad as the companies being delisted and subsequently only trading on foreign exchanges. Either way, the pool of buyers and sellers will ...
2
Macroeconomics won't help much either. Even if you understand all of the intricacies of currency fluctuations, interest rates, monetary and fiscal policies, etc., it won't give you a leg up in trading because most everyone else in the FX market known those things too. "kinda relevant" is about the right description.
If you want to learn macro ...
2
If an investor owns put options on the XYZ stock with a strike price of 40 and the XYZ is declared completely worthless then when the investor exercises his/her options he/she will
get $4000 per contract. However, it will take a long time for the stock to be declared worthless. Therefore, it is often better to sell the option.
1
A put option can be settled by delivering the stock and receiving the agreed payment. Even if the stock is worthless, the stock certificates can still be delivered and the agreed payment received. So the put option holder should be fine if the stock becomes worthless.
Bankrupt shares often still trade, so you can buy them. Even if they do not trade, they can ...
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