128
Almost nobody would just give you a pile of money with no expectation of return. In most cases you exchange equity in the company for the investment. A simple example might be that I estimate your idea/company to be worth $4M currently, so for $1M I want 25% equity. When you sell for $30M, I get 25% of the proceeds. If you go belly up, I likely don't recoup ...
110
It means they're making a big loss in cash terms, yes. The claim that they are profitable is based on a theory that they are accumulating valuable assets in exchange. In Netflix's case, it's that they are spending lots of money on their content, which they expect to produce income in future years too.
So essentially lots of cash going out the door now, but ...
66
Do they want your help?
Many times parents have difficulty taking advice from those whose nose and butt they wiped. Your accomplishments and investments are independent of the fact.
What are their needs?
They likely have social security and is that meeting their needs now? What happens after dad passes? Coming up with solid numbers is an important step ...
48
Probably they shouldn't be investing. It's too late for that. And if they aren't investing it's pretty simple: Sell the big property before they urgently need the money because that takes time, then pay off the mortgage on the other house because the mortgage only costs money and they probably can afford to pay it off. In that order so they always have some ...
34
You're talking about the difference between Profit and Loss (as in, the accounting report with the same name) versus Cash Flow (again, accounting report of the same name).
The difference exists because not all assets are cash. Yet a non-cash asset is carried on the accounting books at its cash value - the value of a building, the value of vehicles, ...
26
Explain to your parents what a fiduciary1 is.
Tell them that no matter how much they like this guy (gal?) they should only invest with someone that they have a fiduciary relationship with - because they only have one shot left and it needs to be the best thing for them.
Steer them to someone who is a certified financial planner or any other ...
17
Given your specific situation, being debt free and in Germany where there are supportive social structures in place for potential unemployment etc, I would consider the following:
Depending on your industry and how easy it is to get a new job if suddenly let go, have a small emergency fund. Nothing fancy needed especially if you live in a city where public ...
15
This might be closer to the sunk cost fallacy with a bit of loss aversion thrown in. I know it is hard emotionally to "lock in your losses", but that money is gone and it is a new day. You have an asset that is worth what the stock trades at today and that's what you have to work with.
It is very possible that stock might regain its previous losses, but ...
13
Typically, if you create a business that wants investors, you will issue stock in the company. One unit of stock is called a share. You decide how many shares there will be and how much each share is worth. The total value of all the shares represents the market value of your business.
Say you issue 1 million shares in your company, and you value each ...
11
Here's the general order of things:
Keep 3-6 months of expenses in a savings account for emergencies (lose your job, car accident, mauled by dingos, etc.)
Pay down all your debt as fast as possible.
Make sure you're contributing ~15% to your 401k, IRA, or similar personal retirement account.
Invest everything else into a brokerage account for long-term ...
7
A typical "friend who wants to help them with investing" is actually out for himself.
The most benign way this occurs is the "friend" recommends them into annuities and load mutual funds that pay him a gigantic commission, at the expense of the value of the investment.
For instance I found a Florida investment "counselor" had put my parents into a ...
7
Apart from capital investments (purchasing valuable assets with borrowed money) negative cash flow can be a result of late payments. If your customer pays you at the end of the month for a service which you have to deliver (and pay the associated costs) now, then a rapidly growing customer base can become problematic because of negative cash flow despite the ...
5
It means that they have enough money (or credit) to make these purchases now, but aren't currently making that money back. They've spent more than they currently expect to make - but are still 'profitable' because they believe those purchases will make them more money.
So for example, let's say Netflix is currently spending $5 Million on new assets this ...
4
At this point investing is too late. After being in a similar situation and hiring an elder care lawyer my self, here's my advise.
If you had 5 years of good health on parents part you could put all there assets in a trust and protect them, but this doesn't seem like a viable option.
You probably want an eldercare lawyer.
As they age taking care of the ...
4
How do I stop salary promotions from being filled up with new expenses?
You just do? There is nothing in the world that overrides your decisions, whether smart and stupid. So, if you geta promotion and thus more money - YOU are filling it with expenses.
Make a budget, you must visualize and materialize what you actually earn, be aware where you spend it ...
3
Suppose, for example, that it costs you $2000 to bring a new customer on board, and that you reasonably expect that customer to pay you $100/month for at least the next 5 years. Suppose further that your sales force is doing a bang-up job, and signing up 100 customers/month. Also suppose that you are good at controlling your fixed costs.
You are cash-flow ...
3
Yes, they should move, and the line
You can now buy or convert to Admiral Shares of this fund at a $3,000
minimum.
suggests that one can do so in a tax-free swap, the basis remaining the same.
2
Yes, compounding frequency does have an impact on your return. In general, more frequent compounding boosts your return.
The big proviso is that you have to leave the money invested in order for it to compound. In your savings account example, that's exactly what you're doing and the more frequent payout means that the interest is itself earning interest.
...
2
Is an ISA of this kind worth it for a portfolio < £2000?
Not really. The only difference between any ISA and a regular account is that you won't ever have to pay taxes on the benefits you made out of the money you put in.
In the UK, at the moment we have a free personal allowance of £11000 for capital gains (e.g. buy/sell stocks, mutual funds...) and ...
2
There are many different types of Stocks & Shares ISAs. I'm assuming here that you're thinking of investing in a fund, rather than picking your own shares.
Generally, the fees that are charged to your account are reasonably transparent. There may be a single fee, or alternatively a "platform fee" levied by the people you invest through, and a fund fee ...
2
Most stocks at 10% dividend or more are either in trouble or else they finance regular business operation with short-term debt that continuously rolls-over. In the second case a rise in short-term interest rates decreases margins.
Most stocks at 5% dividend or so, have significant long-term debt and even pension obligations. These companies are often ...
2
In most states they are required to pay you interest on money that's in escrow. That being said, the amount won't be significant.
In the grant scheme of things, the interest you'll be earning from that CD is also not significant.
How much you end up paying for damages at the end of the lease is also irrelevant. Some have pointed out that some apartment ...
2
Lets say you are meticulous and will return the apartment in perfect condition. Also lets say that the landlord will not charge you for any repairs.
During the year, the 1330 will earn about $28 in interest. In that case you would be much better off allow the apartment to hold the 1330 as you will only lose $28.
On the other hand, lets say that you ...
2
There's a distinction between selling the company and selling your stake in the company. Let's say you gave the initial investor a 10% state in exchange for the $1m. Then you have a 90% stake in the company.
If you sell this stake, then the new buyer will now have a 90% stake, and the original investor will still have a 10%, but no money. However, if the ...
2
Buy and hold is actually a terrible strategy, generally speaking for the average investor.
The main and most famous proponent of Buy and Hold is probably Warren Buffett. But he doesn't just advocate buy and hold.. He also advocates careful and deep research, before making that said "buy and hold" investment. Even then, among his investments only a few ...
2
(1) Assets held in stocks for many years (regardless of their "paper" value at any given moment, like now) are a way to protect them from taxation for those years. Unlike bank accounts, mutual funds, real estate, income-generating assets, etc, stocks incur NO taxes AT ALL during those held years-- it's a 100% taxation shelter for that time. So if there is ...
2
I never quite saw the difference between saving and investing - some investments are very safe but with lower return, savings accounts are just another safer-with-lower-return options.
So, assuming you're not tying your money up in something like a pension where you cannot get your money out until retirement age, you only need to consider the risk levels ...
1
I see poor prospects in the future for this line of business
You answered your own question.
Unless a stock is already at exactly 0 it can always go down further. Holding onto a stock believing that in the long term it will go down is just about the opposite of any decent investment advice ever.
Now obviously you could be acting on good information that ...
1
The Wikipedia sentence is a little bit ambiguous, and a little bit wrong. In particular, I can't find a section 15(d) in the Securities Exchange Act of 1934. (Perhaps a later amendment changed the numbering, such that there is now a section 15(d).) But section 13(a)(2) does indeed indicate that the "Commission" has the authority to require annual and ...
1
As you know, even bonds have some market risk unless you hold then to maturity, but they will have much less risk than equities.
If you just want "safer" investments and are willing to take some risk, then you might research various bond ETFs that will have more liquidity than individual bonds. There are government bond (lower risk) ETFs and corporate bond ...
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