New answers tagged investing
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Yes, mathematically, on average investing in equities in your 401(k) will put you ahead, but unless you can get a full match on the 19% (which is very rare), then the gain isn't life-changing (maybe an extra $5-10k depending on the amount and limit of the match). Plus, if you're young, you still have plenty of time to make up for the lost match, and with no ...
1
This can be any of the following schemes.
Ponzi scheme.
Any of the Forex trading scam schemes
A pump and dump sales scheme fund, that trick misinformed investor using regression toward the mean to harvest money from the gullible greedy investor. It doesn't matter what kind of funds is it, all tricks are similar.
Here is how the scheme works regression ...
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If I choose to invest $19k into my 401k and assume the average rate of return of 7%,
And here we go. Assuming a company match for the 19000 your first year investment is an average of 107% (!). Beat that. See, your 19000 get matched with ANOTHER 19000 by the company and THEN you make 7% (also on the match? not sure). Also there is this thing about pre and ...
6
What would make investing into my 401k the better option other than NW?
Company match. Eliminating all 401(k) contribs means no company match, and that's a pay cut, which naturally is Unwise.
More important is the foolishly binary thinking embedded in your statement:
If I choose to invest $19k into my 401k
Who mandates that you must fully contribute ...
3
The "illusion" is the assumption that these vicious cycles can't happen, that liquidity is guaranteed by the large number and sophistication of market participants. They are warning people who focus on the current high level of liquidity that it could disappear suddenly if conditions change.
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The two that I'm familiar with are KWEB and CQQQ, both of which are Chinese Tech/Internet stock ETF's.
If you want to find and research other ETF's, this site has a good screener. You can screen by asset class, stock type, sector, country, etc.
From there, you can look at the individual equities that comprise the ETF to see if they're inline with what you'...
2
Asset management is a category that the Financial Services Commission (FSC), which is the Mauritian government regulator for financial markets, lists as a licensed activity under code FS-1. Assets Management. Therefore, I would check whether the company purporting to manage funds hold any regulatory status there, as a first step in the due diligence process. ...
1
Free riding in general means buying without having the money to do so (generally, using unsettled funds from its own sale to cover the cost). At the retail level, your broker will generally have rules that prevents free riding in your account. Your broker is incentivized because the fundamental problem is that you effectively borrowed money without actually ...
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Yes, as the SEC explains, Federal Reserve Board's Reg T requires that you pay for the purchase of a security before you sell it:
In a cash account, an investor must pay for the purchase of a security
before selling it. If an investor buys and sells a security before
paying for it, the investor is “freeriding” which is not permitted
under the Federal ...
-2
Nope. It is called day trading.
THAT SAID - you will not be able to execute the buy with 0 balance. This is quite standard for many day trade operations where "0 balance" means "no profits for the day on YOUR account" not "no money at the broker" (as the broker accounts are owned by the company).
Otherwise no broker will let you buy stock with 0 balance - ...
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I saw a nice sound-bitey phrase today that I think helps address this question. "It's not how you time the market, but time in the market."
That reminded me of an article I read (and I looked for a while, but couldn't source it, so please accept my apologies that I cannot properly credit the original author). He took 3 hypothetical people.
Each had $12k to ...
1
If you continue reading that page and look at the table it refers to, it shows years where Chrysler has a relatively high price (82-101) but low P/E ratios (6.7-10.8), and periods with low prices (52-56) and high P/E ratios (22.9-26.2). How I interpret this is that Chryslers earnings (the denominator) swing wildly (between 2.13 and 24.92) but their prices do ...
9
But it does seem that, say you had a crystal ball and you knew when a
recession was going to occur, then switching to a conservative
strategy for that period is the smart move to make.
But you don't have a crystal ball.
To be clear - I'm not talking about timing individual stock picks.
...
switch one's managed fund from an aggressive to a ...
3
Don't try to time the market
Because everyone else is trying to time the market. In doing so, you/they are impacting the market, changing it. You are also not betting against "the market" you are betting against an aggregate of all traders - and wisdom tends to be found in the crowd. If you have better information than the others, you are basically a hidden ...
1
There are a number of web sites that offer ETF information. One of them that I have used is ETFDB. It has a free screener. For example, it shows that there are 121 Asian ETFs for Developed Asia.
There are other screening choices as well. You can select an ETF and click on is holdings. That will provide the major holdings. It requires a subscription if ...
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If we exclude speculation about future value, there's one rather simple reason to buy such a bond:
If you're looking for a safe way to store a lot of money, this is in fact the cheapest option.
Let's assume you're a bank with a lot of money that your customers gave you. This money must be stored somewhere. Of course you can lend it to other customers ...
1
Why would one buy a bond with a negative rate?
Buying a bond with a negative redemption yield can be profitable in real terms in a period deflation. If deflation sends prices down by 4% and you receive back 99% of your money, then in "real terms" you are up (about) 3%.
Compare this to buying a bond with a positive redemption yield, buy whose yield is ...
-3
Because you expect to sell the bond at $102 as soon as possible
who cares about what happens in 5 years
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Assuming you're talking about corporate bonds (not government), the general process is as follows:
The company hires one or more (usually several) investment banks to underwrite the bonds. This bank(s) agree to buy the bonds initially from the company then sell them on the secondary market.
The underwriters determine an appropriate coupon rate for the bonds ...
1
Different bond issues work different ways. The auction process for US Treasuries is described pretty well on the Bureau of the Fiscal Service's TreasuryDirect site. Basically, institutional investors put in bids ("I will loan $X millions at Y%) and Treasury accepts them in order from lowest interest rate to highest until their funding target for that auction ...
3
In order to have a "market" price and ticker symbol or ISIN (which is what I think you mean by "no one is mentioning the stock name") the stock must be listed on a market. Remember that the stock price is the last price someone paid for it on a stock market.
A symbol will be allocated by each stock market it trades on at or just before IPO; there is no ...
0
You should never play earnings in the short-term. It's usually a coin toss because you never know how the market will react.
If you were a short-term trader, you could sell your position before earnings. You would have made a 20% profit in a few months.
If you were a longer term investor, that type of price movement would be irrelevant noise. It helps ...
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There are a couple key points here.
Stocks are higher risk/higher reward. IF you have a good portfolio, it can be tough to find better returns elsewhere. The broad market (S&P 500) has more than doubled in the past 10 years and many individual stocks have grown even more than that.
That said, you can also LOSE money in individual stocks if you don't ...
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If you feel like you're going to need the money at some point, put it into a liquid investment.
For low risk, you have premium savings accounts that can yield roughly 2-2.4%. Nothing too exciting but there is no downside risk and it's easy to transfer in and out.
For medium risk, you can choose from a range of ETF's, such as whole market ETF's, dividend ...
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Trading is the process of taking advantage of shorter-term price action whereas investing usually represents the purchase of a company with intent to hold for a longer-term.
For example, a trader may buy a chart breakout on AAPL and hold for $5/share whereas an investor may buy AAPL at a "good price" and hold for a few years.
Of course, there's a middle ...
0
I've never experienced it with any of the brokers I've used. The "miscalculated ticks" are rare - certainly not frequent enough to keep you from using trailing stops.
Make sure to use a limit on the trailing stop. In that case, even if you did get stopped out accidentally, you could always rebuy at a similar price
1
The term refers to what happens behind the scenes. When you place a trade, it takes about 2 days for the trade to settle. If that trade is a sell order, you will need to wait for 2 days to reuse the capital. In the meantime, it is unsettled.
This doesn't affect the profitability of a trade.
Think about it like buying an item on eBay and paying by check. ...
1
Unfortunately, it's not that simple nor is it that efficient. There are a few things to keep in mind.
Stocks move based on perception not reality. Positive sentiment
causes people to buy and negative sentiment causes people to sell.
This leads into the next points.
A company can report great earnings and poor guidance for the
upcoming quarter. More often ...
7
My best guess would be:
Liability.
If someone sues "you" for something that happens at a certain property, they're really suing the company which owns that property.
In the event that the company loses the lawsuit, you liquidate that property to pay off the judgement while retaining all of your other property.
4
You sold your ETF shares so the transaction is complete. Poof! Your shares are gone.
Equities have a T+2 settlement date. Since it's a Cash Account, that means that the proceeds from your sale will be available for trading in two days.
In a margin account, your broker would allow you to buy other securities immediately.
13
The term "unsettled funds" is a legal term, defined by legislation and judicial decisions and enforced/monitored by the SEC. The intuition is the idea that while a financial transaction on a security may be processed at one point in time, the "settlement" of the cash takes time and could end up reversed or delayed (such as for rule violations, investigation, ...
1
Due to the efficient market hypothesis, stocks with higher volatility have higher return. If you believe in the efficient market hypothesis, there is no way around that.
Some ways to pick stocks with high volatility:
Just see how much the stock price has varied for the previous 20 years (only valid for companies having long-term price history)
Prefer ...
1
REITs must distribute 90% of their taxable income to shareholders. For this REIT that seems to be an 8% dividend ("cash yield") on average.
The overall growth of the REIT, which includes both capital appreciation (increase in property values) and income (rents/leases) is expected to be 12% per year on average. If you reinvest the dividends back into the ...
2
Stocks for the long run!
If you're saving for your newborn son, chances are he will need the money only 20 years from now. 20 years is long enough time period that the investment should include a very hefty amount of stocks. In fact, I would advise you to invest ONLY in stocks, gradually, for the next 20 years. Purchasing stocks for the next 20 years will ...
1
I suppose the REIT for some reason believes their properties appreciate at a rate of 4%, giving 8% + 4% = 12% projected yield per annum.
However, actually properties do depreciate and not appreciate. A reasonable depreciation rate for properties is -2%. To maintain the real value of your investment, the REIT needs to invest into repairs at about 2% per year ...
1
"From my understanding, they can say whatever they want in the forward guidance since they are legally protected anyway?"
That is totally incorrect.
they have to add the fine print you mention, which is no big deal, a trivial issue
but
there is a huge body of law and regulations regarding what they can and can't say
The answer to your question is very ...
0
The main questions are:
What's your interest rate (both before and after) ?
Are you going to invest the money you save ?
You're saying time to pay off closing costs is 4 years, but what does that mean ? Does that mean that it'll take you 4 years to get back to the same principal amount that you have now ? In that case it doesn't seem like it's worth it. ...
2
This is not that simple. A company's share price is not just based upon guidance, but credibility on accuracy. The market experts then classify it as conservative, aggressive or unreliable. If conservative, they would add expectations... I.e. there are cases when company gave a conservative guidance, market added more and share price went up. When results ...
5
The Securities Exchange Act of 1934 formed the SEC and granted it the power to oversee all securities as well as the markets, the conduct of brokers, dealers, and investment advisers as well as the financial reports required of publicly traded companies.
More specific to your question, its anti-fraud provisions prohibit misstatements or omissions in an ...
5
Unless your child has earned income an IRA or Roth IRA is not available.
You can use a 529 plan to save money. It has several advantages in that the money grows tax deferred. Some states give you a state tax break on contributions. You have to check for your state.
It can be used for post-secondary education, which means that it can be used for vocational ...
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The limitations of 529 accounts have been mentioned in comments, so think about an UGMA (Uniform Gifts to Minors Act) account.
https://www.investopedia.com/terms/u/ugma.asp
https://www.troweprice.com/personal-investing/products-and-services/non-retirement-accounts/ugmas-utmas.html
Up to $1,050 in earnings tax-free.
The next $1,050 is taxable at the ...
2
4 years seems a little high for a break-even point. One rule of thumb I've seen is that you should refinance if you can reduce your rate by 1% or more. I assume you're rolling your closing costs into the new mortgage, which increases your principle and raises your payment, lessening the improvement.
If you can afford to pay $2,100 per month, then look at ...
0
I think it would be very small the number of people who started spread betting and made a profit in their first 6 months and that means that most people as the sign says make a a loss. I'm not saying you can't make a profit from it but you need to obtain some knowledge and develop a strategy this is very important without a good strategy it is nearly ...
1
Share price is total discounted value of future earnings (plus assets). A single quarter will be small portion of that. For instance, if the discount rate is 8%, then a single quarter is about 2% of the total value. So quarterly reports are not important for the current earnings as much as for the future outlook. Current earnings being 10% above expected ...
2
The market is forward looking and share price tracks company earnings, thought not in a straight line linear correlation that you suggest. If a company reports earnings significantly higher than expected, its stock price tends to rise and vice versa.
Sometimes "companies beat earnings expectations yet they depreciate a bit." This is because there are ...
3
Debt funds are exposed to fixed income risks, which overlap with but are not the same as equity risks. Equity, for example, falls during every recession. Debt may or may not.
The main risks you face in fixed income assets are:
Inflation risk. If inflation ends up being higher than expected, the price of your fixed-income assets will likely fall because the ...
1
If you want to protect yourself from negative interest rates, the best way is to invest into long enough government bonds.
The value of a bond increases as interest rates decrease, and decreases as interest rates increase.
Essentially, by buying long government bonds, you are "fixing" the interest rate you are getting for the bond part of your portfolio. ...
2
I have never invested in a cash-only ETF, but I definitely have invested in a cash-only traditional mutual fund, which is called money market fund.
Such funds make a lot of sense. At least in Europe, there are systems for supposedly ensuring that if you deposit money to a bank, and the bank goes bankrupt, that as a creditor of the bank, your assets are ...
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You may have stumbled upon a particularly unattractive ETF because as you say, the yields don't seem to be better than what you could get at your local bank. I'm not sure if is due to the nature of the Australian cash markets at the moment but I do know that there are attractive examples of this in the US.
In the US we have "Money Market Funds" which ...
2
For the US to accomplish negative interest rates it has to drastically increase the money supply - which it has several ways to do - but the outcome is that assets become more expensive. More practically "it costs more money to purchase the same value". Think of it like rapid inflation. Owning assets would then be the best way to preserve your wealth. Real ...
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