New answers tagged investing
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I'd highly recommend reading JL Collin's Stock Series. This is a great resource to teach you about how investing works, and gives you a primer on index funds, stock and bonds. Aditionally (and most importantly) it teaches you how to think about your money so that you don't make the bad decisions that so many people do by panic selling every time the market ...
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Market timing vs dollar-cost averaging
This is a strategy for changing the asset mix in your portfolio. Paid brokers positively love dollar-cost averaging; because it allows them to give exactly the same advice regardless of market conditions, and always be "right" and evade responsibility for market turns, even obvious ones.
I'm not 100% thrilled with ...
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Neither of these strategies apply to long-term investing. They are more applicable to day-traders or short-term investors.
"Buy low, sell high" is more of a reminder that one should not always buy things that have gotten expensive (follow the trend) and sell things when they've declined (panic sell). If you're a long-term investor, then these short-term ...
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If you add or subtract a fixed number to the all of the portfolio returns and regress them against the market returns, you will get the same alpha value as before shocked the portfolio returns.
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While cryptocurrency is new and unusual, there is a similar instrument which is much older more familiar: Gold. Obviously it's not exactly the same, but we can make useful analogies.
How does one invest in gold?
Buy and sell chunks of gold itself
Trade shares of a fund (ETF) that holds gold for you
Trade shares of gold producers (miners)
Trade shares of ...
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I think that you might be conflating retail shorting with institutional shorting.
Retail is subject to a Reg T amount of 150% of the value of the position at the time the short is created but since the full value of the credit shorted position is included, it's effectively 50% margin. When short, we pay a borrow fee. Some brokers share that fee with the ...
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The technical answer to you question involves the Synthetic Triangle:
There are six basic synthetic positions:
Synthetic Long Stock = Long Call + Short Put
Synthetic Short Stock = Short Call + Long Put
Synthetic Long Call = Long Stock + Long Put
Synthetic Short Call = Short Stock + Short Put
Synthetic Short Put = Short Call + Long Stock
...
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The call option writer gets the option premium. If the option is exercised, the option writer gets the agreed price but bears their own cost of acquiring the underlying share. There may be transaction costs for each part of the process.
So if the option is not called, the payoff for the option writer is:
Payoff = OptionPremium - TransactionCosts
And if ...
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The call seller has the obligation to sell IBM at $100 if it is over $100 at expiration. If it is, his gain or loss will be the premium received less the intrinsic value of the call. The intrinsic value is the in-the-money amount.
1) At $105, the intrinsic value is $5 so the loss is - $300 (+ $2 - $5)
2) At $101, the intrinsic value is $1 so the gain ...
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0.5% is less bad than 0.0%. You're only losing 0.75% instead of 1.25% to inflation (which is 60% loss instead of 100% loss). As for where to put money for two to three years... savings or term deposit accounts are exactly where I'd put them.
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The FRB sets an initial margin requirement of 50% for the purchase of securities and it can be met by cash and/or marginable securities. Brokers can require more. .
The FRB's maintenance requirement for securities is 25% (brokers can require more).
The initial margin requirement for futures contracts can be as low as 5%
In all cases, your assets (...
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A margin account is one where you can borrow money from your broker to buy securities. The loan is collateralized by your cash and/or marginable securities. You pay interest to the broker on cash borrowed. However, you do not have to borrow cash from your broker.
Some strategies cannot be done in a cash account and require a margin account: shorting ...
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Past returns are past, future returns are future.
I have no experience in Indian real estate market, but I should mention that any CAGR should take into account inflation. Stocks yield about 6% above inflation. If inflation has been on average at 14-24%, that explains the origin of the high CAGR in real estate.
Also, how much time has your father spent in ...
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When you sell the futures contract, the contract basically says that, if you hold it to the contract date, you promise to sell whatever is being contracted for at the specified price. If you buy the contract and hold to that date, then you promise to buy. So being long or short on a future means exactly what the terms would suggest, that you are going to ...
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I have a gold mine in my back yard (pls keep this a secret). I know that I'll have 100 oz by 12 months from now. As a hedge position, I sell one future contract. I've locked in my sale price, and I no longer worry that the price of gold will drop before my 100oz is mined and ready for sale.
A speculator is on the other side of that contract. In effect, he ...
answered Nov 15 at 13:21
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A speculator trades futures in hope of making a profit. He makes a profit if he buys and later sells a contract at a higher price (or he shorts a contract and buys it back at a lower price than he sold it for). He is simply trying to profit from price change.
A hedger is someone who buys and sells the actual commodity and uses futures to protect ...
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Think about the income produced by the portfolio at retirement. Then a $75,000 income requires a $2,142,857 portfolio at 3.5% return.
To produce the portfolio requires $75,000 a year put-in for twenty years at 3.5% return with monthly compounding to reach $2,209,253 . Or even yearly compounding reaches $2,195,210 .
The first problem is taxes and so taxes ...
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I'd suggest you read JL Collin's stock series. This will give you a good primer on the pros and cons of stocks and bonds and (most importantly) teach you how to think about your investments. His main recommendation would be to invest in index funds which have been shown to beat the vast majority of actively managed funds over the long-term. I highly ...
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I can't speak for South Africa specifically, and I'm by no means an expert, but since there are no other answers, I'll chip in...
Saving is generally a good thing to do, so you should find a home for any 'spare' money at the end of month. Even if it's just a few quid/bucks/rand, it's still better to save it than to start thinking you're rich and squander it ...
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Your sample scenario is correct, but on such a short timeline the advantage is likely not very significant. If instead of 2023 you waited until 2050 to request reimbursement, you could have significantly more than your initial $10k contributions depending on investment performance.
The great benefit of an HSA is that it gets pre-tax contributions, tax-free ...
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Many good answers here already. Your best bet would be to read up on investing in index funds, JL Collin’s stock series is a great source on this. Simple, easy to understand and will save you a butt loaf of money in the long run.
If you don’t feel like learning though there are many companies out there willing to take your money, analyze your risk tolerance ...
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Yes, there are in the UK. They are called investment trusts (though they aren’t really trusts in the normal sense of the word — they are companies). Around 60 of the 350 companies in the FTSE-350 list of the biggest listed companies in the UK are investment trusts.
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That thing is called a mutual fund.
They are readily available, either as a mutual fund proper, which has rules for investing and withdrawing, or as an exchange-traded fund, which trades in real time just like a stock.
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What you are specifying is an actively managed mutual fund, where a monkey throws poo at a wall to pick stocks at random ... and ...
answered Nov 9 at 15:26
Harper - Reinstate Monica
34.7k6 gold badges52 silver badges115 bronze badges
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Berkshire Hathaway does exactly what you want. Each share is $331,000, so you probably won't be investing in it...
For us mere mortals, actively managed mutual funds and ETFs do the same thing, except they're funds managed by brokerage firms, not companies.
Many firms offer them. Three popular ones are, alphabetically:
Charles Schwab
Fidelity
Vanguard
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Where's your retirement?
Let's review how compounding works. When you invest, you get interest/dividends/gains. Normally, those gains are themselves reinvested. Suppose your investment makes 10% a year. You start with $1000 and get $100 back in the first year, and reinvest. What happens after 30 years?
$100 back x 30 years = $3000, right?
No ...
answered Nov 8 at 18:32
Harper - Reinstate Monica
34.7k6 gold badges52 silver badges115 bronze badges
0
This depends on you, and how much cash you like to have. Personally, I love cash, I love having way more of it than I need. Every additional dollar that I have that I don't need makes me feel more comfortable with any situation life throws at me because, I have cash, and you need cash to survive.
So, do you feel comfortable with 6 months? Is that more than ...
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If no one is depending on you - six months should be plenty.
(depending = spouse, child, parent, etc.)
Put the extra into investments.
The money you invest is still available to you if you need it.
The downside is that if there is a bad economic problem and you lose your job at the same time then you may need to pull the money out while the investments ...
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TL;DR
I'd agree with most others: 3-6 months in cash, invest the rest. If you feel like 6 months cash is not enough, you can keep more cash, but if you have investments that you can sell without harsh penalties, it's probably safe to count them as part of your emergency fund for longer term emergencies such as extended unemployment.
Long version
One ...
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I don't see why I'd need more than 6 months' worth of savings.
If you work in a region dominated by one company or industry and can't/won't move, then having more than six months of expenses socked away in something stable would be a good idea. Especially if that company nosedives right around when the market falls like a stone.
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If you treat saving as a buffer for flexibility, then you will see the opportunity cost from a different perspective.
In life, even if you have everything cover by social security net and insurance, it is still a bad idea by putting yourself into a stringent financial position. Sometime life events or opportunities will appear in unexpected timing e.g.
...
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There are some very good reasons to have more than 6 months of income saved, and also some good ones to have less. You must weigh what applies to you.
For example a person with a very secure job, who has a spouse that also works and has expenses that are less than either salary probably does not need 6 months of savings. Three months could be more than ...
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A broker allows you to trade on a stock exchange. That stock exchange keeps a list of buy&sell orders that came in from multiple brokers, and repeatedly determines a price at which the buy orders and sell orders are balanced. That means the buy orders at or above that price are matched with sell orders at or below that price. The stock exchange then ...
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The six months of savings is for an emergency fund. The advice is for 3 to 6 months. This emergency fund is to cover you for a six month period of time if you are not employed. This isn't invested in any instruments that have the risk of losing money.
So what other purposes should you have a pot of money, in addition to the job loss emergency fund, that ...
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[I] have $1k in savings, $1.25k in indivudal stocks that earned about 6% in the past year, and $500 in cryptocurrency (mostly BTC, ETH) that have earned 0% all time. I have about $28k of student loans at 6-8% (different providers). I don’t own any assets really and have a leftover income of about $1.2k per month after rent, electric, other personal expenses (...
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At a high level, the market (buyers and sellers) determine the price, not some mythical "calculator". How that is determined is that buyers and sellers come together and agree on a price to transact at. The exchange takes care of all of this - there is no human-to-human interaction in exchange trades.
For most stocks, there are many buyers and many sellers. ...
0
FINRA requires firms to maintain minimum net capital requirements to help prevent a firm from becoming insolvent, or at least requiring the firm to cease operations immediately. This is done to limit how over-extended a firm can get.
If your brokerage firm becomes insolvent then you will definitely lose the value of your options, if their expiration is ...
0
SIPC coverage comes into play when a broker shuts down and customer assets are missing due to theft, unauthorized trading, and other fraudulent activities. It guarantees the custody function of the broker and of your assets but not their value. SIPC will transfer your assets to another broker. This is likely to take a few weeks or months but certainly ...
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FWIW, you unwittingly laid a trap by setting up your question the way you did, and half of your responders fell into it.
How much you're spending on what right now is completely irrelevant. So are your current assets, because they're so small. Current debt is marginally relevant.
The only questions that drive the "Financially Independent"/"Retirement" ...
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In your current circumstance, the best thing you could do is pay off your current debt as quickly as possible while avoiding any new debt. If you paid an extra $1k a month towards your student loans, you could be debt-free in under 2 years. Even quicker if you diverted some of your monthly savings towards paying that off.
In those 2 years, spend an hour a ...
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spending (eating, eating out, clothing, leisure, other life expenses): 42%
rent, gas, electric, internet: 20%
For most people, these are the other way round, and rent is their single largest expenditure. If you've got a really low rent you're in an excellent position.
by financial independence I mean enough to have bought a home, car, and maintain ...
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I would recommend reading Mr. Money Mustache which provides advice on how to cut down on your living expenses, manage debt, avoid sinking money on things that don’t add value to your life, and offers tips on investing for retirement. I would also recommend reading JL Collin’s stock series which will give you a primer on how investments work, where to invest, ...
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First off,
I have to say "rent, gas, electric, internet: 20%" is phenomenal, do everything in your power to keep this at that % for as long as possible.
Then, given the safety nets that are standard for most European countries, a large amount of savings isn't required. Unless that is, if you need a lump sum of money for a significant investment (real ...
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There are some new fundamentals related to this question.
For instance, mutual funds have begun investing in companies before the IPO.
And the Softbank holding company has funds for accredited investors that invest in companies before the IPO. However, anyone can invest in the Softbank company itself.
Finally, non-accredited investors can invest in small ...
0
TL;DR:
No; it's not prudent resolution.
Don't put all your eggs in one basket
You should not put all your efforts and resources into a single stream of income; you should diversify so as to reduce the risk of potentially losing everything.
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Well this is not financial advice.
I can provide you my prespective, the FD on indian banks is used to loan out to other people, but due to current NPA problem people are slowling loosing confidence on banking system, your question also came after facing the same fact.
You should move your savings to liquid funds as they are very liquid which means the ...
0
While dividends are cash flow rather than income, it's somewhat different with preferred stocks since they are a hybrid security, leaning more toward fixed income.
The bulk of them are issued at $25 and are callable in 5 years at the discretion of the issuer with a maturity date which can be decades or even never (perpetual).
There are three primary risks.
...
3
One practical solution is to invest in an ETF like DGRO. Currently it is yielding 2.29%, so to live off of divdends, you have:
(1500*12) / .0229 = 786,000.
At $500/month, you have some work to do.
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That depends, what will you be investing in for dividends? Will it be a mutual fund/index fund/ETF that will produce a 0.5%-3% dividend? Possibly a bond fund that will give ~2% in dividends? Will it be energy/oil stocks that can give anywhere from 2%-7%? How about REITS that can give anywhere from 2%-8%? That all depends on you, but I will set up the ...
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First off, given your research, or lack thereof, thus far, you seem to be aiming to speculate on a coin price fluctuating. Given that margin trading and/or future contracts are commonly offered with up to 125x leverage, you can go short/long the highest market cap coin on leverage and achieve significant returns if your aim is indeed speculating/day-trading, ...
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But lately I've been looking at Cryptocurrencies and I want to Invest some Money into it. Does Anyone have any recommendations on how much to Invest and where. Really any advice is appreciated.
Yes.
I have always said that to invest in gold, the best choice is a gold mine. Or, a mining equipment manufacturer.
To invest in cryptocurrencies, there are two ...
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