New answers tagged

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When interest rates go up, the prices of fixed-rate bonds go down (since you can now get bonds with higher coupon rates). So the value of a bond fund would go down. Duration is a measure of the sensitivity of bond prices to interest rates. Mathematically, the relative change in value is approximately equal to the duration times the change in interest rates, ...


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Your holdings consists of multiple "lots", each with its own acquisition date. Your brokerage will most likely offer you different "cost basis methods" to select which one to sell. One of these methods should for you to select manually from which lot you want to sell, so it's your choice how much gain you want to realize. Here are the ...


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You report each 'account', not each investment. Look for your account numbers, likely one for checking and one for investing. I would be surprised if each of your funds were a separate account. You'll need to find the maximum value for each 'account' having an account number. https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-...


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I am sure there is plenty of detailed answers on this topic around here so this is the short version set some money aside for an emergency fund for unemployment, new car, etc. Depending on you life situation this is probably in the 5-15k range. This money needs to be liquid and risk-free. It's only purpose is to avoid going into debt if you need cash fast ...


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Nations are not companies. Nations do not exist to make money but to improve the life of their citizens. A good life has many aspects but the most important ones are health, social security, basic infrastructure, education, housing, protection against crime, protection against aggressive neighbouring nations. Improvements on those aspects often improve the ...


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Most governments don't actually have any extra money sitting around. The U.S. for example raises a certain amount of money each year in taxes but actually spends an even greater amount, which it pays for by creating money out of thin air. It would be hard to justify printing money just to invest it because the government wouldn't get any benefit since they ...


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Governments invest in other things besides stocks and bonds. They have natural resources that they then sell the rights to. They have land for parks that is then used for the enjoyment of all. They own infrastructure such as roads, railroads, and airports and the like that is then used by their citizens and businesses. Some nations have a lot of investment ...


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But if it's so great - why don't countries do it? Oh sure they do. I think you'll find that many countries that have excess oil wealth have decided to invest. For example, see Government Pension Fund of Norway and other sovereign wealth funds. Why doesn't every government invest it's money into diversified investments in the stock market or other things? ...


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The highest leverage you can get as a retail investor is limited by regulation. And to get anywhere near the level of leverage you're asking about you'd need to use Options and/or Futures. If your requirement that no options or futures could be used was lifted though, the following inadvisable scenario would get you an incredible amount of leverage... maybe ...


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Everywhere? In the US, pretty much every provider that offers a margin account gives a 4:1 margin - you have 100k cash, you can buy 400k of stocks (or do other transactions, like short sales, write naked calls, etc.). Try eTrade, JPMorgan Chase, Vanguard, Robinhood, etc. The minimum to get a margin account is to have 25k equivalent in the account; that's ...


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The core of your question: My best guess is I should take $20,000 and put it into index funds. I'm worried about tax implications and what happens with dividends (like are some funds automatically withheld? I know I'll make more overall but will I end up having to pay if I make enough in dividends come tax season, and then possibly not have enough out of ...


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Assuming the 40k you mention is in a regular savings account, I think your idea of putting some of that into index funds is perfectly reasonable. Then again, it's pretty reasonable to leave it where it is too. You need to keep enough money in cash, in a regular bank account, to weather 3-6 months of expenses during an 'emergency' — whatever that means. ...


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If your Emergency Fund, 401k, IRA, and HSA are all taken care of, the next obvious choice is a regular Brokerage account. Get whatever money you have left, put it in a Brokerage account and invest it in cheap, broad index funds. I personally recommend the money be evenly invested across a Large-Cap Index Fund, Mid-Cap Index Fund, Small-Cap Index Fund, ...


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To quote another answer: You can't max out your retirement savings. There is no limit to what you are allowed to save/invest for retirement. There are specific tax-advantaged ways to invest money (IRA, 401(k), HSA, 529, etc.) that have various rules constraining amount and manner of contributions, distributions, etc.; it is possible to max out these ...


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No. A product described as an Instant Cash ISA would have no provision for holding stocks/shares. But you are able to transfer the cash within an Instant Cash ISA to an account that does permit holding stocks/shares. If you do so, make sure you get the new account provider to do an ISA Transfer. Do not withdraw the cash from the ISA yourself, otherwise that ...


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Just a partial answer here to add to what has already been said. Many of the other answers are talking about the company having assets, and about your investor adding his $1 to your company's assets, etc. However, a complicating factor is that many companies, especially fast-growing startups, have intangible assets whose values can change rapidly based on ...


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You did not "sell" 50%… You "sold" the whole thing when it was worth what the two of you agreed it was worth at the time, then bought back half of it at the different value the two of you agreed at a (very slightly) different time. There was never any change in the overall value of the business… only in what the two of you agreed should ...


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Sure - you could say you are disadvantaged. But no differently than when the price of bonds goes up, or for that matter the price of a steak or a vacation. As far as dividends, it's not the blessing some think it is. You can get the same cash-flow just by selling shares that you own of any stock at all. And if you think "but I still get the dividends ...


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Welcome new user, it's Just bad data. This actually gets asked a lot on here. It's just bad data. There's nothing more to it than that. However, Do note that if this is a thin market, It is perfectly possible that is a gap. Don't forget one of the actual ideas of candlesticks is to easily observe gaps. Imagine more typical candles, which show one entire ...


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If popular dividend stocks such as those on the "dividend aristocrats" like JNJ and MMM continue to climb over time, won't new investors like myself be severely disadvantaged buying into these? The amount of stocks one can get to receive respective dividends are severely reduced compared to those buying year/decades ago. For example MMM is now near ...


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Yes, if stock prices go up and dividends don't, then you get back a smaller percentage of your stock price as dividends. That is correct. This may mean the dividends are no longer a good investment. That is also correct. However there's nothing special about dividend stocks in this case. If the price of something goes up and the amount you get out of it ...


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New investors paying a higher price for a stock receive a lower yield. Is that a disadvantage? Not really. This statement often riles the natives: Share price is reduced by the exact amount of the dividend on the ex-div date so there is no gain from receiving a dividend. It provides zero total return. Read this from Vanguard: Imagine you're interested ...


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The absolute dividend is irrelevant. A dividend of 15 cents can be a real lot of the share price is 1$ each and 20$ dividend can be nothing if shares note at thousands of dollars. It is always the relation between those two that is important, aka the dividend yield, to compare two stocks. And another note: dividends themselves are considered irrelevant by ...


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There are a few things going on here. First, banks can't just invest all their depositors' money in mutual funds. Banking relies on the idea that when you deposit money today, the bank will definitely give it back to you when you need it. It's easy to take that for granted, to the extent that most of us choose banks based on their fees and customer service ...


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Banks are already 90-100% 'invested' in assets, mainly loans and also bonds. They have plenty of ways to attract deposits and to make investments. Often, the bank's referral fee for directing customers to mutual funds is higher than the banks' expected profit for attracting the equivalent amount in deposits. Or, the bank is simply giving good advice to ...


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Banks investing their depositors money is extremely, and systemically, risky. What if those investments lose money, even if just for a little while? The bank could collapse and the depositors could lose their money, or could trigger a bailout from a government. This is why - historically in the US - there is a legal requirement that banks can be only deposit ...


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The "worth" of something in econ 101 terms is some price between the price someone would sell it for and the price someone would buy it for. For non-liquid investments (and non-commodities really), that gap tends to be large, and there are transaction costs -- learning enough about the product to determine if it is what you think it is -- that are ...


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I'm becoming more interested in buying gold / silver coins as a hedge against inflation and especially hyperinflation. I know very little about this, and there are thousands of sites on the internet about this. I'm sure many of them are a little less than honest. Don't. A good strategy against inflation / hyperinflation has the following properties: It is ...


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I think you are confusing a couple of things. How do you do the valuation of your company? If you sold 50% of your company for $1, then the buyer thought it was worth $2. You can sell part of your company for any amount that the buyer and seller agree on. If you are doing a valuation of your company and it's only asset is $1 in petty cash, and your friend ...


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"The simplest possible answer." I have thought a LOT about the pedagogy here and I am now attempting to put in the simplest possible answer. Say Mr. Wonderful does a transaction, he writes a cheque for $1m and he now owns 20% of the company. Is the million bucks in the company? Friends! For now, let us say that the $1m in fact goes in to the ...


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I don't see an answer that gives a clear explanation of the difference between "pre-money" and "post-money" valuations, which is critical to understanding this kind of scenario. Say I have a company, and I am told that it is worth 1 USD (100% of the company). So far, so good. My friend, who has 1 USD, asks me if we can join forces. He ...


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The other comments have explained the accounting valuations of investments in large, steady businesses, but I want to a perspective that's more specific to Shark Tank. Let's say a shark accepts 30% of a business for $300k. The business is worth $1M after, so it was worth $700k before, right? Not so fast. The sharks are not only trying to value their share, ...


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It's a term that refers to human productivity and experience. Here's a great definition for it from Investopedia: https://www.investopedia.com/terms/h/humancapital.asp They're saying they want to get people motivated to be productive again, basically.


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I'm not seeing a difference between "CAGR" and "compound interest calculator" in this example. They should give the same results - an initial investment P grows by X% per year - how much will it grow over T years? The answer should be F = P * (1+X)^(T) So reversing that to find the annual growth gives X = (F/P)^(1/T) - 1 Normally, ...


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Welcome. Why is such a calculation important to you? How accurate does it need to be? While not accurate it may be close enough to divide total return by the time period. In this case 150%/5 = 30%. The actually return is a bit lower, but is close. I like this method as it is pretty simple to find the approximate APR over days or months not just so many ...


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The important thing to always remember is that you must maintain a separation in your mind between you as individual(s) and the company. Think of the company as a box. Inside that box are assets (e.g. cash, real estate, income-generating contracts) and maybe liabilities (e.g. unpaid bills, loans). The value of the box is what someone else (e.g. someone ...


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Too long for a comment, so here: The main source of confusion here is arguably the undefined expression "join forces". Under one interpretation, you sell a share of your firm to a friend at a value you accept uncoerced: there is no effect on firm value; only an effect on your portfolio: more cash, fewer shares. Under another interpretation, you ...


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tl;dr: You asked: Can someone help me understand this? No, because you understand it perfectly already! From a purely mathematical point of view on its own, the sharks are indeed ripping them off. (But it's probably still worth it!) Details: Wow. After reading your question, I just watched 2 episodes of Shark Tank to be sure, and you're absolutely correct. ...


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The concept is know as "enterprise value," "firm value" or "pre-money" in different contexts. It is the market value of the company minus the company's cash plus the company's debt. In your example, the enterprise value of the company is $1 before the deal is made and is also $1 after the deal is made. $2 market value minus $1 ...


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You are confusing investment in the company itself with purchasing shares of the company from another person. In your example, the company has $1 worth of assets, and you have 100% of the company. When your friend wants to invest his own $1, there are two ways he can do this. He can purchase the entire company from you outright, in which case you now have 0% ...


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The answer is right there in the article (bold added): What are government securities or G-Sec? Government securities are the debt instruments which are issued by the government to borrow money. It is divided into two categories namely, Treasury bills are short-term instruments. They get mature in 91 days, 182 days, or 364 days. Dated securities which are ...


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It says so in the article: Reserve Bank of India (RBI) has announced that it will purchase four government securities (G-Secs) that amount to ₹20,000 crores. So G-Secs is just an abbreviation for Government Securities. What is this? This question is also answered by the article: What are government securities or G-Sec? Government securities are the debt ...


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Here's an answer from www.seekingalpha.com I think explains what you're looking to understand: Buying SPACs before the merger announcement and selling it after could be an opportunity to generate alpha in the current environment. SPACs usually go up substantially after the merger announcement, yet trade near cash value before, creating a opportunity to ...


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if I invest $10000 and hold the stock for more than a year, will I be taxed Long Term Capital Gain rate on the yield ($1000) or will it be short term gain/ordinary income? Depends on exactly how the deal is structured. If you buy an actual share in the company, there are no taxes due until you sell your share again. If they invest your money on your behalf,...


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In 2010, the OCC enacted Options Symbology Initiative (OSI) which expanded option symbols from 5 characters to 22 characters. In both cases, the option's root symbol was the stock's symbol unless the option was adjusted due to a corporate action such as a fractional split, a special dividend, etc. The OCC provides a few months of option bulletins here. It ...


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Your headline says "generate returns" which is not the same as stock price going up. Fundamentally, stock is ownership in a business that is (hopefully) generating a profit. That profit has to go somewhere, and there are pretty much two places: Dividends and growing the business to generate even more profits down the line. The profits from the ...


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The Kelly Criterion implies you have some sort of estimate on these probabilities when in reality nobody knows this. There would be a ton of variables involved in estimating the probabilities of equities being at certain values and at the end of the day they would never be definitive numbers. You should ideally be searching for some sort of probability ...


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To reiterate and expand on gaefan's answer. You set a target portfolio allocation. Periodically you examine the values of the allocations. Cull the high values (take profit!) and distribute the gains to lowest value allocations. This allows you to sell when high and buy low, without trying to time the market. You simply, on a pre-planned take take profits ...


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To expand on @Menziel's answer, you have to consider opportunity cost, taxes, and your personal wants and needs. Opportunity cost is what Menziel was leading towards. If you have a fixed amount of money today, would you rather invest in the company you already own or a different company/asset that you think will do better. That said the world is uncertain, ...


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If you divide the market into asset classes and study the long-term returns and covariances of those classes, then a Kelly-like formula will tell you the optimal fractions of your portfolio that belong in each of those classes. For example, you could decide that you want to invest in a mix of S&P500 stocks and intermediate term government bonds. (...


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