New answers tagged

0

Franklin Templeton is a very large fund manager with over 1.4 trillion USD under management. I'm not sure how large of a purchase you're looking to make, but even if there was insufficient liquidity on the secondary market to meet your needs, the APs should swoop in to purchase your shares, at a [small] discount to NAV, to exchange with Franklin. Of course, ...


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 ...


0

A trading edge is an advantage over other market participants. Its difficult to find, its duration is usually for a limited period of time because markets change all the time (days, weeks, months, and infrequently years). Most investors don't even know that edges exist. In order to succeed with trading, not only must one have a trading edge but it must be ...


1

Net_Income_before_tax / Sold_item_at = Operating_Margin, so yes, your interpretations are correct: raise the selling price, and Operating Margin goes up; reduce COGS and expenses (which increases Net Income before tax)and Operating Margin goes up; do both, and Operating Margin goes way up. Note that another way to compute it is: Operating Margin = 1 - ...


0

You are only allowed to trade settled cash in a cash account. With T+2 settlement (adopted in the U.S. in 2017), the funds from a sale will not be available for two days. There is no limit to how many day trades you can make in a cash account as long as you are using settled funds. For example, assuming that you do not pay commissions, if you have $10,...


1

When the spinoff occurs, you will be long shares in the parent company and long shares in the spinoff. You might receive the same or a different number of spinoff shares. The acquisition date for the spinoff stock will be the same as the acquisition date for the parent stock. There will be no short positions involved. If you choose to sell the spinoff ...


0

Generally: depends. One way: You get the same percentage ownership on the new company as on the old one - not necessarily the same number of shares, but the same tiny percentage. Another way: They form a new company, the old company owns 100% of the new company and sells some of the shares on the open market or to outside investors. Then you are still long ...


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, ...


1

If (for whatever reason) you're deeply interested in the "true epistemological basis" of what the hell a share is, investigate the history of "stock". Thus, begin with The Dutch East India Company and go from there. (It's interesting that everyone uses the word "stock" all the time, but few realize what it means/ origin.) I ...


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 ...


1

The major upside of assets in a retirement account is that those assets are not "re-taxed" as they grow. As pre-tax stocks in a retirement account grow and pay dividends, the resulting assets are also pre-tax assets, and you don't have to pay taxes until you withdraw the assets. Likewise, as after-tax stocks in a retirement account grow and pay ...


1

The obvious thing you've missed is that (for traditional IRAs) you get an immediate tax savings on your contribution. Second point involves closing your position. It's quite uncommon to hold a single stock for multiple decades, so any trading gains are taxed. Even if you do hold it for that long, the stock presumably pays dividends, which would be taxed if ...


1

Most people stop earning an income from their job at approximately age 65 and will live 20+ years in retirement, the common advice is that they still have to be partially invested in stock even after they retire to increase the livelihood that their money will last and not be eaten away by inflation. What if I want to retire at 40 and withdraw all of the ...


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 ...


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 ...


1

Perhaps you have not truly exhausted all tax-advantaged options. As a state employee you may also be eligible to contribute to a tax-advantaged 457 plan administered by your state. These have VERY high annual contribution limits. Check with your Human Resources department for eligibility. Edit with more clarifying info: The limit to a 403b plan 19.5K and ...


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 ...


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I recommend putting at least some of it into cryptocurrency. Little risker than some, but the governments of the world are doing their best to destroy their currencies. Corona bailouts helped them out a lot with that mission. Real inflation(as opposed to the government fake number) is predicted to be over 12%. Alternative currency is needed. You can setup an ...


0

As others have said, you can put that money into index funds or pay down your mortgage. Personally, I'd put it in index funds: Paying down the mortgage effectively "earns" a 2.875% "return" on interest you didn't have to pay. Do you think index funds could earn a higher return? If so, index funds will make you more money. Interest on ...


0

OP is in mid-Atlantic US, small town 1-hour from major metropolitan area. Time to retirement 20 yrs. Try to estimate house price increase over 20 years. Step 1, look back 20 years. Taking a random example, https://fred.stlouisfed.org/series/ATNHPIUS51157A So 250% nominal growth in 20 years. OP can do this for their actual town. Step 2, all you can really ...


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 ...


0

Find a wealth management company that offers non-market holdings (REIT's, LLP's, etc.) it's good to be less dependent on the market (remember in 2008 ALL sectors of the market went down). And from personal experience these holdings while they don't have the liquidity of stocks and bonds do provide a nice return. Also consider Annuities. Again, they have a ...


-7

If you live in an area where you guess there is a reasonable chance of real estate prices continuing upwards Move to a more expensive house, the most expensive house you can just barely afford. Don't forget real estate price gains are massively leveraged. (And this is the only leverage available on investments, in this world, to "civilians".) If ...


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 ...


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, ...


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-...


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 ...


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 ...


0

debt is and will increase with this new administration Faster than during the current administration? My fears are ... there will be a major correction to the stock market some time in the near future. You can't lose money in CDs, TIPS and Treasury Bills. The market recovers from corrections relatively quickly (where "relatively" is relative). ...


1

For "truly big" questions such as this, you have to formulate an opinion on issues such as: https://en.wikipedia.org/wiki/American_decline You predict: there will be a major correction to the stock market some time in the near future If one really thinks that, You could go long, but, keep tight stops (not a perfect strategy, but it will "...


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! ...


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 ...


0

If a person wanted to keep the holdings, one can still obtain stock certificates. Ask your broker. If the company is being de-listed because they can’t or won’t follow the transparency laws of the strongest exchange of the world, one has to wonder why.


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 ...


0

People that want liquidity are selling, thats it. The purpose of the company doesn't change and the earnings of the company don't change because of delisting, you are still a shareholder in that. The company isn't going private, one exchange on the planet decided to not list the shares, thats it. So people that want or require liquidity are selling. Don't ...


1

My teacher in Financial Instruments calculated it fairly easily in the following way. He first calculates the portfolio variance using the following formula: =SUMPRODUCT(weights array,MMULT(Covariance matrix,weights array)) He then gets the standard deviation by taking a square root of the answer and this is the portfolio st.dev.


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 ...


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 ...


1

Simplistic example: Two sponsors raise $100 million for the purpose of creating an S&P 500 tracking ETF. Fund A issues 1.0 million shares so its initial price is $100. Fund B issues 2.5 million shares so its initial price is $40. An equal dollar investment in either fund earns the same amount, assuming that both funds track the underlying index ...


-1

If all else is equal, one potential advantage of a low-price ETF is that for small investors you may be able to take advantage of a Dividend Reinvestment Plan, whereas for high-price ETFs you may not. If you have $10000 to invest, and your options are a $25/share ETF or a $500/share ETF, then you can buy 400 shares of the first and 20 of the second. Suppose ...


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 ...


1

From further research, I have found that different financial services companies - Morningstar, MarketWatch etc. use different ways of addressing it. Morningstar, for example, uses Cost of Revenue and includes only Goods and Services Purchased from operating expenses while calculating components of CCC. MarketWatch, on the contrary, still uses COGS term but ...


1

In the U.S. the ETF sponsor files with the SEC. If approved, the sponsor forms an agreement with an authorized participant who has the authority to create or redeem ETF shares. The AP borrows shares, places them in a trust, and the trust provides the AP with ETF units. The ETF shares are then sold to the public on the stock exchange.


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.


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.


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 ...


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 ...


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).


0

Does a person make a profit when the bid price is higher than what was originally paid for the share? Only if the person sells for that bid price, meaning they place an order and get it executed at that price. I ask to sell a share at a higher number than what I paid for it, especially if the share is appreciating in value, do I stand a higher chance at ...


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