query: Rationale behind using 12, 26 and 9 to calculate MACD

positive: The values of 12, 26 and 9 are the typical industry standard setting used with the MACD, however other values can be substituted depending on your trading style and goals. The 26d EMA is considered the long moving average when in this case it is compared to the shorter 12d EMA. If you used a 5d EMA and a 10d EMA then the 10d EMA would be considered the long MA. It is based on what you are comparing it with. Apart from providing signals for a reversal in trend, MACD can also be used as an early indication to a possible end to a trend. What you look out for is divergence between the price and the MACD. See chart below of an example:  Here I have used 10d & 3d EMAs and 1 for the signal (as I did not want the signal to show up). I am simply using the MACD as a momentum indicator - which work by providing higher highs in the MACD with higher highs in price. This shows that the momentum in the trend is good so the trend should continue. However the last high in price is not met with a higher high in the MACD. The green lines demonstrate bearish divergence between price and the MACD, which is an indication that the momentum of the trend is slowing down. This could provide forewarning that the trend may be about to end and to take caution - i.e. not a good time to be buying this stock or if you already own it you may want to tighten up your stop loss.

negative: "First, it's much safer to be shorting stocks over $5 than stocks under $5.  I use 3 indicators to show that a stock has topped out and about to drop. Key is the timing cause the initial drop is often the biggest. More close you get in at the top, the higher the risk. Using 1D Charts ONLY:   - MACD Indicator:  I use the histogram, when it reaches a peak height, and the next day it is down 1 ""Step"". If you wait til the MACD lines cross, you are pretty late IMHO.  Need to get in earlier. Timing is everything.   - RSI(15) - Needs to topped out and above 67 meaning, ""Over bought""  - Do not buy when RSI is high above 70. Often stocks go on a Run up when RSI is over 70!   - I use Stoch RSI or CCI to confirm my status on RSI. I like to see that all 3 indicators agree. This gives me a 75% chance that the stock will drop. It may take a day or 2.. so you need patience."

negative: The periodic rate (here, the interest charged per month), as you would enter into a finance calculator is 9.05%. Multiply by 12 to get 108.6% or calculate APR at 182.8%. Either way it's far more than 68%.  If the $1680 were paid after 365 days, it would be simple interest of 68%. For the fact that payment are made along the way, the numbers change.  Edit - A finance calculator has 5 buttons to cover the calculations:  N = number of periods or payments %i = the interest per period PV = present value PMT = Payment per period FV= Future value In your example, you've given us the number of periods, 12, present value, $1000, future value, 0, and payment, $140. The calculator tells me this is a monthly rate of 9%. As Dilip noted, you can compound as you wish, depending on what you are looking for, but the 9% isn't an opinion, it's the math. TI BA-35 Solar. Discontinued, but available on eBay. Worth every cent.  Per mhoran's comment, I'll add the spreadsheet version.  I literally copied and pasted his text into a open cell, and after entering the cell shows,  which I rounded to 9.05%. Note, the $1000 is negative, it starts as an amount owed.  And for Dilip - 1.0905^12 = 2.8281 or 182.8% effective rate. If I am the loanshark lending this money, charging 9% per month, my $1000 investment returns $2828 by the end of the year, assuming, of course, that the payment is reinvested immediately. The 108 >> 182 seems disturbing, but for lower numbers, even 12% per year, the monthly compounding only results in 12.68%

negative: The solution is x = 8.92. This assumes that Chuck's six years of deposits start from today, so that the first deposit accumulates 10 years of gain, i.e. 20*(1 + 0.1)^10.  The second deposit gains nine years' interest: 20*(1 + 0.1)^9 and so on ...    If you want to do this calculation using the formula for an annuity due, i.e. http://www.financeformulas.net/Future-Value-of-Annuity-Due.html  where  (formula by induction) you have to bear in mind this is for the whole time span (k = 1 to n), so for just the first six years you need to calculate for all ten years then subtract another annuity calculation for the last four years.  So the full calculation is:  As you can see it's not very neat, because the standard formula is for a whole time span.  You could make it a little tidier by using a formula for k = m to n instead, i.e.  So the calculation becomes  which can be done with simple arithmetic (and doesn't actually need a solver).

negative: The original post's $16 has two errors: Here is the first scenario: .                                                 Tax Liability($) on   Net .                        Cash    # of     Price    Paper     Realized   Value Time:                     ($)    Shares   ($/sh)   Profits    Profits    ($) 1. Start with:            100        -      n/a         -          -      100 2. After buy  10@10$/sh:    -       10       10         -          -      100 3. Before selling:          -       10       12        (5)         -      115 4. After sell 10@12$/sh:  120        -      n/a         -         (5)     115 5. After buy  12@10$/sh:    -       12       10         -         (5)     115 6. Before selling:          -       12       12        (6)        (5)     133 7. After sell 12@12$/sh:  144        -      n/a         -        (11)     133 8. After buy  14@10$/sh:    4       14       10         -        (11)     133 9. Before selling:          4       14       12        (7)       (11)     154 10.After sell 14@12$/sh:  172        -      n/a         -        (18)     154  At this point, assuming that all of the transactions occurred in the same fiscal year, and the realized profits were subject to a 25% short-term capital gains tax, you would owe $18 in taxes.  Yes, this is 25% of $172 - $100.

negative: Mostly some custom work i've done myself, bayesian and time series models, but there is some pattern matching. Most TA functions such as MA's, MACD's, BollingerBands, are simple ways of doing time series analysis.  MA's are basic filters.  MACD is essentially a way of viewing acceleration, as its the informational difference between filters.  BB's are mean reverters based on standard deviation/  RSI is a ratio of filtered up to down moves basically generating an indicator based on how strong the market has moved.

negative: Let's say I have $10,000, and I invest said monies in mutual fund   XXXXX at $100/share, effectively giving me 100 shares. Now, let's   assume at the end of the year I have a 5% return. My $10,000 is now   $10,500. At what point does my investment benefit from compounded interest?   Monthly? Quarter? Yearly? Does it even benefit? Daily would be my answer as your investment, unless you are selling shares or not re-investing distributions is getting the following day's change that impacts the overall return. Consider how if your fund went up 2% one day and then 2% another day from that $10,000 initial investment. The first gain brings it up to $10,200 and then the second makes it $10,402 where the extra $2 is from the compounding. The key though is that these are generally small movements that have to be multiplied together. Note also that if your fund goes up and down, you may end up down overall given how the returns compound. Consider that your $10,000 goes up 10% to $11,000 and then down 10% to result in $9,900 as the return for up x% and down x% is (1+x)(1-x)=1-x^2 which in this case is 1% as 10% of 10% is 1%. The key is how long do you keep all the money in there so that the next day is applied to that amount rather than resetting back to the initial investment.

negative: The equation is the same one used for mortgage amortization.  You first want to calculate the PV (present value) for a stream of $50K payments over 20 years at a10% rate.  Then that value is the FV (future value) that you want to save for, and you are looking to solve the payment stream needed to create that future value. Good luck achieving the 10% return, and in knowing your mortality down to the exact year. Unless this is a homework assignment, which need not reflect real life.  Edit - as indicated above, the first step is to get that value in 20 years:  The image is the user-friendly entry screen for the PV calculation. It walks you though the need to enter rate as per period, therefore I enter .1/12 as the rate. The payment you desire is $50K/yr, and since it's a payment, it's a negative number. The equation in excel that results is: =PV(0.1/12,240,-50000/12,0) and the sum calculated is $431,769 Next you wish to know the payments to make to arrive at this number:  In this case, you start at zero PV with a known FV calculated above, and known rate. This solves for the payment needed to get this number, $568.59 The excel equation is: =PMT(0.1/12,240,0,431769) Most people have access to excel or a public domain spreadsheet application (e.g. Openoffice). If you are often needing to perform such calculations, a business finance calculator is recommended. TI used to make a model BA-35 finance calculator, no longer in production, still on eBay, used.  One more update- these equations whether in excel or a calculator are geared toward per period interest, i.e. when you state 10%, they assume a monthly 10/12%. With that said, you required a 20 year deposit period and 20 year withdrawal period. We know you wish to take out $4166.67 per month. The equation to calculate deposit required becomes - 4166.67/(1.00833333)^240= 568.59  HA! Exact same answer, far less work. To be clear, this works only because you required 240 deposits to produce 240 withdrawals in the future.

negative: Well, one can easily have rates below -100%.  Suppose I start with $100, and end up with $9 after a year. What was my rate of return? It could be -91%, -181%, -218%, or -241%, or something else, depending on the compounding method.  We always have that the final amount equals the initial amount times a growth factor G, and we can express this using a rate r and a day count fraction T. In this case, we have T = 1, and B(T) = B(0) * 0.09, so: So, depending on how we compound, we have a rate of return of -91%, -181%, -218%, or -241%. This nicely illustrates that:

negative: This is a present value calculation, which excel or any financial calculator can handle.  N = 300 (months) %i = 5/12 or .05/12 depending on the program/calculator PMT = $5000 (the monthly payment) FV = 0 (you want to end at zero balance) This calculates a PV (present value of $855,300)  Chad had it right, but used a calculator that didn't offer the PV function, so he guessed and changed numbers til the answer was clear. user379 makes a good point, but why start inflation calculations at 65, and not now? You look like you're in your 30's, so there's 30 years of inflation, and $60K/yr in today's value will need to be closer to $150K/yr, given about 30 years of 3% inflation.

negative: > their ad-block / “quote of the day” screen is so toxic and poorly designed it’s unbelievable.  This really shocked me. If you want to force me to look at an ad before I get to the content I can see the commercial rationale behind it. But that quote? Thrashy, pseudo-intellectual bullshit wasting my time. WTF?

negative: generally Forward P/E is computed as current price / forward earnings.  The rationale behind this is that buying the stock costs you the current price, and it gives you a claim on the future earnings.

negative: I'm actually building a UK stock screener right now. It's more of an exercise in finding out how to work out technical things like MACD and EMA calculations, but if those are the things you're interested in, it's at  http://www.pifflevalve.co.uk/screen-builder/ As I say, it's more of a personal project than anything commercial, but it's fun to play with.

negative: "Wow, this analysis really surprised me. Very complete and useful, but i think my teacher request was easier. He just said: ""Try to build a diversified portfolio. Then try to add a commodity (like silver or gold) and understand how the risk vary introducing an asset like this."" So, i'm basically making a stocks portfolio and i'm calculating its expected return and risk. (for example 40%FB, 10%JNJ, 20%GS, 10%F and 20%MCD) then i'm adding GLD (so now i have something like 20%FB, 10%JNJ, 10%GS, 10%F and 20%MCD 30%GLD) and i'm actually making an excel spreadsheet where i calculate all the: -Expected returns -St Deviation -Covariance  At the end i compare the returns and the risks on the 2 different portfolios."

negative: Graphs are nothing but a representation of data. Every time a trade is made, a point is plotted on the graph. After points are plotted, they are joined in order to represent the data in a graphical format.  Think about it this way.  1.) Walmart shuts at 12 AM. 2.)Walmart is selling almonds at $10 a pound.  3.) Walmart says that the price is going to reduce to $9 effective tomorrow. 4.) You are inside the store buying almonds at 11:59 PM.  5.) Till you make your way up to the counter, it is already 12:01 AM, so the store is technically shut. 6.) However, they allow you to purchase the almonds since you were already in there.  7.) You purchase the almonds at $9 since the day has changed. 8.) So you have made a trade and it will reflect as a point on the graph. 9.) When those points are joined, the curves on the graph will be created. 10.) The data source is Walmart's system as it reflects the sale to you. ( In your case the NYSE exchange records this trade made). Buying a stock is just like buying almonds. There has to be a buyer. There has to be a seller. There has to be a price to which both agree. As soon as all these conditions are met, and the trade is made, it is reflected on the graph. The only difference between the graphs from 9 AM-4 PM, and 4 PM-9 AM is the time. The trade has happened regardless and NYSE(Or any other stock exchange) has recorded it! The graph is just made from that data. Cheers.

negative: You're confused because the source you cite leaves out one number that isn't relevant to the argument they're making: total costs. The number you're expecting, $9 x 365 or $3285 is the total cost of buying the jewelry which, when subtracted from the $3650 sales volume gives us the net profit of $365.  The investment is the amount of money original put into a system our company. In this case the merchant bought his first piece of jewelry for $9, sold it for $10, took one dollar in profit and used the other 9 to reinvest by buying a new piece of jewelry. We can extend the analogy further. After 9 days of selling, the merchant will posses $18, allowing him to now buy 2 pieces of jewelry each morning and sell them for $20. Every day his costs will be $18 and he'll turn a $2 profit, all with the original investment of $9.

negative: It is a good enough approximation. With a single event you can do it your way and get a better result, but imagine that the $300 are spread over a certain period with $10 contribution each time? Then recalculating and compounding will be a lot of work to do. The original ROI formula is averaging the ROI by definition, so why bother with precise calculations of averages that are imprecise by definition, when you can just adjust the average without losing the level of precision? 11.4 and 11.3 aren't significantly different, its immaterial.

negative: Straight line in this example should be just the $2MM per year.  I don't think the author of the problem intended you to use anything in the actual tax code like MACRS.  I think the goal of the problem is to get you to identify the value of the depreciation tax shield and how the depreciation does affect your cash flow by reducing your taxes, even though depreciation itself is not a cash event.

negative: The monthly repayments of the initial $ 300,000 loan can be calculated using this formula:  source: Finance Formulas The monthly payment is It is not readily apparent how the formula works, but it is derived by induction from this summation, in which the sum of the discounted future payments are set equal to the present value of the loan:  For the second part of the question, reinvestments are stopped after 9 months, after four investments of $ 26,374.77 * 3 = $ 79,124.31.  And presumably each loan is repaid in 3 years, since 45 - 9 = 36 months. Calculating the repayments for these loans: The total returned for all four loans is:

negative: When you pay monthly, you're making 12 payments / year. Assuming you have a payment of $1000/mo, that's $12,000/year that you're paying for your mortgage. When you opt for bi-weekly, they're saying that you can pay half of your mortgage ($500) bi-weekly (can be configured to align with your paycheck). Since there are ~26 bi-weekly periods in a year, you're making 26 * $500 = $13,000 in mortgage payments each year. Some of these companies charge a fee for you to utilize this service. The main concept behind this is that people are horrible at budgeting on their own, so when $500 is immediately taken from your paycheck, you'll be able to budget around what's left and be able to make that extra payment each year without thinking about it or realizing it.

negative: Biweekly pay for salaried employees is typically calculated as Annual-salary / 26. Twice a month pay for salaried employees is typically calculated as Annual-salary / 24. If you were getting paid twice a month and now are getting paid every other week, your paycheck will be roughly ( Twice-a-month-paycheck-amount * 24 / 26 ).  If you were paid $1000 twice a month, you'll be paid $923 every other week.   $1000 * 24 = $24K and $923 * 26 = $24K.   You will get paid every other week regardless of month boundaries on a biweekly pay cycle.

negative: If you're taking a Terminal DCF, you shouldn't be using 1-year risk free rates, so the 2.77% is probably much more accurate. That being said, we're in a historically low-rate environment, so even the 2.77% is probably a bit low.   Here's another data point that puts the WACC at 8%:  [http://www.wikiwealth.com/wacc-analysis:mcd](http://www.wikiwealth.com/wacc-analysis:mcd)

negative: I am an instructor who teaches Financial Modeling courses to investment bankers in NYC. Looking at the model, I do not see anything wrong with it. There are just too many assumptions. I would rather use the Multiple Value for the Terminal Value calculation, but, it will not make any significant differences. Some more thoughts :  a) The author has used text book method for valuation, but, everyone improvises the text book method, hence, subjective evaluations.   b) Oil and Gas valuation is quite a deep subject and every time we create models, industry experts come and big time change the inputs. We have no indication that the model is tested by industry experts (O&G Operations experts)  c) For matured companies like ARAMCO, I would prefer the DCF model as used and then parb (adjust) using comparables. I do not see that it has been done in the model.  d) In some cases, investment experts would rather use 3 stage DCF model (5 years, next 10 years, next 20 years or so). It makes the model pretty complex, but, provides more accuracy.  e) The revenue taken in the calculation is flat, instead, he should have taken the data from past 10 years and modeled the fluctuations.   f) One of the biggest challenges we have faced in this sector is the accounting method full cost of successful effort. High CAPEX only occurs in one of the methods and depending on the company's maturity level, people may use different methods. More on this method in this link -http://www.investopedia.com/articles/fundamental-analysis/08/oil-gas.asp  I am at wits to understand how the value will be more than 1 Trillion dollars in any case.

negative: You are calculating using different methods.  For example, to obtain 6.45% 6.44647 This is effectively the same as the money-weighted return calculation. In arriving at 6.06% you have calculated the true time-weighted return. Both answers are right, but they are different measures. To use time-weighted returns you need to know the value of the investment at the time of every cash flow. Modified Dietz uses a simple approximation to avoid that requirement.  Money-weighted return gives results that are more accurate for back calculating than Modified Dietz, (also without requiring interim valuations), but the calculation is more complex. See How to Calculate your Portfolio's Rate of Return for a decent reference.

negative: The 1.140924% is calculated by taking 13.69%/12 = 1.140924%. Dividing this number by 100 gives you the answer 1.140924 / 100 = .01140924. When dealing with decimals it's important to remember the relationship between a decimal and a percent. 1% = .01 To return .01 to a percent you must multiple that number by 100.  So .01 x 100 = 1% In order to get a decimal from a percent, which is what is used in calculations, you must divide by 100. So, here if we are trying to calculate how much interest you are paying each month we can do this: 9800 * .1369 = $1341.62 (interest you will pay that year IF the principal balance never changed) 1341.62 / 12 = ~111.81 Now, month two 9578.34 * .1369 = 1311.274746 1311.274746 / 12 = 109.28 In order to get your monthly payments (which won't change) for the life of the loan, you can use this formula: Monthly payment = r(PV) / (1-(1+r)^-n) Where:  r= Interest Rate (remember if calculating monthly to do .1369/12) PV= Present Value of loan n=time of loan ( in your case 36 since we are talking monthly and 12*3 = 36) from here we get: [(.1369/12)*9800]/(1-(1+.1369/12)^-36) = $333.467 when rounding is $333.47 As far as actual applied interest rate, I'm not even sure what that number is, but I would like to know once you figure out, since the interest rate you're being charged is most definitely 13.69%.

negative: Because if there is enough uncertainty then dcf can give you wildly different numbers? The shortcomings of such a simplistic method of valuation should be obvious.   Also why does it matter that they don't run projections?

negative: The MWRR that you showed in your post is calculated incorrectly. The formula that you use... ($15,750 - $15,000 - $4,000) / ($15,000 + 0.5 x $4,000) Translates into a form of the DIETZ formula of (EMV-BMV-C)/(BMV + .5 x C) The BMV is the STARTING balance. And as a matter of fact, the starting balance was NOT 15,000. It was IN FACT 11,000. See, the starting value for a month MUST BE the ending value of the prior month. So the BMV of 11,000 would give you the correct answer. Because if you added 4,000 at the start of the month (on day 1), it would have to have been ADDED to the 11,000 of the PRIOR month's ENDING value. Make sense? That would also mean that the addition of 4000 to the 11000 would imply that you started day 1 with 11,000. Make sense? Summary: When doing the calculations, you may use the ending value on the last day of the month to get your EMV. BUT YOU MAY NOT take the ending value on day 1 to get the BMV. That simply can not make sense since you already added a bunch of money during the day. Think about it. Davie

negative: I get that, but do boats depreciate at a much faster rate than a car, for any reason? That was the impression I got from your comment. Funnily enough, I was in a meeting today where someone said you have two happy days with a boat; the day you buy it, and the day you sell it. Hah.  Watching my dad, a boat seems like a complete pain in the ass as an investment. Far too much maintenance for the actual time you get to use it, and constant, regardless of whether or not you use it at all (unlike a car, which can sit in a garage without major issue for a certain amount of time), and then the mooring and gas are all costly, too. I just wanted the rationale behind a boat being a shitty investment, really.

negative: Edit3: Regarding the usefulness of the bare number itself, it is not useful unless, for example, an employer uses that average in the computation of how many options the employer grants to the employee as part of the compensation paid. One of my employers used just such an average. What is far more common is to use two or more moving averages, of different periods, plotted on a chart.  My original response continues below... Assuming there are 252 trading days a year, the following chart does what you have done but with a moving average: AAPL on Stockcharts.com  Edit: BTW, I looked up the number of Federal holidays, there are 9. The average year has 365.2422 days. 365.2422 × 5/7 = 260.8873. Subtract 9 and you get 251.8873 trading days in the average year. So 252 is a better number for the SMA than 250 if you want to average a year.  Edit2: Here is the same chart with more than one average included: AAPL chart w/indicators

negative: This is the wrong citation. PPACA relies on Code Sec. 4980H (26 USC 4980H) to define full time employees as anyone working 30 hours a week or more. Furthermore, this determination can be made according to IRS Notice 12-58, which offers employers flexibility in the period used to make such determination.

negative: The term 'interest' tends to be used loosely when discussing valuation of stocks.  Especially when referring to IRAs which are generally the purvey of common-folk who aren't in the finance industry.  Often it is used colloquially to include: Using this definition (which is what I'm guessing your IRA Calculator is doing), your stock would have increased in value by a total of $26 over the course of 10 months.  Still not terribly good (only a couple percent increase), but certainly not a couple cents.

negative: This link does it ok:  http://investexcel.net/1979/calculate-historical-volatility-excel/ Basically, you calculate percentage return by doing stock price now / stock price before.  You're not calculating the rate of return hence no subtraction of 100%.  The standard is to do this on a daily basis: stock price today / stock price yesterday. The most important and most misunderstood part is that you now have to analyze the data geometrically not arithmetically.  To easily do this, convert all percentage returns with the natural log, ln(). Next, you take the standard deviation of all of those results, and apply exp().  This answers the title of your question. For convenience's sake, it's best to annualize since volatility (implied or statistical) is now almost always quoted annualized.  There are ~240 trading days each year.  You multiply your stdev() result by (240 / # of trading days per return) ^ 0.5, so if you're doing this for daily returns, multiply the stdev() result by 240^0.5; if you were doing it weekly, you'd want to multiply by (240 / ~5)^0.5; etc.  This is your number for sigma.  This answers the intent of your question. For black-scholes, you do not convert anything back with exp(); BS is already set up for geometric analysis, so you need to stay there. The reason why analysis is done geometrically is because the distribution of stock returns is assumed to be lognormal (even though it's really more like logLaplace).

negative: This calculation arrives at the correct answer.  However, it uses the formula for an annuity due.  This means the payments are made at the beginning of the month and the last month of the 10 year period has interest accrued. See the section, Calculating the Future Value of an Annuity Due. The rate is given as an effective rate. with  In Excel, =FV((1+0.12)^(1/12)-1,120,3500,0,1)


query: Using credit card points to pay for tax deductible business expenses

positive: "For simplicity, let's start by just considering cash back. In general, cash back from credit cards for personal use is not taxable, but for business use it is taxable (sort of, I'll explain later). The reason is most personal purchases are made with after tax dollars; you typically aren't deducting the cost of what you purchased from your personal income, so if you purchase something that costs $100 and you receive $2 back from the CC company, effectively you have paid $98 for that item but that wouldn't affect your tax bill. However, since businesses typically deduct most expenses, that same $100 deduction would have only been a $98 deduction for business tax purposes, so in this case the $2 should be accounted for. Note, you should not consider that $2 as income though; that would artificially inflate your revenue. It should be treated as a negative expense, similar to how you would handle returning an item you purchased and receiving a CC refund. Now for your specific questions: Part 1: As a small business owner, I wish to attend an annual seminar to improve my business. I have enough credit card reward points to cover the airfare, hotel, and rental car. Will those expenses still be deductible at the value displayed on the receipt? Effectively no, these expenses are not deductible. If you deduct them they will be completely counter-acted by the ""refund"" you receive for the payments. Part 2: Does it matter if those points are accrued on my personal credit card, rather than a business credit card? This is where it gets hairy. Suppose your company policy is that employees make purchases with their own personal credit cards and submit receipts for reimbursement. In this case the employer can simply reimburse and would not know or care if the employee is racking up rewards/points/cashback. The trick is, as the employee, you must always purchase business related items normally so you have receipts to show, and if you receive cashback on the side there seems to be a ""don't ask, don't tell"" rule that the IRS is OK with. It works the same way with heavy business travelers and airline miles- the free vacations those users get as perks are not treated as taxable income. However, I would not go out of my way to abuse this ""loophole"". Typically, things like travel (airfare, hotel, car rental, meals) are expected. But I wouldn't go purchase 100 company laptops on your personal card and ask the company to reimburse you. The company should purchase those 100 laptops on a company card and effectively reduce the sale price by the cashback received. (Or more realistically, negotiate a better discount with your account rep and just cut them a check.) Part 3: Would there be any difference between credit card points and brand-loyalty points? If the rental car were paid for with points earned directly on the rental car company's loyalty system (not a CC), would that yield a different result? There is no difference. Perhaps the simplest way to think about this is you can only deduct an expense that you actually incur. In other words, the expense should show up on a bank or CC statement. This is why when you volunteer and work 10 hours for a charity, you can't call that a ""donation"" of any amount of money because there is no actual payment made that would show up on a bank statement. Instead you could have billed the charity for your 10 hours of work, and then turned around and donated that same amount back to them, but it ends up being a wash."

negative: "The following is based on my Experian credit scoring feedback and experience here in the UK over many years.  (And for further information I currently hold a credit score of 999, the highest possible, with 6 credit cards.)  Now I'm assuming that while there may be some differences in particulars in your case due to the difference in locality nevertheless the below should hopefully provide some broad guidelines and reasonable conclusion in your situation: Having a large number of active credit accounts may be seen as a negative.  However having a large number of settled accounts should on the contrary have a positive effect on your score.  As you keep your accounts mostly settled, I think having another card will not be to your detriment and should in time be beneficial. A large total credit balance outstanding may count against you.  (But see the next point.)   Having your total outstanding debt on all credit accounts be a smaller proportion of your total available credit, counts in your favour.  This means having more cards for the same amount of credit in use, is net-net in your favour.  It also has the effect of making even larger outstanding credit balances (as in point 2) to be a lower percentage of your total available credit, and consequently will indicate lower risk to lenders.   It appears from my experience the higher the highest credit limit on a single card you are issued (and are managing responsibly e.g. either paid off or used responsibly) the better. Needless to say, any late payments count against you.  The best thing to do then is to set up a direct debit for the minimum amount to be paid like clockwork every month.  Lenders really like consistent payers. :) New credit accounts initially will count against you for a while.  But as the accounts age and are managed responsibly or settled they will eventually count in your favour and increase your score. Making many credit applications in a short space of time may count against you as you may be seen to be credit reliant.  Conclusion: On balance I would say get the other card.  Your credit score might be slightly lower for a couple of months but eventually it will be to your benefit as per the above.    Having another card also means more flexibility and more more options if you do end up with a credit balance that you want to finance and pay off over a period as cheaply as possible.   In the UK the credit card companies are falling over themselves trying to offer one ""interest free"" or 0% ""balance transfer"" offers.  Of course they're not truly 0% since you typically have to pay a ""transfer fee"" of a couple of percent. Still, this can be quite cheap credit, much much cheaper than the headline APR rates actually associated with the cards.  The catch is that any additional spending on such cards are paid off first (and attract interest at the normal rate until paid off).  Usually also if you miss a payment the interest rate reverts to the normal rate.  But these pitfalls are easily avoided (pay by direct debit and don't use card you've got a special deal on for day to day expenses.) So, having more cards available is then very useful because you then have choice.  You can roll expensive debts to the cheapest lender at your disposal for as long as they'll offer, and then simply not use that card for any purchases (while paying off the balance as cheaply as possible), meanwhile using another card for day to day expenses."

negative: (1). Is this right? Pretty much, though this is a really rudimentary way to think about it. (2). If it is, why is it that extensive services are provided by high margin companies competing for talent, rather then lower margin businesses looking to boost their profits by reducing their expenditures on employees (by cutting out the government)? It's the polar opposite of that. Google (and companies like that) do things like have a day care center on premises.  The company staffs a day care center which has costs, then lets employees use it for free.  This is a business expense for Google, and in relative terms, a considerably large business expense that a lower margin business could no afford. Employer healthcare is a tax protected expense for employees via section 125 of the tax code.  The company portion of the healthcare costs are a deductible business expense to the company, as expected.  Healthcare is different than most other expenses because the employee can forego income before it's effectively received which negates it from taxable income.   This doesn't work for something like food purchased at a cafe on a Google complex.  If employee money is being spent at a corporate cafe, it's taxable income being spent (though the cost of running the cafe is a tax deductible business expense to the company). There have been discussions in congress to assess a value as income to employees for services like on site child care and no cost employee cafeterias. To address your new example: For example, suppose John Doe makes $100,000 a year taxed at a rate of 20%, for a take home pay of $80,000. He spends $10,000 on food. His employer Corporation decides to give him all of his food and deduct it as a business expense - costing them $10,000. But now they can pay John Doe an amount so his take home pay will be reduced by $10,000 - $87,500 The company is now spending $97500 employing John Doe, for a savings of $2500$. This would be an audit prone administrative nightmare.  Either You need John to submit receipts for reimbursement up to the $10,000 agreed upon amount which would require some kind of administrative staff, or After a very short period of time John forgets the abstract value of the food cost arrangement, that is only really benefiting the employer in the form of lower payroll expense, and is enticed away for more pay somewhere else anyway.  The company may be saving $2,500, though again there will be an additional administrative expense of some sort, but John is only saving $500 ($97,500 * 0.20 - $100,000 * 0.20).

negative: "(Disclaimer: I am not an accountant nor a tax pro, etc., etc.) Yes, a Canadian corporation can function as a partial income tax shelter.  This is possible since a corporation can retain earnings (profits) indefinitely, and corporate income tax rates are generally less than personal income tax rates.  Details: If you own and run your business through a corporation, you can choose to take income from your corporation in one of two ways:  as salary, or as dividends. Salary constitutes an expense of the corporation, i.e. it gets deducted from revenue in calculating corporate taxable income.  No corporate income tax is due on money paid out as salary.  However, personal income taxes and other deductions (e.g. CPP) would apply to salary at regular rates, the same as for a regular employee. Dividends are paid by the corporation to shareholders out of after-tax profits.  i.e. the corporation first pays income tax on taxable income for the fiscal year, and resulting net income could be used to pay dividends (or not). At the personal level, dividends are taxed less than salary to account for tax the corporation paid.  The net effect of corporate + personal tax is about the same as for salary (leaving out deductions like CPP.) The key point: Dividends don't have to be paid out in the year the money was earned.  The corporation can carry profits forward (retained earnings) as long as it wants and choose to issue dividends (or not) in later years. Given that, here's how would the partial income tax shelter works: At some point, for you to personally realize income from the corporation, you can have the corporation declare a dividend. You'll then have to pay personal income taxes on the income, at the dividend rates.  But for as long as the money was invested inside the corporation, it was subject only to lesser corporate tax rates, not higher personal income tax rates.  Hence the ""partial"" aspect of this kind of tax shelter. Or, if you're lucky enough to find a buyer for your corporation, you could qualify for the Lifetime Capital Gains Exemption on proceeds up to $750,000 when you sell a qualified small business corporation.  This is the best exit strategy; unfortunately, not an easy one where the business has no valuable assets (e.g. a client base, or intellectual property.) * The major sticking-point:  You need to have real business revenue!  A regular employee (of another company) can't funnel his personally-earned employment income into a corporation just to take advantage of this mechanism.  Sorry. :-/"


query: Am I required to have a lawyer create / oversee creation of my will?

positive: "This is not intended as legal advice, and only covers general knowledge I have on the subject of wills as a result of handling my own finances.   Each state of the USA has its own laws on wills and trusts.  You can find these online.  For example, in Kentucky I found state laws here:  http://www.lrc.ky.gov/krs/titles.htm and Title XXXIV is about wills and trusts.  I would recommend reading this, and then talking to a lawyer if it is not crystal clear.   Generally, if a lawyer does not draft your will, then either (1) you have no will, or (2) you use a form or computer program to make a will, that must then be properly witnessed before it is valid.  If you don't have it witnessed properly, then you have no will.  In some states you can have a holographic will, which means a will in your own handwriting.  That's when you have that 3am heart attack, and you get out a pad of paper and write ""I rescind all former wills hereby bequeathing everything to my mistress Samantha, and as to the rest of you go rot in hell. "" One issue with these is that they have to get to court somehow, and someone has to verify the handwriting, and there are often state laws about excluding a current spouse, so you can guess for yourself whether that one might disappear in the fireplace when another family member finds it next to the body or if a court would give it validity. And there can be logic or grammar problems with do it yourself wills, made in your own handwriting, without experience or good references on how to write things out.  Lawyers who have done a bunch of these know what is clear and makes sense.  (1) In Tennessee, where I live, an intestate's property, someone who died with no will, is divided according to the law.  The law looks to find a spouse or relatives to divide the property, before considering giving it to the state.  That might be fine for some people.  It happened once in my family, and was resolved in court with minimal red tape.  But it really depends on the person.  Someone in the middle of an unfinalized divorce, for instance, probably needs a will help to sort out who gets what.   (2) A form will is valid in Tennessee if it is witnessed properly.  That means two witnesses, who sign in yours' and each others' presence.  In theory they can be called to testify that the signature is valid.  In practice, I don't know if this happens as I am not a lawyer. I have found it difficult to find witnesses who will sign a form will, and it is disconcerting to have to ask friends or coworkers for this sort of favor as most people learn never to sign anything without reading it.  But a lawyer often has secretaries that do it...  There is a procedure and a treaty for international wills, which I know about from living overseas. To streamline things, you can get the witnesses to each sign an affidavit after they signed the will.  The affidavit is sworn written testimony of what happened, that they saw the person sign their will and sign in each others' presence, when, where, no duress, etc.  If done correctly, this can be sufficient to prove the will without calling on witnesses.  There is another option (3) you arrange your affairs so that most of your funds are disbursed by banks or brokers holding your accounts.  Option (3) is really cheap, most stock brokers and banks will create a Transfer-On-Death notice on your account for free.  The problem with this is that you also need to write out a letter that explains to your heirs how to get this money, and you need to make sure that they will get the letter if you are dead.  Also, you can't deal with physical goods or appoint a guardian for children this way.  The advantage of a lawyer is that you know the document is correct and according to local law and custom, and also the lawyer might provide additional services like storing the will in his safe.  You can get personalized help that you can not get with a form or computer program."

negative: It is a necessary process to inspect the building. If you want to buy a building in future, then you should search a good experienced team, that's done professional work. As you know, today so many problems are creating. We perform by a good  inspector, the Assured Building Inspections are the most and  regulatory building inspection safety agency, which is available in your city. We are responsible for overseeing the most effective and efficient services. It's also known as Australia's largest  pre purchase building inspections Newcastle NSW. Building inspectors impact the making plans and creation levels of initiatives and investigate compliance with constructing codes.

negative: "I agree with this argument. Finance, legal, and tax compliance industries are bogus and add dubious value at best. The creation of more wealth helps those that created the wealth the most, but it oftentimes also does help everyone else as well (think: Steve Jobs & his company's many creations).  But I also believe that if you had a ""full equalizer day"" and redistributed all the wealth in the US so that each of us had the same amount of money (we'd each roughly have $255,000 if my math is correct), then within 1 generation you'd already see a similar wealth distribution to what we have now. Most would consume more- rather than invest- and it would only be a temporary fix.  It's a rarity to find people advocating for changing the system that creates inequality (the Fed currently being the biggest perp) instead of simply trying to redistribute the results of that system."

negative: I believe there are two ways new money is created: My favorite description of this (money creation) comes from Chris Martenson: the video is here on Youtube. And yes, I believe both can create inflation. In fact this is what happened in the US between 2004 and 2007: increasing loans to households to buy houses created an inflation of home prices.

negative: "So, I am one of these ""job creators"" right now.  I am doing software development and have hired 1 person from the U.S. and a team from Germany. So I will leave it to someone else to determine how changing my tax structure impacts job creation."

negative: Everyone thinks that before buying the home recognize  the condition of the home. In that case we will help you, it is an one most trustable building inspection company in Australia.  We carry out by a very good  inspector, the Assured Building Inspections are the most and  regulatory  property inspections and reports company, which is to be held in your city. We are responsible for overseeing the handiest and green services. It's additionally called Australia's biggest  pre purchasing building inspections. Building inspectors effect the planning and creation ranges of initiatives and check out compliance with building codes.

negative: I don't disagree.  My iPhone is made with products from Fox con. They have a horrific record for taking care of their employees. I need to own that.  Simultaneously, Apple goes out of its way to do everything they can in order to stifle that victimization. This includes searching for other vendors, overseeing as much of the production process as they are allowed to, and also creating factories and processes here in America that are more under their direct control.  I do not see rival companies (like Samsung) doing the same thing.  I would never say that I live a purely virtuous life. But I try to make a stand where I think it will make a difference while still being able to provide for my family.  And I provide for my family very well.

negative: Depending on your local laws, such a layoff may be an unlawful act. If the whole purpose of the lay-off is to strip the employees of their RSU's, the employer may be liable and get sued. However, you have to check that with a lawyer licensed in your jurisdiction. In many places there are no laws against this. In any case, you may claim that there was no good faith/just cause in the action and still sue the employer. Mere threat of a lawsuit may thwart the whole deal, so I suggest the employees to lawyer up and talk to the employer. That, by the way, will require to create a union - a representative body for the employees. In some places that by itself may be a just cause for termination (in some extremely anti-union jurisdictions, I would guess if there were some they would be in the US). Bottom line - talk to a lawyer.

negative: "I don't think any of us claims pizza is an American creation instead of an Italian one. Pizza *is* an Italian creation.    We are only saying that the regular pizzas they have in the US are mostly non-Italian style, and shouldn't be count as real authentic Italian food. It'd be like saying pastas are an Chinese creation. Pastas was inspired by the Chinese, but the Chinese didn't create pastas, they have [mian] (http://en.wikipedia.org/wiki/Chinese_noodles ), which means noodles.    Point is, if someone change something too much and that thing becomes a ""new/different"" thing, we will call that person the creator and use its terms."

negative: "Ok this is random but now I am super curious -- how can one argue plastic's inability to store value comes artificially/by opinion?  As a man-made good, are there not any finite restrictions on its creation?  It reminds me of the Golgafringians of Douglas Adams' *Life, the Universe, and Everything* when they attempted to make leaves a currency.  Or do you argue something along the lines that plastic's value is artificial in the same manner as the dollar -- whether it is paper or plastic it can represent a promised/existing product despite its potentially infinite nature?  And yeah, I know ""potentially infinite"" is a TERRIBLE term given the finite nature of anything on earth required to make plastic...but I couldn't come up with a better term though I am sure one exists"

negative: Do you need such a detailed budget?  I have found that a detailed budget creates two problems: I would suggest starting simple, and adding complexity as you discover you need it.  Create a budget with just a few categories Then, I enforce my budget with my auto deposit.   My required expenses, which I have a pretty good notion of the total amount get paid from one online bank.  Enough money goes in and I electronically pay. Retirement money and e-fund money get deposited into the brokerage and credit union where I keep those piles at. Finally, my optional expenses go into a second bank (I am using simple.com at the moment) and I spend from there with a card.  They have a nice reporting feature, and if I want to save up for a toy or something I save up there.  Bonuses and other extra income end up there as well.  This way, I really only have to monitor the last account to see if I can have fun or buy a new item. My bills and retirement are different pools of money, and I don't carry around a card that can access that money.

negative: But how can you have continued growth? Nothing is perpetual at least not in real life - maybe in theory :)  I'm guessing you're talking about growth in the money supply right? Well how can you keep growing your money supply indefinitely if doing so requires the creation of a larger amount of debt than the amount that already exists?  Think of it in rounds. If each round of debt requires that new debt to the amount of 105% of the old debt is created, how long can you keep that running for? You've essentially got the principle of compound interest working against you.   I'm obviously missing something really big because this seems ridiculous to me...

negative: "Good.  I had an internship I HATED!  And you know what?  For damn good reason!  My ""Professor,"" the person that oversees the internship, noticed how much I hated that shit and changed my internship.  I didn't even make it to the end, I hated it so much.  I thought I was going to suffocate.  Conclusion:  There is a reason you hate this shit!"

negative: The website likely has no differentiation. I am hoping, however, the service does.   I'm not looking to break down a fledgling business plan, I am just looking for information on how and where to build or buy a website that performs thusly:  Company creates account and posts the service they can provide, Consumer applies for said service, I deal with some required middle-man work which is at the cost of the consumer.

negative: "Reimbursements for business expenses are generally not taxable, but the commute from home to the job and back is not considered business travel and if they're paying for that it is taxable income. I don't think carpooling changes that, but I am not a tax lawyer or accountant. The rest of your questions seem to be company policy issues. There is no ""should"" here. You aren't required to pick up the other guys, but he isn't required to reimburse those miles (or employ you) so think carefully about your priorities before pushing back. Never invoke what thou canst not banish."

negative: On a company level ROCE over WACC would be more meaningful in my view but the end result should be be pretty much the same. This concept is closely related to value creation. Value can only be created when a company's ROCE is exceeding its cost of funding - WACC. This is also tightly related with the NPV concept. Value is only created when the NPV on a project is >0.  And to directly answer OP. Study in detail WACC. (weighted average cost of capital). Focus on the Modigliani–Miller theorem with taxes and financial distress costs. Good luck.

negative: I think you'll find some sound answers here: Money Creation in the Modern Economy by the Bank of England Where does money come from?  In the modern economy, most money takes   the form of bank deposits. But how those bank deposits are created is   often misunderstood. The principal way in which they are created is   through commercial banks making loans: whenever a bank makes a loan,   it creates a deposit in the borrower’s bank account, thereby creating   new money.  This description of how money is created differs from the   story found in some economics textbooks.

negative: "ETF Creation and Redemption Process notes the process: While ETF trading occurs on an exchange like stocks, the process by   which their shares are created is significantly different. Unless a   company decides to issue more shares, the supply of shares of an   individual stock trading in the marketplace is finite. When demand   increases for shares of an ETF, however, Authorized Participants (APs)   have the ability to create additional shares on demand. Through an ""in kind"" transfer mechanism, APs create ETF units in the   primary market by delivering a basket of securities to the fund equal   to the current holdings of the ETF. In return, they receive a large   block of ETF shares (typically 50,000), which are then available for   trading in the secondary market. This ETF creation and redemption   process helps keep ETF supply and demand in continual balance and   provides a ""hidden"" layer of liquidity not evident by looking at   trading volumes alone. This process also works in reverse. If an investor wants to sell a   large block of shares of an ETF, even if there seems to be limited   liquidity in the secondary market, APs can readily redeem a block of   ETF shares by gathering enough shares of the ETF to form a creation   unit and then exchanging the creation unit for the underlying   securities. Thus, the in-kind swap to the underlying securities is only done by APs so the outflow would be these individuals taking a large block of the ETF and swapping it for the underlying securities.  The APs would be taking advantage of the difference between what the ETF's trading value and the value of the underlying securities."

negative: "So far, everyone seems to be missing the point of the article, which concludes that higher taxes on the rich will not reduce job creation and, very importantly, economic policy should focus on creating a ""healthy economic ecosystem."" Without this, entrepreneurs have no customers."

negative: I can't find anything specifically about holding international real estate as a US taxpayer, but the act of transferring the money to (I presume) an account of yours in Italy, and any other associated accounts, will trigger requirements for reporting under FBAR and FACTA. Even with this, it is primarily a reporting requirement. I do not believe you will incur any additional taxes unless you do rent out the property (or allow someone not a reported dependent to make use of the property). Note that if you do not report and should, the penalties are quite steep, so please do comply. NOTE: I am not a tax expert, nor a lawyer, nor an accountant, nor an agent of the IRS. Please consult one or all of these before making any decisions.

negative: I think that some of that might have to do with not being confortable with accepting systems of rules that people just make up and accept.  In the case of relativity, things are based on observation and governed by logic which shouldn't have any contradictions.  To understand the creation/destruction of money, it requires understanding how a set of made up rules were implemented and lead to a state where the rules no longer work or seem to form a contradiction, IMO.  I wouldn't say it's harder to understand than relativity, I would just say that understanding it requires seeing that, unlike physics, not everything was played exactly by the rules.

negative: "Yes, very prohibitive. A common thing I was doing over 8 years ago was SHA1(MD5(""username"")+""password"")), in fact.   The problem with this method is that later one we wanted the users to be able to change their username, so instead we started doing something like this:  SHA256(MD5(""timestamp of account creation"")+SHA-1(""password"")+CustomSieve(""password""+""password""))  CustomSieve was a script that used every even character's ASCII binary representation to modify the string itself. Like my own hashing function that was not good enough for professional use, but unique enough that it drastically changed the final SHA-256 hash. Most people would probably say this was overkill, but I didn't want to just be sending two hex hashes into a SHA256 in case some day someone created a rainbow table specifically designed to crack hashes of hashes.  The timestamp of account creation was stored with the username in it's own table and accessing that table was logged differently and audited separately, so a hacker would have to be doing some really weird things in order to get that info."

negative: "I've hired a lawyer to make sure all the T's are crossed.   - I am not charging my employer for the service. I created a ""Free tier"" that fits the scale of my employer, and implemented it that way for them. Larger government bodies are paying for the higher tiers. On multiple levels, i've been sure that nothing conflicts with either our purchasing policy, or any written employee policies.    - I did 100% of the work on my own time and using my own resources. I was extremely careful to ensure this was the case. There is no clause anywhere in my employment agreement that says the company owns anything I do outside of company time. Believe it or not, this is actually less of an issue for a government body because the government doesn't exist to make a profit from services, and because they are getting an expensive service for free, it's actually a significant net benefit for them.  I certainly would be at a significantly higher risk if I was working for a for-profit corporation as they certainly would try to go after me.    - I was also careful in how the software was presented. While I agree there is a level of a obfuscation without a doubt, I've confirmed it certainly not a legal issue for the company, nor is it grounds for a lawsuit, and likely not even grounds for termination (although at this point, I don't really care as I have bigger fish to fry)"

negative: It's also bad to create skewed incentives that result in the best candidate not getting the job.   Or should we have no feelings for the other candidates who apply?   Edit: Hypothetical situation. My wife gets a job in another city, and I also need to relocate. I currently have a job. I am the best candidate for a new job, but don't get it because of the proposed tax credit.   Not only have you created an incentive for the company to hire a second best candidate, which is bad for the company and its customers, but I am unable to relocate.   Bad policy. Economic engineering that sounds good, but is not the most efficient means of allocating resources.

negative: People should actually be able to ask anything they want for something they do. I am sure it was agreed before the case started they would get a percentage of the settlement. Too bad could not just give them 16 million in ticket master credit though.  How many clients do the lawyers have? Hundred-thousands? I am sure it is also more than one lawyer, not to mention their clerks etc. Look at when the claim filed, 2003? So 9 years almost of working on a case? I know they have not worked totally on this case but still. This price seems totally reasonable to me. Even if it is not reasonable the clients agreed to it.

negative: Don’t waste time trying to create a video on your own. Why do it when you have expert animation video makers by your side? They are skilled in the art and science of creation, copy, edit, and finalization of the video to give you a refined version of your content.

negative: Fundamentally these are my opinions I am expressing. Even though I try to remain as factual as possible, and have significantly modified my opinion over the years as a result of apparently factual information, it's still technically just opinion.  > My view is not so much that labour and finance capital returns need to be balanced (although that is probably a great thing to aim for), but that creation of wealth/capital needs to be intrinsically linked with the creation of real value.  By the way, when I say capital it's not generally just finance capital, but all operational capital goods. Which includes factories and all means of production. A certain amount of financing is needed to keep it operational, and more is needed to increase the means of production to grow overall wealth.  Have you ever heard of the [Bowley's law](http://en.wikipedia.org/wiki/Bowley%27s_law)? Basically you can't really push this ratio very far. If consumer demand dries up then production will get cut back to meat demand. Overproduction of stuff they can't sell is not what they are in business for. Likewise, is demand exceeds the capacity of production to keep up it pushes inflation, which drives up cost to reduce demand. So this ratio remains very nearly a constant. Even though this ratio was at historic highs in the 1970s, and historic lows today.  What happens when you artificially dry up labor returns, through excessive supply side policies, is that demand for production falls. Hence production is cut back to meet that demand. This of course reduces employment and increases job competition, which puts more downward on wages exacerbating the situation. Only once labor cost fall low enough it effectively subsidizes inefficient production methods which limits the falling wages at a reduced overall productivity. Note that this is under present circumstances, not those of the 1970s. This adaptive matching between production and demand insures that the Bowley ratio is never too far off of its historical averages, even if productivity is driven well below its potential.  More or less the same effect occurs for the opposite reason if capital return ratios are too low. Though with opposite effects on the inflation rate and such. When consumer demand is high enough capital will pay whatever labor cost is required to meet that demand, so long as it remains profitable enough, i.e., they get a reasonable ratio of the market return. Consumer demand with sufficient capital profit margins is what drives full employment, not the sheer volume of capital returns as present policies essentially assume. Yet you can't have a broad based consumer demand, to drive employment, without sufficient labor returns, as those labor returns is what finances that demand needed to drive employment.  So not only does labour and capital returns need to be balanced. Economics does NOT allow it to be unbalanced, at least for long. Even if balancing requires the economy to shrink, productivity to fall, etc., that is exactly what it will do to remain balanced. No choice given, no matter how draconian the regulations to force it. This is true under purely agrarian economies of the past, pure communism, and even ecology. This is why I am a capitalist, because nature gives me no choice. But acceptance of that fact does not require me to have an ounce of tolerance for cronyism.  The only thing we can do is not push this balance in either direction to destructive levels. Because destruction is what will happen for the balance to remain. Because so much of our productive capacity has been in productivity gains since the 1990s, and wages and demand have as yet not matched these productivity gains, we have a huge latent wealth capacity that continues to grow as we fail to take advantage of it. So far our supply side policies haven't so much destroyed wealth and productivity. Rather it has prevented us from seeing the potential gains from the latent productivity growth from technologies over the few decades.  ---  The last part you mention about wealth/capital needing to be intrinsically linked with the creation of real value. You are absolute 100% entirely correct. Perhaps even more than you know. Ever heard of planned obsolescence, or [The Light Bulb Conspiracy](http://topdocumentaryfilms.com/light-bulb-conspiracy/)? That link is a documentary on the issue that will make you mad. We could almost certainly pay a flat 90% tax rate on everything and still not come close to what this issue cost us. That's not the only means this issue imposes cost, but it is extreme.   Of course just because an appliance still works doesn't mean people will not replace it with newer better models. But the trash pile insures there is a much more limited secondary market for poorer people. Consumption debt cost is also a far bigger issue than people recognize. Debt to finance capital goods for production is fine, as this feeds productivity and wealth in a manner that sustains itself even as the debt is paid. Consumption debt is an entirely different beast. Creating a significant section of the population that feeds on peoples income without producing a thing. Only to let allow people to consume income they haven't earned yet.  This generally falls under the category of rent seeking behavior. Yeah, the lack real value creation turns my stomach. That people will knowingly spend money on temporary non-essential novelties and such is all fine and dandy, but underhandedly renting our base appliances for a certain number of uses is outrageous in my book.

negative: "> But what exactly are the new jobs that will be created? Nadella says to expect “people on people jobs.” These require skills that demand significant interaction, such as eldercare,   In other words, low paying undesirable boring jobs... until a robot can do those jobs too...  > “So much of the last 10 years has been consumption … now is the time for creation -- like in [building video game] Minecraft, with [Microsoft Paint spinoff] paint3d,”   ... to make money for the platform owner (Microsoft who owns Minecraft) and almost nothing for you... and you can do this ""creative work"" only in your 20s or 30s... after which you are outdated and not so creative... great job security. I never heard of people becoming millionaires from creating apps on Google/Apple, youtube channels or all the other ""creative"" channels.  **BOTTOM LINE: the whole purpose of Robots and AI is to take jobs and work away from people! Simple as that.**  **Currently, millions of low skilled people have to do work done by robots and highly skilled people do the work done by AI. With robots and AI, either you are totally useless for any work (low skill people) or lose you job/income (highly skilled).**  I am not against robots or AI, but I think they should be regulated. For example, all customer service (i.e. talking to a human being) must be done by humans, where AI is just a tool to help that customer service human. Another example, every group of robots doing work must be supervised by a human who gives them instructions what to do and how to do it."

negative: Thanks for the reply! I am considering all lines of work as the priority is the location, then the job. But if the work I can get is relevant and expands my network, that carries a lot of value.  The plan is to stay where I am for the next 2-3 years to gain the required work experience to become a charterholder and developing my skills/project portfolio to become a better candidate. I would still be young enough to move to Australia/UK on a working vacation/youth mobility and I want to be set up to have a good chance by then.

negative: The president doesn't have a magic wand that automatically makes his will the law of the land.   The president is the chief executive over a complicated bureaucratic system we call the US government. With many branches and departments, some of which are legally separated by the US Constitution and not directly under the president's control.  No things aren't going to get better because the issues this country faces are beyond the office of the president. Maybe if Congress would get serious about America we would see a little traction on the recovery, as we would have 2/3 branches of the government moving in in the same direction. Currently the US government is a centipede with 2/3rds of its legs busted.  **EDIT:** I don't mean to give the impression that the Judicial Branch is dysfunctional so much as I wanted to illustrate that it tends to follow the Legislative and Executive branches, not lead them. The Legislative branch creates the laws that the Executive branch (Office of the President) enforces. The Judicial branch oversees these two branches to make sure they create laws that abide by and operate within the Constitution.

negative: Perhaps a technicality, but minors do not have the legal capacity to bind a contract. Making a purchase from a store is a contract. I'm not a lawyer and there may be case law to the contrary or that creates exceptions, but my understanding is that purchases made by a minor may be void if later challenged. JohnFx's answer is true from a practical sense. But if you get turned away at a store, understand that they're probably just being careful to avoid headaches later.

negative: Legal tender laws and capital gains tax mean that other commodities are at an unfair legal disadvantage to local fiat currency.  In other words, governments are using taxes and regulations to manipulate the market and create artificial demand for the currency their central bank has a monopoly on the creation of.

negative: > If a corporation pays poverty wages that I am then required to subsidise through my taxes,   be mad at the gov't then. the public is not supposed to have control over private businesses, they're supposed to have control over their gov't.


query: Pros and Cons of Interest Only Loans

positive: Pros: Cons: Before the housing bubble the conventional wisdom was to buy as much home as you could afford, thereby borrowing as much you can afford.  Because variable rates lead to lower mortgages, they were preferred by many as you could buy more house.   This of course lead to many people losing their home and many thousands of dollars. A bubble is not necessary to trigger a chain of events that can lead to loss of a home.  If an interest only borrower is late on a payment, this often triggers a rate increase.  Couple that with some other things that can happen negatively, and you are up $hit's creek. IMO it is not wise.

positive: "Given the current low interest rates - let's assume 4% - this might be a viable option for a lot of people.  Let's also assume that your actual interest rate after figuring in tax considerations ends up at around 3%.  I think I am being pretty fair with the numbers. Now every dollar that you save each month based on the savings and invest with a higher net return of greater than 3% will in fact be ""free money"".  You are basically betting on your ability to invest over the 3%.  Even if using a conservative historical rate of return on the market you should net far better than 3%.  This money would be significant after 10 years.   Let's say you earn an average of 8% on your money over the 10 years.  Well you would have an extra $77K by doing interest only if you were paying on average of $500 a month towards interest on a conventional loan.  That is a pretty average house in the US.  Who doesn't want $77K (more than you would have compared to just principal).  So after 10 years you have the same amount in principal plus $77k given that you take all of the saved money and invest it at the constraints above. I would suggest that people take interest only if they are willing to diligently put away the money as they had a conventional loan.  Another scenario would be a wealthier home owner (that may be able to pay off house at any time) to reap the tax breaks and cheap money to invest. Pros: Cons: Sidenote:  If people ask how viable is this.  Well I have done this for 8 years.  I have earned an extra 110K.  I have smaller than $500 I put away each month since my house is about 30% owned but have earned almost 14% on average over the last 8 years.  My money gets put into an e-trade account automatically each month from there I funnel it into different funds (diversified by sector and region).  I literally spend a few minutes a month on this and I truly act like the money isn't there.  What is also nice is that the bank will account for about half of this as being a liquid asset when I have to renegotiate another loan."

positive: The advantage of interest only mortgages is that they can increase your cashflow as you are only paying the interest and not any part of the principle. We have most of our investment loans on interest only for 10 years. When we got the loans about 6 to 7 years ago our LVR was only 60% and the property prices have increased by about 40% in that time. We also place our excess cashflow into offset accounts linked to the investment loans, so there is extra cash available in case things go bad. The disadvantage of interest only mortgages is that you are not paying off any principal for the length of the interest only period. If you are over extended this could cause problems as you need to rely totally on the price of the property going up for your equity to increase. As you are currently paying mortgage insurance leads me to believe your LVR is above 80%, so you would not have much equity available in your home. With an interest only loan this could pose you some problems. You should never try to over extend yourself, the slightest thing that goes wrong could get you into financial troubles. Always try to have some buffer to help you stay on your feet if circumstances do change for the worst.

positive: "The main disadvantage is that interest rates are higher for the interest-only loan. It's higher risk to the bank, since the principal outstanding is higher for longer.  According to the New York Times, ""Interest rates are usually an eighth- to a half-percentage point higher than on fully amortized jumbo loans."" They're also tougher to qualify for, and fewer lenders offer them, again due to the risk to the bank. Since you can always put extra towards the principal, strictly speaking, these are the only  downsides. The upside, of course, is that you can make a lower payment each month. The question is what are you doing with this? If this is the only way you can afford the payments, there's a good chance the house is too expensive for you. You're not building equity in the home, and you have the risk of being underwater if the house price goes down. If you're using the money for other things, or you have variable income, it might be a different story. For the former, reinvesting in a business you own might be a reason, if you're cognizant of the risks. For the latter, salespeople on commission, or financial industry types who get most of their income in bonuses, can benefit from the flexibility."

negative: This is very much possible and happens quite a lot. In the US, for example, promotional offers by credit card companies where you pay no interest on the balance for a certain period are a very common thing. The lender gains a new customer on such a loan, and usually earns money from the spending via the merchant fees (specifically for credit cards, at least). The pro is obviously free money. The con is that this is usually for a short period of time (longest I've seen was 15 months) after which if you're not careful, high interest rates will be charged. In some cases, interest will be charged retroactively for the whole period if you don't pay off the balance or miss the minimum payment due.

negative: The loan is private, so the business is more of a red-herring. The fact that you're closing it and lost a lot of money explains the loan, but is rather irrelevant otherwise as the loan is personal. Do consider potential tax benefits on writing off a loss, talk to a local tax adviser on that. Pros: Cons: I'm sure there are more considerations, of course, and I'm not familiar with the Canadian social safety nets to understand how much of a damage con #1 would be.

negative: Talk about coincidence, we just recieved letters from our bank saying that our interest only loans will be going up by 0.46% and if we want to keep our lower rate we will need to change early to P&I. Now our Interest only periods end in 6 months to about 16 months anyway. We have decided to change to P&I early and save on our interest expenses. Why? Because the main purpose of investing is to make money not to save on tax. Even if you are on the highest marginal tax rate for every extra dollar of expenses you spend and claim as a deduction you will only get about 50 cents back through tax savings. If you are on the lowest marginal tax rate your tax savings will reduce to less than 20 cents for every extra dollar spent. If you are investing in order to save on tax you may be investing for the wrong reasons. Your primary reason for investing should be to make money, for wealth creation. A good reason to stay with an Interest only loan for an investment property would be if you require the extra cash flow you would receive compared with an I&P loan.

negative: Without commenting on your view of the TV market:  Let's have a look at the main ways to get negative exposure:  1.Short the stocks  Pros: Relatively Easy Cons: Interest rate, costs of shorting, linear bet    2.Options  a. Write Calls b. Buy puts  Pros: Convexity, leveraged, relatively cheap Cons: Zero Sum bet that expires with time, theta  3.Short Stock, Buy Puts, Write Calls  Short X Units of each stock, Write calls on them , use call premiums to finance puts.  Pros: 3x the power!, high kickout Cons: Unlimited pain

negative: Here are the pros and cons and an analytical framework for making a decision. Pros of walking away: Cons: Here's the framework: compare the value of first and second sections for you [1] http://www.nytimes.com/2009/07/30/business/30serviceside.html?_r=0 [2] http://www.mortgagecalculator.org/

negative: Pro:  - Faces less redemption pressure and hence the Fund Manager can focus more on long term gains rather than immediate gains.  - Works well in emerging markets.  - Less churn out in case the market falls sharply, there by making more money in long run. Cons:  - No additional money to invest/take advantage of market situation.  - Less liquid for investor as he is locked in for a period.

negative: The optimal down payment is 0% IF your interest rate is also 0%. As the interest rate increases, so does the likelihood of the better option being to pay for the car outright. Note that this is probably a binary choice. In other words, depending on the rate you will pay, you should either put 0% down, or 100% down. The interesting question is what formula should you use to determine which way to go? Obviously if you can invest at a higher return than the rate you pay on the car, you would still want to put 0% down. The same goes for inflation, and you can add these two numbers together. For example, if you estimate 2% inflation plus 1% guaranteed investment, then as long as the rate on your car is less than 3%, you would want to minimize the amount you put down. The key here is you must actually invest it. Other possible reasons to minimize the down payment would be if you have other loans with higher rates- then obviously use that money to pay down those loans before the car loan. All that being said, some dealers will give you cash back if you pay for the car outright. If you have this option, do the math and see where it lands. Most likely taking the cash back is going to be more attractive so you don't even have to hedge inflation at all. Tip: Make sure to negotiate the price of the car before you tell them how you are going to pay for it. (And during this process you can hint that you'll pay cash for it.)

negative: As far as the spam mail goes, I own a rental (in Connecticut) and live in Massachusetts, I get very little mail related to this property. I view this as a non-compelling reason.  Your other reasons pick up quick in value. The protection from the rest of your assets is helpful, and the one con for most is the inability to get a loan with such a structure, but in your case, a cash purchase is mentioned.  I don't know what the fees are to start an LLC, but overall, I believe the pros outweigh the cons. Yes, your Pro 4 looks good, an ongoing business with a track record will help the next purchase.

negative: Of course, the situation for each student will vary widely so you'll have to dig deep on your own to know what is the best choice for your situation. Now that the disclaimer is out of the way, the best choice would be to use the Unsubsidized Stafford loan to finance graduate school if you need to resort to loans. The major benefits to the Unsubsidized Stafford are the following: You'll be forced to consider other loan types due to the Unsubsidized Stafford loan's established limits on how much you can borrow per year and in aggregate. The borrowing limits are also adjustable down by your institution. The PLUS loan is a fallback loan program designed to be your last resort. The program was created as a way for parents to borrow money for their college attending children when all other forms of financing have been exhausted. As a result you have the following major disadvantages to using the PLUS loan: You do have the bonus of being able to borrow up to 100% of your educational costs without any limits per year or in aggregate. The major benefit of keeping your loans in the Direct Loan program is predictability. Many private student loans are variable interest rate loans which can result in higher payments during the course of the loan. Private loans are also not eligible for government loan forgiveness programs, such as for working in a non-profit for 10 years.

negative: "It can be a good thing for the bank to refinance your loan for you - since you will be keeping the loan at that particular institution.  This gives them more time to enjoy the free money you pay them in interest for the remaining life of the loan. Banks that offer ""No closing costs"" are betting that mortgage payers will move their mortgage to get the lower interest rates - and whomever holds the loan, gets the interest payments."

negative: As I understand it (please correct me if i'm wrong, i've looked at this before and i've been a sole trader briefly but I've never formed a LTD company) there are pros and cons to forming a limited company. Pros Cons

negative: The main problem I have with Uber is they represent themselves differently in some contexts than others. To most customers, Uber is Uber, not the individual who is driving.   Conceptually, individuals not being able to shield themselves behind a corporation is an interesting idea, with both pros and cons.

negative: A loan with modest interest is better than paying by cash if there are better alternatives for investment. For example, suppose you are buying a house. Consider two extremes: a) you pay the house entirely by cash, b) the entire buy is financed by the bank.  Historically, real (subtracting inflation) house prices (at least in the U.S.) have not risen at all in the long run, and investing all of your own capital in this way may not be optimal. Notice that we are looking at a situation where one is buying a house and living in it in any case. Rent savings are equal in cases a) and b). If instead you were buying a house not for yourself, but as a separate investment for renting out, then you would receive rent. In the case a), the real return on your capital will be zero, whereas in case b), you can invest the cash in e.g. the stock market and get, on average, 7% (the stock market has yielded a 7% real return annually including dividends)  annually minus the bank's interest rate. If the interest is lower than 7%, it may be profitable to take the loan. Of course, the final decision depends on your risk preferences.

negative: Presumably, the inverse of the advantages? You are guaranteed the interest rate that is written on your mortgage commitment as long as the first draw happens before the rate hold expiry date (typically 120 days from application date). In most cases, it takes at least 6 months or more to build a home from the ground up. That means that you are taking a chance at what the interest rates and qualifying criteria will be several months down the road. You can normally only lock in 120 days prior to possession with a 'Completion Mortgage'. Lenders are constantly changing their guidelines and rates are predicted to increase over the coming months. That means you are much better to obtain draw mortgage financing to avoid any of these uncertainties. You will know that you have your financing in place right away before construction even starts. This is a huge peace of mind so you can relax and get ready for the big move. So thus, if interest rates are lower 6 months or a year from now, that'd be the disadvantage -- a longer lock-in period.

negative: Go for 15 years loan - Lower interest rate over 2-5 years period. If you can afford to pay 20% down then please do. Do not assume the average ROI will +(8-10%). It all depends on market and has variable factors like city, area and demand.

negative: Normally interest only mortgages are taken incase one planning to sell off the property after a few years and purchase of the property is for investment. In such a case instead of burdening oneself with a huge EMI, one opts for an interest only mortgage, and towards the end of the term, sell off the house at profit and repay back the entire principal.  I am not to sure if interest only mortgages are encouraged for properties you plan to live in. Although I do not know about the ING scheme, normally there is no prepayment option on interest only mortgages, its Bank way of earning a fixed income for the contracted period and thats the reason why the interest rates are lower than a regular mortgage. If you do the math, you may be paying more in total interest than on a regular mortgage.

negative: "My credit Union has a ""credit builder"" loan, they loan $1000 and put it in a savings account you cant withdraw from and take out automatic payments. That would be better, the whole point of credit is on time payments, but my lender told me the effects on credit would be minimum. Probably best for those with no credit history."

negative: Generally speaking, an interest-free loan will be tied to a specific purchase, and the lender will be paid something by the vendor. The only other likely scenario is an introductory offer to try to win longer-term more profitable business, such as an initial interest-free period on a credit card. Banks couldn't make money if all their loans were interest-free, unless they were getting paid by the vendors of whatever was being purchased with the money that was lent.

negative: Overall, I strongly recommend cashing out your savings and becoming debt free today, and then never borrowing again except for a house. Advantages: Disadvantages: My wife and I paid of all of my grad school debt last year, and we’re paying off all of her grad school debt this year.  To pay that aggressively, we’ve had to learn to live on a much tighter budget.  But when we’re done, if we simply invest what we have been paying toward debt into the stock market, our nest egg will compound to over $10 million by the time we retire.  According to Dave Ramsey, when the Forbes 400 were polled, 75% of them cited becoming and staying debt-free as the single best way to build wealth: http://www.daveramsey.com/article/three-steps-to-wealth-building-for-young-adults/lifeandmoney_college/text4/

negative: I would use student loans and avoid credit card debt if debt is your only option.   Here are the advantages I see:   Disadvantages:

negative: GnuCash—Great for the meticulous who want to know every detail of their finances. Pros: Cons:

negative: I'm currently using Halifax. Pros: Cons: I'm might start using TD Waterhouse in future, as they claim to have no admin charge.

negative: "It's a decision that only you can make. What are the chances that you'll want to take another loan (any loan - car, credit card, installment plan for new fridge, whatever else)? What are the chances that with the bad credit you'll find it hard to rent a place (and in Cali it's hard to rent a place right now, believe me, I bought a place just to save on the rent)? What are the chances that the prices will bounce and your ""on-paper"" loss will be recovered by the time you actually need/want to sell the house? You have to check all these and make a wise decision considering all the pros and cons in your personal case."

negative: "Canada would most likely not convert any time in the near future. The challenge for Canada converting to the US Dollar or the fictional ""Amero"" mentioned by JohnFX is that : Some of the benefits would be: The challenge right now for any government would be to sell the pros over the cons and from that viewpoint the cons would appear to have more negative impact to voters.  Considering that Canada currently has a minority government with no expected change to that status for some time the risk would be very high. For more details see Pros and Cons of Canadian Monetary Union and to see the Mexican impact see North American Currency Union It is interesting to note that currency union was first proposed in 1999 when the Canadian Dollar fluctuated between $0.64 to $0.69 US.  The Canadian Dollar is closer to par with the US Dollar currently (in fact it rose to $1.10 US in Nov. 2007).  Look-up historical rates at the Bank of Canada"

negative: The main benefit of paying off the loan early is that it's not on your mind, you don't have to worry about missing a payment and incurring the full interest due at that point. Your loan may not be set up that way, but most 0% interest loans are set up so that there is interest that's accruing, but you don't pay it so long as all your payments are on time, oftentimes they're structured so that one late payment causes all of that deferred interest to be due.  If you put the money in the bank you'd make a small amount of interest and also not have to worry about funds availability for your car payment. If you use the money for some other purpose, you're at greater risk of something going wrong in the next 21 months that causes you to miss a payment and being hit with a lot of interest (if applicable to your loan).  If you already have an emergency fund (at least 3-6 months of expenses) then I would pay the loan off now so you don't have to think about it.  If you don't have an emergency fund, then I'd bank the money and keep making payments, and pay it off entirely when you have funds in excess of your emergency fund to do so.

negative: As with most strategies there are pros and cons associated with this approach: Advantages of using LEAPS: Disadvantages of using LEAPS: Read more about it in great detail on my blog: http://www.thebluecollarinvestor.com/leaps-and-covered-call-writing-2/

negative: Mint.com—Easy solution to provide insight into finances. Pros: Cons:

negative: "The question asked in your last paragraph (what's the downside) is answered simply; if you take out a loan and close the cards, that's a ding on your score because your leverage ratio on this portion of your credit jumps to 100% or more, and because you'll be reducing the average age of your lines of credit (one line of credit a few days old versus five lines of credit several years old each). If you take out the loan and don't close the accounts, it's one more line of credit, increasing your total credit, lowering your leverage, but making institutions more reluctant to give you any more credit until they see what you'll do with what you have. In either case, assuming you can get the loan at less than the average rate of the cards (that's actually not a guarantee; a lot of lenders will want APRs in the 20s or 30s even for a title loan or other collateralized loan), then your cost of capital will also go down. That gives you more of a gap of discretionary income that you can better use to ""snowball"" all this debt as you are planning. Another thing to keep in mind is that the minimum payment changes as the balance does. The minimum payment covers monthly interest at least, and therefore varies based on your interest rate (usually variable) and your balance (which will hopefully be decreasing). A constant payment over the current minimum, much like a more traditional amortization, would be preferable."