query: Why deep in the money options have very low liquidity

positive: There is less liquidity because they are less volatile. Option traders aren't exactly risk averse (read: are degenerate gamblers) and the other market participants that use options don't have much use for deep in the money options. Also, just trade more liquid assets and equities if you want liquid options. At-the-money options, and at-the-money options strategies have hundreds and thousand percent payoffs on relatively mundane price changes in the underlying asset.

positive: One reason might be the 100% margin requirement on long options.  Suppose I want to go long AAPL.   I could get a deep ITM call or buy shares. $12,700 for 100 shares, with it's 25% margin requirement is like around $3200 locked up cash.  Combine with a deep OTM Jan 2017 $70 strike put for $188, would give a $3400 margin requirement to enter the trade. or I could be in the JAN 2017 $70 strike for nearer $5800, but with a 100% margin requirement due to being a long call. So (3400/5800) = 59% increase in margin requirement for Deep ITM calls. Plus long term the shares will pay dividends, while a LEAP CALL does not.

negative: "If you're looking to leverage your capital more efficiently, at the money options offer the best balance. Options deep in the money will have little time premium remaining on them, but don't allow for greater leverage. On the other hand deep out of the money options may be thinly traded, or might not offer the ""mirroring"" you'd like of the underlying. By purchasing ATM you will likely be buying some time premium, but still be leveraging your capital, potentially several times over."

negative: The liquidity is quite bad. I have seen open Intrest drop from thousands to zero.  Theta and the lack of liquidity are strong reasons not to buy options. Instead, consider selling them.  They say that most Option purchases expire worthless. Why is this so? Because hedge funds buy those out-of-the-money puts in case their position goes against them (like insurance).  Make money selling insurance. No one makes money buying insurance.

negative: you asked for strategies which use deep in the money options:  dividend mispricing can use deep in the money options, basically its an arbitrage play on ex-dividend dates. and any kind of spread can use deep in the money options, depending on how wide you want your spread to be

negative: 1.45 and 1.40 are the last trade prices.  The last trade (1.45) for the 27 strike call must have occurred earlier than the last trade (1.40) for the 26 strike call.  These options have low liquidity and don't trade very often.  You have to look at the bid and ask prices to see what people are currently bidding and asking for those options.  As you can see, the premium based on the bids and asks does decrease the further you go out of the money.

negative: Options can have a negligible time premium. For American1 calls the time premium is never negative. If it had a negative premium it would be profitable to exercise it immediately. A deep in the money call has a delta of exactly one. That is, it's price movements completely mirror the price movements of the underlying stock. That means an option seller can buy stock and completely hedge his short option position. The seller of the option may be in an position to buy with very little margin and take your money and invest it. For example, consider a stock trading at $7.50, with its January 2014   $4 call option trading at $3.50. For one option, representing 100 shares, a trader could take your 350 dollars and invest it, and only use a small portion of the money to buy the stock on margin. Market-makers can typically borrow money at very low interest rates. If you have high borrowing costs, or are unable to buy on margin, then buying deep in the money calls can be a good strategy. Long story short, option sellers are making money off selling these deep in the money calls even with almost zero time premium. So, in general, there's no way to make money by buying them. 1. An American call is a call that can be exercised at any time up to and including its expiration date.

negative: For a deep in the money, it almost makes no difference because the intrinsic value, the price of the option, is seldom far above the liquidation value, the price of the underlying less the strike price. For an at the money, ceteris paribus, an early exercise would immediately cut the value of the option to 0; however, life is not so simple as JB King has shown. Purely theoretically, for an at or near the money option, an early exercise will be an instantaneous cost because the value after exercise is less than the previously trading or implied option price.

negative: You will tend to find as options get closer to expiry (within 2 months of expiry) they tend to be traded more. Also the closer they are to being in the money they more they are traded. So there tends to be more demand for these options than long dated ones that are far out of the money. When there is this higher demand there is less need for a market maker to step in to assure liquidity, thus there should be no effect on the underlying stock price due to the high demand for options. I would say that market makers would mainly get involved in providing liquidity for options way out of the money and with long periods until expiry (6+ months), where there is little demand to start with and open interest is usually quite low.

negative: "Yes this is possible in the most liquid securities, but currently it would take several days to get filled in one contract at that amount There are also position size limits (set by the OCC and other Self Regulatory Organizations) that attempt to prevent people from cornering a market through the options market. (getting loads of contacts without effecting the price of the underlying asset, exercising those contracts and suddenly owning a huge stake of the asset and nobody saw it coming - although this is still VERY VERY possible) So for your example of an option of $1.00 per contract, then the position size limits would have prevented 100 million of those being opened (by one person/account that is). Realistically, you would spread out your orders amongst several options strike prices and expiration dates. Stock Indexes are some very liquid examples, so for the Standard & Poors you can open options contracts on the SPY ETF, as well as the S&P 500 futures, as well as many other S&P 500 products that only trade options and do not have the ability to be traded as the underlying shares. And there is also the saying ""liquidity begets liquidity"", meaning that because you are making the market more liquid, other large market participants will also see the liquidity and want to participate, where they previously thought it was too illiquid and impossible to close a large position quickly"

negative: You can do some very crafty hedging with the variety of options.  For instance, deep out of the money options are affected more by changes of market volatility, knowing this you can get long or short vega very easily, as opposed to necessarily betting on changes in the underlying asset.

negative: The liquidity of options is really not a problem, as the option price is determined by the underlying price, and even if there was very little liquidity in the option itself, market makers are required to make a market at the price determined by the underlying. As long as the underlying has enough liquidity your slippage in trading the options should not be too much of a problem. You can read this ETO Market Making Scheme document for more details.

negative: The fact that the option is deep in the money will be reflected in the market price of the option so you can just sell it at a profit. If there's a (n almost) guaranteed profit to be had, however, you can always find someone who will lend you the money to cover the exercise... they'll charge you interest, however!

negative: Option liquidity and underlying liquidity tend to go hand in hand. According to regulation, what kinds of issues can have options even trading are restricted by volume and cost due to registration with the authorities. Studies have shown that the introduction of option trading causes a spike in underlying trading. Market makers and the like can provide more option liquidity if there is more underlying and option liquidity, a reflexive relationship. The cost to provide liquidity is directly related to the cost for liquidity providers to hedge, as evidenced by the bid ask spread. Liquidity providers in option markets prefer to hedge mostly with other options, hedging residual greeks with other assets such as the underlying, volatility, time, interest rates, etc because trading costs are lower since the two offsetting options hedge most of each other out, requiring less trading in the other assets.

negative: The liquidity primarily depends on the specific equity type / position you are looking at. You want to look for stocks or ETFs that have significant volume themselves before trying to jump into an option contract. The most important things you should look at are Volume and Open Interest for the specific contracts, strikes, and expiration. Near the money / in the money contracts from near term expiration tend to have the highest liquidity and the smallest (relative) spreads.

negative: Yes, and there's a good reason they might. (I'm gonna use equity options for the example; FX options are my thing, but they typically trade European style). The catch is dividends.  Imagine you're long a deep-ITM call on a stock that's about to pay a dividend. If that dividend is larger than the time value remaining on the option, you'd prefer to exercise early - giving you the stock and the dividend payment - rather than hanging on to the time value of the option.  You can get a similar situation in FX options when you're long a deep-ITM American call on a positive-carry currency (say AUDJPY); you might find yourself so deep in the money, with so little time value left on the option, that you'd rather exercise the option and give up the remaining time value in return for the additional carry from getting the spot position early.

negative: Depending on the day and even time, you'd get your $2 profit less the $5 commission. Jack's warning is correct, but more so for thinly traded options, either due to the options having little open interest or the stock not quite so popular. In your case you have a just-in-the-money strike for a highly traded stock near expiration. That makes for about the best liquidity one can ask for.  One warning is in order - Sometime friday afternoon, there will be a negative time premium. i.e. the bid might seem lower than in the money value. At exactly $110, why would I buy the option? Only if I can buy it, exercise, and sell the stock, all for a profit, even if just pennies.

negative: ode2k noted the liquidity can very wildly especially 9 months out and there will be little volume even in the largest stocks.  Victor noted standard measures of liquidity don't always apply cleanly to options as they are priced using a hybrid of model and market inputs.  So your question is generally very hard to answer on SE, but you can get an answer yourself without too much trouble. The best way to get a feel for slippage in your case is to just get quotes.  Most systems should let you get a quote for both buying and selling options at the same time.  This will give you a feeling for how much you are paying in spread.  Do the same for near dated options to get a feeling for spread size when you end up selling. You should factor in some widening of spreads at bad times, but this should get you a feeling for the scale of the slippage problem.

negative: I understand that ITM have little time value, so they will have small time decay(theta), but why OTM has a lesser theta than ATM? The Time value represents uncertainty.  That uncertainty decreases the farther away from ATM you get (in either direction).  At-the-money, there is roughly a 50% chance that the option expires worthless. As you get deeper in-the-money, the change that is expires worthless decreases, so there is less uncertainty (there is more certainty that the option will pay off).  As you go deeper OTM, the probability that the option expires worthless increases, so there is also less uncertainty. At the TTM decreases, the uncertainty (theta) decreases as well, since there is less time for the option to cross the strike from either direction.  Similarly, as volatility decreases, theta decreases, since low-volatility stocks have a less change of crossing the strike.

negative: There are a few situations in which it may be advantageous to exercise early. Wikipedia actually has a good explanation: Option Style, Difference in value To account for the American's higher value there must be some   situations in which it is optimal to exercise the American option   before the expiration date. This can arise in several ways, such as: An in the money (ITM) call option on a stock is often exercised just   before the stock pays a dividend that would lower its value by more   than the option's remaining time value.  A put option will usually be   exercised early if the underlying asset files for bankruptcy.[3]  A deep ITM currency option (FX option) where the strike currency has a   lower interest rate than the currency to be received will often be   exercised early because the time value sacrificed is less valuable   than the expected depreciation of the received currency against the   strike.  An American bond option on the dirty price of a bond (such as   some convertible bonds) may be exercised immediately if ITM and a   coupon is due.  A put option on gold will be exercised early when deep   ITM, because gold tends to hold its value whereas the currency used as   the strike is often expected to lose value through inflation if the   holder waits until final maturity to exercise the option (they will   almost certainly exercise a contract deep ITM, minimizing its time   value).[citation needed]

negative: long deep ITM calls is equivalent to owning the equity.  You're going to pay alot and hence will start off in a hole already, and you aren't getting too much leverage there at all depending how deep ITM you go.  Covariance scales, but assuming B-S in order to get nice scaling and ignoring the risks you are actually taking with options (unlimited down-size ie you can lose your entire investment in the option, people forget this) will screw you unless you really know what you are dong.  Leverage means increasing your risk.  long dep ITM is not obtaining much leverage and therefore not risking too much.  but you aren't going ot get 3-4x leverage this way.  you get leverage by saying: oh, i have 100, i could invest in 1 share of stock OR I could buy 100 worth of some option.  If I pick a deep ITM (think strike = 0) it's identical to owing the stock.  If i pick ATM, i have a ~50/50 chance of wining, so i should be able to double my upside.  If I go OTM, i can increase my exposure to the upside while increasing hte chance that my options expire worthless.  So really, i have no idea why deep ITM do what you are trying to do.  and If you don't either, you probably shouldn't do it.

negative: First, in the money options are scarcely created because most options trade at the money with the rest evenly distributed between in and out, so they are at best half the market when created. They are also closed before expiration. The reason is still unknown, but one theory is: Barely in the money options carry enormous exercise risk because the chance that could be turned into a potentially solvency threatening unhedged liability is great; therefore, option sellers prefer to close barely in the money options so not to take on unhedged liability risk. Statistically, option sellers are risk avoiders.

negative: An option gives you the option rather than the obligation to buy (or sell) the underlying so you don't have to exercise you can just let the option expire (so long it doesn't have an automatic expiry). After expiration the option is worthless if it is out of the money but other than that has no hangover. Option prices normally drop as the time value of the option decays. An option has two values associated with it; time value and exercise value. Far out of the money (when the price of the underlying is far from the strike price on the losing side) options only have time value whereas deep in the money options (as yours seems to be) has some time value as well as the intrinsic value of the right to buy (sell) at a low (high) price and then sell (buy) the underlying.  The time value of the option comes from the possibility that the price of the underlying will move (further) in your favour and make you more money at expiry. As expiry closes it is less likely that there will be a favourable mood so this value declines which can cause prices to move sharply after a period of little to no revaluing. Up to now what I have said applies to both OTC and traded options but exchange traded options have another level of complexity in their trading; because there are fewer traders in the options market the size of trade at which you can move the market is much lower. On the equities markets you may need to trade millions of shares to have be substantial enough to significantly move a price, on the options markets it could be thousands or even hundreds. If these are European style options (which sounds likely) and a single trading entity was holding a large number of the exchange traded options and now thinks that the price will move significantly against them before expiry their sell trade will move the market lower in spite of the options being in the money. Their trade is based on their supposition that by the time they can exercise the option the price will be below the strike and they will lose money. They have cashed out at a price that suited them and limited what they will lose if they are right about the underlying. If I am not correct in my excise style assumption (European) I may need more details on the trade as it seems like you should just exercise now and take the profit if it is that far into the money.

negative: "As already noted, options contain inherent leverage (a multiplier on the profit or loss). The amount of ""leverage"" is dictated primarily by both the options strike relative to the current share price and the time remaining to expiration. Options are a far more difficult investment than stocks because they require that you are right on both the direction and the timing of the future price movement. With a stock, you could choose to buy and hold forever (Buffett style), and even if you are wrong for 5 years, your unrealized losses can suddenly become realized profits if the shares finally start to rise 6 years later. But with options, the profits and losses become very final very quickly. As a professional options trader, the single best piece of advice I can give to investors dabbling in options for the first time is to only purchase significantly ITM (in-the-money) options, for both calls and puts. Do a web search on ""in-the-money options"" to see what calls or puts qualify.  With ITM options, the leverage is still noticeably better than buying/selling the shares outright, but you have a much less chance of losing all your premium. Also, by being fairly deep in-the-money, you reduce the constant bleed in value as you wait for the expected move to happen (the market moves sideways more than people usually expect). Fairly- to deeply-ITM options are the ones that options market-makers like least to trade in, because they offer neither large nor ""easy"" premiums. And options market-makers make their living by selling options to retail investors and other people that want them like you, so connect the dots. By trading only ITM options until you become quite experienced, you are minimizing your chances of being the average sucker (all else equal). Some amateur options investors believe that similar benefits could be obtained by purchasing long-expiration options (like LEAPS for 1+ years) that are not ITM (like ATM or OTM options). The problem here is that your significant time value is bleeding away slowly every day you wait.  With an ITM option, your intrinsic value is not bleeding out at all. Only the relatively smaller time value of the option is at risk. Thus my recommendation to initially deal only in fairly- to deeply-ITM options with expirations of 1-4 months out, depending on how daring you wish to be with your move timing."

negative: This sometimes happens to me. It depends on how liquid the option is. Normally what I see happening is that the order book mutates itself around my order. I interpret this to mean that the order book is primarily market makers. They see a retail investor (me) come in and, since they don't have any interest in this illiquid option, they back off. Some other retail investor (or whatever) steps in with a market order, and we get matched up. I get a fill because I become the market maker for a brief while. On highly liquid options, buy limits at the bid tend to get swallowed because the market makers are working the spread. With very small orders (a contract or two) on very liquid options, I've had luck getting quick fills in the middle of the spread, which I attribute to MM's rebalancing their holdings on the cheap, although sometimes I like to think there's some other anal-retentive like me out there that hates to see such a lopsided book. :) I haven't noticed any particular tendency for this to happen more with puts or calls, or with buy vs sell transactions. For a while I had a suspicion that this was happening with strikes where IV didn't match IV of other strikes, but I never cared enough to chase it down as it was a minor part of my overall P/L.

negative: The penny pilot program has a dramatic effect on increasing options liquidity. Bids can be posted at .01 penny increments instead of .05 increments. A lot of money is lost dealing with .05 increments. Issues are added to the penny pilot program based on existing liquidity in both the stock and the options market, but the utility of the penny pilot program outweighs the discretionary liquidity judgement that the CBOE makes to list issues in that program. The reason the CBOE doesn't list all stocks in the penny pilot program is because they believe that their data vendors cannot handle all of the market data. But they have been saying this since 2006 and storage and bandwidth technology has greatly improved since then.

negative: "Institutions and market makers tend to try and stay delta neutral, meaning that for every options contract they buy or write, they buy or sell the equivalent underlying asset. This, as a theory, is called max pain, which is more of an observation of this behavior by retail investors. This as a reality is called delta hedging done by market makers and institutional investors. The phenomenom is that many times a stock gets pinned to a very even number at a particular price on options expiration days (like 500.01 or 499.99 by closing bell). At options expiration dates, many options contracts are being closed (instutitions and market makers are typically on the other side of those trades, to keep liquidity), so for every one standard 100 share contract the market maker wrote, they bought 100 shares of the underlying asset, to remain delta neutral. When the contract closes (or get rid of the option) they sell that 100 shares of the underlying asset. At mass volume of options traded, this would cause noticeable downward pressure, similarly for other trades it would cause upward pressure as institutions close their short positions against options they had bought. The result is a pinned stock right above or below an expiration that previously had a lot of open interest. This tends to happen in more liquid stocks, than less liquid ones, to answer that question. As they have more options series and more strike prices. No, this would not be illegal, in the US attempting to ""mark the close"" is supposedly prohibited but this wouldn't count as it, the effect of derivatives on stock prices is far beyond the SEC's current enforcement regime :) although an active area of research"

negative: I think George's answer explains fairly well why the brokerages don't allow this - it's not an exchange rule, it's just that the brokerage has to have the shares to lend, and normally those shares come from people's margin, which is impossible on a non-marginable stock. To address the question of what the alternatives are, on popular stocks like SIRI, a deep In-The-Money put is a fairly accurate emulation of an actual short interest.  If you look at the options on SIRI you will see that a $3 (or higher) put has a delta of -$1, which is the same delta as an actual short share. You also don't have to worry about problems like margin calls when buying options.  The only thing you have to worry about is the expiration date, which isn't generally a major issue if you're buying in-the-money options... unless you're very wrong about the direction of the stock, in which case you could lose everything, but that's always a risk with penny stocks no matter how you trade them. At least with a put option, the maximum amount you can lose is whatever you spent on the contract.  With a short sale, a bull rush on the stock could potentially wipe out your entire margin.  That's why, when betting on downward motion in a microcap or penny stock, I actually prefer to use options.  Just be aware that option contracts can generally only move in increments of $0.05, and that your brokerage will probably impose a bid-ask spread of up to $0.10, so the share price has to move down at least 10 cents (or 10% on a roughly $1 stock like SIRI) for you to just break even; definitely don't attempt to use this as a day-trading tool and go for longer expirations if you can.

negative: That question makes assumptions that don't hold in general As to why to deal with futures:  Well, there's just one contract per maturity date, not a whole chain of contracts (options come at different strike prices).  That in turn means that all the liquidity is in that one contract and not scattered across the chain. Then, moreover, it depends what underlying contracts you're talking about.  Often, especially when dealing with commodities, there is no option chain on the spot product but only options on the futures contracts. In summary, the question is somewhat bogus.  Options and futures evolved historically and independently, and were not meant to be substitutable by one another.  So their rights and obligations are just a historical by-product and not their defining feature.  I suggest you refine it to a specific asset class.

negative: "As you've observed, when you're dealing with that amount of money, you're going to have to give up FDIC guarantees. That means that keeping the money in a bank account carries some risk with it: if that particular bank goes bust, you could lose most of your money. There are a few options to stretch the FDIC limit such as CDARS, but likely can't handle your hypothetical $800 million. So, what's a lucky winner to do? There are a few options, including treasury securities, money market funds, and more general capital investments such as stocks and bonds. Which one(s) are best depend on what your goals are, and what kind of risks you find acceptable. Money in the bank has two defining characteristics: its value is very stable, and it is liquid (meaning you can spend it very easily, whenever you want, without incurring costs). Treasury securities and money market funds each focus on one of these characteristics. A treasury security is a piece of paper (or really, an electronic record) saying that the US Federal Government owes you money and when they will pay it back. They are very secure in that the government has never missed a payment, and will move heaven and earth to make sure they won't miss one in the future (even taking into account recent political history). You can buy and sell them on an open market, either through a broker or directly on the Treasury's website. The major downside of these compared to a bank account is that they're not as liquid as cash: you own specific amounts of specific kinds of securities, not just some number of dollars in an account. The government will pay you guaranteed cash on specified dates; if you need cash on different dates, you will need to sell the securities in the open market and the price will be subject to market fluctuations. The other ""cash-like"" option is money market funds. These are a type of mutual fund offered by financial companies. These funds take your money and spread it out over a wide variety of very low risk, very short term investments, with the goal of ensuring that the full value will never go down and is available at any time. They are very liquid: you can typically transfer cash quickly and easily to a normal bank account, write checks directly, and sometimes even use ""online bill pay""-like features. They have a very good track record for stability, too, but no one is guaranteeing them against something going terribly wrong. They are lower risk than a (non-FDIC-insured) bank account, since the investments are spread out across many institutions. Beyond those two somewhat ""cash-like"" options, there are of course other, more general investments such as stocks, bonds, and real estate. These other options trade away some degree of stability, liquidity, or both, in exchange for better expected returns."

negative: "Your broker likely didn't close your position out because it is a covered position. Why interfere with a trade that has no risk to it, from their perspective? There's no risk for the broker since your account holds the shares available for delivery (definition of covered), for if and when the options you wrote (sold) are exercised. And buyers of those options will eventually exercise the options (by expiration) if they remain in-the-money. There's only a chance that an option buyer exercises prematurely, and usually they don't because there's often time value left in the option. That the option buyer has an (ahem) ""option"" to exercise is a very key point.  You wrote: ""I fully expected my position to be automatically liquidated by whoever bought my call"". That's a false assumption about the way options actually work.  I suggest some study of the option exercise FAQs here: Perhaps if your position were uncovered – i.e. you wrote the call without owning the stock (don't try this at home, kids!) – and you also had insufficient margin to cover such a short position, then the broker might have justifiably liquidated your position. Whereas, in a covered call situation, there's really no reason for them to want to interfere – and I would consider that interference, as opposed to helpful.  The situation you've described is neither risky for them, nor out of the ordinary.  It is (and should be) completely up to you to decide how to close out the position. Anyway, your choices generally are:"

negative: If you're talking about just Theta, the amount of decay due to the passage of time (all else being equal), then theoretically, the time value is a continuous function, so it would decay throughout the day (although by the day of expiry the time value is very, very small).  Which makes sense, since even with 15 minutes to go, there's still a 50/50 shot of an ATM option expiring in-the-money, so there should be some time value associated with that one-sided probability. The further away from ATM the option is, the smaller the time value will be, and will be virtually zero for options that are deep in- or out-of-the-money. If you're talking about total time value, then yes it will definitely change during the day, since the underlying components (volatility, underlying price, etc.) change more or less continuously.

negative: Differences in liquidity explain why American-style options are generally worth more than their European-style counterparts. As far as I can tell, no one mentioned liquidity in their answer to this question, they just introduced needlessly complex math and logic while ignoring basic economic principles. That's not to say the previous answers are all wrong - they just deal with periphery factors instead of the central cause.  Liquidity is a key determinant of pricing/valuation in financial markets. Liquidity simply describes the ease with which an asset can be bought and sold (converted to cash). Without going into the reasons why, treasury bills are one of the most liquid securities - they can be bought or sold almost instantly at any time for an exact price. The near-perfect liquidity of treasuries is one of the major reasons why the price (yield) of a t-bill will always be higher (lower yield) than that of an otherwise identical corporate or municipal bond. Stated in general terms, a relatively liquid asset is always worth more than an relatively illiquid asset, all else being equal.  The value of liquidity is easy to understand - we experience it everyday in real life. If you're buying a house or car, the ability to resell it if needed is an important component of the decision. It's the same for investors - most people would prefer an asset that they can quickly and easily liquidate if the need for cash arises.  It's no different with options. American-style options allow the holder to exercise (liquidate) at any time, whereas the buyer of a European option has his cash tied up until a specific date. Obviously, it rarely makes sense to exercise an option early in terms of net returns, but sometimes an investor has a desperate need for cash and this need outweighs the reduction in net profits from early exercise.  It could be argued that this liquidity advantage is eliminated by the fact that you can trade (sell) either type of option without restriction before expiration, thus closing the long position. This is a valid point, but it ignores the fact that there's always a buyer on the other side of an option trade, meaning the long position, and the right/restriction of early exercise, is never eliminated, it simply changes hands. It follows that the American-style liquidity advantage increases an options market value regardless of one's position (call/put or short/long). Without putting an exact number on it, the general interest rate (time value of money) could be used to approximate the additional cost of an American-style option over a similar European-style contract.

negative: In general, liquidity is a good thing, because it means it is easy for you to buy or sell a stock.   Since high liquidity stocks have a lot of trading, the bid-ask spreads tend to be pretty low.  That means you can go into the market and trade easily and cheaply at just about any time.  For low liquidity stocks, the bid-ask spreads can get pretty high, so it can make it hard or expensive to get into or out of your trades. On the flip side, everyone pays attention to high liquidity stocks, so it's harder to get an edge in your trading.  For a company like Microsoft there are 30-50 full time analysts that cover them, thousands of professional traders and millions of investors in general all reading the same new articles and looking through the same financials as you.  But in low liquidity stocks, there probably aren't any analysts, a few professional traders and maybe a few thousand total investors, so it can be easier to find a good buy (or sell). In general, high liquidity doesn't mean that everyone is selling or everyone is buy, it just means everyone is trading.


query: Advantage of credit union or local community bank over larger nationwide banks such as BOA, Chase, etc.?

positive: Banks, the big ones, have shareholders and the board to answer to.  Credit Unions have members and the board to answer to.  You become a member by joining a CU. Banks' prime objective is profit maximization, a credit union's prime objective is members' welfare.   Personal experience: I didn't mind that the banks charge fees, what was frustrating was keeping up with the policy changes.  Have X amount to avoid Y fees.  Once you fulfill that, do something else to avoid some other fees.  You miss one notice and you'll pay dearly!  This constant jumping of hoops was enough to switch. Not saying CUs don't change rules, but in my opinion, not as frequently as big banks.  On fee, for instance, my overdraft with my CU is $5.  With BofA it was something like $35 before regulations put a cap on such ridiculous fees.

positive: Don't switch just because you hear people panicking on the talk shows. Banks are competitive business and won't start charging for using debit cards too fast. If and when they decide to do such a thing after all - then start shopping and see who doesn't catch up with the fees and still provides the services you want for the price you're willing to pay.

positive: Fees mostly.  BOA, for example, just announced $5/month for for all debit cards.  Chase has foreign transaction fees, mostly hidden. BOA once famously raised interest rates on credit card holders to 28%, legally.  Also, some people do not like patronizing a bank with CEOs that bankrupt the company and then get multi-million dollar golden parachutes. Finally some people have a problem with banks or institutions that suspend accounts based on political or unproven legal proceedings (ala Wikileaks and BOA).  Credit unions are less like to be involved in this sort of activity since they are not privately traded, and as such they are not ruled by shareholders who demand bottom line results at all costs.

negative: "The reason ""on-line"" savings accounts (Ally, CapitalOne, American Express, and many others) provide much higher rates than brick-and-mortar banks is because they're not brick-and-mortar. They do not need to pay for a huge amount of real estate, utilities, public-facing employees, inter-office mail, security, etc etc. All that - allows them to pay more for your money. The back office of these banks is the same as that of Chase, BOA or Wells Fargo. Its just that they don't have the enormous expense of having a branch in every neighborhood, while still reaching all the same population of depositors. So no, its not a scam, these are reputable banks. Some have physical offices (for example, I know that CapitalOne has some branches in New York), some don't (IIRC neither Ally nor American Express Federal Saving Bank have physical branches). But they're banks nonetheless, insured as required by FDIC (or NCUA, in case of credit unions), and provide all the same services for less (or all the same savings for more, if you will). IMHO, giving 0.01% APR is a scam. Not the other way around. The old-style banks want your money for free, and you're worried why would someone else treat you better... Well, that's why the US has one of the most retarded financial systems in the Western world..."

negative: amen to that , too big too fail should have never even been pronounced.  But again, some people are at fault, if people went to credit unions instead of banks in drove, banks would be forced to change their way at some point. Even get smaller instead of bigger to better serve the community its in...not so long ago you , you could have a loan at a local bank for your small business, nowadays with no collateral, you get squat. there is no risk to the lenders, and they manage to still fuck up ~!

negative: Why don't people switch banks?  It's honestly not that hard.  Once I switched to a local credit union, I'll never use a big bank again.  The service is amazing and there are pretty much no fees for anything.

negative: "How would having a 20% down payment change the conversation for you?  And who are you looking to get a mortgage from?  If you go to a local community bank or credit union, you might have a better chance explaining your situation and having them take that into account rather than going to one of the mega-banks (Bank of America, Chase, Wells Fargo, etc) who may only look at your FICO score when making a lending decision. The thing to keep in mind is ""how much of a risk are you to the lending institution?""  If you have a strong down payment 15% to 20%, you will be a much better candidate.  Bear in mind, anything less than 20% down will require PMI (Private Mortgage Insurance, which I think runs a certain dollar amount per $1k you have borrowed).  If you have a strong downpayment, and the only debts you have are your student loans (which will be paid off in five years anyway), then you are far less risky than someone in a similar situation with more debt."

negative: I have been using Bill Pay from BoA, Chase, and a local Credit Union, all for at least five years (maybe even 10), and never had any issues with lost checks. Sometimes, an address given to me was incorrect, and what happens is either nothing (meaning, after 90 days, the check is considered outdated and the money gets reimbursed in the account) the bank notifies me after about two weeks that the check was returned as 'recipient not found at that address' or 'invalid address', and the money gets restored right then. That is no guarantee, of course, that nothing will ever happen. But banks are not supposed to accept checks where the recipient name does not match. Also, you should consider using 'Quick Pay' or 'Pay an individual' instead, whatever your bank calls it. That will transfer the money same or next day to your other account, without ever mailing a check. You do not need to enter account information across banks, it works by both banks contacting you through your logins/emails.

negative: I agree with JoeTaxpayer that you will be better off in the end if you can just not use your card you are better off in the long run.  That said if you are determined to get a card you can control go to a credit union or local bank.  Most of them will give you the credit limit you want.  This may provide you with a card that you can make use of but know that you can not go wild.  The down side is most of these will not be reward cards but my local credit union gave me a 7% card where my Chase card is at 18%(was 5% before the changes to credit card regulations).

negative: >I shudder to think of the security at small bank websites, frankly.  I had a local credit union for years as my main account and before that I had TD Bank. I 100% trust my local credit union over TD Bank any day to protect me from foreign intrusion or fraud.

negative: First, if you live in/around a reasonably populated urban area, and you're in the United States, I can't see why you would choose to bank with Chase, B of A, or another large commercial bank. I think you would be much better served by banking at a reasonably large credit union. There are many differences between banks and credit unions, but in a nutshell, credit unions are owned by the members, and operate primarily to provide benefits to their members, whereas a bank is owned by the shareholders, and operates primarily to make profits for the shareholders (not to benefit the customers). The banking industry absolutely hates the credit unions, so if you've ever been nickeled-and-dimed with this fee and that charge by your bank, I have to ask why you're still banking with a company that irritates you and/or actively tries to screw you out of your money? I live in California, and I've banked at credit unions almost exclusively since I started working nearly 30 years ago. Every time I've strayed and started banking at a for-profit bank, I've regretted it. For example, a few years ago I opened a checking account at a now-defunct bank (WaMu) just for online use: eBay and so forth. It was a free checking account. When Chase bought WaMu, the account became a Chase account, and it seemed that every other statement brought new fees, new restrictions, and so forth. I finally closed it when they imposed some stupid fee for not carrying enough of a balance. I found out by logging in to their Web site and seeing a balance of zero dollars; they had imposed the fee a few statements back, and I had missed it, so they kept debiting my account until it was empty. At this point, I do about 90% of my banking at a fairly large credit union. I have a mortgage with a big bank, but that was out of my hands, as the lender/originator sold the mortgage and I had no say in the matter. My credit union has a highly functional Web site, permits me to download my account activity to Quicken, and even has mobile apps which allow me to deposit a check by taking a picture of it, or check my account activity, etc. They (my credit union) are part of a network of other credit unions, so as long as I am using a network ATM, I never pay a fee. In sum, I can't see any reason to go with a bank. Regarding checks, I write a small number of checks per year, but I recently needed to reorder them. My credit union refers members directly to Harland-Clarke, a major-league player in the check printing business. Four boxes of security checks was around $130 plus shipping, which is not small money. However, I was able to order the very same checks via Costco for less than half that amount. Costco refers members to a check printing service, which is a front/subsidiary of Harland-Clarke, and using a promo code, plus the discount given for my Costco membership, I got four boxes of security checks shipped to me for less than $54. My advice would be to look around. If you're a Costco member, use their check printing service. Wal*mart offers a similar service to anyone, as does Sam's Club, and you can search around to find other similar services. Bottom line, if you order your checks via your bank or credit union, chances are you will pay full retail. Shop around, and save a bit. I've not opened a new account at a credit union in some time, but I would not be surprised if a credit union offered a free box of checks when you open a new account with them.

negative: If you are going to live in the house for awhile, you can probably use a regular mortgage. Shop around and look for a mortgage program that works. Look at local banks/credit unions, particularly those with community development programs.  Usually an investment mortgage is higher rate, higher payment and has higher underwriting standards.

negative: Banks that use this amazing ClearXChange service: BOA, Capitol One, Chase, 1st Bank, Frost, US Bank and Wells Fargo I have Wells Fargo. There is a tab for SurePay. I had an option to register my phone number and/or email for this service. I wasn't automatically setup.

negative: "Under the assumption you're not looking for a particular credit union/bank (since that'll make this question off topic), you can apply for a secure credit card. That's where you essentially put up a sum of money as collateral. That would be the safe way for someone with ""little or no credit history"" and wants to build credit. Any big bank (Wells Fargo, Chase, etc.) should be able to do that for you. You can also do that online provided you have the means to transfer money into the account."

negative: Check with a small local bank or credit union, they might offer better terms. That said, my local credit union still charges $6/month for a checking account if you don't have a direct deposit into it.

negative: The bank is expected to issue you a check for the balance of your account, make sure your name and address on file is correct as that is who they will make the check to and send it. Have the credit union also contact Chase, or get a statement from the credit union, about their customer. If the check does bounce back to the credit union and the account was under his name, then you will have to deal with the state and his estate and you will have to find a different solution for the bills.

negative: There are banks and credit unions that don't charge fee for incoming wire transfer. You most likely won't get that from big brick and mortar banks like BofA, Citi but if you are doing it regularly, using another bank that offers it free would save you a lot. Since ACH are free, you can transfer money between those banks to your regular bank (e.g. BofA) for free. There would be delay involved in this process due to additional ACH. You could also use one these banks as your primary bank to avoid that delay. Credit unions are also generally fee friendly and many would offer free incoming wire transfer. However you are limited to what is available to you as all of them would have some membership criteria.

negative: Most US banks allow to initiate wire transfers online. (I do it regularly with BoA and JPMorgan-Chase) Once you have your account details in Germany, you log on to your US account, set it up, and initiate the transfer; that should go through within one day. The exchange ratio is better than anything you would get buying/selling currency (paper cash money), no matter where you do it. Chase takes a fee of 40$ per online transaction; BoA 45$. The receiving bank might or might not take additional fees, they should be lower though (I have experienced between 0€ and 0.35%). Therefore, it is a good idea to bundle your transfers into one, if you can.

negative: "Ally Bank $0 - from their website (emphasis mine): To receive a wire transfer from a non-U.S. bank: Incoming wire transfers from a non-US bank are processed by our   designated receiving bank, JP Morgan Chase Bank, N.A. You'll need to provide the following information to the person or   business sending the wire transfer to you: Receiving Bank: JP Morgan   Chase Bank, N.A. ABA/Routing Number: 021000021 Address: 1 Chase   Manhattan PLZ, New York, NY 10005 SWIFT Code or Bank Identification   Code: CHASUS33 Beneficiary Account Number: 802904391 Beneficiary Name:   List 'Ally Bank' since the wire is being processed by JP Morgan Chase   Bank, N.A. Further Credit: Your Ally Bank Account Number and your name   as it appears on your Ally Bank account. Note: We won't charge you to receive a wire transfer into your Ally   account. https://www.ally.com/help/search.html?term=SWIFT&console=false&context=Help&domain=www.ally.com&section=Help+%26+FAQs Alliant Credit Union $0 - from their website (emphasis mine): Direct international wire transfers  International wire transfers are   handled through our correspondent bank for processing. International   wires can take up to 10 business days to be credited to the receiving   institution. Funds should be wired to: Northern Trust ABA# 071000152 ""Note: US   Banks do not use SWIFT codes. This ABA # is used in place of SWIFT   codes for US Banks."" 50 South La Salle Street, Chicago, IL 60603 For further credit: Alliant Credit Union Account Number 35101804 11545   W. Touhy Avenue, Chicago, IL 60666 For final credit: Member’s name and complete address (No P.O. Box)   Member’s 14-digit account number Destination of funds (checking,   savings or loan number)  Incoming wire transfers: Wire transfers received Monday - Friday,   7:00am - 3:00pm, CT, will be credited to your account the same day.   Wire transfers received after 3:00pm, CT, Monday - Friday and on the   weekend will be credited the next business day. Fees:   We do not charge a fee to receive incoming wire funds. However, the financial institution wiring the funds may charge for this   service. http://www.alliantcreditunion.org/help/receiving-a-wire-transfer-to-your-alliant-account"

negative: How do credit unions work in the US?   Why not just get rid of deposit insurance for commercial banks and keep it for credit unions. Restrict credit unions ability to filter money to the new 'investment bank' sector by keeping them out of repo and money markets (not sure if this is done currently) and bang - Corporates/institutions can still lend short and banks can still lend long in the professional world, while unsophisticated retail customer's checking accounts at least are protected from the inevitable crash.

negative: Some companies have banks and brokerages that are completely separate systems. So you could be actually running ACH transactions between two different banking entities. Bank of America used to have significant latency between BoA accounts, because they ran into delays integrating Fleet, BankSouth and BoA systems.

negative: "What is a good bank to use for storing my pay? Preferrably one that has free student accounts. Can I save money from my paychecks   directly to a Canadian bank Otherwise, can I connect my bank account   to my Canadian account online? Any (almost...) bank in the US has free college checking accounts. If the bank you entered doesn't - exit, and step into the one next door which most likely will. The big names - Wells Fargo, Bank Of America, Chase, Bank of the West, Union Bank, Citi etc - all have it. Also, check your local credit union. Do I need any ID to open a bank account? I have Canadian citizenship and a J-1 visa Bring your passport and a student card/driving license (usually 2 ID's required). What form of money should I take with me? Cash? Should I apply for a   debit card? Can I use my Canadian credit card for purchasing anything   in the states? (Canadian dollar is stronger than US dollar currently,   so this could be to my advantage?) There's some fuss going on about debit cards right now. Some big banks (Bank of America, notably) decided to charge fees for using it. Check it, most of the banks are not charging fees, and as far as I know none of the credit unions are charging. So same thing - if they charge fees for debit card - step out and move on to the next one down the street. Using debit card is pretty convenient, cash is useful for small amount and in places that don't accept cards. If you're asking about how to move money from Canada - check with your local (Canadian) bank about the conversion rates and fees for transfers, check cashing, ATM, card swipes, etc - and see which one is best for you. When I moved large amounts of money across the border, I chose wire transfer because it was the cheapest, but for small amounts many times during the period of your stay it may be more expensive. You can definitely use your Canadian credit/debit card in the States, you'll be charged some fee by your credit card company, and of course the conversion rate. How much tax does I have to pay at the end of my internship? Let's assume one is earning $5,000 per month plus a one time $5,000 housing   stipend, all before taxes. Will I be taxed again by the Canadian   government? $5K for internship? Wow... You need to talk to a tax specialist, there's probably some treaty between the US and Canada on that, and keep in mind that the State of California taxes your income as well. What are some other tips I can use to save money in the California? California is a very big place. If you live in SF - you'll save a lot by using the MUNI, if your internship is in LA - consider buying an old clunker if you want to go somewhere. If you're in SD - just enjoy the weather, you won't get it in Canada. You'll probably want a ""pay as you go"" wireless phone plan. If your Canadian phone is unlocked GSM - you can go to any AT&T or T-Mobile store and get a pre-paid SIM for free. Otherwise, get a prepaid phone at any groceries store. It will definitely be cheaper than paying roaming charges to your Canadian provider. You can look at my blog (I'm writing from California), I accumulated a bunch of saving tips there over the years I'm writing it."

negative: I work in banking for the private bank division for a major bank as a banker. I have been helping clients with these types of transactions for years. I believe that large transactions like this are best left to the big boys. That is where the talented bankers/loan officers/underwriters are, and that is the type of transaction they specialize in. I know for a fact that your credit union will not be able to suit your needs, and a smaller bank will be tough to deal with. I wouldn't worry at all about the credit pulls as much as picking a rock solid bank with lots of experiences doing these kinds of deals. That is my 2 cents, albeit a little bit biased, but it is also coming from experience. History with the bank definitely matters, but what business you can bring to the bank along with the lending (deposits, 401k management, personal investments, business services, etc) matter just as much and can make or break the approval/decline or even the terms being favorable or not favorable to your company.

negative: Politicians are for sale and regulations are useless when they are not enforced.  Community banks and credit unions have to comply or get hammered by the state and federal governments.  The mega banks soldier on under an utterly feckless and corrupt congress.  People should never pay fees or credit card interest, pay off their loans, and get out from under banker's thumbs.  They are giant impoverishing machines.

negative: I ducking KNEW there was shit going on with WF when I got them in 07.  Cancelled my account and went to a local credit union, those beautiful bastards have grown into a formidable local bank it it's fantastic to see them taking on big banking.    Keep it up Legacy Texas!

negative: Go to your local credit union and open an account there! Why do people put up with banks? Big banks are for business not for regular folks, they will nickel and dime you all the time, and that's the honest ones, the scum like WF will just trash you.

negative: Dude- my background is in banking specifically dealing with these scenarios. Take my advice-look for a balance transfer offer-credit card at 0%. Your cost of capital is your good credit, this is your leverage. Why pay 4.74% when you can pay 0%. Find a credit card company with a balance transfer option for 0%. Pay no interest, and own the car outright. Places to start; check the mail, or check your bank, or check local credit unions. Some credit unions are very relaxed for membership, and ask if they have zero percent balance transfers. Good Luck!

negative: I would have been tempted to dismiss your claim, but the data I found shows that you're correct. On the plus side, the growth rate in credit union market share is higher in New York than it is in California. While there is no question that bankers hate credit unions, I can't tell you why credit unions have a smaller market share in NY. Maybe the regulatory environment is part of it. Banks have a big lobby, and they pay a lot of taxes in NYC.

negative: I would suggest your local credit union or local bank for security and liquidity.  Liquidity is probably the most important issue for a emergency fund.

negative: In 2-3 years, if they are able to keep doors open without letting Countrywide or Merrill go, they will be a behemoth once again. Although I favor Citi over their peers due to thei consolidation efforts and global focus, you must be severely misinformed if you think BoA is worthless.

negative: "you could get a discover card and then just ""freeze"" it.  you might need to unfreeze it for a few minutes when you sign up for a new service, but it is unlikely an ongoing subscription would process a charge in that window. i believe merchants are charged a small fee for a transaction even if it is declined, so they won't try constantly forever. discover account freeze faq capitalone offers this freeze feature on their ""360"" debit cards. you can even freeze and unfreeze your card from their mobile app. this feature is becoming more common at small banks and credit unions too. i know of 2 small local banks that offer it. in fact, almost any bank can give you a debit card, then set the daily POS limit to 0$, effectively making it an atm-only card. but you may need to call the bank to get that limit temporarily lifted whenever you want to sign up for a new service. alternatively, jejorda2's suggestion of virtual account numbers is a good idea. several banks (including discover) have discontinued that feature, but i believe citi, and boa still offer them. side notes:"

negative: Some options: See if the seller will sell to you on Contract.  With a significant down payment the seller may be willing to sell you the condo on contract.  This fill in the year or so you will probably need to go from contractor to full time employee with enough time on the job to get a mortgage.   Keep Shopping.  Be up front with the lenders with the problems you are running into and see if any of them can find you a solution.  You may need to take a higher rate in the short term but hopefully you can refinance in a few years to a more reasonable rate. Check with a local bank or credit union.  Many times local banks or CU's will finance high demand properties that may be out of favor with the super banks that have no ties to your community.  These banks sometimes realize that just because the standard spreadsheet says this is a bad risk the reality is the specific property you are interested in is not the risk that it appears on paper.  You will have to find a bank that actually retains its mortgages as many local banks have become agents that just sell mortgages to the mortgage market. Talk to a Realtor.  If you are not using one now it may be time to engage one.  They can help you navigate these bumps and steer you towards lenders that are more amenable to the loan you need.

negative: A counterpoint to that is that a money / finance system depends on a significant degree of trust that this paper is worth something, that banks will return your deposits when you collect them etc. This is an area where developed countries have an advantage over 3rd world countries - it is hard to start a business when you are scared that the local police chief will just come a long and steal your assets.

negative: Today Richard Steggall runs Urban FT, Inc., that is acknowledged as the superior and one among the fastest developing providers of Digital Banking solutions to around 80 Community and Regional Banks as well as Credit Unions in the United States, and plenty of international brands. He is one of the members of the Young Entrepreneur Council.

negative: Their loans and rates are not very good for a credit Union. They are the most bank like in the way they operate (in a bad way).  Customer service has always be excellent the issue I have is with their services. It is very easy to find a better credit Union with far better services.


query: Steps and timing of the SEIS investment (in the UK)

positive: You make the investment in Jan 2016. Assuming the SEIS certificate is issued before 5th April 2016, then you will enter the SEIS investment on your 2015-2016 tax return and claim the relief in that year. If the certificate is not issued in time then you will enter it in the 2016-2017 tax return and get the relief then. Note: I am assuming that the startup is already registered with the SEIS scheme by someone else - because if you are asking about how to go about that, I don't think that is an issue of personal finance.

negative: If you have such a long term investment goal there really is no reason to try time the markets, 1990s market high was nothing compared to 1999s market high which was nothing to 2006  etc and so on(years quoted as example).  Also consider cost of opportunity missed by holding back investing your immediately available investment capital and have it sit in a bank account for 18-24months, collecting meager returns instead of a 5-10% potential return for example(which isnt a strech by any means). Now if you re really hell-bent on timing the market, since you re in the UK, if you really want to attempt it, I would pay close attention to Brexit news and talks that are scheduled for 2018 onwards. Any delays on that deal and/or potential bad development may lead to speculation and temporary lows for you to buy in. If thats worth the effort and cost of opportunity mentioned before is up to you.

negative: The UK has historically aggressive financial law, inherited from Dutch friendship, influence, and acquisitions by conquest. The law is so open that nearly anyone can invest through the UK without much difficulty, and citizens have nearly no restrictions on where to invest. A UK citizen can either open an account in the US with paperwork hassles or at home with access to all world markets and less paperwork.  Here is the UK version of my broker, Interactive Brokers.  Their costs are the lowest, but you will be charged a minimum fee if you do not trade enough, and their minimum opening balance can be prohibitively high for some. If you do buy US products, be sure to file your W-8BEN.

negative: Transfers of money to the UK for any purpose are not generally taxed, so you can just transfer it here and invest. Once the money is here, you'll be taxed on the business activity like anyone else - the company will have to pay corporation tax, and depending on your own residency you might have to pay income tax on any distributions from the company.

negative: the financial information is generally filed via SEDAR (Canada) or SEC (US) before the conference call with the investment community.  This can take before either before the market opens or after the market closes.  The information is generally distribute to the various newswire service and company website at the same time the filing is made with SEDAR/SEC.

negative: The preparation for starting up of the company has lasted already more than 2 years. Let's say the company starts officially in January next year. So, in January 2014... 8 million USD is invested to purchase the equipments and the company will start selling their prdocuts right away. Imagine the company will be selling the same amount of products each year at the same price for 5 years. After 5 years it will sell the equipments for 6 million USD and cease to exist. The depreciation of  equipments is divided into those 5 years. So, each year the depreciation of equipments is 400.000 USD. In despite of this, the company will make 500.000 USD per year as a profit before tax.  So, the equipments are bought in Januardy 2014 (first month of the existence of the company) and sold in December 2018 (last month of the existence of the company). This is the NPV that I calculated. Is it correct?

negative: Honest question, in UK, who pays the salary while the woman is on the maternity leave?  I bet it's not the employer.  If so, any cost concern is bullshit, and if the person (or rather a group thereof) can't step in effectively, the place has bigger issues stemming from poor management.  tl;dr: the only reason for this discrimination is that management is **bad**.

negative: The vesting date. Look at publication 525, under stock options, where they talk about ESPP: Your basis is equal to the option price at the time you exercised   your option and acquired the stock. The timing and amount of pay   period deductions do not affect your basis.

negative: Step 1: Get a part-time job in sales.  Perhaps selling appliances at Sears. Step 2: If you are great at that, then look into becoming a stock broker/investment adviser in Boise ... which is a sales job.   Step 3: If you are great at that, then you might be able to become a portfolio manager, perhaps a hedge fund manager for the clients you collected as a stock broker/ investment consultant.   That seems to be the steps I have seen from reading the bios of a number of professional investors.   The other method seems to be an MBA from a top 10 business school.

negative: In addition to the other excellent answers here, check out Mr. Money Mustache's site, it's based in the US but the basics still hold here in the UK. Another great site is the Monevator which is UK based and gives some great information on passive investing. Well done on getting to this point at your age - you've got plenty of time for the miracle of compound interest to work for you. EDIT: Once you have any existing debts paid off, take a look at passive/index investing. This could be a good way to make your £150 work for you by capturing the gains of the stock market. Invest it long-term (buy and hold) to make the most of the compound interested effect and over time that money will become something substantial - especially if you can increase payments over time as your income increases. You could also look at reducing your outgoings as recommended on the Mustache site linked above so you can increase your monthly investment amount.

negative: What you will probably get is an option to buy, for £10,000, £10,000 worth of stock. If the stock price on the day your option is granted is £2.50, then that's 4,000 shares. Companies rarely grant discounted options, as there are tax disincentives. The benefit of the stock option is that when you exercise it, you still only pay £10,000, no matter what the 4,000 shares are now worth. This is supposed to be an incentive for you to work harder to increase the value of the company. You should also check the vesting schedule. You will typically not be able to exercise all your options for some years, although some portion of it may vest each year.

negative: "Starting with small amount of money is definitely a good idea, as it is a fact that majority of the online traders lose their initial investment. No wonder that for example in the UK, FCA decided to make steps to raise the chances of clients staying in business by limiting leverage to 1:50 and 1:25. http://www.financemagnates.com/forex/bloggers/new-fca-regulations-going-affect-retail-brokers/ Trading leveraged products is risky and you will lose some, or all your money with very high chance. But that doesn't mean necessarily it is a ""bad investment"" to trade on your own. Imagine you have a $1000 account, and you trade max 0,1 lot fx position at once maximum (=$10.000 position size, that is 1:10 leverage max). Beginner steps are very challenging and exiting, but turning back to your initial question: is there a better way to invest with a small amount of money Obviously you could purchase a cheap ETF that follows a broad market index or an already existing successful portfolio."

negative: First I  assume you are resident for tax purposes in the UK? 1 Put 2000 in a cash ISA  as an emergency fund.  2 Buy shares in 2 or 3 of the big generalist Investment trusts as they have low charges and long track records – unless your a higher rate tax payer don’t buy the shares inside the ISA its not worth it  You could use FTSE 100 tracker  ETF's or iShares instead of Investment Trusts.

negative: There is none, whatever sector you invest in will be subject to cyclical market difficulties, however alpha can be generated from two sources: Timing and selection.  Its much easier to get the timing done over a long period of time.

negative: In the US this is considered a sale, and the proceeds will be taxed as if you've sold the stocks in any other way. The decision about the treatment (capital, ordinary, etc) is dependent on what kind of stock that is, how you acquired it, how long have you held it, etc. If it is a regular stock that you bought as an investment and held it for more than a year - then it will likely to be a capital gain treatment. However, this is only relevant for the US taxation. Since you're a UK person, you should also check how it is handled in the UK, which may or may not be different.

negative: Use an exchange traded fund ETF, namely SPDR MSCI Japan EUR Hdg Ucits ETF. It is hedged and can be bought in the UK by this broker State Street Global Advisors on the London Stock Exchange LSE.  Link here. Article on JAPAN ETF hedged in Sterling Pound here.

negative: "If you ""have no immediate plans for the money and will probably not return to Switzerland for a long time or at all"" then it might be best just to exchange the money so then you can use/invest it in the UK.   Maybe keep a bill or two for memory-sake - I do that whenever I travel to a foreign country."

negative: "FTSE ethical investment index: http://www.ftse.com/products/indices/FTSE4Good ""The FTSE4Good Index is a series of ethical investment stock market   indices launched in 2001 by the FTSE Group.  A number of stock market   indices are available, for example covering UK shares, US shares,   European markets, and Japan, with inclusion based on a range of   corporate social responsibility criteria. Research for the indices is   supported by the Ethical Investment Research Services (EIRIS)."" -   Wikipedia"

negative: As you are in UK, you should think in terms of Tax Free (interest and accumulated capital gains) ISA type investments for the long term AND/OR open a SIPP (Self Invested Pension Plan) account where you get back the tax you have paid on the money you deposit for your old age. Pensions are  the best bet for money you do not need at present while ISAs are suitable for short term 5 years plus  or longer.

negative: I've only tried this on the UK HSBC website / updated May 2017 After sitting on the phone for about a half hour I got instructions and want to share them to stop anyone else going through the same rigmarole I did. First, you will need: Follow these steps: It will save them in the list of past payment recipients when you click on the Payments link from the quick links on the dashboard view. Hope this saved someone some time.

negative: The paper is appealing to its readership to consider the profit and loss generated by Starbucks in UK operations as independent of other operations in other countries. Starbucks was profitable in the UK, but they offset these profits with investments in other overseas operations (not UK), to lower their tax rate in the UK. To the Guardian this seems unfair, even though UK law permits this. Seems like there is some case to be made for considering a change in the law.

negative: FYI, I am assuming you are an individual investor.. The rates on the website may change, if the government decides so. Anyway it is a UK government website, so it would reflect the changes immediately.

negative: You are doing great! Congratulations. Check out the Dave Ramsey Baby Steps.  He has advice for exactly your situation. The book Financial Peace covers the topic in detail.  You have an Emergency Fund which is Step 3.  Step 4 is investing 15% for retirement in 401k and similar.  Step 5 is funding college if you have children. In Step 6, he advises putting any extra money towards the principle on your home.  Owning your own home outright is a better goal than investing the money at a higher interest versus your mortgage interest rate. After your are completely debt free, then you can invest and give generously which is Step 7. Answering your question, push your emergency fund to 6 months, bump your retirement saving to 15% and put any extra money to your mortgage.

negative: I can't speak about the UK, but here in the US, 1% is on the cheap side for professional management.  For example Fidelity will watch your portfolio for that very amount.  I doubt you could claim that they took advantage of her for charging that kind of fee. Given that this is grandma's money, no consultation with the family is necessary. Perhaps she did have dementia at the time of investment, but she was not diagnosed at the time.  If a short time has past between the investment and the diagnosis, I would contact the investment company with the facts.  I would ask (very nicely) that they refund the fee, however, I doubt they under obligation to do so. While I do encourage you to seek legal council, there does not seem to be much of substance to your claim.  The fees are very ordinary or even cheap, and no diagnosis precluded decision making at the time of investment.

negative: The other answers are good, but not UK-specific. You need to look for an Independent Financial Advisor (IFA). These are regulated by the FCA and you pay them a time-based fee for their services, they do not take commission on the products they recommend to you.  The Government Money Advice Service page (hat tip to @AndyT in the comments on the question for the link) tells you how to go about finding one of these and what sort of questions to ask. Contrary to the note in the answer by @Harper, in the UK many IFAs do have perfectly nice offices, this is not a sign that should put you off.  Personal recommendations for IFAs are usually the best way to go but failing that there are directories of them and many will have an initial conversation with you for free to ensure you are aligned with each other.

negative: "It's just a guess, as I'm from the UK and am unfamiliar with the term ""investment"" mortgage but is it one where you are buying the property in order to rent it out, and make money from it, rather than to live in? In the UK we call those ""buy to let"" mortgages and one of the main differences is that you have to have a higher deposit to get that type."

negative: It seems to me that the study fails to adjust for the fact that if the UK became a US state, UK taxes would be removed which would probably result in lower living costs, higher incomes, more investments..and shittier healthcare... etc etc.

negative: Here would be the general steps to my mind for creating such a plan: Write out the final desired outcome. Is it $x in y years to fund your retirement? Is it $a in b years to put as a house down payment? This is the first step in defining how much money you want at what point in time. Consider what is your risk tolerance and how much time do you plan on spending in this plan. Is it rebalancing once a quarter and that's it or do you plan on doing monthly research and making tweaks all the time? This is slightly different from the first where one has to be mindful of how much volatility would one handle and what time commitment does one have for an investing strategy. Also, how much money would you be adding to the investments on what kind of time table would also be worth noting here. Construct the asset allocation based on the previous two steps along with historical returns averaged out to be a first draft of what you are buying in general. Is it US stocks? Is it a short-term bond fund? There are more than a few choices here that may make sense and it is worth considering based on the first couple of responses that determine what this will look like. Retirement in 40 years may be quite different than a house down payment in 2 years for example. Determine what brokerages or fund companies would offer such funds along with what types of accounts you'd want to have as in some countries there may be tax-advantaged accounts that may be useful to use here. This is where you're almost ready to start by doing the homework of figuring out how will things work. This may vary depending on one's jurisdiction. Get the applications from whatever institutions you'll be using and run with the desired asset allocation across various funds and accounts. Note that in the first few steps there were points of being aware of how much would you have, how aggressive are you investing and so forth. This is where you actually send in the money and get things rolling. Run with the plan and make tweaks as needed to achieve result, hopefully desired or better.

negative: Source Rule 41 of the AIM Rules sets out the procedure for delisting. In summary, a company that wishes to cancel the right of any of its trading securities must: The notification to the Exchange should be made by the company’s nominated adviser  and should be given at least 20 business days prior to the intended cancellation date (the 20 business days’ notice requirement is a minimum). Any cancellation of a company’s securities on AIM will be conditional upon seeking shareholder approval in general meeting of not less than 75% of votes cast by its shareholders present and voting (in person or by proxy) at the meeting. The notification to shareholders should set out the preferred date of cancellation, the reasons for seeking the cancellation (for example annual fees to the Exchange, the cost of maintaining a nominated adviser and broker, professional costs, corporate governance compliance,  inability to access funds on the market), a description of how shareholders will be able to effect transactions in the AIM securities once they have been cancelled and any other matters relevant to shareholders reaching an informed decision upon the issue of the cancellation. Cancellation will not take effect until at least 5 business days after the shareholder approval is obtained and a dealing notice has been issued by the Exchange. It should be noted that there are circumstances where the Exchange may agree that shareholder consent is not required for the cancellation of admission of a company’s shares, for example (i) where comparable dealing facilities on an EU regulated market or AIM designated market are put in place to enable shareholders to trade their AIM securities in the future or (ii) where, pursuant to a takeover which has become wholly unconditional, an offeror has received valid acceptances in excess of 75% of each class of AIM securities.  The company’s Nominated Adviser will liaise with the Exchange to secure a dispensation if relevant. So you should receive information from the company regarding the due process informing you about your options.

negative: It's done by Opening Auction (http://www.advfn.com/Help/the-opening-auction-68.html): The Opening Auction Between 07.50 and   a random time between 08.00 and   08.00.30, there will be called an auction period during which time,   limit and market orders are entered   and deleted on the order book. No   order execution takes place during   this period so it is possible that the   order book will become crossed. This   means that some buy and sell orders   may be at the same price and some buy   orders may be at higher prices than   some sell orders. At the end of the random start period,   the order book is frozen temporarily   and an order matching algorithm is   run. This calculates the price at   which the maximum volume of shares in   each security can be traded. All   orders that can be executed at this   price will be filled automatically,   subject to price and priorities. No   additional orders can be added or   deleted until the auction matching   process has been completed. The opening price for each stock will   be either a 'UT' price or, in the   event that there are no transactions   resulting form the auction, then the   first 'AT' trade will be used.

negative: You have to check if the investment vehicle you are planning to buy is acceptable for ISA on a case by case. Then if it is allowed by HMRC you have to check that your ISA provider offers those products (the mainstream providers might offer a more limited range of products and you might have to go to change your provider)

negative: "the way they explain it is this: say you contribute 1 million each month from july 2010 to june 2011, they wait for the 12 million at the end of the year and ""start to invest"" it at the start of the next financial year (july 2011 to june 2012). so after june 2012, they'll get the profit, subtract admin costs and all, then announce the balance as interest. the interest announced applies to the whole 12 million from 2010-11. i guess the excuse here is that since they announce interest per financial year, they wouldn't have enough time to properly invest money collected towards the end months of apr, may and june, if they were to announce interest in the following july.. so they'd need another year to properly do the investing for that money collected.  how else would you handle giving interest for money collected in june? i can see their point but i just feel like there's something off there."

negative: Put £50 away as often as possible, and once it's built up to £500, invest in a stockmarket ETF. Repeat until you retire.