query: Why should a company go public?

positive: You go public to raise money, to invest in the business and/or pay off the existing shareholders. It's really as simple as that. The advantage of being public is that your shares can easily be bought and sold, and so you can issue and sell new ones and your existing shareholders can sell out if they want to. The disadvantage is that you are much more tightly regulated, with more disclosure requirements, and also that you are exposed to much more pressure from your shareholders to maintain and increase your share price.

positive: Most businesses want to grow, and there are a variety of ways to raise the money needed to hire new employees and otherwise invest in the business to increase the rate of that growth. You as a stock holder should hope that management is choosing the least expensive option for growth. Some of the options are debt, selling equity to venture capitalists, or selling equity on the open market (going public). If they choose debt, they pay interest on that debt. If they choose to sell equity to venture capitalists, then your shares get diluted, but hopefully the growth makes up for some of that dilution. If they choose to go public, dilution is still a concern, but the terms are usually a little more favorable for the company selling because the market is so liquid.  In the US, current regulations for publicly traded companies cost somewhere in the neighborhood of $1M/year, so that's the rule of thumb for considering whether going public makes sense when calculating the cost of fundraising, but as mentioned, regulations make it less advantageous for executives who choose to sell their shares after the company goes public. (They can't sell when good spot prices appear.) Going public is often considered the next step for a company that has grown past the initial venture funding phase, but if cash-flow is good, plenty of companies decide to just reinvest profits and skip the equity markets altogether.

positive: "The reason to go public is to get money. Not to be snarky, but your question is like asking, ""Why should a company try to sell its products, when if they just piled them up in a warehouse they wouldn't have to worry about shipping and customer complaints and collecting sales tax?"" The answer, of course, is because they want the money. Sure, there are disadvantages to going public, like more regulation, required financial disclosures, and having to answer to stockholders. That's the price you pay for accepting money from people. They're not going to give you money for nothing."

positive: The purpose is to go public but also to generate more wealth. The real money comes when market values you at a price more than your cash flow. If a company brings in $1000 of cash flow, then that is what the employees and owners have to distribute among themselves. But if they are likely to increase to $2000 next and $4000 next year and they go public then the stock will do well. In this case, the promoters and employees with options/RSUs will benefit as well. The increased visibility is also very useful. Look at Google or FB. They didn't need the IPO proceed when they went public. They had enough cash from their business but then they would only have $1-10 billion a year. But due to the IPO their investors and employees have a huge net worth.  Basically, with just a small % of shares in the public you can value the company at a high price valuing in the future cash flows (with a discount rate etc.). So instead of realizing the profit over the next 15 years, you get to enjoy it right away.

negative: this is not necessarily true. sometimes it makes sense for a public company to go private. usually a private equity firm will buy up the shares. the private equity firm would usually be financed by a bank and the cash flow from the company will help pay off the financing. there are pros and cons to both private and public companies. a pro for a private company is the reduced regulation and there is no need to follow sarbanes-oxley act.

negative: Here is something I have always wondered. Companies are required to go public after they have a certain number of investors. Used to be 500 now 2000. Can a company that has been forced to go public, then be made private again? How?

negative: The main reason is that a public company is owned by its share holders, and share holders would care about the price of the stock they are owning, therefore the company would also care, because if the price go down too much, share holders become angry and may vote to oust the company's management.

negative: A company typically goes public in order to bring in additional capital. In an IPO, the company (through its officials) will typically do so by issuing additional shares, and offering to sell those to investors. If they did not do that, then there would be no net capital gain for the company; if person A sells share in company C to person B, then company C does not benefit directly from the exchange. By issuing and selling additional shares, the total value of all stock in the company can increase. Being publicly traded also greatly increases the confidence in the valuation of the company, as a consequence of the perfect market theory. There is nothing in this that says that initial investors (cofounders, employees, etc.) need to sell their shares in the process. They might choose to do so, or they might not; or they might be prevented from doing so by terms of any agreements that they have signed or by insider trading laws. Compare What happens to internal stock when a company goes public? Depending on specifics, it might be reasonable for the company to perform a share split prior to the initial public offering. That, however, doesn't affect the total value of the shares, only the price per share.

negative: how do they turn shares into cash that they can then use to grow their business? Once a Company issues an IPO or Follow-On Public Offer, the company gets the Money. Going over the list of question tagged IPO would help you with basics. Specifically the below questions; How does a company get money by going public in an IPO? Why would a company care about the price of its own shares in the stock market? Why would a stock opening price differ from the offering price?  From what I've read so far, it seems that pre-IPO an investment bank essentially buys the companies public shares, and that bank then sells them on the open market. Is the investment bank buying 100% of the newly issued public shares? And then depositing the cash equivalent into the companies bank account? Additionally, as the stock price rises and falls over the lifetime of the company how does that actually impact the companies bank balance? Quite a bit on above is incorrect. Please read the answers to the question tagged IPO. Once an IPO is over, the company does not gain anything directly from the change in shareprice. There is indirect gain / loss.

negative: I totally see your point about not seeing into the future, infrastructure has to take into account so many variables it's often very difficult to plan these things I can see why a major project might take months on end, if not years. I'm okay with (private or public) companies doing the bare minimum and saving a few dollars here and there. That being said obviously all companies should should fall under the same rules or laws, if companies can take huge short cuts that end up harming people there is something really wrong with the regulations and the company is clearly at fault.   I think you have the right idea, I don't see why the government couldn't force private companies to abide by infrastructure plans similar to the ones public companies use or come up with ? do public companies take longer because there is more oversight?

negative: > He added that the company will be providing ... outplacement services, including a job fair with local IT employers.  Why even bother with the charade: If Lowes doesn't see the need the need to hire in this country, why should anybody else?  It is a [good idea](http://www.theonion.com/article/report-98-percent-of-us-commuters-favor-public-tra-1434) for *everybody else* to carpool or use mass transit.

negative: An Initial Public Offering (IPO), is the perfect first marketing of shares by the secretly purchased company to the public. The companies going public hick finance through IPO's for working capital, debt repayment, acquisitions, and a manager of other uses. If you want to learn the fundamental of the IPO best site is W3Teachers.com. For more INFO. visit :-http://www.w3teachers.com/IPO/IPO-DASHBOARD

negative: "I agree with you most of what you're saying, but there is still the fundamental conflict at the bottom of all of this.  You are saying that the public accounting firms *should* do these things, when they are in fact just businesses, which are by definition amoral.  The ""public"" in ""public accounting"" is misleading here, for the firms are privately held owned organizations.  Of course there are going to be reputational benefits for acting in accordance to these standards, but if they can reasonably get away with it then why wouldn't they?  Edit:  Your comment in regards to the inefficiency of government audits is an excellent point, though."

negative: ">on behalf of the general public  That's where you're wrong.  They did this for one reason, to enrich themselves *at the expense of the general public*.  The general public got nothing from this.  Actually, they got less than nothing as they're almost certainly going to be charged more to cover the expense of the settlement.  This was a completely self-serving lawsuit brought by a bunch of greedy lawyers cloaking themselves in the guise of ""doing good by the public"".  These people should have their fingernails removed with rusty pliers.  They're the scum of the earth.  This is exactly why people say class action lawsuits are massively subject to abuse.  This is a textbook example, and why the whole system needs to be reformed."

negative: Companies need to go public before you can buy their shares on a public stock exchange, but all companies have shares, even if there's only one share. And anyone who owns those shares can give them to whoever they like (there are generally restrictions on selling shares in unlisted companies to unsophisticated investors, but not on giving them away).

negative: But it goes both ways. Why should the people care about your business and if it's sustainable? The market will deem it unprofitable if he can't support paying his workers living wages.   If there are no minimum wages that a person can scrape by on then you have preditory companies taking advantage of people or the business offsetting the cost to the public (like tips). The public would be subsidizing the business.   I think you need to dig deeper into that logic.

negative: "If by ""most public companies"" you mean ALL public companies. Heck, even some non-public companies have to file 10-Ks.  OP, I'd avoid any exchange-based list (a public company may be de-listed, for example) and go right to the source: Edgar."

negative: Not sure of the question here if by IPO(initial public offering) you mean private company then:  A company can invest its excess money into other companies, to earn returns.  Also a company that is private can attract private investment if the sector is doing well on publicly traded markets.  Finally a company can diversify away risk, by holding shares of a company that would benefit in the event of a disruption in their own industry.

negative: "> At Google, they oversee a search algorithm that seeks to surface “authoritative” results and demote low-quality content. This algorithm is tuned by an internal team of evaluators. If the company silences dissent within its own ranks, why should we trust it to manage our access to information?  Yeah, ""persons""; *this* is going to be the organization that filters our searches and dictates whose videos we can easily watch.  I can almost get behind Steve Bannon's [""public utility"" idea](http://fortune.com/2017/07/29/bannon-facebook-google-monopoly/). Maybe with a little Sherman AntiTrust thrown in."

negative: The original investors and founders own them. Think about it this way - When you hear that an IPO priced at $10 opened at $50, is that 'good or 'bad'? Of course, it depends who you are. If you are the guy that got them at $10, you're happy. If you are the founder of the company, you are thinking the banker you paid to determine a market price for the IPO failed. Big. He blew it, basically as you just sold your company for 20% of the perceived value. But, instead of selling all the shares, just sell, say, 5%. Now, the IPO opening price is just a way to understand the true value of your company while keeping 95% of the upside once the market settles down to a regular trading pattern. You can slowly sell these shares into the market or you can use them as cash to take over other companies by buying with these shares instead of actual cash.  Either way, the publicly traded shares should trade based on the total value of the company and the fraction they represent.

negative: Why the hell did they take a position on SOPA in the first place?   Companies should only take public positions on issues when that position would have a positive effect on their business and their customers. Did they think they would sell more domain names as their customers get screwed out of the ones they already own?

negative: "After the initial public offering, the company can raise money by selling more stock (equity financing) or selling debt (e.g. borrowing money).  If a company's stock price is high, they can raise money with equity financing on more favorable terms.  When companies raise money with equity financing, they create new shares and dilute the existing shareholders, so the number of shares outstanding is not fixed. Companies can also return money to shareholders by buying their own equity, and this is called a share repurchase.  It's best for companies to repurchase their shared when their stock price is low, but ""American companies have a terrible track record of buying their own shares high and selling them low."" The management of a company typically likes a rising stock price, so their stock options are more valuable and they can justify bigger pay packages."

negative: Great for Facebook but why does a company like Sun Microsystems or FedEx sell stock?  In order to reach quarterly goals a publicly traded company has to make sure they stay in the black every quarter by cutting cutting cutting cost which may not be good for a long term goal of investing in new ideas or processes.

negative: Why would you want the company who failed to be the one monitoring your credit?   Bankrupt them and be done with them. They're likely going to be sued into insolvency and that in turn should create an about-face to the other credit companies.    The last thing anyone should want is giving additional or further responsibility to a company with the largest personal information leak of all time.

negative: Aside from the market implications Victor and JB King mention, another possible reason is the dividends they pay. Usually, the dividends a company pays are dependent on the profit the company made. if a company makes less profit, the dividends turn out smaller. This might incite unrest among the shareholders, because this means that they get paid less dividends, which makes that share more likely to be sold, and thus for the price to fall.

negative: When they need more capital and it becomes cheaper to finance that capital through an IPO rather than taking out more debt. There certainly isn't a magic point at which they *should* go public.  On the other hand, I have a feeling that Musk is probably more than content to not have to do IR for Spacex alongside Tesla, so I doubt we'd see it for quite some time.

negative: It is in the interest of private owners, stockholders and boards to ensure long-term viability of companies as well. In the case of stockholders and boards, the current price of the stock has its future earning potential priced into the value of the stock. For example, if Microsoft or Google declared that they were shutting down their big research projects, their stock would tumble. Pharmaceutical and chemical companies also have interest in long term viability. They understand that the projects that they start today will not hit the market for another 10 years. If they go bust, all of that money is wasted.

negative: "Sycamore Partners ""saves"" brick and mortars from the ultimate death. By going private, these companies do not face the pressure of Wall Street and they can usually be saved and turn around a profit ( The Limited and Talbots are a few saved consumer shops)"

negative: "Does your company offer a 401k? or similar pre-tax retirement plans? Is your company a publicly traded company? These questions are important, basically the key to any of your investments should be diversification. This means buying more than one kind of investment, amongst stock(s), bonds, real estate or more. The answer to ""How Much"" of your salary should go to company stock, is subjective. I personally would contribute the max toward a retirement plan or even post-tax savings, which would be invested in a variety of public companies.  Hope that helps."

negative: Is their risk taking creating jobs though?  When i bought Apple stok a few years ao, what entrepreneurial spirit did I promote or encourage?  Why not give extra tax breaks for the sale of stock purchased during a public offering (since that goes to helping the company) but not for secondhand (less necessary) trading.  Should we give big tax breaks to people who lend businesses money?

negative: No one is to blame other than these antiquated ceos that are so out of touch with the public. If half of your failed aplicants are failing due to mj maybe its time reevaluate your requirements perhaps ? The excuse of saftey concerns is completely misleading bs. I wonder how many current employees most likely use mj regularly. Fact is the general public view mj as more innocuous than alcohol yet these companies use its illegality as a reason to dodge isurance claims when thier employees are injured. Most frustrating part of this article is when he complains about being unable to compete with germany ...you know why ? Because most of Europe doesnt have completely invasive drug testing procedures and instead recruits based on qualification and performance like any good company should.

negative: For the same reason you wanted it when you bought it. No-one guarantees that you'll be able to sell the stock you hold, and in fact many people get stuck with stocks they'd like to sell, but no-one is buying. But if investors think there's a profit potential that is not exhausted yet - they'll want to buy the stock.

negative: "I was being a bit facetious, but in general the public accounting profession  should be dedicated to the public good. Any scope restrictions placed on the auditors while performing the engagement should immediately be reported by the staff to accounting management. Basically any shady acts of the client should be noted in the work papers and reported. There's a whole bunch of rules to tell an audit staff accountant when to go above their own seniors/management if there is collusion or fraud.   Scope restrictions, ie. ""Hey you can't go in the warehouse to count inventory"", depending on the severity could qualify the audit report, disclaimer of an opinion, or withdrawal from the engagement. Therefore it's the auditors responsibility to refuse to provide a false audit report to the public or otherwise users of the financial statements. They should never act in the manner most profitable for the firm when faced with an ethical dilemma.   Then there's practicality and most audit partners will do anything it takes to keep their largest clients. On the same coin, those clients want a clean bill of reference for their creditors. Long standing relationships are most vulnerable to letting things slide in favor of the client.   There are thousands of companies and even ones publicly traded. The government would have to grow exponentially to actually audit all of these companies. That'll never happen, they have no idea where their own money goes as long as the revenues cover the expenditures."

negative: The main reason to exercise the shares sooner rather than later is that you have to hold the shares for 1 year to gain access to the long-term capital gains rate when you sell your shares. You do not want short-term capital gains rates to apply to these shares when you sell them. If the company is unable to go public and sells privately, you may not have any choice but to sell your shares immediately. If the company goes public you will simply have to hold your shares for a year after you buy them before selling to get the lower tax rate.

negative: Public companies sometimes buy up all their shares in order to go private^(1).  Is that the sort of thing you're talking about?  If so, [this article](http://www.investopedia.com/articles/stocks/08/public-companies-privatize-go-private.asp) might be of interest to you.  ^(1) Actually, most of the time, they partner with private equity firms to do it, but I think the effect is essentially what you're describing.

negative: Why aren't we protesting single payer schooling.   We are all charged taxes that go into single entities that then pay for public schooling for all.       In most countries, healthcare is no different to education.  Public option that delivers a level of service, then the ability to pay for private alternatives on top.


query: Interest charges on balance transfer when purchases are involved

positive: "Its called a ""Grace Period"" and you are not paying interest on the 0% BT, you are paying interest on the amount you spent in purchases If you do not pay your balance in full by the due date your grace period ends. This means that you have to pay interest on the purchased amount from the day it is made. This is why when you do a balance transfer the card should be put in the Sock Drawer until the BT is paid off. In order to restore the grace period you must pay the balance in full and the grace period will start during the Next Payment Cycle. Lets Assume: Statement cuts on the 1st and Due date is the 20th. you make the minimum payment of $10 Balance now is $100 Since you have a balance of $100 from the previous statement and a new purchase of $50.00, when the next statement cuts you will have to pay interest according to the terms on the $50.00 portion. In order to get the grace period back you will have to pay in full and wait for the next cycle In case I did not explain it well here is a quote from creditcards dot com website: The cost of carrying a balance   This is because carrying a balance of   any size into the next billing cycle means there is no grace period on   your purchases during that cycle. The card company will begin charging   interest on your purchases the day you make them. So leaving even $1   in unpaid balance on your card will cost you considerably more than   the measly finance charges on that dollar. To see how this works let's consider an imaginary card user named   Sally. She's so happy she got a new credit card that she charges   $1,500 in purchases on the first day of her monthly billing cycle.   After the cycle ends, Sally pays off the entire $1,500 by the due   date, wiping her balance to zero. As a result, her purchases during   the second month are also free of interest. She has used her grace   period wisely to avoid finance charges. What happens if Sally leaves just $1 of her balance from the first   month unpaid? That $1 begins to accrue interest starting the first day   of the billing cycle. It's just $1, so the interest is not a big deal   -- but because she used up her grace period without paying off her entire debt, her new purchases during the second month also start to   get hit with interest charges immediately, starting the day of the   transaction. Assuming she makes another $1,500 in purchases at the   average annual interest rate of about 13 percent, that means $16 in   finance charges for the month. If Sally repeats this pattern, the   interest costs add up to $190 over the course of a year."

positive: The 'common sense' in it is that they want the maximum money from you while still suggesting to a quick read that you get away free. Their target is not to make you happy, but to make money of you.

negative: "Credit Cards typically charge interest on money you borrow from them.  They work in one of two ways. Most cards will not charge you any interest if you pay the balance in full each month.  You typically have around 25 days (the ""grace period"") to pay that off.  If that's the case, then you will use your credit card without any cost to yourself. However, if you do not pay it in full by that point, then you will owe 19.9% interest on the balance, typically from the day you charged the payment (so, retroactively).  You'll also immediately begin owing interest on anything else you charge - typically, even if you do then pay the next month the entire balance on time.  It's typically a ""daily"" rate, which means that the annual rate (APR) is divided into its daily rate (think the APR divided by 365 - though it's a bit different than that, since it's the rate which would be 19.9% annualized when you realize interest is paid on interest).   Say in your case it's 0.05% daily - that means, each day, 0.05% is added to your balance due.  If you charged $1000 on day one and never made a payment (but never had to - ignore penalties here), you'd owe $1199 at the end of the year, paying $199 interest (19.9*1000). Note that your interest is calculated on the daily balance, not on your actual credit limit - if you only charge $100, you'd owe $19.90 interest, not $199. Also note that this simplifies what they're actually doing.  They often use things like ""average daily balance"" calculations and such to work out actual interest charged; they tend to be similar to what I'm describing, but usually favor the bank a bit (or, are simpler to calculate). Finally: some credit cards do not have a grace period.  In the US, most do, but not all; in other countries it may be less common.  Some simply charge you interest from day one. As far as ""Standard Purchases"", that means buying services or goods.  Using your credit card for cash advances (i.e., receiving cash from an ATM), using those checks they mail you, or for cash-like purchases (for example, at a casino), are often under a different scheme; they may have the same rate, or a different rate.  They likely incur interest from the moment cash is produced (no grace period), and they may involve additional fees.  Never use cash advances unless you absolutely cannot avoid it."

negative: "Basically, your CC is (if normal) compounded monthly, based on a yearly APR. To calculate the amount of interest you'd pay on each of these accounts in a year, pull up a spreadsheet like Office Excel. Put in your current balance, then multiply it by the annual interest rate divided by 12, and add that quantity to the balance. Subtract any payment you make, and the result is your new balance. You can project this out for several months to get a good estimate of what you'll pay; in accounting or finance terms, what you're creating is an ""amortization table"". So, with a $10,000 balance, at 13.99% interest and making payments of $200/mo, the amortization table for one year's payments might look like: As you can see, $200 isn't paying down this card very quickly. In one year, you will have paid $2,400, of which $1,332.25 went straight into the bank's pockets in interest charges, reducing your balance by only $1,067.75. Up the payments to $300/mo, and in 1 year you will have paid $3,600, and only been charged $1,252.24 in interest, so you'll have reduced your balance by $2,347.76 to only $7,652.24, which further reduces interest charges down the line. You can track the differences in the Excel sheet and play ""what-ifs"" very easily to see the ramifications of spending your $5,000 in various ways. Understand that although, for instance, 13.99% may be your base interest rate, if the account has become delinquent, or you made any cash advances or balance transfers, higher or lower interest rates may be charged on a portion of the balance or the entire balance, depending on what's going on with your account; a balance transfer may get 0% interest for a year, then 19.99% interest after that if not paid off. Cash advances are ALWAYS charged at exorbitantly high rates, up to 40% APR.  Most credit card bills will include what may be called an ""effective APR"", which is a weighted average APR of all the various sub-balances of your account and the interest rates they currently have. Understand that your payment first pays off interest accrued during the past cycle, then pays down the principal on the highest-interest portion of the balance first, so if you have made a balance transfer to another card and are using that card for purchases, the only way to avoid interest on the transfer at the post-incentive rates is to pay off the ENTIRE balance in a year. The minimum payment on a credit card USED to be just the amount of accrued interest or sometimes even less; if you paid only the minimum payment, the balance would never decrease (and may increase). In the wake of the 2008 credit crisis, most banks now enforce a higher minimum payment such that you would pay off the balance in between 3 and 5 years by making only minimum payments. This isn't strictly required AFAIK, but because banks ARE required by the CARD Act to disclose the payoff period at the minimum payment (which would be ""never"" under most previous policies), the higher minimum payments give cardholders hope that as long as they make the minimum payments and don't charge any more to the card, they will get back to zero."

negative: "As Dheer has already told you in his answer, your plan is perfectly legal, and there are no US tax issues other than making sure that you report all the interest that you earn in all your NRE accounts (not just this one) as well as all your NRO accounts, stock and mutual fund dividends and capital gains, rental income, etc to the IRS and pay appropriate taxes. (You do get a credit from the IRS for taxes paid to India on NRO account income etc)  You also may also need to report the existence of accounts if the balance exceeds $10K at any time etc. But, in addition to the foreign exchange conversion risk that Dheer has pointed out to you, have you given any thought to what is going to happen with that credit card? That 0% interest balance of $5K does not mean an interest-free loan 0f $5K for a year (with $150 service charge on that transaction). Instead, consider the following. If you use the card for any purchases, then after the first month, your purchases will be charged interest from the day that you make them till the day they are paid off: there is no 25-day grace period. The only way to avoid this is to pay off the full balance ($5K 0% interest loan PLUS $150 service charge as well as any other service charges, annual fees etc PLUS all purchases PLUS any interest) shown on the first monthly statement that you receive after taking that loan. If you choose this option, then, in effect, have taken a $5K loan for only about 55 days and have paid 3%  interest (sorry, I meant to write) service fee for the privilege. If you don't use the card for any purchases at all, then the first monthly statement will show a statement balance of $5130 and (most likely) a minimum required payment of $200. By law, the minimum required payment is all interest charged for that month($0) PLUS all service fees charged during that month ($150) PLUS 1% of the rest ($50). Well, actually the law says something like ""a sufficient fraction of the balance to ensure that a person making the required minimum payment each month can pay off the debt in a reasonable time"" and most credit card companies choose 1% as the sufficient fraction and 108 months as a reasonable time.  OK, so you pay the $200 and feel that you have paid off the service fee and $50 of that 0% interest loan. Not so!  If you make the required minimum payment, the law allows that amount to be be applied to any part of the balance owing. It is only the excess over the minimum payment that the law says must be applied to the balance being charged the highest rate. So, you have paid off $200 of that $5K loan and still owe the service fee. The following month's statement will include interest on that unpaid $150. In short, to leave only the 0% balance owing, you have to pay $350 that first month so that next month's statement balance will be $4800 at 0%. The next month's required minimum payment will be $48, and so on. In short, you really need to keep on top of things and understand how credit-card payments really work in order to pull off your scheme successfully. Note also that the remaining part of that 0% interest balance must be paid off by the end of the period or else a humongous rate of interest will be applied retroactively from Day One, more than enough to blow away all that FD interest. So make sure that you have the cash handy to pay it off in timely fashion when it comes due."

negative: "Banks are in it to make money. But they're expected to provide a social good which powers our economy: secure money storage (bank accounts) and cashless transactions (credit/debit cards).  And the government does not subsidize this.  In fact, banks are being squeezed. Prudent customers dislike paying the proper cost of their account's maintenance (say, a $50/year fee for a credit card, or $9/month for a checking account) - they want it free.  Meanwhile government is pretty aggressive about preventing ""fine print"" trickery that would let them recover costs other ways.  However there isn't much sympathy for consumers who make trivial mistakes - whether they be technical (overdraft, late fee) or money-management mistakes (like doing balance transfers or getting fooled by promotional interest rates).  So that's where banks are able to make their money: when people are imprudent.  The upshot is that it's hard for a bank to make money on a prudent careful customer; those end up getting ""subsidized"" by the less-careful customers who pay fees and buy high-margin products like balance transfers.  And this has created a perverse incentive: banks make more money when they actively encourage customers to be imprudent.  Here, the 0% interest is to make you cocky about running up a balance, or doing balance transfers at a barely-mentioned fee of 3-5%. They know most Americans don't have $500 in the bank and you won't be able to promptly pay it off right before the 0% rate ends.  (or you'll forget).  And this works - that's why they do it.   By law, you already get 0% interest on purchases when you pay the card in full every month.  So if that's your goal, you already have it.  In theory, the banks collect about 1.5% from every transaction you do, and certainly in your mind's eye, you'd think that would be enough to get by without charging interest.  That doesn't work, though.  The problem is, such a no-interest card would attract people who carry large balances.  That would have two negative impacts: First the bank would have to spend money reborrowing, and second, the bank would have huge exposure to credit card defaults.   The thing to remember is the banks are not nice guys and are not here to serve  you.  They're here to use you to make money, and they're not beneath encouraging you to do things that are actually bad for you. Caveat Emptor."

negative: "For the mortgage, you're confusing cause and effect. Loans like mortgages generally have a very simple principle behind them: at any given time, the interest charged at that time is the product of the amount still owing and the interest rate. So for example on a mortgage of $100,000, at an interest rate of 5%, the interest charged for the first year would be $5,000. If you pay the interest plus another $20,000 after the first year, then in the second year the interest charge would be $4,000. This view is a bit of an over-simplification, but it gets the basic point across. [In practice you would actually make payments through the year so the actual balance that interest is charged on would vary. Different mortgages would also treat compounding slightly differently, e.g. the interest might be added to the mortgage balance daily or monthly.] So, it's natural that the interest charged on a mortgage reduces year-by-year as you pay off some of the mortgage. Mortgages are typically setup to have constant payments over the life of the mortgage (an ""amortisation schedule""), calculated so that by the end of the planned mortgage term, you'll have paid off all of the principal. It's a straightforward effect of the way that interest works in general that these schedules incorporate higher interest payments early on in the mortgage, because that's the time when you owe more money. If you go for a 15-year mortgage, each payment will involve you paying off significantly more principal each time than with a 30-year mortgage for the same balance - because with a 15-year mortgage, you need to hit 0 after 15 years, not 30. So since you pay off the principal faster, you naturally pay less interest even when you just compare the first 15 years. In your case what you're talking about is paying off the mortgage using the 30-year payments for the first 15 years, and then suddenly paying off the remaining principal with a lump sum. But when you do that, overall you're still paying off principal later than if it had been a 15-year mortgage to begin with, so you should be charged more interest, because what you've done is not the same as having a 15-year mortgage. You still will save the rest of the interest on the remaining 15 years of the term, unless there are pre-payment penalties. For the car loan I'm not sure what is happening. Perhaps it's the same situation and you just misunderstood how it was explained. Or maybe it's setup with significant pre-payment penalties so you genuinely don't save anything by paying early."

negative: "What you have is usually called a pre-paid credit card.  You pay some money (Indian Rupees) to the credit card company, and then you can use the card to pay for purchases etc in foreign (non-Indian) currencies upto the remaining balance on the card. If a proposed charge exceeds the remaining balance, the transaction will be declined when you try to use the card.  There might be multiple ways that the card is set up, e.g. it might be restricted to charge purchases denominated in US dollars alone, or you might be able to use it anywhere in the world (except India).  The balance on the card might be denominated in INR, or in US$, say. In the latter case, the exchange rate at which your INR payment was converted into the $US balance is fixed and agreed to at the time of the original payment: you paid INR 70K (say) and the balance was set to US$ 1000 even though the exchange rate on the open market would have given you a few more US dollars. In the former case with the balance denominated in INR, a charge of US$ 100, say, would be converted to INR at a fixed agreed-upon rate, or at the current exchange rate that the Visa or MasterCard network is using, plus (typically) a 3% fee currency exchange fee, and your balance in INR will decrease accordingly. With all that as prologue, if you made a purchase from Walmart USA and later returned it for a credit, it should increase your credit card balance  appropriately. You may be whacked with currency conversion fees along the way depending on how your card is set up, but with a US$-denominated card, a credit of US$100 should increase your card balance by US$100. So, that $US 100 can be spent on something else instead.  In short, the card is   your ""bank"" account. You cannot spend more than the remaining balance on the card just like you cannot withdraw more money from your bank account than you have in the account, and you can recharge your card by making more INR payments into it so as to increase the available balance. But it is like a current account in that you are unlikely to earn interest on the balance the way you do with a savings account. So what if you are back in India and have no further use of this card? Can you get your balance back as cash or deposit into your regular bank account? Call the Customer Help line, or read the card agreement you signed."

negative: First and foremost you should do more research on credit cards and what everything means.  As expressed by others the balance transfer fee is not what you think it is.  Credit cards can be great, they can also quickly erode your credit score and your standing.  So understanding the basics is VERY important.   The credit card that is right for you should have the following criteria.  The first two points should be straight forward, you should not have to pay a CC company for the privilege to use their card.  They should pay you through perks and rewards.  It should also be a CC that can be used for what you need it for.  If you travel internationally a lot and the CC you choose only works within the US then what good is it? The third point is where you need to ask yourself what you do a lot and if a CC can offer rewards through travel miles, or cash back or other bonuses based on your lifestyle.  The transfer fee is not what you think it is, people who already are carrying debt on another credit card and would like to transfer that debt to another credit card would be interested in finding a fee or a low %.  People do this to get a batter rate or to get away from a bad credit card.  If one charges 28% and another charges 13%, well it makes sense to transfer existing debt over to the 13% provided they don't crush you on fees.  Since you have no credit card debt (assumption based on the fact you want to build your credit), you should ask yourself for what purpose and how often do you plan to use the credit card.  Would this card be just for emergencies, and wont be used on daily purchases then a credit card that offers 3% cash back on gasoline purchases is not for you.  If you however love to travel and plan to use your credit card for a lot of purchases OR have a few large purchases (insurance, tuition etc.) then get a credit card that provides rewards like miles.  It really comes down to you and your situation. There are numerous websites dedicated to the best credit card for any situation.   The final thing I will say is what I mentioned at the beginning, its important, CC's can be a tool to establish and improve your credit worthiness, they can also be a tool to destroy your credit worthiness, so be careful and make smart choices on what you use your card for.  A credit score is like a mountain, it requires a slow and steady discipline to reach the top, but one misstep and that credit score can tumble quickly.

negative: No credit card company would ever give a card with either no credit limit or that was not in credit (for prepaid cards) because they would earn no money from it. The company's income is entirely derived from fees that they charge you for balances and interest on those balances so a 0 limit card would be worthless to them. Getting a prepaid card and letting the balance hit 0 might be a way around this but the fees that you will be charged , and will become a debt in your name, when the billing system tries to take the first paid month's cost from the card and fails will be exorbitant. They may go so far as dwarfing the actual cost but the one thing that they will certainly do is lower your credit rating so this is not a good idea.

negative: "You can have as many IRA accounts as you want (whether Roth or Traditional), so you can have a Roth IRA with American Funds and another Roth IRA with Vanguard if you like. One disadvantage of  having too many IRA accounts with small balances in each is that most custodians  (including Vanguard) charge an annual fee for maintaining IRA accounts with small balances but waive the fee if the balance is large. So it is best to keep your Roth IRA in just one or two funds with just one or two custodians until such time as investment returns plus additional contributions made over the years makes the balances large enough to diversify further. Remember also that you cannot contribute the maximum to each IRA; the sum total of all your IRA contributions (doesn't matter whether to Roth or to Traditional IRAs) for any year must satisfy the limit for that year. You can move money from one IRA of yours to another IRA (of the same type) of yours without any tax issues to worry about. Such movements (called rollovers or transfers) are  not contributions and do not count towards the annual contribution limit. The easiest way to do move money from one IRA account to another IRA account is by a trustee-to-trustee transfer where the money goes directly from one custodian (American Funds in this case) to the other custodian (Vanguard in this case). The easiest way of accomplishing this is to call Vanguard or go online on their website, tell them that you are wanting to  establish a Roth IRA with them, and that you want to fund it by transferring money held in a Roth IRA with American Funds. Give Vanguard the account  number of your existing American Funds IRA, tell them how much  you want to transfer over -- $1000 or $20,000 or the entire balance as the case may be -- and tell Vanguard to go get the money.  In a few days' time, the money will appear in your new Vanguard Roth IRA and the American Funds Roth IRA will have a smaller balance, possibly a zero balance, or might even be closed if you told Vanguard to collect the entire balance.  DO NOT approach American Funds and tell them that you want to transfer money to a new Roth IRA with Vanguard: they will bitch and moan and drag their heels about doing so because  they are unhappy to lose your business, and will probably screw up the transfer. Talk to Vanguard only. They are eager to get their hands on your IRA money and will gladly take care of the whole thing for you at no charge to you. DO NOT cash in any stock shares, or mutual fund shares, or whatever is in your Roth IRA in preparation for ""cashing out of the old account"". There is a method where you take a ""rollover distribution"" from your American Funds Roth IRA and then deposit the money into your new Vanguard Roth IRA within 60 days, but I recommend most strongly against using this because too many people manage to screw it up. It is 60 days, not two months; the clock starts from the day American Funds cuts your check, not when you get the check, and it is stopped when the money gets deposited into your new account, not the day you mailed the check to Vanguard or the day that Vanguard received it,  and so on. In short, DO NOT try this at home:  stick to a trustee-to-trustee transfer and avoid the hassles."


query: Is is possible to take a mortgage using Bitcoin as collateral?

positive: This doesn't make any sense. For the people who ask you this, suggest that they borrow the money to invest with you. They can use their bitcoins as collateral for the loan. That way, they get the same benefit and your company doesn't go out of business if the price of bitcoin drops, even temporarily, because the loan becomes unsecured. If they want to try to use a volatile asset as collateral and have to figure out how to cover when the price drops temporarily, great. But why should they put that risk on your other investors who may not be so crazy? Also, this obviously won't meet the investor's concerns anyway. Say the price of bitcoin goes up but you lose 10% of the money you borrowed. Clearly, your investors can't have an interest that worth as much as they would have if they held bitcoin since you lost 10%.

negative: "The current mortgaged owner would typically not have the right to sell any portion of the house without approval from the bank. The bank doesn't ""own"" the house through the mortgage, but they do have a series of rights that, in some cases, look similar to ownership.  Remember that a mortgage is just a loan that uses a house as collateral, to reduce the risk to the lender in the event of default. If it was just a personal loan, without collateral, then there would be a much higher risk of default (and therefore the interest rate would be closer to 20% than 2%). But because the loan was taken with collateral, that collateral can't be sold without the bank's permission. If the bank allowed this to happen, then one risk would be exactly as you say - that the mortgagee stops paying the bank, and the bank no longer is able to recover the full value of the loan on selling the remaining 50% of the house owed as collateral."

negative: You could use Bitcoin. Bitcoin is THE fee-killer. I haven't used US and China exchanges, but you can connect your US bank account to Coinbase, buy bitcoins, transfer to BTCChina, and sell for CNY. There are many other options to convert from and to Bitcoins, but Coinbase seems to be most practical and most widely used in the US and BTCChina is the largest and probably most trusted exchange in China. You can also use LocalBitocoins for both buying and selling, but people on LocalBitcoins typically charge larger fees than exchanges, though this may vary. Please read a bit about Bitcoin before using it, and be aware of the risks. It's still very new (but revolutionary and very easy and fast to move internationally). Try with a small amount first to check it out. Your electronic wallet can be stolen, and you're exposed to certain risks of exchanges shutting down or government/banks stepping over their boundaries. One nice thing is that you probably won't be affected by volatility as you won't be holding bitcoins for long. Also be aware that the Chinese don't like capital leaving China and there is a possibility that China government will introduce further regulations on exchanges (though they have stated that buying, selling and owning bitcoins is legal). You're doing the opposite, importing money into China, but you'll probably feel it in one way or the other. P.S. Approximate fast fee calculation: Coinbase has 1% transaction fee + $0.15 bank fee. Bitcoin transfer is free or in some cases with minimal 0.0001 BTC fee (a bit less than $0.01 currently). BTCChina has 0.3% trading fee and 0.5% CNY withdrawal fee. As you can see, the main fees are exchange fees, but still less than 3% and if you find a good exchange combination with low fees you're golden, or might even make money on transaction if BTC price rises. Also check this Reddit thread - there are alternative China exchanges with lower fees. P.P.S. Found this blog post, maybe a bit outdated, but probably with better calculation than mine as it takes into account exchange prices.

negative: I have come to the conclusion, taking into account the Mining aspect of Bitcoin, that it is the biggest coordinated brute force attempt to try and Decrpyt something.   Yes . .I know, a hash cannot be reversed, thats what they said about MD5 and in the absence of true random, anything is possible.  So they get everybody excited, woohoooo . .bitcoin is $4000 . . .get everybody to buy systems with 5/10/15 high end graphic cards. spend US $ 1500-2000 to make US $7-8 a day and all that processing power goes where?  When the Hash for a piece of data will never change and always remain the same.

negative: I'd take a look at some graphs and chart the price of bitcoins and its value. You'll be surprised that it follows basically any other vehicle for money. There were several times where the price of bitcoin dropped drastically and ontop of that, there is a wide margin of error that could cost you your entire wallet with no equivalent to a FDIC insurance or possibility of government/federal intervention in the event of theft.

negative: You would probably be best off checking through your loan documents to see if anything is listed in it in regards to tearing down the existing house. Likely it is not allowed. Thinking about it logically, the house is collateral for the mortgage, and you are wanting to destroy the collateral. I would expect the bank would not be pleased. Semi related question (answers have some good info) -  Construction loan for new house replacing existing mortgaged house?

negative: "What you're looking at is something called ""Bridge-Financing"".  Essentially, it allows you to borrow your down-payment from the bank, using your old home as collateral.  The interest rate varies, but if you get the bridge from the same institution as your new mortgage, they will often be a bit flexible.   You take possession of the new home, and begin mortgage payments on it normally.  When the old home is sold, the bridge is paid off.   Note that the deposit on signing for the new house will still have to be cash.  All bets are off if you are talking about a NEW new home, as builders usually require advance payments during the build."

negative: To calculate any daily return, all one need do is divide the final value by the initial value, subtract 1, and multiply by 100%: This can be applied to either the futures alone, the investments used as margin collateral alone, or all together. Margin collateral as a factor of a derivative's return Collateral can take many forms. Many suggest that cost and revenue for a derivative trade should also take into account margin requirements.  This can become problematic. If a futures position moved against the trader, yet the margin was secured with equities at the maximum, and the equities moved with the trader, the futures trade could be interpreted as less of a loss because the collateral, which is probably totally disassociated with the futures position, increased in value. Then again, if a futures position moved with the trader, yet the margin collateral moved against the trader then taken together, the futures trade would look less profitable. Furthermore, most likely the result of a futures position and its collateral would never produce the same result, so extrapolation would become ever more difficult. For ease of analysis, a position's cost and revenue should be segmented from another unless if those positions are meant to hedge each other.  Margin is not a cost, but it is a liability, so margin will affect the balance sheet of a futures trade but not its income statement, again unless if the collateral is also used to hedge such futures position.

negative: You submitted a claim for damage to the deck. The insurance company notified the mortgage company. Now the mortgage company wants to make sure that the collateral for the loan is still in good condition. They want you to make the repairs that you insisted needed to be done. They may even require you to use a licensed contractor before releasing the funds. Once you own the house without a mortgage, then you can decide for yourself if minor repairs need to be done.

negative: "Joe has explained how most mortgages work A mortgage is simply a loan backed by a property (and, because it's   both very large and very common, covered by some specific laws). As   such, the bank isn't an ""investor"" in your house; it simply is lending   you money with the property as collateral. So, it doesn't get any   share of the profit. However there are some mortgages when the bank takes part of the increase in the property value, e.g. Castletrust’s “But to Let Equity Loan” in the UK.  Other products allows a old person to take money out of their property in exchange for say 60% of what the property sells for on their death. Islamic mortgages also work in a different way as interest is not allowed to be charged.  For example Unlike a conventional mortgage where the purchaser borrows money from   a lender which is then repaid with interest, Al Rayan Bank's Sharia   compliant Islamic mortgage alternatives (Home Purchase Plans or HPP)   are based upon the Islamic finance principles of a Co-Ownership   Agreement (Diminishing Musharaka) with Leasing (Ijara)."

negative: Banks consider investment mortgages (and any mortgage where you don't live in the property), as a riskier investment than an owner occupied, home collateral mortgage. The sources of increased risk range from concerns that you will screw up as a landlord, your tenants will destroy the place, you won't have tenants and can't afford to pay the bank, and/or you'll take out several other investment mortgages and over extend yourself. All of these risks are compounded by the fact that it is harder for the bank to convince you to pay when they can't put you out on the street if you default. Banks lend and invest in money, not real estate, so they would much rather have a paying loan than a foreclosed house, especially with the modern foreclosure glut. The increased risk means the bank will charge higher interest for the loan, may require a higher downpayment, and will require higher lending standards before issuing the loan. A new housing investor can get around these higher prices by living in the home for a few years before renting it out (though your lender could possibly require you to renegotiate the loan if you move out too soon).

negative: Obviously the best way to consolidate the real-estate loans is with a real-estate loan. Mortgages, being secured loans, provide much better interest rates. Also, interest can be deducted to some extent (depending on how the proceeds are used, but up to $100K of the mortgage can have deductible interest just for using the primary residence as a collateral). Last but not least, in many states mortgages on primary residence are non-recourse (again, may depend on the money use). That may prove useful if in the future your mother runs into troubles repaying it. So yes, your instincts are correct. How to convince your mother - that's between you and her.

negative: As pointed out in a comment, it would be more natural to get a regular mortgage on the second house, which is essentially using the second house as collateral for its own loan.  If you are to use the first house, either mortgage it or get a home equity line of credit on it and use that money to buy the second house. The relative merits of the options may depend in part on where you live, whether or not you live in the homes, and the relative cost of the two properties.  For example, in the US, first and second homes get preferred tax treatment in addition to rates that are typically better than commercial loans (including mortgages for investment properties).  If you're going to get a better rate and pay less taxes on one option and not on the others, that's definitely something to weigh.

negative: "Let's illustrate how typical mortgage and its insurance works, from the very beginning. few years pass You're at the last point now. The whole point of the insurance was to preserve value of bank's collateral, at least from its point of view. By making a claim you have testified that a damage has occurred and some value of the property was lost. It's only reasonable for the bank that it wants the value of the asset to be restored to the value of the loan. Or the other way around. Bank doesn't really care if your deck is repaired, it only cares to have right side equal left side in the books. By taking the mortgage you've agreed to preserve the value of the property. There are many ways out of this situation, but pocketing the money isn't one of them.  There is no need to fight the mortgage company, because they're right. Talk with them in good faith and walk through available options. If you feel that you can live with the deck as it is, then paying back part of the loan might be a good idea. You don't ""lose"" the money this way, you're still 2k ahead - just not now, but in 20 years.  Afterthought: it's possible that it would be ""enough"" to re-evaluate the house to ensure it's still worth its original value even with damaged deck (eg due to other improvements you've made over the years or general property prices rising in the area). I put quotes, because you have to count costs of reevaluation which may be too big to make it worth. AND it might turn out it's worth even less, eg if the prices dropped. Or add another collateral, but that means signing another lien which also costs money."

negative: "The loan-to-value ratio (LTV Ratio) is a lending risk assessment ratio that financial institutions and others lenders examine before approving a mortgage. It sounds like your lender has a 60% requirement. Remember the home is the collateral for the loan.  If you stop making payments, they can take the house back from you.  That number is less than 100% to accommodate changing market prices, the cost of foreclosure, repairing and reselling the home.  They may be a safety factor built in depending on the home's location.   If you want to buy a $1.8 million dollar home you will have to come up with 40% down payment.  That down payment is what reduces the risk for the lender.  So no, there is no way to cheat that. Think about the transaction from the view of the lender.   Note: in some areas, you can still get a loan if you don't have the required down payment.  You just have to pay a monthly mortgage insurance.  It's expensive but that works for many home buyers.  A separate insurance company offers a policy that helps protect the lender when there isn't enough deposit paid. Update:  Er, no.  Keep it simple.  The bank will only loan you money if it has collateral for the loan. They've built in a hefty safety margin to protect them in case you quit paying them your monthly payments.  If you want to spend the money on something else, that would work as long as you provide collateral to protect the lender.  You mention borrowing money for some other purpose then buying a home.  That would be fine, but you will have to come up with some collateral that protect the lender. If you wanted to buy a new business, the bank would first ask for an appraisal of the value of the assets of the business.  That could be applied to the collateral safety net for the lender.  If you wanted to buy a business that had little appraisal value, then the bank would require more collateral from you in other forms.  Say you wanted to borrow the money for an expensive operation or cosmetic surgery. In that case there is no collateral value in the operation. You can't sell anything from the surgery to anybody to recover costs. The money is spent and gone.  Before the bank would loan you any money for such a surgery, they would require you to provide upfront collateral.  (in this case if you were to borrow $60,000 for surgery, the bank would require $100,000 worth of collateral to protect their interest in the loan.) You borrow money, then you pay it back at a regular interval at an agreed upon rate and schedule.  Same thing for borrowing money for the stock market or a winning horse at the horse race.  A lender will require a hard asset as collateral before making you a loan...   Yes I know you have a good tip on a winning horse,and you are bound to double your money, but that's not the way it works from a lender's point of view.    It sounds like you are trying to game the system by playing on words.  I will say quit using the ""40% to 60%"" phrase.  That is just confusing.  The bank's loan to value is reported as a single number (in this case 60%)  For every $6000 you want to borrow, you have to provide an asset worth $10,000 as a safety guarantee for the loan. If you want to borrow money for the purchase of a home, you will need to meet that 60% safety requirement.  If you want to borrow $1,000,000 cash for something besides a home, then you will have to provide something with a retail value of $1,666,667 as equity. I think the best way for you to answer your own question is for you to pretend to be the banker, then examine the proposal from the banker's viewpoint. Will the banker alway have enough collateral for whatever it is you are asking to borrow? If you don't yet have that equity, and you need a loan for something besides a home, you can always save your money until you do have enough equity.  Comment One. I thought that most lenders had a 75% or 80% loan to value ratio. The 60% number seems pretty low.  That could indicate you may be a high risk borrower, or possibly that lender is not the best for you.  Have you tried other lenders?  It's definitely worth shopping around for different lenders.   Comment Two. I will say, it almost sounds like you aren't being entirely honest with us here.  No way someone with a monthly income who can afford a $1.8 Million home would be asking questions like this.  I get that English probably isn't your first language, but still.  The other thing is: If you are truly buying a $1.8 Million dollar home your real estate agent would be helping you find a lender that will work with you.  They would be HIGHLY motivated to see this sale happen.   All of your questions could be answered in ten minutes with a visit to your local bank (or any bank for that matter.)  When you add up the costs and taxes and insurance on a 30 fixed loan, you'd have a monthly mortgage payment of nearly $10,500 a month or more.  Can you really afford that on your monthly income?"

negative: You'll have to take cash from your Credit Card account and use that to trade. I doubt any brokerage house will take credit cards as it's trading without any collateral (since credit cards are an unsecured credit)

negative: His argument seems to be all hinging on the seamless transaction/transfer of money (which I do agree is something that can be made much better) but what about other functions that banks do... like lending (mortgages) ect.   I don't see how that works on blockchain/bitcoin.. and also I don't see why it has to be Bitcoin and not some competing crypto.

negative: I am not a financial expert, but I'm pretty sure that it DOES matter.  When you take out a mortgage on a home, you are using the home itself as collateral. If you fail to make payments on that home, and go into foreclosure, the bank takes possession of your home. With that understanding, imagine you borrow $500K for a purchase of a home. If the cost of the home was $1M, the bank will have more confidence they can recover the money they lent you (by selling the home should it go into foreclosure) than they would if the house was only worth $700K. In effect, the larger your down payment, the easier it would be for the bank to recover their money should you go into foreclosure early on. As far as 50% overcoming a low credit score... that's a very open-ended question. There are just too many factors at play to give a simple yes or no answer to that.

negative: Rich people use debt for various reasons. The question should not assume that billionaires don't use debt. They also pay lower interest rates on that debt because they have enough collateral that their debt is safer than a typical mortgage. Many rich people will use interest only mortgages on their primary residences so that they can keep their stock earning at higher growth rates than the mortgage interest that they are paying all while writing off a portion of that mortgage interest on their taxes.  Taking an artificially low salary and receiving equity for the larger portion of compensation is also a tax strategy to limit the amount of taxes owed on that income. If paid directly in stock grants, that will count as income, but if paid in options, then the purchased stock will only be taxed at the lower capital gains rates if the stock is held for a year after the options are exercised. Every billionaire will have complicated tax avoidance strategies that will require multi-year planning for the best long-term minimization of taxes. Debt is a strategic part of that planning. Also consider that a major part of that upscale lifestyle (corporate jets, fancy meals, etc.) is on the company dime because the CEO is always on the clock. As long as he is meeting with business prospects or doing other company business, those expenses will be justified for the corporation and not attributed as income.

negative: A lender will look at three things when giving a loan: Income. Do you make enough money each month to afford the payments. They will subtract from your income any other loans, credit card debt, student loan debt, mortgage. They will also figure in your housing costs. Your Collateral. For a mortgage the collateral is the house, for a car loan it is the car. They will only give you a loan to a specific percentage of the value of the collateral. Your money in the bank isn't collateral, but it can serve as a down payment on the loan.  Your Credit score. This is a measure of how well you handle credit. The longer the history the better. Using credit wisely is better than not using the credit you have.  If you don't have a credit card, get one. Start with your current bank. You have a history with them. If they won't help you join a credit union. Another source of car loans is the auto dealer. Though their rates can be high. Make sure that the purchase price doesn't require a monthly payment too high for your income. Good rules of thumb for monthly payments are 25% for housing and 10% for all other loans combined. Even a person with perfect credit can't get a loan for more than the bank thinks they can afford. Note: Don't drain all your savings, you will need it to pay for the unexpected expenses in life. You might think you have enough cash to pay off the student loan or to make a big down payment, but you don't want to stretch yourself too thin.

negative: "I took a second mortgage when I moved house because I had a long-term fixed rate mortgage that would have incurred punitive fees if I had cancelled it. Rather than doing that I took a second mortgage over the same term for the difference. As my second mortgage was with the same lender, they still had ""First Charge"" on the property (This means that in the event of default they have first call on the property to recoup their losses), so the interest rate was not higher (actually it was slightly less than my first mortgage). My case is not that usual, normally a 'second mortgage' is with a separate provider that takes a ""Second Charge"" on the property. The interest rates are normally higher as a result as there is more chance that the lender will not recoup their money in case of a default as the first charge has priority. The second mortgage may still be cheaper than an unsecured loan, as the second charge provides some collateral, this might make it attractive if a sudden expense needs to be covered."

negative: Yeah, all tech suffers from obsolescence. That doesn't negate the inherent value, it just means that something could possible be more valuable in the future. The limited nature of Bitcoin and the increase in demand is what's driving the price at the moment. Many people are already invested in Bitcoin and that will give it fiat even in the face of competitors.

negative: "I think the nuance you're introducing here is probably as close as you're going to get to acknowledging Bitcoin's price action isn't ""just"" about ""chinese money"", despite your first comment on the topic.  If you're predicting that Bitcoin's market value will take a hit when China announces restrictions on bitcoin or its surrounding ecosystem, you're spot on. Bitcoin already takes a nosedive whenever China makes a sneezing noise that vaguely sounds like ""bitcoin.""    But high volatility is not the same thing as collapsing. If you're waiting for a bitcoin collapse, don't hold your breath while doing so."

negative: By in combination with fiat I mean we will continue to use sterling or dollars in society along with Bitcoin perhaps for online purchases exclusively, as an example. Many people here advocate for a society that would only use cryptocurrency as money.   Cryptocurrency, specifically Bitcoin, is unlike fiat currency firstly because it is not backed by a government, it's in the ether so to speak, it proves its own value intrinsically. No central authority decides on the actions to take in regard to the currency.   Other characteristics that separate Bitcoin from fiat are its inability to be inflated, it's finite nature, there will only ever be x amount of bitcoins - it is deflationary by nature of the algorithm. Central authorities can devalue their fiat currency through financial instruments like inflation and controlling the production (quantitative easing). This isn't true of all crypto currencies like dogecoin and maybe ETH

negative: "The mortgage broker makes money from the mortgage originator, and from closing fees.  All the broker does is the grunt work, mostly paperwork and credit record evaluation.  But there's a lot of it.  They make their money by navigating the morass of regulations (federal, state, local) and finding you the best mortgage from the mortgage lender(s) they represent.  They don't have any capital involved in the deal.  Just sweat equity. Mortgage originator is the one who put up the capital for you to borrow.  They're the ones who get most of the payments you send in.  They sell the mortgage if they receive what they consider an equitable offer.  Keep in mind that the mortgage, from the lender's point of view, is made up of three parts.  The capital expenditure, the collateral, and the cashflow.  The present value of the cashflow at the rate of the loan is greater than the capital expenditure.  Any offer between those two numbers is 'in the money' for them, and the next owner, assuming no default.  But the collateral makes up for the chance of default, to an extent. There's also a mortgage servicing company in many cases.  This doesn't have to be the current holder of the loan. Study ""the time value of money"", and pay close attention to the parts about present value, future value, and cash flow and how to compare these."

negative: Just a thought because this is a really good question: Would the buying and selling of blockchain based digital currency,   using other blockchain based digital currencies, be subject to like   kind treatment and exempt from capital gains until exchanged for a   non-blockchain based good or service (or national currency) Suppose someone sells 1 bitcoin to buy 100 monero.  Monero's price and bitcoin's price then change to where the 100 monero are 3 bitcoins.  The person gets their bitcoin back and has 66.67 monero remaining. This scenario could be: Suppose someone sells 1 bitcoin at $1000 to buy 100 monero at $10.  Bitcoin crashes 80% to $200 while monero crashes to only $6 per monero.  $6 times 100 is $600 and if the person gets their bitcoin back (at $200 per bitcoi), they still lost money when measured in US Dollars if they move that bitcoin back to US dollars. In reading the IRS on bitcoin, they only care about the US dollar value of bitcoin or monero and in this example, the US dollar value is less.  The person may have more bitcoins, but they still lost money if they sell.

negative: you dont need any permits or be inside the US to trade the exact same securities on US exchanges. you can literally move your bitcoin from a chinese exchange to us exchange in seconds.  i don't see how you can possibly run into legal issues if anyone from outside the country can trade bitcoins on an exchange inside the country without any permit. a lot of these exchanges dont ask for ID or social security number anyways. none of it is government regulated. also trading anything is never a passive income. theres no such thing as an easy or obvious investment. there are always risks- and the actual risk is often deceivingly low

negative: You can't    Your problem is that no one will value you new currency call it bytecoin. People will ask why is the bytecoin worth anything and you don't have an answer. You employees will have worthless currency and be effectively making under minimum wage.   Its the same as if you printed Charles dollars with your face instead of George Washington, no one would take them for real money or be willing to trade them for services or food. Bitcoin's basis of value is that many people will trade real services or other currencies for it, but it took decades for this willingness to use bitcoin to build, and mostly because of the useful features of bitcoin, it can protect anonymity is easy to transfer world wide and many more. Even with those features the value of bitcoin is very volatile and unreliablie because it lacks backing. How many decades are your employees willing to wait, what amazing new features will you nontechnical staff add that bitcoin lacks?

negative: "This is the best tl;dr I could make, [original](http://www.dnsassociates.co.uk/blog/bitcoins-tax-implications-uk) reduced by 92%. (I'm a bot) ***** > Tax practices of bitcoin activities in UK The HMRC guidelines on the tax treatment of transactions relating to the sale or use of bitcoins and other similar cryptocurrencies are applicable for bitcoin.  > Different taxes and their activities concerning bitcoins In the case of activities concerning bitcoins and other cryptocurrencies, the taxes like income tax, corporation tax and capital gains tax transactions will hinge on the very activities taking place and the parties involved, in the similar way as transactions involving a normal currency, such as sterling, are decided.  > No special instructions are there for income tax, corporation tax and capital gain tax for the transactions relating to bitcoins.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/72z5sg/bitcoin_tax_in_the_uk_explained/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~218069 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **bitcoin**^#1 **tax**^#2 **activity**^#3 **currency**^#4 **transaction**^#5"

negative: Depending on how tech savvy your client is you could potentially use bitcoin. There is some take of indian regulators stopping bitcoin exchanges, meaning it might be hard to get your money out in your local country but the lack of fees to transfer and not getting killed on the exchange rate every time has a huge impact, especially if your individual transaction sizes are not huge.

negative: In a process called collateralization, your mortgage is combined with others to form a security that other can invest in. When done right, this process provides liquidity, more money to be lent for more loans. When done wrong, bad things happen.  My mortgage happens to be held by the issuing bank. Yours was sold into such a pool of mortgages. One effect of this is the reselling of the servicing of the loan. I've had other mortgages that were sold every year, but I never paid ahead. With this bank, I'm on my fifth refinance, but the bank keeps the loan in house no matter what. I don't know if there's any correlation, it depends on the originating bank, in my opinion.

negative: "Most personal loans in the US are for the purpose of purchasing some tangible object (usually a house or car) and that object is the collateral for the loan. Indeed, the loan proceeds are usually paid directly to the seller without passing through the bank account of the borrower, and the seller delivers the title of the car to the lender, or a mortgage lien is recorded on the real property. Except possibly in the case of a refinance of a home mortgage,  there is not much cash from such a loan to send to a friend to invest in his business, whether in the US or in India.  These types of loans are ""relatively easy"" to get. Much harder to get are unsecured personal loans. Unless your friend has a very friendly banker, getting an unsecured loan of, say, $20,000 ""just for the heck of it"" is not easy. Some reasonably well-off people do manage to get such loans and use the money to invest in the stock or bond markets, in which case, the interest paid on such loans can be deducted on  Schedule A (but only to the extent of the actual investment income; any extras can be carried over to the next year). So, will your friend be investing in your business or making a loan to your business? and do you anticipate that your business will generate any investment income or interest for your friend? If not, and your friend still wants to finance your business (while making payments on the loan in the US), then your friend must really like you a lot (or have faith that a few years down the road, you will be able to sell your business to GoAppTel for mucho big bucks and pay him off very handsomely)."

negative: The comparison with tulip mania shows a wilful ignorance of what bitcoin is. Scarcity is one of the things that makes bitcoin good, sure, but it's not the only thing. Could you have transfered millions of dollars worth of tulips around the world in minutes, securely and for pennies on the dollar?   >In bitcoin’s case, Dimon said he’s skeptical authorities will allow a currency to exist without state oversight  *Allow* Bitcoin to exist? Authorities don't get say whether Bitcoin is *allowed* to exist or not. You'd think the CEO of one of the largest banks in the world would know that.   >“If you were in Venezuela or Ecuador or North Korea or a bunch of parts like that  Bitcoin is outperforming a lot of currencies, not just in Venezuela, Ecuador or North Korea.  > if you were a drug dealer, a murderer, stuff like that, you are better off doing it in bitcoin than U.S. dollars,”  Why would Bitcoin be better for *only* those things? He's trying to smear Bitcoin as being only used for illegal activities and that is simply not the case. Besides, the reason that people *do* use it for those things is due to the inherent privacy aspects of Bitcoin (though not perfectly private, they're still useful).