tag:blogger.com,1999:blog-20126765329332625272024-02-08T08:23:38.289-08:00The Male StormA maelstrom of Canadian financial ideasJim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.comBlogger37125tag:blogger.com,1999:blog-2012676532933262527.post-67228866750161387372010-06-27T20:15:00.000-07:002010-06-27T20:21:38.077-07:00Wal-Mart's First Financial Product, a MastercardI expect more financial products to roll out in the near future, hopefully including high interest savings accounts and GICs with rates to challenge the likes of Ally, Canadian Tire Bank, and Presidents Choice Financial. In the meantime, they have issued their own Mastercard and you can read about it <a href="http://www.thestar.com/business/companies/walmart/article/823669--wal-mart-canada-issues-rewards-based-mastercard">here</a>. More details are at Wal-Mart's site <a href="http://www.walmart.ca/wmfinancial">here</a>.Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com0tag:blogger.com,1999:blog-2012676532933262527.post-20061072307653826542010-06-05T09:42:00.000-07:002010-06-05T09:53:22.862-07:00Wal-Mart Gets Retail Banking Approval in CanadaThis week Wal-Mart received final approval to offer retail banking services in Canada. Their official launch is on June 15, and they've been tight lipped about it so far. I'm hoping that we will see something like the convenient online access provided by Ally along with savings rates to match. Maybe this will finally light a fire under the likes of ING Direct and PC Financial whose rates have been very sadly lacking of late. <br /><br />Also in recent news, credit unions have been given the green light to go national, leaving their provincial borders behind if they so choose. If they do elect to do this, they will have to adopt CDIC insurance, and its $100K limit. I hope that the online Manitoba credit unions such as Achieva, MAXA, and Outlook don't go national as we already have access to them for deposits, and their insurance is unlimited.Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com0tag:blogger.com,1999:blog-2012676532933262527.post-51313618281739688832009-11-04T19:08:00.000-08:002009-11-04T19:32:45.168-08:00Ally "Bank" Sets up ShopThere's a "new" financial player in the high interest savings account game these days. Perhaps you've seen their ads on tv, one of which has a man taking a toy truck away from a boy and giving him a cardboard cutout of one instead. Many of us can relate to this as we've watched the interest rates on our savings accounts head downward even as the Bank of Canada rate has held steady. Ally promises to be different, but we'll have to see. They are currently offering 2% on their high interest savings accounts, which is <strong>almost double</strong> the rate offered by the likes of ING Direct. <strong>Triple</strong> the now pathetic 0.65% offered by Altamira Cashperformer, now owned by the National Bank of Canada.<br /><br />Ally appears to operate much like ING Direct, with electronic linked access to your regular bank account. They promise no fees. They also claim that interest is compounded daily. They are CDIC insured up to the usual $100K. Ally is currently a product of ResMor Trust, so if you already have financial deposits with ResMor, you may want to pay attention to the fact that the insurance limit refers to all of your ResMor holdings. You can read more about them <a href="http://www.ally.ca/en/the-ally-story.html">here</a>.<br /><br />I think they deserve our business as many of the other players now are paying rates close to the "big banks" that they like to mock in their ads. When it comes to your savings, you really should pay attention and shop around.Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com2tag:blogger.com,1999:blog-2012676532933262527.post-76880192440678635952009-06-14T07:11:00.000-07:002009-06-14T07:53:02.380-07:00Get $200 Free from TD Canada Trust<a href="http://www.tdcanadatrust.com/">TD Canada Trust</a> have just introduced their "Simply Save" program. This program is a lot like Scotiabank's "Bank The Rest" program, which is really designed to just trigger more overdraft protection service fees on their poorest customers. You can read my previous <a href="http://himmicane.blogspot.com/2008/05/scotiabanks-new-bank-rest-savings.html">blog entry</a> on that if you like. In a nutshell, every time you use your atm card, be it for cash withdrawal or debit purchases, you can designate an amount of money to be transferred into a savings account. So it is just an automatic way to transfer money out of your chequing account and into a restrictive savings account with high fees. Such a savings account typically allows one free withdrawal per month, with a $10 fee for any subsequent withdrawals. So be careful if you have such a savings account, read the fine print.<br /><br />For a limited time (to July 24, 2009), if you sign up for this program, TD will give you $10 (up to a maximum of $200) over the next year, for every $100 you manage to transfer to yourself. If you set up the plan to transfer the plan maximum of $5 every time you use your card, then it will take 20 transactions to save $100. So that's 20 transactions for the bank to give you a free $10, or in other words, the bank will pay you 50 cents every time you use your card for the next year. That's pretty darn sweet. So essentially if you shuffle $2K to yourself using 400 transactions next year, the bank gives you $200. To put it in perspective, you'd have to have a $10,000 GIC at 2% for a year to make $200. It's like the bank is setting aside 10 grand for you.<br /><br />Don't forget to pull your savings out once a month and transfer them to some CDIC insured bank such as <a href="https://www.myctfs.com/Products/HighIntSavings/">Canadian Tire Financial Services</a> who will actually pay you some decent interest on the money. This will minimize the opportunity cost of your $2K used in the scheme.Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com0tag:blogger.com,1999:blog-2012676532933262527.post-71052058868499315512008-12-06T08:36:00.000-08:002008-12-06T08:45:35.035-08:00Car Insurance Liability Coverage - Do you Have Enough?If you're a car owner, I'd like you to take a look at your liability coverage on your insurance policy. Is it only a paltry $500K, or is it $1 million or hopefully higher? A lot of car owners just blindly keep renewing their policies year after year without considering how much actual liability coverage they have. In my opinion, $1 million is no longer enough and you should really be taking it up to $2 million, which will cost you around $20 per year more than the $1 million level. This is even more important if you occasionally drive into the USA, since our dollar has fallen to about the 80 cent level.Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com2tag:blogger.com,1999:blog-2012676532933262527.post-89245862206477414702008-11-24T19:40:00.000-08:002008-11-24T20:01:26.016-08:00Deflation "Grows" Your Existing DebtIn a recent <a href="http://www.reportonbusiness.com/servlet/story/LAC.20081122.STBUYSIDE22/TPStory/Business/">column</a> in the Globe and Mail, <span class="blsp-spelling-error" id="SPELLING_ERROR_0">Avner</span> <span class="blsp-spelling-error" id="SPELLING_ERROR_1">Mandelman</span> points out that we're likely in deflationary times. In normal times of inflation, money slowly loses its value as it gets diluted. If you're in a negative monetary position <span class="blsp-spelling-error" id="SPELLING_ERROR_2">ie</span>. carrying debt, inflation will slowly make the debt less and less significant while your wages likely rise as well. During deflation, the opposite occurs. Your debt becomes more and more significant as your wages likely sit flat or possibly decline. On top of all that, the stuff you bought with the borrowed money is likely to be dropping in value too, faster than just the usual depreciation. I'm a big proponent of retiring your personal debt quickly, but in times of deflation I can't emphasize this enough.Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com0tag:blogger.com,1999:blog-2012676532933262527.post-90262976152448477652008-11-23T07:35:00.000-08:002008-11-23T07:49:09.305-08:00Christmas Gift Cards - Be Careful!!!We're now coming into the Christmas gift-giving season, and gift cards tend to be very popular. Stores love them since they get cash in advance, and overall the full value purchased on them tends not to be completely redeemed. They get lost, set aside and forgotten, or damaged leaving behind stored value that simply never gets spent. Due to there being no simple way to tell how much money is left on them, they get set aside. Always keep the last register receipt with your gift card, else it's like having store specific cash that has all the ink faded off except for the serial numbers. Some stores do have websites that let you check the money remaining on the card, but who wants to have to go running to the web to find out that there's $0.50 left on a card?<br /><br />Next year, 2009, is not looking very good for retail, so store closings and bankruptcies are likely to be quite common. Don't be left holding useless gift cards, and I also don't recommend giving gift cards that are likely to become worthless. Assume that any gift card is not going to be redeemed in one fell swoop, and that your "giftee" is going to take six months or more to spend it down. In light of this, only buy gift cards from solid businesses that are highly likely to be around through 2009.Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com0tag:blogger.com,1999:blog-2012676532933262527.post-10293985493795835202008-11-08T08:24:00.000-08:002008-11-08T08:51:27.716-08:00Finding Secure Money MattressesIn these turbulent financial times, cash is king. Even gold doesn't seem to be doing all that well. So in this brief post, I'd like to just take a look at where one can securely park their money.<br /><br />Money market funds, traditionally, have been great places to park your cash. They have generally paid pretty good rates of interest. But just how secure are they? They are not covered by CDIC insurance, and do you really know what paper is held by them? I'm going to define a secure money "mattress" as a place to park cash where the interest rates are top notch, and where this cash is insured. So just where are these mattresses? I'm listing the top three that I'm aware of, in order of my perceived quality of the insurance backing them.<br /><ol><li>Pretty much any high paying Canadian bank account with CDIC insurance qualifies. The insurance covers you up to $100,000 per depositor per bank. An RRSP account qualifies separately and so does a joint account. The downside is that if you have a lot more than $100K in cash to protect, you are having to open accounts at more than one bank, spreading around your $100K amounts. Such high interest accounts are ING Direct, President's Choice Financial's Interest Plus, ICICI Bank, and HSBC Direct. Do your homework though, some of these banks are easier to deal with than others.</li><li>CIPF Insurance covers investment brokers. If an investment broker goes bankrupt, your cash on hand with them is covered up to $1 million. But can you find a broker in Canada that will pay you more than a laughable rate on idle cash? I'm aware of only one right now, Etrade Canada with their new cash optimizer account. I believe that this is CIPF insured up to $1 million and they pay slightly better than ING Direct right now. This can save you having to maintain multiple $100K accounts at different banks. But it is still prudent not to have everything in one pot anyway. However, as always, do your own due diligence here and don't rely on what some guy has typed in his blog. Yes, even me. ;)</li><li>Manitoba Credit Unions. I'm not sure what the rules exactly are for opening accounts in Manitoba, but their credit union bank accounts are insured to <em>unlimited</em> amounts even for non-residents. Such credit unions are Achieva Financial and Outlook Financial. They will typically service charge the hell out of you unless you just use the accounts as mattresses and don't transact on them. But they pay really high rates of interest. Do lots of your own due diligence here.</li></ol>Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com0tag:blogger.com,1999:blog-2012676532933262527.post-20278621099998427832008-10-08T17:44:00.000-07:002008-10-09T08:32:42.835-07:00My Idea Became a Billion Dollar ($945 million) CompanyBack in 1999, three <span class="blsp-spelling-error" id="SPELLING_ERROR_0">Nortel</span> employees, namely myself, Claude <span class="blsp-spelling-error" id="SPELLING_ERROR_1">Bouffard</span>, and John Shannon were enjoying beers after work at the Royal Oak pub in <span class="blsp-spelling-error" id="SPELLING_ERROR_2">Kanata</span>, Ontario. We bantered about some ideas around <span class="blsp-spelling-error" id="SPELLING_ERROR_3">micropayments</span> on the <span class="blsp-spelling-error" id="SPELLING_ERROR_4">internet</span>. Why couldn't we pay small amounts of money, such as 25 cents for the newspaper, and have it just show up on our phone bill? We worked in the <span class="blsp-spelling-error" id="SPELLING_ERROR_5">DMS</span> division of <span class="blsp-spelling-error" id="SPELLING_ERROR_6">Nortel</span> and had some idea of how the billing system worked. After all, <span class="blsp-spelling-error" id="SPELLING_ERROR_7">telcos</span> have very well established billing systems for handling tiny line items, and they have an established system for reconciling these amounts amongst themselves. So the idea was essentially that you'd click on a link, a secure transaction box would pop up and prompt you for your "Go Pin". Well, the name Go Pin would come later but it serves to help you understand how it would work. The 25 cents or whatever it was would simply show up on your phone bill.<br /><br />Our VP at the time, Bob Tipple, was convinced enough by John and Claude to allow Claude to run full-time with the idea. Claude being the infectious ball of energy that he is, drove the idea forward to the point where it had enough legs for the internal incubator folks to take the whole idea seriously. John and Claude sold it to the incubator folks, I was occasionally <span class="blsp-spelling-error" id="SPELLING_ERROR_8">cheerleading</span> from the technology side. <span class="blsp-spelling-error" id="SPELLING_ERROR_9">Nortel</span> created the business as <span class="blsp-spelling-error" id="SPELLING_ERROR_10">GoPin</span> Inc, and venture capitalists were found, and finally a CEO, Gary <span class="blsp-spelling-error" id="SPELLING_ERROR_11">Marino</span>, from the banking industry in the US came on board to lead. The company underwent a number of name changes, to <span class="blsp-spelling-error" id="SPELLING_ERROR_12">Pinmoney</span> then I4Commerce, then <span class="blsp-spelling-error" id="SPELLING_ERROR_13">BillMeLater</span> and it moved to Baltimore. Also, as you likely already figured out by now, the original idea morphed into <span class="blsp-spelling-error" id="SPELLING_ERROR_14">BML</span> doing <span class="blsp-spelling-error" id="SPELLING_ERROR_15">realtime</span> credit checks and handling the billing, as opposed to trying to herd the cats we like to call <span class="blsp-spelling-error" id="SPELLING_ERROR_16">telcos</span>.<br /><br />Ironically the company sold for $945 million, more than <span class="blsp-spelling-error" id="SPELLING_ERROR_17">Nortel's</span> total market capitalization today. What did I get? Well, I do have a nice <a href="http://www.flickr.com/photos/16702202@N00/2921071172/">mug</a>, a great story, a sense of pride, and I'm a little older and a bit wiser now. Maybe it's time to try another idea, but this time actually get some money out of it. I do not know how <span class="blsp-spelling-error" id="SPELLING_ERROR_18">Nortel</span> itself fared, they likely cashed out to a <span class="blsp-spelling-error" id="SPELLING_ERROR_19">VC</span> early.<br /><br />Update: This has been picked up by the mainstream media, I have made the front page of the <a href="http://www.canada.com/ottawacitizen/news/story.html?id=9a17a812-5b98-4b47-a6bf-df3387163414">Ottawa Citizen today</a> (Oct. 9). Why does everyone have to misspell my last name?Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com4tag:blogger.com,1999:blog-2012676532933262527.post-3723462159141250252008-10-07T18:30:00.000-07:002008-10-07T18:40:20.507-07:00Don't Catch a Falling KnifeToday I would simply like to say that one should wait until the stock market stabilizes and begins a sustained upwards trend before you decide to buy in. While you may look at those low stock prices and start to salivate, please hold off, unless of course you prefer to just roll the dice with wild abandon, or have gambling money you want to spend now. By holding off, you might not end up buying the absolute bottom, but don't be greedy, have some prudence in these times of uncertainty. If you prefer, buy in on a regular basis over time (dollar cost averaging), that's a better idea than trying to grab at some of these falling knives.Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com0tag:blogger.com,1999:blog-2012676532933262527.post-5070584367126255072008-10-04T08:26:00.000-07:002008-10-04T08:43:51.230-07:00The Race Has Begun for TFSAsToday, the race has begun in Canada to get you to sign up for a tax free savings account. Since TFSAs don't actually come into effect until Jan 1, 2009, ING Direct has decided to simulate it from now until the end of the year by paying you double the interest. As of Jan 1, 2009 they will automatically register a TFSA with the government for you (based on the early simulation account), and transfer up to $5000 from this early simulation into it.<br /><br />I urge any of you with any money just sitting in a savings account somewhere, and you probably do since the equity markets are in turmoil, to consider opening your TFSA now. If you do it today, and fund it to the full $5000, expect a nice bonus interest payment on Dec. 31 of this year of about $35. Earning 6% on your money (as of today's rates) is pretty darn good and beats any GICs out there. I don't want to sound like a complete fan boy for ING Direct, I'm sure that there are similar offers at other progressive financial institutions too. Feel free to share by leaving a comment.Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com0tag:blogger.com,1999:blog-2012676532933262527.post-34359189711071688952008-09-27T15:51:00.000-07:002008-09-27T15:52:46.447-07:00The $700 Billion BailoutSo let's say that they strike a deal and the government buys up all that bad paper. Then what? People still can't make the mortgage payments and the defaults continue? I don't understand why the lenders don't just renegotiate or freeze the interest rates to keep people from defaulting on their mortgages. Propagate the lower earnings from those mortgages up the food chain into the ABCP. Everybody ends up getting less, except the little guy ie. the homeowner gets to continue living in their home and make payments towards eventually owning it. Have the government issue coupons attached to the mortgages, the value of such coupons dropping each year. This allows both the homeowner and lending institution to be weaned out of the situation slowly. This also avoids needing to have all the $700 billion up front, apart from having to buy up enough of the currently worthless paper to keep the system afloat right nowJim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com0tag:blogger.com,1999:blog-2012676532933262527.post-49689604781147670562008-09-16T20:08:00.000-07:002008-09-16T20:22:47.979-07:00Scary Financial TimesWith the collapse of so many financial institutions looming in the US, and the Fed stepping in with $100 billion+ dollars of prop-up funding, one has to be very worried. The US is already running yearly deficits close to $500 billion, so this extra prop-up cash has to be coming from the printing presses (ie. from out of thin air) and/or via loans from other countries such as China. The Fed did not cut interest rates this week, so that tells me that they're likely worried about the printing presses fueling inflation.<br /><br />Some people may see these times as a great buying opportunity, but I don't recommend trying to catch a falling knife. Wait until things settle out, and cross your fingers that they do. If you're looking for a decent GIC rate, ING Direct just came out with a 1.5 year GIC at 4%. I think it's a time limited promotional rate since it beats the rates on all their other GICs except for the 5 year which also has the same 4% rate.Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com2tag:blogger.com,1999:blog-2012676532933262527.post-81773860702184964272008-07-13T07:09:00.000-07:002008-07-13T07:53:11.477-07:00Saving Money on Cell Phone Use in CanadaSince there's been a lot of hype recently in the cell phone market with the launch of the iPhone, I thought I'd point out an easy way to potentially save yourself a couple of hundred dollars on your cellphone bills every year. It essentially hinges on how much you use your phone and when. If you're a heavy user, just continue to regularly examine your cell phone use and shop around, assuming you're out of contract of course. If you're a light user, then consider using a pay as you go or prepaid plan. For example, I'm on Roger's <span class="blsp-spelling-error" id="SPELLING_ERROR_0">Paygo</span>. I use their virtually unadvertised $100 (+ tax) prepaid card, since it has 365 day expiry time. I'm also on their 1 cent evenings and weekends "plan" with it. This does last me an entire year. So I'm paying $8.33 (+ tax) a month for a cell service and it includes call display and optionally voicemail. If I put more money into the account before the time expires, it all rolls over into the next 365 days. They allow you to build it up to a maximum of $500 I think. Any Roger's phone can be turned into Roger's <span class="blsp-spelling-error" id="SPELLING_ERROR_1">Paygo</span>, once out of contract of course. They may even give you some free airtime to get you going.<br /><br />I'm not running a Roger's commercial here, but they do use the technically superior <span class="blsp-spelling-error" id="SPELLING_ERROR_2">GSM</span> for their network. I wish we had another <span class="blsp-spelling-error" id="SPELLING_ERROR_3">GSM</span> competitor in this country. But there's also a few other reseller deals using Roger's network that are also very good value. The first is 7-11 stores, with their <a href="http://speakout7eleven.ca/">Speak Out Wireless</a> offering. The second is <a href="http://retail.petro-canada.ca/en/mobility/2303.aspx"><span class="blsp-spelling-error" id="SPELLING_ERROR_4">Petro</span>-Canada Mobility</a>. <br /><br />If you're stuck with no option but to use Bell's network, then please have a look at <a href="http://www.virginmobile.ca/vmc/en/home/index.html">Virgin Mobile</a>.Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com0tag:blogger.com,1999:blog-2012676532933262527.post-69457285600633170962008-07-02T06:52:00.000-07:002008-07-02T07:02:39.828-07:00How Much Do You Spend on Coffee?Starbucks has just announced that they're closing 600 locations in the US. While you might joke that this only represents one city block, it is actually significant and impacts a lot of their employees. When times start to get tough, people start to cut back on discretionary spending. But rather than deny themselves some of those simple pleasures, they tend to look for cheaper alternatives. Today I'd like you to take a moment and think about how much money you're dropping on coffee in the course of a work day. If you are spending $5 a day on coffee at work, then that's $100 a month. Over the course of a year, that's $1200. For many people, that's a week on a beach in Cuba.<br /><br />You can make your own delicious cup of coffee quite cheaply. For example, a kilo can of Hills Brothers medium roast coffee is under $5 at Price Chopper. Use 18% cream (not 10% coffee cream) and you can have a cup that will be at least as good as Tim's if not better.Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com0tag:blogger.com,1999:blog-2012676532933262527.post-46756704148984132602008-06-27T11:30:00.000-07:002008-06-29T10:16:00.791-07:00It's Almost Official: The Dow is now in a Bear MarketAs reported Friday in the Globe and Mail <a href="http://www.reportonbusiness.com/servlet/story/RTGAM.20080627.wdowbear0627/BNStory/Business/home/">here</a>, the Dow has now fallen 20% past its peak. But it closed on Friday just above that mark, so while technically it is not the official start of a bear market, it is highly likely to happen this week. I remember being in Spain in March 1999 when the Dow first cracked the 10,000 mark. It is now going on close to ten years, and it only up about 10% from there. I do wonder how long this bear market is going to last, since the price of oil and the Iraq war are fueling inflation. Add in the subprime crisis, and it isn't looking good, at least for our largest trading partner. But there is <a href="http://www.reportonbusiness.com/servlet/story/RTGAM.20080627.whousing0627/BNStory/Business/home">speculation </a>that our housing market is headed for a large correction as well. One has to wonder if there's enough foreign demand for our commodities to keep the TSX out of bear territory. I guess basically what I'm trying to say in today's posting is be <em>very</em> prudent with respect to your finances right now. Things aren't looking very rosy.Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com0tag:blogger.com,1999:blog-2012676532933262527.post-21401965956134269182008-06-25T05:12:00.000-07:002008-06-25T05:25:27.618-07:00It's BBQ Season. Save Money on PropaneHere in Ottawa I notice a proliferation of places that sell "swap" propane BBQ tanks. The idea is that you simply drop off your empty tank and take a full one in its place. A lot of places have these tanks including many gas stations. They are stored outside of course, typically in a locked cage. Cost to swap your tank at one of these places is about $27. Cost to fill your tank instead of swapping it is about $16. That's a 70% premium folks! Many people think that once they have a swap tank, they have no choice but to go and swap it when they need a fill up. But many places will refill swap tanks, as long as the date stamp on it indicates that it is less than 10 years old, same restriction as any other tank.Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com2tag:blogger.com,1999:blog-2012676532933262527.post-76326087865765329472008-06-24T12:39:00.000-07:002008-06-24T12:51:07.837-07:00Actively Managed Funds Continue to LagIn today's Globe and Mail there is an <a href="http://www.theglobeandmail.com/servlet/story/RTGAM.20080624.wfundmanagers0624/BNStory/Business/">article </a>pointing out that fund managers continue to do poorly compared to index funds. There really isn't any reason to invest with active managers, and the data continues to support that. Of index funds, I personally like the TD Efunds due to their low MERs and green approach of not mailing out paper. Also the iShares exchange traded funds are extremely good value if your investing patterns cause the brokerage fees to not be an issue. ING's Streetwise Funds are ok too but they do have MERs close to double what they should be.Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com1tag:blogger.com,1999:blog-2012676532933262527.post-25042004092587615612008-06-20T07:08:00.000-07:002008-06-20T07:33:30.866-07:00Buying a Desktop Computer? Save a lot of money.Here in Canada, the best deal by far on a "new" desktop computer is a refurbished HP Media Center machine on sale. You cannot even build one yourself for less money. These HP machines also use solid good name brand components such as <span class="blsp-spelling-error" id="SPELLING_ERROR_0">ASUS</span> motherboards, and <span class="blsp-spelling-error" id="SPELLING_ERROR_1">Seagate</span> hard drives. By refurbished, they simply mean that the computer has had to go back to factory for some reason. If the box is simply opened in the store, then back it goes to factory for refurbishment. By factory, I mean an authorized outlet for examining/troubleshooting the machine. These machines are also current, meaning that they are not "lease returns" that have been used for a couple of years.<br /><br />So where do you find such machines? <a href="http://www.futureshop.ca/catalog/proddetail.asp?logon=&langid=EN&sku_id=0665000FS10100651&catid="><span class="blsp-spelling-error" id="SPELLING_ERROR_2">Futureshop</span> </a>and Best Buy both carry them on a regular basis. But like I said earlier, wait for them to go on sale, where you can scoop one for less than half the price of new, saving you upwards of $500. Yes, it is well worth paying the shipping charges.<br /><br />Also, the refurbished HP Pavilion and the Compaq machines are also good deals, but nothing beats the sheer value of those Media Center machines with their better graphics cards and hd<span class="blsp-spelling-error" id="SPELLING_ERROR_3">tv</span> tuners built in, and typically huge hard drives.<br /><br />The only downside I see with buying refurbished is the shorter warranty period of 90 days. But misbehaving components usually show up within the first 30 days anyway. Also, HP should be using beefier power supplies in their machines.Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com0tag:blogger.com,1999:blog-2012676532933262527.post-55254724491898834672008-06-18T16:38:00.000-07:002008-06-18T17:04:00.443-07:00Need Foreign Cash for a Trip?We are entering the summer here in Canada (northern hemisphere to be correct) and it is the main travel season for many people. This travel is often far overseas, as much of the charter aircraft used for Caribbean travel are shifted instead to Europe. So you are headed overseas and need a few hundred dollars worth of foreign cash? Many people don't feel comfortable travelling without having some foreign cash on them. This is a prudent move, as you may have problems finding an <span class="blsp-spelling-error" id="SPELLING_ERROR_0">atm</span> that works with your bank card upon landing in the distant land. And then there are the service charges. Ten years ago I used bank machines in places such as Poland and Austria, and was only charged $2.20 per PLUS system transaction. Today, that same transaction will probably cost you between $5 and $10 dollars just in transaction fees. So much for technology making things cheaper. But of course these transaction costs are simply a bank gouge. They also get you on the exchange rates although those rates are usually pretty decent.<br /><br />If you decide to bring a lot of foreign cash with you, <strong>please</strong> consider going to a foreign exchange place instead of your bank. Here in Ottawa we have <span class="blsp-spelling-error" id="SPELLING_ERROR_1">Accu</span>-Rate. They fairly consistently beat the bank exchange rates, and you can pay with your bank card as an <span class="blsp-spelling-error" id="SPELLING_ERROR_2">interac</span> direct payment. By going there, you can easily save $10-$20 or more depending on what you're buying and how much. Also, the foreign exchange place is likely to have the foreign notes that you're looking for. The banks only carry a small selection and it is not uncommon for small branches to run out of the popular currencies such as Euros.<br /><br />To <span class="blsp-spelling-error" id="SPELLING_ERROR_3">somerize</span>, all I'm trying to say is do shop around a bit, as most of these places including the banks do post their rates and update them throughout the day. If you spend 20 minutes online and find a $20 saving, then your time was well spent at $60 per hour, as long as you don't have to drive a long way to the establishment. Also ask your friends and coworkers if they have any favourite place to exchange money. Sometimes friends have some foreign cash that they haven't exchanged yet and are willing to give you a good deal. You can both win on such transactions as the buy/sell spread is usually a few percent.Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com0tag:blogger.com,1999:blog-2012676532933262527.post-23457538043725936822008-06-16T20:52:00.000-07:002008-06-16T21:07:28.789-07:00Mutual Funds: Cutting the Number of Unitholders Lowers the MERIn today's Globe and Mail, columnist Rob <span class="blsp-spelling-error" id="SPELLING_ERROR_0">Carrick</span> <a href="http://www.theglobeandmail.com/servlet/story/LAC.20080614.MKFUNDS14/TPStory/TPBusiness/">points out </a>that mutual funds with a high barrier to entry have better returns. By a high barrier to entry, we typically mean a large initial investment. Are these fund managers any better than the norm? Perhaps yes, but Rob does point out that these particular funds do have smaller <span class="blsp-spelling-error" id="SPELLING_ERROR_1">MERs</span>. He speculates that such funds have fewer investors, and so mundane costs such as statements and mailings are less and thus is reflected in the lower <span class="blsp-spelling-error" id="SPELLING_ERROR_2">MERs</span>. In my opinion, this finding just provides more support for funds such as TD <span class="blsp-spelling-error" id="SPELLING_ERROR_3">efunds</span> which cut the paper mailings to zero and passes the savings on to investors in the form of low <span class="blsp-spelling-error" id="SPELLING_ERROR_4">MERs</span>. I have heard that a typical mutual fund account incurs printing/mailing costs on the order of about $50 per account per year. Seems high, but does anybody out there have a better number? On an average investment of $5000, that's a full percent.Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com0tag:blogger.com,1999:blog-2012676532933262527.post-26282248881765866672008-06-12T06:03:00.000-07:002008-06-12T07:12:03.453-07:00Velocity of Money Theory for this Round of Inflation? I Don't Think SoIn today's Globe and Mail, Avner Mandelman has a column which you can read <a href="http://www.theglobeandmail.com/servlet/story/LAC.20080607.STBUYSIDE07/TPStory/TPBusiness/">here</a>. Avner Mandelman is president and chief investment officer of Giraffe Capital Corp. He is stating that inflation is very under reported in the US right now, then goes on to explain why he thinks that inflation is raising its ugly head again. He states that he believes that it is due to the velocity of money. In previous postings, I have stated that money has to move in order to do work, and if it is not moving (equivalent of being stuffed in a mattress for example) it may as well not exist. Avner thinks that this round of inflation is mainly due to money moving <i>faster</i> than it has in the past. He claims that this faster movement is being caused by technology. Click a mouse and voila, money has moved. While I agree to some extent that yes, money can move faster and thus might contribute to some rise in commodity prices, I feel that this effect is a minor one. Money has been moving a bit faster for quite a few years now, but I don't think anything radical has happened here to explain inflation.<br /><br />I'll tell you what I think is happening. I think that large pools of offshore US dollars are making their way back into the mainstream US economy. If US dollars are used extensively as a medium of exchange in other areas of the globe, especially areas that don't do a lot of trading with the US itself, then those dollars may as well not exist as far as the US is concerned. US dollars are widely accepted all over the planet and have been used as a major medium of exchange outside the US. For example, El Salvador uses the US dollar as its official currency. Those dollars can flow all over El Salvador as a medium of exchange, and as long as El Salvador doesn't chase US goods or services or bids up commodities (such as oil) that the US is also trying to buy, then those dollars may as well simply not exist as far as the US is concerned. Of course El Salvador does a lot of trade with the US so in reality this example doesn't really apply, I just use it as a hypothetical one to illustrate my point.<br /><br /><br />So why are these previously isolated dollars now starting to find their way home? Well, in one simple word, the Euro. The Euro is a relatively new currency that is an alternative to the US dollar since it is also being widely accepted worldwide as a medium of exchange. A lot of foreign entities, formerly holding US dollars, are now opting to hold some Euros instead. Those displaced US dollars are now starting to come home to roost. Also remember all the spending on the Iraq war, much of it done in newly "printed" US dollars? Those billions of dollars spent overseas are also finding their way back to the US. This whole thing has been fairly obvious as we watch the US dollar fall with respect to the Euro.<br /><br />To "somerize" lol, all this, the money supply doesn't have to actually grow to cause inflation, it just has to <i>effectively</i> grow with respect to the particular economy where you are measuring the inflation. Velocity changes just don't cut it, in my opinion anyway.Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com2tag:blogger.com,1999:blog-2012676532933262527.post-11432957300189836392008-06-07T16:43:00.000-07:002008-06-07T17:50:32.006-07:00Getting More Out of a Tank of GasolineWith the price of gasoline reaching ridiculous levels of over $1.30 a litre, I thought I'd share with you a few tips to stretch your mileage. The usual motherhood statements of drive less, and plan your routes to minimize travel, still obviously apply.<br /><ul><li>Optimal mileage is reached at about 80 kph (50 mph). So slow down when you're on the freeways. Get in the rightmost lane and do the speed limit or a bit under.</li><br /><li>Acceleration costs you gas, significant gas. Try to time your speed as you approach red lights to avoid actually having to stop, and thus reduce acceleration. Yes, this means coasting. Coast as much as possible instead of active braking. Active braking is a indicator that you stayed on the accelerator pedal too long. Simply try to time things such that you're doing less active braking, more coasting, and thus less accelerating.</li><br /><li>Maintain your momentum as much as you can without compromising safety. Try to know your car and don't unnecessarily slow down when you don't have to, especially around corners.</li><br /><li>Use the downslope of hills to your advantage to help you get up the other side. Allow your speed to bleed down somewhat on the upslope, don't press down a lot more on the accelerator just to maintain your speed going up hill. Gently accelerate back up to speed once you're over the crest.</li><br /><li>Keep your tires inflated to the level indicated by the sticker in your car. Under-inflated tires will hurt your mileage.</li><br /><li>Check and change your car's air filter at least every 6 months. Reduced engine airflow will hurt your mileage.</li><br /><li>Use your air conditioning sparingly. Turn up the temperature in your cabin by a couple of degrees. The compressor puts a significant load on your engine.</li><br /><li>Accelerate gently. Hard acceleration sucks a <b>lot</b> of gas.</li><br /><li>Only fill your tank to the halfway point. By leaving out those extra 25-30 litres of fuel, you have effectively taken 40 lbs out of your car. In fact, if everybody did that, it would create a temporary glut of fuel and prices would come down, at least for a little while. </li></ul><p>As always, <b>never</b> compromise your safety. Don't zoom around corners if you don't feel safe doing so, and when you're coasting keep your foot ready to hit the brake and <b>pay attention</b> to the road. Also, be aware of drivers behind you and try not to piss them off with your frugal moves.</p><br /><p></p>Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com4tag:blogger.com,1999:blog-2012676532933262527.post-25299931699120095902008-06-05T16:18:00.000-07:002008-06-05T18:24:59.575-07:00Save Money, Drink Imported German BeerWith temperatures here in Ontario starting to significantly warm up, I'd like to bring up a subject near and dear to most of our hearts: <b>BEER!</b><br /><br />So I was at the LCBO today and bought 8 assorted cans of imported German beer for almost exactly $16 including a total of 80 cents deposit on the cans. It was actually slightly under $16. I bought 4 litres of beer (500 mL cans) total. German beer is arguably the best stuff on the planet. By the way, the lowbrow comedy movie "Beerfest" is really funny....I laughed my ass off. Those who have seen me in person know that I have no ass so it must be true, but I'm starting to really digress....A case of Labatt's Blue is $38.50 at the beer store for 24 bottles of 341 mL, including deposit. That's a total of 8.18 L of beer. The equivalent price of German beer would be about $32.75, almost 20% cheaper. Given the strength of the Euro, and the shipping cost of those suds, I'm somewhat dumbfounded. Perhaps our big brewers spend crazy amounts of money on advertising/promotions and pass the lack of savings on to us. While I can certainly appreciate those girls-in-bikini ads on tv, I do not want to actually pay for them while there's other suckers out there who don't mind doing so.<br /><br />Yes, more money can be saved by buying some of the "buck-a-beer" + deposit brands like Lucky or Lakeport and those are good beverages too. I do recommend buying those brands as signifcant money can be saved over the course of the summer. But even at $1 per beer, as much as 50 cents of that flows to the government as taxes. Yikes. Also, the lack of retail competition in Ontario likely has something to do with it. Prices in Quebec are lower, but one has to be careful when comparing. In Quebec, the prices do not include deposit, PST, and GST. When added in, you are still slightly cheaper, but not by much. Costco in Quebec sells beer and you can save some money, but again not huge amounts, but hey, every little bit counts. If you live in another province, feel free to do your own comparisons and report back.Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com5tag:blogger.com,1999:blog-2012676532933262527.post-31296739913714930012008-06-04T10:42:00.000-07:002008-06-04T11:32:14.949-07:00Beat the Stupidity Tax - Play the Lottery For FreeWe've all heard the term "stupidity tax" as it applies to playing the lottery. You have better odds of being struck by lightning as you do winning the lottery, at least the big jackpot. I do applaud you lottery players for keeping my overall tax bill down a bit though. And of course, <i>you can't win if you don't play</i> is a slogan often heard around the lottery. Many of you play small amounts of money responsibly and get a bit of entertainment excitement out of it. This is reasonable and ok. Hey, I'm not here to chide you about wasting money on the lottery, I'm here to help you <b>play for free!</b><br /><br />Now that I have your attention, I want you weekly lottery players to please consider this scheme. Every week, cut your lottery expenditures in half. Yes, I mean in half. For example, if you're spending $4 a week buying two $2 tickets, then please just buy one ticket instead. Put the weekly $2 into a tax free savings account (TFSA) that will become available to you starting January 1, 2009. This amounts to $104 a year. Put the toonies in a change jar if you have to, and get it into the bank a couple of times per year. The more frequently you deposit it, the better. Invest this money in a low MER Canadian Index fund such as TDB900. If you're in another part of the world, use the equivalent investment for your country. Over the course of 15-16 years, this money will have grown (assuming 10% annual tax free compounding) to about $4000. This should now allow you to play the weekly lottery to the same level for free, for the rest of your life. It should earn about $400 per year, but the lottery will likely be more expensive to play by that point.<br /><br />If you're spending $10 per week on tickets, then instead save $5 a week into your account. This is $260 per year saved. Over 15-16 years, you will likely have over $10,000 there. If instead of gambling at all (except through the low MER mutual fund if you consider that gambling) you invested the entire $10 a week, after 30 years you'd have over $100,000 in the account.<br /><br />In my defense, I didn't say the free lottery play was going to be <b>immediate</b>! lol . And the use of the term free is a bit liberal, considering that it fundamentally is your own money that you're playing with. But you would have, in all likelihood, lost that money anyway, that's why I feel justified in using the "free" label. I just directed you to set it aside to build a future annuity to use to play the lottery.Jim Somervillehttp://www.blogger.com/profile/08438509407388777099noreply@blogger.com2