Sony PRS-T1: Crashing E-books

Sony reader PRS-T1 by Hideya Hamano

Lately, my somewhat dated Sony PRS-T1 e-book reader has been crashing on newer ePub format e-books. I can read a few chapters, and then out of the blue, the device will stall, eventually booting me back to the device home screen. Resuming the e-book and trying to navigate past the crash point creates a reproducible issue.

In terms of buying a new e-book reader, I can’t really make a good case for it. Sure, the device is five years old, but in general, it still gets the job done. You may have noticed this trend, where technology and I are concerned. Why throw out a mostly usable though slightly imperfect piece of technology when you can fix it? Challenge accepted!

Long story short, I’ve since found a really simple way to get around the issue by converting the ePub file.

The Problem

It’s unclear to me if the crash relates to formatting in specific ePub files themselves, certain characters, book length or a result of newer versions of the ePub file format. This issue has really only come up in two e-book files over the past six months or so. A minor nuisance, but a nuisance never the less.

The Solution

I’ve talked about the Calibre e-book manager on my blog before. It serves a number of purposes including allowing you to transfer e-books to your reader.

A lesser used feature allows you to convert e-books directly in Calibre, by right clicking on a title and selecting “convert books”. You’ll end up with another copy of the ePub title, however, it will be reformatted by Calibre. Converted ePub files seems to fix this problem for me. Simply remove the old ePub file from your e-book reader and transfer over the new file created by Calibre. Much cheaper than buying a new e-book reader! The only caveat with all this is that your e-book file must be DRM free for conversion to work. The joys of technology.

Header image by Hideya Hamano – Sony Reader “PRS-T1” // CC by 2.0

Choosing the Right Financial Professional for your Investments

Some tips to help you choose the right financial professional to sort out your investments.

John Liu - Financial Gain

I’ve written a bit about my distrust for the personal finance industry in Canada, given there’s room for plenty of conflict of interest and product recommendations that aren’t in your best interests. Self-educate or be taken advantage of. Over in the U.S., a retirement account fiduciary rule which protects consumers from financial firm conflicts of interest is in the midst of being attacked. When corporate interests are put before consumer interests, you have to look out for yourself. Buyers beware. So, that begs the question: how do you find a financial professional that’s right for you?

What Type of Professional do you need?

Financial Planners

In Canada, financial planners will create a plan, assessing cash flow, retirement, risk management and asset allocation. It’s invaluable to have a plan before you start putting your money to work for you. It may be extremely cheesy, but, if you fail to plan, you plan to fail. What financial planners generally won’t do is suggest specific products or make trades for you. That gets into the realm of financial advisors.

Financial Advisors

Professionals with this title will look at your asset allocation, willingness to accept risk and suggest actual financial products (stocks, bonds, mutual funds, ETFs, etc.). They may also make trades for you, depending on the service levels they provide.

Note: There are absolutely firms that offer both services. It’s just important to be aware that there is a distinction between the two types of professionals and the services they can provide.

Tips on Choosing a Financial Professional

So you’ve figured out what you need, be it a financial planner, an advisor, or both, so what’s next?

  • In general, what you’re going to be looking for is a “fee only” professional. They may either charge by the hour, or as a percentage of the assets they manage.
  • Ideally, the person you work with should not receive a direct commission from the specific investment funds they suggest. This is important, because it removes a substantial conflict of interest. If they’re pushing their own products, and receiving a commission for it, whenever you buy or sell, they’re less likely to suggest lower fee, better suited options. Directly ask them how they’re paid.
  • Don’t be tricked by an impressive sounding combination of letters, following a person’s job title. Ask what the designation following a professional’s title indicates. Is the designation managed by the financial industry, or administered by an independent organization? The CFP (Certified Financial Planner) designation in Canada is one of the more recognized designations, despite it not touching on index investing.
  • You’re going to want to avoid banks and large financial institutions. Unfortunately, while you may have a longstanding relationship with them, they make money by selling overpriced financial products. Their advisors lean more towards salespeople, which I’m uncomfortable with.
  • If you want index mutual funds or index ETFs, it’s important to ask upfront whether this is something they advise on. Not all financial designations provide education on these products.
  • You’re also going to want to assess how responsive the professional is, and how easily you can have a conversation with them. If you can’t get in touch with or understand them, they’re not someone you’re going to want to work with over the long-term.
  • Oh yes, finally, avoid insurance companies when looking at investments. This may sound obvious, but they’re extremely likely to try and sell you an array of insurance products instead of actual investments. It’s true that you can tax shelter money within the investment portion of a life insurance plan, but why wouldn’t you just buy an actual investment?

Resources

  • For Canadians, Holy Potato offers a list of fee only financial planners and coaches.
  • MoneySense also provides a list of approved financial advisors. I’d go with the Holy Potato list first. The MoneySense article is a pay for listing service.
  • Preet Banerjee has a good, far more detailed write-up on choosing a financial planner.
  • MyMoneyCoach has an article on how to find a financial advisor
  • Despite everything I’ve said above, Steadyhand is a solid option, if you’re comfortable with actively managed mutual funds and associated fees. I’ve suggested them a couple of times before, despite the fact that I would not use them myself. They’re probably the best pro-consumer actively managed mutual fund firm in Canada.

Header image by John Liu – Financial Gain // CC by 2.0

Thoughts on Millionaire Teacher: Second Edition

The second edition of Andrew Hallam’s Millionaire Teacher may very well be the only personal finance book you need to read this year.

Millionaire Teacher - 2nd Edition

ISBN: 9781119356295, Author: Andrew Hallam

Let’s get this out of the way: Millionaire Teacher is my favourite intro to personal finance book. I first read Andrew Hallam’s Millionaire Teacher a little under two years ago, after which point I gifted two copies to people I thought could benefit from the information. This is the first book I’ve felt compelled to do that for, and also the first book I’ve thought I needed to re-read, with the January 2017 release of the second edition.

For people who want to understand how to better manage their money for the long-term, increasing your chances of a comfortable retirement, this should be your go to book. The writing is clear and low on jargon. It covers a ton of information I wish I’d had coming out of high school.

With that said, I trotted over to my local library and picked up a copy, with the hopes of reading new information on ETF investing and robo-advisors, which were absent in the first edition.

What the Book Covers

  • Intelligent spending
  • Investment growth over time (the power of compounding)
  • The importance of investment fees (why index funds work and why actively managed funds on average underperform market return)
  • Controlling for poor investor / investing behaviour
  • Asset allocation (the importance of investing in both stocks and bonds)
  • Index investing in different countries (including Canada, the U.S. and Great Britain with sample portfolios)
  • Alternatives to do-it-yourself investing
  • Dealing with investment advisors/brokers (effectively, having a BS detector and knowing which questions to ask)
  • Avoiding common mistakes (why buying gold may not be wise, avoiding investment newsletter advice, etc.)

New Personal Takeaways

  • Consider a guaranteed pension plan within the context of the fixed portion of your holdings. This implies that you can hold more equity and less fixed assets in your RRSP/TFSA/Taxable accounts. Ah to actually have a pension.
  • Do-it-yourself investing, which is my preferred strategy, may not be ideal for everyone. Simplicity is sometimes worth the price premium where people may not want to spend an hour a year managing their portfolio. In those cases, the additional investing cost can be worth it.
  • The new segment involving asking banks about putting together an index fund portfolio matched my experience with TD bank directly. It is not a strategy they actively support. They will throw information at you to try and dissuade you from this course, despite research backed findings indicating that it provides a greater probability of success.

Summary

If you’re going to read one personal finance book this year, try to make it this one. Personal finance books tend to be dry, though this one tends to avoid that pitfall entirely. This book can help you gain a better understanding of how to get your money working for you. In comparison to other, similarly targeted titles like the Wealthy Barber Returns, I found this title less anecdotal with a far better flow.

Additional Resources

Mutual Funds: Hidden Costs Matter

Why understanding hidden mutual fund fees is important. Should you consider moving to Exchange Traded Funds? What’s the impact?

OTA Photos - Analyzing Stock Market

For a while now, I’ve been considering switching from TD Bank’s E-Series index mutual funds in Canada, to lower cost index ETFs. When you’re starting out, TD E-Series funds are great and admittedly, less daunting than dealing with ETFs. They provide a painless way to get your money working for you. As your portfolio grows in value though, it may be worth considering what you’re paying.

I definitely suggest considering the e-series funds for early Canadian investors, for the following reasons:

1) No fee to buy or sell in a TD Mutual Fund / TD Direct Investing account

2) You can set-up an automatic monthly purchase plan, automating adding money to your investments, at no additional cost.

3) They’re some of the lowest cost bank provided index mutual funds in Canada. Tangerine, for instance, has an average MER of about 1.07%. My TD E-Series portfolio was averaging somewhere between 0.42% and 0.45% in fees, based on my allocation.

4) Buying and selling through TD’s platforms (be it TD EasyWeb or TD WebBroker) is extremely simple. You tell it how much of a fund you want it to buy, and off you go.

5) You don’t have to worry about market trading hours. It’s much easier than directly using the stock market to make a purchase. You place a dollar value order and away you go. The order is taken care of after market hours (time to post the transaction and the like is another matter).

ETFs on the other hand, are more complex to buy and sell, and unless you’re on Questrade, will likely have a transaction cost of about $10 each time you buy or sell. ETFs are traded during stock market hours. You’ll generally want to buy them when the stock market is actually open to avoid unexpected price surprises. Mutual fund transactions, by contrast, are processed at the end of the business day, which makes buying and selling a little easier. Further, with ETFs you have to consider the current bid-ask spread, and figure out how to price your order. Not complicated, really, however with mutual funds, you can just enter a total dollar amount you want to buy, and you’re off to the races.

With that said, as your portfolio grows in value, ETFs can provide a notable fee savings, through their lower Management Expense Ratios (MER). Factor in advisor fees, and the cost difference grows even larger.

A Cost Comparison between TD E-Series Funds and Vanguard ETFs

Let’s do a quick Comparison, comparting TD’s fund expenses to Vanguard Canada’s, to give you a better idea of what a regular investor might be paying.

TD E-Series Fund MER

TDB900 (Canada) TDB902 (U.S.) TDB911 (International) TDB909 (Canadian Bond)
0.33% 0.35% 0.51% 0.50%

Vanguard Canada Fund MER

VCN(Canada) VXC (International including U.S.) VAB (Canadian Bond)
0.06% 0.27% 0.13%

Note: Vanguard’s VXC covers U.S. and international markets all in one fund, which accounts for the difference in number of funds.

Given these percentages will look small to most, being a fraction of a percent, let’s do some math. Assume Bob has $100,000 dollars invested in each of these portfolios. For TD, we’ll go with a simple 25/25/25/25 asset allocation split equally across their four funds. In Vanguard’s case, we’ll go with a 33/33/33 split for their funds. Let’s see what the annual cost difference looks like.

Bob’s TD E-Series Annual Cost Breakdown:

Fund Value MER Cost
TDB900 $25,000 0.33% $82.50
TDB902 $25,000 0.35% $87.50
TDB911 $25,000 0.51% $127.50
TDB909 $25,000 0.50% $125.00

Bob’s Total Annual Cost with TD: 82.5+87.5+127.5+125= $422.50

Bob’s Vanguard Canada Annual Cost Breakdown:

Fund Value MER Cost
VCN $33,000 0.06% $19.80
VXC $33,000 0.27% $89.10
VAB $33,000 0.13% $42.90

Bob’s Total Annual Cost with Vanguard: 15+40+67.5+32.5 = $151.80

Bob will pay an additional $270.70 yearly, on a portfolio of $100,000 with TD’s E-series when compared to Vanguard. If you consider the power of compounding amounts in your investments, you should also be aware of the power that compounding costs can have to eat away at your retirement money.

I would wager many investors don’t quite consider the impact these costs can have on your ability to retire comfortably. Over a lifetime, these annual costs can account for tens of thousands of dollars that you might otherwise have available in your accounts. The cost gulf between quality index ETFs and mutual funds grows when you look at actively managed mutual funds, with MERs between 1.6% and 2.6% on average in Canada. Are you getting value for you you’re paying for, or are you ensuring bank advisors/brokers have a great vacation, fueled by your retirement savings?

Summary

TD E-Series funds, or even ETFs, are not for everyone. There are other options available like Tangerine or Robo-advisors, where you transfer money, and they handle portfolio asset allocation in low cost funds. The key take away from all this, is ultimately that costs matter. There’s no requirement for firms to show you what exactly you’re paying holistically, even with the new CRM2 regulations in force in Canada. The regulations will show what you’re paying for investment advice, but not so much what you’re paying for your actual investments. Costs matter, and if you don’t take charge of what you’re paying, nobody will.

Resources

  • Canadian Couch Potato on whether moving to ETFs makes sense.
  • Morningstar has a two part series on what Canadians pay for mutual funds, if you want to learn about different types of costs. Part one and part two are linked.
  • Steadyhand has a relevant article explaining investment costs, including a useful infographic.
  • Vanguard has a great write-up on the differences between mutual funds and ETFs.
  • Bonus image, by Sacha Schua (CC by 2.0) which spoke to me, when learning about ETFs (I found my first experience buying ETFs more stressful than I anticipated):

Sacha Schua - Thinking about my ETF hangups -- index card

Header image by OTA Photos – Analyzing Stock Market // CC by 2.0

Democracy is Broken: Failures of the Best Political System We’ve Got

Democracy is the best system we’ve got. However, there are certain inherent deficiencies which are important to consider.

Feral78 - Democracy

It’s easy to look at Canada’s neighbour to the south and judge, or think their political situation is unique. I’d argue, however, that the current events are a likely outcome, a direct result of the way modern democratic systems are structured. Be it Canada, the U.S. or the U.K., there are some fairly obvious problems. Watch the news, and more oft than not, it’s competition instead of collaboration. The goal is to undermine, and win, but at what cost?

The amount of political divisiveness, or in-group and out-group thinking is absolutely destructive. Calling someone a “lefty” is used as an insult, as if merely existing on that side of the spectrum invalidates all opinion and rational thought. Similarly, derisively calling someone out for voting Trump is equally harmful, regardless of their reasons for casting their vote as they did.

It creates an us versus them mentality, which will never lead to common ground. Ideally, and perhaps naively on my part, I believe people on both sides of the political spectrum would be best served working together for the best long-term outcomes for their country. Unfortunately, because people are subject to human biases, that’s not really how our democracy works. Party lines are drawn, and positions are held and fought over, with nary a side willing to give an inch. This is absolutely not limited to U.S. politics. Winning is not winning if you have to give something up, or so it goes. Game theory, this is not.

If you follow the Canadian federal political system, you have minority parties, such as the Conservatives and NDP party constantly squabbling, pushing forward ridiculous scenarios like “elbowgate”. That is certainly not a collaborative form of government, but rather one where political gain is achieved by undermining one’s opponent. On the other side, the Federal Liberals, with a majority, have little incentive to work with their opponents, for a better Canada. Often, political platform promises are made and quickly trampled. So much for electoral reform, which was one of the pillars of Trudeau’s campaign.

Thinking through all these things, while fighting with glorious insomnia, I came up with a list of issues or deficiencies, which hamper the effective functioning of democracies, be they Canadian, U.S. or British.

Informed Voting

No requirement for informed voting: groups can make better decisions, to a point, when the people making decisions have thought deeply about the issues at hand. When you have people strictly making decisions based on party name, feelings, or the charisma of a leader, we all lose. This may be an area where our educational system has vast room for improvement.

Confirmation Bias

People focus on facts that confirm what they already believe: political opponents may make extremely good points, but if people are vested in their current point of view, it’s extremely difficult to bring them around to another point of view. Never mind the current fake news trend, or fake news calling trends.

Party before Country

Supporting party before country: “Oh, I always vote liberal.” This line of thinking, without critical thought on what the party presently supports, is of no long-term benefit to the advancement of a nation.

Short-term Focus

People choose short term self-interest over long-term country benefit. This can lead to single issue voting. For instance, if lower taxes, or increased jobs to lower middle-income households is most important to you, this is more likely to be a determining factor in who you support. So yes, the party you vote for may create jobs for your demographic, but what’s the bigger picture? What other policies are they promoting, and what will your country look like? What does the platform, considered holistically, mean? Is the leader truly someone you’d feel comfortable with, running your country?

Similarly, politicians are focused on ratings and rewarded based on a rather short timeframe. This incentive shifts focus from long-term country direction to one of more shortsighted policy. Why focus on difficult, long-term solutions that may take decades or even generations, when you can focus on the next four years and get more votes.

Emotional Arguments are more Persuasive than Facts

People are easily swayed by emotional appeals and simple solutions, whereas factual argument and opinion require deeper thought. Thus, facts start to matter less than feelings. In this way, people become easily manipulated into voting against their own long-term interests. If you’re unemployed, it’s easy to find another group to blame for your unemployment, despite the situation being multifaceted. There may be less manufacturing jobs, there may be less demand for the widgets being produced and your skillset may be outdated. It’s easy to lay blame on a single factor, based on feeling.

The Dark side of Charisma

People choose charisma over substance. Which politician is more likable and trustworthy? What this means is that often, where the message is coming from can be just as important as what they’re saying.

Poor Voter Turnout

A high proportion of voters abstain from voting. This means that parties get elected who were not even selected by the majority of the capable voting pool. As such, the party in power may only represent a subset of the population, and not the general population at large.

Corruption and Special Interest Influenced Policy

In positions of power, without proper regulation in place, politicians may be predisposed towards certain initiatives, based on private and foreign donation. Recently in the NewYork Times, the British Columbia Liberal government was exposed for taking party donations from private and foreign interests, due to limited regulation. What they’re doing is perfectly legal, though is it ethical, and in the best interests of the constituents?

This is not limited to BC, Canada, the U.S. or the U.K. To some degree, this is an issue where politicians are able to receive compensation from private interests. If you receive a paycheck from different sources, you become beholden to those sources.

Argument from Socrates

Historical, cultural and societal context gives people an understanding of the environment in which they’re voting. Without an understanding the context, including how government operates, people may not be situated to rationally choose government. How do you gauge the effectiveness of that which you do not understand? Democracy as a hereditary right begets inherent difficulties (many of which are discussed above), including the potential election of demagogues who prey on popular desires and prejudices, rather than well thought out positions.

There’s an interesting YouTube video, by Alain de Botton, on why Socrates hated democracy. Definitely worth the four minutes of your time.

Summary

With all this in mind, it’s easier to get context for the democracy we live within. A first step would be to understand that just because someone has different political leanings from you does not immediately invalidate their position. Lashing out and mocking people with a different point of view, as things go, is a fairly base response. It’s easy to judge, harder to understand. Working through these issues is probably not easy, though things worthwhile rarely are. It’s easy to feel smug, looking at the goings on in the U.S. or the U.K., however, I’d wager we’re really not all that different in the end.

Header image by Feral78 – Democracy // CC by 2.0

Cheap Laptops: Not Worth the Hassle

Buying a laptop that lasts over three years may mean spending a little more up front.

Matt Mets - Computer on Fire

A couple of years back, I was helping my parents choose a new laptop. Their one criterion was:

  • Sub $500 machine

Right there, you can see an issue. When making a large purchase, price should never be the sole determinant. There are other elements, such as reliability or speed that depending on your use case should be considered.

Needless to say, they picked up a random HP Pavilion something or other at Costco, and over the past two years, this machine has been more of a nuisance than anything else.

So far:

  • Failed battery, out of warranty, which no longer charges
  • Hard drive which is throwing errors when checked with Crystal Disk, also out of warranty

Ultimately, to save a couple hundred bucks on a computer they ended up paying more than that, in terms of cost of replacement parts and technical support time (even if they weren’t directly charged for the latter). They would have been much better served buying a higher end, more rugged machine. A Lenovo ThinkPad, or any business class laptop, really would have been much better purchases. When you put price over all else as your key purchasing determinant, your future self may be the one footing the bill. You pay less upfront, but over the long run, you’re no further ahead.

In replacement part costs, the HP Pavilion is now on par with my nine year old desktop. For a machine that is largely used for e-mail and browsing the internet, that is entirely unacceptable. If you use something daily, it might be worth considering spending more in that area. Be it shoes, a bed, a computer chair or even your laptop.

I’m not advocating consumerism, or hedonistic purchasing. Those are largely wasteful and don’t necessarily lead to increased long-term satisfaction. What I’m saying is, sometimes you have to spend a bit more to make sure you get your money’s worth.

Make your money work for you, don’t buy junk, and save the family computer technician a headache or two, or three!

Resources:

If you’re looking for a laptop, here are some useful resources:

Laptop Magazine’s Best Business Laptops

PC Magazine’s Best Business Laptops of 2017

The Wirecutter – What Laptop Should I Buy

Header image by Matt Mets – Computer on Fire // CC by 2.0

Build a Computer that Lasts: 9 Years Strong

Build a quality computer that can last you a decade. Do your research and spend your money where it matters most.

Taryn Domingos - Old School

In the age of disposable electronics, it is absolutely still possible to build a computer that you won’t have to replace every five years. I’m fairly money conscious, so making what I buy last is important. A dollar saved is a dollar earned and all that. I don’t enjoy buying things for the sake of buying things, only to have to replace them a few years later. Money earned is much better spent elsewhere, as much as I do enjoy playing with new toys. Be it my retired car, my computer, or even my bicycle that’s generally been my philosophy. Do your research, buy quality within reason, maintain it, and you’ll get your money’s worth. This is absolutely how my old car lasted nearly 18 years, despite Quebec’s salty roads and aggressive drivers.

Nine years ago, a few friends and I got together to assemble the very computer I still use daily when not working. I’ve had to replace only two components due to failure, including a hard drive and a power supply in nine years. It still runs just fine. How is a computer quite this old still useful for fairly intensive computing?

Key Areas to Focus your Money:

1) The CPU (processor): this piece can easily be replaced, though the likelihood that you’ll actually replace it is fairly low. Buy a proven performer that is well liked in the overclocking community, even if you never plan to overclock.

I picked up an Intel Q6600 which was well liked in the enthusiast community (released back in 2007). It wasn’t the cheapest option, but it still performs well today and I see no reason to upgrade. Last generation games still work just fine. Good old patient gaming I guess.

2) The motherboard: spend a little more on a quality motherboard. Don’t skimp here – this is not something you want to have to replace. Buy a quality, name brand, well reviewed motherboard that meets your needs. Do not buy the lowest cost option, unless you fancy the idea of gutting your computer to replace this eventually. I never wanted to deal with this possibility, did a ton of research, and got a motherboard that was about $50 bucks more expensive than other options. Divide that across nine years, and yeah, it was totally worth it. Rest in peace, ABIT, may my motherboard continue well beyond the end of your company. These days, this probably means looking at a board produced by Asus, Gigabyte or MSI.

3) The power supply: yes, my power supply absolutely failed spectacularly with an audible pop. However, when it went, it didn’t damage any other components in my machine. A quality power supply is an investment in the other bits of your machine and can help prevent them from premature failure or damage.

Closing Thoughts

The rest of the bits, such as memory or videocard are arguably less important to strategize over. I got a mid-range graphics card that I eventually replaced when a co-worker was selling his “old” card a few years ago. I paid $20 bucks to upgrade my mid-range graphics card to something far more modern and far more powerful. I paid about $100 for an SSD (Solid State Drive) which improved the overall feel of the machine. At those prices, why not?

Occasionally, I get the upgrade bug, but reason takes over. I’ve spent under $250 in replacement parts over the last nine years, for bits which actually broke down, which I think is pretty decent (under $28 bucks a year). I definitely haven’t had to spend $1,200 Canadian to assemble a brand new machine, harvesting old computer parts like something out of Frankenstein. I think that’s great value for my money.

Buy quality, do your research and spend your money where it matters most.

Useful Resources:

PC Part Picker Canada: Great resource when researching computer components, includes user ratings and pricing on parts, as well as suggested builds.

Reddit’s Build a PC Subreddit: Great place to see what other people are building, read feedback on suggested builds and get some advice.

Header image by Taryn Domingos – Old School / CC by 2.0