Archive for September, 2009

This and That: Bank of Canada Interest Rate Decision and more…

September 10, 2009

  1. The Bank of Canada decided to keep interest rates steady at 1/4 percent. The Bank noted that GDP growth in the second half of this year could be stronger than projected but the strength of the Canadian dollar remains a risk to growth. The Bank currently expects to maintain interest rates until the end of 2Q 2010.
  2. Where Does All My Money Go?’s Preet shared his views on financial matters for 20-somethings with Rob Carrick.
  3. Paul Krugman, winner of last year’s Nobel Memorial Prize in Economics, explains how last year’s meltdown has shattered assumptions among economists that people are perfectly rational and markets are perfectly efficient. It’s a wonderful column, check it out.
  4. The Wealthy Boomer added his comments to’s Seven Lessons From the Meltdown.
  5. Oh Boy! Larry MacDonald reported that basic cable fees could increase by as much as 15% to 33%.
  6. When it comes to the stock market, it pays to ignore all the noise and remain invested (provided, of course, an investor has a sensible plan). Michael James on Money points out that the TSX 60 is trading at the same level it did last October.
  7. Million Dollar Journey wrote about the importance of taking baby steps towards financial goals.
  8. Four Pillars notes that refinancing a mortgage may not actually save any money.
  9. Canadian Financial Stuff pointed out the importance of teaching kids to be frugal when they go back to school.
  10. With wildfires raging in British Columbia this summer, Squawk Fox had been ready to leave at a moment’s notice. She taps into her experience to write about the 5 ways to be prepared for natural disasters.

Have a great weekend everyone!

What should Microsoft Money users do?

September 9, 2009


I use Microsoft Money to track our personal finances — everything from income and spending to tracking our portfolios. Money has its quirks but I’ve been using it for years and it gets the job done. Unfortunately, facing competition from free online money management tools such as Wesabe and Mint, Microsoft has decided to shutter the Money product line. While a current copy of Money Plus can be used indefinitely, online updates will expire two years after initial activation or Jan. 31, 2011, whichever is earlier.

Microsoft Money’s online updates allows users to (1) download transaction data from credit cards, bank accounts and brokerage accounts and (2) download stock prices, currency exchange rates. I don’t use (1) but will miss (2) when the online updates of my current copy expires. Fortunately, I own just around 10 securities and updating security prices manually once every month or so would be tedious but not too onerous. Currency rates can also be manually updated in Microsoft Money.

To update stock prices manually, go to Money’s Portfolio Manager. Click on “Update prices” under “Common tasks” on the left and select “Update prices manually…”. Just pick a stock and update its price in the following window.

Updating stock price manually in Microsoft Money

I had to dig around to find a way to update currency rates. Click on Tools->Program Settings->Update Currencies and update the exchange rate in this window.

Updating stock price manually in Microsoft Money

The Eron Mortgage Fraud Study

September 8, 2009


In Enough Bull (see my review of the book), David Trahair refers to a systematic study of an investment fraud by Neil Boyd of Simon Fraser University. In the 1990s, Eron Mortgage raised more than $200 million from thousands of investors, purportedly to fund real estate investments in Western Canada and the United States. In reality, it was a classic Ponzi scheme and when the fraud was exposed, investors lost most of their capital.

Neil Boyd found that investors in Eron were primarily older males who wanted to fund their future retirement. Many of them invested their retirement savings but some borrowed funds or mortgaged their existing properties to raise capital to invest in Eron. They had an average household income, wealth and education. Eron was mostly an affinity fraud — most investors were attracted to it because family and friends were involved but some got involved through media reports, seminars and advertisements. Asked why they thought Eron appeared to be a reasonable risk, investors cited its appearance as a legitimate business, the “guaranteed” rate of return and involvement of friends and family as main factors. Surprisingly, earlier investors got burned the most because they made additional investment at later dates.

Investors who lost more than $50,000 reported considerable harm to their retirement security, current financial situation, emotional well-being, physical health, friendships and marriage. Noting the widespread harm caused by the crime, the author calls for stiffer penalties for securities crime. Unfortunately, no amount of deterrence will prevent crime and caveat emptor applies to investment products.

One regulator contrasted the decision to invest in a security with the decision to buy a new car. In the latter case we go to the car lot, we test drive the vehicle to make sure that it fits us, we consider the warranty, we know the brand name and the comparable choices within a similar realm; we even bargain over the price, and whether we will lease or purchase. We are skeptical and typically very knowledgeable purchasers. In contrast, decisions to invest often take place without a corresponding base of knowledge and, most important, without a correspondingly critical analysis. We can make improvements to regulatory law so that it better protects investors, but it will ultimately be a well-informed and skeptical investor who is least likely to be victimized by the fraudulent dishonesty of men like Brian Slobogian and Frank Biller.