iPad Review

Posted by Preet on Apr 13, 2010 | 7 comments

So the cat’s out of the bag: there is no iPhone Macro. I indeed purchased an iPad. Here is my review after having used it for the last few days.

iPad Models

There are six models to choose from, but the only factors of differentiation are memory size (16GB, 32GB, 64GB) and whether or not it has WiFi or WiFi + 3G. 3G just refers to the ability to connect to the internet when you are not in the range of a wireless network. Here are the prices in the US:

It should also be pointed out that if you want to take advantage of 3G services, you have to subscribe to a plan. Currently the only plans available are $14.99/month for 250MB of data or $29.99/month for unlimited data (this is through AT&T, the only service provider in the States). There are no contracts and you can activate the service right from your iPad – no need to call anyone or go into a store – and you can cancel anytime. Realistically, I can’t imagine these price points and non-contract feature will trickle through to Canada, but the Canadian pricing has not been officially released yet.

Do you need 3G service?

In my opinion, no. Think of it this way: do you have a laptop with wifi? It does the trick, right? Right. No need for the monthly costs. Stick with a WiFi only model and save some money now and forever. There are apps available that allow you to cache web pages for future offline browsing.

Do you even need an iPad, period?

Funny that you ask. Just yesterday I ran into an old colleague and he said he was due for a new desktop and laptop computer and was trying to figure out if he needed a laptop now that the iPad was available. After playing with the iPad he realized that it was capable of doing about 95% of what he needed a laptop to do while he wasn’t using his desktop. It would also be about 50-65% of the price of the laptop he was looking at getting. So to him, it makes sense. If you already have a laptop and desktop, you don’t need an iPad – it would be just for cool factor and nothing more.

What does an iPad do?

Where to begin. The entire interface is built on a touch screen which encompasses the entire front of the device. It really is just like a giant iTouch (aka iPod Touch). The main difference is that it’s much bigger which makes for a great experience. Any app you have for your iPhone or iPod Touch will migrate over once you plug it into your iTunes account, but the apps appear just as they do on your iPhone (i.e. small). You can double the size of these apps to use up the screen real estate, but they become pixelated. There is nothing different about them. The new iPad specific apps are gorgeous though, with much more functionality (hovering toolbars and pop-up windows).

One of the central apps will be the iBookstore application which is Apple’s ebook reader app. It is not available to Canadians yet (it’s turned off for Canadian iTunes accounts so far). However, you can download the Amazon Kindle app where apparently, the same books are cheaper anyways.

You can also plug it into your TV to watch movies and TV show you download from iTunes.

What doesn’t an iPad do?

Lots. And it was probably designed that way to get a lot of recycled sales for the 2nd gen models to follow.

It does not have a camera – so no video conferencing.

It does not have USB ports.

It does not work as a phone (out of the box anyways). You can simply get the Skype app and use it as a phone, but only as a speakerphone. I have a Skype Out account so I can make unlimited calls to computers and phone in North America for a whopping $2.95/month.  But since Skype In accounts are not available in Canada, you can only receive calls from computers, not landlines. The iPad has become our new home phone line and we don’t have regular home phone service anymore.

So what’s the verdict on the iPad?

If you are looking for a new laptop and you already have a desktop for the heavy lifting applications, I recommend it. It’s pretty rare that someone needs a full laptop and a full desktop.

If you don’t want a desktop and are wondering about laptop versus iPad: get the laptop.

It wouldn’t replace a smartphone because it is too cumbersome, and isn’t a real, fully functional phone.

So essentially, it’s a cool gadget but you don’t need one. Having said that, it is a dream to use and to surf the web with. It’s very intuitive and the ingenuity of the app designers is pretty much unlimited these days. I’ve been using it for meetings for presenting powerpoint presentations to small groups of people, or individuals – and it is very useful in this capacity. It turns on instantly and you can pull up a presentation and have it running in literally 5 seconds.

It’s definitely a winner.

But you don’t NEED it.

Perhaps you should just wait for my contest to launch for a chance to win a FREE iPad. Stay tuned… :)

TER: The Trading Expense Ratio or Total Expense Ratio?

Posted by Preet on Mar 23, 2010 | 1 comment

By now, most people have heard of the MER (Management Expense Ratio) in mutual funds and ETFs. Another term that gets bandied about is the TER, which is less well known and has a few different meanings depending on which country you are in.

Meaning 1: TER = Trading Expense Ratio (Canada)

When you look at a Canadian fund’s MRFP (Management’s Report on Fund Performance), it is now required to show the Trading expense ratio of the fund which represents the amount of trading commissions incurred to manage the portfolio as a percentage of the total assets of the fund. For example, if you had a $100 million fund and the trading commissions for the year incurred by the fund manager to manage the portfolio was $1 million then the Trading expense ratio is 1%. This is NOT reflected in the MER. Funds with higher portfolio turnover rates (meaning the manager buys and sells more often) or funds that invest in less liquid securities (like micro-caps for example) will have higher Trading expense ratios. Funds with low turnover and that invest in larger-cap names will have lower Trading expense ratios. Here is a screen-shot of an MRFP report which shows where you can find the Canadian TER:

In this case, you can see that the TER is 0.73%. If you add this to the fund’s MER of 2.46% you will get a truer sense of the total costs to run this fun.

Meaning 2: TER = Total Expense Ratio (US and UK)

Now to really throw a wrench into things: TER as the Total Expense Ratio means different things based on what country you are in. In the UK, the Total Expense Ratio is the same thing as the MER in North America. But in the US (predominantly) the Total Expense Ratio is the MER + Trading Costs.

Here’s a little breakdown…

In the UK the TER stands for Total Expense Ratio and is equal to the US or Canadian definition of MER

In Canada the TER stands for Trading Expense Ratio which is the cost of commissions paid in the fund as a percentage of the fund’s total assets.

In the US, TER stands for Total Expense Ratio and is equal to the US or Canadian MER + Trading Expense Ratio.

Yeah, I know.

Options Gurus Set Up Paid Educational Website

Posted by Preet on Mar 14, 2010 | 1 comment

I use options in my own portfolio but only rarely write about them. I will try to write more option-related material in the future, but for those who are interested in learning more right away you might be interested in a new site set up by some of the top option bloggers on the internet. The new website is called “Expiring Monthly“.

One of the contributing authors is Dr. Mark Wolfinger, and you may want to read the interview I had with him on this blog by clicking here. I consider him to be a real straight shooter and so when he approached me to help promote his site there was absolutely no hesitation on my end. However, he did indicate that he was offering affiliate commissions for referrals to the site who end up subscribing, so in the interests of disclosure let me make it clear: I receive monetary consideration for people who sign up for the Expiring Monthly website (price is $99/year).

I realize that over the weekend I had posted an affiliate link for Questrade, but rest assured the back-to-back affiliate offers are simply a matter of coincidence. I don’t actively look for affiliate opportunities, and it will probably be months and months before you see another, and it will always be disclosed. The flip-side is that I’m planning on giving away an iPad on the blog in the near future (as soon as they are available for pre-order in Canada which should be in a few weeks).

I’ll let the guys behind Expiring Monthly provide their own commercial and simply cut and paste their introduction page below, but the amount of knowledge Dr. Wolfinger gives away on his blog for free is testament to the value he can provide. Now multiply that by 5 authors.

I normally don’t endorse anything on this blog, but if you have ever considered signing up for one of those ridiculous option trading system seminars which you pay $1000 for a three day workshop near you and promise you that you can quit your job and sustain yourself trading options, save yourself. In this case, I would say you should really consider Expiring Monthly as you will learn practical, no nonsense information.

So, like I said – if you have an interest in options trading check it out. If not, then stick around anyways because I’ll be announcing an iPad giveaway in the near future for having to put up with the back to back affiliate posts! :)

One final note – they are holding a raffle for all people who sign up for their website and prizes will be a number of books and an private mentoring session with an options trading pro.

Now to Expiring Monthly’s description:

*****

Expiring Monthly is the brainchild of five of the top options bloggers on the Internet:

• Adam Warner of the Daily Option Report

• Bill Luby of VIX and More

• Jared Woodard of Condor Options

• Mark Wolfinger of Options for Rookies

• Mark Sebastian of Option 911.

Our goal is to provide a monthly magazine in digital format that’s informative to new option traders, yet interesting to the most experienced traders.

If you trade options, Expiring Monthly is your magazine.  We never want you to outgrow this publication

Every issue of Expiring Monthly contains a Feature Interview and an Extended Feature Article.  Our Follow The Trade feature tracks at least one trade per month from entry to exit, with appropriate commentary.

We have a few humorous trading anecdotes, along with all the insight, analysis,  market commentary, and trading tips you expect from our writers.

More features are planned, including Book Reviews.  If you suggest a feature, we’ll give it serious consideration.

*****

Click here for more information: Expiring Monthly Website.

Income Tax – The Canadian Tax Bracket System

Posted by Preet on Oct 15, 2007 | 64 comments

Updated to 2009 Tax Year

Personal Income Tax

You may or may not be aware that Canada’s personal income tax system is set up in a “progressive” manner. Basically the more you earn, the more you are taxed. In fact you may have heard people referring to high-income earners losing half of what they make to income tax. While it is true that a high income earner will pay a lot of money in tax, they don’t normally pay HALF of their income to the income tax collectors.

Tax Rates

Allow me to explain… There is no 50% tax bracket in Canada. In Ontario, the highest tax bracket, or marginal tax rate,  that exists is 46.41% for income over $126,265 (for the 2009 tax year). So right off the bat you can see that someone would not lose HALF their earnings to income tax. But there is more to this story than just the top tax rates. Let’s start with an example and then work backwards… If Bob earned $130,000 for 2009, he would have a combined total federal and provincial income tax of $41,171. That would leave him with a “take-home pay” of approximately $88,829. As you can see this is clearly not half of his income. So what gives?

The Candian tax system uses what are commonly called “tax brackets”. Each bracket has its own rate of tax, and as you move up through the brackets the marginal tax rate increases until you reach the top tax bracket which is 46.41% (Ontario). Here are the income tax brackets for Ontario (2009 Combined Federal and Ontario Provincial Personal Income Tax Rates as sourced from Ernst & Young):

If you earned $130,000 you would be in the highest of tax rates subject to the highest “Marginal Tax Rate” of 46.41%, but that rate of 46.41% ONLY applies to the income over $126,265. As you can see from the table above, the first $10,320 of your income (no matter how much your total income is) incurs no personal income tax. The concept of “Average Tax Rate” is just a way of figuring out roughly how much of your income is going to the government in the form of personal income tax. If we go back to our high income earner ($130,000) and do the math, we will find: $41,171 Total Tax Bill / $130,000 Total Income = 31.67% Average Tax Rate.

Average Tax Rates serve no purpose for tax filings – they are only calculated to see how much of what you earn is going to the government. MARGINAL TAX RATES come into play for many calcuations and are important in calculating the effects of certain financial strategies – so that number is ultimately more important. The Average Tax Rate is just nice to know… Or not! :)

Here is a link for quickly figuring out your Marginal Tax Rate, Average Tax Rate and Tax Rates on different types of income.

Use our strong dollar to save on online purchases…

Posted by Preet on Aug 1, 2007 | 0 comments

Our dollar has been hovering around $0.95 USD.  So to figure out how much you pay for something that is listed in US funds, just divide the US price by 0.95. Now you have how much you will pay in Canadian funds.

To take advantage of this you need to know that the price spread of an item (the difference between how much it costs in US funds and how much it costs in Canadian funds) is greater than the price spread between the loonie and the US dollar.  (The price spread between the loonie and the US dollar is 5 cents divided by 100 cents). <– THAT’s the philosophy, but what you really need to know is that when you divide the US priced item by the exchange rate, is the result less than what the items sells for in Canadian funds? Let’s take an example:

I posted that I recommend “The Richest Man in Babylon” as a great book to buy.  If you look on Amazon.COM, it is $6.99 USD.  If you look on Amazon.CA is it $9.99 CAD.

$6.99USD / 0.95(Exchange rate) = $7.36 CAD

So it is actually cheaper to buy it on Amazon.com since our loonie has made such a dramatic increase in value over such a short period of time. HOWEVER, you have to note that to qualify for free shipping on the US site, you need to spend $25 USD. To qualify for free shipping on the Canadian site you need to spend $39 CAD. In addition, the US site will not ship for free to Canada, so to really save money you need to find a friend with a US address and have it sent there and then arrange to get it across the border.  That’s a fair bit of trouble for a small savings, but for electronics…. :)

An iPod tax in Canada up to $75?!?!

Posted by Preet on Jul 24, 2007 | 0 comments

Yikes! It’s actually a blanket tax on flash memory storage devices by the looks of it, and it will range based on the size of the memory – and for a 30GB iPod it looks to be $75!

It hasn’t gone into effect yet and won’t be until at least 2008 – but if it is passed and you were considering buying a device which would incur the tax keep an eye on the implementation date!

You can read the full story here. I have to give credit to the BoyGeniusReport (which is a website that provides ungodly fast sneak previews of the next generation mobile phones and other cool gadgets) for digging up this info before the general Canadian Press! Well done! If you are a tech-head – you will LOVE the BoyGeniusReport.com.

Read about the Canadian iPod tax by clicking here

Link to the BoyGeniusReport by clicking here