Arsicles

ETFs: Index Funds That Trade Like Stocks

2008-05-11T12:34:02Z

In How to Build An Investment Portfolio, I explained the benefits of using index funds instead of the actively managed funds that dominate most portfolios put together by financial advisors. Vanguard and DFA both provide an excellent selection of indexed mutual funds, giving you the ability to implement a variety of portfolio strategies. However, buying into DFA funds is impossible for most investors, with typical $100,000 account minimums and only through approved advisors. So, the obvious solution is to open a Vanguard account, which only requires a $3000 balance. Another option is to use index ETFs, which trade like stocks, in whatever brokerage account you wish. There are hundreds of quality index ETFs available today, including ETF versions of most of Vanguard’s index funds.

What is an ETF?

An ETF is a “closed-end” mutual fund that trades like a stock at a continuously variable price throughout the day, in contrast to traditional “open-end” mutual funds that trade at a fixed price set at the end of each day. This has a number of important implications:

More Flexibility

While I don’t believe in market timing, I think it makes perfect sense to buy something you want when it’s on sale. Prices will always float up and down, but it’s nice to be able to pull the trigger when you see a discount you are happy with, rather than being forced to make a decision before you know what the eventual price will be. Also, like an eBay auction, you can set a threshold for what price you are willing to pay, called a “limit order”, then go about your work for the day, instead of sitting glued to your computer checking the price constantly.

Trade commissions

With open-end mutual funds, many creative ways exist for companies to sneak in added expenses. These include transaction fees, front and back-end loads, and 12-1b fees. Fortunately, none of these fees apply with Vanguard mutual funds held in a Vanguard account. A golden rule of investing: expenses should always be kept to a minimum.

100 Free Trades at Wells Fargo

With ETFs, you avoid the unnecessary costs that plague many mutual funds, but you add one in the form of a trade commission. Commissions vary widely from broker to broker, and often go down when you hold a certain amount of assets in your account. For example, Wells Fargo has a great deal going now where $25,000 in assets will give you 100 free trades per year. Scottrade is a good option for starters, with $7 trades regardless of your account balance.

(click for fine print)

These trade commissions could chew off a significant portion your money, especially with smaller transactions. For instance, even with the relatively low $10 fee TD Ameritrade charges, a $1000 ETF purchase equals 1% of your investment. That isn’t negligible. You might even be better off buying a no-load, no-transaction-fee actively managed fund with a relatively low expense ratio (gasp!).

Less Flexibility

You might think the trade fee isn’t so bad, just a one-time thing that you’ll never have to deal with again once you buy your shares. But remember, trade fees are charged for each lot of shares sold and purchased, so you get hit twice if you ever want to exchange assets between funds.

This comes into full effect with normally recommended “housekeeping” chores such as portfolio rebalancing and year-end tax-loss harvesting. You might need to buy and sell from several funds, and the costs can add up quickly, making such maneuvers detrimental rather than beneficial. Also, realize that dollar-cost averaging, where you make steady regular contributions throughout the year (and get hit with a fee each time), is not well suited to ETFs. Meanwhile, it is common for open-end mutual funds to allow for tiny $100 contributions free of charge.

Lower Expense Ratios

As you can see in the table below, Vanguard ETFs usually have around half the expense ratio of the corresponding open-end mutual fund. You can consider this a trade-off for the added commission you may pay for the ETF version. If the amount you are investing makes the commission negligible by comparison, or if the commission is waived, ETFs become a more attractive, economical investment strategy, compared to using the traditional, open-end funds.

Great Selection

The selection of ETFs gets better every month as more ETFs are announced. You can build a portfolio of Vanguard index ETFs identical to their open-end mutual fund equivalents, or expand beyond Vanguard with hundreds of other quality index funds.

What ETFs Are Best?

Not all ETFs and index funds are created equal, even if they sound like the same thing. Vanguard ETFs are usually the best choice, tracking appropriate indexes with the lowest costs. There are cases where you can make a good argument for using non-Vanguard ETFs, and with a few asset classes you have no choice, due to lack of availability. In the table below, open-end mutual funds from DFA and Vanguard are compared with their ETF alternatives. Again, Vanguard ETFs are identical to the open-end fund with the same name, with the differences in cost structure outlined above.

Asset Class	DFA Portfolio		Vanguard Portfolio		ETF Portfolio
	Symbol	Cost	Symbol	Cost	Symbol	Cost
TSM	-	-	VTSMX	0.15%	VTI	0.07%
LC	DFLCX	0.15%	VFINX	0.15%	SPY	0.08%
			VFINX	0.15%	IVV	0.09%
			VLACX	0.20%	VV	0.07%
LCV	DFLVX	0.28%	VIVAX	0.20%	VTV	0.10%
LCV	DFLVX	0.28%	VIVAX	0.20%	RPV	0.30%
SC	DFSTX	0.38%	NAESX	0.22%	VB	0.10%
SC	DFSTX	0.38%	NAESX	0.22%	IWM	0.20%
SCV	DFSVX	0.53%	VISVX	0.23%	VBR	0.11%
	DFSVX	0.53%			RZV	0.35%
	DFFVX	0.46%			IJS	0.25%
	DFFVX	0.46%			IWN	0.25%
REITs	DFREX	0.33%	VGSIX	0.21%	VNQ	0.12%
Total Int.	-	-	VGTSX	0.27%	VEU	0.25%
Total Int.	-	-	VFWIX	0.40%	VEU	0.25%
Int. LCV	DFIVX	0.44%	VTRIX	0.41%	EFV	0.40%
Int. SC	DFISX	0.56%	-	-	GWX	0.59%
Int. SCV	DISVX	0.70%	-	-	DLS	0.58%
EM	DFEMX	0.61%	VEIEX	0.37%	VWO	0.25%
EM	DFEMX	0.61%	VEIEX	0.37%	ADRE	0.30%
EMV	DFEVX	0.63%	-	-	DGS	0.63%
EM SC	DEMSX	0.81%	-	-	DGS	0.63%
TIPS	DFFGX	0.23%	VIPSX	0.20%	TIP	0.20%
TIPS	DFFGX	0.23%	VIPSX	0.20%	IPE	0.18%
US Bonds	DFFGX	0.23%	VBMFX	0.20%	BND	0.11%
US Bonds	DFFGX	0.23%	VBMFX	0.20%	BIV	0.11%
Global Bonds	DFGBX	0.29%	n/a in U.S.	-	BWX	0.50%
Global Bonds	DFGBX	0.29%	n/a in U.S.	-	WIP	0.50%

You can see that every asset class and style is covered by ETFs, and the situation will only improve in the near future as more and more ETFs are rolled out to target specific markets that index investors demand.

The main distinction between international funds VGTSX and VFWIX / VEU is that the latter include a 5% allocation to Canada and are eligible for a foreign tax credit, so they are preferable in taxable accounts. Both indexes include a 20% EM allocation. For emerging markets, the clear pick is VWO for low cost and diversity. ADRE is composed of only 50 companies, which is obviously less than ideal when the fund is supposed to represent the entire economy of the world’s emerging markets. Still, it’s an alternative to VWO with increased exposure to Brazilian and Chinese markets. It actually pairs nicely with DGS, which emphasizes Taiwan, South Africa, Thailand, and Malaysia stocks, but if I had to pick just one it would be VWO. There are other EM ETFs out there, but they have significantly higher expenses compared to VWO and ADRE.

For info and commentary on US Small Value and International Small Cap ETFs, I’ll refer you to a few good articles I found:

The Best Smallcap International ETF? That Depends – SeekingAlpha.com
Seven With Small-Cap Value, ETF-Style – TheStreet.com
Domestic Small-Cap Value Funds – Altruist Financial Advisors LLC

The biggest difference between Vanguard’s BND and BIV bond ETFs is that the latter excludes Mortgage-Backed Securities, which actually make up 33% of BND. This is preferable according to advisor / author / guru Larry Swedroe.

Do ETFs Make Sense For You?

To invest in index funds with smaller account balances, you should really trade ETFs as little as possible and minimize costs with a low-cost broker such as Scottrade or TD Ameritrade. With less than $25,000 in assets, it might be best to just open a Vanguard account and use their open-end funds to avoid dealing with trade commissions altogether.

As your account balance grows and the trade commissions become more negligible, a portfolio stacked full of ETFs becomes practical. As in the case of free trades with Wells Fargo (and a similar deal from Bank of America), you can probably manage a portfolio of ETFs year after year without ever paying a trade commission. Even with $10 trades, if this is applied to a transaction of $10,000, now we’re talking about 0.1% of your investment. To an extent, that is negligible, and you will automatically recoup this within one year since Vanguard ETFs typically differ by about 0.1% in expense ratio from their corresponding open-end fund.

For more about index funds and ETFs, read Rick Ferri’s All About Index Funds. This excellent book covers the history of index funds and how to use them effectively, including important chapters on ETFs and asset allocation strategies.

He’s written a newer book more focused on ETFs, aptly titled, The ETF Book. I can’t vouch for it’s contents, although the reviews on Amazon are quite positive. I suspect it could be overkill though, as the chapter in All About Index Funds would probably suffice for many.

How to Build an Investment Portfolio

2008-04-01T23:25:31Z

It irks me every time I see an ad for some pompous investment advisory firm. It typically shows some well-to-do people sitting around smiling, while a generic acoustic guitar strums in the background, and some guy with a gruff voice tells you how good they are at managing their client’s “complex” investment objectives. I think we all have one simple objective – to make as much money as possible! It should come as no surprise that these companies are incredibly wealthy because they often make more from your money than you do. The truth is, it’s easy to invest your money all by yourself with the simple advice in this article and beat the vast majority of investors using high-cost brokerage firms.

“The stockbroker services his clients in the same way that Bonnie and Clyde serviced banks.” — William Bernstein

I know I’d feel duped if I realized I was contributing part of my earnings to the $2.65 million per year needed to keep naming rights for the Edward Jones Dome. More typically, your assets will be siphoned off to silently fund a marketing campaign and provide a salary for the guy who sold you your funds. This isn’t conspiracy theory, it’s literal truth. Take a moment to read about loads and 12b1 fees if you aren’t familiar with these terms. Of course, some people get a thrill from throwing their money around indiscriminately and don’t care if they’re paying their advisor more than they’re paying themselves. My opinion is these people need to be taxed at a rate of 100% until they come back to reality.

Indexing vs. Active Management

The history of the stock market is a random but upward coarse over time, as illustrated in this graph. Research has consistently shown that expensive, actively managed funds are most likely to fall behind of the overall market’s return. Interestingly, these funds dominate most portfolios, and are invariably what financial advisors will try to sell you. Meanwhile, index funds, by definition, are designed to track the market, and while they rarely if ever beat the market, they almost always match it. Considering a historical annual return of ~10%, the market’s performance is something anyone should be happy with. So what is an index fund? And why does active management have such a poor track record? Let me explain these things briefly…

An index fund is a mutual fund designed to track some market index, which can be broad such as the Wilshire 5000 index that tracks the entire US stock market, or more narrow such as the Russell 2000 Value index that follows US small-cap value stocks. The stock make-up of a true index is determined by an objective algorithm, rather than an emotional human, leading to optimal diversification, low turnover and resultant low costs. Costs are important because investing isn’t free. You want to pay as little as possible, meanwhile financial companies want to sneak in as many fees and hidden expenses as possible. An interesting fact is that the only quality of a fund that has been shown to correlate consistently with higher returns is lower costs, as illustrated in the table below. If you use an indexing investment strategy, you will lower costs drastically. Financial advisors hate index funds because they don’t make any money from selling them.

Expense Ratio vs. Annual Return
Expense Ratio	Average Annual Total Return
0.50% and below	12.05%
0.51%-1.00%	11.67%
1.01%-1.50%	11.23%
1.51% and above	9.16%
Note: Data are for ten years ending Dec. 31st 2004 (Source: Lipper Inc.)

Active management means there is a fund manager who picks stocks for the fund based on their opinion of what will do best. More often than not, this results in overactive buying and selling, substantially increasing costs and attenuating gains. To worsen matters, managers tend to pick stocks based on their predictions of where the market is headed, rather than analyzing the value of individual companies relative to their stock price (a successful stock picking strategy called “value investing”). Trouble is, no one can consistently predict the future of the market, which besides its upward trend, is random.

Now, a brief history of actively managed mutual funds: if you go back to 1970, there were 355 of them in existence. Only nine beat the S&P 500 (a common index of the US economy) through 1999, and only two of them by more than three percent. That’s a pretty poor record – two out of 355. Bottomline: picking a winning actively managed fund is very much like playing the lottery or going to a casino – the odds are stacked heavily against you. If that sounds like a good way to invest your retirement money, have fun. With indexing, your investments will mirror the market and closely follow its long-term upward trend.

Asset Allocation and Portfolio Theory

With index funds you always get the lowest costs and market tying performance, leaving just one factor to be concerned with: asset allocation. Asset allocation means having an appropriate amount of money invested among the various asset classes and “styles” of US and international stocks, bonds, and treasuries, so that you “don’t put all your eggs in one basket”. A general principal is that riskier investments are more volatile and have the potential for amazing gains but also devastating losses. Stocks, or equities, are a risky investment class, and some stocks are much riskier than others. Nevertheless, in the long-run, they are by far the highest-performing investments, and so they appropriately make up the bulk of any portfolio with a distant time horizon.

You can leverage risk or volatility by combining investments that have a poor or negative correlation with each other, so that while one is moving down, the other is typically moving up. Commonly this involves adding some proportion of bonds and treasuries, which generate steady positive interest while buffering the wild swings of the stock market. In the end, a well-balanced “portfolio” achieves greater long-term returns with less volatility than one made up of stocks alone. How you decide to balance your portfolio should be based on a realistic assessment of your risk tolerance.

The remainder of this article will look at three sample asset allocation strategies that you can copy, alter, mix and match. I’ll start by looking at a simple, single fund approach and end with a portfolio made up of fifteen different index funds. Among these examples, I think you’ll find something that’s just right for you.

Target Retirement Funds

Fidelity Freedom 2045 Fund

Portfolio management can be as simple or complicated as you like, but if you’d rather be completely hands-off with your investments, everything can be managed for you automatically. One way of doing this is to pay an advisor to help you set up an asset allocation and periodically move things around to keep it balanced and appropriate, and they will be happy to lop an additional 1-2% off in addition to the actual fund expenses for this service.

Today, most of the major mutual fund companies have introduced target retirement funds that do this formulaic work at no additional charge. These funds are named by a year that should be close to your target retirement date. The asset allocation automatically adjusts to be more conservative as you age, basically meaning it will very gradually shift from stocks towards fixed-income like bonds and treasuries.

Most of these are actually conglomerates of actively managed funds, like the Fidelity Freedom Fund shown to the right. This is a downside for the reasons I already mentioned, including higher costs. With expense ratios in the range of 0.75-1%, this means that each year, regardless of gain or loss, that percentage of your money will go to the brokerage firm, paying the costs of active management.

Vanguard Target Retirement 2045 Fund

Vanguard’s target retirement funds are the exception, composed of index funds, with expense ratios of around 0.2%, making them the best option in my book. Again, why hold any active funds when they have such a poor track record? All of these retirement funds have merit though, given the convenience of having a robust portfolio contained within in a single fund that adjusts its asset allocation automatically for your whole life.

Total Market Index Investing

If you’d like a bit more flexibility and control over your portfolio, you can follow another simple strategy using total market index funds. The Bogleheads’ Guide to Investing suggests the following asset allocations based on your age, using Vanguard total market index funds:

Vanguard Index Portfolios
	Young	Middle-Aged	Early Retirement	Late Retirement
Total Stock Market Index Fund	80%	45%	30%	20%
Total International Index Fund	0%	10%	10%	0%
Total Bond Market Index Fund	20%	20%	30%	40%
TIPS	0%	20%	30%	40%
REIT	0%	5%	0%	0%

As its name implies, the Total Stock Market Index Fund (TSM) tracks all traded US stocks, and so, if it had existed in 1802, it would have closely follow the line labeled “stocks” in the graph shown earlier. Similarly, the Total Bond Market would follow the course of the line labeled “bonds”. And so on…

The Bogleheads’ Guide to Investing, put together by three “diehard” disciples of Vanguard founder John Bogle, is an excellent overview of personal finance and index investing, which I would recommend to anyone. You can use the table above as a starting point and make changes to based on your own research. For example, I find the treatment of international stocks here questionable. I don’t see why they should be left out of a young investor’s portfolio, and limiting them to a max of 10% at any age borders on ignoring them completely. Even though the book is written for US investors, and the US is the largest economy in the world, many argue that a portfolio should be weighted according to global market-capitalization. This would give you a 50/50 domestic and international stocks, since the US makes up about half of the world economy. Most would agree that 70/30 is a safe and happy medium.

Bonds, TIPS, and REITs

Bonds and TIPS (Treasury Inflation-Protected Securities) are included in a portfolio to decrease its overall risk. They are investments that typically have some guaranteed appreciation, albeit with less potential gain compared to stocks. Also, they have low correlation with stocks, often moving in opposite directions with market swings. Additionally, bonds and TIPS don’t correlate with each other, so having both gives you the best hedge against the more risky stock portion of your portfolio. The easiest way to own them is to buy into a low cost index fund.

REITs (Real-Estate Investment Trusts) are another asset class that doesn’t correlate much with others, adding further diversification, although at a recommended 5% in only one of the age groups in the table above, it’s obviously not a key part of the authors’ overall investment strategy. Many agree that REITs are not that important to hold, while others use them for greater than 15% of their portfolio. Esoteric discussions about REITs, TIPS, and other aspects of asset allocation theory can be found in abundance at the Diehards.org Investing forums, another product of John Bogle / Vanguard fans. They are always bubbling with interesting, intelligent discussions to give you food for thought, if nothing else.

Beating the Total Stock Market Index

While anyone should be happy with tying the market, with its average ~10% annual return over the past 80 years, some index investors use strategies to beat it over the long term. To beat the TSM, you must be willing accept greater risk and volatility in your investments.

If you are using the historical upward trend of all stocks over long periods of time as your justification for investing in them, why not focus on a defined subset of stocks that have done the best of all? You may have seen or heard of the Morningstar style box that visually categorizes stocks based on company size and relative value or growth qualities. Using these definitions, research has shown that small and value stocks have consistently outperformed the market at large, while growth stocks have lagged behind. These traits seem to act independently, meaning that stocks don’t have to be small and value to outperform, but there is a distinct value effect, as seen in large value stocks, and a small company effect, as seen in small blend or “core” stocks. That is the gist of the market-beating strategy of overweighting small and value stocks in your portfolio relative to the TSM.

The performance of small and value styles carries over to international stocks as well, as shown in the graph above. Here it looks like they beat out US stocks, but really it is just that the data started being collected in 1982, at the beginning of the 80’s bull market, after a long recession in the world economy. Increased exposure to emerging markets is another consideration, given that it is the highest overall returning asset class of all (using data collected since 1989). EM stocks have been extremely successful in the past 5 years, surpassing the S&P 500 by a huge margin. The caveat is that these higher performing asset classes have also had the most volatility, as indicated in the standard deviation values shown at the bottom of the figure above. Meanwhile, sticking to the TSM / S&P 500 gives you the least volatile equity portfolio.

IFA Index Portfolio

Vanguard TSM / Total International

A good example of a riskier asset allocation strategy is seen in the portfolios offered by Index Funds Advisors (IFA), which are heavily tilted toward small, value, and EM stocks relative to their global market capitalization, or in other words, relative to the way they would weighted in a total market index portfolio. This is shown nicely above, using Morningstar’s Instant X-ray to look at how the style box for an IFA portolio compares to one composed of Vanguard’s TSM and Total International index funds (70/30 ratio).

If you plan to stay invested for 10 years or more, a riskier indexing strategy becomes very attractive, and if history is any guide, it is likely to pay off. This is illustrated in the figure to the right, showing 10-year annual rolling period returns from 1957-2006 of five different IFA portfolios, which use DFA index funds. This impressive back-test shows the highest-risk portfolio “90” with an average annual return of almost 14 percent over 50 years, never dropping below a 5% average over any 10-year period. The table below compares the make-up of these five portfolios:

IFA Index Portfolios

US Large Company Index	4	8	12	16	20
US Large Cap Value Index	4	8	12	16	20
US Small Company Index	2	4	6	8	10
US Small Cap Value Index	2	4	6	8	10
Real Estate Index	2	4	6	8	10
International Value Index	2	4	6	8	10
International Small Company Index	1	2	3	4	5
International Small Cap Value Index	1	2	3	4	5
Emerging Markets Index	0.6	1.2	1.8	2.4	3
Emerging Markets Value Index	0.6	1.2	1.8	2.4	3
Emerging Markets Small Cap Index	0.8	1.6	2.4	3.2	4
One-Year Fixed Income Index	20	15	10	5	0
Two-Year Global Fixed Income Index	20	15	10	5	0
Five-Year Gov’t Income Index	20	15	10	5	0
Five-Year Global Fixed Income Index	20	15	10	5	0

Within the stock portion of each IFA portfolio is an identical ratio of styles and asset classes. Rather than subtracting from small, value, or EM allocations, risk is leveraged by increasing the proportion invested in fixed income indexes, which are mostly comprised of bonds and treasuries. This contrasts the Vanguard portfolios discusses earlier, where the domestic / international stock ratio varied between age groups, on account of the historical notion of foreign investments being riskier. Another difference here is that rather than just going by age, IFA provides a Risk Capacity Survey that will recommend a portfolio number based on your answers. A higher portfolio number means more risk – more stocks and less fixed income.

IFA‘s founder is the author of an index investing book (where I got some of my figures), called Index Funds: The 12-Step Program for Active Investors, and it is just that, breaking the bad habits of active investors with a mountain of investment research that goes back centuries, all favoring an index investment strategy. There are free online and PDF versions of the book at IFA.com. Just as the Bogleheads’ book focused on Vanguard funds, this one focuses on its own preferred index fund provider: Dimensional Fund Advisors (DFA). Vanguard’s index fund selection is quite good, but it comes in second to DFA, which offers a veritable giant-size crayon box of index funds, covering important market nooks like micro-caps and emerging markets value stocks.

Not everyone has easy access to DFA, or even Vanguard index mutual funds for that matter, so in a planned follow-up article, I will show you how you can use any brokerage account to build a robust index portfolio using index ETFs. In addition to replicating the portfolios shown in the tables of this article, I will look at other ETF portfolios advocated by various investment professionals and enthusiasts. After that, my next article will look at the best overall brokerage accounts out there, with a focus on an indexing investment strategy.

Conclusion

I hope one thing people can take away from this article is that there is no single “right” way to build a portfolio, and it doesn’t have to conform exactly to any standard. I know that for me, part of what held me back from investing earlier was thinking I would screw everything up if I didn’t do it just right. This is what leads so many people to give up and hand their money over to a broker / adviser combo person. This sets up a conflict of interest that slowly, invisibly robs millions of investors of a portion of their retirement savings.

Even if you just invest in TSM and nothing else, you will beat most of these thieving advisory firms. With a riskier index portfolio tilted toward small and value stocks, you should blow them away. The most important thing is to put your money in the market early and often, so you can take full advantage of the power of compound interest to grow it exponentially over your lifetime. Knowing there is room for flexibility makes getting your feet wet in investing a lot more comfortable, and using index funds to track the market instead of a manager’s whims also leads to greater peace of mind.

Canon's New Vixia HD Camcorders

2008-01-07T21:26:23Z

The Vixia Line

Canon has announced three new HD camcorders today that kick off the Vixia line of high-end consumer models. The black paint jobs are definitely nice, making the HV30 look less toy-like compared to its predecessor, and the HF series sports some sleek new styling, an area where Canon has taken a back seat to competing Panasonic and Sony models. You sure will look cool now with a Vixia in your hand.

HV30

This is the camcorder so many HV20 fans have been pondering, and now that it has been announced, HV20 owners can rest comfortably knowing it wasn’t really worth holding out for. The added features can be counted on one hand: black chassis, 30p mode, larger zoom toggle control, upgraded LCD that resists solarization (changing image appearance with screen tilt), and support for an expanded battery pack. No changes have been made to the CMOS or other components of the imaging system, which is fine, the HV20 is already amazing the way it is. It would have been nice if they’d enabled some more manual controls in the HV30, but alas they didn’t.

The 30p feature is no doubt the most significant addition to the spec, but I wonder how much use it will really get. Mitch Glick, assistant manager of Product Marketing at Canon, had this to say about it:

“We recognize that people want to do a lot of web video work. Typically, when people are doing compression for the web, you’re compressing at 15fps. If you’re at 30fps, you’re only pulling out every other frame. It holds the quality together better.”

Why not just use 60i? The math works out nice with that mode too. One big reason people like to use the progressive mode on the HV20 is that it improves on the low-light performance of 60i significantly (as shown here), It will be interesting to see how the 30p mode’s low-light performance stacks up to 24p. If it delivers similar results, it may hold some real value to people for the reasons the Canon rep mentioned. The extra frames will also help smooth out the sometimes stuttering look of 24p when panning, giving it an edge. But given the history of 24fps in film, I don’t think too many indie filmmakers will switch from 24p to 30p, while there may be some casual users who decide to shoot in 30p instead of 60i, if there are indeed low-light benefits.

HF10 and HF100

These are Canon’s first solid state HD camcorders, and they include more exciting features than just solid state storage. The lack of moving parts for storing data likely means longer battery life and probably shelf life as well. They share a 1/3.2-inch CMOS that packs 3.3 megapixels (compared to the HV20/30’s 1/2.7-inch CMOS with 2.96 megapixels). Both record in AVCHD format, like the hard drive based HG10, but now in full HD 1920×1080 resolution with a maximum bitrate of 17mbs, up from 1440×1080 and 15mbs in the HG10. All of this makes for a significant upgrade over the previous HG10, but we’ll have to wait for some objective testing to know for sure how all of these specs translate into video performance.

The HF100 will retail for $899, while the HF10 will be $1099. The extra $200 gets you a black chassis and 16GB of internal flash memory, while the HF100 can record to SDHC memory cards only (the HF10 can still accept them for expansion). When you consider a 16GB SDHC card costs nearly $200 anyway, it may be hard to justify getting the lesser HF100. Other cool features include an intelligent battery that allows the HF10/100 to display in minutes how long before the battery dies. Zoom is up to 12x from 10x on the HV20 and HG10. We’ll have to see where street prices on these go in the coming months.

The 15mbs bitrate imposed by the AVCHD format was clearly a limiting factor in the HG10’s video performance. It shares the same CMOS as the HV20, yet has less sharpness and more compression artifacts. Also, its 24p mode is choppy and unusable, while the HV20 captures nearly pro-quality 24p footage. It remains to be seen how well the marginally increased 17mbs video bitrate will take advantage of the upgraded imaging system in the HF10/100. And while 24p and 30p modes are also included in the HF series, being progressive, we’ll have to wait and see if they suffer the same issues seen with 24p on the HG10, and be rendered useless. The new HF10/100 has a lot of potential, but the question is whether its AVCHD format will be a bottleneck that keeps it from surpassing the HDV-based HV series on the totem pole of HD camcorders.

Ultimate Financial Lifestyle Guide - Part 1

2007-10-31T11:07:18Z

Who doesn’t want freedom, control, and peace of mind in their financial lifestyle? Is there any reason not to lower all your expenses and maximize earnings? In this series of articles, I’ll detail the ultimate products and strategies that can enhance your financial lifestyle in every aspect. In Part 1, I will discuss the importance of saving money, the best online checking accounts, the best brokerage accounts, and Roth IRAs.

Saving is Everything

No matter how much or how little you make, the only thing that matters in the long run is how much you save. And the earlier, the much better. Aim for saving 20% or more of your income. If this isn’t possible, do yourself a favor and at least try to salvage 10%. Start early and aggressively and you won’t have to save nearly as much later. The power of compound growth is illustrated profoundly in the graph below. It shows three different investment scenarios, all with $4000 annual contributions compounding over time at 8% annual return:

As you can see, a $40,000 total investment, made in $4000 increments over ten years, beats a $120,000 investment started ten years later. In fact, the $40,000 investment will continue to beat the one started ten years later into perpetuity, despite additional $4000 contributions each year! Looking at the first curve above, you can see that combining these two scenarios – early and continued investment – is a recipe for becoming a millionaire by age 65. Of course you can reach that point much sooner if you are able to invest a lot early in life, giving your exponential growth curve something like a steroid injection, except legal.

Roth IRA

The Roth IRA is the biggest tax break for individuals ever created. Max it out every year, as early as you can. I start this guide with the importance of saving and IRAs because probably the single best thing you can do for your finances is to pay yourself first. Secure money for your contribution ahead of each New Year’s like someone is holding your child for a ransom. Then you can pay yourself on January 1st and know that you’ve already met the most important financial goal for the year.

The key feature of a Roth IRA is that you avoid capital gains taxes on your investments; you pay tax on the invested money right at the start and then never again. A Traditional IRA lets you deduct your contributions from your taxes, but in retirement, your withdrawals are taxed as regular income – not good, especially since your initial investment will have grown exponentially. If you are able to contribute the maximum amount to your Roth IRA each year, which is harder to do since you are using taxed money, it is almost always a better option compared to a Traditional IRA, regardless of your current and future tax bracket, as illustrated in this article.

If you don’t already have a Roth IRA, I’d recommend opening one with Fidelity or Vanguard, as they both offer an exhaustive array of mutual funds, have great customer service, and most importantly, they have low expenses. As for what you should invest in, remember, this is your IRA, not Wall Street. Investing in it should be boring, not like a never-ending episode of “Mad Money”. To start, you could do much worse than to use one of the target-retirement funds that give you an appropriate asset allocation that automatically adjusts over time. While your money is (hopefully) growing in this fund, you can devote some time to learn more about asset allocation strategies and the benefits of index funds. Read Index Funds: The 12-Step Program for Active Investors to ground yourself in reality before you start throwing your money at the stock market.

Schwab Investor Checking / Fidelity mySmart Cash Account

See my checking deals article for a review of high-interest checking accounts. Most people have a single checking account where they keep thousands of dollars earning 0% interest. If you are one of them, look into one of these accounts, you will be very glad you did.

Since my checking deals article was published, Schwab lowered the APY on the Investor Checking account from 4.25% to 4.00%, but I think it remains the best overall product out there. The APY is still very competitive, and it has the most complete feature-set of any internet-based checking account in existence:

No minimum balance
Unlimited ATM rebates (use any ATM you want)
Free Checkfree BillPay
Fast, free ACH
Free, unlimited paper checks
Unlimited pre-paid deposit envelopes (no postage necessary)
Free Direct Connect access in Quicken

A quasi-checking account is offered by Fidelity called the mySmart Cash Account that matches the Schwab account on the above features. It has the potential for higher earning if you keep your cash in a linked money market fund earning ~5%. Read more about setting it up correctly on FatWallet. My only reservation about this account stems from the fact that it is actually a brokerage account in a checking account’s clothing. This has a couple of implications. First, you can’t see your balance when you use ATMs. Also, Quicken sees it as an investment account, which can cause a number of problems when you try to replicate the functionality you get with regular checking accounts. Schwab, meanwhile, shows both ledger and available balances at ATMs and appears as a regular checking account in Quicken.

It’s a good idea to have at least 3 months of living expenses stashed away as a liquid asset, available on demand. With an account like Investor Checking or mySmart, you have one-stop shop in a full-featured checking account that also earns high-interest for keeping a cushion of cash as an “emergency fund”. You can just subordinate the account you may already have at a local branch bank, using it for making deposits at local ATMs or branches. You can then ACH the money to your high-interest account to start earning interest the next day.

Vanguard / Fidelity Brokerage Account

If you go beyond funding your IRA each year and keeping a cash pool of 3 to 6 months of living expenses on hand, you should consider starting to invest in mutual funds or ETFs in a regular taxable brokerage account. Choosing between Fidelity and Vanguard can be looked at as a clash of the titans of active vs. passively managed funds, respectively, although each broker offers both types of funds. I have become a believer in passive index funds, because of their extremely low expenses and tax advantages over high turnover mutual funds. Vanguard’s mutual funds have an average expense ratio of 0.21 percent, one-sixth of the average fund’s 1.27 percent. In the words of Vanguard’s founder, Jack Bogle:

“Asset allocation is critically important; but cost is critically important, too – All other factors pale in into insignificance.”

A nice article was recently on Morningstar that gives some common sense advice on investing with ETFs, a type of index fund. If you want a great, honest, and concise overview of finance management and investing, I can highly recommend a book I’m reading now, The Bogleheads’ Guide to Investing.

Ignore advice of financial advisers and brokers who will suggest high-load, high-expense funds that siphon a share of your investment to support their own livelihood. Research has shown time and again that an index such as the S&P 500 will beat most actively managed portfolios by a wide margin over a long period of time. For more on constructing your portfolio, just ask some friendly Bogleheads for assistance.

If you decide to go with Investor Checking instead of the mySmart account, you can still put a big chunk of cash, your “emergency fund” money, into a money market fund with Fidelity or Vanguard and get that extra percentage point of earnings. Again, these earn ~5% APY and can be readily sold off whenever you need cash. The only qualifier is a $2500 minimum investment and $2000 minimum balance to avoid fees. To me, this is the ideal scenario, as your Quicken experience isn’t crippled with the MySmart account, and you still get the ~5% APY for a large amount of your liquid assets.

More to Come…

Part 2 of my Ultimate Financial Lifestyle Guide will look at the most successful money saving strategies, online shopping deals, and today’s top rewards credit cards.

Seven Blog Design Tips for Textpattern

2007-09-10T10:17:10Z

Textpattern is the CMS that powers my site, and almost every day I learn how to take advantage of another one of its endless features. If you’re using Wordpress instead, I feel sorry for your mother. Detailed below are seven design tips that I’ve used in the recent redesign of AndrewSwihart.net, some coming from two excellent books I’ve read: Textpattern Solutions: PHP-Based Content Management Made Easy, and Beginning CSS Web Development: From Novice to Professional.

1. Local Development Site

Before my Samsung 226BW review got popular, I didn’t see much traffic here, so I was content changing things on the live site, knowing maybe only 1 or 2 passersby would be around when I was redressing the proverbial mannequins in the display window. When you’re seeing more steady traffic like I am now, it’s not a good idea to regularly subject visitors to the horror of your site under construction.

The solution is to install Textpattern locally on your computer so you can mess things up as much as you want. You can do a perfect port of your live site by following this excellent guide on Wion.com. He covers every potential pitfall, and the instructions are clear and thorough.

It’s possible to do a whole transfer of your site in a couple minutes, and the process is almost identical if you want to import your local development site back up to your web server. The only thing you have to do each time is change the Site URL field in Admin » Preferences to match the site you’re working on, so all your relative URLs will still work.

2. Style Sheet Management

One of the biggest buzz-kills in CSS web design is hunting around over and over for style properties that you want to change. To minimize this you should keep your CSS as organized as possible. An article called Creating Sexy Stylesheets by Jina Bolton is one of the best single, free guides to CSS management I’ve found on the web. Read it from beginning to end for an excellent primer on minimizing CSS work flow headaches.

A single style sheet is best for the speed of your site, but one sheet can be long and hard to navigate when you are making a lot of changes to your site’s design. For this reason, it’s nice to use multiple style sheets to divide up the different properties of your CSS. A lot of people find it useful to separate reset styles, layout, typography, forms, IE hacks, and print styles (to optimize your site’s appearance for printing). In Textpattern, you can create multiple style sheets like this and link to them in the <head> element with tags as follows:

<txp:css n="reset" format="link" />
<txp:css n="layout" format="link" />
<txp:css n="typography" format="link" />
<txp:css n="forms" format="link" />
<txp:css n="ie" format="link" />
<txp:css n="print" format="link" media="print" />

When you are in the thick of the design stage for a site, this kind of modular CSS is very convenient. In addition, organizing your style declarations in one of the ways suggested in Jina’s article will make finding them much faster and less cumbersome.

Also in that article, Jina talks about making your own CSS “framework.” That’s really just a fanciful term for a set of style sheets like those above, except stripped down to act as a template for designing several sites. A bunch of egotistical developers came up with the term as if it was a revolutionary idea. However, a CSS template (I like that term better) is a great idea and something any web designer would benefit from in the long run.

My Thoughts on Blueprint

I think the popular Blueprint CSS template is a great learning tool, created by experts and full of nifty tricks, but it’s not perfect. Regarding reset styles, you may want something more or less rigorous than what Blueprint provides. An article on Perishable Press provides and discusses a collection of reset styles for you to pick and choose from. These, in effect, replace the lowest priority styles in the cascade – the browsers’ default styles. Meanwhile, the grid layout of Blueprint may not be something you would need or want for a simple blog site, although the logic behind it is worth appreciating. As for Blueprint’s typography stylesheet, its organization and completeness is admirable, however, you will almost certainly make changes to the styles for your own site. It would be most savvy to use something like Blueprint as a starting point for making your own CSS template, which will save you a huge amount of time rehashing commonly used styles across multiple sites, with little or no bloat.

3. Textpattern Forms

Making liberal use of forms in Textpattern is another thing you can do to be organized and code your site efficiently. Forms are used for storing and micro-organizing snippets of markup. You give each form a name and it’s added to an alphabetized list. Then, in place of the chunk of markup you put in the form, you can simply type a tag like this:

<txp:output_form form="form_name" />

I’ve taken this advice, and it makes it easier to quickly find what I’m looking for when I go to make a change. Most importantly, when you reuse forms on several pages or in articles, the changes are reflected everywhere that references the form. In this way, forms are like CSS, except for HTML and Txp tags instead of styles.

An idea to get you started is to put your headers, sidebars, and footers into their own forms, and then call them into all the pages that use them. In general, any commonly used snippet of code deserves a place in a form.

4. Use Tags

I now use the tru_tags plugin for tag-based navigation on my site, which makes use of the built-in keywords feature in Txp. Tag and category-based navigation work pretty much the same from the user’s perspective, but tags hold the advantage when you’re the one creating the site, especially for blogs. First, its nice to be able to just type in some words in the keywords box in Textpattern, without having to go make new categories every time you write an article on a new topic. Also, there’s no limit to how many tags you can assign to an article, whereas, by default in Txp, categories are limited to just two. You can use the rss_unlimited_categories plugin to get just that, but you’re still stuck with creating the categories before you can use them. The other nice benefit I get from using tags is that I can automatically add them to the metadata for each article with a single Txp tag, like this:

<meta name="keywords" content="<txp:keywords />" />

If you are using the keywords field for this purpose already, as it’s intended, you can use the same words for organizing your content. Simple and automatic, the best rules to live by ;)

5. Make Your Site Come Alive

Textpattern lets you exploit the power of PHP without knowing a lick of the language. You can decorate your sidebar, archives, photo gallery, and other areas with dynamic elements that update automatically as you write new articles, upload new pictures, etc… And setting up these dynamic elements in Textpattern is worlds easier and more accessible for a novice than it is in Wordpress, courtesy of elegant, simple Txp tags. More to come…

6. Add Some Flare

With the easy-to-use Javascript package JQuery now being packaged with Txp, it’s time to use it to add a little spice to the behavior of your site. If you haven’t noticed my new subscription area on the top of the sidebar, I have a tiny smidgen of JQuery goodness in there when you click “email”. Here is the entire code for it:

$(document).ready(function() {
// hides the element by default
$('#email_sub').hide();
// toggles the element on clicking the noted link 
$('a#email_toggle').click(function() {
 $('#email_sub').slideToggle(400);
  return false;
 });
});

That’s it! If you have an idea for some effect you think might be possible with Javascript, surf over the Learning JQuery and see if Karl or someone else has an example you can work from. You can usually figure out what the scripts are doing even if you don’t know the syntax. You just have to plug in a few elements, classes, or ids into the right spots and it should work fine.

7. Speed It Up

Textpattern is known to be the slimmest, fastest CMS out there, so you may not feel like there is much to be done here. But I recently discovered a plugin called asy_jpcache that makes Txp even faster. It serves up cached versions of pages as long as the cache is less than 15 minutes old or whatever time limit you specify. According to benchmarks reported in the plugin’s thread and in this article, you can get anywhere from a 8x to 20x speed boost!

When you are finished (or are taking a break from) playing with your CSS, you should condense your multiple sheets into a single, static style sheet for optimal page loading speed. To do this, just copy and paste the contents of each individual sheet into one big “default” sheet. Now, to make a static CSS file (to take the place of the style.php file), you can use the plugin rvm_css and link to the file in your <head> element like so:

<txp:rvm_css format="link" />

This single Txp tag will load a static version of whatever stylesheet you have assigned to each section under the Presentation tab in Textpattern. You should also always remove unnecessary comments and maximize selector grouping to make your CSS as small and efficient as possible.

There are other things you can do in terms of designing your site for speed, and some of these are well layed-out in Paul Stamatiou’s 5 Ways to Speed Up Your Site. If you really get into it, check out his other site speed articles. Paul is a bit of a website optimization fetishist ;)

Before

After

Conclusion

I hope these tips are useful to people who have made the wise decision to blog with Textpattern instead of Wordpress. In making your own dynamic blog site, there is nearly unlimited customization possible using simple Txp tags and plugins – no PHP to deal with or even look at. I’d love to get some constructive feedback on my site’s current design; for kicks you can click the screenshot above to see the original AndrewSwihart.net.

Killer Checking (and Savings) Deals

2007-07-24T01:22:42Z

Who Else Wants Free Money?

If you have any significant amount of money that's earning less than 4% interest, this article is for you. You might already have a checking account at a local brick and mortar bank with lots of branches and ATMs in your neighborhood. These accounts have one advantage, and I already mentioned it - local branches and ATMs. The huge downside is that they earn no interest, and the "savings" accounts that are tied to them typically earn half a percent or less. There are many smarter options for parking your day-to-day cash, and today I'll be looking at the best checking accounts among the most savvy of deal-finders.

High-Interest Heaven

A few weeks ago, I decided to investigate high-interest savings and money market accounts as a place to store extra cash that I could siphon from my existing checking account. The first one I looked at was ING's Orange Savings account with 4.5% APY, because I had seen commercials and gotten junk mail about it. I quickly discovered that ING launched an online checking account earlier this year, called Electric Orange, that earns just 0.5% less interest. The Orange Savings account immediately lost its appeal for me, in light of this new high-interest checking account.

After all, your checking account is where all the action takes place. It's where most people set up their employer's direct deposit to go so the money is ready to be used for paying bills, writing checks, and using a debit / ATM card. It always made sense to me that banks separate the savings account from the checking to add a barrier to getting any interest on the money they are holding for you. I almost couldn't believe my eyes that this "checking" account earned 4%, while my current bank's "savings" account didn't even break half a percent. To me, a high-interest checking account screams simple and automatic, two of my favorite lifehacks. I was excited about Electric Orange, but I had to do more research. What's the catch? Is this the only account of its kind?

As I suspected, there are some drawbacks to Electric Orange that keep it from being perfect. As an online checking account, there are no local branches or branch ATMs. You can still set up direct deposit, but to deposit paper checks, you will have to send them to the bank by mail. As for making withdrawals, ING has that pretty well covered. With Electric Orange, you can use the extensive Allpoint network of ATMs without incurring any fees. This ATM network is surprisingly widespread and plentiful, and most people won't have a problem finding several ATMs in their area to use for free. In fact, it may well be the case that the coverage of the Allpoint ATM network is better than any single bank in your neighborhood.

Beyond the lack of local branches, you also don't get traditional paper checks with Electric Orange, but you can request a check you fill out online to be sent to you by mail, which takes a couple days. This is better than nothing, but really it would be a pain to have to go through such a process just to give someone a check. The lack of some of the usual features of a checking account with Electric Orange may not bother you one bit, but I'm not one to jump on anything without looking at what else is available first.

In Search of the Perfect Account

Well, it turns out there are several alternatives to Electric Orange, and they earn even more interest and provide free paper checks! And as opposed to using the (albeit respectable) Allpoint ATM network, most other online checking accounts give you rebates for ATM fees you incur, so that you can use any ATM you want! Of the accounts I've picked out below, you should never run into trouble with ATM fees (others have smaller limits like $6/month). None of these accounts have monthly maintenance fees, and they are all FDIC insured except for Fidelity (SPIC insured). Some will even supply you with pre-paid envelopes for making check deposits by mail. Saving that precious time it takes you to write the bank's address and stick a stamp on an envelope (that you bought with your hard earned cash), you could make the argument that having pre-paid deposit envelopes is even more convenient than visiting a branch ATM like we're all used to. In the table below, I've put the best checking accounts available today side by side, so that you can quickly and easily see the important differences that set them apart.

	ING Electric Orange	SalemFive eOne Checking	E-Bank ePremium Checking	Schwab Investor Checking	Fidelity Core + MMA
Annual APY	4%	5%	5%	4.25%	~4.4% / ~5.15%³
Minimum Balance	$0	$0	$2500²	$0	$0⁴
Paper Checks	no¹	yes (100)	yes (unlimited)	yes (unlimited)	yes (unlimited)
ATM rebates	none (Allpoint network)	$15/month	unlimited	unlimited	hard to qualify⁵
BillPay service	Yodlee	Metavante	Checkfree	Checkfree	Checkfree
ACH	yes (1d+2d)	no	no	yes (1d+3d+1d)	yes (1d+4d)
Pre-paid envelopes	no	yes	yes	yes	no
Quicken downloads	web access	direct, $5/month	direct	direct	direct
Hard pull	yes	yes	yes	yes	no
Links	sign up	sign up	sign up	sign up	sign up

ACH: Automated Clearing House = electronic transfer of funds to and from different accounts. ACH on each account is detailed below.
Quicken downloads: With Web Connect Access, you have to go to the bank website to initiate downloads. With Direct Connect, your account info can be downloaded from within the Quicken program.
Hard Pull: See this explanation of hard vs. soft credit pulls.

You can request a check you fill out online to be mailed to you
$10 monthly fee if $2500 minimum balance not met
Core account set to FTEXX Municipal Money Market earns ~4.4-4.6%, varying with your federal and state tax bracket. FSLXX Select Money Market earns ~5.15% and auto-sweeps into Core.
$2500 minimum to open account, after that no minimum on the Core account. FSLXX fund requires a $2000 minimum balance.
$5000 minimum balance to qualify for debit / ATM card, $500,000 for ATM rebates (I'm not joking)

SalemFive and eBank offer straightforward online checking accounts similar to Electric Orange, except they lack the useful ACH function. Their advantages over ING are real paper checks, freedom to use any ATM, and a full percent higher APY. With SalemFive there is no minimum balance, while eBank requires $2500 in the account to avoid a $10 monthly fee. If keeping this balance is not an issue for you, the benefits over SalemFive include unlimited free checks, Checkfree billpay (considered the best by many), and free direct connect to Quicken. The $15/month ATM rebates offered by SalemFive is more than sufficient, making the unlimited rebates offered by eBank a negligible selling point.

has apparently had a small bank in Reno, NV since 2003. Now they are going after the online checking market with Investor Checking. You typically open this account with a Schwab One brokerage account (waiving that account's minimum balance requirement). The resulting combination is something quite unique and appealing to me. The checking account pretty much runs the table (pun intended), meeting or exceeding every perk offered by the other banks. It has a moderately lower APY (4.25%), but the unmatched feature set is perhaps worth the loss of interest to those who aren't keeping a ton of money in the account.

Fidelity Investments provides full check-writing and Bill Pay service on Core accounts, which is where your money sits if it isn't invested anywhere else. People have been using it as their main checking account with great success. I recommend reading the Quick Summary in the Fidelity FatWallet thread for all the details.

While Fidelity gives you a lot of benefits like Checkfree billpay and ACH, and has the potential for very healthy earning power, the main downside is in the debit card. First, you have to keep a $5000 minimum to qualify for the card, which is issued by PNC Bank. To qualify for ATM rebates, your balance must be in excess of $500,000! So, unless you are already quite wealthy, you'll just get an ordinary PNC Bank check card, although if you happen live in Pittsburgh that's not so bad.

Fidelity as a checking account

You should change your Core account from FCASH (the crappy default) to Fidelity Municipal Money Market (FTEXX), a tax-free fund that has a variable interest rate depending on your federal and state tax bracket, typically around 4.4-4.6% (even higher depending on your income). See here for a detailed explanation of how this works. If you can keep a $2000 minimum balance, you can take it to the next level by putting your money into the Fidelity Select Money Market fund (FSLXX), which currently earns 5.15%. You can't actually write checks out of FSLXX, but the sweet thing is Fidelity will automatically sell FSLXX shares and sweep the money to cover checks and deductions made on the Core account with no fees or limits.

Many people keep all their money in FSLXX and just let it sweep into the Core as needed. This appears to be an unofficial but extremely reliable feature. It seems a tad abusive and brazen to be testing the lenience of Fidelity like this, and it may be prudent to keep at least some money in the Core account to avoid constant auto-selling of FSLXX, and to avoid any penalty that may arise if Fidelity decides to quit being so nice!

Presidential Checking PLUS is another online checking account that I could have included in this round-up. It apparently has a great track record and a lot of people still use it and like it. They were disqualified because their website looks like it's out of the 90s. I'm just kidding, if someone wants to help me fill out another table entry I will add it, along with any other account that is deemed worthy of having such a high honor bestowed upon it.

There are also several small local banks now offering checking accounts that earn upwards of 6% interest! See "Local High Yield Reward Checking Accounts" on Bank Deals. This seems to be a recent trend, and most just require you do set up your direct deposit with the account and complete some number of debit card transactions each month. I don't know why this trend is going on, or how long it will last, but it could be a great deal if you live near one of these banks.

Taking Advantage of Multiple Accounts

Seeing as there is no downside to having more than one checking account (and because people tend to develop a strange devotion to their branch banks), many people will keep their existing checking account with a branch bank for depositing paper checks, and then use ACH to transfer the funds to a high-interest online account.

There are subtleties to how ACH works with each of these accounts though. With ING, the money shows up in your account the next day, and there is a subsequent two day hold before you can use the funds. During those two days your money does not earn interest. There are a lot of folks on the FatWallet forums who's head would explode if they weren't earning interest AND didn't have access to their funds for those two days. It doesn't seem like that big of a deal, considering the amount of money it would take to gain any significant interest worth getting upset over losing in a two day period. Meanwhile, Schwab and Fidelity do better by FWers. They also transfer the funds in one day, and then have 3 and 4 day holds respectively, during which you DO earn interest and are able to use the funds for making trades, but not for withdrawal. Schwab currently only lets you ACH into the linked Schwab One brokerage account (this may change later this year), so you have go to the website and do an additional same-day transfer from Schwab One into Investor Checking once the three-day hold is up.

Float time is good - ING is not

Paralleling the way they temporarily smuggle your incoming ACH funds, ING sticks it to you when you send checks compared to the other banks. They deduct the amount of the payment the day the check is sent, while the other banks will leave your funds intact until the recipient actually cashes the check. This is called "float time," and as with ACH, it's nice to get those few extra days of interest on your money. Once you realize these subtle shortcomings, combined with the lack of real checks or a more competitive APY, ING doesn't seem quite as appealing.

I Talked to Chuck

Well not really, but I did choose Schwab Investor Checking, because it offers more flexibility than any other account, and adds the intriguing aspect of a linked Schwab One brokerage account. I've been meaning to start doing some small investing on my own, and the convenience of having the Schwab One account linked to my checking is just about the best way I can think of for doing that. Charles Schwab is one of the biggest names in discount brokerage, and there are a ton of no-load mutual funds available with no transaction fees. And as you can clearly see in the table above, Schwab gives you every feature you could possibly want on the Investor Checking account.

As for the advantage over Fidelity, it's the debit card. Fidelity almost got my account, but a $5000 minimum just to get the ATM card made it impractical. In truth, I currently couldn't even meet the $2500 required to open the account. Once I do save up an appreciable amount of cash this year, I plan on quickly contributing my $4000 yearly limit to my IRA. And of course the real benefit of Fidelity comes when you hold your money in FSLXX, which requires a $2000 minimum balance. The bottom line is that I'm just not there yet financially for Fidelity to make sense.

On a side note, the web sites for Schwab and Fidelity both have excellent, ergonomic designs. Both look really slick, are very easy to navigate, and offer a lot of content to help you research your investing.

Savings and Checking Combos

Another (more cumbersome) way to go about earning top dollar on your liquid cash assets is to have a free, no-interest checking account linked to a high-interest savings or money market account. These have APYs of ≥5% and may even allow limited check-writing in addition to being linked to a real checking account. If so, you are generally limited to 6 transactions per month (ATM use doesn't count), and only three of those can be checks or debit card use (ACH transfers could eat up the other three). With this kind of setup you have to keep an eye on your checking account balance and the number of transactions you're doing on the savings account to avoid extra fees.

Accounts like this are available from GMAC, HSBC, Citibank, Washington Mutual (blog post), and Bank of America. As my balance is usually low, I prefer the consummate account features of Schwab Investor Checking over the moderate increase in APY. But, if you keep a higher balance, a 0.75% increase could make a big difference. Extreme FWers would kill for a 5.3% rate instead of 5%, even if it means many hours spent over the course of the year micromanaging balances in checking and savings. I'd rather just get a SalemFive or Fidelity account to earn that ≥5% rate, and retain the no-hassle peace of mind of a simple and automatic single account.

For a pure savings account, the current leader is FNBO with 6% APY (blog post), announced May 1st and guaranteed through Sept. 28th. Just a few months ago it was 5.25%. This illustrates an important point: the rates for all of these accounts will fluctuate a little (or a lot) with the financial climate, promotions, and federal interest rates. A lot of banks have offered teaser rates only to have them revert to below average after a short period of time. If you get in on it, like this FNBO deal that was promised for 5 months, you will come out on top with a nice load of interest earned before you move on to your next victim :-).

Becoming Deal-Savvy

A great place to find out about these banking deals as they come up is the appropriately named Bank Deals blog. It's a nice, clean source of information compared to surfing the sometimes murky waters of the FatWallet Finance forum. It also gives a lot of attention to various CDs, many exceeding 6% APY, for those of us who can commit to tying up a chunk of cash for a year or so.

Another awesome blog is My Money Blog, which has a scope beyond just banking deals (although it doesn't miss a beat on that note), and contains a lot of interesting, practical financial advice regarding investments and retirement strategies.

For an up-to-date overview of high-interest checking, savings, and money market accounts, always check the Best current APY/APRs thread on FatWallet.

Summary

If you are sitting on thousands of dollars earning less than a percent interest, opening any one of these accounts would be a great choice.

- If you liked this article, buy me a drink!

Review: Samsung 226BW LCD, "C" Panel

2007-05-27T02:58:36Z

Introduction

I just bought a Samsung 226BW to replace my aging 191T, which has served me well for 5 years. The price of quality widescreen LCDs with fast response times finally fell to my breaking point. While my 19" 191T cost almost $800 when I got it in 2002 (from a sketchy retailer with the lowest price I could find), I just got this 22" widescreen 226BW from NewEgg for under $300.

The Samsung 191T is still a great monitor; even today, it holds its own compared to a lot of modern LCDs, with its great color, classic design, screen homogeneity, and very wide viewing angle. Pretty much everything about it is great except the response time. Rated at 25ms, the monitor that was once "the best 19" LCD on the market" has been killed in terms of response time over the years by the advent of "gaming LCDs" with TN panels. The 226BW, Samsung's latest refinement of such an LCD, has a quoted 2ms response time, making for streak-free FPS gaming. The only downside is that I'll be out of excuses for sucking at Counterstrike other than my lack of skills.

Controversy

This popular model has, however, come under scrutiny because Samsung has used LCD panels from at least three different manufacturers since its release. The monitor is sold with the same model name and no indication of a change on the packaging. You have to look at a tag on the back of the monitor or view a hidden service menu in the on-screen setup interface to find out what panel it has inside.

The use of different panels is particularly disturbing because most of the reviews of the 226BW are based on the original, and by all accounts superior, "S" panel, which is made by Samsung. The respected monitor review site Behardware praised this "S" version, specifically for its exceptional color out of the box. Then, Samsung began silently shipping the same model with a panel made by AU Optronics, the "A" version. It was found to have bad color compared to the "S", and people who ended up with one felt victimized by Samsung's bait-and-switch.

Behardware recently published an in-depth comparison of the "S" and "A" panels, along with a color profile for the "A" panel that improves its colors to being as good as the "S" panel. After reading this, I was ready to buy the monitor, even if I got an "A" version, knowing I could use the ICC profile they provided if that was the case.

Soon after that, I find that there is a third panel made by Chi Mei (CMO), called the "C" panel, which has come to inhabit most of the retail supply of 226BW's. I was already in impulse-buy mode, so I went ahead and ordered it along with a Colorvision Spyder2 for the calibration, crossing my fingers that I would be able to bring the color fidelity up to at least the level of my 5 year old 191T.

Calibration

When I first fired up the 226BW, I got nervous. The color had such an awful blue-shift that I wondered if it would ever be acceptable, even after calibration. I immediately broke out my Spyder2 and started the calibration. One thing owners of the "A" or "C" versions can be thankful for is that you do get a lot of manual display controls, which can complement the calibration. Specifically, RGB slider controls allow you dial in a fine-tuned white point, using the Spyder2 as a guide, prior to doing the full calibration. Besides that, there are Color Temperature and Gamma presets as well as MagicBright modes, all of which can be used to tweak the image to individual preference.

In setting my white-point, I tweaked the RGB sliders as little as possible so that the color difference was less than 0.50 Dab according to the Spyder2. This resulted in the values R51 G47 B50. For the automated portion of the calibration, the Spyder2 goes on for about 5 minutes or so displaying and sensing an array of reds, greens, blues, and grays. It uses the data it collects to generate a custom ICC profile that modifies the color look-up table for the entire gamma spectrum. This is what makes a calibrator like the Spyder2 so much more powerful than simple gamma controls like Adobe Gamma.

Post-Calibration

When the Spyder2 was finished, the color quality had dramatically improved. Having lived with it for a few days, I am more than satisfied with my 226BW "C", which I think now has better color accuracy than my old 191T, but only when viewed at or close to the perpendicular angle - more on that below. The Spyder2 reports a white-point Delta E of 0.7, and for that I should be ecstatic. This is taken from the Spyder2 Help file:

"A Delta E of less than 3 is good. Less than 2 is quite good. Less than 1 is excellent but not often achieved in practice (if you get Delta E less than 1, consider taking a trip to Vegas)."

This monitor does have some minor deficiencies in common with most "gaming" LCDs. The brightness is not totally uniform, and even when you face the monitor straight on, the top portion tends to be a bit darker, and the bottom portion somewhat washed out. When you move you head so that your line of sight is perpendicular with the top or bottom, that portion is corrected, but then you have an accentuated problem on the portion you moved away from. When I first started using the monitor, it bothered me a bit, but now after a couple days I'm already used to it. It's just easy to spot changes when you've used the same LCD for 5 years.

Reaction Time

If you look up the specs on the panels that are put into the 226BW, they are rated at 5ms, but Samsung increases their performance to 2ms using "RTA" overdrive, which is turned on by default. Behardware explains this well in their "A" vs. "S" comparison article. In my limited gaming thus far with Counterstrike: Source, I have absolutely no complaints. I cannot see any smearing or streaking whatsoever. Movies also look great, there is no ghosting at all that I can tell.

For a more objective measurement, I went ahead and ran the popular LCD benchmarking program PixPerAn and took 50 photos at 1/1000 second exposure. Below are representative examples of the best and worst afterglow I saw in the 50 shots:

I think the results are pretty close to the those found by Behardware when they tested the "S" version.

Improving the Color of Your "C" Panel

I hope that in following the three steps below, those who have bought a "C" version like me will be able to improve its color as dramatically as I have. I made color profiles using both 100% and 75% Brightness for anality's sake, although switching back and forth between them I can't even tell a difference.

1. Go into the setup menu of the 226BW, and choose Reset Image and Reset Color. Among other things, this will set the Brightness at 100%, which may bother some people. If you like a dimmer display, use one of the ICC profiles below that were made using 75%, 50%, and 25% Brightness.

2. Using my RGB values may or may not improve the white point on your 226BW, because of many factors that could play into things, such as different video cards. Still you could use them as a rough guide, assuming all "C" panels could benefit from the slight adjustments I made. To make the changes, navigate to Color Control in the setup menu, and set the RGB sliders to the values I mentioned above: R51 G47 B50. If nothing else, you can try them out and then revert back if you think it's worse.

3. Download an ICC profile below:

226BW(Digital)-factory-R51-G47-B50.icm

downloads: 16571 | 27.8KB
Use with Brightness at 100%
226BW(Digital)-factory-Bri75-R52-G46-B50.icm

downloads: 11483 | 27.8KB
Use with Brightness at 75%
226BW(Digital)-factory-Bri50-R51-G48-B50.icm

downloads: 9059 | 27.8KB
Use with Brightness at 50%
226BW(Digital)-factory-Bri25-R51-G47-B50.icm

downloads: 7251 | 27.8KB
Use with Brightness at 25%

- If you're happy with my ICC profiles, buy me a drink!

And paste it here:

C:\windows\system32\spool\drivers\color\

XP users:

Download Microsoft's WinColor, install it, and now Color will appear in your Control Panel. Open Color, select the Profiles tab, and load one of the profiles above. Next, go to the Devices tab, choose Displays, and click Add.... Now select the profile you want to use with the 226BW, hit OK, and choose Set as Default.

To get the profile to load with Windows XP, right-click the Start button » Open All Users, navigate into Programs » Startup folder. Put a shortcut to WinColor.exe here. Right-click the shortcut, click Properties, and add /L to the end of the Target field, so it looks something like this:

"C:\Program Files\Pro Imaging Powertoys\Microsoft Color Control Panel
Applet for Windows XP\WinColor.exe" /L

Don't copy and paste the above line into your Target field, since you may have installed the program to a different location. Just add a space, forward slash, and an L to the end so it looks like the above example. Also be sure you don't have any other gamma loaders in your Startup folder or otherwise set to start with Windows, such as Adobe Gamma or Powerstrip.

Vista Users:

You do not need Wincolor to use the profiles. Right click anywhere on the desktop, and from the personalize menu, select display parameters » advanced parameters » color management tab. Check Use my parameters for this peripheral. Click Add and select the ICC profile you want for the monitor, and set it to default. Click on the Advanced tab in the peripheral profile, select the desired ICC profile, and click OK. You should see the change instantly at that point.

Following these steps should improve things for anyone with a "C" version 226BW. Again, due to people using different video cards and even differences between monitors, you may not see quite the improvement that you would if you used a calibrator on your own setup. I would highly recommend the Spyder2 if you are not satisfied with the profiles I've provided.

Conclusion

I am very happy with the 226BW "C" version after calibration. If I had to use it the way it came out of the box, I would have sent it back or sold it on eBay in a heartbeat; the color was that bad. I imagine a lot of people wouldn't have a problem with it, but coming from a great monitor like the 191T, I had high expectations. Fortunately, the Spyder2 allowed my expectations to be met. There is little to complain about with this beautifully designed monitor, and I would encourage anyone on the fence to go ahead and make the purchase.

I hope this review was helpful for those who are wary of the mystery surrounding the "C" version of the 226BW, which has seemingly supplanted almost all of the stock available these days. I took some more shots of the monitor that are in my photo gallery tagged with 226BW. If you have any special tests you would like to see done, just let me know. As long as they are relatively easy to do, I'm happy to oblige.

Pros

Extremely good response time for smear-free gaming and movies
Great color possible with a custom ICC profile
Beautiful housing design looks a lot better than typical computer equipment

Cons

Color out of the box is pretty awful, with a strong blue shift
Poor viewing angle, typical of gaming LCDs with TN panels, results in a lack of display homogeneity
Lack of inputs other than DVI and VGA

Update 5/29/07:
I've added new color profiles made at 50% and 25% Brightness. Switching back and forth between the two of them, they are slightly different, but they are both significantly different than the 75% and 100% profiles. I still can't tell the 75% and 100% profiles apart for the life of me. If you like low brightness, you should try one of these new profiles.

This is how I feel about the different brightness settings: 25% is great for night surfing, 50% is probably "just right" for a lot of people, 75% shows off the monitor's luminance without hurting my eyes and is my choice for gaming, and 100% is really intense but may be preferable for gaming for some people. Still, if you feel like you need it this high you might want to get your eyes checked.

Gravel Censored From MSNBC Polls

2007-05-03T18:11:48Z

Mike Gravel, the surging Democratic candidate for President, has been censored from the rank list of candidates in an MSNBC sponsored poll, conducted by the National Journal. It is not the role of the media to blacklist some candidates while building others up. This is a purely Orwellian tactic, and we should not let it stand.

They do this on account of him being "rude" during the Democratic debate that took place April 26th on MSNBC. They go on to denigrate him personally, saying he's "a little off."

Support uncensored coverage and open debate by ranking Gravel #1 on the left-hand sidebar on the page linked below:

CLICK HERE AND RANK GRAVEL #1

It is important that we don't allow the media to get away with smothering honest debate in our society. Gravel was the most vibrant and passionate candidate on stage that night, and for that he should be praised, not censored!

A thread on this issue is located on Gravel's campaign website.

You can do more by e-mailing the people associated with this article to express your disapproval:

E-mail Marc Ambinder, National Journal poll associate editor (mambinder@nationaljournal.com)
E-mail Chuck Todd, political director of NBC News (Chuck.Todd@nbcuni.com)
National Journal Feedback Form

A disturbing sentiment I continue to hear from people in the media is, "He or she should not be included in the debate, since their support is so low." This is a self-fulfilling prophecy, since you need TV exposure to develop any support to begin with. The people responsible for showing us the candidates and delivering their messages don't have any appreciation for the power they wield in shaping the polls and the responsibility they have to provide unbiased coverage.

With a grassroots effort on the part of Gravel's supporters, we have to run our message down the media's throat, that he must be heard. Nothing is more needed right now than candid DEBATE on the issues. The mainline candidates would much rather let their money do the talking, through ads and TV spots, than have to actually discuss policy. This is the source of the nervous laughter you hear from Clinton, Obama, and the others in the April 26th debate. It's safer for them to say nothing at all. Once you open your mouth and say anything meaningful, you polarize a potential voting demographic. Gravel is the only candidate who is not afraid to tell it like it is.

Thanks for your attention, and please show your support for open debate and fair media coverage by ranking Gravel #1!

Mike Gravel - The Revolution Will Be Televised

2007-05-02T01:11:53Z

Former Senator Mike Gravel has taken the 2008 Presidential race by storm. On April 26th, his campaign came to the MSNBC televised South Carolina debate with a reported debt of over $90,000 and nearly undetectable support among Democrats. Following the debate, his funds moved swiftly into positive territory.

After this first television appearance, he became a celebrity of blogs all over the internet, garnered invaluable TV spots on the major networks, and through a grassroots effort on the part of his new supporters, landed a key invitation to the upcoming New Hampshire debates on May 3rd, to be televised on CNN. Gravel gained more in that one night than any other candidate, by a long shot.

In March, Gravel was refused an invitation to the NH debate, on account of a lack of "measurable public support." Disturbingly, some people were actually upset that he was to be included in the recent SC debate. If he had not been on stage that night, thousands of voters would not be abuzz with his name today, he would not have gotten invited to the NH debate, and his campaign would be falling even deeper into debt. How in the hell are you going to get your name out to begin with if you never get any time on TV? Do you really want to be limited to the usual suspects and those with enough ties to private interests to generate astronomical campaign funding?

Mike Gravel is an uncanny candidate. The central item of his campaign platform is called the National Initiative, a measure that would let Americans introduce and pass laws, similar to state referendums, only on the federal level. This kind of reform would finally give us power over juggernaut special interests and corporations that control our government and our culture. This is a truly revolutionary idea, and we have a once in a lifetime chance for a revolutionary president.

No other candidate comes close to matching this guy in my book. Clinton, Edwards, Obama, Biden, Richardson, Dodd - on April 26th he made their identity crystal clear: just another cheap batch of phony, corrupt politicians with nothing strong about them other than their ties to the private interests that run and ruin our country every day. Watch the video above for a good laugh and maybe even shed a tear of joy. To some, he came off as a crazy kook, while others saw his courage and passion. He did let his tempers flare a bit, but at the same time that's partly what got him noticed. He's quite tame in all the other media clips on his YouTube channel.

Take a look at his campaign's official website, Gravel08.us to learn more about his positions and how you can help his campaign. The greatest obstacle this revolutionary candidate faces is exactly what makes his opponents so vile, yet so powerful - private interests. Will it be possible for him to compete with multi-million dollar campaigns, while the media continues to portray him as some kind of comic relief? People like you and me will have to overcome these obstacles together. But that's what his campaign is all about, after all.

ASCII Generator dotNET

2007-02-08T17:50:35Z

While randomly surfing to Sourceforge today, I came across an impressive little application called ASCII Generator dotNET that transforms any image into "ASCII art." It magically creates a paragraph-like block of text characters that looks as close to the original image as possible using merely letters, numbers, and punctuation.

Here's an example of what it can do, using the famed black and white close-up of Jim Weinheimer's demonic eyes from the OR scene in "Final Rotation":

ASCII Generator dotNET has a user-friendly drag and drop ability and generates the text image instantly. The user-interface gives you an image tab and a text tab for comparing the original and the generated ASCII text.

What I found most impressive are the real-time controls for brightness and contrast, image size, as well as a small selection of pre-defined character sets to use when building the ASCII image. You can manipulate all of these aspects of the generated text in real-time, making for a quite satisfying amount of control over the final output. The latest versions have even added color support, for those interested.

I found this application to produce consistently accurate and impressive results considering the limited resolution that is possible when using ASCII characters to display a complex image. It is well suited to working with simple images with clear areas of contrast and not too much fine detail, although the tweaking controls available can help add definition to more complicated pictures. If you can still see the individual text characters, step back from the monitor for the best effect!

The application is completely free, just like almost everything on Sourceforge. The developer has even posted a tutorial to get you up and running, although the program is so simple and easy to use, I found it to be rather self-explanatory. So go try it out!

NOTICE: You also need to install the Microsoft .NET framework for the program to work.