A hot road in Cambodia.

Summer Heat

Another week goes by, as I enjoy the last of the summer heat. Although I will miss the heat, I need my sleep! With a combination of a hot, stuffy apartment and ragweed allergies, I don’t think I’ve gotten more than about 4-5 hours of sleep a night.

Posts of the week

I posted what could be my first controversial post of Invest It Wisely’s history: Consumer Ethics and Animals: Where Do You Draw the Line?. I also gave a look into my own background in the post “Who is Behind Invest It Wisely?“, and I did a quick introduction into the advantages of ETFs versus mutual funds in the post “How to Invest in Vanguard Funds Using ETFs — and Save Money While You’re at It“.

Weekend Reading

Beating The Index: Why Investing in Oil is Investing in China
BTI looks at the advantages of investing in oil, and how we can capitalize on the growth of the Chinese economy within the safety and security of the Canadian dollar and market.
Aspiring Millionaire: Yakezie Challenge Blog Carnival
Aspiring Millionaire did a great job on the Yakezie Challenge Blog Carnival. Many great articles (including one from yours truly) were included… check it out!
Top Gear: May and the machine
Ever wondered with amazement how it is that regular Joes can afford to drive something as complex as a modern car? This is a very interesting look at how we have benefited greatly from free markets and the advance of technology.
Buy Like Buffett: Why Your Grandparents Made More Money In The 70′s Than You Make Now
Does it ever seem like your money doesn’t go as far as it used to? Does it seem harder to afford the basic necessities of life than it was for your parents? Buy Like Buffett takes a look, and I offer an interesting counterpoint in the comments section.
The Daily Capitalist: Good is Bad, Bad is Good
This is an interesting look on how people are criticized by mainstream economists for saving their money, practicing frugality, and refusing to go further into debt to maintain a consumerist lifestyle.
Singularity Hub: Who Owns You? 20% of the Genes in Your Body are Patented
Yet another reason why patents are a joke… except there is nothing funny about what these companies, through the long arm of the government, are trying to do.
Mises Economics Blog: Social Insecurity
Is Social Security a ripoff for the young amongst us?
The Biz of Life: Who’d Have Thunk It: Expense Ratios Better Predictor of Future Performance Than Morningstar Ratings
Turns out that one of the best ways to compare funds might just be to take a look at the MERs!
Andrew Hallam: Do You Want to Beat the Market?
Andrew Hallam considers the possibility of delivering a knock-out punch to the market, along with strategies in evading a pack of hungry boars…
Faithful With A Few: Thoughts About Marriage on Our Anniversary
This is an inspiring story of true wealth, and a great story of a man’s devotion to his wife and family.
Juxtapoz: Dollar Origami Creator also Lives in Garbage Truck
This is a pretty neat garbage truck that’s been converted into a mobile home!
My Own Advisor: Our super simple automatic savings plan
My Own Advisor lays out a super simple strategy for building up your savings nest egg.
Everyday Tips and Thoughts: Should A Family of Four Be Able to Live Off $111,000 Per Year?
Is $111K a year enough for a family of four to live on and survive? Should they be complaining? Head over to read more about this family and their “dilemma”.
Wealth Artisan: Why Do New Cars Depreciate Sharply?
Wealth Artisan looks at some of the reasons why a car loses some 15-20% of its value the moment you drive it off the dealer’s lot…
Budgeting In the Fun Stuff: Developing a Frugal Food Habit: 4 Tips For Lowering Your Grocery Bill
This post looks at four different ways you can save money on groceries and lower your food bills.
Cool to be Frugal: Preparing for a Baby – What Do You Really Need?
Mrs. Frugal looks at what is really needed for the baby on the way.
How To Get Girls If You Live At Home With Mom & Dad
The Financial Samurai takes a hilarious look at the “advantages” of living at home.
Larry MacDonald: The Great Reflation: J. Anthony Boeckh
Larry takes an initial look at the book “The Great Reflation”, by J. Anthony Boeckh. The author offers a word of warning for those expecting a return to financial stability and seeking to buy and hold.
Young & Thrifty: 6 Tips for Buying Organic On the Cheap
Want to buy organic food, but don’t want to get ripped off in the process of doing so? Y&N has six suggestions to help you out.
How to Pick a Mutual Fund – Type
This is an in-depth post that looks at different types of investments, such as stocks, bonds, and precious metals. Bret also gives his thoughts on real estate and the merits of active investing versus passive investing.
DIY Investor: Don’t Bailout
Robert offers his perspective on investing in today’s markets, and suggests that we need to keep things in perspective and keep the long term in mind. These might be one of the best times to invest if you consider things in that sense!
Car Negotiation Coach: Your father was wrong: How NOT to negotiate car price
The Coach looks at two commonly-used strategies used to negotiate car prices, examines their pitfalls, and then offers his advice in getting the best price.
Sustainable Life Blog: Debt Free Budget
Jeff looks at how much money could be saved by going to a debt-free budget…
Youtube: A Meal To Die For
How’s this for an interesting restaurant?

Have a great Labour Day weekend, and see you next week.

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8 Comments Kevin on Sep 3rd 2010

Every day, we buy things and go on about our daily lives without thinking too much about the consequences of our actions. We don’t usually put too much weight on our day to day lives, but, unknown and unseen to us, ethical decisions actually play a big part of our daily consumer lives. Do we choose to save money by buying goods from China, or do we spend more money and support a local industry? Do we drink a regular cup of coffee, or do we ask for the fair trade beans? Do we buy a real fur hat, or go for the faux-fur?

Different cultures have different ideas of what is right and wrong

Caged cats. Source: http://www.dailymail.co.uk/news/article-528694/Olympics-clean-Chinese-style-Inside-Beijings-shocking-death-camp-cats.htmlMany of our decisions cover the treatment of other living creatures. Do we eat a steak for lunch? Do we use those prescription pills, knowing that studies were performed on animals? Every culture has a different level of respect for different animals, with a different sense of what is “taboo” and what is not “taboo”.

Now, this may come as a little shocking, but dogs and cats (among other strange things, in Western eyes) are still considered food in many parts of Asia. It has started to become something of a taboo, but only for Westerners and the younger generation; many of the older folks don’t see things the same way.

Caged dogs. Source: http://www.animalsasia.org/blog/index.php?entry=entry090218-221648What is even more shocking is that there are reports that in some places in China, cats and dogs are taken off the streets and killed for their fur. Some of this fur may even have made its way overseas, and could be sitting in your home right now. Now, what is yet even more shocking is the apparently barbaric and cruel manner in which this is done. Not only is it enough for them to take what is probably a stray but could be someone’s pet off of the road and stuff them in a cage along with dozens of other animals, but they then bash the poor thing senseless, hang it, skin it alive, and then toss the still-living and breathing carcass onto a heap, where the animal is left to wail in pain as it slowly dies.

Now, I don’t know if these reports are true or not, but given the depths to which the human soul can sink, I can not discount the possibility completely. It’s very obvious that animals can be exploited for fur, and it’s also possible for the creature to still be alive and aware even after being bashed over the head. I read this story in a fundraising pamphlet by your favorite animal rights activists, so again, I am not sure how much of the story is sensation and how much is truth.  However, I have to accept that there is probably some level of truth in there, and that alone leaves me feeling horrified.

So not only do they eat animals that we consider as pets, but some of them even see our furry friends as nothing more than mere agglomerations of physical matter, to be stripped and discarded of like ore from a mine!

Exploiting our cohabitants

However, aren’t we being a little hypocritical in a sense? You see, we heavily exploit animals when it comes to food. We have built an entire industry around the wholesale slaughter of cows, pigs, chickens, and seafood for the consumption of meat. We consider these animals as nothing more than the property of the human race, to be eaten or disposed of at our pleasure.

Panda and baby. First seen here: Panda and Baby. First seen here: http://www.celsias.com/article/electricity-your-garbage-part-2/Why is it that these animals seem to have less rights? Is it because they’re simply not as cute, like our friends to the right? Or perhaps it’s because we think that some animals are too dumb to be treated as nothing more than walking food. There seems to be a double standard: One standard for the animals we think are cute and intelligent and that we anthropomize to a certain extent, and another standard for the rest of the animals that we don’t care about. This is also culturally relativistic: Some cultures eat cows, while others see the cow as sacred. The standards vary from place to place.

One justification for the consumption of animals as meat is that we are built as omnivores. We are built to eat both animal matter and plant matter. We evolved in an environment where big game animals were plentiful, and we learned how to hunt them with spears. As we became smarter and better at gathering high quality food, the increased nutrition allowed our brains to grow larger still. This feedback loop is how we became an intelligent, yet aggressive species. Instead of hunting with claws, we used spears.

By eating meat, we are simply continuing our place in the ecosystem. Life and death form a circle; the lion and gazelle co-evolved and fill a niche in the African savannah. The lion has evolved to chase the gazelle, and the gazelle has evolved to run away from the lion. In our case, we’ve evolved to create ranches where we can raise animals until it is time to eat them. This is our expression of our place in the ecosystem.

However, is it really fair to continue to justify the consumption of meat, simply because it’s something we used to do? We used to kill the men and drag off the women from neighbouring tribes, too, but we don’t do that sort of thing anymore. We’re a modern, civilized species. Why do we continue to slaughter animals when it’s no longer a case of life or death? How can anyone justify the consumption of meat when there is such a wide array of vegetables, beans, nuts, and supplements? Isn’t the vegetarian way of life a little more civilized, even if we are not herbivores?

Ah, but not so fast! While it is true that vegetarians do not directly contribute to the slaughter of animals for meat consumption, they still contribute to the destruction of entire ecosystems. Just look at how much space a farm takes, and look at how much land is consumed for raising crops. Much of that land used to be forested, and all of that land used to contain an ecosystem that supported a diverse variety of wildlife, big and small! By consuming grains and other vegetarian staples, you have directly participated in the destruction of vast swaths of land for agriculture.

That cereal breakfast you enjoy? Well, the grains in that cereal probably came from a farm where Bambi used to live, until some farmers cut down his forest and destroyed his home and his life. Who is the vegetarian to say that this is somehow morally superior to the consumption of livestock that would probably not even survive at all in the wild in their current domesticated form?

In the end, it is up for us to decide

Humans are the most intelligent and powerful species on this planet, and we have dominion over the earth. We obviously get to make the rules. We also like to pretend that we’re more than simply intelligent barbarians, and that we can treat our companions of the earth with compassion and respect. So, where should we draw the line when it comes to the treatment of animals? Do we stop performing animal studies, at the risk of humans dying? Do we stop consuming all animal-based products, at the risk of malnutrition and malaise? Do we stop wearing fur hats, at the risk of… vanity?

It might be a more important question than you think: what if one day, now or in the future, there is something out there that is more intelligent and powerful than us, and what if they are watching us and observing how we behave?

So, it’s a dilemma. Where do you draw the line?

Disclaimer: I am an omnivore and I believe that it is our right to use animals for the benefit of humans. I am ambivalent when it comes to the consumption of cats and dogs in foreign cultures, but I find the skinning alive of these same animals for fur to be quite cruel. I believe that given our unique position of power, we can exercise our power in a manner that demonstrates compassion. There is no point in subjecting a living, feeling creature to an agonizing death nor needlessly prolonging its suffering.

P.S. Please don’t search for “cats in cages” or “dogs in cages” in Google Images. Even with safe-search moderate, I saw some things there that I really wish I hadn’t.

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14 Comments Kevin on Sep 1st 2010

Were you ever curious about why I started blogging, where I come from, and where I want to go next? I reveal all of that and more in today’s Yakezie Member Post. Check it out!

In other news, thanks to everyone who included me in their roundups over the weekend:

If I missed you… let me know!

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4 Comments Kevin on Aug 31st 2010

Falling coins. Source: http://www.flickr.com/photos/85169118@N00/3183438063/Is it possible to save money by investing in exchange traded funds (ETFs) instead of mutual funds? For many of Vanguard‘s mutual funds, this is possible. Even more importantly, Vanguard ETFs offer Canadians and people living internationally the ability to invest in Vanguard mutual funds via ETFs.

First, I’ll compare the difference between investing in a Vanguard mutual fund, and investing in a Vanguard ETF. Vanguard has an online calculator that allows you to compare the differences in costs between ETFs and mutual funds for a given investment type.

Example one: Investing in the Vanguard Total Bond Market Index Fund (VBMFX) versus the corresponding ETF (BND)

Want to invest in a broad market of bonds, but not sure if mutual funds or ETFs are better for you? Using the online calculator, I compared the following two investments:

  • Vanguard Total Bond Market Index Fund (Investor Shares) (VBMFX)
    • Management expense ratio (MER): 0.22%
  • Vanguard Total Bond Market Index ETF (BND)
    • Management expense ratio (MER): 0.12%

Note: The Admiral Shares series has a lower MER of 0.12%, but requires a minimum $100,000 investment.

Using the online calculator, I entered the following data:

  • Initial investment of $10,000.
  • Monthly investment of $200.
  • Commission of $4.99.
  • Time span of 15 years.
  • 5% rate of return.

Using this data, it turns out that I would have saved $339.12 by going with the mutual fund. The downside of ETF investing is that it’s usually done through a broker, and the broker charges commission for each transaction. With a commission of $5 per transaction, I’m effectively reducing my return by 2.5% for each monthly investment, which somewhat hurts my overall returns.

When it comes to a longer time span, however, the lower MER can swing the balance in favor of the ETF. I changed the parameters as following:

  • Increased monthly investment to $250.
  • Increased time span to 25 years.

With the longer time span and slightly larger monthly investment, the balance has now swung in favor of the ETF. I can now save $397.68 by going with the ETF.

You can adjust different parameters within the online calculator and see which scenario looks more attractive for you.

Example two: Investing in a Vanguard ETF versus a typical Canadian bank mutual fund

For those of us living in Canada, we don’t really have a choice between Vanguard mutual funds and Vanguard ETFs. For us, the choice is more between a typical selection of mutual funds at one of the large banks and Vanguard ETFs through a broker.

For my second example, I’m going to compare investing in the BMO International Index Fund versus the Vanguard Europe Pacific ETF. Both investments track the MSCI EAFE index; the ETF returns are using “market price total returns” data.

Here’s some performance data for both funds:

1 year 3 years
Benchmark: MSCI EAFE index 6.26% -10.28%
BMO International Index Fund 5.11% -12.14%
Vanguard Europe Pacific ETF 5.40% -9.67%

The interesting thing here is that the Vanguard ETF actually outperformed the index over the past three years. In the last year, it’s lagged the index somewhat, though not as much as the bank mutual fund.

If we started with a $10,000 initial investment, here’s how that investment balance would have changed over time:

1 year 3 years
BMO International Index Fund $10,511.00 $6,782.25
Vanguard Europe Pacific ETF $10,540.00 $7,370.48
The ETF advantage $29.00 $588.23

After a $5 commission, the 1 year case does not look too compelling. The differences increase over the years, though, and there is a much more significant difference after three years. You would have paid an additional $583.23 for the “luxury” of investing through your bank account over the last three years. Although both positions ended at a loss due to the global financial crisis and the ensuing turmoil, you saved money with the Vanguard ETF.

Additional ways to save money on Vanguard ETFs

For those of you living in the U.S., if you have $50,000 or more in Vanguard funds, then you can take advantage of Vanguard Voyager Services to invest in Vanguard ETFs commission free. If you cannot take advantage of commission free trading, then you can reduce relative costs by investing larger amounts, or investing less frequently. Investing less frequently, however, has to be traded against the opportunity costs of not being invested in the markets.

Further Reading

So, here are two simple examples of how it can be possible to save money using ETFs. If you have the option of buying a Vanguard mutual fund, then it may be the better choice depending on your specific investing strategy. If you don’t have that option, however, and you are forced to choose between so-so bank funds and a Vanguard ETF, then the ETF can become a compelling play.

As I recently liquidated my unregistered investments for a downpayment, and my RRSP account does not offer the choice of investment in ETFs, I am currently invested in mutual funds. As I continue to generate income, however, I will be looking at ETFs in the future. How about you? Are you currently investing in ETFs? What do you think about investing in ETFs versus mutual funds?

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28 Comments Kevin on Aug 30th 2010

Housing Bubble. Source: http://www.irvinehousingblog.com/blog/comments/emergence-of-shadow-inventory-to-push-prices-lower-in-2011-altos-research/The talk about housing prices and bubbles never ceases. I’ve been doing some thinking on this topic, myself; I don’t quite see the Canadian housing market as being in a bubble, myself, due to our recourse loans encouraging people to stick it out rather than default, and the fact that stricter lender requirements should mean that more of the lendees should have the ability to pay. This does not mean that high housing prices will not have a drag on the economy as over-leveraged people end up throwing most of their income into high monthly carrying costs.

One commonly accepted measure of housing affordability is the median price multiple. A good ratio of median price to median income is a ratio of around 3 times. In many Canadian cities, this index is now in the mid 4s and even reaching the 5s, signalling that housing prices are on the high side. Read the rest of this entry »

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21 Comments Kevin on Aug 27th 2010

Wolf and straw house. Source: http://www.glala.com/m/_general/reports.asp?riIDReport=63&CAT=1The winds of the wolf’s breath are coming back to haunt us, again. Amid the talk of deflation and of falling house sales, gold has found its way to the $1240s, and silver is in the $19s.

It’s been two years since the crisis blew up, and people are still unemployed and still in debt. There are those of us in bubbles (and you guys know who you are… and I admit that I somewhat belong to this group, too) who are doing fine; we have jobs, we have some savings, and not too much debt. How do we reconcile this reality with the storms brewing outside? Read the rest of this entry »

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15 Comments Kevin on Aug 26th 2010

Grocery shopping. Source: http://frank.itlab.us/worldtrip_2002/muscat.htmlYesterday, I talked about how I recently shifted to a more primal way of living, and how both my mental and my physical health have dramatically improved, as a result.
Today, I want to share some frugal tips with you on how you can also improve your health and fitness, without breaking the bank!

So, is it possible to go primal and be frugal at the same time? I believe that it is. The ultimate frugality was practiced for millions of years, as our ancestors made use of what was available to them: fat and protein from game animals, and roots, vegetables, berries, fruit, and nuts from the environment around them. This is the environment that we evolved in. Although we’ve also been eating grains and other processed foods since the agricultural revolution, this was never a worldwide phenomenon until recently, and our bodies are not well adapted to process these nutrients, which can cause health problems. Read the rest of this entry »

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22 Comments Kevin on Aug 24th 2010

Laser BrainSuffering from foggy head syndrome…

Over the past few months, I’ve been experiencing an increasing set of symptoms that are best described as a “foggy head”. I would feel like I was drifting in a perpetual fog throughout the day, almost as if I had never quite woken up. I would catch myself looking at my screen in a daze from time to time…

I went to visit the doctor in what was probably the first time in quite a while, and I scheduled a blood test. The blood test came back with normal numbers all around, except for a few normal-high numbers for the liver, notably bilirubin. I had a follow-up ultrasound done of my abdomen, which found no problems at all. The doctor noted that I had two spleens, but told me that it’s harmless. I then had a second blood test done for the liver to rule out hepatitis and other diseases. My bilirubin was still high, but everything else was normal. This could possibly indicate that I have Gilbert’s syndrome, which appears to be relatively harmless.

So if everything was basically fine, then what was wrong? Read the rest of this entry »

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22 Comments Kevin on Aug 23rd 2010

At Andong, a traditional Korean village.

Guest Posts

My first guest post is live! The theme is “the difference between volunteering and forced giving”, through a tale of a traveler, a poor woman, and a scheming farmer. Thanks to Christian Common Cents for publishing!

Weekend Reading

Read the rest of this entry »

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11 Comments Kevin on Aug 21st 2010

Forest road. Source: http://www.johnharveyphoto.com/India/CorbettNP/ForestRoad.htmlMy very first guest post is now up at Christian Common Cents! The post started out as a discussion between Joe Plemon and me on his post “Four Lessons From Some Wealthy Beggars“, and eventually turned out into a short story on the difference between volunteerism and forced giving.

Please pay Christian Common Cents a visit, and while you’re at it, why not pay a visit to Personal Finance By The Book, as well? These are both great blogs, and Joe should also have an interesting post up on Friday within this same theme. I’ll add the link once the post is up!

Update:

Here is Joe’s new post: Does the Bible Teach Communism?

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4 Comments Kevin on Aug 19th 2010

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