Author Archive: indexfundfan

Computer backup with Mozy.com

2006-07-13-mozy-logo-beta-120.pngIf you have been a computer user for a while, you would probably have experienced the agony of losing your precious files due to hard disk failure or corruption. The answer is of course to make regular backups to another storage medium, probably somewhere offsite.

Recently, I signed up with the service from Mozy.com which gives you 2GB of free online storage. This space can be used to backup and store your computer files. Mozy claims that the storage is secure and encrypted but I can never completely trust this. So, what I did was to use an AES encryption program to encrypt my files before uploading them to Mozy. So far it has worked quite well.

If you should decide to sign up, you can use the referral code 4NG3X3 or this link to get an additional 256MB, for a total of 2.25GB. (Disclosure: I will also get 256MB.)

EDIT 2006-08-01: A free computer backup program with strong encryption is Cobian Backup.

Is buying gold (metal) speculation?

The rise in gold prices led many people, including some “financial advisors”, to think that putting money in investment vehicles that bet purely on price of gold is a good strategy. This is evidenced by the return of the popular gold savings account and the introduction of gold ETFs like GLD and IAU.

In my opinion, investors should exercise caution and take a serious look at the following figure derived from the book “Stocks for the long run” by Prof. Siegel.

2006-07-09-gold-returns.jpg

Larry Swedroe puts it this way:

1. Any commodity is bad investment IMO — (since there is) no expected real return .

2. Equities however must have an expected return to compensate for the risks, so if you are going to invest in gold IMO the way to do it is NOT to buy gold itself but to instead by gold mining stocks (which of course now involves equity risks, but at least there is compensated risk being taken).

My conclusion? Buying gold looks like speculation to me.

Acid test for investors

The recent ‘small’ correction in the equities market is a good acid test on the suitability of an investor’s investment plan. Which of the following options did you take in June?

  • a) I have trouble sleeping and cannot stand my portfolio’s volatility. I sold out all my equity funds for cash. Being able to sleep is more important to me and I consider the loss a small price to pay for my lesson.
  • b) I am very excited with the sale in the equities market and invested a lot more! My original equity to fixed income target was 70% : 30%. Now it has become 75% : 25%.
  • c) I stuck to my plan. I re-balanced out of fixed income to equity but only to the extend as to keep my equity to fixed income ratio consistent with my investment plan.

If you choose a), it is a sign that your original investment plan was way too aggressive, and if you have chosen b), you probably have a risk appetite that is greater than what you have chosen for your original investment plan (rare case I would say).

But, if you have stuck to your plan, I would say congratulations to you for a well-formulated investment plan and good financial discipline!