Blessed by the Potato

Word on the Street was super depressing.

It was the first time at Harbourfront, and there were road closures and a Jays game (who are actually popular at the moment) working against it, but on the other hand the weather could not have been more perfect for an outdoor festival.

I have a lot to complain about, and that’s pretty much all this post is, so feel free to skip from here if you like. One note before you go: the lack of attendance means I have a lot of inventory on hand at the moment, so I have extended my free shipping offer if you buy the Value of Simple from my direct site.

First is how confusing the new Queens Quay is as a roadway. I was just commenting to Wayfare about how weird it was and how all the reports I’d heard of collisions and streetcar problems were making sense after seeing it for myself. We saw an SUV make a left turn against the left-turn light (but there were four other green lights on at the time and no one coming the other way, so kind of understandable), and I said someone’s going to not expect the streetcar to be coming up on their left, not see the red light for the turn, and hit it one day. Well sure enough the next light cycle that’s exactly what happened. The guys manning the gate at Word on the Street said it was the second such collision they’d seen that weekend, which sounds crazy to me.

Harbourfront is not a great location for an event like this because it’s so isolated down by the water: it’s not on the subway, it’s hard to drive to, and people can only approach it from one direction, which leads to a lot of congestion as people move in and out at peak times.

Then parking is such a rip-off at Harbourfront. It’s not just that it’s expensive, it’s expensive in a really aggravating way. WotS officially ran 11am-6pm. Parking was flat rate, pay-in-advance until 6pm, and then a second flat rate pay-in-advance if you stayed after 6pm. Well, I had a booth that was supposed to be open until 6, so I figured I wouldn’t be leaving until 6:30 or so with teardown and stragglers and packing up, and had to make that call in advance. But as it turned out other people started packing it in early, which led to the attendees filtering out early, and then the organizers started tearing down the signs early and telling people to be ready to move out because getting cars on site to unload everything was going to be a nightmare. So we were packed up and out of the parking spot by 6:05pm — that 5 minutes of parking cost $14 because of the flat rate system with the really stupid break point. For a 6pm event, stretching the parking flat rate to 7pm or so would have made sense, but no, they had to try to gouge the exhibitors those last few bucks. That also likely had an effect on the attendees disappearing by 5:30 — those who drove were probably aiming to make sure they were long gone by the 6pm cut-off on the first rate. And one more parking/Queens Quay annoyance is that there isn’t a right-turn lane or right-on-red allowed to get out of Harbourfront, so at each light cycle all the pedestrians would block the cars from turning right, who would then block the cars from going straight, and it took forever for people to just get off the site and on to the road, two cars per light cycle at a time. They could have really used a cop or two directing traffic to get a few more in a row getting out and going.

As for the festival itself, it was very weirdly laid out — and from my vantage point — a practical ghost town. To be clear, there were a fair number of people in attendance overall, but it was very unevenly distributed.

On the layout, it was spread around Harbourfront, with buildings separating it roughly into thirds. There were many people who had no idea very large sections of WotS existed because they didn’t go through one or both of the buildings to explore the other parts. There were many, many lost people, and not many maps or signs saying things like “more WotS this way!” I think they needed to define a traffic flow pattern and put some arrows down to help people hit all of it, or even just put up more signs saying “independent authors this way! More kidstreet this way!” I think we spent more time at the booth helping people find other booths than we did selling books and talking about investing. I heard from other people that were touring more of it that other parts were much, much busier than where I was, but even then there were a lot of dead pockets: a tent might have been divided into four booths, one facing each direction, and two sides of it would get no traffic, with people not even knowing they could go around the other side of the tent. Or booths set up in weird, dead corners — the kids area had a healthy crowd, but most of it was set up outside and the stuff inside was so dead that Wayfare took a break to sit down in a corner in there and do some work on her laptop.

My location was terrible. They put booths facing both directions down a little alley between the buildings. That alley did not get much foot traffic in the first place, and splitting it to either side further cut it down. Unfortunately it wasn’t evenly bisected, so ~3/4 of what traffic there was went down the side opposite me. In the sales material for authors they highlight that (in the past) 225,000 people attend Word on the Street. I had maybe 2,000 people walk by my booth all day. Not stop to chat or even let their eyes focus on the signage, just walking by in total. I didn’t have a great view of the main entrance, but I know what 50,000 people at a Jays game looks like and I don’t think there were even that many at the whole event.

To talk business for a sec, I had brought just under 100 books, hoping to sell nearly all of them, plus 200 bookmarks to give away and 100 postcards with some quick facts about RESPs for all the parents with little ones that would be going for the kids stuff. But because of the segregation there were hardly any parents coming by — the kids’ stuff was on the other side of the Harbourfront building and they had no reason to come down my little alley (those who did to go the long way around to the TVO stage did so on the other side of our tent where the alleyway was wider). I only managed to give away (for free) maybe ~40 RESP cards and ~60 bookmarks. I sold 14 books (I needed to sell ~55 to break even on the day).

I know it was hard in advance to figure out if this would be worth it for me — I couldn’t find other authors blogging about this or similar events. So I went through a bit of a Fermi calculation, figuring that of the wildly inflated 225k attendance figure, maybe 20k would make it within sight of my booth (which would average just about a person walking by per second over the 7 hours — basically some decent milling crowds, which fit well with my memory of past events and didn’t seem too extremely optimistic). Then of that, maybe 5% would be interested in the topic and slow to have a look, and maybe 10% of those interested would buy a copy after talking for a bit — which would have worked out to selling a book every 5-10 minutes, and a healthy margin of error above the break-even level. The big kicker for me is that I actually wasn’t too far off on those estimates that should have been harder to guess at — about 4% of those who did pass by did pause to pick up a card or bookmark, and possibly chat for a bit; about 17% of those did make a purchase — it was that first traffic number that was off by an order of magnitude that spoiled the predicted success. (Though I did vastly underestimate how much time people would need to talk about investing before making a decision on whether to buy the book).

Now I made some marketing mistakes that could have helped get people who did walk by to stop and check it out in more detail, the biggest one I think was to prominently feature the cover of the book in a large, eye-catching poster when instead I could have used that space for a large, eye-catching poster that somehow got people to stop and check out the book — whether that was summaries of reviews, a few bullet points about how the book helps, or leading questions to get people to come in. But the fact is whether my “conversion rate” was a factor of two or three times better just wouldn’t have mattered given how little traffic there was there in the first place. But either way, from a business perspective, WotS was totally not worth it for selling books (or even just exposure — only 10 people visited the site today).

Of course, all this whining about the space and layout and lack of traffic is from the point of view of an exhibitor. As I was writing this I saw on Twitter someone praise this year’s layout, because it clumped together all the booths on that person’s hit list so they didn’t have to walk around the whole event: just a surgical strike to one corner and they were out. Wayfare rather liked the extra stage space that Harbourfront offered because it made it more of an “event” versus the book sale frenzy it started off as. Which highlights part of the problem for people like me: it does no good to bring in tens of thousands (if not the hundreds of thousands in past years) of people to see big-name authors or local magazine offerings or kids’ musicians or whatever if those are all clustered together and then hardly anyone explores the rest of the event.

I recall in past years that everything was laid out fairly logically, so you knew where to go to hit everything (up and down Queen St., or around the loop in Queen’s Park, with IIRC a bit of a grid of tents in the middle). Most trade shows are similar: nice, neat rows so you can come up with some kind of logical search path and hit most of the things to explore. And then the vendors are somewhat randomized in there, so you get a reward for exploring further — ah, another SciFi (or whatever you’re into) booth down this row, let’s go (and also stumble on something nearby). Here it was confusing, and the clustering meant if you were primarily looking for one thing, there was no reward for exploring further (and because it was confusing, if you did want something else you had a hard time finding it).

Harbourfront offered more large stages/auditoriums for particular events like the performances from TVO shows for kids, or authors doing readings, but it also brought those people away from the rest of the festival, again segregating more. But, it was more of a “cultural event” — which is fine for attendees, but vendors should be wary.

So in short, from the perspective of a local author, in one of the dead spots in the layout, I think the new Harbourfront location for WotS was a complete bust. Possibly the old ones were too and I was just mistaken in my attendance assumptions or got swept up in their fancy marketing (though if you do a google image search you’ll find more people with umbrellas in the rain at Queen’s Park than on an absolutely gorgeous day at Harbourfront). Either way, for those following along here for self-publishing anecdotes, it looks like a booth at a generalist literacy event is not a great choice for spending your precious marketing dollars (unfortunately not much else is).

The other reason it was depressing was the reasons people were giving me for not buying the book. There’s the usual catch-22 I’ve faced with the book all along, too: those who are interested enough in investing to stop and have a look at the book generally don’t feel they need an introductory, practical guide because they’re already doing it. Those who could really be helped by a book like this just walk on by without making eye contact. That sort of thing is helped a lot by audience selection at other events like Money 201 talks at the library. But while I haven’t come up with a good solution to the problem yet, I’m used to facing that one. What was really depressing was seeing so many people with debt problems to tackle before they could even think of investing. So many who didn’t even want to try to learn, because “simple investing” was an oxymoron. A few who at one point I thought must have read my blog and were out to troll me because they didn’t need to invest because they had real estate. I didn’t give anyone the RE bear hard-sell, but when I mentioned that this offered an easy way to diversify, one guy actually said he didn’t need to “because it’s different here” — he said the literal words and I was like “Am I on camera here? Is this really happening?” A few were a little older than me, and didn’t like the sounds of moderate, long-term growth that focused on costs — they needed to beat the market and get rich quick because they didn’t have enough time left to save for retirement the slow way.

Fortunately, 100% of parents at WotS already know about and use an RESP for their kids.

I’ve written many times before about how basement suites (BS) are not magical. They are a way to live in less space, in what becomes a non-detached house, with an option to take it over and make a SFH detached again. However, if the rental market in general is crazy, the added costs of a basement suite generally is, too.

Well MoneySense recently featured a very short article touting how a BS could help a Vancouver couple become mortgage-free faster. Unfortunately given the length, they didn’t examine any of the underlying assumptions.

The assumption was that they could renovate their house for $75,000 to create a two-bedroom BS, which would then rent for the princely sum of $1800/mo. There are no additional costs with this rent — which either means they had an even higher gross rent, or neglected the added costs entirely.

So, reality check time, how might this actually play out?

Firstly, $1800 sounds really steep for a basement suite. I know Vancouver is a bit pricier than Toronto, but really. So I did some checking on Craigslist. I found one outlier basement suite at $2495/mo, one at $2150/mo, a small handful at $2000/mo, and then just 10 starting at $1800 — so that might be possible for them, but it’s at the very upper end of the basement suite market (and at that price point I can see they are competing with a number of above-ground units or exceptionally large basement units). Even at $1700 many of the suites were above-ground or fully furnished. $1650 seems to be a more reasonable rent expectation.

And that is not going to come free. In addition to the effort and loss of privacy (which we won’t slap a price tag on), they’ll have increased utilities usage¹ and likely a higher insurance premium. Let’s call that $50/mo. So they’re now bringing in $1600/mo.

But they’re going to have some other expenses to account for, like vacancy and maintenance. Let’s be generous and assume the unit turns over every four years, with just a month of vacancy and a quick paint, patch, and appliance tune-up of $3000. Now they’re down to netting an average of $1500/mo. On which they have to pay some tax — sure, they’ll have some interest and property tax to write-off, but even figuring on 4% of the $75k invested, if they’re in the 40% tax bracket their after-tax amount to help pay down the dreaded mortgage is just $9k/yr.

Bring that figure back to the mortgage calculator and their mortgage-free date goes from age 68 to… 68. Yep, taking all that risk, living first in a construction zone and then with lowly basement-dweller renter scum beneath their feet will likely leave them paying off the mortgage on the very same date as if they had done nothing. To be fair, that’s using a 5% mortgage rate as in the article. If their base case is topping up a (today’s) realistic 3% mortgage to the same $3k/mo as used in the article, then they’d be done at 67.7 in the base-case payoff, and 67.5 in the rental suite case — ahead by two months.

Not examined in the article is the other alternative: downsize. If all they need/want is the space in the upper unit, and obviously don’t mind sharing walls, then they could move to a townhouse (or rent or move out of the GVA entirely) and move their mortgage pay-off day to right now.

1. Contrary to stereotypes, basement-dwellers² do shower, which adds to the water and water heater (whether gas or electric) bill. Plus the other incremental utility usage.
2. Again, 96% of my readership, so no offense intended in tackling these persistent stereotypes head-on.

In a non-registered account you will at some point have to pay tax on any capital gains, and you have to report that amount yourself. You’ll need some method to properly* track your cost base so that when you sell you know how much of a gain (or loss) to claim on your taxes. [TL;DR — click here to download the spreadsheet]

I often get asked whether tracking ACB yourself is really necessary. Brokerages and mutual fund dealers will track your book value for you, and most of the time they’re accurate. So you could save yourself a fair bit of effort by just relying on their calculation for tax purposes, especially if all of your accounts are in one place. However, if you have holdings of the same ETF/stock/fund at different brokers (e.g., if I had an account at TD Waterhouse holding VDU and one at Questrade holding VDU) then they wouldn’t talk to each other and there would be no option other than to track it myself. They also don’t seem to catch superficial losses. The bigger issue though is that the brokers sometimes make mistakes in the book value calculations, and it is ultimately your responsibility to report correctly to the CRA.

So the only proper advice I can give is to carefully track it yourself to double-check your broker/mutual fund dealer because the onus on being correct will fall on your shoulders. But that said, I do personally know a few people who do not track it themselves and who come out fine (either because the broker/dealer gives them correct information, or because even when there are errors they don’t get audited) — in the real world it’s very tempting (and understandable) to take the free tracking offered. With mutual funds there’s one less step for information to go wrong (at least if you’re buying funds from the issuing company, like TD e-series at TD), so it’s even more likely to be correct, but you’ll never know if you’re the one unlucky customer with a bad book value calculation until you get audited. And of course, the errors they’re making could be costing you money. If you do let the company track for you, at least be sure to hold on to the statements you’ll need to re-do the calculation if it comes to it.

Tracking it is not all that hard a mathematical exercise, the tricky part comes in being careful to put everything on the right side of the ledger and to follow-through each year. There can be a lot of transactions to put in there, including annoying “phantom” distributions that change your cost base but didn’t actually show up in your brokerage statement. There are a number of tools out there to try to help you with your ACB, including a web-based calculator and spreadsheets from several sources, like this classic (if sparse) one from the old Canadian Capitalist blog.

I myself use a very barebones spreadsheet similar to CC’s, but it’s not a great model for others to use because it depends on me knowing what it is I’m doing with the ACB calculation to create each new row as needed.

So I’ve created a new template that I hope is better suited to the target audience for the Value of Simple (click here to get the sheet). This sheet assumes that you’ll have a fairly typical experience of buying/DRIPing many shares/units over time, and only occasionally selling. So rather than save space and intersperse all the transactions as they happen, it’s set up to go with your workflow. I assume that you’ll go through various modes. First you’re buying and holding, then it summarizes your ACB for a sale with all the adjustments from RoC and reinvested capital gain distributions, then you make a sale (or series of sales), and then get back into buying mode. Then each of your funds gets its own tab.

As with many ACB trackers, the superficial loss rule can throw you for a loop. It’s hard to catch everything that can trigger a superficial loss, so there is no automatic check for it so you won’t have a false sense of security — you’ll have to catch those situations yourself (though there is a sample of that case so you can see how to adjust your cost base for when it does happen).

* – I often stress the importance of tracking this yourself. That’s because it’s so tempting to not track it properly and independently and rely on the “book value” or “cost” listed on your brokerage statement. Most of the time this will be correct and you could have saved some record-keeping effort. However, sometimes it won’t be, and then you’ll be mis-reporting to the CRA. It’s analogous to tracking your TFSA contributions yourself: the CRA online tool or phone reps may be able to accurately tell you how much room you have left, but in the rare case where that’s wrong the penalties will still fall in your lap. So I’ll try my best to tell you how to track and report properly, and make it as easy as possible; if you choose not to and get audited, at least you’ll know what you did wrong!

Word on the Street is just three weeks away, and I’m excited to have a booth there this year, where I’ll be hawking the Value of Simple (the booth will be called Simple Investing).

It’s tough to estimate how many copies I’ll need on hand, so I just figured that if I sold a copy every five minutes I’d be doing pretty well, did the math, and will arrive with just under 100 copies. Running out would be a good problem to have, so I’m hoping that it turns out to be a conservative estimate — but if I’ve over-estimated, expect a sweet sale for xmas orders this year.

I’m gearing up for it in other ways too. While I’ve long been with PayPal to accept credit cards for orders through my direct site (and to invoice for credit cards for side business stuff), for this kind of event I wanted to get a mobile card reader to take payments on-site. I was briefly excited to see that PayPal had one called PayPal Here — and it even supported Windows tablets! — but then saw that they don’t like Canadians and I had to go find someone else until some indeterminate future date when the rollout came north of the border. Intuit has an option for Canadians, but only works on iOS devices. That leaves Square¹, which I had actually heard of and knew as the little start-up that kicked off the use-your-mobile-phone-to-take-credit-cards business. Though they don’t support Windows tablets or Blackberries (the devices I will have on-hand at WotS), they did support Android, and Wayfare is currently shopping for a new cell phone and will likely go Android.

I have to say I was impressed with the whole process — easy to sign up, and the hardware is tiny and light and arrived in just a week. Thanks to this thread at CrackBerry I was able to get the app working on my BlackBerry (which does run many Android apps — getting them on is usually the tricky part), and have charged myself a $1 sample transaction just to see how it worked. Other than having to sign with my finger (no pen or stylus I have seems to work on the BB’s screen), it was incredibly smooth and easy. As an aside, given that new BBs run Android apps, I’m surprised companies with apps like this don’t bother to port their apps over so us dinosaur BB users can download them without workarounds. I know we’re a small and dying breed, but it’s not nothing.

Other than that I’m trying to come up with all the material I will want at the booth to give away and help with promotions. I’ll be bringing along some hardcopies of the reading guide, which makes me wish I had designed it for standard print sizes instead of for screen display. Bookmarks tend to be a standard thing, but I’m not sure what to put on mine that would make it useful or stand out against a sea of hundreds of other bookmarks (maybe one of the comparison tables? “Don’t Panic”?).

Wayfare had a great idea to take advantage of the family-oriented nature of WotS: have stickers for the kids and RESP info cards for the parents, so I’m working on the design for that, with not much time left to send it to a printer and get it back before the big day!

Readers, anything else you think I should include? Or is this getting to be too many little bits of cardstock at the table?

1. This is an affiliate link, but that didn’t affect my review of Square. If you use this link to sign up they’ll waive my credit card processing fees, but if you do so after WotS it’s likely that will be of no benefit to me anyway.