That was my job then; in a different sense, it is my job now. My goal as a writer, commentator, and independent money manager is to retain most of the profit potential from personal investing while removing much of the risk.

Nobody can avoid every up and down in the market. What you can do, however, is to ensure that you don’t get crushed when the market rolls over. My own portfolio is a case in point. Over the last seven years, starting in September of 2000, my investment process has yielded an annualized return of 20% a year. I had only one losing year in that time, but it was a doozy. During four months in 2002, my portfolio lost 32% of its value. I was shaken, but I scraped together my spare cash and invested. Over the next 16 months, my portfolio rallied 86%, which I found about as astounding as the 32% loss.

The experience taught me that risk control works. Oddly enough, though, risk control doesn’t get a lot of attention. The most popular books and websites on investing spend nearly all their time focusing on the prospect of big returns; they rush over the matter of how to avoid big losses or how to deal with these losses when they happen. The result? Many people sour on investing because they take risks they don’t intend and lose a lot of money. They conclude that the investment game is rigged against them and they leave investing.

It doesn’t have to be that way. Let me suggest five simple ways you can control your worst tendencies, reduce your risk and become a happier investor.

1. Spread your bets around.

The most basic rule of risk control is to diversify your investments. It is also the most neglected rule.

Most people don’t understand what diversification means. For starters, it means building a buffer against all the stuff you would prefer not to think about—unemployment, sickness, a horrible bear market, etc. Before you start investing, you need three to six months of living expenses set aside in bank deposits, money market funds and short-term bond funds. Having this cushion protects you from having to sell investments in an emergency, which in turn allows you to take risks with your remaining money.

On top of your emergency funds, your portfolio should include a dollop of high quality bonds that mature in anywhere from two to 10 years. For older people, bonds cushion the downside of the total portfolio and ensure that you can’t be devastated by a stock market downturn. For younger people, bonds provide an additional benefit—you can sell them to buy stocks or other investments if the market plunges and you spot tempting bargains. So how much of your portfolio should you devote to bonds? As little as 20% of your portfolio if you’re in your twenties and a risk taker; 50% or more if you’re above 65 or naturally cautious.

Once you’ve got your emergency funds and your bonds stowed away, it’s time for stocks—and, once again, diversification should be your starting point. You don’t want to bet your entire future on a handful of stocks or on one industry or even on a single country. The easiest way to ensure that you’re widely diversified among many different stocks is to invest in a mutual fund or exchange-traded fund that holds scores of individual stocks, representing a multitude of different industries.

If, like me, you prefer to buy individual stocks, you have to balance your desire to be widely diversified against how much money you have to invest and—just as important—how much time you have to spend researching companies. My minimum for reasonable diversification is 15 stocks. When I started investing as a serious amateur back in 1992, I started with 15 stocks in my portfolio, and I bought $2,000 of each of them. Since then I’ve made maybe a dozen serious investing mistakes, but because I had my money diversified among many companies, none of my mistakes ever cost me more than 2% of my total capital.

These days I’m even more diversified: I run with 35 stocks, which is close to the maximum an individual can hope to research. Generally I devote an equal amount of money to each of my stocks—an equal weight, in investment jargon—because usually I can’t tell what my best ideas are. When a position gets more than 20% away from its target weight, I consider whether I should bring it back to equal weight or sell the whole thing. Occasionally I deviate from equal weighting, but only when I have a very safe stock that is grossly undervalued. I never go above a double weight, which means that a single stock rarely accounts for even 6% of my overall portfolio.

The final way I diversify my portfolio is intellectually. I try to listen to as many viewpoints from as many different people as I can. I do this because the ideas of all but the most careful investors are internally correlated. They reflect some idea of what the economy is likely to do in the future, and they lean toward companies that fit that view. Some investors love companies with high P/E multiples and incredible growth stories. Other investors—and I’m one of them—love companies in distressed industries that are going for a song. You should listen to both camps. Doing so insures that you learn to think about investments from a wide number of perspectives. It makes investing more businesslike.

2. Follow the cash.

Most investors pay a lot of attention to how much a company earns; few investors realize how easily management can manipulate those earnings with fancy accounting. To reduce risk in the stocks you buy, keep an eye on a company’s cash flow as well as its earnings.

Your first step should be to look with a questioning eye at the non-cash, or accrual items, on the company’s financial statements. Non-cash items include entries for such things as depreciation, inventory adjustments, or bad debt allowances. Cash is certain, but non-cash items such as these are anything but. Earnings can be thrown up or down by how quickly management decides to write down the value of a new factory or by how much it estimates its inventory of rotary-dial phones is really worth. The accounting industry tries to set guidelines for non-cash items, but management still has a lot of leeway.

For non-accountants, the easiest way to sniff out possible trouble is to compare the earnings statement with the cash flow statement —specifically the top segment of the cash flow statement, which shows “cash flow from operations.” This is the amount of cold hard cash the company’s operations are generating, before making any payouts to lenders or shareholders, or investing in new equipment. In most cases, if a company’s earnings are growing, its cash flow from operations should also be going up, since higher earnings just about always mean more cash going through the business. So what if a company says its earnings are growing, but its cash flow isn’t? You should be very, very wary. The financial statements aren’t necessarily bogus, but you have to puzzle out how a company’s earnings can be rising without throwing off more cash.

Sometimes there is no good answer to this puzzle. Remember Sunbeam, the small-appliance maker that hired “Chainsaw Al” Dunlap to goose its business? I owned the stock in 1996 when Dunlap came on the scene. But after two earnings reports I became suspicious. “All of these restructuring efforts are improving earnings, but they’re not producing cash from operations,” I thought. “What gives?” I concluded something fishy was going on, so I sold for a nice gain. Over the next six months, the stock rose by 60%—then plunged 90% as it became clear that most of Sunbeam’s increase in earnings was the result of accounting shenanigans.

3. Take emotion out of it.

You should look over your portfolio two to four times a year. In my own case, I follow a very structured process. I take all of the investment ideas that I have gathered up since my last portfolio pruning, and rate them on valuation, momentum, and accounting quality to arrive at a composite measure of their overall desirability. I compare these ideas to the companies that are already in my portfolio.

This sounds complicated and so it is. But exactly how you do your ranking is less important than having a system for comparing the stocks in your existing portfolio to the alternatives that the market is offering you. Your goal should be to take the emotion out of investing. You don’t want to fall in love with the companies that you already own. To avoid this, I try to pinpoint what companies in my ideas list are better than the median idea in my portfolio.

I also look at the companies in my portfolio that are below the median in desirability, and I ask why I’m keeping them. In many cases, the companies are less desirable because they’ve gone up in price and are no longer as cheap as they once were. In other cases, they’re less desirable for the opposite reason— the company’s business has deteriorated and shows no signs of turning around. Every three to four months, I usually sell two or three companies from my 35-stock list and replace them with more promising companies from the ideas list. I typically hold a stock for three years. Many of my ideas go against me at first, but often turn and make money for me later.

4. Love the unloved.

Most people avoid industries under stress. Who can blame them? The industry outlook is horrible; there can’t be anything good here.

I take a different view. I believe that some of the safest plays consist of buying financially strong names in weak sectors. You can often spot these companies because they’re cheap in comparison to their earnings and to their book values. For more on how to spot undervalued companies, visit the website of Tweedy, Browne, the famous value-investing firm, and read their excellent paper on What Has Worked In Investing (http://www.tweedy.com, then look under Research & Reports). In addition to the standard measures, I look for companies with good bond ratings, which are the best single measure of a company’s creditworthiness. Companies with the best ratings can generate cash well in excess of what is needed to pay all their creditors.

Once I’ve bought a stock, I try to be patient, because the payoff is usually not instantaneous. In mid-2000, when steel stocks looked horrible, I bought Nucor, the soundest company in the industry. I sold it in early 2002 for a gain, because I had better opportunities elsewhere. Steel companies dropped like flies in 2002 and even Nucor slid. In early 2003, it had fallen enough for me to buy back in. When enough steel-making capacity had been closed, steel prices began to rise. Nucor flew, and I made a nice profit—again.

The key to making this contrarian strategy work is to not overdo it. Some industries—newspapers, say—truly do have questionable futures. You have to analyze each situation on its own merits. At present, my favorite industries are insurance, energy, agriculture/food processing, cement, and chemicals.

My value-hunting approach means that most of the stuff I buy is not popular. I veer away from firms that are pioneering new technologies or markets. They are difficult to value because there are so many unknowns.

When I talk about the companies I own, the response is often, “You invest in obscure stuff. What do you think about Google?” I don’t have an opinion on Google. I can’t tell you whether it will produce enough profits over the years to justify its current price or not. So much depends on future tastes and competition. I’d rather own cement companies; they are very difficult to make obsolete.

5. Smart money is slow money.

If a stockbroker or financial planner tells you that you’ll miss a huge opportunity if you don’t buy right now, ignore them. A smart investor moves at his or her own pace.

To make sure that you don’t get pressured into buying something, avoid salespeople. Stockbrokers, financial planners, mutual fund salespeople and even the experts on the television all have financial incentives that can pull them in directions opposite to what’s in your best interest. Before buying any stock or any financial product, you should do a bit of background reading so that you understand what you’re buying and how much rival products cost. In many cases—insurance is a good example—you’ll find that the simplest product is your best buy. Complexity in insurance, and many other investments, is usually a cover for increased fees.

Especially when it comes to buying stocks, patience is your best friend. If an idea seems like a sure thing, sit on it for a month. If the idea is still a good one, you will usually still have time to act on it. If the idea is a bad one, the extra time will help you do further research and may expose the problems.

One of the best ways to make money is to avoid losing it. When I approach new ideas, I ask how likely it is that I will lose money, and how much I could lose if I am wrong. I lose about 20% of the time—and that’s fine. I know I can’t avoid all setbacks, but if I take my time and do my research, I can limit my losses and make money on the rest of my ideas.

David Merkel, CFA, FSA, is the founder of the Aleph blog (http://alephblog.com), a website devoted to investment and risk control.

This is when you begin to realize that the most fundamental investing skill of them all is the ability to recognize who you can trust and who you can’t. Like a poker player, you have to be able to detect the bluffers from the people who truly do hold a good hand. Here are five questions that you should ask anyone who wants to help manage your money:

How do you make money from this? Anyone who offers to help you manage your cash is looking for a piece of it. Bank employees are encouraged to push bank products. Financial advisers earn hidden fees for selling you mutual funds. Bestselling authors have to tantalize readers with the prospect of huge returns to sell their books. The more willing someone is to explain how he makes money from helping you—and the more specific he is about how much he’s making—the more trustworthy he is. A good adviser will disclose what his fees are for selling you a mutual fund or buying a stock for your portfolio. He will also be happy to show you how much each mutual fund is charging you in the way of management fees, or MERs.

What are your qualifications? A surprising number of supposed financial experts have no qualifications. Oh, sure, they’ll hand you a line about how they graduated from the school of hard knocks, but that’s not real knowledge. You should steer clear of any “financial adviser” who doesn’t possess the Certified Financial Planner (CFP) qualification and ignore any money manager who doesn’t possess the Chartered Financial Analyst (CFA) designation. If you’re assessing authors, prefer those with PhDs in finance, especially those that teach at top universities.

What else should I read? If the expert’s answer is to grab a sheaf of marketing materials and push them into your hand, you should cross that person off your list. Genuine experts will welcome your interest and suggest some fine background reading. Some excellent books are A Random Walk Down Wall Street by Burton Malkiel, Winning the Loser’s Game by Charles Ellis, Buffett: The Making of an American Capitalist by Roger Lowenstein and Contrarian Investment Strategies by David Dreman.

What returns can I expect? Be suspicious of anyone who talks glibly of 12%-a-year returns or better. Mutual funds that invest in Canadian and U.S. stocks have returned 9% a year or less over the past couple of decades. Funds that invest in Canadian bonds have returned about 7.5%. Those returns have come during an unusually prosperous time for both markets. A reasonable expectation for your portfolio is 6% to 8% a year.

What do you think of index funds? Lowcost index funds beat 75% of actively managed mutual funds over time. Not everyone is a fan of indexing, but any financial adviser should be willing to discuss indexing with you. If he or she won’t, look elsewhere.

It took a TV show to change our minds. In our hotel room one night, we watched an episode of Anthony Bourdain: No Reservations, in which the globe-trotting chef chows down on the streets of Mumbai. Enough’s enough, we thought. Soon after checking into a luxury hotel in Varanasi, near the banks of the Ganges River, we threw ourselves at the mercy of some of the lowest-rent establishments on the planet.

It was the best decision of our three week trip—and not only because the samosas and deep-fried veggie balls covered in yogurt and chili sauce were outstanding. Our experience proved to us that
India dazzles you when you step out of your comfort zone, if only briefly. After our meal, we felt that we had passed an initiation rite in which the country slapped us on the back and said, “Welcome, friends!”

Like many people, we had thought for years about going to India but had always put it off. We figured it was too hot, too crowded, too polluted, and too far away for a brief vacation. What we discovered during our trip is that India is also beautiful, friendly and surprisingly accessible.

We landed in Delhi, India’s capital, then headed west into the state of Rajasthan, famous for its desert landscape and Mughal forts and palaces. We stayed beside Ranthambore National Park, where 400 sq km of parkland provide a home for about 30 tigers, then we moved on to Bundi, where you can climb to a ruined fort, home to thousands of bats. Next up were Udaipur, India’s version of Venice, and Jaipur, the state’s biggest city and the base for exploring pink sandstone palaces. Finally, we flew to Varanasi, where devout Hindus bathe in the Ganges, and back to Delhi where we made a day trip to Agra and the Taj Mahal.

India was admittedly not the most relaxing trip we have ever made. Poverty and pollution abounded. But so did wonderful food, friendly people, and a kaleidoscope of cultures. We were initially wowed by India’s overwhelming exoticism, then the frenzy of activity turned us cranky for a few days. Finally, though, we emerged in love with all things Indian. We’ve traveled through a dozen or so countries on four continents and can honestly say that India is hands-down the most fascinating place we’ve visited.

The key to getting the most out of your first trip is knowing when to indulge yourself and when to scrimp. We let our budget-hunting side get the best of us in Delhi. Culture shock—the unpleasant kind—hit us when we saw our hotel room: $60 a night bought us a grimy shower with a trickle of water, threadbare sheets and a view of an alley that was home to a pack of street dogs. It was a good lesson. We would urge you to spend $250 a night in megalopolises like Delhi and Mumbai to get a comfortable room in a central location.

Elsewhere in India luxury is cheap. For example, in Udaipur, a city of 16th-century marble palaces and tranquil lakes, we stayed in a mansion. We sipped afternoon chai while gazing upon the lake below—and all of this for about $50 a night. In other cities we stayed in familyrun places that offered candlelit dining, impeccable service and a deep sleep for under $100 a night. We even splashed out on a luxury “Swiss” tent on the outskirts of Ranthambore National Park. This all-inclusive slice of fantasy, with trips into the park to see tigers, samba deer, king-fishers and wild boar, cost $150 a night for the two of us.

We discovered that plane travel within India was the way to go for all but the shortest distances. Airlines like Jet and SpiceJet are modern, safe and efficient, and they hop over the country’s creaking infrastructure. Air travel also lets you see more of the country in a briefer period of time. We flew twice—from Jaipur to Varanasi, and then Varanasi to Delhi—and the total cost was about $300 for each of us.

We took a more frugal approach toward the rest of the trip, not because we wanted to pinch pennies, but because we wanted to experience the real India. We followed our own itineraries, fought our way through traffic on cycle rickshaws and three-wheeled tuk-tuks, and ate at a delicious array of establishments.

Some of our more memorable meals were eaten in places that would make a food inspector’s head spin. Take Karim’s, a shabby (though world-famous) restaurant in the middle of Delhi’s bustling spice market: we ate tandoori chicken there that will forever make Indian food in Canada seem like a distant echo. Or the squash curry and stuffed eggplant we ate at the homey Queen’s Cafe in Udaipur—so delicious and different that we immediately signed up for cooking lessons, which were held on the floor.

We haggled ferociously for just about everything. Picture India as a billion people eager to do business with you—all for a flexible price, of course. Language is rarely a barrier, since higher-end merchants are fluent in English and even the lowly street vendor will be able to get his point across. On our first night in Udaipur we met Sam, a young man who invited us into his shop to discuss the price of a few T-shirts. When we offered him a third of what he set as his starting price, he was taken aback, but smiled. The negotiations that followed gave us the opportunity to talk about who we were and what we did when we weren’t matching wits over 50 rupees (about a dollar). When we passed by Sam’s shop the next day, we waved at each other like good friends.

If you are too tired to haggle, you can shop with ease at stores such as Anokhi and Fabindia, where prices are fixed. In smaller towns, you can also find women’s collectives, which operate in the same way. You’ll probably pay more here, but the quality is often outstanding. Either way, India is a shopper’s paradise, especially for clothing and textiles—and compared to prices in the West, things are essentially free there. Next time, we’ll pack nothing but socks and toothbrushes and buy everything else on the fly.

Six steps to enlightenment
Still nervous about booking a trip to India? Don’t be. All it takes is a little preparation:

• Remember that India is big and you’ll be able to see only a slice of it on your initial visit. We started with the allencompassing guide to India published by Lonely Planet. This gave us a sense of where we wanted to go. Once we narrowed our focus to a specific region, we bought the Footprint guide to Rajasthan.

• Plan your visit between November and the middle of February. This four-month period of relative comfort is sandwiched between the rainy monsoon season and the start of unbearably hot weather.

• Visit your local travel health clinic and find out what shots you’ll need. We received shots against diphtheria, tetanus, polio and hepatitis A and B. We also received a liquid vaccine, called Dukoral, to help ward off some effects of diarrhea and E. coli. Malaria pills are necessary and pricey (about $6 a pill). You may also want to get shots for typhoid, measles and, if you’re venturing into the countryside, rabies.

• The high season is a busy time in India, so we suggest you book most of your accommodation and travel from Canada, either through the Web or a travel agent. You can find information on makemytrip.co.in about booking domestic flights within India.

• Take U.S. dollars and traveler’s cheques. ATMs are few and far between. We used credit cards only at hotels.

• At least three weeks prior to leaving, apply for a traveler’s visa to enter India.

Throw in some details of terroirs, estates and vintages and you could be forgiven for thinking you’d encountered a cork dork raving about a favorite wine. But the bittersweet truth is that the world has gone loco for cocoa. Chocolate connoisseurs and reviewers are now according the humble cacao bean the same respect usually reserved for fine wines.

In New York, you can stop into Chocolat Michel Cluizel where a sommelier will guide you through a tasting of fine chocolate wafers made from beans grown in São Tomé or Papua New Guinea as if they were a flight of wine. Or head to Del Posto, where Mario Batali, the famed chef, offers an Assaggi di cioccolato—hunks of Swiss, French and Ecuadorian chocolate, wheeled to your table and served up like so much rare cheese, complemented by three exotic rums. In Toronto, you and a group of friends can contact A Taste for Chocolate to organize a tasting, which includes six different fine chocolates, complete with rating sheets and pretzels (for palate cleansing).

Perhaps the most delicious thing about the chocolate craze is that it remains an affordable luxury. “If you go to buy the finest wine, it costs hundreds of dollars, whereas the finest chocolate bar is only $15,” says Tracey Edelist, founder of A Taste for Chocolate.

If $15 sounds like a lot for a piece of chocolate, remember that we’re not talking about your afternoon Mars bar. This is straight-up dark chocolate, usually with at least 65% cocoa content and a minimum of additives, so that what you taste depends largely upon the beans themselves.

The chocolate that earns the biggest raves comes from criollo and trinitario beans, which together make up only about 5% of the world’s annual cocoa production. Chocolate makers identify products made from these varieties by the place where the beans were grown. Just as with fine wine, the makers also include tasting notes on the label. Some companies label products as “Grand Cru” or “Vintage.” And, yes, experts will talk about a bean’s “terroir,” or place of origin, in the same reverent way wine connoisseurs debate the merits of one chateau versus another.

Consider Chuao, one of the world’s finest chocolates. It takes its name from a remote Venezuelan village plantation renowned for its high quality criollo beans. In 2000, the name Chuao was recognized by Venezuela as an “appellation of origin,” ensuring that its use is restricted to beans and cocoa products from that area only. Amedei, an Italian chocolate maker, holds exclusive rights to the beans under an arrangement with the Venezuelan government and produces limited edition, hand-numbered bars.

Chocolate of this quality should be savored, not gobbled, says Jenn Stone of js bonbons, a gourmet chocolate shop in Toronto that offers a class in how to taste fine single-origin chocolates. “I always recommend customers try at least two in one sitting and no more than five,” Stone said. “This way they can compare the chocolates without tiring their palates.”

To put the claims of the chocolate connoisseurs to the test, MoneySense decided to hold our own tasting. We removed wrappers from 11 bars to ensure a blind tasting. We then grouped bars by their place of origin: three from Ecuador, three from Madagascar, two from Venezuela and three assorted Caribbean varieties.

Even to our untutored palates the regional differences were obvious. The Ecuadorian bars were woody and fruity, with hints of caramel and coffee. Madagascan bars were more aromatic, with undertones of coffee and citrus. Venezuelans were rich with hints of raisins. And the Caribbean contingent (with samples from Trinidad, Jamaica and a blend of Caribbean beans) ranged from woody to floral.

Equally eye-opening was the discovery that more expensive is not necessarily better. The modestly priced Lindt Excellence bars ($3.99 for 100 grams at your local grocery or drugstore) were solid runners up in two categories. The company’s Ecuador bar beat out Vintage Plantations’ “estate bottled” organic offering ($5.99 for 100 grams), while its Madagascar bar offered a delightful middle ground between the extreme opinions inspired by Michel Cluizel’s prize-winning Mangaro Noir ($11.99 for 100 grams) and Amedei’s Premier Cru ($4.29 for 20 grams). While Lindt may lack the complexity of the more exotic brands, it was great value for the price.

Surprisingly disappointing was Valrhona’s Araguani ($5.29 for 75 grams), a Venezuelan chocolate with port and raisin undercurrents. It drew negative reactions for its almost turpentine aroma and cloying mouthfeel. But perhaps it was unfair to stack it up against the unanimous winner: Amedei’s Chuao (the most expensive of our selections at $11.99 for 50 grams).

Our Chuao—one of only two battered boxes on the shelf at Pusateri’s, a high-end food shop in Toronto—had a slight bloom (that white coating that appears on chocolate that is old or stored at the wrong temperature). But, ah, looks were deceiving. Its woody, tropical aroma gave way to intense, pure chocolate, with hints of coffee and raisins. The effect was complex but smooth—incentive enough to inspire my tasting partner to polish off the bar when my back was turned.

Your own tastebuds may come to a different conclusion, of course. Just like wine, fine chocolate varies from vintage to vintage, says Clay Gordon, author of Discover Chocolate and creator of the massive chocophile.com website, which features reviews of high-end chocolate from around the world. “I might like one vintage from a producer, and not the next,” he says. His list of most reliable producers includes Bonnat, Michel Cluizel, Pralus and Felchlin.

If, like us, you get hooked on fine chocolate, Gordon points out one nice difference between top-end chocolate and high-end wine—chocolate doesn’t age well. “It’s not like you can buy 10 cases when you find something you like and cellar it for five years, because the chocolate will eventually change texture.”

In other words, eat up.

More, please, more
How to satisfy your craving for the darkest of desires

If we’ve whetted your appetite for more about single-origin chocolate, visit websites such as chocophile.com and U.K.-based seventypercent.com for a full serving of news and reviews of the finest chocolate on the market.

Wikihow.com and lindt.com offer tips on tasting. Begin with the chocolate at room temperature. Then break off a piece: good chocolate should give way with a crisp snap. Inhale the aroma at the breakpoint and let the flavors evolve as the chocolate melts on your tongue. Finally, you should chew—but not too much. The point is to savor, not devour.

If local shops don’t carry the bars you’re looking for, you can order top brands online from jsbonbons.com and atasteforchocolate.com.

There’s only one problem with accidental death insurance, says Lorne Marr, president of LSM Insurance in Markham, Ont. “It doesn’t make any sense.” Accidental deaths are rare, accounting for only about 5% of mortality. But accidental death insurance often costs more than a term life policy that would cover you no matter how you die.

“Aside from the coverage offering poor value,” says Marr, an independent insurance broker with 14 years of experience, “the biggest reason I wouldn’t buy it is because my family doesn’t need more money just because I happen to die in an accident.” In fact, your family’s costs would likely be higher if you were to die from cancer or some other disease, which is a much more common cause of death than accidents.

Anne Kleffner, associate professor of risk management and insurance at the University of Calgary, agrees that accidental death insurance makes no sense. “If you’ve bought the right amount of life insurance to begin with, it seems a bit silly to then spend more money for coverage you can only use if there’s an accidental death.”

So what should you do if you get an offer from your bank or insurance company for accidental death insurance? If you don’t think you have enough coverage, “you should just buy more term insurance instead,” says Kleffner. “It’s pretty clear that the accidental death coverage is not worthwhile.”

It doesn’t have to be that way. Several nifty devices allow you to take your TV programs on the road with you and watch them at your leisure, whether you’re sitting in a coffee shop or riding in a taxi. One technology goes even further and allows you to watch your home TV from anywhere with an Internet connection. If you’re in Shanghai and you want to catch a Toronto Blue Jays game as it is played half a world away, you can tune into your home TV and do just that.

An easy way to take your programs on the road with you is to record them on a data card. The V-Mate from SanDisk ($150) is a wallet-sized box that plugs into a video source such as your cable box or DVD player. (Like all the products mentioned in this column, it can be found at major electronics retailers such as Best Buy or Future Shop.) The V-Mate records video onto a removable data card, such as a postage-stamp-sized SD card or a Sony Memory Stick. The V-Mate can squeeze up to 3.5 hours of programming onto a single 1 GB data card, giving you plenty of space for multiple episodes of Lost. (Most data cards, like the ones that come with many cell phones, store 512 MB or 1 GB. If you need more space, larger capacity cards cost about $70 per GB.)

Once you’ve recorded your video, you can plug the data card into your laptop computer, your PlayStation Portable, or any other media player that has a compatible card slot. The V-Mate can also export video to mobile phones with multimedia capabilities. It comes equipped with presets for several smart phones from Nokia, Motorola and Sony Ericsson. Or you can use a manual setting to customize it for devices that are not explicitly mentioned in its presets. For example, I recorded a show using custom settings so it would play from the micro-SD card that came with my BlackBerry 8800 smart phone.

If recording to data cards sounds way too geeky for you, you may want to resort to something more familiar. How about recording your TV shows to DVD? You can then take the DVDs with you and play them back on your laptop or any DVD player attached to a TV.

Panasonic offers a line of recorders that allow you to burn your TV shows onto recordable DVDs. The budget-end DMRES16S ($230) records programs straight to DVD, while the more luxurious DMREH55S ($600) includes a 200 GB built-in hard drive. This massive hard drive can store up to 355 hours of programming so you can keep a heap of shows on hand, then transfer them to DVD when you have time. Each recordable DVD disc can store up to eight hours of programming.

If you like the TV-to-go idea, but don’t want yet another gadget to worry about, then perhaps your next laptop computer should be one that can record TV. Many new laptops come preloaded with Windows Vista, a new operating system from Microsoft. Vista comes in many fl avors and the Home Premium or Ultimate versions include a built-in program called Windows Media Center that can record TV shows
when connected to a cable or satellite box. You can even buy laptops such as the Toshiba Qosmio G30 ($2,999), which come already equipped with Vista Home Premium, a remote control, and a TV tuner
as well as a 17-inch screen. If you already own a laptop, you can buy an add-on TV tuner for your laptop from Hauppauge called WinTV. Various WinTV models are priced between $70 and $150.

Perhaps the most elegant TV-to-go technology of them all comes from a California company called Sling Media. Its Slingbox gadget lets you take the TV programs in your living room with you anywhere you go. You connect the Slingbox to your digital cable box. Then you hook the Slingbox up to your high-speed Internet service. Finally, you load the Slingbox software onto your laptop. On the road, you connect your laptop to a high-speed Internet connection and call up the Slingbox software. The Slingbox back home pushes the television signal from your living room across the Internet to your laptop screen, so you are, in effect, watching your home TV on your computer screen. Also on screen is a virtual remote control so you can channel hop just as easily as if you were sprawled on your living room couch.

There’s only one catch: if someone back home is trying to use the PVR or DVD player when you do, you’ll be battling for the remote. Otherwise, though, the Slingbox is the answer to a road warrior’s dream. The basic Slingbox starts at $180. The Pro version ($300) can hook up to four sources, so that TVphiles can access their cable boxes, DVD players, personal video recorders and even VCRs and switch between them remotely.

Sling Media will take things a step further this fall when it introduces the SlingCatcher. This device frees you from watching your Slingbox TV content on your laptop. Once connected to the Internet, this little box receives the signal from your Slingbox back home and pipes it onto any screen, including your hotel room television. Price is expected to be around $225. Sling Media has also released mobile software to let you play your Slingbox streams on an Internet-connected Windows Mobile or Palm device ($35).

Tell your TV that times have changed. You are now the master

To help narrow down the field, I always ask some questions back. What will you use your laptop for? What’s your budget? Will it sit on a desk most of the time or will you travel with it frequently? What do you want to do with it? Do you have any single daughters? (OK, that last inquiry is not always in the strict line of questioning, but it does help me get dates.)

You should begin your laptop search by asking yourself many of the same questions. Then find the category below that best describes you, and check out my recommendations.

Student

Kids can have it all these days—mobility, functionality and, yes, even entertainment. If you’re in small quarters like a dorm room or tiny apartment and you want a workhorse machine that can plow through your studies, but also transform into an entertainment system for downtime, my first choice would be the Toshiba Qosmio G40($2,799). The Qosmio packs all the power of a desktop computer in a heavy (5 kg) but portable package. It boasts a generous 17-inch screen for movies, and works fine with an iPod or digital music player. The Qosmio also comes with a high-definition DVD player that plays HD DVD movies. For a less expensive 17-inch system in the same category, consider the Dell Inspiron 1720/1721 ($1,058 and up).

Family user

If you want a mobile computer to take to the cottage and share with the kids, look at an Apple MacBook (starts at $1,249). These easy-to-use, handsome systems include the iLife software suite for making movies and creating music. MacBooks are also low maintenance, free from nasty spyware and viruses, and pack all the tools a kid needs for homework. If you prefer to stick with a Windows-powered laptop, then look at Dell’s Inspiron 1520/1521. Dell used to have a reputation for making dinky, crappy laptops. This new line is totally redesigned and getting a lot of attention. The biggest problem with buying a Dell laptop these days? Picking which one of eight colors you want.

Budget buyer

A hot deal is rarely a good deal in the laptop market. However, you can protect your pocketbook and still get a decent system by compromising in two areas. The first is the microprocessor. Choose a lower-end Intel processor such as the Celeron Duo or opt for a processor such as the Turion 64 made by Intel’s rival AMD. Both processors work fine for everyday tasks, but are far cheaper than state-of-the-art processors.

Another way to save is by lugging a bit of extra weight. Heavier machines that tick in between 2.5 and 3 kg are cheaper than their lightweight rivals. The 2.5 kg Hewlett-Packard Pavilion DV2402CA ($849) is a decent choice. Also look at the Toshiba Satellite A200 ($749).

Business traveler

The mobile executive can choose between an ultra-portable system that slips nicely into a purse or a more substantial yet still ultra-light laptop that has a more robust keyboard and screen. Systems in either category weigh less than 2 kg, which makes them a joy for those who spend a good part of their lives lugging briefcases around airports. Executives who want an ultra-portable that is barely larger than a hardback book should look at the hardy yet petite Lenovo ThinkPad X61 ($1,699) or the Sony VAIO TZ series ($2,500). Those who desire something slightly bigger should consider the Lenovo ThinkPad T60 or T61 ($1,399 and up).

Gamer

If you’re on the hunt for a laptop capable of playing the hottest, latest, most demanding video games, you have only two real choices—Hewlett-Packard’s Voodoo Envy line ($3,158 to $5,000+) or Dell’s Alienware Area-51 systems (starting at $1,769, but much pricier with options). Both are aimed at performance gamers who want to be able to play games without compromise. These gorgeous systems come with 15- and 17-inch screens (and in one case a 20-inch screen). They have the guts to handle the data-processing loads imposed by many leading-edge games and high-end graphics systems to display the animated imagery in stunning detail.

Hip geek

I like to think that I slip into this last category. It’s for techies who want the coolest and best machine.

Most of the hip geeks these days are going for Apple’s MacBook Pro (starts at $2,199 for a 15-inch model and $3,099 for the 17-inch version). Part of the MacBook’s appeal is what it’s not—it’s not primarily a Windows machine and that’s appealing to many techies who have come to loathe Microsoft and its creations. But, to give the MacBook its due, it’s also well designed and nearly immune to viruses.

My personal choice is the Dell XPS M1330, which is the closest you can come to a MacBook while staying within the Windows universe. This fully redesigned laptop weighs in at 1.8 kg; you can order a 13.3-inch LED screen as an option. (LED is a bulbless light technology that uses less power. All the cool kids have LED screens these days.) The M1330 features a built-in webcam in the bezel above the screen and an HDMI connector to output information to your high-definition TV. Fashionistas take note: the M1330 comes in three colors (red, black and white).

If you want to look further afield, consider Lenovo’s T-series. It’s long been a geek favorite thanks to some nifty extras such as shakeproof, drop-resistant internal mechanisms that protect users with slippery fingers. Lenovo’s ThinkPad T60 or T61 ($1,399 and up) are excellent choices. Geeks are also gasping at LG’s beautifully designed new laptops. You may know LG primarily as an appliance maker, but if esthetics matter to you, be sure to have a peek at the sleek, handsome LG R500 laptop ($1,900) if you get the opportunity.

I had been mulling that question in one form or another since February, when I handed my annual RRSP contribution over the desk to my bank adviser. “Will I ever be able to quit work?” I sighed. I didn’t mean it seriously. But my adviser looked at the numbers on her computer screen and said, “Oh, I think so. Let me put you in touch with one of our retirement planners.”

I was only 54. I had worked as a copy editor at the same newspaper in London, Ont., for almost 33 years. I had always assumed I would have to continue working there until I was at least 60 to make ends meet in retirement. But when I met with the bank’s planner, she went over the numbers and assured me I could quit work almost immediately. I was single, I had no dependents, and I had a paid-off house. If I took the money that had built up in my pension plan, invested it wisely, and lived modestly, I could say goodbye forever to the office. There was only one catch: my pension plan allowed me to take the commuted value of my pension only if I acted before my 55th birthday. That was a mere eight weeks away and I had to give at least two weeks’ notice. I had to make a decision right away.

Was I ready to make the leap into sudden retirement? As I wrestled with that question, I began to realize that retirement is a psychological and social issue, as well as a financial decision. If you’re pondering early retirement, let me tell you about what I’ve learned as I’ve struggled to make sense of my own situation.

The first question I had to deal with was whether I really wanted to retire. Most people say they would jump at the chance to walk away from work, but the reality is more complicated than that. Work provides us with a sense of self-worth. It also offers a sense of belonging and of contributing to the world.

As I contemplated my own retirement decision, I felt torn. I could list good reasons for continuing to work. I could also list reasons for taking early retirement. On the “continue to work” side of the ledger, I felt proud of my work and I felt appreciated in the newsroom. I also liked knowing that I was building up my pension and enjoyed a benefit plan and all the perks that go with employment. On the “retire right now” side of things, I detested my schedule, which required me to work evenings and two weekends a month. I resented how my evening-and-weekend working life isolated me from friends and family.

What finally tilted the decision toward “retire right now” was the memory of a colleague who had died suddenly a few months earlier. He was 61 and had been eagerly waiting for retirement. He had been holding on at work simply to build up his pension. I didn’t want his fate to be mine.

The question, of course, was whether I could afford to retire. Under the terms of my pension plan, I would lose 5% of my pension payout for each year I retired before 65. I had always assumed that the penalty ruled out early retirement for me, but the bank planner pointed out that if I acted quickly and withdrew the commuted value of my pension before turning 55, I would have a decent-sized nest egg that I could invest myself.

Would that nest egg be enough? I had listed my annual expenses before meeting with the planner. I had added in my projected spending for home improvements and a new computer. I had also considered areas where I could cut back and budget more effectively. I had concluded I could get by on an income of about half of what I was making in my job.

Was that realistic? To be honest, I didn’t know. The conventional wisdom, propounded by the Canadian Bankers Association and many others, says you need 60% to 80% of your working income to maintain your lifestyle in retirement. But that figure depends upon how you want to live after work. If you want to maintain both a house and a cottage, or if you want to travel extensively in retirement, you’ll need at least 80% or more of your pre-retirement income.

For most people—including me—80% is probably overkill. Malcolm Hamilton, a consulting actuary with Mercer, a Toronto human resource consulting firm, says Canadians who merely want to maintain their current lifestyles will need retirement incomes that are only 50% to 60% of their working incomes. We can live on a lot less in retirement because our expenses are a lot less. We no longer have mortgage payments to make or kids’ tuitions to pay. We pay less tax because our incomes are lower. And we no longer have to save for retirement because we are already retired.

But even if I could live on 50% of my working income, could I count on my nest egg to generate that amount? Stock markets go up and down. So do bond prices. As I researched the matter, I was surprised to discover that the amount I could withdraw each year from my portfolio was smaller than I would have thought. Most experts agree that if you want to make your money last for decades, you should withdraw no more than 4% a year of your starting principal, adjusted for inflation. (That means if you start with $100,000 and inflation is running at 2% a year, you should withdraw $4,000 the first year, $4,080 the second year, and so on.)

Hamilton says a 4% withdrawal rate is a very safe figure if your objective is to live a modest lifestyle and leave a large estate. But he says he doesn’t think a 5% or even 6% withdrawal rate is out of line in the early years of retirement. “The truly elderly don’t spend much even if they have it,” he says. “So the idea that you should spend frugally early in retirement so you have lots of money later on is not necessary for most people.”

Based on my list of expenses, I figured I could generate about 50% of my take-home pay by withdrawing about 4% of my savings a year. That looked very encouraging. And I thought I could supplement my income by doing freelance writing and editing jobs, not only to make money, but because I like the work. When my financial planner assured me I had enough money to pay my basic living expenses for 30 years, I decided to walk out of the newsroom for the last time as a fulltime employee on the day before I turned 55.

The jury is still out on whether retiring at the age of 54 years, 364 days was the smartest financial move I ever made. I now realize that my initial list of expenses missed several items, including health care costs that had previously been covered by my employer, Christmas gifts and charitable donations. I also underestimated the amount I would want to spend on entertainment. Rather than living on 50% of my pre-retirement income, I’m getting by on more like 60%. And that means I’m withdrawing 5% of my savings every year, rather than the 4% I had hoped for.

I budget more stringently than I did when I was working and I’m still getting accustomed to the fact that I can’t spend as freely as I used to. It’s not so much a question of cutting back as planning when I should buy something I want or need – making sure I don’t schedule a major service on my car the same month my property taxes are due, for example; occasionally using my credit card in a tight month so that I won’t have to pay it off until the following month, when I know there will be fewer bills coming in; not automatically buying the most extravagant gifts when I’m Christmas shopping, as I had been inclined to do. I haven’t had to deprive myself of anything significant, but each month necessitates its own spending strategy and I think it will take a couple of years to ascertain my financial comfort zone.

I have been surprised by how much I’m enjoying my part-time writing and editing work. Unlike my full-time job, my new duties are done on my own schedule, in my own house, and that makes all the difference. I find that my feelings are shared by many of my retired acquaintances. Among them are a former circulation manager who delivers prescriptions for a drug store, a newspaper production technician who organizes and scrapbooks family photos for clients, and a bank manager who works part time in a high-end kitchenware store. While they all enjoy the extra money—in some cases, the cash is essential—they also like being active and feeling fulfilled.

In terms of improved health and social life my retirement is an unqualified winner. Every time I hear about the latest crisis at the office where I used to work, I’m thankful I no longer have to deal with the stress and anxiety such events used to cause me. I have renewed my interest in cooking healthy meals and I particularly enjoy eating them at regular times. After being restricted by evening and weekend work, I find the freedom to go out for dinner with friends or see a movie—any time I want—is still a heady sensation. I’m especially looking forward to a year of gardening without having to compress all the work into a limited time. These may be modest pursuits, but they contribute disproportionately to my quality of life. In a nutshell, my retirement so far has not been life-altering as much as life-affirming.