Monday, September 12, 2005

Dealing With Disasters

IS THERE ANY WAY TO PREPARE your finances for the possibility of a disaster on the order of Hurricane Katrina? If you trade or bank online, or use a computer to track financial matters, you might want to think seriously about creating a disaster plan for your computer-based records—now—because information about brokerage and bank accounts, insurance policies and the like can get lost, along with personal effects. Yet most computer-users don’t get religious about creating backups until they lose some important files.

While backing up data used to be a somewhat onerous task, especially back in the day of the old 5¼-inch floppy disks, it now just takes some foresight.

If your computer has a DVD burner, you can quickly copy four to 8.5 gigabytes of data (including photos, e-mails, bookmarks, financial records, and more) onto a DVD.

You can also install a second hard disk in your computer relatively quickly, especially if you opt for an external drive, and just copy the entire contents of your computer’s primary drive onto that one.

One problem with planning what you’ll back up is the way most computers intermix data with program files on your computer’s hard disk. You can be vigilant and keep data separate from program files, and back up the data frequently, but frankly that takes more computer know-how than most people have. Plus there are some programs that crash if you don’t use their default data location.

Physical backups are great if, for instance, your computer gets a virus, or the main hard drive just plain crashes. But what if your house burns down or gets flooded? If you have an external hard drive, which typically is the size of a book, you could grab it and take it with you. If you had two internal hard drives in your computer, however, they would both be ruined simultaneously in the event of a disaster.

I’ve taken to using a Google e-mail (mail.google.com) account for backing up my more frequently changed files, by compressing an entire folder into a .ZIP file and mailing it to myself. This works great for things like my word-processing folders and my personal-finance data files. It’s cheap—free, actually—but it’s a little time-consuming. Plus there’s a limit of about 2.6 gigabytes (but growing daily) that I can store in one Google e-mail account. You can then access such files from any computer, via your Web-based e-mail.

You also can subscribe to online services that allow you to back up your data over an Internet connection to a computer located somewhere distant, so if disaster strikes your hometown, your files are safe.

The online-storage alternatives can automatically back up the files you designate to a remote location. These are handy, because once you set up the schedule, and keep your Internet connection up and running, the backups are automatic. You could, for instance, tell the service to back up the files you want at 2 a.m. every day. But don’t even consider using one of these unless you have a high-speed Internet connection. Initial backups of a couple of gigabytes can take six to 10 hours, even over a high-speed connection; I don’t even want to think about how long that would take over dial-up.

Windows users have a variety of online-backup choices. One of the more popular is Connected DataProtector (http://onlinebackup.connected.com), which is very easy to set up and use. First, you install a program called the DataProtector Agent on your computer. Run the program, and while following the prompts, tell it which folders and files you want backed up. The Agent will automatically do the backups at a specified time each day; it looks for files that have been created or changed since your last backup, and avoids storing duplicates.

Connected’s services include the ability to “roll back” your computer to a previous backup. Or you can have the service send you CDs with all your data, in case the computer you’ve been using is completely disabled. You’ll pay $165 per year to keep 2 gigabytes of data backed up; other plans that range from $80 to $800 a year for up to 30 gigabytes of data are available.

IBackup (http://www.ibackup.com) has backup plans for Macs and Linux-based computers, as well as those running Windows. This service is far more flexible than Connected’s, but the unfamiliar interface and multiplicity of options might take getting used to. be using the computer for a while. (You can perform most functions on your computer while the backup is running, but it will run much more slowly than usual.)

Another good insurance policy is to have more than one online-brokerage account, for those times when you can’t get through to one of your brokers, and a backup Internet access provider, for when your main connection goes haywire. Also, if you’ve got a high-speed Internet connection, it’s still a good idea to have dial-up access available, just in case.

Based on how we stretch PCs to their limits sometimes—say, during our annual review of online brokers—it’s not a bad idea to have more than one PC. Given that you can get a basic, if unexceptional, desktop for as little as $299, it’s inexpensive insurance if you’re actively trading a significant portfolio. Or with laptops going for as little as $500, one could serve as a backup if your main desktop fails or if you need to relocate on short notice.

Clarification: In our Aug. 29 column, “Read All About It,” we took a shortcut and referred to RealTick as an online broker, which is not an adequate description. RealTick is an independent market-data, analytics and direct-access trading platform—available globally through a variety of institutional and retail brokers. Through the RealTick interface, users can also route trades to multiple brokers. Many financial institutions offer customers RealTick in conjunction with other electronic-trading platforms.

Online Broker News: Schonfeld Group, a proprietary and retail trading and investment firm, has acquired the Electronic Trading Group, further consolidating the high-end active-trader market. The Schonfeld Group historically has served traders who use their offices, rather than traders who work remotely. This acquisition extends the firm’s presence in the remote-trading business.

The numbers are huge at this end of the business. ETG’s proprietary traders and retail-trading customers trade on average 5 million shares a day, one-third of which are traded remotely. Schonfeld Group trades approximately 140 to 150 million shares per day, or 2% to 4% of all listed and OTC volume. Once the deal is done, Schonfeld will be home to approximately 1,200 active traders, nearly half of whom are retail.

Published in Barron’s September 12, 2005

Posted by twcarey on 09/12 at 01:02 PM
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