Net Worth MAY 2025

Chart updated to end of MAY in sidebar.

Stocks/cash increased $7,015 (+2.55%) to $281,827 but a large part of that increase was the bi-annual allocation of employee shares via the ESPP. I bought some VGAD and VVLU ETF units in my Vanguard Personal Investor account. I will 'rebalance' to my target 80:20 allocation via any future purchases (by varying the ratio of VGAD:VVLU units I purchase in each tranche. The good thing about the Vanguard Personal Investor account is that there is no trade fee when purchasing Vanguard ETFs, and only a flat $9 trade fee when I eventually sell the accumulated units in an ETF.

Retirement savings (SMSF etc) increased by $99,697 (+4.91%) to $2,128,487, partly boosted by the final $20K NCC made during the month.

Est. valuation of our home (my half) was unchanged at $1,191,911 (for the fourth month in a row). And the 'Other real estate' (my 'lake house' and the investment apartment) decreased by -$13,272 (-0.61%) to $2,165,400.

Other assets (my online depository bullion account at Perth Mint, and the bullion value of my gold and silver proof coin collection) increased by $1,182 (1.90%) to $63,275. I am currently adding $200 worth of gold to my Perth Mint online depository account each month.

Overall, NW increased by $94,622 (1.99%) to $4,828,909 during May.

Subscribe to Enough Wealth. Copyright 2006-2025

The insanity of IBKR

I thought I would setup a trading account with IBKR, with the intent to simply use it in future to make regular purchases of VDAL ETF units and making use of their advertised low-rate margin lending.

Turns out it was a total waste of my time and effort. In summary:

My wife already had an (unused so far) account with IBKR and sent me a 'referral' link, so I decided to sign up and test things out.

After signing up and transferring in an initial $2K to fund my account (and answering some questions about income and net worth) the automated sign-up process suggested I join as a 'sophisticated/ wholesale' account, rather than 'retail' account.

Looking at the info available about their margin lending, it *appeared* that the standard interest rate of 5.4% would apply, while a 1% 'surcharge' would be added for retail investors, so I thought 'why not sign up as a wholesale/sophisticated' investor if I get an extra 1% pa cheaper margin loan rate?

Turns out that:

1. I was not eligible for the $1K worth of IBKR shares as a new referral, as I am in the same household (address) as DW. I also didn't even get the normal $200 bonus available for any new account -- apparently as a referral from the same household I get even less than a 'walk in' new account!

2. The sophisticated/wholesale account application was 'pending' until I provided either a) a CPA (accountant) certificate regarding my assets/income meeting the requirements (I don't use an accountant, so that would cost me $110 -- and need renewal every 2 years), or b) get an SOA from a AFSL (while I am a registered financial advisor, I am currently 'between' AFSLs, and probably couldn't issue an SOA for myself anyway (and it would cost at least $500 to have one prepared by the paraplanner service at my old dealer group).

3. Further reading of the 'fine print' around the margin lending rates also revealed that the 1% surcharge is still applied to wholesale *individual* accounts, even if they are sophisticated/wholesale (so what's the point?)

So, I decided to cancel my application to change the default retail account to wholesale, so I could then immediately proceed with the process to change the default 'cash' trading account to a 'margin loan' trading account (and make my first test trade).

It was simply to apply online for the account type change, BUT they then sent out an automated email saying that since I didn't have an SOA, I would need to get a 'financial situation check' done by an associated third party. After sending in a copy of ID (driver's license') a second email then provided a link that I would need to use to provide that 'third party' with full access (login) to my main bank account -- so they could download and check my past 6 months of transactions! Sounds very risky to give some random 'third party' login access to my bank account(s)!!

And WTF - why a 'credit check' at all? - a 'margin loan' is secured against the value of the securities held in the account (and IBKR only has a modest LVR max of 50% in general), so there should be no need for personal financial info. This process would be something required if you were applying for an unsecured personal loan, not a margin loan.

Anyhow, I sent a rude reply to the email requesting I provide direct access to my main financial account, and withdrew most of my $2K deposit (I left a token $10 to keep the account open, in case they come back with some more sensible process), and will likely close the account.

All this for a modest $50K margin lending facility!

ps. I already have margin lending arrangements with three other margin lenders for a total credit limit of $900K, but the interest rates (between 9.4% and 10.2%) make use of margin uneconomic (except perhaps as a tax strategy to eliminate taxable dividend income and replace it with long term capital gains -- but at considerable risk). Looks like when I start investing my regular HEAS loan amounts (3.95% interest rate) I might as well not use 'double gearing' and instead just invest using my Vanguard Personal Investor account (where I can buy Vanguard funds and ETFs for $0, and only pay a $9 fee to sell Vanguard ETFs). If I make regular Vanguard ETF purchases there should be no trading fees, and only a single $9 fee when I eventually sell each holding.

Subscribe to Enough Wealth. Copyright 2006-2025

Benchmarking our SMSF performance

It is a bit pointless comparing how our SMSF has performed relative to others, as "it is what it is" to some extent. I can't jump into my time machine and change a decision made 15 years ago! But if our SMSF performance had been woeful, it might indicate that a change could improve future prospects. Fortunately our SMSF performance doesn't seem too bad -- at least in comparison to the median Growth Fund performance as reported by superguide.com.au

The data isn't quite comparable, as our SMSF annual performance (provided by eSuperFund) is for financial years, whereas the Median Growth Fund performance figures are for calendar years (they have financial year data behind a pay wall, but I am not going to pay $55 just to access the data).

The annual figures are shown below, along with historic 10-year trailing averages. The pattern shown from year-to-year is very similar, so comparing FY to CY doesn't appear to skew the comparison too badly.

The 10-yr averages show that our SMSF has outperformed the media Growth Fund by 1.06% - 2.39%. Which is line with the overall average historic annual performance since 2011 -- 9.52% vs. 7.85%. Part of this is likely due to our asset allocation being slightly more 'High Growth' than 'Growth', as shown by the higher stdev (8.27% for our SMSF vs. 6.43% for the median Growth Fund). But we are not taking on all that much extra risk (volatility) as the 2SD range is -7.03% to +26.06% from our SMSF (meaning we could expect the annual return to fall within this range 95% of the time), while the range for the median Growth Fund is quite similar: -5.01% to +20.71%. Personally I would be just as sanguine about a -7.03% negative return as a -5.01% negative return. Even the -3SD performance wouldn't be that much different: -15.3% for our SMSF vs.  -11.44% for the median Growth Fund.

Aside from slightly higher risk (and hence return), the other reason our SMSF performance is slightly better is likely due to the SMSF being quite low fees. The investment fee is only 0.29% (investing mostly in Vanguard Index Funds) and the overall admin fee for our SMSF works out to be only 0.063% based on our current balance.

Whatever the root cause for the performance differential (I won't claim it is due to my brilliant investment selection or occasional attempts at 'market timing'), over a 30-year timeframe the difference would be quite pronounced. A $100K lump sum invested with 9.52% average ROI would result in $1,528,598 vs. $100K invested with 7.85% median Growth Fund performance would result in only $965,171. That would mean the end result would be 58% more to fund retirement after 30 years!

All in all, our SMSF performance has been quite satisfactory. Which is better than the alternative ;)

Subscribe to Enough Wealth. Copyright 2006-2025

Got bored and did a trade

I was bored and clicked on a link to an MSN watchlist idea re 'Large-cap Growth'. It consists of five companies (WiseTech Global, Fisher, Paykel Healthcare, Xero, Pro Medicus and REA Group). The 1-year return was +42.59% and a quick glance at the 5-year chart shows +317.11% growth, and for maximum available historic performance (since 2016) +1,848.25%. Past performance is not an accurate predictor of future performance, but what is... it is all guesswork and good luck.

I decided to transfer $2,500 into my superhero trading app and placed a market order to buy $500 of each stock. We'll see tomorrow if the order is filled, at what price(s). I don't even know if these trade via the app as fractional shares, or if the orders will be rounded down to the nearest whole number of shares.

In any case it is just a minor experiment and we'll see how it pans out over the next 3-5 years. From highs reached in Feb this watchlist had dropped by -24% to a low point on 7 April, and are still down 11% from the Feb highs, so it either a case of buying a dip on an ongoing uptrend, or buying a dead-cat bounce on the way down.

I already had used $1,000 in my superhero trading app to purchase some VanEck Australian Long Short Complex ETF and Vanguard MSCI Index International Shares Hedged ETF last September, so I now have a total of $3,500 invested in my superhero app account, with roughly $500 invested in each of:

ALFA.AU, VGAD.AU, WTC.AU, FPH.AU, XRO.AU, PME.AU and REA.AU

The historic 1-year performance for this 'portfolio' would have been +34.83%, and for past 3-yrs +125.06%, and for past 5-yrs +238.45%. We'll see how this turns out in a few year's time.

The tax reporting shouldn't be too onerous, as I have provided my TFN to superhero when I setup the account, so the ATO should get the required annual data via the 'prefill' function.

Subscribe to Enough Wealth. Copyright 2006-2025