Thursday, 4 May 2017

Free courses on Financial Literacy and Financial Planning

For a bit of fun and revision I'm doing a couple of free courses currently available from that may be of interest to my readers.

One course teaches the basics of financial planning #O2SFinPlan , and another free course covers the basics of financial literacy #O2SFinLitrc .

Both courses started last week, but you can enrol at any time before the course ends and should be able to easily catch up. Each week covers a module via a series of ten short video presentations, and a short multiple-choice assessment quiz at the each of each week. If you complete the course and achieve at least 60%, you will get a statement of completion to print out.

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Tuesday, 2 May 2017

Net Worth: April 2017

A buoyant stock market and Sydney real estate market boosted my net worth again last month - my geared stock portfolio was up 5.79% ($13K), my retirement savings up 2.54% ($21K), and the estimated valuation for our home rose another 4.23% ($34K) despite Sydney real estate prices levelling off during April. Local factors (the announcement of 'NorthConnex', and the pending completion of the Northern Beaches Hospital) meant our suburb showed continued appreciation in real estate prices last month. Overall, my NW increased 3.15% ($67K) during March, which is comparable to my annual after-tax salary! Last time things were going so well was just before the GFC, and my NW chart is starting to look a bit like a 'bubble'.

Last month I toyed with the idea of purchasing a commercial (office) property in Forster (near our lakeside 'hobby' farm) as an investment, with potential to use to office for my own financial planning business when I 'retire' to the countryside. However, although the rental yield was quite good (~5.5%) on the two offices I was considering, the 'outgoings' (strata levy, rates, sinking fund) were considerable (of a similar magnitude to the rent). So, while the rental income would have been sufficient to pay the mortgage interest, and the tenant would be paying 75% or 100% of the 'outgoings', during any periods of vacancy it would have been a money pit. And an office in a country town can be very hard to let if there is a recession... So, in the end I decided to forget about investing in an office, and instead I'll use any spare cashflow to slowly paydown my existing investment loans.

Last month I added some Tesla share CFDs to my CFD account, as it seems to have considerable potential as a speculative investment. My total CFD account only has ~$1000 invested, so it is basically just a 'plaything' I can dabble with when I get bored. I want to leave my share portfolio and superannuation investments generally unchanged, as trading costs can be a huge drag on overall investment portfolio performance.

DW is still looking for a full-time position, and in the meantime is earning a few hundred dollars each week working a few hours each day as a 'nanny' for a local professional couple.

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Monday, 3 April 2017

Net Worth: March 2017

A buoyant stock market and Sydney real estate market boosted my net worth again last month - my geared stock portfolio was up 7.67% ($15K), my retirement savings up 2.43% ($19K), and the estimated valuation for our home rose another 2.33% ($18K). DW used part of her redundancy payment to pre-pay the next 15 months of her monthly interest-only home loan payments, so our mortgage balance showed a one-off reduction that will be slowly 'redrawn' over the next 15 months. Overall, my NW increased 2.72% ($56K) during March. DW is still looking for a new job, with no luck so far.

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Tuesday, 14 March 2017

1,000 Velocity Frequent Flyer bonus points

In case any readers are interested in joining the Velocity Frequent Flyer program, using this link will get you 1,000 bonus points when you open your new account. I joined up when I saw a promotional flyer while skiing last July, and got some bonus points for buying fuel at BP service stations when they were running promotions. As there's no annual or joining fee it's an easy way to get some additional 'frequent flyer' points. When I buy fuel at BP I 'double dip' by swiping the Velocity card to earn points for the fuel purchase (and sometimes quality for 'bonus points' offers) and then pay using my NAB credit card (which earns FlyBuys. points). As I only buy fuel at BP when I see that the price is as good or better than the price I'll get at Shell (with my Coles shopping docket discount) or Caltex (with my Woolworths rewards shopping discount), it is a rare example of really getting 'something for nothing'.

ps. Disclosure: If you join Velocity FF using the link both you and I will get 1,000 bonus points. ;)

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Friday, 3 March 2017

Good service from my 'bank'

Earlier this week I received a phone call from my bank letting me know that an old ~$800 cheque I'd written last month (and forgotten about) to pay DS1's school fees had 'bounced' due to there being insufficient funds in my savings account (there was over $60K sitting in my high-interest online account at the same bank, but I usually keep as little as possible sitting in my savings account as the interest rate is only 0.01% pa). I was told that I should transfer in enough funds to cover the cheque by 11am (the cut-off for same-day interbank payments) or else the cheque would automatically be dishonoured. I transferred some money between my accounts online, and noticed that at the time there was a $15 'insufficient funds' charge appearing on my savings account.

The next day when I checked online, the cheque had been 'cleared' and the $15 fee had been removed, so it looks like the bank's phone call saved me $15 and having to make alternative arrangements to pay the school fee. Hat tip to Qudos bank.

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Wednesday, 1 March 2017

Bitcoin newbie

Bitcoin (and many other cryptocurrencies) has been around now for many years, and after initially (still) being mostly used for nefarious activities and 'dark web' purchases (or maybe just geeks), it now seems to be getting more main stream. So I decided it was about time I had a play around with the ins and out of using Bitcoin. (I'll use the singular, as with 1 BTC currently being 'worth' about A$1547.59 I'm unlikely to have more than a fraction of one BTC any time soon).

To get started I first created a free Bitcoin 'wallet' on my smart phone (I chose to use Copay, but there myriad wallet apps out there - with a range of features, security, ease-of-use, platform availability, cost, etc.). So far so good, but having a wallet with 0 BTC in it isn't much use so I next had to look into how to get some Bitcoin to fill my 'wallet'...

Being a tight-arse I'm not about to spend any real money to 'buy' a Bitcoin, and I'm not sure that using my credit card on a site 'selling' bitcoins would be prudent. So, how to get some Bitcoins into my 'wallet'?

Well, the first (easiest) option seemed to be to install a free 'bitcoin maker' app onto my phone, and use it to 'earn' some BTC. Real 'mining' of Bitcoins isn't viable on a smart phone or even on a high spec PC (unless you join a pool and are content to earn a fraction of a fraction of a Bitcoin, probably worth less than the electricity spent on the computations). So the 'mining' app I've downloaded seems to do no actual 'mining', but instead requires tapping a button every 10 or 30 minutes to 'earn' 500 Satoshi (a 'Satoshi' is one 100 millionth of a Bitcoin, so 500 Satoshi is worth about 0,77c). When they are 'available' tapping the button also displays a 30s ad (presumably that is where the app developer is getting the funds to actually purchase some BTC). I seen numerous trailers for the movie 'Rings(3)', some road safety ads, and a large number of variants of candy crush/tetris... On second thoughts, while the app was easy to install, it certainly was easy to 'earn' the minimum 500,000 Satoshi required to make a withdrawal request. As it took about two weeks to 'earn' that half-million Satoshi (worth around A$10), I certainly won't get rich that way. I've also yet to see that transfer of funds arrive in my Bitcoin 'wallet' (according to the app it should take 'up to 10 days' for the transaction to be processed/added to the blockchain).

One thing I noticed in the first week of using this App was that the ads were using up a significant amount of my phone's monthly data plan (I ran out of data before the end of the month), so I now only turn on my mobile phone Data Connection via 3G when I don't have the Bitcoin mining app running. I initially thought that the 500kS minimum required to make a withdrawal was simply there to ensure the developer got maximum 'breakage' from users that loose interest before reaching the redemption threshold, but since then I've learned that each 'transfer' of Bitcoins incurs a small transaction fee (the amount depends on what priority/speed the transaction processing is assigned), which means that extremely small transactions would cost more to process than they are worth. Tapping the App every ten minutes soon gets very tedious, but its the sort of thing you don't mind doing while watching TV or going for a walk.

A second way of getting some BTC into my 'wallet' is to get people to 'donate' some -- so, in case any reader happens to use Bitcoins, here is a QR code for my 'wallet': some small test transaction would be nice ;)
( 11324np9vhfsWKaqrYHutakZxjqSgSQQrv )
Apparently this Bitcoin address is 'single use'. So after receiving a 'payment' via this address, a new one was generated for my Copay 'wallet', While that apparently is a good security/privacy feature, and would suit a merchant seeking a single payment (for example, for an invoice to be paid in BTC), it doesn't seem suited for use as a permanent 'donate' button on a blog etc.

I've yet to see if subsequent transactions made using this ID get processed OK...

A third way of getting some Bitcoins is to 'mine' them (a complex calculation to solve a 'block' which results in a set amount of Bitcoins to be created - currently 12.5 BTC/block). But to do that at a reasonable rate would require purchasing specialized hardware, which tends to become outdated/non-competitive very rapidly, so the pay-back period calculation is rather uncertain. The economics of 'mining' for Bitcoin is dependent on the cost of electricity (hence many Bitcoin mining 'farms' are places with sources of cheap power, such as Greenland).

I did install one 'Bitcoin Mining' App on my Windows Laptop, which 'mines' as part of a 'pool'. It does seem to actually be working (at a snail's pace), accumulating around 4,000 Satoshi worth of Bitcoin every second day (the minimum amount that gets automatically swept out of the account daily is 2,370 Satoshi, as apparently that is the smallest transaction value that can be processed). At least that transaction did appear in my Copay 'wallet' the next day - so I currently have a balance of 0.000032 BTC in my 'wallet' ;) The Mining app can be setup on up to ten different devices (using the same account details), so in theory I could have my various PCs 'mining' around 20,000 Satoshi/day (worth around 40c!). But the extra power usage would probably cost more than the Bitcoin production is worth.

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Net Worth: February 2017

Despite weakening during the last week on February, overall the Australian and International stock markets made gains during the past month, which gave a positive boost to the valuations of my geared stock portfolio and also to my retirement savings. House prices in Sydney continued to rise, although at a less frenetic pace, which resulted in another small increase in the valuation of my interest in our home equity. So, overall, my NW was up during the past month - reaching a new 'all-time high'.

Since being retrenched in January, DW has been enjoying spending more time at home and being able to meet DS2 after school every afternoon (the timing of her redundancy fit in nicely with DS2 starting at his new OC school and not attending after-school care). She is only just now starting to look for new employment opportunities. She was provided with access to a recruitment/career coaching service as part of her redundancy package, and has been taking the opportunity to update and polish her CV and get some tips on finding and applying for a new job. The Australian economy is still rather weak, and while the overall unemployment rate isn't too bad there has been a noticeable shift away from full-time permanent positions to part-time, casual and contract positions.

As usual the 'total debts' figure above doesn't include the half-million or so of margin loans, as the 'stocks' figure is the net value of my geared share and mutual fund portolio. The 'other real estate' figure is the valuation of the holiday home/hobby farm at the time I 'inherited' from my parents in 2013.

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Tuesday, 14 February 2017

Diet & Exercise update - 2017 Weeks 4-6

So far this year it's been more a case of 'No diet and not enough exercise' ;( For some reason I've simply been unable to cut out the junk food again, so despite my 'core' diet being according to plan, I've still been 'breaking' my diet plan most evenings after getting home from work by having snacks and some 'dessert' in addition to my planned dinner. The record-breaking run of hot and humid weather (many days in the 40s (Celcius) and with high humidity) have meant I've only done a fraction of my required daily walking - it's often been too hot to even walk 'laps' in front of my office building in the shade at lunchtime, and too still to hot and humid to go for an evening stroll. So I've had to make do with trying to do a couple of 'laps' inside our office building in the air con every 30 mins of so throughout the day. I spent a few hours in our pool on the weekend, but I haven't been swimming laps after work either, so I'm probably just using the temperature and humidity as an excuse for my inactivity. As usual, I'll try to stick to my planned menu today, and try to hit my 10,000 steps target. I should also swim some laps when I get home (although at the moment the heat and humidity has been replaced with heavy rainfall...)

.             Fibre      Carbs    Fat     Protein    kCals     Avg Wt   Steps
              g/dy       %        %       g/dy       /dy       kg       /dy
Week 01       41.4       58.8     21.0    136.7      3,134     97.2      5,368
Week 02       43.4       63.7     17.0    126.1      3,022     97.7      5,259
Week 03       38.4       63.3     18.7    128.8      2,972     98.1      5,931
Week 04       44.4       62.4     16.9    123.5      2,892     98.7      4,328
Week 05       41.7       64.4     19.3    116.3      3,029     98.6      5,292
Week 06       43.7       72.1     11.1    120.9      3,153     99.2      4,805

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Wednesday, 1 February 2017

Net Worth: January 2017

Very little overall change in NW during the past month, as the increase in estimated valuation for our home was offset by a slightly larger decrease in the value of my geared stock portfolio and superannuation fund balances.

DW's recent lay-off has emphasized the ephemeral nature of employment in the 'modern economy', and has prompted me to look again at my expenditures. I intend to try to stick to my 'shopping list' when grocery shopping (that would also help with my attempt to lose some weight!) from now on, and to avoid making any unplanned 'discretionary' spending. My goal will be to minimize my monthly CC bill and free up some surplus cash flow each month to slowly whittle away at the balance of my margin loan with the highest interest rate. While it won't  be a significant amount compared to my automated savings, every little bit helps, and can build up over time.

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Tuesday, 31 January 2017

Redundancy strikes again

Until yesterday DW and I were working for the same company, having both started there about 18 years ago. Then yesterday DW was 'offered' a redundancy package. Not much choice in the matter as it was presented as a fait accompli, with her current role being no longer required, and there apparently no other 'fit' found for her. At least the redundancy package was 'generous', adding up to almost 2 years worth of salary and DW was happy enough to sign and clear out her desk the same day. Personally I'm not overly impressed by the 'generosity' of the package, as the 3 weeks x 10 years of service (the maximum counted for redundancy payouts in this state) is pretty much a requirement under state laws, and the payout for unused accumulated annual and long service leave is also mandatory. And the four weeks pay in lieu of 'notice' is also fairly standard, as very few companies these days want workers to stay at work during the required 'notice' period, as they are afraid of disgruntled, laid-off employees getting up to mischief or their presence (dead man walking) being 'bad for morale'. All-in-all the only generous aspect was a couple of extra weeks payment 'ex gratia'.

As DS2 is starting school at his new 'OC' school today, DW is quite happy to be out of work and able to meet him after school. She isn't sure if she will do a TAFE course, have a go at starting up a home business, or just spend more time gardening. Whether or not she 'needs' to get another job will largely depend on whether or not the rental income from her 'off-the-plan' investment unit turns out to be sufficient to cover the interest payments on the 'portfolio loan' (against our home equity) that will be used to pay for the unit upon settlement this coming May-June. As I pay all the household bills her lack of income won't have any immediate impact. In the longer term, if she doesn't get another job she will end up not having as much as expected in her superannuation account to fund her retirement, and she also won't be able to pay down much (any) of the loan balance. If Sydney real estate prices continue to rise over the next decade or so that won't be much of an issue, but if there is a slump in prices she might end up owning a home unit that is worth less than her mortgage...

Of course DW getting laid off immediately made me wonder how secure my own position at the company is - but there isn't really much point worrying about it unless/until it happens. At the moment my role seems fairly secure, but that can easily change, often as a result of decisions made 'behind closed doors' that one is blissfully unaware of until the axe falls. It did prompt me to do a quick spreadsheet model of how I might be tracking with regards to funding my retirement if I was laid off tomorrow, and comparing it with the likely situation if I was laid of next year, or the year after, and so one...

It turns out that, making some reasonable assumptions regarding ongoing contributions rates while I'm still working, and the likely future rates of taxation and earnings on our superannuation investments (I've taken the average rate of return for the past ten years as a 'guesstimate' of possible future returns, given that this is lower than average rate of return for the past three years, or over the entire period of available data), I could 'retire' tomorrow and get a sustainable retirement income of around 80% of my current 'take-home pay' if I sold up my stock portfolio, paid off the margin loans, and added the net amount to my current superannuation balance. This 'sustainable' model assumed that I had to re-contribute around 2% of the fund value every year to allow for inflation, and that the balance of my superannuation account would be run down until there was no residual balance at age 100. (While that may be an optimistic lifespan, my paternal grandparents both lived until 94, and my parents are both alive and well and in their 80s). It also assumed a low rate of tax on superannuation 'pension' payments, which of course is subject to legislative risk.

If I do manage to keep my job for at least another couple of years my sustainable retirement income rises to around 100% of my current 'take-home' pay rate, and working any longer would mean that either a) I can fund a higher rate of 'pension' payments out of my superannuation during retirement, or b) I will be likely to end up with some residual balance, or c) my desired rate of pension will be sustainable even if investment returns are worse than expected, or if there are a couple of years of poor investment performance immediately after I 'retire'.

Of course even if I get laid off tomorrow I could probably find some gainful employment until my intended retirement age - either at some other job (probably involving more work for less pay), or possibly by getting qualified as a financial planner and having a go at starting my own financial planning business...

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