Thursday, 11 September 2014

Learning Judo after a forty-year break

The Judo club that my sons attend on Saturday afternoon is planning to run another 'adult beginner' course (lasting 10 weeks) next term (starting about four weeks from now), so I've decided to attend the lessons and see how it goes. I did Judo for a year or two when I was in High School, and as I have to spend a couple of hours watching the kids at Judo most weekends anyway, I thought that I may as well join in (the adult course is being run concurrently with the older kids class). I still have a Judogi from when I made an aborted attempt to resume Judo training in my late 30s (the class was full of twenty-something 'alpha males' and a bit too 'gung ho' for my liking), so the only cost will be $120 mat fees for the 10-week course, plus $120 to join the NSW JFA for a year.

The standard adult class seems reasonably accomodating of older players (there are several black and brown belts that are around my age or even older), so hopefully I can survive the adult beginner class if I don't 'over do' it. If nothing else, the decision to resume Judo training has given my diet and exercise regime a new focus, with a very short time frame in which to shed as much excess weight as possible and do daily aerobic exercise (5BX) and attend the gym until my current membership expires on 10 October.

If I enjoy (and survive) the beginner course I plan to keep attending lessons once or twice a week, and aim to eventually get a yellow and perhaps an orange belt, but I doubt that I'll be able to progress beyond that level even if I keep training indefinitely, as progressing to the higher Kyo grades require attaing some competition points and even the 'masters' competitions (for over-30s) are likely to put me in hospital!

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Tuesday, 2 September 2014

Net Worth: August 2014

The past month saw little change in the value of my stock portfolio or SMSF, as the markets dropped mid-month and had only just recovered to the previous month's close by the end of August. On the other hand, Sydney property prices have continued increasing, so my overall net worth got a boost from two month's worth of increase in the valuation of our home (as the monthly sales data were not available when I did last month's net worth calculations). Overall my net worth increased by $18,426 - which seems impressive until you realize that simply keeping pace with inflation (around 3% pa) would require a monthly rise of over $4,000.

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Monday, 1 September 2014

Cancelled my gym membership (again)

I had joined the local Crunch Fitness gym with high hopes of regularly attending and getting my money's worth for the modest $15 per fortnight fee. Unfortunately I only managed to get to the gym once every couple of months or so for a couple of reasons:
* the location isn't on my normal route home from work, so it meant an extra half-hour detour on the way home if I wanted to go to the gym after work,
* I couldn't attend three days a week in any case, due to having to collect DS2 from after-school care immediately after work and then prepare the kids dinner on those days that DW works (and usually has to work back), and
* there wasn't any car parking at the gym, which meant parking at a nearby shopping center car park and walking ten minutes to get to the gym - not really an issue, but not much fun during the recent heavy rain storms we've been getting in Sydney.

In any event, I've increased my fitness walking to a brisk 30 minutes every lunchtime at work, and also a couple of extra 30 minutes walks around our local streets after dinner several times a week. While hardly an aerobic work-out compared to spending 40 minutes circuit training at the gym, as long as I ensure I get at least 30 minutes of brisk walking done every day, and some longer walks on the weekends, it is better than nothing, and should help improve my fitness as I gradually lose weight through dieting (a cross between a daily 'standard' diet plan of around 2200 kcals that is a modest version of CRAN, and a couple of low-cal days (of around 1,500 kcals) along the lines of the 5:2 'FAST' diet, and periods when my diet goes out the window and I revert to my 'bad' old habits of eating junk foods and snacks). And when the weather is fine I can go kayaking around middle harbour with DS1, bush walking in the nearby national park, or take the bike for a spin.

All in all, it just didn't seem worthwhile paying $30 each month in gym fees when I was never getting to the gym! And in a few months time it should be warm enough again to swim laps in our backyard pool...

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Thursday, 21 August 2014

Macro Timing the Stock Market

Many years of stock market investing have proven to me that I am unable to 'pick' individual stocks that will out-perform, and I also can't 'pick' individual funds or fund managers that will consistently out-perform the general stock market (assuming that such funds or fund managers actually exist - there is a body of evidence that suggests that hardly any funds or fund managers 'beat' the relevant index after taking fees into account, and that the few that do are probably the result of random chance rather than intrinsic skill). However, having decided to (mostly) stick with investing in 'the index' (or in the case of our retirement savings, investing in a mix of indexes via the Vanguard 'High Growth' index fund that provides some automatic, low cost, rebalancing  between the various 'growth' indices - Australian shares, International shares, property, bonds etc.) I'm still left wondering if there is some way to 'time' alterations to our investment portfolio. Such as deciding when to be 'fully invested' (or even 'geared' into investments) and when it might be prudent to eliminate gearing or even move partially into 'risk free' investment in fixed interest.

As the stock market is, broadly speaking, a measure of a nation's private wealth-creation, it would seem plausible that the total stock market (eg. the 'all ordinaries' stock market index, XAO) would be correlated to the nations per capita GDP. And, indeed, a plot of this data (obtained from by selecting the 'Australian Nominal GDP per capita' and 'Australian Stock Index' options for the period 1950 to current) on a logarithmic scale, show that the XAO generally moves in line with the per capita GDP.

What is most interesting is that from this chart it seems quite obvious when the stock market was 'fundamentally' over-valued in the post-WWII period (such as in the late 1960s, in 1987 and in 1999-2001 and again in 2005-2008). The plot suggests that it was a very good idea to reduce leverage/gearing or even to short the market during 2007 to protect against a major correction (my biggest investing cock-up was failing to roll-over my index put options in late 2007), and that at present the Australian stock market isn't particularly over-valued. Indeed 2009 and 2012 look as if the were probably good times to be investing in the Australian stock market.

As I'm already fully invested (and with a bit of gearing into Australian stocks outside of our superannuation investments) the graph doesn't really provide me with much immediately useful information. But such a plot may help 'ring the bell' the next time the stock market is 'expensive' and it is a good time to move my asset allocation towards cash and fixed interest investments. It may also be a good tool for my sons to use when managing their investment asset allocation over the coming decades....

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Saturday, 9 August 2014

Earn 30% return with no risk!

Well, of course its not quite as good as it sounds, but, if you open a new ANZ Acess Advantage account before the end of this month (31 August 2014) AND deposit at least $2000 into the account by the end of next month (30 September 2014) AND log in to ANZ goMoney or online banking before the end of next month (30 Sep) THEN you will receive $100 from ANZ. Which, assuming the $100 is deposited soon after the end of September, means you could earn $100 on your $2000 deposit within two months and then close the account^ you would achieve an annualised return of more than 30% pa on that $2000 deposit!

To apply online you can visit

Not too shabby considering the online application process only takes a couple of minutes to complete, and, presumably, you can deposit the $2000 into the new account via EFT. The process was relatively painless because I am already an ANZ customer (via our SMSF bank account), so I probably don't need to visit a branch to satisfy the 100-point ID check that would be needed if you don't have an existing relationship with ANZ bank.

The account is available to persons over 12 years old, so I may also let DS1 know about this offer - a much easier way to earn $100 than spending two hours busking or a week of early morning newspaper round.

^ to avoid the usual $5 monthly account-keeping fee -- unless you want to keep the account open, in which case you can avoid the account-keeping fee if you have $2000 deposited into the account each month eg. have your salary paid into that account.

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Sunday, 3 August 2014

An 'interim' pay rise - hip, hip, huzzah!

After being told late last month the our company's annual pay review (that was normally conducted every June under the previous ownership) would be deferred until Dec/Jan to bring it in line with the US parent company procedure, it was announced last week that we would all be getting a 'cpi' increase of 3% back-date to 1 July, and that there will be also be an official round of 'pay and promotions' reviews done in December. While the amount of money involved isn't large, its a relief to see that the change in annual performance and salary review scheduling isn't being used to implement a 'de facto' pay freeze.

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Saturday, 2 August 2014

Net Worth: July 2014

This month's net worth calculation is slightly less accurate than usual as the stocks figure was negatively impacted by a significant capital return (of around $10,000) from IPE (I don't include my cash account balances or current credit card balances in my monthly calculation as they generally have little net effect). In addition, the estimated market valuation for our home was not updated as the average sales price data for our postcode was not available this month, so I used the same figure as last month. In reality there is likely to have been an increase in the estimated valuation of around $15,000 based on the RPData average sales price index for our city.

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Sunday, 6 July 2014

Tiny fish in a massive pond

The sale of the private marketing company I work(ed) for to a large Multinational Company was finalized on 30 June (end of the Australian financial year), and we were treated to a bit of a motivational session/corporate ethics intro by the incoming management team one afternoon last week, followed by a hello/goodbye social event (drinks and finger food) hosted by the outgoing owner and the new management on the following afternoon/evening. I was pleasantly surprised to get a thank you card and a cheque for a gift of $5,000 from the departing owner, a nice gesture since the sale had been finalized a few days previously and she could have just ridden off into the sunset without a backward glance. DW also received a thank you card, but her cheque was for $2,000 - presumably because she works part-time (3 days/week), given that she's worked for the company a few months longer than I have (more than 15 years).

So, I now officially work for a regional specialist branch office of a large multinational 'Fortune 500' company, that has around 10,000 staff globally. I expect there will be some major changes not too far down the track - they are planning to spend the next 2-3 months with an interim management structure in place while they go through the 'integration' process and work out what changes to implement by the end of this year. I don't think the 'integration' will be a particularly pleasant experience for the 400 or so staff that are the 'integratees', given that the parent company generated about $300K profit per existing employee. The figures for the private company weren't public, so I don't know exactly how much profit per capita it made, but I'd guess it was only around $100K per headcount, or less. So I'm sure 'head office' will be expecting to implement major 'efficiency gains' during the first year. Although there is apparently a sizable budget earmarked for growing this regional business, the initial signs don't suggest that they are going the spend very much of that budget on staff remuneration. It was quite amusing to hear during the introduction session that the new owners were 'surprised' to learn that our company routinely does that annual performance review/remuneration review cycle in June - we normally get our annual salary letters in the first week of July. The parent company follows the US practice of doing its compensation reviews in Dec/Jan - so it looks like we are getting an 'accidental' pay freeze for the next six months!

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Net Worth: June 2014

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Wednesday, 4 June 2014

Beware "low" fees on Superannuation accounts

While the Australian Superannuation system has a lot of good features (practically universal coverage, tax advantages in exchange for preservation until retirement age, providing some mitigation of the impact of the aging population on the cost of the aged pension system, encouraging workers to plan for their retirement, and a reasonable rate of enforced savings of current salary income towards retirement) it also has some bad features (such as complex tax rules, changes to rules over time eroding confidence in the system, the tax benefits being negligible for below AWOTE workers, and the biggest tax benefits being available to those who probably wouldn't get the aged pension in any case and don't need any encouragement to save for their retirement - for example the ability to make a $150K pa 'after tax' contribution into superannuation provides a 15% tax rate environment to high income earners who would otherwise be exposed to the top marginal tax rate on investment income if it was invested outside of the superannuation system). And one of the worst features is the often excessive fees charged by superannuation fund administrators (especially the 'retail' funds).

A side effect of the generally outrageous fees charged by superannuation funds is the growth of so-called "low fee" funds that many retail funds have set up to stem the flow of superannuation savings away from retail funds and towards Industry (trade union) superannuation funds and self-managed superannuation funds (SMSFs). However, not all "low fee" funds are particularly good value! As a random example I had a look at the Suncorp Everyday Super Fund that is advertised as being a "low fee" superannuation fund.

Suncorp Everyday Super charges an administration fee of $1.50 per week plus 0.65% of your balance. And for the Suncorp Lifestage Fund investment option there is an 'Investment Fee' of 0.2%.

While 0.65% admin fee is certainly a lot lower than many retail funds (some charge around 1.50% administration fee), it still can excessive for anyone with a signficant amount accumulated in their superannuation savings. For example, with my current superannuation balance of around $600K, a 0.65% 'admin' fee would cost me $3,900 every year! By comparison, our SMSF administrator charges $699 pa for admin (including audit report costs), and even with the extra SMSF 'supervisory levy' charged by the ATO (a ridiculous $259 from 2014), the total 'admin' cost of $958 for our SMSF is less than 0.15%.

The 'sticker' cost of 0.2% Investment Fee for the Suncorp Lifestage Fund may appear to offset some of the higher admin costs, given that in our SMSF the Investment Management Fee charged by Vanguard for the LifeStrategy HighGrowth (Index) Fund is around 0.4%. However, drilling down into the Suncorp Lifestage Fund 'Profile' reveals that there is a 0.85% 'Management Fee' embedded in the Lifestage Fund.

So, overall, putting $600,000 into a SMSF and investing in a 'growth' index fund investment option would cost around $3,458 pa, whereas having the same amount in the 'low fee' Suncorp Everyday Super Fund and invested in the Lifestage Fund would cost you $1200 'up front' as an Investment Fee, and then an annual cost of around $9,000. A difference of over $5,500...

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