Monday, 23 January 2017

Diet & Exercise update - 2017 Weeks 2-3

I hadn't managed to get back into the swing of sticking to my diet plan, so my weight continued to creep up for the past couple of weeks. Aside from eating some junk food, I think a lack of exercise due to the recent run of hot (38C+) and humid weather hasn't helped - I haven't been going for long walks at lunchtime or in the evenings, or doing my weekend session of squash with the kids while they were staying with my parents up at the lake house.

Now the kids are back in Sydney and school term is about to start, things should settle back into the normal routine. I managed to get the pool filter working again last week, and finished cleaning the pool on the weekend, so I'll do some laps after work if it is too hot to go for a walk.

.             Fibre      Carbs    Fat     Protein    kCals     Avg Wt   Steps
              g/dy       %        %       g/dy       /dy       kg       /dy
2017
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

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Friday, 20 January 2017

Benchmarking my NW performance

My usual benchmark for NW performance is to compare it to the 'cut-off' NW reported in the annual BRW 'rich list'. However, that benchmark has a couple of deficiencies:
- the cut-off is for a fixed number of 'richest' Australians, which due to population growth becomes a more and more selective group, hence pushing up the 'cut-off'
- the NW estimates in the 'rich list' are estimates of debatable accuracy

I therefore view it as more of an aspirational target than a realistic benchmark of my NW performance.

The annual HILDA report that came out last year offers a more robust metric for comparison - Table 5.1 in the report provides Australian household net worth estimates (based on a statistically significant sample), for the years 2002, 2006, 2010 and 2014. The values of mean, median, top10% and top1% are provided in '2014' dollars (ie. adjusted for inflation).

For comparison purposes I used my monthly NW estimate from networthiq.org to calculate my average annual NW figures, and then used the online inflation calculator from the ABS to calculate the equivalent values in constant 2014 dollars.

Plotting these NW values against the mean, median, top decile, and top "1%" figures from the HILDA report show that my NW suffered more from the GFC (due to my use of gearing in my stock portfolio I presume), but bounced back by 2014. However, while my relative NW increased substantially vs. the mean (up 51%), median (up 50%) and top deciles (up 44%) between 2002 and 2014, it barely 'kept pace' with the household NW reported for the top "1%".

But looking at the 2010 figures, my relative performance was down slightly vs. the mean (down 9%), median (down 14%), and top decile (down 8%) groups, but substantially worse that for the top "1%" (down 43%). So I'm hopeful that going forward my NW should also gain ground vs. the 'top 1%' metric. I'll have to wait until the 2020 HILDA report to find out!



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Thursday, 19 January 2017

Adapting William J. Bernstein's book "If You Can" for Young Australians

After dabbling with stock picking and then fund/fund manager picking (and not doing very well at either), I eventually arrived at the same sort of conclusions as William J. Bernstein - pick a suitable asset allocation and invest via low-cost 'index' funds. He recently published a nice small volume of investment advice for 'Millennials', but it is a bit too 'US-centric' (eg. 401K plans and so on) to be immediately applied by young Australian investors. With that in mind, I decided to have a look at how the principles expressed in Bernstein's book could be employed by my sons when they start a career and begin to think about saving and investing.

In a nut-shell, Bernstein's advice for (US) Millennials is simply to:
* save 15% of your (pre-tax) salary annually, and invest it.
* invest it in equal proportions in: domestic stock market index fund, international stock market index fund, and domestic bond market index fund.
* rebalance each year to maintain equal proportions in these three asset classes.

For Australians, the tax system provides substantial benefits for investing inside superannuation. And 9.5% of salary is directed automatically intro superannuation via the 'SGL' (superannuation guarantee levy) for most employees. This can be 'topped up' to the 15% target by arranging to have another 5.5% (or more) of salary directed into superannuation via 'salary sacrifice' (bearing in mind the $30K pa 'cap' on concessionaly taxed contributions (SGL+SS))

However, for Australians, the plan's assumption that half of retirement income needs will eventually come from 'social security' isn't correct, as our 'aged pension' system is both means and assets tested (and while the US social security system in underfunded, our aged pension system is completely unfunded - relying on current tax payers to pay for the aged pensions of retirees -- not a great situation given the aging population and shrinking proportion of taypers:retirees). So perhaps the required rate of savings for Australian Millennials needs to be a bit closer to 30% of salary than 15%. (But this isn't quite as bad as it seems, given that US workers also have around 7.65% deducted for social security and medicare).

Now, in terms of how to invest those savings in the proportions suggested by Bernstein, one could invest in the Vanguard 'growth' index fund, which has the following 'target' (strategic) asset allocation:

35% domestic stocks/property:
Vanguard Australian Shares Index Fund (Wholesale) 31.0%
Vanguard Australian Property Securities Index Fund (Wholesale) 4.0%
35% international stocks/property:
Vanguard International Shares Index Fund (Wholesale) 24.0%
Vanguard International Property Securities Index Fund (Hedged) (Wholesale) 4.0%
Vanguard International Small Companies Index Fund (Wholesale) 3.5%
Vanguard Emerging Markets Shares Index Fund (Wholesale) 3.5%
30% fixed interest:
Vanguard Australian Fixed Interest Index Fund (Wholesale) 12.0%
Vanguard International Fixed Interest Index Fund (Hedged) (Wholesale) 12.0%
Vanguard International Credit Securities Index Fund (Hedged) (Wholesale) 6.0%

nb. Fees: 0.90% on first $50K, 0.60% on next $50K, then 0.35% on balance over $100K.

This is fairly close to the recommended three-way equal split, and would not require any rebalancing as the fund automatically maintains the asset allocation within a fairly tight band. Some of the growth asset allocation is into 'property' rather than shares, but over the long term that should not have much impact on overall return, and may add some additional diversification benefit.

Alternatively, Australian investors could invest in the relevant Vanguard listed ETFs to get the desired asset allocation. Some examples:
VGS: MSCI World ex-Australia
VTS: CRSP US Total Market Index
VUE: FTSE All-World ex US Index
VAF: Bloomberg AusBond Bank Bill Index
VSO: MSCI Australian Shares Small Cap Index
VLC: MSCI AUstralian Shares Large Cap Index
VAS: S&P/ASX 300 Index

However, while the management costs are low (0.05% - 0.30% pa), there may also be a cost to purchase the ETFs via a broker (eg. CommSec), which would rule out making multiple, small purchases on a regular basis. One disincentive to moving out of the 'growth' index fund and into a mixture of ETFs is that some capital gains might be realized (although the rate of capital gains tax is fairly low within a SMSF).

Once DS1 is old enough to become a member/trustee of our SMSF, I'll add him to our SMSF and arrange for his current 'retail' superannuation fund balance to be 'rolled over' into our SMSF. Our SMSF doesn't quite have the asset allocation recommended by Bernstein - it has around 4% invested in cash (in an ANZ V2Plus account paying a silly 0.75%) to provide a 'float' for any SMSF tax bills, and the rest is invested in the Vanguard Lifestrategy 'High Growth' fund. The fund is around 90% invested in 'growth' assets, and only 10% invested in fixed interest. By the time DS1 finishes uni (he is only doing his HSC this year, and plans on doing a 5-year 'double degree' and possible then a 1.5 year masters) and has substantial superannuation contributions flowing into our SMSF, both DW and I will be close to retirement, so we may review the SMSF asset allocation at that time. Once the bulk of the SMSF is in 'pension mode' any capital gains tax implications arising from moving out of one Vanguard Fund into another will be insignificant.

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Tuesday, 17 January 2017

My current Portfolio of ASX listed investments

I'm a fairly passive investor in the stock market, so aside from some small changes in holding quantities due to dividend reinvestment plans, the only substantial changes since I last posted my stock portfolio details in 2015 are a large decrease in the value of my IPE holding (due to some substantial returns of capital as the fund is slowly wound up), and the liqudation of my holding in the Berkshire ETS last year. I also added small holdings of AFI and ARG in mid 2016, which are both listed investment companies, in order to reinvest some of the cash into the market.

LEML account: (17.JAN.17)
CODE QTY Company Name Mkt Price Mkt Value
AGL 1035 AGL Energy Ltd A$22.03 A$ 22,801.05
ANN 480 Ansell Ltd A$24.25 A$ 11,640.00
ANZ 2149 ANZ Banking Ltd A$30.04 A$ 65,329.60
BHP 748 BHP Billiton Ltd A$26.92 A$ 20,136.16
CYB 236 CYBG PLC A$ 4.67 A$  1,102.12
NAB 1013 National Aust Bank A$30.73 A$ 31,129.49
QBE 1572 QBE Insurance Ltd A$12.295 A$ 19,327.74
S32 748 South32 Limited A$ 2.81 A$  2,101.88
TWE 1250 Treasury Wine Estate A$10.43 A$ 13,037.50
------------
Market Value sub-total A$186,605.54

CSML account:
AFI 5000 Australian Foundation A$ 5.93 A$ 29,650.00
ARG 4000 Argo Investment A$ 7.61 A$ 30,440.00
IFL 2000 IOOF Holdings A$ 9.26 A$ 18,520.00
IHD 1000 IShares ASX Div Opport A$13.86 A$ 13,860.00
IPE 244000 IPE Limited A$ 0.17 A$ 41,480.00
RDV 500 Russel High Div Au Shrs A$29.99 A$ 14,995.00
STO 3750 Santos Limited A$ 4.06 A$ 15,225.00
WBC 490 Westpac Banking Corp A$32.75 A$ 16,047.50
WPL 239 Woodside Petroleum A$32.02 A$  7,652.78
------------
Market Value sub-total A$187,870.28 
============

Market Value total A$374,475.82

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Tuesday, 10 January 2017

Diet & Exercise update - 2017 Week 1

Well, although I managed to follow my diet plan for the first five days of 2017, averaging 2,448 kcals/day, I then ate way too much on the three days I was visiting my parents at our lake house. I also didn't walk very much while at the farm (although I did a couple of hours tractor driving slashing overgrown paddocks). So overall 'week 1' of 2017 was rather mediocre, with too many kcals/day energy intake and not enough walking. And didn't play squash on the weekends we were out of town. The weather has been too hot and humid to go for long walks at lunchtime (or even in the evenings), and unfortunately to pool pump and salt chlorinator have been playing up again, so our pool is a bit too 'green' to swim laps after work. I spend some time acid washing the salt chlorinator sensor on Sunday, and hopefully that gets the pump working again and I can give the pool thorough clean up.

I have three air pistol competitions coming up in February/March, so I need to make sure I start doing SCATT training and 5BX every day.

.             Fibre      Carbs    Fat     Protein    kCals     Avg Wt   Steps
              g/dy       %        %       g/dy       /dy       kg       /dy
Week 41       42.2       65.9     16.8    120.9      3,107     96.2      9,767
Week 42       43.3       62.6     22.3    129.5      3,488     97.3      5,317
Week 43       40.8       53.5     24.7    108.3      2,755     97.0      6,007
Week 44       36.9       52.4     24.1     97.1      2,856     97.1      4,481   
2017
Week 01       41.4       58.8     21.0    136.7      3,134     97.2      5,368

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Thursday, 5 January 2017

Why Aussie share investors hate US share investors

Well, not actually hate them, just envious.

As can be seen in the chart below, Investors in the Aussie share market have basically gone nowhere since the start of 2007. That's right, practically 0%  gain over the past decade. In comparison, despite the impact of the GFC (which the US caused, just to rub salt in the wound) the US S&P-500 index has made a respectable 60% or so gain since the start of 2007. Go figure.




Sure the Australian 'mining boom' came to end during the past decade. And the economy suffered a lot from the GFC. But even so, we haven't had a recession for more than a quarter of a century, and our GDP is actually up considerably since the GFC. In fact, the Australia stock market since the GFC has performed eerily like it did during the Great Depression.

To make matters worse, I invested shares with gearing, so I've been paying interest for the privilege of making no money for the past decade! And DW is more interested in property investing than the stock market, so I can't even whinge about the poor stock market performance without getting an "I told you so" ;)



source: http://www.treasury.gov.au/  - 19th Annual Colin Clark Memorial Lecture

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I bought a raffle ticket

While I usually don't gamble, I couldn't resist the temptation to buy a $10 raffle ticket being sold be Cessnock Pistol Club (to be drawn at the Nationals in April). I saw their ad for the raffle while processing my entry in the ISSF Vintage competition (not sure why it is called 'vintage') being held next month. As they are only selling 400 raffle tickets, and the prize is a voucher for a $3600 Pardini pistol, each ticket is notionally 'worth' 1/400 x $3600 = $9. So the cost of $10 seems reasonable. Most lotteries payout around 50%-70% of their ticket sales revenue in prizes, so a $1.30 'Oz Lotto' ticket, for example, is only 'worth' around 80c on average. Of course the reality is that there is a 99.75% probability (399/400) that I've simply thrown that $10 away ;)

If my air pistol results at competitions this year warrant it, I am thinking about upgrading my ~30 year old Feinwerkbau model 100 air pistol - possibly getting the new Steyr Evo 10 air pistol (which replaces the Steyr LP10 that seems to have been the most popular choice at World Cup, Olympic and Commonwealth Games air pistol competitions in recent years). I checked with the company that will be redeeming the raffle prize voucher, and it can be redeemed for any pistol of similar price. So, if I do happen to win the raffle, it would save me having to spend ~$3000 for a new air pistol.

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Tuesday, 3 January 2017

Net Worth: December 2016

Happy New Year! The Trump/Santa Claus Effect saw global share markets continue to appreciate during December, resulting in my geared stock portfolio and my retirement savings each increase by more than $30K during December. There was no price data available for our suburb (apparently due to few people willing to sell their properties while the hospital precinct rezoning is being finalized, rather than a lack of buyers), so our 'estimated' price for our home was unchanged last month. As I didn't make any capital improvements to my rural property, than too saw its 'book' price remain unchanged.

Overall, my net worth just passed the A$2m mark. So I'm officially a 'multimillionaire' (for the moment). Just goes to show how little 'millions' are worth these days. I still have a (small) mortgage, I still take a packed lunch to work, and I'm still a 'wage slave' hoping that I don't get retrenched before I reach my planned retirement age (~67-70). As I'll be 'too rich' to qualify for a part-pension or benefits card when I reach retirement age, having a reasonably comfortable retirement will rely on having my mortgage paid off and having retirement savings that (at current interest rates) will generate around $25,000 pa income. Hardly the jet-setting lifestyle the term 'multimillionaire' normally brings to mind? If I do keep my job for another 10-15 years I should be able to build up my retirement savings sufficiently to have an after-tax income in retirement close to my take home pay. One side-benefit of making large salary sacrifice contributions into superannuation is that one is acclimatised to a more modest 'pay packet'.


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Sunday, 1 January 2017

Diet & Exercise update - Week0 2017

I managed to avoid overeating too much during the xmas break, so I'm starting 2017 about 10 kg lighter than at the start of 2016 (but about 10 kg more than where I got to mid-way through the year). My best weight was achieved around the time we went skiing and I did the City2Surf last August, but since then I've been very slack about sticking to my diet plan, and the weight has slowly been creeping up again. So far in 2017 I haven't eaten any junk food - so the trick will be to continue that throughout 2017 (and the rest of my life)!

We drove up to the lake house on Christmas Day, and spent a few days relaxing with my parents. The boys there with my parents for a couple more weeks, while DW and I go back to work on Tuesday. We'll drive up again next weekend, and then we'll collect the boys the following weekend and bring them back to Sydney.

I didn't do any target shooting practice or much walking while at the farm - it was too hot to go for long walks in the day, and there were a few too many mosquitos about for a pleasant evening stroll. But I did chop down some lantana and I spent a couple of hours on the tractor slashing one of the paddocks. We also did some gold fossicking in a local state forest (didn't find any gold in the samples of dirt we collected), so at least I got a bit of exercise while at the farm.

As today is the first of Jan I'll make sure I reach my daily step-count goal of 10,000+ steps/day, and also make sure I do my daily 5BX and do some SCATT air pistol training before midnight.

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Saturday, 24 December 2016

Air Pistol Training: Dec 2016

My daily air pistol training sessions (~1hr every evening using the SCATT for 'dry fire' practice) seems to be slowly improving my results. I've been tracking the summary results from my SCATT sessions and my weekend shoots at the local air pistol club, and there seems to be a trend towards better scores. Aside from strengthening the specific muscle groups used to raise and hold a pistol steady during an hour, I presume the result is mostly due to improved hold (a somewhat smaller arc of movement, as shown by the SCATT 'trace length' graph) and more consistent trigger release (few 'wild' shots resulting in 8s or 7s due to trigger 'jerk', and hence more 10-shot 'cards' that end up with scores in the low 90s, rather than in the 80s).

The plots below (on the left) show histograms of 'card' totals for the first, second and third sets of 20 practice and club match shoots. They show that when I first started shooting regularly a couple of months ago I was often having a 'card' with a score in the low 80s. By the second set of twenty sessions I had reduced the number of 'bad' cards considerably, and was mostly shooting in the low-mid 90s, with a handful of cards in the 95-97 range. The third set of twenty sessions (which is still in progress) shows that although I am still having the occasional bad card (below 90) on an 'off' day, I have increased the percentage of cards in the 95-97 range to the extent that it is almost the same as the percentage of cards falling into the 89-91 range. My end goal would be to shoot nearly all cards in the 92-94 and 95-97 range, and occasionally get a card of 98-100.

At the national championship level, shooting all 95-97 or better per 'card' is required. And at world championship level nearly every series of ten shots would have to be 97 or above to even make it into the finals!


A review of some SCATT traces from last night's practice session shows where I still need to improve my shot consistency. The first plot  below shows what a typical  'good' (for me) shot looks like - with a small AM (the 'hold' area in green) settling well within the 9-ring, and the final second (yellow trace) lying mostly within the 10-ring, and then the trigger release (blue line) being smooth and not displacing the point of aim. Ideally the follow through' (red) trace would show that I maintained my hold until after the shot away.

The second trace shows a more typical shot, with a larger AM (more wobble in my hold), possibly due to slight changes in stance, grip, breathing etc. resulting in a '9'.

The third trace shows the problem of occasional trigger 'jerk' that I need to eliminate - while the AM was OK, I must have consciously tried to 'pull' the trigger at the instant the sight picture was 'perfect', and as a result the more abrupt trigger motion upset my sight alignment and threw the shot into the 8-ring. To win competitions I'll need to work on my trigger release and completely eliminate such 'wild' shots. And of course it is a lot more difficult to achieve this during the stress of a competition than while calmly practicing at home!

At least my regular practice is slowly improving my AM and hence my scores - as shown in plots of SCATT trace length (a measure of how much 'wobble' is in my hold), and SCATT average shot score.

So far I've been doing some SCATT training most days, but I haven't yet got back into the habit of doing daily 5BX exercise sessions, or started doing any isometric or weight training. To maximize my performance I'll need to work on this during 2017. I also need to work on my mental state during competitions - too often I find myself thinking about previous bad shots, or worrying about how my score is progressing during competition, rather than calmly executing each shot in the same manner I do during practice sessions.

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