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Saturday, 29 September 2007

Another Great List of Personal Finance Blogs

There have been a couple of great listing of PF Blogs recently, and another one has appeared, this time from Hustler $$$ Blog. It's a listing of many personal finance blogs that have been around for a while, and grades the 'Graduating Class of 2007' according to their posting frequency and popularity. I only got a "C" grade (and only came in at #29 in that category), but the grading seems fair based on it's popularity (links, RSS readers and monthly visits). I'm quite happy as long as someone (anyone) is reading my posts, and hopefully getting some useful information occasionally.

Copyright Enough Wealth 2007


Best Saving Account for Children

I'm always keeping and eye out for what savings and investments are best for DS1 and DS2. I recently learned that the BankWest Kid's Bonus Saver Account is paying 10% interest on the entire balance, provided they make a deposit in the month of between $25 and $250 and no withdrawals. The Kid's Bonus Saver Account has to be linked to a BankWest Children's Saving Account, but this account has no fees and no minimum balance. The account is designed for the specific benefit of the child but it must be opened and operated by an adult. These accounts are only available for children up to the age of 15 - when they reach 15 they'll be automatically converted to the Teen Scheme account. The Children's Saving Account provides online access, and you can make Direct Credits into the account. The interest rate on the Children's account is still a reasonable 3.25% on balances between $0 and $5000, but you'd want to keep most of the money in the kid's account and just accumulate enough in the Children's Saving Account to be able to make a $25 deposit in the linked Kid's Bonus Saver Account each month.

Copyright Enough Wealth 2007


Friday, 28 September 2007

Hedge Fund Tanks, Money goes Missing

The unit price (for the end of August) just got released for the Macquarie Equinox Fund (which I invested $50,000 in last year at an issue price of $1.00 per unit). The price dropped from around $1.13 at the end of July to around $1.05 for the end of August. However, given the market volatility in August this is hardly surprising, and the unit price may bounce back this month. It's funny how many hedge funds have turned out to be more correlated with the stock market that most people believed, and that they failed to benefit from increased market volatility.

I also received a statement regarding a distribution of $2,570 that was paid out on 19th September. The only problem is that I haven't seen this amount appear in my regular bank accounts. I can't remember if I nominated one of my online savings accounts for distributions, so I'll have to log in to all my accounts and try to find out where the money has gone.

Copyright Enough Wealth 2007


Blogging My Way to Fame and Fortune

It's been an eventful week in Blogland. The Money Editor at news.com.au is writing an article about how the web is changing the way people deal with money and has requested an interview (she emailed me via my NetWorthIQ page). I've agreed to answer questions that will be emailed to me on Monday - it will be interesting to see what the questions are. I've no idea what sort of mention I'll end up getting in the article, but as news.com.au has an alexa rank around 780 so a mention of enoughwealth.com would be nice.

On the financial side, EnoughWealth.com got it's first "real" sponsor this week - I'm getting paid for displaying a text ad for 12 months. It's not a huge amount, but at least it's genuinely passive income - up to now the only worthwhile revenue from blogging has come from PayPerPost paid posts.

Copyright Enough Wealth 2007


Platinum Ho Hum

Through my workplace I have access to a "special deal" whereby I could get a "Platinum" card from one of the major banks for 'only' $200 per annum membership fee - which is a slight discount to the normal $250 annual fee. The only trouble is that I can't for the life of me see how this card would be worth even $200 a year to me. It does have a "free" rewards program which earns 1.25 pts per dollar spent on the card, and up to 55 days interest free on purchases, but I already earn FlyBuys points on my normal NAB VISA card (which I redeem for a cash credit on the account), so that would be of no net benefit. It also has a 0% balance transfer offer, but only for 6 months, so I wouldn't earn enough interest through CC arbitrage to pay for more than a couple of years worth of membership fee. That leaves me just a plastic "status symbol" costing about $4.00 a week - and even the "status" of a Platinum card has been devalued on the years, so that these days only a Black Amex or similar will make any impression. Overall I think I'd rather put an extra $100 a year into DS1 and DS2's bank accounts at Christmas time.

Copyright Enough Wealth 2007


Thursday, 27 September 2007

Up, up and away.

After all the doom-and-gloom of the market correction in July/August we seem to be back to irrational exuberance mode (expectations of world demand for commodities to continue rising even as the US heads towards a possible recession). The Australian stock market hit another "all time high" today. If there isn't a slump in the US overnight we'll probably end September on a high, which will mean that my net worth this month will also set a new record. The recent market rise has boosted the value of my leveraged stock portfolio, but as the market has risen the value of my Index Put Options has declined, somewhat offsetting those gains. The options are getting close to worthless at the current Index level, so any further market rise will be fully reflected in the value of my portfolio.

Copyright Enough Wealth 2007


Wednesday, 26 September 2007

To Buy or Not To Buy, That is the Question

Over the past year I've built up a large parcel (124,000) of Options to purchase ING Private Equity (IPE) shares at $1.00 each. The options only cost a couple of cents each on average, so my total investment is around $2,500. The original plan was to hopefully sell them at a profit before the expiry date at the end of October - just a few percent rise in the IPE stock price above $1.00 would cause the IPEO price to double from 2c to 4c...

However, as the chart below shows, IPE has stubbornly refused to move more than a few cents above the $1.00 float price, despite the Australian stock market hitting all time highs in the past couple of days. I had expected the IPE price to climb back to over $1.10 (which it reached in July), but it has refused to rise above $1.03 despite the diluted NTA of the shares being an estiimate $1.20 or more. I had a feeling that once the options have expired the IPE shares may increase to "fair value" of around $1.20 - but to benefit from this I would have to excercise the options at $1.00 each. Betting $124,000 on such a "hunch" is a bit risky, although unless there is a massive market plunge the IPE price shouldn't drop below their recent low of $0.95. This would mean a loss of around $5,000. Perhaps it is worth taking the plunge and funding the options excercise from my available margin loan credit.


The alternative would be to sell my options at the current price of 1.3c - which would mean crystalising a much smaller loss of around $1,000 on my IPEO investment. Decisions, decisions - at least I have until the end of next month to decide one way or the other.

Copyright Enough Wealth 2007


Frugal Living: Save Money with DIY Projects

Although my grandfather was a plumber and did carpentry as a hobby, my dad and I are strictly amateurs when it comes to home repairs and improvements. However, you can a lot of money with DIY projects compared to buying ready-made furniture such as bookcases, or having to pay tradesmen to hang a door or fix a toilet cistern. Do-it-yourself projects can also be a great hobby and stress reliever - but only if you know what you're doing!

Although DIY is a potential money-saver, things can easily get off-track if you don't know what you're doing and don't know where to turn for help. My dad has been renovating the family home in preparation for selling it and moving to the country. But what started out as a project that should take 3-6 months to complete has now dragged on for over three years! Some tasks, like finishing a ceiling or laying floor tiles can take forever if you don't know the "tricks of the trade" - knowledge is power!. Just a few secrets can save you hours of wasted effort and materials.

If you are thinking about a home improvement project, check out DoitYourself.com. It's is an open, free community with articles and many active forums on DIY home improvement topics. So, whether you are renovating your own home, starting a project, or even buy resale homes to renovate and resell at a profit, you should visit to DoItYourself.com and consider buying the "DoItYourself" DVD.

Copyright Enough Wealth 2007


Tuesday, 25 September 2007

Property to Boom?

A survey of 31 firms, including the major banks, by the Australian Property Institute (API) found that they believe residential property in Sydney has more growth potential than any other class of property on Australia's east coast. As we are overweight in Sydney residential property this would be good news for us. API New South Wales president Tom Webster warned that the Sydney market is "very segmented". "There are large chunks of the Sydney property market that won't go up, but there are other parts, more at the higher end, that will." Fortunately I sold my investment house in Sydney's poorer Western suburbs region back in the 1990's and our house and current investment property are in one of the more "up market" regions of Sydney, so we stand to gain from any rise in the upper end of the Sydeny real estate market.

Since 2003 most of the increase in my net worth has come from the strong rise of the Australian stock market and from my savings plan, while the property in our portfolio has been stagnant since the Sydney real estate boom ended in 2000. As we have around $1.4m worth of property with $0.7m of interest-only mortgages against them, any rise in property prices would significantly boost our net worth.

Copyright Enough Wealth 2007


Saturday, 22 September 2007

PAW or UAW? Compare yourself to the Millionaire Next Door

One of favourite books relating to personal finance (see my recommended reading list for some of my other favourites) is "The Miilionaire Next Door" by Stanley and Danko. One of the most interesting ideas in the book is the concept of Prodigous Accumulators of Wealth (PAWs) and Under-Accumulators of Wealth (UAWs). Two people (or households) could have the same net worth, but for one of them such an accumulation of wealth may be exceptionally good, and yet for the other this amount rather unimpressive, depending on their relative ages and income levels. In her post about net worth Millionaire Mommy Next Door linked to an interesting tool from Banksite.com that allows you to calculate if you are a PAW or AUW and compare your net worth to the "expected" net worth for a household/individual of your age and income level. Type for income, age and net worth in and see how you compare...

Copyright Enough Wealth 2007


Friday, 21 September 2007

You think that's a net worth? THIS is a net worth!

The SMH had a summary of the latest Forbes Rich-400 list of America's super rich. Among the interesting tid-bits: There were 482 American billionaires, and the net worth of the top 400 increased by 18.8% over the past year. The youngest member of the list is 33-year-old John Arnold (at #317 with $1.5 billion), and the oldest is 98-year-old John Simplot ( at #214 with $3.6 billion).

Copyright Enough Wealth 2007


Wednesday, 19 September 2007

Which are the Best Personal Finance Blogs?

A tough question, as blogs differ considerably in their aims, and there is no one 'correct' way to rank the blogs. But there are some very good signposts available to point you towards some of the "best" personal finance blogs that are currently out there:

1. A list of the 25 most influential personal finance bloggers (and a ranking of the 'top 95') has been put together by YourCreditAdvisor. EnoughWealth manages to rank 58 in this listing ;)

2. A list of the 'top 100' personal finance blogs by Fire Finance uses a somewhat different methodology to find the top 100. EnoughWealth was omitted from this listing, but should be included in next month's update.

3. My monthly listing of the net worth of some PF Bloggers gives some indication of who has "hands on" experience investing -- but this list is not comprehensive as many PF Bloggers don't post their personal NW data.

4. PFBlogs.org is also a good source - just browsing the list of current most popular PF posts can help find the PF BLoggers who are generating interesting content.

Any other good listings that you know of?

The differences in the various "top 100" lists shows the problems inherent in any attempt to "rank" blogs. Some listings used somewhat 'obscure' data sources (at least I wasn't aware of some of these ranking tools), and even the most common means to rank blog traffic aren't 100% reliable - for example, not everyone has submitted their blogs to technorati, or installed a Quantcase widget in their blog template. Another factor to bear in mind is that such lists are always a "point in time" snapshot - blogs are continually rising and falling in popularity, and bloggers personal lives can impact on the quality and frequency of their posting. Finally, these lists to some extent are measuring how long a blog has been around (which impacts traffic, google rank, links etc.) and how savvy the blogger is at gaining exposure and increasing their traffic. Neither of which is necessarily an accurate indication of the quality of the blog content.

Copyright Enough Wealth 2007


Tuesday, 18 September 2007

The Early Bird Gets a Bigger Worm

You often see the example of "Dick" and "Jane", the model savers. Jane starts saving $1,000 each year (increasing the amount each year in line with inflation) from ages 21-30 and then stops. Her savings are invested where they achieve a "real"(after inflation) return of 6%. When Jane reaches age 65 she finds that the $10,000 she invested has grown to over $100,000 (ignoring any taxes) - the magic of compound interest over a long time.

By comparison, Dick doesn't start saving until he reaches 35, but keeps saving $1,000 each year until he hits 65. In total he pours $30,000 into his savings account, yet his final investment account balance is slightly less than $84,000 even though he saved more than Jane and earned the same rate of return. This is often used as an example of why it is important to start saving as early as possible for retirement...

What I find even more interesting is the case of Baby X, whose parents put $1,000 into an account for their baby at ages 1, 2 and 3. If this investment earns the same real return (6%) as Dick and Jane, it will have grown to $118,000 by the time X hits 65.

The numbers get really impressive if you look at investing $1,000 each year for a kid from ages 1-10. This is one of the reasons I'll keep driving my seven-year-old Ford Festiva for another five years rather than upgrading to a newer model - it makes more sense for me to put $1,000 each year into each child's superannuation account than moving to a newer model car that will lose that much each year in extra depreciation alone. If nothing else it will mean that they won't need to save extra for their retirement and will be in a better position to pay off a home loan.

It's also a good reason to encourage kids to earn some money and contribute into their own superannuation account - they'll get the $1,500 government co-contribution to help them get ahead. The other benefit of saving for kids via a superannuation account is that the earnings are only taxed at 15%, rather than the exhorbitant rates than can apply to kids "unearned income".

Just as an example, saving $1000 pa from ages 1-10, then $1000 plus $1500 co-contribution from ages 11-20, would result in an account balance of around $778,000 by age 65!

Copyright Enough Wealth 2007


Monday, 17 September 2007

The Company Previously Known as Macquarie Film Corporation Limited

After a slow and drawn out demise, the ill-fated Film Investment Corporation I invested in several years ago (last century I think!) has now been fully wound up. I'd previously received some modest dividends from my $5,000 "investment" in the Australian film industry, and this final dividend of $639.87 brings this expensive lesson to a close. I always knew that investing in films was risky, and the 100% up-front tax deduction was only attractive if there was a reasonable chance of getting a decent ROI. The Macquarie FLIC invested part of their funds in several different film projects - in the expectation (faint hope, as it turned out) that diversification would help reduce the risk of such an investment. However, this turned out to be a classic example of how diversification within an asset class can't reduce "market risk". As it happened, the entire Australian film industry produced a string of flops in the years following my investment, so nearly every project the company had invested in lost money.

The only thing I still don't understand is how come, although the wind-up and deregistration of my shares is a "capital gains event", "no capital gain or loss is likely to arise in respect of this event". The letter from the liquidator did say that "Shareholders should seek their own independent taxation advice..." but that is just the standard "don't blame us if we got it wrong" boilerplate. Since I do my own taxes I'll just have to keep an eye out for any relevant comment about the tax implications of this wind-up in the financial press, or maybe I'll write a question to one of the weekend newspaper financial columns. As far as I can tell, just because an investment was tax-deductible doesn't mean that you wouldn't pay capital gains tax if you eventually sold the investment at a profit. On that basis I was expecting my capital loss to be deductible - but what would I know.

Copyright Enough Wealth 2007


My Blog Template is a Sick Puppy

The last change to my blog template seems to have pushed it over the edge - I get "stack overflow" messages when it loads in firefox (although it displays OK), and at work it crashed IE with an "out of memory" error. It probably explains why my sitemeter stats have crashed in the past couple of days - lots of readers are probably having problems loading the blog. I'll strip out all the code for the items in the RH margin and slowly add in the widgets and code I really want or need. A lot of the items have just accumulated over the past year, and somehow some of the javascript and html code appears to have got mangled.

Hopefully the new, streamlined code with reduced page weight will be attractive to readers who don't have a high speed broadband connection available all the time.

Copyright Enough Wealth 2007


Sunday, 16 September 2007

Frugal Living: Wet Pet

DS1 was interested in getting a pet, so as a first attempt I decided to get him a small aquarium with one fish to look after. Rather than buy a tank from the pet shop, I simply chose a nice cylindical salad bowl from the discount housewares store. For only $5.00 it was lots cheaper than the smallest perspex tank available in the pet stores, and it looks very stylish. Being microwave and dishwasher safe it should cope with having a small 7.5W immersion aquarium heater. For decoration we simply washed some especially pretty marbles that we already had collected, and put them in the bottom of the "tank".

The trick with beginner aquaiums is too not buy one that is too small - it's a lot easier to keep fish healthy if there is plenty of surface area and not too many fish. As DS1 is seven years old he should be able to care for and feed the fish - it only needs a partial water change once a week with aged (dechlorinated) tap water and twice daily feeds. I bought specialist betta food pellets and some free dried blood worms - a few worms in the morning and 2-3 of the tiny food pellets each evening should keep the fish happy and not overfed. As DS1's favourite colour is green we visited five different pet stores/aquarium shops before finding one that had a nice pale emerald body but red and blue fins. There are much more spectacular green betta splendens bred by hobbyists, but you tend to get mediocre quality fish in the typical pet store. If DS1 manages to keep the fish alive for the next two months I'll think about buying a female betta - siamese fighting fish have quite interesting breeding behaviour with the male blowing a bubble nest and looking after the hatched fry until they become free swimming (at which time he'll often eat them, so you need a some spare compartments to keep the male and female adult fish when breeding bettas). If he's lucky (and carefuly looking after the fish) he may be able to breed some fish and sell them as a hobby.

All up the cost was:

"Tank" $ 5.00
Heater $39.95
Fish $12.00
Fish Food $15.05
=======
Total: $72.00

It paid off to compare the prices for the fish food and heater as we went around looking for a suitable fish - the heater was bought for $39.95 after seeing the same one in other shops for $49.00. Similarly we were able to buy the "bulk" 20g pack of Hikari Betta Biogold food pellets for $15.05 after only seeing the smaller 2g pack in other stores for between $7 and $8. Assuming the fish lives long enough to eat the entire pack it will work out to be good value.



Copyright Enough Wealth 2007


Friday, 14 September 2007

Blog Performance and Monetization Update: September 2007

READERSHIP: EnoughWealth.com

Readership plateaued during July and August, remaining close to the June totals. Some slight spikes in readership sometimes occur when I post a comment on the Freakonomics or Dilbert blogs, and the monthly PF Bloggers net worth post is always popular.

My Technorati rating has increased from 63 in July to now be 105 (Rank 49,721).

My Alexa rank is hovering just below the 1-million-mark at 969,013.

After reading the PF Bloggers ranking post by FireFinance [which didn't include Enough Wealth!] I also signed up with QuantCast. Although the statistics have only started being gathered, at the moment Quantcast's estimate of my readership is:
Global: 1,666 uniques (~visitors) per month
US: 1,051 uniques per month
My QuantCast rank is 4,090,819

Feedburner Subscriptions is increasing very slowly, currently sitting at 54 subscribers.
I continue to mirror my posts onto the EnoughWealth.SavingAdvice.com site, as there seems to be little overlap between readership of the two sites. Stats for both sites and combined totals are shown below



MONETIZATION:

I prefer sponsors that make payment direct into my PayPal account, as a USD cheque costs a lot in fees to bank in Australia. I've banked the latest USD cheque I received from KAGI with my credit union - although the cheque may take 4-6 weeks to clear the fees may be lower than the A$20 I'd otherwise have to pay. I generally have a threshold of US$100 for payments by cheque, which means I won't receive any cheques for a while ;)

Google AdSense revenue was tiny, so I've set up a 'wrapper' of code from AdBrite which displays AdBrite ads in the place of AdSense (unless they can't beat the CPM rate I've estimated would be achieved by displaying the AdSense ads). AdBrite revenue from interstitial ads is only 2c-3c per day, but on some days the banner ad revenue jumps to around 25c - I've no idea why, as the same banner ads seem to be displayed on all days.
Newsroom has started accumulated revenue from display of their feeds, but the amount of revenue is negligible and there isn't much content that suits my blog. They've recently upgraded their business editorial content, so I may find some more worthwhile content to "mash". Newsroom currently pays out monthly by cheque once you hit $50, but will "soon" start making payments via PayPal.

My Amazon affiliate earnings haven't increased since a few books were purchased by a blog visitor last year, I may remove the half dozen recommended books off my RH margin and instead do book review posts of my favourite PF books. I could also link to the reviews with a permant link to a Reference Library page with the book ads and links to my reviews. SInce March Amazon has introduced a $15.00 admin fee for each cheque payment. Payment by Direct Deposit would be free, but it's not available for non-USA bank accounts.
Feedburner revenue is accruing (slowly) for ads that get attached to feeds of my post distributed via the IBN group.

PAID [PayPal] PENDING ACCRUED [CHQ] ACCRUED [EFT]
PayPerPost: USD $392.25 USD $ 19.00 - -
Blogsvertise: USD $ 94.50 USD $ 10.00 - -
SponsoredReviews: USD $ 16.25 - - -
ReviewMe: USD $ 60.00 - - -
AdSense: - - - USD $ 14.44 [$100 threshold]
AdBrite: - - USD $ 31.66 - [$100 threshold]
Newsroom: - - USD $ 0.84 - [$ 50 threshold]*
Amazon: - - USD $ 2.71 - [$100 threshold + $15 fee applies]
Feedburner: USD $ 0.05 - - [$ 25 threshold]
------------ ------------ ------------ ------------
TOTALS: USD $563.00 USD $ 29.05 USD $ 35.21 $USD $ 14.44
Grand total: USD $641.70


EXPENSES:

Around USD$51.23 pa. So the income generated is slightly more than the out-of-pocket costs of maintaining and promoting the site.

Annual domain name registration with Dotster USD$14.95, plus $10.00 for the redirection required to have my blog hosted by Blogspot but still use my domain name.

PFBlogs "Friends" fee: USD$2.00 per month.

Google AdWords: USD$0.76 for 4 clicks. Budget is set at max. $7.80 per month, but so far only getting around 1 click per month at $0.19 per click.

Copyright Enough Wealth 2007


Thursday, 13 September 2007

Forex CFD Trading Update: August

I haven't posted about my day trading of AUD/USD Forex CFDs for a while. Mainly because it's being done as a hobby rather than a serious attempt to generate income (although a profitable hobby is always nice to have!). I've now been casually trading for almost six months, and there might be some lessons to be learned from my experiences.

I initially started out with $1,000 of seed money, with an expectation of possibly making some small profits, or at least lose it gradually while having some fun. The first month started off well, before ending up with a small loss. The second and third months lost money, and I decided to add some additional funds to my trading account while trying to improve my trading methods to reduce the impact that large losses were having on my overall results. At that stage I had the tendancy to hold onto losing trades in the hope that the market would ultimately behave as I had initially expected when opening a position.

** LESSON 1: Never trade more than you can afford to lose ** If I really couldn't afford to lose more than $1,000 I should not have added in extra funds when my initial $1,000 kitty was nearly depleted. Although I may eventually trade my way back to an overall profit, I'm currently down around $2,000. If I do have a bad run and end up losing the entire $4,000 I've put into my CMC Markets Trading account I will call it quits. A $4,000 loss If I haven't learned the "secret" of making a profit trading Forex by then, I probably never will. It would also be nice to "quit while I'm ahead" if I ever get to into the situation of having made an overall profit. However, if I do end up in the black I'll be tempted to think I now know what I'm doing, so I'll probably keep trading until I eventually lose the $4,000. Mental note to self: if I ever build up an account balance over $8,000 I should withdraw the inital $4,000 capital.

The problem with my intial trades seemed to be that although I should close any trade where the market doesn't behave as I had expected, there is a lot of "noise" which makes it hard to tell a temporary "blip" from a change in trend until after the trend is well established (and I've therefore lost more than I'd like). Cutting losses too early also didn't seem to be an option, as this tends to close out too many trades that, after a small blip in the wrong direction, eventually come good.

I've recently started to trade more conservatively, taking small profits and cutting losses before they get too severe. This seems to have improved my results (I'm up so far in September), but it means that it will take a long time to claw back to my initial account balance.

My goals at the moment are to have more than 50% winning trades, and to keep the average gains made from winning trades larger than the average losses of losing trades (ie. cut losses and let winning trends run a bit longer before traking profits).

** LESSON 2: Only the house is guaranteed to make a profit ** The chart of my trading results also includes a pale blue line which shows what my account balance would be if there wasn't a 2-pt buy/sell spread (CMC Markets profit margin). To the end of August I had paid just over $800 in buy/sell spread to CMC Markets. No wonder there are so many companies competing to provide CFD trading services, and that they can afford to offer "free" seminars, courses and software to attract new clients.

Summary of overall trading results to end of August:
Gain/Loss Winners Losers Avg Win Avg Loss % Win
-$2,367.98 87 151 $ 80.46 -$ 62.04 37%
Summary by month, showing "progress" in learning to trade:
By Month Gain/Loss Winners Losers Avg Win Avg Loss % Win
APR '07 -$ 318.31 6 11 $142.39 -$106.60 35%
MAY '07 -$1,440.95 10 18 $ 64.48 -$115.88 36%
JUN '07 -$1,011.67 3 19 $ 54.57 -$ 61.86 14%
JUL '07 $1,132.73 40 52 $ 71.01 -$ 32.84 43%
AUG '07 -$ 729.77 28 51 $ 89.18 -$ 63.27 35%

I'm hopeful that my monthly trading results indicate some progress towards profitable trading - August was an unusual month due to some large losses when the AUD plunged due to the Sub-prime mortgage worries, and when the Australian Reserve Bank suddenly intervened to reverse the plunge once the AUD dropped below 78c.

There's no great science to my trading - I just keep a look out for apparent trends up or down, and try to buy in to the trend once it's become apparent. Unfortunately while there appear to be obvious trends when you look at a chart in retrospect, they're almost impossible to spot when they're just starting.

The combination of the time it takes to spot a trend, and the buy/sell spread, means that only large movements or prolonged trends are profitable. My results so far suggest that short-term forex movements are largely "noise" and trying to pick trends is a bit like finding patterns in the interference showing on an untuned TV set. Having strung together six months where I managed to guess correctly less than 50% of the time, it will take a lot of months where I average more than 50% winners for me to be convinced that I am doing better than chance. Even if I do manage to improve my trading to be better than picking randomly, it is unlikely that my "skill" will be sufficient to offset the cost of the buy/sell spread, let along the opportunity cost of the time spent trading. The only good news is that I enjoy trading as a recreation.



Copyright Enough Wealth 2007


Wednesday, 12 September 2007

Repairs to Rental Property might Finally Commence

Well, it only took two months and a week, but the builder allocated by our insurance company finally sent the contract for the repair work for us to sign. The insurance company had said this was being sent out three weeks ago.

I sent in the signed "scope of work" and contract yesterday, along with a cheque for the $100 insurance excess. In order to keep our tenants happy we have had to reduce the rent by $100 per week until the roof repairs are completed, so this incident has already cost $1,100. Hopefully the roof will be fixed in a couple of weeks.

I had asked the insurance company about making a claim for loss of rent, and was adviced to lodge a "written proposal". I haven't had any response to the emails I sent in, so I'll have to spend a few more hours on hold to chase this up. If nothing else this incident will motivate me to shop around when the insurance is due for renewal early next year.

Copyright Enough Wealth 2007


Tuesday, 11 September 2007

A Strange Cheque Day

My post office box was stuffed full of mail today, with five of the items being an odd assortment of cheques. Four of them were in relation to the recent takeover of APA by Babcock & Brown. As I had separate APA holdings in two of my margin loan accounts, I received two cheques for the cash component of the takeover - one for $2,639.66 and the other for $1,243.77. However, for each APA holding there had also been a dividend (paid in the form of an allocation of stapled securities) with any fractional allocation left after rounding down being paid out - hence two more cheques, one for $3.03 and the other for $3.20.

The final cheque I received was even stranger. I have a supplier account setup with KAGI.com which I had created to process credit card payments for the web site design service I started several years ago (I never got any business - probably because my low, low prices seemed too low to seem professional. This is one of the hazards of running a hobby-based business - under charging). I'd made some test purchases myself to check everything was working correctly, and so I had a small credit sitting in my KAGI account. As the account had been inactive for over 12 months KAGI decided to sweep out the inactive accounts and mail out cheques for the balance. However, the cheque that arrived is for US$54 and I only ever had US$27 in my KAGI account! Oh well, the extra amount will help cover the exhorbitant fee ($20!) that my bank charges for depositing a USD cheque.

Copyright Enough Wealth 2007


The Cost of Carbon

I'm no expert, but an article in today's SMH about the potential collapse of the Carbon Trading Scheme in NSW seems to indicate some very poor planning in the establishment of the current carbon trading schemes.

The average household electricity consumption in Sydney is 8.25 MWh pa*. Now, with the current value of a REC (renewable energy certificate) around $6 this means that generating this power from renewable sources (eg. hydro, photovoltaic, wind) would generate RECs worth $49.50 pa at current REC pricing.

In comparison, household electricity in Sydney costs around 9.2c per kWh, which means that 8.25 MWh pa costs a Sydney household around $759.00 pa. The financial benefit of a household converting to renewable energy is thus only around 6.5% at best. In reality, most households have a financial dis-incentive to "go green", as the only practical option is to pay a small surcharge to choose "green" electricity supply from their utility company. Not many suburban households are in the position to install solar, wind or hyrdo generating capacity for household use.

The entire REC system seems to be cumbersome, bureaucratic and costly to administer. I would have thought a much simpler solution would have been to just introduce a carbon tax of, say, $10 per tonne of CO2 generated, added to the bill of the end-user (household or industry). The funds raised could then be allocated by the government via grants to companies that actually generate large quantities of renewable energy. A $10 per tonne carbon tax would only add around 11% to the cost of electricity for a Sydney household. In comparison, the cost of electricity has only risen 7% between 1992/3 and 2002/3. Since the CPI increased by 31% in this period it means that the cost of electricity to Sydney households has dropped in real terms in the past decade, and would still be cheaper than in 1992/3 in real terms if a carbon tax was implemented.

Rather than waste time protesting about selling Australian uranium to Russia and China for their power-generating requirements, green groups would make better use of their time pressuring government to introduce effective economic incentives to reduce carbon emissions.

Then again, there's still the fundamental question of whether global climate change is causally linked to human carbon emission levels, or just coincidental. Since we still don't know exactly why climate varied in pre-historic times, just tweaking parameters in climate models until the increased atmospheric CO2 levels results in a match with the past century of climate data seems like poor scientific method.

* Data from NSW Parliment Hansard Record

Copyright Enough Wealth 2007


Monday, 10 September 2007

SMSF Investment Update

The confirmation notices from Vanguard for our initial investments into the High Growth Fund finally arrived. The initial $5,000 investment was processed on 4 Sep at a unit price of $1.7417, and the first of our regular weekly $25,000 investments was processed the following day at a unit price of $1.7306. The weekly contributions will continue until the bulk of our SMSF balance has been invested into the High Growth fund. With the current market volatility I (we) decided to dollar cost average into the fund rather than invest all our cash at the current price. We will be watching the price with interest while these regular investments are being processed - the best outcome would be a short, sharp drop in unit prices over the next couple of months followed by a rapid rebound to current prices by the end of the year. It's just a likely that the unit price could go up over the next couple of months, in which case a lump sum investment would have been better. Whatever. Once the bulk of our SMSF fund has been invested we'll reduce the weekly investment amounts to match amount we are contributing.

Copyright Enough Wealth 2007


Planning Issues: Life Expectancy

One of the unknown variables that needs to be estimate when formulated any plans for retirement funding is "how long will you live"? Although I think outliving your funds is less of a problem than dying before you reach retirement age, it is still good to have some idea of how long your retirement is likely to last. After reading a post on this topic by My Wealth Builder I plugged my current situation into the life expectancy calculator and got back an answer of 83 years. Not too bad for a male, but largely due to having grandparents who lived to 94, not smoking and being in fairly good health. If I change my answer to include regular aerobic exercise, losing my excess weight (the only one of my 2007 goals that is way behind target so far this year!), and being a "happy" person I can improve this figure to 92 years of age... Time to break out the tracksuit and take fruit to lunch for snacks.

Copyright Enough Wealth 2007


Sunday, 9 September 2007

CC Arbitrage Update

As I suspected, when I finally got through to the correct department at ANZ Bank regarding the "missing" 0% balance transfer it turned out that there was "no record" of the transfer being processed, so I had to request to transfer again in order to get things moving. This time I got a transaction receipt number, so I expect the $14K transfer to hit my NAB CC account within the promised three working days.

I had planned on investing the funds in my online savings account at 6.00% interest (which would be taxable), but my dad asked to borrow some money to complete some house renovations prior to them selling their city house (they're downsizing/treechanging to a country property they bought a few years ago). If I lend the funds to him as an interest-free loan he could "gift" me an amount equivalent to a 4.5% interest rate. As a gift this money would be tax-free, so I'll be no worse off than I would be getting a taxable 6.0% return, and he'll be much better off than having to get a bank loan at around 7.5% interest rate.

Copyright Enough Wealth 2007


Review: FinancialRebel.com

There are a lot of personal finance and investing blogs out there, and the quality of both content, presentation and style varies a lot - from top notch right on down to "must try harder" or even "makes no effort" (mostly those that just regurgitate other sites content as a prop for a page full of advertising). FinancialRebel. com is an investing blog that falls somewhere in the middle of the pack from what I've seen - the layout is OK, but a bit basic, and the colour scheme somewhat garish for my tastes. The content is a mix of stock new tid-bits, stock selections and/or musings (but without much detailed analysis) and some general interest personal finance articles such as this one about how to create a budget. I can't say that this blog strikes me as one of the best around, but it's worth a quick look to see if the content and style suits your interests. However, I suspect that this blog may end up being a "flash in the pan" - after apparently starting up in June (the first post seems to be from 13th June as there aren't any earlier posts currently listed, but it's hard to tell as this first(?) post isn't a "welcome to my blog" messsge) and an initial flurry of posts in July and August there has been no new content since mid-August, so the author (Jason Martin) may have moved on to other interests.

Copyright Enough Wealth 2007


Saturday, 8 September 2007

Net Worth - PF Bloggers August

Here's the latest round-up on how the various PF (Personal Finance) bloggers who post their Net Worth each month are progressing.

Monthly Net Worth of PF Bloggers for August 2007:

Blogger Age Net Worth $ Change % Change
Amateurist Fin. Journey 23 -$37,657.00 -$1,185.88 -3.1%
An English Major's Money 23 $17,929.00 $872.00 N/A
Blogging Away Debt 2x -$41,001.00 $1,068.00 N/A
Blunt Money 2x $225,866.01 $24.21 0.0%
Consumerism Commentary 30 $107,488.00 $5,477.00 6.3%
Crazy Money 27 $278,506.00 $3,488.00 1.3%
Enough Wealth 45 $1,131,814.00 $5,044.00 0.4%
Financial ladder xx N/A N/A N/A
Finance Journey 25 $166,556.00 -$120.00 -0.1%
Lazy Man and Money 2x $205,951.00 -$1,256.00 -0.6%
Make love, not debt 2x -$41,303.44 N/A N/A
Mapgirl 3x $50,311.00 $1,863.00 3.8%
Moomin Valley 42 $440,137.00 $1,182.00 0.3%
My Money Blog 28 $161,400.00 $13,524.00 9.1%
My Open Wallet 37 N/A N/A N/A
Savvy Saver 27 $211,596.00 $4,416.00 2.1%
Tired But Happy 30 $178,140.00 $3,281.00 1.9%

nb. Some ages have been adjusted as follows:
exact age provided = listed as given
"20's" = listed as 2x
"early 20's" = listed as 22
"mid-late 20's" = listed as 27
and so on.

If you have any corrections, let me know as soon as possible after the post and I'll edit immediately. If it's more than a few days after the post, email me and I'll make the change the following month.

Note: Most of these figures are in USD, but some are not (eg. mine are in AUD). Also, some bloggers post combined net worth of a couple, others are single, or, like me, only post their personal net worth.

The N/A figures are either a lack of monthly data, or where I've not included % change data because the net worth is less than +/- $100K.

I've had some appreciative comments about this regualar monthly post - if you like it, please link to it from your blog, or add a link to EnoughWealth to your blogroll. ;)

Copyright Enough Wealth 2007


Friday, 7 September 2007

Review: Debt Consolidation Care

DebtCC is a get-out-of-debt internet community site with information about:
* debt consolidation
* debt consolidation loans
* credit card debt
* debt settlement
* collection agencies
* payday loans
* creditors
* budgeting

They have a "Ranking Chart", which lists over 150 debt consolidation companies that offer debt consolidation, settlement, counseling and budgeting services.

There are interesting articles available on solving debt related problems and there are handy calculators that allow you work out such things as the real APR on your debts, how long it will take to pay off debt with a fixed monthly payment, and the debt to income (DTI) ratio which is an indicator of your financial health.

There is a comprehensive forum section with the following topics:
* Debt Consolidation and Settlement (83446 Posts)
* Payday Loan help (13400 Posts)
* Dealing with Collection Agencies (45045 Posts)
* Credit Repair (6341 Posts)
* Bankruptcy (2184 Posts)
* Identity theft (3036 Posts)
* Getting a Loan (4906 Posts)
* Dealing with Student Loans (1270 Posts)
* Community Success Stories (1904 Posts)
* My story (2436 Posts)
* Creditors and collection agency database (22219 Posts)
* The Pub, feedback and announcements (31334 Posts)


With some new insurance policies many financial institution including federal tax department have to renew his policies. Now people can pay taxes online with the help of online credit card access. Many financial institutions including private banks have revised their policies about debt finance, so now people have some relaxation on debt consolidation. Now with the effects of new policies procedure of getting personal loans is more easy and quick. Also the interest rate is quite low.

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Copyright Enough Wealth 2007


Thursday, 6 September 2007

Beware of Little Old Ladies who can make you Rich

There have been a few cases recently in Sydney of respected, older women taking advantage of trusting friends and neighbours to defraud large sums of money. The SMH has reported the latest instance where a 65-year-old woman allegedly obtained funds totalling more than $2.6 million by deception. Between 2004 and 2006 numerous people invested money in a "business scheme" with the woman, but when some of the investors requested their money back, the funds were allegedly not returned. It goes to show that you should be very careful when "investing" your hard-earned money with friends or relatives. You obviously would have to have a good opinion of the person's integrity and capability to even consider such as investment, but the truth is that it is almost impossible to make an accurate risk assessment of such an investment.

Copyright Enough Wealth 2007


Wednesday, 5 September 2007

CC Arbitrage Update

The 0% balance transfer from my new ANZ CC hasn't gone onto my day-to-day CC account yet, despite the welcome pack stating that the transfer would happen "automatically upon activation" of the new card, and would take "up to three business days" to complete (I activated the card last Friday, so the funds should have arrived by today at the latest). I phoned the ANZ card support to check if the balance transfer was even in the pipeline, and the first CSR I talked to (after being on hold five minutes) transferred me to the relevant department. Unfortunately the next CSR hung up the phone midway through saying "How may I help yo..." - a well-known trick CSR's use to improve their call stats or to shorten the queue. Since it was after 5:30 pm I decided not to try calling back straight away, I'll call again tomorrow.

Overall the online application process and despatch of the card by ANZ was excellent, but the customer service and support has been abysmal - I never got a reply to the two faxes I sent in regarding my customised card image file, and getting hung up on by "customer service" is beyond the pale.

Copyright Enough Wealth 2007


Hawaii Real Estate

Although I fancy buying a Scottish Manor House (I even went so far as to bid on a 17th century Scottish property a few years ago, but didn't bid high enough) the reality is that I'm not overly keen on living in a cold climate in the winter months, and DW is dead set against the idea. A week or a couple of weekends skiing is more than enough "winter" for us. Therefore our retirement dream is to move to a rural property in a warmer climate when we eventually retire from being full-time employees. In our case we will probably move up to the mid-north coast as my parents own a hobby farm at Lake Wallace which has a nice climate all year round.

If we were living in the US we would probably be considering Hawaii real estate. If you are considering relocation there is some information about real estate available online, and you can read this real estate blog for some specific information about how the Hawaii property market is doing these days.

Copyright Enough Wealth 2007


Tuesday, 4 September 2007

Net Worth Update August 2007

My net worth as at 31 August increased by $5,088 (0.45%) during the month to $1,131,814 (AUD), mainly due to contributions into my retirement account and some modest gains in my stock portfolio over the month, despite the volatility. My leveraged stock portfolios increased by a net $3,141 (0.79%) to $402,215 last month, but it would have been a slightly negative month except for a strong 1% lift to the market on the last day of the month. The estimated valuations for my share of our home and investment property was almost unchanged, increasing slightly by $646 (0.08%) to $762,788. The balance of my half of the mortgage also continued to increase by -$884 to -$361,210 as we continue to redraw some of our advance payments to cover the interest payments while DW is working part-time until DS2 starts school in a couple of years.

Copyright Enough Wealth 2007


Takeover Debris

One of the stocks in my porfolio was taken over recently, with the default offer being a mix of shares in various Babcock & Brown investment vehicles plus some cash. I should have completed the paperwork to nominate a preference for receiving cash only for the takeover, as it is I've ended up with various tiny stockholdings:
BBI 105 shares worth $174.83
BBP 93 shares worth $271.56
BBW 36 shares worth $59.40
BEPPA 222 shares worth $200.91

If I'm very lucky these stocks may have a DRP that rounds up to whole numbers of shares, but I doubt it. There will probably be an offer to buy back these shares from stockholds with small parcels at some stage - it costs the companies too much to communicate with stockholders that only have $59.40 worth of BBW shares, for example.


You can get easily mortgage from bank if you have better credit rating. People need to follow each procedure to get home loans and satisfy their needs. Financial institutions have many other products like they are offering now different credit card to their current customers. We have seen many debit and credit card with different credit limits so one can spend in shopping. If you have master card then you can change your limit after some duration and also can get extra reward. Many travel companies are also looking for the assistance and travel insurance can help in order to any damages.




Copyright Enough Wealth 2007


Monday, 3 September 2007

24th Carnival of Money Stories

Roll-up! Roll-up! Welcome to the 24th Carnival of Money Stories.

You can check out past Carnivals and learn more about the Carnival of Money Stories at their homepage. If you made a submission to this carnival and it hasn't been included, it may just be that the submission wasn't a personal story about your experiences with money. On with the show...

SPENDING/CREDIT CARDS

tehnyit presents The small costs of shifting house adds up to a large expense posted at Cheap as chips.

Kyle James presents Beware....Money Saving Tip Headed Your Way posted at Rather-Be-Shopping.com Blog.

chica with issues presents 7 money-related things that I regret doing posted at One Snarky Chica with Issues.

Living Better presents What Is Your Credit Saying About You? posted at PlainAdvice.

paidtwice presents Once upon a time, it only took $1000 to scare me. posted at I've Paid For This Twice Already....

Super Saver presents Renting versus Owning posted at My Wealth Builder.

Millionaire Mommy Next Door presents Help Me David Wann Kenobi; You’re My Only Hope! posted at Millionaire Mommy Next Door.

glblguy presents Reduce Your Expenses By Avoiding Temptation posted at Gather Little By Little.

Tracy Coenen presents One hour and eleven minutes of my life with Bank of America posted at FRAUDfiles.

Prince of Thrift presents Is it stealing? posted at Becoming & Staying Debt Free.

Silicon Valley Blogger presents Beyond Home Buying: How Building And Renovating Can Be The Biggest Investments Of Your Life » Money and Personal Finance Blog In Silicon Valley posted at The Digerati Life.

Shadox presents The Most Expensive Loan in History posted at Money and Such.

SAVING

Meredith H. Kaiser presents How To Waste Money Making The Fancy Recipes You See On T.V. posted at Saving Advice Blog.

teaspoon presents Solving Our Savings and Budget Issues - The No-Budget Budget Way posted at www.TeaspoonFinance.com - Financial wisdom, one teaspoon at a time....

Nina presents Ten Money Questions ? for Deb Price posted at Queercents.

EARNING

wilson ng presents Getting Rid of Customers as a Road to Profitability posted at Reflections of a BizDrivenLife.

INVESTING

Apparently no-one has any interesting stories about their investments this week ;)

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The next Carnival of Money Stories is being hosted by Tight Fisted Miser and you can submit your own money experience here


Copyright Enough Wealth 2007


Sunday, 2 September 2007

Risk - volatilty or loss?

One term that differs slightly in everyday use from its specific meaning in relation to personal finances is "risk". In everyday parlance the expression "risk" is used to describe the chance of losing something of value - health, wealth, happiness and so on. However, this is slightly different from the meaning of the term risk when used to describe expected investment outcomes. The financial definition started out from the same point - the chance of losing one's money in making an investment - but this was then defined in mathematical terms relating to the chance of the actual investment return deviating from the expected outcome. This use of the term can produce some counterintuitive definitions of what investment or choice has the greater risk. For example, leading up to the '87 crash the market wasn't particularly volatile, but the crash involved some very large one day movements in the market index, which increased the value of market risk. This meant that, on paper, this asset class had higher risk after the crash, when prices were considerably lower.

Another good example of this confusion in the meaning of "risk" was described in Kevin Bailey's book "Your Money Guide". He provides the example of two people who skydive out of an airplane at great height. One is wearing a parachute, the other is not. Which one has the greater risk? The answer to this depends on your definition of risk.

Based upon the definition of risk as uncertainty of outcome the person with a parachute has a greater range of possible result - the 'chute may not ope, wind might cause landing in a tree or powerlines, or the landing could be safe. The person without a 'chute has less chance that the outcome will differ from what you may expect - a rapid plunge to a quick death. Hence in financial terms the parachutist is a speculator, and the person leaping out of the plane without a 'chute has greater "risk" in relation to the expected result.

Copyright Enough Wealth 2007


Saturday, 1 September 2007

Retirement Myths, Lies and Traps

An interesting counterpoint to recent reports that people may be saving too much for retirement, is this video report that suggests that retirees may need a larger percent of their working salary as retirement income than is generally accepted. Personally I think you're better off doing a "retirement budget" that suits your planned retirement lifestyle and see how much retirement income this would require.



Copyright Enough Wealth 2007


My SMSF finally Invested some of its Cash

The application form to invest $180,000 of our SMSF in the Vanguard High-Growth fund was successfully sent via eSuperFund to Vanguard. I received an email from Vanguard today advising the Biller code and Reference number to use to send our money to them. I had intended to start off with a $180,000 lump sum, and then dollar cost average (DCA) the remaining balance of our SMSF into the Vanguard fund over the next couple of months at the rate of $5K each week. However, when I went online to transfer some of the $330,000 I'd previously moved from the ANZ SMSF bank account into the trading account held by E*Trade I found out that funds transfers take 1 business day to process, IF you make the transfer request before 1pm. It was 4pm when I read this, so the $180K won't be back in our SMSF V2 bank account until next Tuesday. Meanwhile we only had a little over $6K available balance in the V2 account, so the initial BPay transfer to Vanguard was only $5,000. I'll transfer another $175K to Vanguard when the funds are available next week.

Meanwhile I finally managed to reconcile the amounts paid by our employer for SGL and salary sacrifice in July with the amount deposited into our SMSF in mid-August, so it looks as if everything is working fine from a contributions point of view. As no tax had been deducted from the contributions, I assume that the SMSF tax return next August will tell us how much to transfer to the ATO for this financial year. There will be 15% tax on our pre-tax contributions and any income, so I'm keeping track of how much to put aside for the eventual tax bill. I think it's better to leave this amount sitting in the ANZ bank account earning a reasonable amount of interest, rather than transferring the entire contribution amount to Vanguard each month and ending up having to make a withdrawal from Vanguard next August to pay the tax bill.

Copyright Enough Wealth 2007


NuWire Investor Site

NuWire Investor has a website www.nuwireinvestor.com that offers free investment information. The website is attractive and easy to navigate, but the content scope is fairly restricted - concentrating on US and International real estate and some franchising.

The most interesting article I saw there was "Volatility Kills Compound Interest" which showed an example of six cases where the investment returns had an arithmetic average return of 6.00% over three years, but the more volatile the returns the lower the Averaged compounded return became.

Another interesting article on the site is "Investor Risk vs. Reward" which covers the relationship between risk (volality) and expected return, and why some risk must be accepted in an investment portfolio in order to achieve reasonable returns.

Copyright Enough Wealth 2007