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Wednesday, 4 November 2009

Net Worth Update: October 2009

October saw little overall change in my net worth, with the strength in the Sydney property market being offset by a sharp correction in the stock market in the last week, which produced negative results for my geared stock portfolio and retirement savings (SMSF). By 31 October my net worth had increased slightly to $790,140 (up $1,452).

My retirement account (SMSF) lost -$12,215 (-3.80%) to $309,237, erasing all of last month's gains. The drop in the stock market was exacerbated by our small geared stock investment (8 ASX200 index CFDs, code: IQ). There was around $2,000 of employer superannuation contributions banked during October, so the result is worse than it appears. I expect the rest of the September quarter's employer contribution will be deposited sometime during November (around $4,000). During October I transferred $5,000 of our cash balance into our Vanguard "High Growth" index fund investment and also bought 1 additional IQ CFD. If the market consolidates around current levels I may buy the final 2 IQ CFDs to top up our holding to the planned holding of 10 IQ CFDs.

The estimated valuations for my half of our real estate assets (house and investment property) were up substantially this month, by $21,459 (+0.2.74%) to $805,393. The Sydney real estate market still appears to be in an up-trend at the moment, but the winding up of Federal boost to First Home Owners grant and continued monthly rises in official interest rates will probably limit price increases.

My stock portfolio lost -$7,122 to $40,014 net equity during October (due to the high gearing levels - stock portfolio value is currently around $500,000 with $460,000 of margin and portfolio loans outstanding). Hopefully this is just a normal "correction" of 10%-15%, rather than the confirmation of a double-dip bear market. The relative strength of the Australian economy and Asian trading partners suggests the Australian stock market should have lower correlation with the US stock market in the medium term.

I haven't had any spare cash flow to pay off some mortgage or margin loan debt this month, as I continued spending on "home improvement" projects ($580 for a 81cm HD digital TV and stand from Aldi, $280 for sandstone slabs and besser blocks for constructing a path and steps as part of our swimming pool area upgrade, and about $500 on a new bunk bed and mattress for DS1's bedroom). This month I plan on spending another $250 or so to enclose two existing pine bookcases with sliding doors, and about $400 to lay new turf in the play area I've enclosed next to our swimming pool. It may also be quite expensive (I guess around $500-$1,000) to get our pool ready for swimming - the filter valve assembly needs a new seal, there is a significant leak somewhere in the underground pool piping when the filter is running, and the salt chlorinator needs a major service to get it working again!

Once I find out if I'll be enrolling in the MoA course next year I'll revise our budget for 2010. Perhaps I'll even have time during the Christmas holiday period to get my financial data for this FY up to date in Quicken.

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