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Thursday, 27 August 2009

Retirement Savings Asset Allocation

The value of my retirement savings (superannuation) account is currently around $304,600. About $8,500 of this is sitting in my old Westpac Business Super account in order to retain my $400,000 life insurance policy (Death and Total & Permanent Disability cover), while the remainder is held within our Self-Managed Superannuation Fund in order to minimise administration and investment management fees.

Overall, the asset allocation of my retirement savings is currently as follows:
Australian Shares: 50.6%
International Shares: 34.5%
Property Securities: 9.5%
Fixed Interest & Cash: 5.4%



That's pretty much in line with my target allocation.

Many people would have a higher percentage allocated to property and fixed interest (bonds), but I already have a large percentage of my overall net worth invested directly in real estate (our home and one investment rental property), and I had decided on a long-term high growth investment strategy (including gearing) prior to the GFC, so I'll stick with that plan (it's too late to lock the barn door after the horse has bolted!)

My rate of retirement savings is currently around $25,000pa via my employer's SGL payment of 9% of salary, topped up with salary sacrifice to the maximum concessionally taxed amount. I'd like to be saving another $1,000 each month via undeducted contributions, but at the moment I'm a bit short of cash flow due to a spate of well-priced share purchase plan offers

I've really no idea how well I'm positioned for achieving comfortable self-funded retirement. It will largely depend on what average rate of return eventuates, at what age I retire, and how long I expect to live (hence the withdrawal rate I choose during 'pension phase').

Subscribe to Enough Wealth. Copyright 2006-2009

Sunday, 16 August 2009

More Home Improvements

Years ago, when I was single (and had more spare time and money), I subscribed to various editions of leather bound 'heirloom' books from Easton Press. Altogether I bought approximately 200 books, which cost around A$100 each.



Since buying our current home seven years ago I've intended to convert our lounge room into a 'library' by building some book cases into one half of the room, but haven't got around to it yet. The books are currently scattered around the lounge room in various locations.



Last week I did manage to get one step closer to starting work on this project by buying six flat packs of DIY 'six cube bookcase' kits from Aldi for A$100 each.



These bookcases will provide more than enough storage space for my leather bound books, and for display of some of my collection of coins and other 'collectibles'. I plan to stack two of the bookcases on top of each other to make a 4x3 cube unit 1.6m high on each side of an alcove in the lounge room. I'll then cut the remaining two kits in half to install 1x4 cube units either side the large teak wood carving I bought in Singapore twenty years ago. The wood carving isn't as deep as the bookcases, so I'll be able to mount a flat screen HD TV above the carving and run the data and power cables behind the carving. I'm not sure if I'll leave the cube bookcases 'open' or enclose each cube with tracks and sliding glass doors or hinged glass doors. I can probably leave the glazing for 'phase two' of this project ;) In any case, I won't be starting on this work until after I've finished installing the new pool fencing and done this year's tax returns...

Subscribe to Enough Wealth. Copyright 2006-2008

Monday, 10 August 2009

Superannuation co-contribution cheque arrived

A cheque for DWs $1,501.80 superannuation co-contribution arrived in the mail today from our SMSF administrator, eSuperfund. I can only assume the extra $1.80 was due to interest accrued while the $1,500 government co-contribution was sitting in a holding account for some time. There is always a significant delay between when the $1,000 undeducted superannuation contribution is made and when the co-contribution payment is eventually received. That's because the individual who made the contribution has to lodge their tax return (which confirms if a deduction is being claimed for the contribution, and the individual's taxable income for that year) and the super fund has to lodge it's annual tax return (which presumably includes any deduction claim paperwork) before the ATO can finally decide how much co-contribution to pay out.

Subscribe to Enough Wealth. Copyright 2006-2008

Thursday, 6 August 2009

Panasonic NV-DS15 mini-DV camcorder 'reboot'

After the aborted attempt to "upgrade" to a new (but cheap) HD camcorder, I'm concentrating on making better use of the video equipment I already have. The two new batteries I ordered from estore.com.au arrived within a couple of days of my ordering them online. Charging them up only took a couple of hours and they each provide around 90 minutes of intermittent recording time when fully charged.

To download my miniDV tapes to PC I decided to use the camcorder's firewire connection, as using the serial connector and the video editing software that came with the camera when I bought it in 2000 would be v-e-r-y slow (I think it's really just meant for downloading the 6-second "photo shot" still images that can be recorded with the camcorder). It was a bit off-putting to see that Panasonic had a special document entitled "Cautions for Connecting a Video Camera to a PC" that stressed that the PC should be turned OFF before using a firewire cable to connect the PC to the camera - otherwise there "may" be potential for static electricity damage to the camcorder! Not exactly "plug and play" ;) In practice I've had no problems when unplugging the firewire cable from the camcorder the normal way - using the Windows "disconnect USB device" tool and then turning off the camcorder before unplugging the cable.

The recommended IEEE 1394-1995 i.Link cable from Panasonic (VW-CD1E) is apparently discontinued, and in any case was simply an overpriced 4-pin firewire cable (apparently it cost around $100!). I purchased a generic 4-pin to 6-pin Belkin firewire cable from the local JB Hi-Fi store for $16.95 and it works perfectly. It was a relief to find that Windows Vista detected the camcorder device as soon as it was connected, and installed a working device driver without any problems.

I'm using Windows Movie Maker to download the mini-DV tape contents to my Dell PC. In AVI format a standard 60-min (SP) miniDV tape will occupy approx. 13 GB of harddisk space. Unfortunately the 1TB drive is formatted with Fat-32 file structure, so the maximum size for a single file is apparently 4GB (~19 min of recording time). I found this out when trying to download the first miniDV tape. So I'm splitting each tape into 4x15 minute segments, with a 1-min overlap to make editing easier. As I have around 26 used miniDV tapes this will result in approx. 100 raw video segments in total! As the play-back/download process occurs in "real time" I'm only transferring one or two of my 1-hr miniDV tapes each evening. If I saved the downloaded video files in WMV format I could store each complete 1-hr tape in a 1GB file, but I'm not sure how much the image quality would be degraded using WMV rather than AVI format. I've already had one of the miniDV tapes get damaged (tangled during tape ejection) and was lucky to be able to still rewind the tape and download it without further problems (the data in the damaged section of tape was unusable), so I think its best to make a "master" copy of each tape in AVI format. As I'm storing all my video and digital photo raw files onto my external 1TB harddisk file size isn't an issue yet. For data backups I'll eventually need to buy a second cheap 1TB HDD when ALDI has one on special, and store the second drive off-site (in case of a house fire). But I may put this purchase off for a while as storage media keeps getting cheaper each year. I still remember paying hundreds of dollars for a tape drive and tapes to back up my old 3.5" FDD last century, and the technology was continually being superseded by larger capacity media that were much faster and cheaper (per MB) than what had been available the previous year.

I found manuals for the various Panasonic NV-DS15 camcorder models online, although I eventually also located my original hard copy manuals.

So far we've just been enjoying viewing the unedited tape segments as I download them. Once I've finished all the data transfers from tape to HDD I'll start playing around with editing some footage (meterage? byteage?) using Windows Movie Maker (DS1 is already an expert). My first project will be editing last year's European vacation tapes and burn it the result onto a DVD. I'll insert some relevant still digital photos that DW, DS1 and I took, and maybe make up some graphics showing our journey (I recorded daily way points using my GPS and kept the road maps) and some title frames. Dubbing in some background music and commentary might make the end result look more like a travel documentary and less like the old-fashioned "home movie". The DVD burner software apparently lets you create a DVD "index" to make the finished product look more like a "professional" (rental movie) DVD, but I suspect that the more "professional" I package the finished product, the more obviously amateur the actual camera work will appear! I've been reading up on basic camera techniques (pans, tilts, etc) and will make sure I use a tripod on our next holiday. I'd gotten used to making do with hand-held recording while on previous back-packing holidays, but nowadays we travel by car (or camper van) so there's no reason to leave the tripod at home. Another benefit of using a tripod and remote control for the camcorder (if I can find it!) is that I'll appear more frequently in our holiday movies.

Depending on how the finished DVD turns out, I may just send a copy to our relatives, or maybe we'll even make some of our friends suffer through watching a "home movie" ;)

Subscribe to Enough Wealth. Copyright 2006-2008

Tuesday, 4 August 2009

Net Worth Update: July 2009

My net worth increased 8.65% during July, due mostly to the massive rally in the Australian and global share markets. By 31 July my NW had increased to $702,509 (up $55,938). But that's still about 41% below the peak NW figure I reached in 2007, despite having saved a considerable amount into superannuation in the past two years.

My retirement account (SMSF) gained $18,745 (+6.93%) to $289,256. The gain was mostly due to the stock market rise, with our recent small investment (~$5,000) in 7 ASX200 index CFDs (IQ) contributing around $2,000 of the gain. The overall change in SMSF valuation was also boosted by getting three months backlog of employer contributions deposited into the SMSF bank account in early July, but was held back somewhat by the negative impact of paying out the SMSF tax assessed for FY 2007/8 and also making a provisional tax payment for the 2008/9 FY.

The estimated valuations for my half of our real estate assets (house and investment property) were up $7,662 (+1.00%) to $774,468 in July, and recent sales data indicates a similar rise will be recorded for August. There are some indications that our real estate portfolio valuation may continue to rise during 2009/10, with the gap between new housing construction and the underlying demand for housing supporting house prices in Sydney. However gains will be tempered by the rising unemployment rate. The balance of my half of our real estate mortgages decreased slightly (-$86 or 0.02%) to -$362,944, with all our loans currently "interest-only" and the majority at a fixed rate for the next several years.

My leveraged stock portfolio finally moved back into net positive equity during the month (Woo-hoo!) to have a net value of +$1,729 (a gain of +$29,445 for the month). The gross value of my stock portfolio is around $450,000, so stock market movements have a massive impact on my net worth. The recent rally has been exceptionally steep, reflecting the recent sharp rebound in consumer sentiment and hopes for a rapid recover in the real economy. Although the market may continue to rise (if the economic recovery materialises and unemployment rates max out lower than previously projected), there must be considerable risk that the market will pull back significantly if there is unexpected bad news (or even if the recovery is modest). In the medium term (2-3 years) I think the market might get back to pre-GFC levels if the economy moves back into long-term average growth rates and company profits recover. However, inflationary pressures resulting from the government's deficit-funded stimulus spending could significantly lower the market's p/e requirements in future, limiting growth in stock prices as profits recover. That could lead to another decade of poor stock market performance, similar to the 1970s.

It will be interesting to see how unemployment rate trends as the economic recovery gets underway. It was only a few years ago that economists were predicting labour shortages in the coming decades due to the aging workforce. The current spike in unemployment is likely to lead to a few years of reduced immigration levels, which could exacerbate labour supply issues in the medium term. That could also lead to inflationary wage pressures as the economy recovers and unemployment starts to trend down.

Subscribe to Enough Wealth. Copyright 2006-2008