Our mortgage balance continued to decrease v-e-r-y slowly, as 2/3 of our mortgage is currently on a fixed-rate, interest only contract (another 2-4 years before resetting to standard variable rate, interest only), and the remaining 1/3 is standard (for Australia) variable rate, but also set for interest-only repayments while DW continues to work part-time. We had hoped DS2 would start Kindergarten in 2011, but the local primary school head-mistress decided against allowing 'early entry' (DS2 was born in September, missing the annual "cut-off" date by a couple of months). So, DW will stick with working 2 days a week during 2011. She's decided against returning to work full-time anyhow - preferring to work 3 days a week once both our kids are attending school. It makes sense from her point of view, as when she was working full-time she used to put some of her wage towards our living expenses budget and most of the rest went towards paying off our mortgages as fast as possible. If she went back to working full-time she wouldn't end up having much extra 'pcoket money' to spend, as she would resume contributing towards to family budget, and would also start paying back the money she "borrowed" from me for our trip to overseas to visit her relatives five years ago. From my point of view it means I have to continue paying all our living expenses and that the mortgages won't get paid off -- oh well, the GFC had ruled out my tentative 'early retirement' plans anyhow. It now looks like I'll be working until 70 - unless I get laid off earlier...
The balance of my stock portfolio margin loans remained constant as I am paying interest only on these balances. As interest rates are continuing to rise, I took the opportunity to fix the interest rate (@8.50%) on most of the balance of my Leveraged Equities Margin Loan for next financial year, although it is doubtful whether my stock portfolio will appreciate by more than 8.50% during that time. Due to the margin loan interest being deductible against my PAYG income (at a marginal tax rate of 30% or 38% depending on my other taxable income/deductible expenses) while any capital gains (held >12 months) are taxed at half my marginal tax rate, my leveraged stock portfolio only has to achieve a total return (capital gains + dividends) of around 7% for me to "break even".
I bought some shares in Elders (~$5,000 worth @ $0.41) during the month, betting that although they are currently losing money, they won't go broke (or be taken over at a bargain price) and the cost-cutting measures will return them to profitability. A turn around could see the share price above $2 again in a couple of years.
Late in June I reduced our SMSF investment in IQ (ASX200) CFDs by half - if the stock market continues to decline I'll close out that position before we make a loss on the CFD investment. I had intended to buy-and-hold the CFDs for the next 15+ years, but this may be an opportunity to reestablish our CFD investment at a lower entry price. It will then be hard to decide when to reinvest, as any bounce could be temporary. By the time it becomes obvious that the market has bottomed out, prices may have rebounded above the price we sold out. I may start to dollar-cost average back one CFD per month if the market drops 10% below the price we sold at. I tend to suck at market-timing.
Assets___________$ Amount______$ Diff_____% Diff
Stocks____________ $6,324____-$10,305___-61.97 %
Debts____________$ Amount_____$ Diff_____% Diff
Home Mortgage(s)_$364,106_________-$8____-0.00 %
Net Worth________$889,478_____$28,594_____3.32 %
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