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Monday, 14 January 2013

Lucky escape for Australia's premier optical observatory

As bush fires continue to rage in many places in the Eastern states of Australia, a wild fire in the Warrumbungles National Park threatened the Siding Spring Observatory site which is located inside the national park. Fortunately it appears that although there was some damage to a few of the structures and the lodge used by visiting astronomers, the main telescope facilities survived. Some photos of the fire and resulting damage are shown in this SMH article.

The historic Mount Stomlo observatory in Canberra was severely damaged by bushfire in the 1950s, and completely destroyed by another bushfire a few years ago , so one wonders whether some more preventative clearing of vegetation surrounding these facilities is warranted? These observatories are situated in national parks (since remote, mountain-top locations free of light pollution tend to be found in wilderness areas that are now national parks), so the removal of native vegatation is tightly regulated and usually impossible (aside from national park facilities, roads etc). But, given there are only a handful observatory sites occupying a few hectares of land within Australia's 895,000 square kilometers of national park, surely clearing a few hundred metres around facilities worth many million of dollars (just the main 3.9m AAT telescope at Siding Spring observatory cost almost $16m in 1973!) is justified under any reasonable cost-benefit calculation?

Now that this fire has already burnt out about 40,000 hectares of national park, perhaps it is a good chance to keep clear a slightly larger buffer zone around the observatory, in preparation for 'next time'...

Subscribe to Enough Wealth. Copyright 2006-2013

Saturday, 12 January 2013

Finally, new tenants

After remaining vacant for more than six months, our agent finally found some new tenants to move into our rental property. The timing is rather fortunate, as DW and I were considering lower the rent even further, thinking that some rent is better than none at all. As it is, the new tenants didn't haggle about the rent, and want to sign a one-year lease, so we will have some certainty during 2013.

Although the house has also been listed for sale for the past three month, there have been very few interested buyers (just a couple of 'low ball' offers, which the agent didn't even ask us to consider), so I'd be surprised if we sell it before next Spring.

I've spent several evenings and weekends (and more than $500 in material) fixing up the balcony of the rental property, and DW has been doing a lot of work keeping the garden under control, so it will be good to have the tenants mowing the lawn fom now on! There are still a couple of minor repairs that need to be completed, as the handyman we used to patch and repaint some of the interior walls had missed a couple of the other repairs on our list, and he is now away on holiday.

I was a bit surprised at how long the property remained un-let this time, as we have previously had little trouble finding new tenants because the property is one of the few 'cheap' (around $540/wk) 3-bedroom houses available for rent in an otherwise rather expensive suburb (lots of houses rent for well over $1000 per week). Our property originally rented for about the bottom quartile average weekly rent, but we have had trouble raising the rent to keep pace with the market without putting off tenants that are looking for 'cheap' accomodation in this area. Some of our previous tenants have remained for many years, so, hopefully, the new tenants will stay until we either sell the property or decide to demolish and rebuild as a new home for ourselves. We regularly revisit the idea of building a new house there (that was our original plan when we bought the property in 2000), but we can't really afford the $650K+ the sort of house we have in mind would cost. Also, as we get older it seems less attractive to move house again, as our current home is quite comfortable, and in a nice suburb close to shops, schools and transport. It also doesn't seem worth the effort as we may move to the farm property near Forster once I retire in 15 years or so, and the kids may move out of town when they go to uni (DS1 will finish high school in another 5 years, and DS2 12 years) so spending a huge amount on a Sydney house seems rather pointless.

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Thursday, 10 January 2013

Bought some more ELD shares

Despite having written just a few days ago that I was going to simply 'hold' my current portfolio of stocks, I bought another 17,500 Elders shares at $0.14 yesterday. The shares appear to have 'bottomed' around 11c during December, and in the past few days have started to rise. Given that their 'book value' is allegedly around $1 or more per share, there is always the chance of a significant  turn-around in the fortunes of this historic Australian company. With many parts of the country having now been out of drought for a couple of seasons, it seems logical that a rural services company could benefit from increased sales and profitability over the coming years.

However, I bought my first tranche of ELD shares based on this same logic, only to see them decline further in value after a brief 'bounce'. Time will tell whether buying more Elders shares to 'average down' was an astute buy (aka 'lucky guess'), or simply throwing good money after bad.

From what I've read, it seems that the statistics indicate that buying such 'turnaround opportunity' stocks is usually a bad idea, akin to buying an IPO. Picking individual stocks (rather than investing via an index fund) is breaking one of my current investment 'rules', as is investing in a stock that isn't in the ASX200! This just goes to show that investors do not always act rationally, contrary to what economists generally assume.

I could kid myself that this buy is an example of following Warren Buffet's strategy of buying a good company at a low price, but, having not done any research (I lack Buffet's research ability and resources anyhow) or any sort of financial analysis, it is really just a wild punt.

Perhaps I should stop fiddling around with my stock portfolio and get back to studying my astrophysics texts...

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Tuesday, 8 January 2013

What does my Stock and Fund Portfolio currently look like?

My current portfolio of stocks and managed (mutual), hedge and index funds is shown below.


The current valuation would be great if I didn't currently owe about $493,000 against this portfolio - either via margin loans secured against the portfolio value, or other loans (for example a 'portfolio loan' secured against the equity in our real estate holdings) that were used to purchase these investments pre-GFC ("it seemed like a good idea at the time").

Although the 'net equity' is still negative (about -$17,000), this is an improvement compared to the situation over the past few years. Based on predictions of dividends and capital growth for 2013 that I have plucked out of thin air, my "target" for the portfolio value at the end of 2013 is about $495,000. Aside from funding the loan interest payments (out of a combination of dividend payments, PAYG tax refund and salary income) I also "plan" on reducing the total loan liability to a nice, round $490,000 (although I haven't yet worked out where I'm going to get the $3,000 from, as its not in my budget plan!). If all goes to plan my portfolio may have a postive net equity by the end of 2013. Still extremely sad considering my portfolio net equity was around $450,000 during 2007...

The 'hedge' funds (that turned out not to be hedged against market declines) are listed at the values which will apply at their maturity dates (due over the next few years). These won't pay out any dividends or go up in value, but I'd get a lot less if they were sold prior to their maturity dates (not of of them are even liquid at the moment).

Aside from eliminating the hedge fund investments and paying down some of the loan as they reach maturity, I don't currently plan on making changes to my portfolio. The exeptions being a slight increase in some holdings due to dividend reinvestment plans that are currently in place, and, possibly, offloading IPE and Elders shares if they go up in value as the economy improves.

Subscribe to Enough Wealth. Copyright 2006-2013

23andme

I first learned of the personal genome testing service provided by 23andme.com a few years ago (while watching a US genealogy program on TV) and was interested in using the service for myself and DW, but was put off by the price (then around $300 per test kit, plus a monthly 'subscription' for one year that cost another $100 or so). While information about genetic markers that could indicate an increased risk of some disease may be a helpful in making positive lifestyle changes (or at least prompt getting a relevant medical check-up), I was mainly interested in the genealogical aspects - while I can trace a few of my maternal ancestors back to the mid 1600s, and paternal ancestry to the late 1700s, DW has no family history information prior to her grandparents. So any extra information about where her acestors lived would be interesting.  But at the time, $300 each seemed way too expensive for casual interest, so I never ordered a kit and forgot all about it.

But yesterday I read an article about 23andme in the SMH, and found that since December the price has been reduced to only US$99 per kit, and the 'subscription' fee is no longer imposed. So I went ahead and ordered test kits for myself and DW. The international shipping (including return postage) was $74.95 for the first kit, and $41.00 for each additional kit, so the total cost for the two kits was US$313.95, which was charged as A$302.01 on my Visa card (and there will probably also be a small 'foreign transaction' fee charged by the bank). A$150 each seems a reasonable outlay, especially as routine genealogical information (such as copies of birth or marriage certificates) can cost around $40 each!

It will be interesting to see if the test results provide any interesting hints as to DW distant family origins. And we might get some useful health information that highlights areas of diet and excercise that may require special attention, or prompt us to get a medical check-up for specific risk factors. Although I have seen negative views regarding the 23andme service by some medical professionals (one was advocating using a 'proper' genetic sequencing service costing many thousands of dollars, and consulting a 'genetic councellor' to learn the results), this viewpoint may be influenced by a vested interest in the general public only having access to personal medical information via the medical profession. Personally I think it is generally good for this service to be widely available at quite low cost. While some health results might be concerning, they are only indicators of a possibly heightened risk factor. I'd consult my GP to see if any further tests were warranted if there was a risk factor. And while I might not like learning that I have a very high risk of a particular condition reducing my life expectancy, it could also be useful for financial planning purposes. After all, calculating how long one's retirement savings have to last simply from the 'average' life expectancy has always been a rather haphazard approach.

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Sunday, 6 January 2013

Why Saving and Dieting have a lot in common

I weigh more than I should (or want) to, and I also have less wealth than I want (need for retirement?). I have been trying to address both issues for many years, with a mix of some successes and some failures. So, while I'm neither a nutitionist nor a financial advisor, I do have some personal experience and have slowly worked out what works (for me) and want doesn't.

One thing I've noticed is that saving and investing have a lot in common with dieting. In both endevours 'fad' diets or savings techniques can provide a brief boost, but in the long term the key to success is to make a lifestyle change that results in slow and steady progress towards one's goal. While you can achieve some goals (such as avoiding the dangers of binge drinking or smoking) by completely eliminating the source of the problem, one has to eat and one has to also spend some money (at least while living a conventional lifestyle, rather than moving to a barter-based commune!), so its more a question of self-control after deciding what the optimimum levels of caloric and economic consumption are. Each persons situation will be a bit different.

I find that keeping a detailed record is very helpful for both activities, as it helps avoid the 'snacking' and spur-of-the-moment spending that can otherwise derail the most carefully laid out plans. Tracking actual spending and eating against a plan or 'budget' provides a tool to identify when one goes 'off the rails' and catch any problems early on, when they are easily fixed.

It also allows one to check that the plan is realistic - as cutting back spending or eating too drastically can have adverse effects (eg. malnutrition or eliminating necessary but discretionary spending eg. key insurance), so the initial plan may need some tweaking to achieve the best long-term outcome.

Anyway, the start of 2013 provides yet another opportunity for me to implement my food and spending budgets.

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Tuesday, 1 January 2013

Net Worth Update: December 2012

December saw increases in the values of both our property investments and stock investments (hence also in our retirement savings SMSF). I'm not convinced the estimated property valuations are particularly accurate, as they are based on the average sales price for the entire postcode region (~suburb) for the month, and the relationship between the average sales price and our particular property will depend on the mix of properties that were sold -- if top end houses were sold during the month, the change in average price will not be relevant to the price of our (low-end) rental property.
At the current net worth value it looks quite possible that I will again become a "millionaire" (for the third time!) during 2013. But given the ongoing global economic uncertainty, and challenging environment for Australian manufacturing and retail businesses, I wouldn't be at all surprised to see my NW fluctuate above and below the million dollar mark several times during 2013.

Assets___________$ Amount______$ Diff_____% Diff 
Stocks_*_________-$15,079____+$16,812______n/a % 
Retirement_______$437,870____+$11,986____+2.81 % 
Properties_______$883,493____+$12,838____+1.47 % 

Debts____________$ Amount_____$ Diff_____% Diff 
Home Mortgage(s)_$363,780______-$102_____-0.03 % 

Net Worth________$942,502____+$41,738____+1.91 %

* the Stocks figure is portfolio value - margin loans. As my portfolio value (and margin loan debt) is around $500,000 relatively small movements in the stock market produce huge percentage swings in the net value of my stock portfolio each month.
* the Stocks net equity figure is listed under 'other debts' in NetWorthIQ as it doesn't allow negative values to be entered in the 'stocks' category.
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