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Sunday, 30 June 2013

Sold our investment property - maybe

A new buyer for our rental property was found, so we've finally "sold" our investment rental property for $806,000. Of course nothing is 100% final our bank clears the buyers payment on the settlement date (likely to be 8 weeks from today, unless our sitting tenants agree to move out before that date) - the last "buyer" who had negotiated a final price of $805,000 then pulled out. At least this time the buyer has already paid the 10% deposit to our agent, and has signed the purchase agreement, so the odds are good that the sale will go through. We signed the contract today, and I've made a rough calculation of the net proceeds after the agents fee (~$14,500), capital gains tax (~$68,000), and investment property mortgage ($249,140) are all paid. It should be just about enough to completely pay off the mortgage on our home when the period for the fixed rate part of our mortgage expires two years from now, and in the meantime we can clear roughly 60% of our home mortgage which is on a variable rate loan.

Once our mortgage is paid off I'll probably use the extra cash flow to 'top up' my superannuation contributions until I reach retirement age, while I think DW is planning on (maybe) buying a 1-bedroom apartment as an investment.

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Laptop first impressions

My new Dell 17R SE laptop arrived at my workplace on Thursday via Toll courier, after phoning Dell to redirect the delivery (although the Dell website says that for security reasons orders can't be redirected, Toll said I simply had to contact Dell to arrange a change of delivery address, and it turned out to not be any problem). The laptop looks very stylish with its subtle honeycomb-patterned matt-black cover and keyboard surround, with silver edging. But it is just as big, chunky, and hefty as expected. The setup for Windows 8 was quick and easy, but I must admit that my first impression of Windows 8 is not completely favourable. Aside from looking very tablet-like and colourful, getting to the familiar desktop, seeing the list of 'all apps' and even just getting to 'shut down' all seem buried under a layer (or two) of extra swipes, drags and generally un-intuitive user actions.

I've also noticed that it doesn't seem to have the back-lit keyboard listed when I ordered the product and on the packing sheet, so I've emailed Dell support to ask about this.

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Wednesday, 26 June 2013

Will the new Labor leader become PM? WIll he help Labor avoid annihilation at the next election? Do we care any more?

Despite being removed from the office of Prime Minister by the 'faceless men' of the Labor party three years ago, and the best efforts of some of his disgruntled colleagues to render him unelectable, Kevin Rudd did a John Howard act tonight, and got himself restored to the leadership of the Labor party. It will be interesting to see how Labor goes about marketing him as the 'best choice' for our next PM, when it is obvious that the only reason he's back is that he's more popular than Gillard, and will help Labor retain as many seats as possible at the next election.

It's not clear yet if he will actually be going to the next election as Prime Minister - that will depend on whether he convinces the Governor General that he can form/retain a functioning government with the aid of the 'independents' (two of whom resigned earlier today), and I'm sure the opposition will try to get a 'no confidence' motion up in the last day of parliament tomorrow.

Some pundits have predicted that Kevin's return will turn around Labor's fortunes, and that the 'bounce' in Labor's primary vote might even be sufficient for them to win the election. I think his impact will be a lot less than that, as there are far too many 'candid' comments by fellow Labor members about his failings as PM, for the election campaign to be very positive. And the reality of his removing Gillard from office may even disaffect some of the female voters who had viewed Julia as a role model (not that they're likely to vote for Tony Abbott instead). But Mr Rudd will probably save a lot of marginal Labor seats, and it will be interesting to see if he stays on (for long) if Labor loses the election, but not too badly.

One big positive that might come out of this turmoil is that Rudd may decide to call a 'snap' election in early August, as he isn't 'locked in' to the Sep data the Gillard had announced. I think the Australian public has already had more than enough of this 'election year' and would be relieved to get the election out of the way. An early election date would be brave call though, as it's hard to guess how long a 'honeymoon' period Rudd will enjoy once the election campaign officially begins.

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Tuesday, 25 June 2013

Bought another laptop

Although my old (2008 vintage) Dell Inspiron 1525 is still going strong (with a bit of help from a recent RAM upgrade), I was getting some funny looks from my supervisor and postgrads every time I unpacked it at the astrophysics department ;) I can't really justify buying a new laptop as most of my 'number crunching' is being run on a uni workstation (via a remote connection), but there is a data reduction package I recently installed on the laptop which probably needs a more powerful system to run on, and there is some observatory remote-control software that probably wouldn't even work on my old laptop.

So after a bit of indecision I eventually decided to take advantage of Dell's End-of-financial-year clearance sale to buy a reasonably 'high end' laptop - an Inspiron 17R SE ('special edition') for $899 (about 35% off the RRP, and $500 dollars off the usual price). The 17R SE comes with a fairly stylish anodised and textured aluminium cover plate and interior, back-lit keys, and an 17.3" 1920x1080 FHD display. The CPU is an Intel i7 quad-core running at up to 3.4 GHz, and the system has a 1TB SATA HDD and 2GB of separate video memory. On the downside, this desktop-replacement 'laptop' weighs more than 3kg and looks fairly 'chunky' compared to an ultrabook (it's about 1.5" thick at the back). This form factor probably wouldn't suit a petite lady, but it suits me and will just squeeze into my current aluminium laptop case (a sub-$100 Dicota knock-off of a $300 Halliburton case). Although I've seen the 17R SE configured with a 32 GB SSD, a SSD doesn't appear to have been included in my particular variant (hopefully I can add one as an upgrade in a year to two when SSD prices drop). The 6-cell 48 Whr battery only lasts around 2-3 hours (unlikely to be an issue for me, as I nearly always use my laptop plugged in to a power point). And the model I bought comes with a DVD drive rather than the BlueRay that's available on the more pricey versions, but I don't think I'll miss that as I don't even own any BlueRay discs. The 17R SE comes WiDi built-in, which might someday become useful for making presentations if WiDi ever becomes widely adopted, but the specs say that it requires 'Intel graphics' so the WiDi may be disabled in this model.

When I ordered online on Monday afternoon my order was confirmed by email as soon as my payment had cleared, and it was already with the courier service later that afternoon. Although it was initially scheduled for home delivery between 9-5 on Thursday, there was already a 'missed delivery' card waiting on my porch when DS1 got home from school today. So I'll phone the delivery company in the morning and get the package redirected to my office address.

The 17R SE I bought was initially listed as being on sale until 27/6, but when I checked today it had already sold out. A similar 17R SE model that is now on 'clearance sale' costs $500 more ($1299) and only has an i5 CPU, so I'm quite happy with my decision to make my purchase on Monday.



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Sunday, 23 June 2013

The world's worst time-share investment, or the world's best property 'flip'?

LOL. A guy bought an old US military storage facility in the middle-of-nowhere for $510,000 in April, on-sold 75% to another guy who is now trying to lease space at $1,000 per square foot as a 'resort' facility cum post-apocalypse bunker...

Since the 75% share apparently provides two million square feet of floor space, that means your $1,000 square foot originally cost under 20c a few months ago! But don't worry that you might be ripped-off, rest assured that the guy has 'plans' to put in blast doors real soon now... ;)

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Cheap computer programming course for kids

DS1 has been interested in computing since he was quite young, and has enjoyed extracurricular activities such as the Lego MindStorms robotics course I provided at his primary school (his team competed in the RoboCupJunior event a few years ago), and the Year 9/10 IST (Information Science and Technology) course he began this year (while in year 8) via distance education from NBSC (Northern Beaches Secondary College) through their HSC.LearnOnline. Despite starting the IST course a year earlier (I presume) than the other eight kids that are enrolled in the course, he's consistently ranked first in nearly all the marked assignments, as is having a great time. The benefits of doing the IST course via distance education rather than enrolling in that subject at his selective high school next year are that a) he gets to do the subject as a slightly 'accelerated' student, b) that in turn means that he can also do the Year 11/12 Software Design & Development course while he is in Year 10/11 (and count the mark towards his uni entrance ATAR score, if he does well enough), and c) doing the IST and PDD subjects externally allows him to do choose another subject to study in Years 9-12. My general philosophy for G&T education is to 'broaden' the range of studies taken, rather than focus on accelerating one subject.

Since he's interested in programming, DS1 started a 'computing club' at his school this year, and is hoping to line up enough other students to form a team to enter the AIO (Australian Informatics Olympiad) competition next term (and possible also enter the UNSW ProgComp). He's previously self-taught (with a bit of help from me) in simple computer programming using Python and VisualBasic, but without doing any formal courses in programming there are still some 'gaps' in his basic programming knowledge. So, I've paid for him to enrol in the NCSS (National Computer Science School) 'Challenge' computing course/competition run annually by the University of Sydney through their spin-off venture 'Grok Learning'. At $20 each for the 'Beginner' and 'Intermediate' 5-week course/competition it seems quite good value. Although there are good, free resources available for children to learn Python programming (such as the excellent eBook 'Snake Wrangling for Kids'), doing an online course with deadlines and marked assignments provides greater motivation, especially when there is a certificate from the University of Sydney at the end of the competition showing the level of participation and achievement.

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Saturday, 22 June 2013

Rolled over and reallocated DS1s superannuation

It's a bit hard keeping track of the never-ending changes to superannuation in Australia, especially less 'mainstream' aspects such as the rules around the government superannuation co-contribution as it relates to children's superannuation. But it appears that nowadays it is extremely difficult to meet the requirements for the co-contribution if you are under 18. Aside from the normal rules (a 1:2 government co-contribution of up $500 is available to those individuals that make an undeducted contribution into an eligible superannuation account or RSA, and earn less than $31,920 - those earning up to $46,920 total income are entitled to a reduced co-contribution amount) the 10% 'eligible income' test apparently makes it very difficult for students under 18 to qualify.

While DS1 was doing a paper round he could easily meet this 'eligible income' rule, but these days a large fraction of his income comes from his investments, and only a relatively small amount (~$1000 pa) from occasionally 'working' as a self-employed busker. I'm not sure exactly how the rules get applied to his busking income (although he has an ABN and declared the busking income in his tax return, it may be treated as 'hobby income' and not count (?), and while the investment income from his paper-round money comes from a separate investment account, so gets treated as 'earned income' and avoids the sky-high 'unearned income' child tax rates, it may also not count towards the 10% eligible income test...). I had expected that the $1000 busking income would have satisfied the 'eligible income' test, but that apparently wasn't so - despite making a $500 undeducted contribution into his RSA the previous financial year,  the amount of government co-contribution eventually deposited into his RSA (a few weeks after his tax return was lodged) was only $1!

Since it appears that he can't qualify for the co-contribution, there's no point keeping his fixed interest RSA account open any longer - so I lodged a 'rollover' form with the manager of his 'child' superannuation account, Macquarie Group, to transfer the balance of his AMP RSA into his superannuation account at Macquarie. I 'post-dated' the rollover form a couple of weeks, just in case the interest due at the end of June is calculated on the minimum balance (I didn't want to risk him getting no interest on his RSA for the past six months!), and at the same time I also sent in an 'investment reallocation form' to switch around the investment mix of his Macquarie superannuation account.

His asset allocation at Macquarie had included about 1/3 in property securities, bonds and fixed interest. The new allocation reduces the allocation to these sectors and is weighted more heavily in Australian stocks, small companies, and international equities. With an extremely long investment time-frame of 50+ years until he reaches retirement age, a high-risk, high-return asset allocation seems most appropriate. The recent sell-off in the world equities markets might prove an apportune time to be rolling over his fixed-interest superannuation balance into a more high-risk environment to take advantage of a return to 'normal' rates of investment return in the coming decades. Once he reaches 18 years of age, I'll rollover his superannuation into our SMSF.

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Sunday, 16 June 2013

Still waiting to sell our investment property

Our 'investment' rental property is still on the market, almost a year after we first decided to sell it off. We had originally bought this property in 2000 with a view to rent it out initially, and then later on demolish it to build our 'dream home'. Our plans changed when we bought our current home (we couldn't really afford to build the sort of luxury home we had in mind when we first got married, especially after DW permanently (?) stopped full-time work after DS2 was born, and the GFC had wiped out most of the net value of my stock portfolio), so we decided to sell it and use the net proceeds to reduce our home mortgage as much as possible. That would free up a lot of cash flow to direct towards other investments - I'm no longer a fan of direct investment in rental properties in Sydney, given the constant headaches of delinquent tenants, repairs and maintenance, and the illiquid nature of real estate investments. It's also hard to see any great potential for capital gains in the medium term, given how expensive the Sydney real estate market appears to be.

We have had a series of 'low-ball' offers in the mid-700s (based on house prices in that suburb my estimated valuation is around $830K-$860K) since the property was put on the market, despite our asking price being 'offers over $830,000'. We had one tentative offer of $810,000 last year just before we changed realtors, but unfortunately that 'buyer' saw our property being advertised on the new agents website with a price guide of 'over $795,000' and reduced their offer to $780,000 before we could even negotiate. That sale might have fallen through anyway, but the new agent's strategy of listing our property below $800,000 (in order for it to be seen by buyers looking for houses under the $800,000 mark) appears to have been counter-productive, or at least very bad timing!

The latest offer we received was for $785,000, and they had rejected our reduced asking price of $825,000 before 'accepting' our 'final price' of $805,000. Unfortunately, as I had told DW, nothing is really definite until settlement day arrives - so I wasn't particularly surprised to learn that the 'buyer' pulled out a few days later. Either they got an unfavourable builders report (I think they may have wanted to renovate while living there, rather than demolishing it and building a new house), or perhaps couldn't arrange (or afford) the finance at that price.

Meanwhile our tenants had to be 'read the riot act' by DW (ie. sent a notice of eviction) when their rent payments fell more than 14 days in arrears. That woke them up, and they finally paid a couple of weeks back-rent last Friday, with a promise to 'catch up' the balance of rent owing this weekend (apparently one of their parents has paid the balance of the outstanding rent via electronic transfer, so it should appear in our bank account on Monday). Provided the tenants continue to pay their rent, the property has a rental yield of around 3.4%, which isn't too bad. Things will get more difficult again if we haven't sold the property by the time their lease expires and we have trouble finding new tenants. Last time the property was vacant it took almost six months to find new tenants!

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Monday, 10 June 2013

Getting Fit(ter) on the cheap

I've been singularly unsuccessful losing weight over the past couple of years, despite tracking what I eat (apparently just recording the fact that I ate some unplanned junk food or ate confectionary isn't a substitute for actually sticking to a diet!) and doing some moderate exercise (having a brisk 30-minute walk nearly every lunchtime at work). So I decided to join the 'Crunch' gym that recently opened in a nearby suburb. While I loath and detest going to the gym (my eczema makes getting hot and sweaty a really unpleasant experience), paying in advance is a good motivator to get me to actually do some aerobic exercise on a regular basis. I joined two weeks ago and have so far stuck to my planned twice weekly sessions. At a cost for a 'basic' membership of $6.95 per week (plus a $1 direct debit fee each fortnight, plus an $8 quarterly 'admin fee') its quite affordable (around $4.50 per session) - although I still would much prefer to spend the $474 each year on a new laptop ;)

The gym is conveniently located on one of the routes I can take home from work, so I can stop there on Thursday nights for a gym session on the way home. And on Saturday mornings I can go to the gym while DS1 is attending his Chinese lessons nearby.

Although the amount of calories 'burned off' during a vigorous 30-min aerobic session (bike and rowing machine with an average pulse rate of 140-150, which is 80%-90% of MHR for my age) and 20 minutes of weight training is fairly negligible, I have noticed that a serious bout of exercise supresses my appetite for hours afterwards. So I often consume less calories than normal on the days I go to the gym.

The joining fee for Crunch gym is normally $100, but was on 'special' last month ($30), and I even managed to have that waived after I had enquired why their Google advert said 'no joining fee' (it turned out that was only if you opted for the more expensive 'premium' weekly rate, which includes attending any of the scheduled 'classes' that cost $5 each for 'basic' members). They charged an up-front 'pro rata' amount for the days from when I joined until the normal billing day (the 15th of each month), plus the 'last' month's fees ($27.80). This basically means I will have to give four weeks notice before I want to stop attending the gym. On the plus side, having effectively pre-paid for at least the coming month, there's more incentive to attend the gym regularly and not 'drop out' without making a definite decision to do so.

We'll see how long I stick with the 'new me', and if I finally can get down to a more healthy weight. Ideally this exercise and healthy eating lifestyle should be for the rest of my life...

ps. The most cost-ineffective spending on exercise would have to be our swimming pool. It costs more to maintain each year than the Crunch gym will, and we only use for about half the year.

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Sunday, 9 June 2013

Is Labor's NBN really FTTH? Or just another version of FTTN?

While I think the current NBN plan is a waste of money, with the number of people that will really need 1000 mbps/100 GB/month broadband internet connections in the next 20 years vastly over-estimated, it was nice to learn a couple of months ago that the NBN roll-out plan had finally been expanded to include our region within the next three years (at least, there's a plan to start rolling out here in 3-4 years time, so we would get access in 4-5 years time, if all went 'according to plan' - not very likely given the NBN roll-out track record so far...). Previously roll-out to most of the northern suburbs of Sydney wasn't even part of the 'plan'. (A suspicious correlation between the announced roll-out regions and Labor electorates existed, despite NBN reassurances that their plan had been formulated purely on the basis of roll-out efficiency).

But then, looking at the current coverage maps on their website I noticed a strange dark 'band' cutting across most of the roll-out areas. A closer reading of the 'fine print' accompanying the map below shows that the dark band is the area where homes can connect directly to fibre (ie. FTTH), while the bulk of the areas due to get NBN 'coverage' are only going to get a 'fixed' wireless broadband connection pointed at the nearest tower connected to the fibre.


Surely a wireless link from homes to these towers is FTTN like the coalitions, cheaper landline to the node, based plan? I might be missing something here, but from all the advertising of the NBN I had got the impression the billions spent on the NBN were going to provide a 'box' mounted on each home with a direct optical fibre connection, not just a gloried wireless broadband service?

If were are to get a 'fixed' wireless connection to the NBN, I wonder how good our broadband service will be when a large truck or cement mixer is sitting in the 'line-of-sight' between our fixed wireless antenna and the NBN tower?


If the NBN service is going to be a fixed wireless service, I can see even less benefit switching to NBN compared to a mobile 4G broadband device that can be used outside the home, coupled with antenna at home to improve the signal strength. After all, where I really need fast broadband (at uni and at work) it is already available. Most internet use at home doesn't need a fast broadband link, and if I want to watch downloaded multimedia content (eg. movies) while at home for a few hours every day, I can simply download them overnight or while I'm at work.

Perhaps this 'fixed wireless' situation is just going to be the initial case in five year's time - and that eventually optical fibre will actually spread down each street to connect to 'the home'. But in that case, the much-publicised 'roll-out' plans are at best misleading, and the NBN should be more open about how many years after the NBN 'coverage' reaches a suburb you'd actually be able to get a FTTH connection...

If the FTTH internet connection is going to take ten or twenty years to be fully rolled-out, I'm not sure how 'future proof' it will turn out to be. Technology has a way of making leaps forward in totally expected directions. For all I know, I might be using a quantum-entanglement broadband connection to use the internet in twenty years time, and not the old technology of glass fibre 'land-lines'...

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Tuesday, 4 June 2013

Net Worth Update: May 2013

After a good run up during the month, the stock market reversal in the final week of May left my net worth at a slightly lower point than it started. Still no serious interest in our investment property, and the tenants have fallen behind in their rent payments. DW remains keen on property as an investment class, but, despite the poor performance of the Australian stock market since the GFC, I'd still rather have our house as my only direct property investment.

Assets$ Amount $ Diff% Diff
Stocks *$8,997-$15,846n/a
Retirement$496,609-$4,280-0.85%
Properties$875,262-$575-0.07%
Debts$ Amount $ Diff% Diff
Home Mortgage(s)$363,237-$104-0.03%
Net Worth$1,017,631-$20,598-1.98%
* the Stocks figure is portfolio value - margin loans

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Saturday, 1 June 2013

How much value does a financial planner add?

Not much, in some cases, as this saga of financial planning gone bad show:

http://www.smh.com.au/business/profit-above-all-else-how-cba-lost-savings-and-hid-its-tracks-20130531-2nhde.html

While financial planning has its place - as some planners are highly ethical, well-trained and look out for their clients interests for a reasonable fee, and some of their clients have large amounts to invest and lack the required  knowledge to make optimal investment decisions on their own - there are more than a handful of 'financial planners' that have mediocre skills, or whose focus is on maximising their fee income by advising clients to invest in products that provide large upfront and/or trailing commissions.

This article also highlights that using planners who work for a major financial institution is no guarantee that you'll be taken care of a particular planner does the 'wrong thing'. Although corporations all pay lip-service to lofty goals around customer service and satisfaction, their bottom line is usually, well, the bottom line. So fully compensating customers for losses is not consistent with the corporate aims of minimising costs and maximising profits.

As the saying goes, no one has your best interest at heart more than yourself. So while DIY financial planning has its own inherent risks, it may not be more risky than going to the 'experts', given that it is very hard to know which financial planners are really 'value-for-money'.

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