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Saturday, 27 December 2014

Bought myself a new DSLR camera

I bought my first DSLR camera (a Pentax *ist DS) more than a decade ago, and it produced nice quality images despite the limited 6MP image resolution. One nice aspect was that I could continue to use the old K-mount lenses I'd bought in the 80's to use with my previous Pentax SLR 35mm camera, although I had to focus and adjust exposure settings manually when using those lenses.

However, that old camera had developed an electrical fault (the inbuilt flash would strobe and cause the camera to shut down when you turned it on) and despite twice trying to have it fixed by the local authorized service center, the fault kept recurring, so I decided to finally buy a new camera.

My wife and sons all have compact digital cameras that take nice 'snapshot' photographs, but I still fancy myself as a bit of an amateur photographer, so I decided to buy a more expensive digital SLR camera. In the end I opted for the Nikon D3300 camera twin lens kit. It comes with 18-55mm and 55-200mm zoom lenses, and with the inbuilt lithium battery it only weighs about half my old Pentax DSLR that required four AA batteries. It's one of the cheaper DSLR Nikon cameras, but I don't need the features of the much more expensive 'professional' cameras, or even the 'bells and whistles' that come with models such as the D5300 (who really needs WiFi connectivity between their camera and tablet, or automatic geotagging? Especially when it costs an extra hundred bucks and doesn't improve the image quality one iota?).

I took a few test snapshots during a weekend away over Christmas, and will need to watch a couple of videos on how to use it properly before we go on a two week cruise around New Zealand next month (I didn't even change the settings from the default medium-res JPEG and AUTO mode during this first outing - although I did manage to drop the new camera in the dirt once when the neck strap came updone!). One good thing these days is that SD cards are so cheap that you can buy an 8GB SD card for about the same cost as a 24 exposure roll of 35mm print or slide film used to cost, and then simply save it as the backup media after downloading the contents of a full SD card onto your PC. Even when saving each 24MP exposure in both RAW and high resolution JPEG formats an 8GB SD card will hold around 180 exposures. I've bought a handful of SD cards to use during my holidays so I won't have to worry about downloading images during the trip.

SD cards are fairly robust (according to Digital Camera Shopper "The memory cards in most cameras are virtually indestructible.. Five memory card formats survived being boiled, trampled, washed and dunked in coffee or cola" but the digital data may only last 10-15 years in storage before a significant amount of corruption or data loss becomes apparent. So for true archival storage gold CD-R are probably more secure (whether or not any of my photos will be worth preservation is a separate issue!).

Ellenborough Falls, NSW. Copyright 2014.

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Tuesday, 23 December 2014

Which Sydney Selective High School is 'best'?

While some parents apparently take the view that the 'best' selective high school is simply the one with the best HSC results (usually taken to be the % of their year 12 student cohort on the HSC DA list), this ignores the fact that the 'best' year 7 students will, generally speaking, go on to achieve the 'best' HSC results six years later. So the selective school with the highest Year 7 entry cut-off mark (James Ruse) will get the highest percentage of students making the 'distinguished achievers' list even if there was absolutely no difference in the quality of teaching etc. between the selective high schools. What is of more interest is whether or not there is a difference in how well individual selective high schools are helping each student achieve their 'personal best', based on their individual potential.

A more considered indicator of which selective high school is 'best' (in some sense) might therefore be which one 'value adds' the most during a student's secondary schooling? One way to measure this (that schools use internally, but few schools are game to make public) is how the NAPLAN results for a cohort change from Year 7 to Year 9, compared with the typical change for 'similar' schools. However, as NAPLAN testing stops in Year 9, a better indicator of a school's influence over the entire secondary school period might be to look at HSC outcomes (%DA) vs. the cut-off entry mark into Year 7 for the that cohort of students. While there is some movement of students between schools from Year 7 to Year 12, selective school students generally tend to stay at the school they gained entry to in Year 7, and the relatively small number of additional students admitted in Years 8-11 would probably be a similar standard to the general school population.

As the Year 7 entry cut-off marks for NSW selective high schools were only published from 2008 onwards, the HSC results from 2013 and 2014 can only now be used to plot the correlation between Yr 7 entry cut-off mark and the performance (in terms of %DA in the HSC) of that cohort when they reach Year 12. To date there are only two years data available (2008>2013, and 2009>2014), and it will be interesting to see if the trends apparent in this limited data set hold in future years. {update: see post with more recent data - here}

The results for thirteen NSW selective high schools that are generally ranked in the 'top ten' (in terms of entry cut-off mark) are plotted in figure 1 below. It can be seen that there is a clear correlation between the cut-off mark required for entry into each school and the percentage of these students that perform well enough to make the HSC 'distinguished achievers' list when they get to year 12. While some scatter is to be expected, the points above the trend line would suggest a school has 'added value', while those schools/years falling below the trend line appear to have under-performed in the HSC relative to the potential they exhibited going into Year 7.

The scatter show in figure 1 increases as entry cut-off decreases. This is to be expected as there is greater potential for year-to-year variation in the average ability of a cohort entering a school with a lower cut-off mark. While the cut-off mark might be the same in 2008 and 2009, the cohorts in a selective school with a lower cut-off mark could vary considerable if in one particular year a few more students with high selective school entry test scores choose to attend the 'lower' ranked school due to travel considerations etc. This wouldn't change the minimum entry score required to be accepted into the school, but could boost the % of students making the DA list.





Figure 2 shows the data grouped by gender segregation - the selective boys schools, the selective girls schools, and the selective co-ed schools. From this figure it appears that there is little impact of gender segregation in years 7-12 and student's HSC performance. The couple of data points for boys and co-ed selective schools that appear significantly below trend belong to three specific schools, so are more likely to be due to the schools 'value add' than to gender segregation effects. If that is the case, one wonders if it is such as good idea to segregate students on gender lines during high school. Getting them acclimated to interacting with the opposite sex during high school may be better than leaving it until the booze and party enhanced environment of your typical university campus!


Finally, figure 3 shows the data colour coded to each school. It appears (although it is hard to draw solid conclusions from only two data points) that some of these selective high schools (Girraween, Sydney Technical High School and Normanhurst) under-perform, while others (such as Manly Campus and North Sydney Boys) may out-perform. Such trends will become clearer as HSC results for 2015-2017 are published in future years. In the case of Sydney Technical High School the relative under-performance may simply be because students choosing to attend that school are more interested in technical subjects that do not 'scale' as well as some other HSC subjects (due to the general composition of students taking that subject across all NSW high schools).


It should be noted that these results are Sydney-centric, as there is a greater pool of students within reasonable traveling distance of the Sydney selective high schools, which pushes up their cut-off marks for entry. Selective high schools in country areas tend to be in lower demand, so their cut-off marks tend to be lower. This would mean there is more year-to-year variation in the average ability of the student cohort, independent of the cut-off mark, making it harder to tell if a particular school in these areas is performing above or below trend from the available data. Hopefully BOSTES uses their access to the median entry score of students in these schools and their eventual HSC results to identify which school are achieving the best outcomes, and identifying which variables (such as teacher qualifications, experience, school resources, student socio-economic background etc.) are important, and which positive factors can be promulgated to other schools.


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Sunday, 21 December 2014

School reports hit the hip pocket

The school year has ended and the boys have been shipped off with my parents to spend a week at a beach-front resort on the mid-north coast before we join them on Christmas eve. The boys deserve a break - they've both been applying themselves at school and have achieved the results they deserve. They both got "straigh-A's" on their school report cards, so I'll be giving them $30 each as a small reward for their efforts. The rewards system I introduced last year was $5 for every 'A' (actually, the best report grades currently in use in the NSW education system are 'outstanding' in high school reports, and 'high' in primary school reports). But this year I simplified in to just being a flat $30 rewards for getting straight-A's.

DS1's school achieved another good outcome in this year's HSC results - ranking 8th in the state with 50.7% of the students making the 'distinguished achievers' list. But the whole idea of ranking high schools is a bit silly, as the results are fairly predictable and seem to be based mostly on the mix of students that are attending the school, rather than the 'value added' by the school itself.

For example, the school that is consistently ranked number one in the state, James Ruse High, is therefore the most sought-after school for selective school applicants. It therefore has the highest 'cut-off' mark of any of the selective high schools each year (ie. only the 'best' students can get in), and, as sure as night follows day, six years later that cohort of students gets the best HSC results in the state...

The correlation between the minimum entry score (or 'cut-off; mark) required to gain entry into a selective high school and its HSC results seems quite clear, so it will be interesting to see how DS1s school performs in future years. According to the trend in 'cut-off' mark over the past several years, I would predict that it will continue to do well (as the cut-off marks for entry into those years had increased by around 5 marks). Unfortunately entry cut-off marks have only been published since 2007, so the trend can't be quantified just yet, but should become clear over the next few years...

Manly Selective HS:
Yr 7 entry             >> HSC results
Year  cut-off              Year    Rank     %DA
2014   205                  2019
2013   207                  2018
2012   205                  2017
2011   201                  2016
2010   202                  2015
2009   199                  2014      8         50.7
2008   201                  2013      11       43.0
2007   n.a                   2012      7         51.4
2006   n.a                   2011      10       45.1
2005   n.a                   2010      7         47.2
2004   n.a                   2009      15       41.1
2003   n.a                   2008      15       37.7
2002   n.a                   2007      20       32.6

Comparing these to the data for one of the top selective schools (Sydney Boys High) shows that the Year 12 HSC results are dependent on the quality of the cohort selected for entry into Year 7:

Sydney Boys Selective HS:
Yr 7 entry             >> HSC results
Year  cut-off              Year    Rank     %DA
2014   218                  2019
2013   216                  2018
2012   222                  2017
2011   223                  2016
2010   219                  2015
2009   219                  2014      6         53.0
2008   219                  2013      7         48.2
2007   n.a                   2012      8         48.5
2006   n.a                   2011      4         56.7
2005   n.a                   2010      6         49.2
2004   n.a                   2009      7         43.8
2003   n.a                   2008      7         44.7
2002   n.a                   2007      10       39.2

Of course, the ranking of the school itself only has an indirect impact on an individual student's HSC result and ATAR (as the performance on the student cohort at a particular school in the HSC will affect the scaling of the HSC marks of students attending that school). Of more importance will be how well DS1 does in his chosen HSC courses, and where he ranks amongst fellow students at his school in these subjects. Getting an 'outstanding' result in all Yr 9 subjects, which puts him in the top half of the school in every subject, suggest he should be able to achieve an ATAR of 98+. But as he has no clear idea of which course he wants to do at university, it comes down to simply doing as well as he can, so that he has a good chance of gaining entry into whichever course he fancies.

DS1 is enrolled (via distance education) in an HSC preliminary subject (Software Design and Development) as an 'accelerated' student next year, so he will have completed one of his HSC subjects whilst he's still in Year 11. If he does well enough in that subject it may help him get a good ATAR result, as he will still be doing the normal workload of other HSC subjects in year 12, so he will have an extra couple of units to pick from when the best 10 units are used to calculate his ATAR. Of course the disadvantage of doing his favorite subject as an 'accelerated' student is that he will be competing with students that are a year ahead of him. Also, the distance education course is offered by a non-selective high school that doesn't have exceptional HSC results overall. So unless DS1 ranks at the very top of his class in SDD, his scaled mark in this subject won't be very high. Also, SDD in general doesn't scale up very much, due to the general caliber of the students taking this subject for the HSC, so it's unlikely his SDD result will be included in his 'best 10 units' used for ATAR calculations.

DS1 has also been offered a place in the UNSW High School Computing course in the first half of next year - which teaches the first year university course in computing to selected Yr 11/12 high school students (and a few 'exceptional' year 10 students, such as DS1). It should be fun for him to do, and quite exciting for him to be attending 'uni' after school once a week! While not an HSC subject (so I'm glad he is able to do it while in Year 10, so it won't impact on his Year 11/12 studies), it should help him do well in his SDD course. Also, if he does extremely well (getting 85%+) he would be allowed to enter the CSE Elite students program if he decides to enrol in computer science at UNSW.

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Sunday, 7 December 2014

Net Worth: November 2014

Net Worth was down slightly during November, despite another monthly gain in the valuation of our house. This was due to the Australian stock market suffering a dip during November (but this has already been largely recouped during the first week of December). My SMSF account actually increased during November despite there being no employer contributions deposited during the month and the drop in the local stock market. This was because our investment in Vanguard LifeStrategy HighGrowth Index fund gained value, probably due largely to the drop in the Aussie dollar pushing up the value of unhedged overseas investments.


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Sunday, 23 November 2014

Excess Superannuation Contributions Tax - Timing is everything

Back in May 2010 I had put in place arrangements to 'salary sacrifice' as much as possible into my superannuation, without exceeding the current concessionally taxed contributions (which is the sum of both the mandatory employer superannuation guarantee levy (SGL) plus any additional employer contributions arranged via salary sacrifice). All should have been well, as the annual total of SGL and SS I had agreed with my employer was several hundred dollars below the 'cap' on such concessionally taxed contributions, just in case there was an extra fortnightly 'pay' processed during the financial year...

However, one of the more 'interesting' inconsistencies of Australian superannuation legislation is that while employees need to have made such 'salary sacrifice' arrangements prior to the start of the financial year, and fortnightly payslips report the amount of employer superannuation contributions (SGL and SS) that have notionally been 'paid' on each pay date, the actual timing of employer contributions is much more uncertain. By law, employees are only required to pay superannuation contributions quarterly, and then they have until the end of the calendar month immediately AFTER the end of each quarter to actually make the superannuation payments.

In my case, my employer was in the habit of paying the three monthly contribution payments at the start of the month immediately following the end of each quarter. Which meant that payments for the months of April, May and June were normally processed by the payroll office at the end of June and the funds were then processed by their superannuation administrator and were deposited into our self-managed superannuation fund in the first or second week of July.

However, in 2010 the payroll officer (who was a bit unreliable, and has since been 'let go' for finally making one mistake too many) suddenly decided to process the superannuation payments a few days earlier than usual in June, so that two of the quarter's monthly payments actually got deposited into our SMSF bank account during June. This resulted in my 'concessionally taxed' superannuation contributions for the 2009-10 financial year being a total of 14 months' worth of employer contributions, and therefore exceeded the 'cap' by several thousand dollars...

As this had happened within a few days of the end of June it was way too late to take any remedial action, as any change to my salary sacrifice arrangements at that time would only have affected subsequent months, which would not be processed until the following financial year. So I phoned the ATO for advice at the time, only to be advised that nothing could be done pro-actively, and that I'd have to wait until an excess contributions advice eventuated after the 2010 SMSF tax return had been processed - at which time I could lodge an appeal outlining the 'special circumstances' which affected the timing of the employer contributions.

Nothing seemed to be happening - the 2010 SMSF tax return got processed without any excess contributions notification appearing, so I thought common sense may have prevailed (yes, that was hardly realistic when dealing with the tax office!). But then, just a few months ago, I suddenly received a notice of assessment for excess contributions tax for 2010 (quite a delay, given the 2011, 2012 and 2013 SMSF tax returns have all been processed years ago, and we are currently working with the administrator to finalise the 2014 tax return for our SMSF). The excess contriubtions tax assessment was due for payment within about 21 days, so I phoned the ATO again to check on the appeals process, I was advised that there would be penalties applied if the tax wasn't paid by the due date, and that even if I lodged an appeal immediately the amount due probably wouldn't be varied prior to the due date (as appeals have up to 28 days to be processed, counting from after receipt of all required documentation). So I went ahead and just paid the $1700 or so excess contribution tax, and downloaded the relevant appeal form....

It then took two weeks to get a letter from the company payroll office outlining the fact that they had caused the problem by making an unexpected and unannounced change to the timing of their contribution payments (and I had to provide the new payroll officer with details of the superannuation employer contributions arranged and processed for 2009/10!). I then sent this letter (plus a spreadsheet showing the fortnightly contribution amounts and dates, the totals due for each calendar month, and the expected payment timings vs. the actual dates deposits appeared in our SMSF bank account, plus copies of emails I'd sent payroll reminding them to ensure payments were processed on schedule, as I didn't want to exceed the contribution cap!) along to the ATO. The ATO officer in charge of this case then asked me to provide copied of all my 2009/10 payslips to verify the amounts I'd listed in the spreadsheet. Fortunately I still had all my old payslips sitting in an archive box in the garage...

Subsequently he has also asked for copies of the 2008. 2009. and 2010 financial statements from our SMSF, which I sent last week. It then transpired that what he actually wanted was a listing of the individual employer contributions paid into my SMSF account. I pointed out that I'd already sent him copies of the SMSF bank statements which showed all the deposits, and a spreadsheet showing how much of each deposit was attributed to my account (the employer contribution deposits are complicated by the fact the DW works for the same company as myself, an the employer SGL payments for DW and myself appear as a single deposit into our SMSF bank account, and similarly there is a single monthly payment for the total of salary sacrifice made by both DW and myself).

I'm now in the process of getting a listing of the amount of each deposit transaction attributed to each member (which is based on the information I, as SMSF trustee, provided to our SMSF administrator in order to prepare the financial statements and do the SMSF tax return!). Hopefully that will be last documentation required by the ATO to evaluate my appeal against the excess contribution tax, and they may then decide to 'reallocate' some of the excess contributions for 2010 to other tax years...

Overall, this highlights one of the hidden risks of using superannuation as a tax-effective investment vehicle. Not only do you 'lock in' your savings in superannuation until you reach retirement age (and are subject to legislative risk in the meantime), you don't save a lot of tax unless you are in the top marginal tax bracket (in my case I was only saving a modest amount of tax by 'salary sacrifice', paying 15% contributions tax rather than around 30% PAYG tax on salary). And if something goes wrong and you exceed the contributions 'cap' then the 'excess contributions' have tax levied at difference between the TOP marginal tax rate (around 50%) and the 15% superannuation contributions tax rate ... so my 'excess' contributions ended up being taxed at around 50% rather than my normal marginal tax rate of around 30%!

All in all, and especially in light of the tendency of government to chop and change the superannuation rules relating to the 'cap' on employer contributions, it seems best to stay well below the limits set for concessionally tax superannuation contributions. Especially if your employer has a badly run payroll office!

ps. There were also complications caused by the 'cap' being suddenly changed from year-to-year by the government. From $50,000 pa for over-50s, back to the standard $25,000 pa for everyone, then back up to $35,000 for those over 55 etc... no wonder many people tend to ignore superannuation as being 'too complicated' in Australia!

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Sunday, 16 November 2014

Going on a cruise

We haven't been on a holiday for quite a while (I currently have about 40 days of 'long service leave' accumulated plus another 40 days of accumulated 'annual leave'), so early last week we decided to book a 'cheap' 14-day round-trip cruise to New Zealand during the January school holidays. The initial idea was to book a cheap 'quad share' interior room that would have cost a total of around $6,000, but it turned out that there were not any 'quad share' interior rooms available, and only one interior twin-share room. So we then tried to book one interior twin share room and one slightly more expensive 'ocean view' twin share room close by. However, during the booking stage it turned out that the 'quota' for 12-17 year old children on the cruise was full, so we couldn't book DS1 on. At that stage it was looking like we'd have to defer the trip, as the other available cruises to New Zealand were either one-way (and DW didn't want to have to fly back to Sydney), more expensive (over the Christmas/New Year period), or were travelling during Dec or Feb and would have meant that the boys would miss out on some of the school term.

Luckily DW decided to double-check on the same cruise again the next day, and either the quota had been increased or someone had cancelled, as we were then able to book everyone onto the January cruise we'd initially wanted. There were no longer any interior rooms available, so we ended up booking two adjacent 'ocean view' twin-share rooms for a slightly higher total cost of about $7,500. I'm guessing that the total vacation cost will end up somewhere over $10,000 for the two week trip! Aside from the cruise itself (basically transportation to New Zealand from Sydney, overnight accommodation between ports, main meals, and on-board entertainment), I've already paid another $136 for travel insurance, and we will be applying for new passports for DS1 and DS2 this week as their passports expired in 2013. Each 5-year children's passport will cost $122 (which is half the cost of a 10-year adult passport). Finally there will be extra costs for the various sight-seeing 'excursions' available at each port of call -  I'm estimating at least $100 per excursion per person for the ten days or so we are visiting various ports in New Zealand.

I'll post a break-down of the final costs (and some photos) when we get back.

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Tuesday, 4 November 2014

Net worth: October 2014

The stock market rebounded, so pretty much the opposite happened compared with last month -- my superannuation account balance was up, my geared stock portfolio was up, and, uncorrelated but still welcome, the valuation for our house was up (along with the rest of Sydney real estate it seems). So, overall, my net worth was up by a fairly massive $57,607 (3.70%) during October.

Next month is likely to be much less impressive, even if the stock market continues to do well, as there aren't any more monthly employer superannuation contributions due until next January, and I will be paying the $32,000 tax bill due on the 21st. So I'll be pleasantly surprised if my NW manages to break through $1.65M by the end of 2014, and if things go really well I might become a 'multi-millionaire' (with the bare minimum $2M) sometime during 2017. Just goes to show how little a million dollars really is worth these days.




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Sunday, 2 November 2014

Tax Sux

Having sold our investment rental property at the start of last financial year, my recent tax return ended up having a massive taxable income of over $190,000. Not only did that mean a large capital gains tax amount, but it also meant not getting any rebate for our net medical expenses this year (despite having net 'out of pocket' medical expenses of over $8,000), as DW also had a considerable 'taxable income' from her half of the capital gain from selling the investment property. The large taxable income also meant having to pay both the medicare levy and also a medicare levy surcharge (as we don't have private health insurance). All up, instead of the normal situation of getting a sizable tax refund of some of my PAYG tax (due to deductions for investment loan interest payments), this year I have an estimated tax bill of $32,370 that will be due in about three weeks. As she only works part-time, DW's tax bill will be slightly lower - just under $30,000.

Although we had used most of the net proceeds from selling our investment property to reduce our home loan, we each have around $100,000 invested in cash accounts and some share investments (so we would have funds available at short notice to pay our CGT bill). I liquidated the relevant share portfolio last week in order to have the cash ready to pay my tax bill (the $96,000 share portfolio I bought last year had lost around $6,000 - so I would have been better investing in an index fund, or else just investing in a term deposit), and once the official notice of assessment arrives in the next week or two I'll pay the amount owing and see how much cash DW and  I then have. The plan is for DW and me to each kick in equal amounts and pay off as much as possible of the remaining home loan balance (as the interest is not tax deductible). However, we don't plan to pay off the home loan entirely, as we still have an investment 'portfolio loan' account secured against our house equity.

Going forward, the reduced mortgage payments (once most of our remaining home loan has been paid off) will provide some additional cash flow, which I'll use to slowly pay down my margin loan balances as I get closer to retirement age. The big question mark hanging over my financial planning is whether I will remain in full-time employment until my expected retirement in about 15 years time...

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Tuesday, 21 October 2014

Judo and 5BX update

Well, I survived my first Saturday afternoon Judo lesson, but for a while I thought I might not even last through the 'warm-up' session! If I hadn't been doing my daily '5BX' exercise program and a long walk every day for the previous three or more weeks I never would have got through the entire lesson without collapsing. The first lesson was a good refresher of 'Ukemi' (break-falls), and an introduction to the throw 'O goshi' (major/large/full hip throw).

I was feeling pretty exhausted after the first lesson and had a sore shoulder and hands (the cost of being thrown while still having a BMI around 32!) the first afternoon. The next day I was feeling sore around the neck (probably for tensing up when getting thrown), and by the third day was feeling sore around the diaphragm (poor core body strength). Fortunately by day four I was pretty much back to normal - and was fully recovered in time for my second lesson.

The second lesson started off with an even more exhausting 'warm-up', as we were training in pairs, and I was having trouble keeping up with the thirty-something woman I was training with. I'd also managed to catch the cold that had kept DS2 home from school the day before, so I ended up coughing throughout most of the lesson. The second lesson reviewed O goshi and then introduced 'O soto gari' (major outer reap) throw and the pin 'Kesa gatame' (Scarf hold). I was favouring my right shoulder (which had been sore the week before), so of course I ended up with a sore left shoulder this week! I also had a sore inner thigh (O soto gari probably used muscles that I don't normally use very much). I ended up going to bed early due to my cough (and feeling exhausted) and was feeling pretty sore on Sunday. Fortunately I was already feeling pretty normal again today, so my 'recovery time' already seems to be improving.

Barring any injuries it is looking more likely that by the end of the ten week 'adult beginner' course I should be fit enough to handle to standard adult judo classes. I'll probably forget about attending the second weekly sessions (on Thursday nights) until I get my weight down to where it should be (about 22 kg less than it currently is).

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Saturday, 4 October 2014

Getting fit (or at least a bit fitter) on the cheap

With my 'adult beginner' Judo classes starting next weekend (I found my old 6th Kyu and 5th Kyu grading certificates from 40 years ago, but I'll be starting from scratch obviously) I needed to improve my fitness. So having recently cancelled my Crunch Fitness gym membership (I wasn't going often enough to make it worth keeping) I've taken to doing an hour or so brisk walking every day (at lunchtimes and in the evening), logging my 'step count' using my mobile phone (I'm finally reaching the recommended target of at least 10,000 steps per day). I'm also doing '5BX' exercises every day, which despite it ridiculously easy exercises at the beginning, is starting to gradually improve my fitness level (as measured by the weekly 'step test' I do). Combined with a modest rate of weight loss (using a combination of attempting to cut out all 'junk food' and 'lollies', eating a CRAN-style core diet plan most days, the odd low-calorie 'fasting' day thrown in along the lines of the "5:2 diet", and an increased level of physical activity, I'm managing to shed about 0.75 kg each week) I should be in reasonable shape to commence Judo lessons if I take it fairly easy to begin with.... we'll see how it goes. There's a grading at the end of the 10-week beginner's course (so hopefully I'll get my "yellow belt" back again), and at this stage I'm planning to continue with Judo one or two times a week during 2015, with the goal of achieving my "orange belt". I'm not sure that aspiring to any higher grades would be realistic at my age and level of health/fitness...

ps. DS1 managed to break his arm falling down while ice-skating for the first time during this school holiday period, so with his arm in a plaster cast for the next 4-6 weeks it looks like he'll miss his yet another Judo grading, and won't be attending the older kids class that runs concurrently with the 'adult beginner' classes - at least for a while.

For anyone interested in starting a free, equipment-less, easy-to-do, and quite effective exercise regime that literally only takes 11 minutes each day, you can download the original '5bx' pamphlet from various places such as:

http://csclub.uwaterloo.ca/~rfburger/5bx-plan.pdf

And you might find this old training presentation of interest. It's both amusingly quaint, and provides some useful examples of how to do the advanced versions of some of the exercises properly:

https://www.youtube.com/watch?v=NpGGr1OpK3E

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Net Worth: September 2014

The stock market was down last month. Such is life. Hence our SMSF balance was down, and my geared stock portfolio was down by a larger percentage. Sydney house prices (at least in our suburb) were unchanged. In the long run being heavily invested in the stock market should be a "good thing", but then again, as Keynes quipped "in the long run we're all dead". Maybe October will be a good month for the market...



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Thursday, 11 September 2014

Learning Judo after a forty-year break

The Judo club that my sons attend on Saturday afternoon is planning to run another 'adult beginner' course (lasting 10 weeks) next term (starting about four weeks from now), so I've decided to attend the lessons and see how it goes. I did Judo for a year or two when I was in High School, and as I have to spend a couple of hours watching the kids at Judo most weekends anyway, I thought that I may as well join in (the adult course is being run concurrently with the older kids class). I still have a Judogi from when I made an aborted attempt to resume Judo training in my late 30s (the class was full of twenty-something 'alpha males' and a bit too 'gung ho' for my liking), so the only cost will be $120 mat fees for the 10-week course, plus $120 to join the NSW JFA for a year.

The standard adult class seems reasonably accomodating of older players (there are several black and brown belts that are around my age or even older), so hopefully I can survive the adult beginner class if I don't 'over do' it. If nothing else, the decision to resume Judo training has given my diet and exercise regime a new focus, with a very short time frame in which to shed as much excess weight as possible and do daily aerobic exercise (5BX) and attend the gym until my current membership expires on 10 October.

If I enjoy (and survive) the beginner course I plan to keep attending lessons once or twice a week, and aim to eventually get a yellow and perhaps an orange belt, but I doubt that I'll be able to progress beyond that level even if I keep training indefinitely, as progressing to the higher Kyo grades require attaing some competition points and even the 'masters' competitions (for over-30s) are likely to put me in hospital!

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Tuesday, 2 September 2014

Net Worth: August 2014

The past month saw little change in the value of my stock portfolio or SMSF, as the markets dropped mid-month and had only just recovered to the previous month's close by the end of August. On the other hand, Sydney property prices have continued increasing, so my overall net worth got a boost from two month's worth of increase in the valuation of our home (as the monthly sales data were not available when I did last month's net worth calculations). Overall my net worth increased by $18,426 - which seems impressive until you realize that simply keeping pace with inflation (around 3% pa) would require a monthly rise of over $4,000.



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Monday, 1 September 2014

Cancelled my gym membership (again)

I had joined the local Crunch Fitness gym with high hopes of regularly attending and getting my money's worth for the modest $15 per fortnight fee. Unfortunately I only managed to get to the gym once every couple of months or so for a couple of reasons:
* the location isn't on my normal route home from work, so it meant an extra half-hour detour on the way home if I wanted to go to the gym after work,
* I couldn't attend three days a week in any case, due to having to collect DS2 from after-school care immediately after work and then prepare the kids dinner on those days that DW works (and usually has to work back), and
* there wasn't any car parking at the gym, which meant parking at a nearby shopping center car park and walking ten minutes to get to the gym - not really an issue, but not much fun during the recent heavy rain storms we've been getting in Sydney.

In any event, I've increased my fitness walking to a brisk 30 minutes every lunchtime at work, and also a couple of extra 30 minutes walks around our local streets after dinner several times a week. While hardly an aerobic work-out compared to spending 40 minutes circuit training at the gym, as long as I ensure I get at least 30 minutes of brisk walking done every day, and some longer walks on the weekends, it is better than nothing, and should help improve my fitness as I gradually lose weight through dieting (a cross between a daily 'standard' diet plan of around 2200 kcals that is a modest version of CRAN, and a couple of low-cal days (of around 1,500 kcals) along the lines of the 5:2 'FAST' diet, and periods when my diet goes out the window and I revert to my 'bad' old habits of eating junk foods and snacks). And when the weather is fine I can go kayaking around middle harbour with DS1, bush walking in the nearby national park, or take the bike for a spin.

All in all, it just didn't seem worthwhile paying $30 each month in gym fees when I was never getting to the gym! And in a few months time it should be warm enough again to swim laps in our backyard pool...

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Thursday, 21 August 2014

Macro Timing the Stock Market

Many years of stock market investing have proven to me that I am unable to 'pick' individual stocks that will out-perform, and I also can't 'pick' individual funds or fund managers that will consistently out-perform the general stock market (assuming that such funds or fund managers actually exist - there is a body of evidence that suggests that hardly any funds or fund managers 'beat' the relevant index after taking fees into account, and that the few that do are probably the result of random chance rather than intrinsic skill). However, having decided to (mostly) stick with investing in 'the index' (or in the case of our retirement savings, investing in a mix of indexes via the Vanguard 'High Growth' index fund that provides some automatic, low cost, rebalancing  between the various 'growth' indices - Australian shares, International shares, property, bonds etc.) I'm still left wondering if there is some way to 'time' alterations to our investment portfolio. Such as deciding when to be 'fully invested' (or even 'geared' into investments) and when it might be prudent to eliminate gearing or even move partially into 'risk free' investment in fixed interest.

As the stock market is, broadly speaking, a measure of a nation's private wealth-creation, it would seem plausible that the total stock market (eg. the 'all ordinaries' stock market index, XAO) would be correlated to the nations per capita GDP. And, indeed, a plot of this data (obtained from http://www.measuringworth.com/datasets/australiadata/ by selecting the 'Australian Nominal GDP per capita' and 'Australian Stock Index' options for the period 1950 to current) on a logarithmic scale, show that the XAO generally moves in line with the per capita GDP.



What is most interesting is that from this chart it seems quite obvious when the stock market was 'fundamentally' over-valued in the post-WWII period (such as in the late 1960s, in 1987 and in 1999-2001 and again in 2005-2008). The plot suggests that it was a very good idea to reduce leverage/gearing or even to short the market during 2007 to protect against a major correction (my biggest investing cock-up was failing to roll-over my index put options in late 2007), and that at present the Australian stock market isn't particularly over-valued. Indeed 2009 and 2012 look as if the were probably good times to be investing in the Australian stock market.

As I'm already fully invested (and with a bit of gearing into Australian stocks outside of our superannuation investments) the graph doesn't really provide me with much immediately useful information. But such a plot may help 'ring the bell' the next time the stock market is 'expensive' and it is a good time to move my asset allocation towards cash and fixed interest investments. It may also be a good tool for my sons to use when managing their investment asset allocation over the coming decades....

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Saturday, 9 August 2014

Earn 30% return with no risk!

Well, of course its not quite as good as it sounds, but, if you open a new ANZ Acess Advantage account before the end of this month (31 August 2014) AND deposit at least $2000 into the account by the end of next month (30 September 2014) AND log in to ANZ goMoney or online banking before the end of next month (30 Sep) THEN you will receive $100 from ANZ. Which, assuming the $100 is deposited soon after the end of September, means you could earn $100 on your $2000 deposit within two months and then close the account^ you would achieve an annualised return of more than 30% pa on that $2000 deposit!

To apply online you can visit http://campaign.anz.com/bank-accounts/everyday-offer/

Not too shabby considering the online application process only takes a couple of minutes to complete, and, presumably, you can deposit the $2000 into the new account via EFT. The process was relatively painless because I am already an ANZ customer (via our SMSF bank account), so I probably don't need to visit a branch to satisfy the 100-point ID check that would be needed if you don't have an existing relationship with ANZ bank.

The account is available to persons over 12 years old, so I may also let DS1 know about this offer - a much easier way to earn $100 than spending two hours busking or a week of early morning newspaper round.

^ to avoid the usual $5 monthly account-keeping fee -- unless you want to keep the account open, in which case you can avoid the account-keeping fee if you have $2000 deposited into the account each month eg. have your salary paid into that account.

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Sunday, 3 August 2014

An 'interim' pay rise - hip, hip, huzzah!

After being told late last month the our company's annual pay review (that was normally conducted every June under the previous ownership) would be deferred until Dec/Jan to bring it in line with the US parent company procedure, it was announced last week that we would all be getting a 'cpi' increase of 3% back-date to 1 July, and that there will be also be an official round of 'pay and promotions' reviews done in December. While the amount of money involved isn't large, its a relief to see that the change in annual performance and salary review scheduling isn't being used to implement a 'de facto' pay freeze.

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Saturday, 2 August 2014

Net Worth: July 2014

This month's net worth calculation is slightly less accurate than usual as the stocks figure was negatively impacted by a significant capital return (of around $10,000) from IPE (I don't include my cash account balances or current credit card balances in my monthly calculation as they generally have little net effect). In addition, the estimated market valuation for our home was not updated as the average sales price data for our postcode was not available this month, so I used the same figure as last month. In reality there is likely to have been an increase in the estimated valuation of around $15,000 based on the RPData average sales price index for our city.



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Sunday, 6 July 2014

Tiny fish in a massive pond

The sale of the private marketing company I work(ed) for to a large Multinational Company was finalized on 30 June (end of the Australian financial year), and we were treated to a bit of a motivational session/corporate ethics intro by the incoming management team one afternoon last week, followed by a hello/goodbye social event (drinks and finger food) hosted by the outgoing owner and the new management on the following afternoon/evening. I was pleasantly surprised to get a thank you card and a cheque for a gift of $5,000 from the departing owner, a nice gesture since the sale had been finalized a few days previously and she could have just ridden off into the sunset without a backward glance. DW also received a thank you card, but her cheque was for $2,000 - presumably because she works part-time (3 days/week), given that she's worked for the company a few months longer than I have (more than 15 years).

So, I now officially work for a regional specialist branch office of a large multinational 'Fortune 500' company, that has around 10,000 staff globally. I expect there will be some major changes not too far down the track - they are planning to spend the next 2-3 months with an interim management structure in place while they go through the 'integration' process and work out what changes to implement by the end of this year. I don't think the 'integration' will be a particularly pleasant experience for the 400 or so staff that are the 'integratees', given that the parent company generated about $300K profit per existing employee. The figures for the private company weren't public, so I don't know exactly how much profit per capita it made, but I'd guess it was only around $100K per headcount, or less. So I'm sure 'head office' will be expecting to implement major 'efficiency gains' during the first year. Although there is apparently a sizable budget earmarked for growing this regional business, the initial signs don't suggest that they are going the spend very much of that budget on staff remuneration. It was quite amusing to hear during the introduction session that the new owners were 'surprised' to learn that our company routinely does that annual performance review/remuneration review cycle in June - we normally get our annual salary letters in the first week of July. The parent company follows the US practice of doing its compensation reviews in Dec/Jan - so it looks like we are getting an 'accidental' pay freeze for the next six months!

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Net Worth: June 2014

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Wednesday, 4 June 2014

Beware "low" fees on Superannuation accounts

While the Australian Superannuation system has a lot of good features (practically universal coverage, tax advantages in exchange for preservation until retirement age, providing some mitigation of the impact of the aging population on the cost of the aged pension system, encouraging workers to plan for their retirement, and a reasonable rate of enforced savings of current salary income towards retirement) it also has some bad features (such as complex tax rules, changes to rules over time eroding confidence in the system, the tax benefits being negligible for below AWOTE workers, and the biggest tax benefits being available to those who probably wouldn't get the aged pension in any case and don't need any encouragement to save for their retirement - for example the ability to make a $150K pa 'after tax' contribution into superannuation provides a 15% tax rate environment to high income earners who would otherwise be exposed to the top marginal tax rate on investment income if it was invested outside of the superannuation system). And one of the worst features is the often excessive fees charged by superannuation fund administrators (especially the 'retail' funds).

A side effect of the generally outrageous fees charged by superannuation funds is the growth of so-called "low fee" funds that many retail funds have set up to stem the flow of superannuation savings away from retail funds and towards Industry (trade union) superannuation funds and self-managed superannuation funds (SMSFs). However, not all "low fee" funds are particularly good value! As a random example I had a look at the Suncorp Everyday Super Fund that is advertised as being a "low fee" superannuation fund.

Suncorp Everyday Super charges an administration fee of $1.50 per week plus 0.65% of your balance. And for the Suncorp Lifestage Fund investment option there is an 'Investment Fee' of 0.2%.

While 0.65% admin fee is certainly a lot lower than many retail funds (some charge around 1.50% administration fee), it still can excessive for anyone with a signficant amount accumulated in their superannuation savings. For example, with my current superannuation balance of around $600K, a 0.65% 'admin' fee would cost me $3,900 every year! By comparison, our SMSF administrator charges $699 pa for admin (including audit report costs), and even with the extra SMSF 'supervisory levy' charged by the ATO (a ridiculous $259 from 2014), the total 'admin' cost of $958 for our SMSF is less than 0.15%.

The 'sticker' cost of 0.2% Investment Fee for the Suncorp Lifestage Fund may appear to offset some of the higher admin costs, given that in our SMSF the Investment Management Fee charged by Vanguard for the LifeStrategy HighGrowth (Index) Fund is around 0.4%. However, drilling down into the Suncorp Lifestage Fund 'Profile' reveals that there is a 0.85% 'Management Fee' embedded in the Lifestage Fund.

So, overall, putting $600,000 into a SMSF and investing in a 'growth' index fund investment option would cost around $3,458 pa, whereas having the same amount in the 'low fee' Suncorp Everyday Super Fund and invested in the Lifestage Fund would cost you $1200 'up front' as an Investment Fee, and then an annual cost of around $9,000. A difference of over $5,500...

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Net Worth: May 2014

The net value of my geared stock portfolio, retirement account (SMSF) and home all increased during the past month, resulting in a solid gain in overall net worth estimation. The retirement account gain was largely due to 5 months of employer contributions (Jan to May) all being deposited into our SMSF bank account during May.

Normally employer contributions for each quarter (eg. Jan, Feb and Mar) and due by the end of the month following the quarter (eg. Apr), and take a week or more to be processed by the Company Superannuation administrator (BT Super) and arrive in our bank account (eg. early May). The HR department had been talking about making the superannuation payments monthly, which accounts for the Apr and May payments being processed in May as well. Fortunately my age and current superannuation rules regarding concessionally tax contributions mean that even with 2-3 months extra payments being processed in the current financial year I wouldn't exceed the contribution cap.

Recent Sydney real estate index figures from RP Data are showing a slight decline in house prices, so the estimated valuation for my half of our home is likely to decrease slightly over coming months (my estimation used a moving 12-month average price guide for our postcode, rather than the daily Sydney Index value). As usual, I don't include assets or liabilities belonging to DW, DS1 or DS2 in my personal net worth figures.

Assets$ Amount$ Diff% Diff
Stocks *$245,086$9,583n/a
Retirement$602,386$11,0391.87%
Home$496,457$9,3281.91%
Farm$325,000$325,000n/a
Debts ^$ Amount $ Diff% Diff
Home Mortgage(s)$102,358-$7-0.01%
Net Worth$1,566,571$29,9571.95%
* the Stocks figure is portfolio value - margin loans. The LVR is around 80% overall.
^ doesn't include the ~$675,000 of investment loans, as these are already deducted when calculating the value of my geared stock portfolio.

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Friday, 9 May 2014

Net Worth: April 2014

A fairly quiet month, aside from a good increase in my retirement account value (which was partly due to January employer contributions being deposited during April). The Feb and Mar superannuation contributions were paid by my emplyer on 28/4 and should be hitting our SMSF bank account "any day now" according to the payroll department. Still not sure why it takes BT super (that handles the company superannuation payments) more than two weeks to deposit funds into the member accounts! But as our annual SMSF tax bill was paid in early May there won't be much impact overall this month.

The contribution payment delays can really be a pain at the end of the financial year, as having one or two of the Apr/May/Jun payments appear in our SMSF bank account before the end of FY can push me over the concessionally tax contributions (Salary Sacrifice plus SGL) limit if all three payments arrived late the previous year. With all the payments being processed electronically (from employer to BT Super, and then from BT Super to ANZ bank) there is no reason for the payments to take more than two business days to arrive in our SMSF bank account.

I've continued to report the 'hobby farm' valuation as the nominal "purchase" cost ($325,000) which was used to calculate the stamp duty, but I'll make a separate note of it's monthly valuation estimate (the valuation is based on house price sales in the nearby township, which may not be a very good guide to changes in values for a nearby 25 acre rural property). This month my estimation increased from $354,900 to $357,000 (+0.86%).

Assets$ Amount$ Diff% Diff
Stocks *$235,503-$951n/a
Retirement$591,347$10,4341.80%
Home$487,129$3,6280.75%
Farm$325,000$325,000n/a
Debts ^$ Amount $ Diff% Diff
Home Mortgage(s)$102,365$90.01%
Net Worth$1,536,614$13,1020.86%
* the Stocks figure is portfolio value - margin loans. The LVR is around 80% overall.
^ doesn't include the ~$675,000 of investment loans, as these are already deducted when calculating the value of my geared stock portfolio.

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Sunday, 20 April 2014

How to Live forever (or die trying)...

Although (with a BMI currently hovering around 32 and having only just resumed regular gym sessions) I'm hardly a poster-boy for healthy living, I've always been intrigued by the possibility of extending natural lifespan in humans via Calorie Restriction (CR). This is often termed CRAN (Calorie Restriction with Adequate Nutrition), CRON (Calorie Restriction with Optimal Nutrition), or CRL (Calorie Restriction for Longevity) in order to clearly differentiate it from eating disorders such as anorexia nervosa, where food intake is restricted, but in an unhealthy manner.

While there's no doubt that obesity can lead to numerous health issues and premature death, in practice it is often difficult to lose weight (and keep it off) and achieve the recommended BMI of around 22. Otherwise the developed countries wouldn't be experiencing an 'obesity epidemic'. Then, once you achieve a healthy BMI and take regular aerobic and strength training exercise, is the any further benefit to be achieved via CRAN?

While CRAN had been proven in multiple independent experiments to extend lifespan in simpler species (such as worms and mice), there was little hard data on the effects (for good or bad) that CRAN could have on humans. Most historical examples of calorie restriction were simply cases of starvation, where the adverse effects of malnutrition were the dominant factor. Given the ethical issues surrounding doing CRAN studies on randomly selected groups of human test subjects, the best scientific data applicable to humans is likely to come from primate studies (although there are a number of people voluntarily adopting CRAN to some degree as a lifestyle choice, such isolated cases are not a controlled study).

A study published a few years ago (by the NIA) had seemed to show that in rhesus monkeys CRAN had no significant beneficial effect. And yet a new study published only a few weeks ago (ref: Colman, R.J. et al. "Caloric restriction reduces age-related and all-cause mortality in rhesus monkeys." Nat. Commin. 5:3557 doi: 10.1038/ncomms4556 (2014).) has found that CRAN did indeed have a significant effect on rhesus monkey survival rates. The apparent disparity in results is (according to the authors of the new study) due to the 'control' monkeys in the NIA study having not actually been fed 'ad libitum', but instead had, unintentionally, been fed on a slightly calorie-restricted diet (as shown by the fact that this 'control' group had lower average weights than is typical for Rhesus monkeys in captivity). The 'control' group had therefore already been getting some of the benefits available from CRAN (as shown by the unusually high survival rate to 40 years - the equivalent of around 116 years old for a human!).

As a very rough approximation of how effective CRAN 'might' be when applied to humans (from young adulthood - so this will be more relevant to DS1 and DS2 than myself!), I've scaled the age of Rhesus monkeys (by a factor of 2.9) to bring the survival rate curve of the monkey 'control' group (red squares) in line with that of UK humans in 2010 (blue diamonds). The scaled plot of the CRAN group of Rhesus monkeys (green triangles) should therefore be roughly in line with what one might expect to happen in the case of humans adopting a CRAN diet from young adulthood onwards.

Hopefully this could mean that instead of around 50% of humans in developed countries surviving to age 80, and very few making it past 100, by adopting a CRAN diet for their adult life, around 50% of people could live past 100, although the maximal natural lifespan could probably not stretch much past 130. The main benefit would be a significant reduction in the many disabling age-related illnesses that often reduce quality of life past 70.

It will be very interesting what happens to the surviving Rhesus monkeys over the next 5 or so years, but which time the survivors will be achieving the normal 'maximal lifespan'.

All in all, there seems to be sufficient evidence to warrant not only my getting down to my 'healthy weight' BMI of around 21-23 (and going to the gym 2-3 times a week), but for me (and later on my sons), adopting a modest level of CR (say 80% of 'normal' maintenance calorie intake) while ensuring our diet has no nutritional deficits. In practice this can be as simple as cutting out all 'empty calories' from snacks and junk foods, and avoiding (or at least minimising) processed foods that all generally high in fats, salt, and/or sugar.

The biggest hurdle is the self-control/psychological one associated with most forms of dietary restriction. If it was easy I would have stuck with CRAN since I first learned about it (and got down to my healthy BMI) back when I was in my mid thirties. I'm due to get my annual blood test done next week, and I'll post some selected biomarkers (BMI, cholesterol etc.) for the past couple of years and update them annually. Hopefully I'll be able to get down to a healthy weight again over the coming year, and transition into a more healthy CRAN-based dietary lifestyle. After all, there's not much point being wealthy if you're in poor health and die young!

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A change is as good as a retirement

Since being retrenched from my previous job as a scientist at a tiny, privately-owned minerals processing research company about 15 years ago, I've been working for a small privately-owned marketing company (of around 250 employees). The company owner/CEO is about ten years older than me, and had wanted/planned to sell up and retire in her fifties (until the GFC squeezed profit margins and made the business less saleable), so it was always unlikely that my current job would last all the way through until my retirement. Pre-GFC the prospect had been more likely, as I had hoped to be able to afford 'early retirement' (by around age 57-60). But post-GFC my SMSF balance wasn't going to be sufficient unless I keep working until 67 or thereabouts.

Last week my employer announced that she will be retiring this year, having managed to sell the business to a large, multinational company. As usual this is being presented to the current employees as a completely positive development, with the new 'owner' having deep enough pockets to properly fund the company's future growth and expansion. But while the prospect of a multinational parent company with deep pockets may well be exciting for the younger employees (via improved education/training, opportunities for international work travel and the chance to work for different divisions located in different countries, and the greater chance of career progression to senior positions available within a large, multinational company), for those of us over 50 the change doesn't seem so 'exciting'. While there are promises that all existing permanent employees will retain their positions ("no retrenchments") this is only ever a short-term guarantee (I.e. it really mean "no retrenchments --- just now"). New ownership always means the chance to restructure a business to make it more efficient, which generally means laying off some of the existing staff working for the acquired company (once the new owners have absorbed all the valuable IP and determined which "key staff" they want to retain). My position is even more precarious as a large part of my current role was tasks associated with a part of the company that isn't being sold off, but is being split off as a smaller private company to be retained by the current owner. So I expect that in the next couple of months those tasks will have disappeared, and my work will have been restructured around the remaining "internal audit" tasks that I perform. I've had little training and no professional qualifications in internal audit (just a couple of short courses completed about ten years ago), so I'll either be given some proper training and have a chance to obtain audit certifications (the "best case" scenario) or else end up retrenched and with little prospect of getting a similar position elsewhere.

Changing employer and career path in my late thirties was quite stressful, but worked out OK in the end. But being unemployed and looking for a new position (and career path) again in my fifties isn't likely to have such a happy ending. I'll probably either wind up in a new job which requires a lot of unpaid overtime to 'get up to speed' and prove myself (again), hence putting an end to my part-time PhD studies, or else end up in a much lower paid position with little or no job security. Or perhaps even be unable to find any decent job at my age and wind taking early retirement with an inadequate superannuation balance (and no access to aged pension due to the assets/means test).

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Sunday, 13 April 2014

New Worth: March 2014

The net value of my geared stock portfolio and retirement account (SMSF) were both down slightly over the past month, having suffered a significant dip due to the global stock market being affected by the Crimean Peninsula tensions which were only partially recovered towards the end of the month.

The Stocks figure was also reduced by about $13,000 this month due to costs associated with the transfer of my parent's hobby farm into my name during the past month (my 'inheritance'). I was initially not going to include the market valuation for this property in my net worth calculations, but as the transfer and ongoing costs will be incorporated I may as well include the value of this 'asset' (although, as I intend to pass this property on to my sons in my will, it should be considered a non-liquid asset).

The remaining amount shown for 'properties' and 'home mortgage(s)' is my half of these figures. As usual, I don't include assets or liabilities belonging to DW, DS1 or DS2 in my net worth figures (which is why I was initially not going to include the value of the hobby farm mentioned above).

Assets$ Amount$ Diff% Diff
Stocks *$236,454-$8,559n/a
Retirement$580,913-$7,112-1.21%
Home$483,501$1,0360.21%
Farm$325,000$325,000n/a
Debts ^$ Amount $ Diff% Diff
Home Mortgage(s)$102,356-$39-0.04%
Net Worth$1,523,512$310,40425.59%
* the Stocks figure is portfolio value - margin loans. The LVR is around 80% overall.
^ doesn't include the ~$675,000 of investment loans, as these are already deducted when calculating the value of my geared stock portfolio.

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Wednesday, 5 March 2014

Net Worth: February 2014

February saw a rebound in the stock market that provided a nice boost to my geared stock portfolio and also to my SMSF account. In fact this month saw a new high reached in my net worth, however this wasn't too exciting given the previous high was way back in 2007. After adjusting for inflation there is probably no net rise in net worth over the past seven years, which is fairly mediocre considering I am 'saving' about $40,000 each year (via superannuation savings and also indirectly by servicing the interest payments on my geared investment loans). However, considering the size of the hit my net worth took in 2008 it could be much worse!

Assets$ Amount$ Diff% Diff
Stocks *$245,013$25,717n/a
Retirement$588,025$21,1773.74%
Properties$482,465$3,1090.65%
Debts ^$ Amount $ Diff% Diff
Home Mortgage(s)$102,395$100.01%
Net Worth$1,213,108$49,9934.30%
* the Stocks figure is portfolio value - margin loans. The LVR is around 80% overall.
^ doesn't include the ~$675,000 of investment loans, as these are already deducted when calculating the value of my geared stock portfolio.

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Net Worth: January 2014

There was almost no change in my net worth during January as the drop in value of my SMSF account balance was almost exactly offset by the increase in estimated house equity. Despite the slight down-turn in the stock market, my geared stock portfolio ended the month almost unchanged.

Assets$ Amount$ Diff% Diff
Stocks *$219,296$645n/a
Retirement$566,848-$4,787-0.84%
Properties$479,356$4,1460.87%
Debts ^$ Amount $ Diff% Diff
Home Mortgage(s)$102,385$90.01%
Net Worth$1,163,115$50.00%
* the Stocks figure is portfolio value - margin loans. The LVR is around 80% overall.
^ doesn't include the ~$675,000 of investment loans, as these are already deducted when calculating the value of my geared stock portfolio.

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Thursday, 2 January 2014

Net Worth: December 2013

Another rather poor month for the Australian stock market that reduced the value of my leveraged share portfolios, but the value of my SMSF account increased due to the unhedged exposure to international share markets boosting the value of our High Growth Index Fund investment in A$ terms. The continued rise in the Sydney real estate market boosted the estimated market value of our house, which also added to my net worth total this month. It is now approaching the pre-GFC high reached in mid and late 2007, but of course, is still well below this level in real terms (ie. if adjust for inflation). My parents have decided to transfer the title of their hobby farm property (that I was to inherit) to me immediately, as that will mean that five years after it has been 'gifted' to me its value will no longer included in the 'asset test' used to determine the rate of aged pension they receive. Although they are both about eighty years of age, my maternal grandparents lived until their mid 90s, so transferring the property title now may still give them a higher pension for a decade or more, rather than leaving it to me in their will. It will also mean that I take over paying the council rates and other costs of maintaining the property, which will also boost improve their budget. There will be some costs (that I will pay) involved in transferring the title (the largest cost being the State government 'stamp duty' charge) to my name, and I should get a couple of valuations done by registered appraisers so I have a sound basis for the 'cost base' that will apply for any capital gains tax due when/if the property is eventually sold by me or my sons (I need to see if the title can be registered in both my name and that of my sons, or will have to be left to them in my will as they are both minors). I probably won't include the value of this 'hobby farm' in my NW figure, as it is a 'one off' windfall gain, and would mean my NW graph does not reflect the performance of my savings and investment strategy over time. So, like the fact that my 'net worth' figure doesn't reflect our households 'net worth' (as it doesn't include the value of DWs investments, retirement savings or her half of the value of our home), this should be born in mind when comparing my graph to those of some other PF bloggers.

Assets$ Amount$ Diff% Diff
Stocks *$218,651-$762n/a
Retirement$571,635$9,6191.71%
Properties$475,210$8,8101.89%
Debts ^$ Amount $ Diff% Diff
Home Mortgage(s)$102,376-$7-0.01%
Net Worth$1,163,120$17,6741.54%
* the Stocks figure is portfolio value - margin loans. The LVR is around 80% overall.
^ doesn't include the ~$675,000 of investment loans, as these are already deducted when calculating the value of my geared stock portfolio.

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