Thursday 31 December 2015

2015 HSC results show how little effect the school has on student outcomes

Well, the 2015 HSC results are now out, and the usual 'school ranking' list made the front page of many Sydney newspapers, followed shortly thereafter by the usual disclaimers that the school rankings don't really mean anything. But that doesn't stop many parents thinking that getting their child into the 'right' high school from Year 7 will have a major impact on their eventual HSC results.

The actual results however, show that individual schools have very little influence on the results their students achieve -- the predominant factor influencing HSC results (in terms of % of 'Distinguished Achievement' (Band 6 or E4) subject results, and % 'All Rounder' (students with 10 units of Band 6 or E4 results in total)) is simply the ability level (as measured by the 'cut-off' selective entry test result to gain entry into the school) of the cohort of students that entered Year 7 six years earlier...

The figures below show that a school with a high 'cut-off' mark (selective schools entry test) to get into Year 7 will end up with a high percentage of Distinguished Achievement and All Rounder results when that group of students sits the HSC exam. For example, a school with a cut-off mark for entry of around 200-210 will end up with around 25%-45% "DA" and 5%-20% "AR" six years later. And a school with a higher cut-off mark (eg. 230-240) will end up with around 60%-75% "DA" and 30%-60% "AR".

The slight impact that a school can have is only apparent when a school consistently gets HSC results significantly above (or below) what you would expect based on the 'cut-off' score (ability level) that the students had when they entered Year 7. For example, NBSC Manly seems to consistently achieve slightly higher HSC results than would be expected from the 'cut-off' mark required to gain entry into Year 7 (However, even that may not be a 'real' effect - there are geographic reasons why some high ability students that might otherwise have gone to a selective high school with a higher cut-off mark decide to attend Manly. It's a long commute to get to James Ruse or Sydney Boys High from the Northern Beaches suburbs! So the correlation between 'cut-off' mark and average student ability level may sometimes be weakened by .local factors). And Sydney Technical HS seems to get a lower %DA in the HSC than one might expect from the entry cut-off scores for that cohort going into Year 7. But again, the %AR results for Sydney Technical are much closer to the expected range, so it might simply be that students choosing to attend Sydney Technical HS are not particularly strong in the compulsory English subject for the HSC, which might explain why the %DA results are depressed while their overall %AR results are more in line with the level of student ability.

[note: each school has four data points on the above charts, as the release of the 2015 results means I now how four years where I have the cut-off entry score and corresponding HSC results for that cohort]

These results also help to explain why private schools offer full and partial scholarships to attract students with high selective high school entry scores (and scholarship test score results, which are comparable) -- they are simply underwriting their future HSC results and school rankings.

It also becomes obvious why James Ruse will continue to come top of the school rankings (but might get pipped by Baulkham hills in a few years time), and which schools will continue to be at the top of such 'ranking' tables in future. You simply have to look at the current Year 7 entry cut-off scores to get a good estimate of the school's HSC results for 2021:

School (2015 cut-off mark for Year 7 entry):
Baulkham Hills (235)
James Ruse (230)
Sydney Girls (223)
Nth Sydney Boys (221)
Sydney Boys (220)
Nth Sydney Girls (219)
Hornsby Girls (216)
Fort Street (216)
Normanhurst (214)
Girraween (210)
NBSC Manly (206)
Sydney Technical HS (197)

One interesting side-effect is that selective high schools that do well in the HSC 'rankings' tend to become a more popular choice for parents choosing a school, so their 'cut-off' marks tend to increase, which in turn means a higher average ability level for the next cohort of students entering Year 7, and better HSC results five years down the track. This seems to be the trend at Baulkham Hills, and to a lesser extent at Fort Street.

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Saturday 19 December 2015

Glide Pro Fishing Kayak

I recently saw a TV for kayaks on 'Christmas sale' at BFC (Boating Camping Fishing) and decided to check them out online. The inflatable kayak I'd bought from Aldi had been fun, but turned out to be too small to be usable for someone of my BMI (100+kg). I'll relegate that one for DS1 and DS2 to use.

After looking at the cheapest 'Glide Junior' kayak (on sale for $149, with a maximum capacity of 60kg) and the basic 'Glide Adult' kayak ($199, max. 110 kg) I initially decided to spend a bit more money for the more upmarket 'Glide Reflection' ($299, 2.92m long, max. 110 kg) that looked a lot more stylish. But having decided to spend $299 on a kayak I checked out the other available models and found that the 'Glide Explore Fishing' kayak (in Granite [mottled light-grey] colour) was available at the same price, but had nicer features and a maximum capacity of 160kg. So I placed an order online for that model, with pickup from my local BFC (a few km from my home) to save me the $120 delivery fee. Pickup was supposed to be ready 'within four business hours' of ordering online...

Unfortunately by the time my credit card payment was processed the next morning the last kayak of the model/colour I had ordered had just been sold at the local BFC store. I emailed a complaint to the online sales customer service and they replied very quickly that they'd arrange something to satisfy me. In the end it turned out that the 'Glide Explore Fishing kayak - Granite' wasn't in stock at any of their Sydney stores, so they offered to 'upgrade' my order to the 'Glide Pro Fishing Kayak' in Charcoal colour. This kayak has an RRP of $699 and was 'on sale' for $559.20, so I'm very happy with the 'upgrade', although it might be more 'yak than I actually need. It is quite a bit larger (3.65m long and weighing 31 kg) but has larger capacity (180kg weight) and comes with a foot-operated rudder system. A rudder probably isn't really necessary on a kayak under 4m in length, but it makes this 'yak look a bit more 'cool' (it certainly won't be 'cool' if left sitting in the sun too long -- the darker colour (almost black) makes it heat up quite fast - even after the ten minute drive home the hull was almost too hot to touch).

The extra length and weight don't seem to be an issue -- it still fitted nicely onto the roof rack of my Ford Escape (and the rear didn't stick out far enough to require a warning flag), and I had no problem lifting it onto the roof rack with another man at the BFC loading dock, or with getting it down with my 15-year-old son helping at home. At a pinch I could probably load and unload this 'yak by myself, but a mishap could easily see my straining my back or putting a ding in the car door, so it is generally a two-man operation.

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Friday 11 December 2015

Atlassian -- Darling or Dud?

A local IT company Atlassian (founded by a couple of UNSW classmates who now find themselves in the top 20 richest Australians list) is a market darling, having seen the share price surge 32% after the IPO started trading. However, despite wishing the company well (Australia certainly could do with some more examples of successful high-tech companies), I have doubts about its success in the long term. At the current price, the company is 'valued' at around $8b, despite only having revenue of around $200m in 2014 (despite the 2014 revenue, up 44%, being trumpeted in a press release on Sep 10 2014, this years figures aren't announced yet -- not wanted to dampen the IPO party?). Also, while being in the enviable position of actually making a profit (albeit only about $7m!) for several years, it still reminds of the speculative bubble companies of the era at the start of this century, that relied on p/r rations instead of p/e ratios to justify their stock prices. While this worked out well for investors in Google, Amazon, and Apple, it certainly wasn't the case for investors in most of the '' era IT start-up companies.

I'll have to check my CityIndex CFD trading account tonight and see if Atlassian shares are available as a CFD -- I'm tempted to keep a close eye on the share price and be ready to short-sell Atlassian at the first hint that their bubble might burst. While the revenue chart for Atlassian currently has the exponential appearance of the SaaS market in general, indefinite exponential growth is next-to-impossible, and a reversion to an S-shaped curve (if not a boom-and-bust trajectory) is much more likely. If one assumes revenue merely quadrupled from 2014 levels (to $1b pa) before levelling off, and if one also assumed that all revenue beyond $200m was profit (ie. around $800m pa profit), that would justify current pricing and a market valuation of $8b with a modest (for an IT growth company) pe of 10. However, if costs (for R&D etc) continue to grow in line with revenue (as has been the case so far), it is hard to justify the current share price if profits are only ever in the tens of millions range. And if revenues plateau (or drop off)...

However, I won't be placing a huge bet on Atlassian either way (maybe just a few hundred dollars for fun), as my track record for making judgments about the potential of individual stocks (and IT stocks in particular) is exceptionally poor. I recall ignoring the float of Microsoft in the early 80s as it seemed overpriced already in the IPO, I bought CSL shortly after it floated and then sold it again when I'd quadrupled my investment -- only to see it increase another 25x since I sold out, and I still smart at the memory of 'investing' a couple of thousand dollars in GEN (Global Entrepreneurs Network) unlisted shares in the 1990s, only to see them go out of business before even getting to the IPO stage (if their attempt to raise even more cash from their investors had succeeded they might have hung around long enough to benefit from the madness).

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Wednesday 2 December 2015

Net Worth: November 2015

A fairly flat month: Sydney house prices have definitely stopped rising, and auction clearance rates have apparently gone from 90% earlier this year to around 60% now. As usual the "experts" are of divided opion -- some predicting a bursting of the housing 'buble' and falls of 40%, some predicting a return to 'modest' price growth of  around 10% in 2016, and some predicting  a period of price stagnation resulting in a slight decrease in 'real' prices over the next year or two...

As a result our estimated current house valuation is $684,053 (my half share - I don't include DW figures in my personal NW calculation), a modest gain of $3,238 (0.48%) since last month's review. This, as usual, doesn't reflect any potential 'windfall' profit if the property gets rezoned next year and redeveloped into medium density housing apartments as part of the new hospital precinct. Recent residents' meetings have had real estate agents advise that things could finalized within 18-24 months, and some residents have signed 'options' to sell their property to developers for around $2.5m.

My retirement savings balance estimate dropped slightly to $715,783 (down $7,382 or 1.02%), due to weakness in the stock market. The valuation of my geared share portfolio dropped considerably (down $24,215 to $113,816) but this is likely to have been exaggerated due to my investment in IPE paying out a dividend/capital return of around $13,000 today, so the valuation at the end of November was probably 'ex dividend'.

As usual I haven't adjusted the 'cost base' valuation for the hobby farm I 'inherited' from my parents at the start of 2014.

Overall, my net worth was $1.800m, down $28,122 (1.54%) from the previous month end figure.

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Friday 27 November 2015

Employer Health Benefits

One nice aspect of working for an 'international' company that has its HQ in the US is that their standard 'benefits' package for staff includes medical coverage (which is essential in the US, but not so much here in Australia due to universal public health coverage via Medicare). Now that the 'integration' phase has been completed, we are moving to new employment contracts from 1 Jan, and our new opt-in 'Health Plan' becomes available from 1 Jan also.

The Health Plan is a quite generous scheme offering 'top' private hospital insurance as well as a suite of 'extras' cover (such as dental, optical, physio etc.) with most basic options available from 1 Jan and some of the others (such as physio) having a 12 month 'waiting period' unless you are transferring in from another existing health plan.

The company will be fully funding the standard cost of the plan (at lesast for those within the 'base tier' of taxable income -- under $90,000pa for singles or $180,000pa for families, and in cases where there is no 'Lifetime Health Cover loading'). Unfortunately, while we are likely to be well within the 'base tier' in terms of family income (as DW only works 3 days per week), we haven't had any health insurance since 2008, so we currently have a LHC loading of 10%. That will mean our 'out of pocket' premium is estimated to be around $26 per month, which is still excellent value  -- even just by going for routine annual checkups at the dentist we should get back more in benefits than the 'out of pocket' premium cost. Of course our employer will be footing most of the premium (I guess around $200+ per month), so if we had to pay full cost for private health insurance we would probably still continue to rely on Medicare and the public hospital system.

One side benefit of having private health cover under this company plan is that our LHC loading will stay at 10% while we have private hospital insurance, and after ten years the LHC loading will revert to 0%. That could be a major benefit in the long term if we decide to continue with private health insurance after we retire (when we are more likely to need 'elective' surgery such as knee or hip replacements, dentures or hearing aids...). Of course that assumes we stay employed for the next ten years -- one downside of the completion of the 'integration' process is that we have all got new employment contracts that include a clause whereby we can have our employment terminated for 'any reason' with only 4 weeks notice. I suspect if that happens I'd be lodging an 'unfair dismissal' claim though, and might end up with the equivalent of a redundancy payment. It would still not be very nice to find myself unemployed and over 55 though...

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Wednesday 25 November 2015

Employer Superannuation benefits

The takeover of the company I work for has finally concluded the 'integration' phase -- some people have left, some people have been transferred overseas, and some people have transferred in from the US 'head office' to our office in Australia, either permanently, or for a short period to help us 'locals' transition to new systems, processes and policies that are the new standard. The final stage was to dump all our old job titles and get new ones selected from the standard set, and to switch our superannuation from the old Employer Fund to a new preferred Fund.

DW and I currently have our super in a SMSF, so we won't be 'rolling over' our current balance into the new Employer Fund, however I will nominate the new fund to receive our contributions from 1 Jan as the new fund has very low management fees (only 0.2% after a hefty rebate by our company) and has default amounts of Life/TPD insurance and Salary Continuance (Income Protection) insurance provided with the premiums rebated by the company.

Overall the new Employer Fund will provide around $150,000 worth of life/TPD insurance and 21 months of 75% salary continuance insurance (paid for up to two years after 90 days waiting period in cases of temporary disablement eg. a heart attack/stroke/accident etc.). Looking at some quotes from an online insurance broker, these two covers would otherwise cost me around $2,000 per annum in premiums, so it is definitely worthwhile to nominate to join this new Employer Fund for our ongoing superannuation contributions (SGL and salary sacrifice).

Ideally I'd like to have the 9.5% SGL contributions paid into this new fund, and keep my salary sacrifice contributions paid into our SMSF, but unfortunately we aren't allowed to have our employer superannuation contributions paid into two difference funds. However, I can always do an ad hoc 'rollover' into our SMSF if I want to (I'll have to check if there are any exit or rollover fees in the new fund).

Since our SMSF will no longer be receiving employer contributions after Jan 1 I'll cancel the monthly transfer of $5,000 from our SMSF bank account into our Vanguard HighGrowth Index Fund investment, and leave the remaining cash balance to provide for future SMSF tax and annual fee payments. There should also be sufficient cash available to fund the first 'pension' payout once we switch our SMSF into 'transition to retirement pension' (TRP or TRAP) mode once we hit the preservation age (57 for DW and myself). As we intend to 'recontribute' the pension amounts as an undeducted (nonconcessional) personal contribution every six months there only needs to be around 2% of the SMSF balance available in the bank account to avoid having to liquidate any of our Vanguard investment to fund the TRP payments.

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Tuesday 3 November 2015

Net Worth: October 2015

The CFC ('chinese financial crisis') seems to have fizzled out, with global markets apparently deciding that the sky isn't falling (again) after all. The GFC was 'the big one', then the EFC had less impact, with the PIGS not collapsing after all, and now the imminent 'CFC' appears to morphed into just a transition to a more sustainable rate of economic growth. Ah well, I'm sure they'll be another 'crisis' soon enough.

Overall the market recovery during October and the continued rise in the 'estimated valuation' for our home pushed my net worth back above A$1.8m, which is new 'all time high' -- although if you adjust for inflation and debit the value of the hobby farm/weekender I 'inherited' last year I still have a way to go before I'm as well off as I was in late 2007.

My geared stock portfolio gained $32,650 but is still well below the levels of 2007, or even where it had recovered to in 2010 before the end of the 'mining boom'. My retirement account was boosted by the share market gains and also by one monthly employer contribution being deposited during the month. Our estimated house price gained $36,794. Overall my net worth improved $102,586 during the month, which recovered the losses suffered in the previous two months. I make no predictions as to where my net worth might be at the end of this year or next...

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Thursday 1 October 2015

Net Worth: September 2015

A rather poor monthly performance with the stock market dip at the end of the month capping off a period of weakness. My geared stock portfolio lost $20,141 (-16.05%), and the market weakness also adversely affected my retirement savings, with my SMSF account balance dropping $8,286 (-1.19%) despite two months worth of Employer Contributions (including my hefty amount of salary sacrifice) being deposited during September.

Sydney real estate has also come off the boil, with a relatively small monthly gain being reported in most available sales price data. The data previously used to estimate our house valuation (six months average sales price for our postcode) is no longer available, and the switch to a difference source of monthly average sales price resulted in a 'paper' loss of $3,757 (-0.58%). The local council has delayed the release of planning report regarding housing densities in our suburb until at least April 2016, with any 'rezoning' happening after that. So we aren't likely to make any windfall profit from selling our home to a developer until at least 2017. In the meantime I'll continue to use the conservative valuation based on house sales across the entire suburb.

The $336,000 valuation used for my rural 25-acre 'hobby farm' property is still based on the valuation at the time I 'inherited' the property, plus subsequent capital improvement expenses. A rough current price estimate (based on movement in the house sale prices in the nearest country town) suggests it might currently be worth around $440,000 in the current market.

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Tuesday 29 September 2015

The Bell at the Top of the Stock Market

Amongst the many old adages relating to the stock market is the one saying "no one rings a bell at the top of the market". And like many such adages it is basically incorrect. The "bell" one should listen out for is when the market is out of line with its fundamental essence - the economy.

As a case study, I've pulled about 35 years of quarterly GDP index data for the Australian economy, normalised for 2010=1.00 (source: source: ) and calculated quarterly average 'All Ordinaries Index' (XAO) values from the adjusted daily close data (source: ). I've then simply divided the quarterly average XAO index by the GDP index to get a simple measure of the valuation of the stock market compared to the national economy.

(nb. The unconventional x-axis is simply due to the way I had uploaded the data into my spreadsheet, resulting in the x-axis starting with the most recent quarterly data.)

From this simple plot one can clearly see the two 'once in a lifetime' instances of 'irrational exuberance' (aka 'the madness of crowds') that occurred in 1987 and again in 2007. If one had got out of the market during the two quarters prior to each 'crash' where this overvaluation became apparent from this sort of simple plot, one would have done very well. (In my case I hadn't started investing in stocks back in 1987 -- I was just doing 'paper trades' as part of a Business Economics course at university, and in 2007 I decided to 'insure' my geared stock portfolio using Index Put Options rather than liquidate my stock investments and crystalize a capital gains tax liability, and then failed to 'roll over' my put options.

The only difficulty with trying to take advantage of this clear signal is that when the market moves above the trend line it can do so for a considerable period, and by a substantial percentage, so while this plot will show when the market has moved into dangerous territory it can still be difficult to 'pull the trigger' and liquidate ones portfolio (or buy Put options) when the market appears to be in a strong up-trend. One strategy might be to sell off a fraction of the portfolio as soon as the market is clearly well above trend, and then sell off an additional fraction every month or two while the market continues to set new highs. Waiting for the market to peak and establish a clear down-trend is often impossible to implement due to the speed at which a market 'crash' can occur.

While it may be tempting to also try and time Index Fund purchases by waiting for the price to drop below the trend line, the market tends to dip below trend more frequently, but with less severity, than the relatively rare instances when the market moves substantially above the trend line. For that reason it is probably sufficient to simply dollar-cost-average into the market (from example via an automatic savings plan being setup to buy a fixed dollar amount of Index Fund units each month) as long as the market is around or below the trend line. If the market drops considerably below the trend line due to global events that may only have a transitory impact it might be an opportunity to make an additional 'lump sum' investment utilizing any 'spare' cash reserves, or by deciding to increase gearing (however, if one already employs gearing, there is often little scope to borrow more when the market suffers a large drop -- one is more likely to be concerned about the possibility of a margin call).

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Monday 7 September 2015

Coaching costs bite

I booked coaching classes in Advanced English, '3 unit' Mathematics, Physics and Chemistry for DS1 next school term (10 weeks of 7-hours/week coaching cost around $800). Although he doesn't start these HSC 'Preliminary' subjects until Year 11 at the start of next year, the plan is that having some advanced exposure to the core syllabus content might help him do his best in these subjects at school next year. We'll see how it pans out. I'd previously bought him a set of Excel study guides for his HSC Preliminary subject selection, but he had hardly glanced at them this term (too busy doing school 'homework' at the last minute to ever actually 'study' - except the night before a class test), so leaving planning and execution of a study schedule to him seems a forlorn hope. Perhaps having scheduled weekend 'coaching' classes and set 'homework' will be more effective.

DS2 has actually been enjoying attending 'Year 4' coaching classes this year (he is in Year 3 at school), and he recently sat for a 'scholarship' exam run by North Shore coaching and did well enough to qualify for a 1/4 scholarship (fee rebate). Unfortunately that was only for entry and attendance in the Year 4 'Young Achiever' coaching classes next year, and when I went to enroll him last weekend I learned that very little of the 'High Achiever' course content differs from what he has already done this year in the Year 4 'Fastrain Extended' program. So instead I've enrolled him in the Year 5 'Fastrain Extended' course for next year, and he will have to sit another 'entry exam' to see if he switch into the Year 5 'High Achiever' course. After I complained a bit about not being told that the Year 4 'Young Achiever' course content would be almost identical to what he has already been doing this year (and hence a total waste of his time and my money), they at least agreed to waive the normal $30 exam fee. I've enrolled DS2 for the next four terms, as there is a small (10%) discount applied for multi-term enrollments of three of more terms. The cost for the four terms was around $2200! Still, I suppose it is a lot cheaper than private school fees, and will be money well spent if he gains entry into OC and then Selective High School. of course one can never be sure if the money spent on coaching has actually 'added value', or if the students might have done just as well without attending any coaching classes. I managed to get into 'OC' when I was in Primary School, but in those days there wasn't the 'coaching industry' that exists today. In some ways coaching is a bit of an 'arms race' - parents whose kids might struggle to get into OC or Selective HS send them to coaching to get the extra few marks that might get them in, which in turn means that parents of 'bright' kids are worried that their kids might 'miss out' of the chance to attend if they don't go to coaching also...

At a minimum coaching should help improve exam technique and reduce exam nerves/stress in the actual selection exams, and provide some help in any subject areas that need improvement. Whether it does any good in areas where a child is already performing well is much less certain. And there is a view held by some academics that the nature of coaching classes might make them counter-productive for more gifted pupils (who might find the 'workbooks' favoured by coaching school to be repetitive and boring). As with most things it is up to the parent to decide whether or not coaching may/will be beneficial and if the expense is justified.

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Wednesday 2 September 2015

Net Worth: August 2015

A negative month for my net worth, with global share markets taking a battering as the reality of the slow-down in the Chinese economy hit their stock market and then the rest of the world followed suit. This devalued my geared stock portfolio and retired savings considerably, although the overall impact was slightly mitigated by the continued rise in the estimated valuation of our Sydney real estate. The local council is still deciding on the rezoning of the area surrounding the new hospital site (which includes our home), so for the moment I'm continuing to use an estimated valuation based on the average sales data for the entire suburb.

The overall monthly decline in my net worth was -$57,738. Not a particularly cheerful amount considering it is about the same as my annual after-tax 'tax home' pay! So far 2015 has seen very little change in my net worth, although the monthly fluctuations have been 'interesting' to say the least.

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Monday 31 August 2015

Academic Competitions for School kids

There are quite a few academic competitions (national or state) available each year. Some of the ones DS1 and DS2 have entered (and I can recommend) are:


DS2 has now finished the round of ICAS tests for this year, an annual routine we commenced many years ago when DS1 was in Year 3. The ICAS (International Competitions and Assessments for Schools) tests are run by Educational Assessment Australia (EAA), an educational non-profit group of the University of New South Wales (UNSW) that specialises in large-scale assessment programs in Australia and more than twenty countries internationally. ICAS tests cost a small fee and are available for Digital Technologies, Science, Writing, Spelling, English, and Mathematics.

Most schools (I think) offer some ICAS tests - in our local Primary school they used to offer the whole suite of ICAS tests to interested pupils, but recently have reduced it to only English and Mathematics. I suspect this is due to low participation rates (only around 8/40 pupils in DS1s class did the ICAS tests this year) due to lack of interest (especially amongst those that don't expect to do well in such tests), having to attend the test before school, and the cost.

Fortunately the coaching school DS1 attends on Saturday morning is also able to offer ICAS tests in those subjects where it is not available at the pupil's normal school - so DS1 was able to do the remaining ICAS tests not available from his local public school.


Not really a competition, and not available to a student each year, the National Assessment Progam - Literacy and Numeracy, aka 'Naplan', is a compulsory test administered by the Department of Education every year, but only sat by pupils every second year (when they are in years 3,5,7,9). It is designed to allow the government to see how effective public education is in teaching 'the basics' of literacy and numeracy (English and mathematics) to the 'minimum standard' expected per the curriculum. The results are reported in 'bands' (1-6) for each year, in a similar way that 'bands' are used for assessing student performance in the HSC. Detailed results (showing student responses to individual questions, the correct response, and what % of the student cohort got the correct answer) are also provided, which can be a helpful guide if your child is having greater difficulty with one particular subject or one area within a subject. However, it is a fairly blunt tool at the top end, with DS1 and DS2 getting mostly band 6+ (the little triangular pointer which says 'somewhere above band 6...').

Young Scientist Competition:

This is an annual competition run by the Science Teacher's Association of NSW (STANSW) for students from years K-12 (there are separate categories for K-2, 3-6, 7-9. and 10-12). Entries can be in the category of 'Scientific Investigations', 'Models and Inventions', or in both categories. There is plenty of online help for parents and teachers at and as entry is free it is nice way to introduce kids to the 'scientific method' and writing a 'lab report' without having to worry if the entry is 'competitive'. Every entry gets a certificate ('participation', 'commendation',' high achievement' or 'excellence' depending on the score) so all student efforts get rewarded. There are small cash prizes for the top entries in primary school categories, and some more substantial cash prizes (and trophy for the winner) in the senior school entries. Some winning entries also go on to the National Science and Engineering Awards and might be selected to proceed on to the International Science and Engineering Fair...

Logical Thinking Challenge (LTC):

This is a free online adaptive multiple choice test (24 questions in 30 minutes) run during one 24-hour period each year (12/13 September this year) for students in Years 3-8. It is developed by the University of Melbourne and achieving an excellent result 'wins' free entry into the Creative Problem Solving (CPS) written competition run by North Shore Coaching the following month. North Shore Coaching also donates $100 to every school that has more than 30 students participate in the LTC. See for details and online registration.

Creative Problem Solving (CPS) National Competition:

Run by North Shore Coaching College, this competition costs $20 (refunded/exempt for those that do well in the LTC), this written test is set and marked by the University of Melbourne. Entries close on 6 October and the test is on 17 October. Trophies, Certificates and Prizes are awarded in each Age Group (A-F).

AMT Competitions:

The Australian Mathematics Trust (AMT - see runs both 'open' and 'invitational' competitions in the areas of mathematics and informatics. These competitions have to be entered via school registration. The annual 'open' competitions are:

Computational and Algorithmic Thinking (CAT) - for students in years 5-12. Held in March.

Australian Mathematics Competition (AMC) - for students in years 3-12. Held in May.

Australian Informatics Olympiad (IAO) - for students in years 7-12 with programming ability. Held in September.

Australian Statistics Competition (ASC) - for students in years 7-12. Project based, due in September.


UNSW Computing Department runs an annual programming competition (ProgComp) for High School teams around Australia. The main round is held in schools (19 June this year), and the best dozen or so teams get invited to compete at the Grand Final held at UNSW on 5 Sep this year. Teams comprise of up to three students. The competition involves solving as many as possible of around five set problems in two hours, using any programming language that will take input from keyboard or text file and produce output as a text file. The program code and text file submissions are manually reviewed to check that output has not been 'typed' rather than generated by a running program. The manual marking allows some marks to be awarded for partial solutions.  Textbooks and manuals can be consulted, but no outside help is allowed.

DS1 has entered this for the past couple of years (using Python) and enjoys getting a better score each year, but as a 'team' of only one student, his entries aren't competitive. He might have more luck organising a real 'team' next year when some of the other students are studying Software Design and Development in Year 11...  unless you make it to the 'Grand Final' there are no prizes, but you do get a certificate, and your name on the past results page:

Chess Competitions:

There are school-team based 'round robin' competitions run by the NSWJCL (NSW Junior Chess League) during terms 2 and 3. There is also a one-day interschool chess competition held at the end of term 3. Aside from that, the NSWJCL also runs one-day, and two-day chess competitions during each school holiday. The entry fees are modest ($15 for a one-day competition involving 7x30 min games), but you also have to pay the small annual fee to join the NSWJCL (for which you will get the magazine each term that includes some Chess puzzles, articles about winners of NSWJCL competitions, and the printed chess ratings listing). DS1 and DS2 play school chess, but don't take it very seriously, so they only attend one (or two) of the one-day chess competitions during school holidays if they have nothing else organised.

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Thursday 27 August 2015

HSC Subject selection

DS1 has just gone through the process of selecting which subjects he will do in years 11-12 for his Higher School Certificate (HSC).

He was already enrolled in Preliminary SDD (Software Design & Development) this year (via distance education through HSCOnline) as an 'accelerate' student, so will be doing his HSC exams for that subject while he in in Year 11. Although computer programming is one of his favourite subjects (he started the Year 9 ITC course while he was in Year 8, but couldn't do it last year as it was no longer offered by HSCOnline), it doesn't 'scale' very well (so, unless he gets in the top 1% in that subject it is unlikely to be included in the 'best 10 units' used to calculate his ATAR for university entry). So it is probably a good idea to get in done while he is in Year 11 next year so he can concentrate on the more demanding (and better scaling) HSC subjects like Ext 2 Math while he is in Year 12. He is also doing a lot of other extracurricular computing activities this year (he completed the UNSW Computing 1 course( 'HS1917') earlier this year, and will be doing his week of 'work experience' at NICTA in term 4), so once his SDD final exam is completed early in term 4 next year he can have a 'gap year' from computing studies while he concentrates on his other HSC subjects.

For his 'real' HSC subjects he is doing English Advanced (no choice about that as 2 units of English has to be included in the HSC and in the 10 units used for ATAR calculation, and everyone at his selective High School does English Advanced rather than Standard) and English Ext 1 (although it's not his best subject, so he may drop English Ext 1 in Year 12 -- although it 'scales' well there isn't any point if he isn't at least in the 'top half' of the class). He might also have to drop Ext 1 English to make room for his other subjects and Ext 2 Maths in his school timetable.

He is also doing Maths and Math Ext 1 in Year 11, and intends adding Math Ext 2 in Year 12 (if his results are good enough). Math Ext 2 'scales' extremely well, so if he has the ability it can be quite time-effective compared to some other subjects that can take an inordinate amount of time (especially those that involve a 'major work' project).

His other subjects are Chemistry, Physics, Economics and Business Studies. He is quite interested in both science and finance/economics so those subject choices should suit him quite well. These subjects also happen to 'scale' quite well (if you achieve a decent result) as they are popular with the more able students. Given that most of the students attending selective high schools have been drawn from the 'top 2%' of students in the state (based on the entry tests done at the end of primary school), he should do fairly well in his HSC mark and ATAR ranking as long as he is in the 'top half' in each subject at his school. Ideally he should be aiming for the top quarter in each class, and possible try for 'first place' in some of his better subjects (he came first in Commerce last year, so he might do quite well in Economics and Business Studies).

Overall, his HSC preliminary subjects (year 11) at school for next year are:
English Advanced + Ext 1 (ie. 3 units)
Mathematics + Ext 1 (ie. 3 units)
Business Studies (2 units)
Chemistry (2 units)
Economics (2 units)
Physics (2 units)
and HSC Software Design and Development  (2 units) taken via distance education.

This is a total of 16 units, which is quite a heavy workload! Fortunately aside from Judo he doesn't have any time consuming extracurricular activities, as he is no longer studying piano.

In his HSC (year 12) at school he will probably be taking some combination of:
English Advanced (+ Ext 1 ?)
Mathematics + Ext 1 (+ Ext 2 ?)
Business Studies

However, as the school rules (and timetabling restrictions) only allow enrollment in 14 units or less for Year 12, he may have to drop a subject if he continues with English Ext 1 and also wants to do Maths Ext 2. He'll be making that decision around this time next year.

Although DS1 will be very busy, I don't think he'll be under too much pressure, as he has no interest in studying either medicine or law at university, and so he should easily get a sufficient ATAR to enrol in whatever science, engineering, computing or economics course he finally decides upon (he is still thinking about what he wants to 'do' at university). It will be interesting to see if he ends up doing well enough to qualify for a university scholarship though...

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Buying straw hats in Winter

The stock market was down nicely on Monday and early Tuesday, so I decided to take the opportunity to 'top up' my holdings in IHD (iShares S&P ASX High Dividend ETF) and RDV (Russell High Dividend Australian Shares ETF), buying about $6,000 worth of each using my Comsec margin loan account.

I didn't get around to placing my order until mid-afternoon, by which time prices were already recovering. As I intend to hold onto my geared share portfolios for at least 10-15 years until I retire (and probably longer, although I'll probably pay off any remaining margin loan amounts when I retire as the tax benefits of negative gearing will be negligble if the current 'tax free' status of superannuation pension income remains in place) it makes sense to add to my stock portfolio when 'the market' panics and shares are 'on sale'.

Of course the downside of such market volatility is that my superannuation balance has gone down by about $35,000 over the past couple of months. But as I'll still be in 'accumulation phase' for the next 10-15 years it pays to remain sanguine about such market volatility. I was tempted to move the $40,000 cash we have sitting in our SMSF into our Vanguard High Growth Index Fund investment, but decided to stick with out current $5,000 per month transfers to 'dollar cost average' the ongoing investments.

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Tuesday 4 August 2015

Net Worth: July 2015

My estimated net worth at the end of July had recovered some of the decrease experienced the previous month, reaching $1.815m (including the 'cost base' value for the lakeside property I 'inherited' from my parents in 2014). The gains were due to a rebound in global stock prices (although not to 2015 highs, and the Australia stock market is still well below its previous highs experienced in 2007), which is reflected in the valuations of both my geared stock portfolio and my superannuation balance, and a continued rise in the estimated valuation of our Sydney home.

There are no investment changed planned for this month. I will continue to save mostly via 'salary sacrifice' contributions into my SMSF.

I'm currently re-assessing my previous plans to add an extension to the existing 'holiday home' on my lakeside property - the plan was to have a $50,000 two-storey 'kit shed' added to the rear of the building. By getting my owner-builder permit and employing contractors directly I expected to finish the building to 'lock-up' stage for around $150,000 and then install a kit kitchen and bathroom, gyprock, painting, flooring etc. myself during holiday stays at the property. However, that would require my 83-year-old father to do the day-to-day supervision of the contractors, and me try to manage things 'long distance' with many 7-hour round trips to the farm a couple of times a month. However, my father isn't too keen on being responsible for supervising the on-site activities, and as I am supposed to be working on my part-time PhD (and also doing a couple of Diplomas via distance eduction over the next 12-24 months) I doubt I'd be able to 'project manage' the work to the extent required. Just finding willing and able local contractors to do the site survey, bush fire assessment, and architectural drawings via phone calls and emails has been problematic. The alternative would be to find a local builder to contract to complete the project to 'lock-up stage', but that would make the project much more expensive. As we are only planning on using the property as a 'weekender' and holiday home until I retire, and our eldest son will soon be too busy during his final years of high school to spend all his vacation time 'up at the farm', it is probably sensible to put the plans for adding an extension on hold until I retire and decide how much time I will actually spend living on the lakeside 'hobby farm'.

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Friday 10 July 2015

Stop! Identitfy thief!

I've only myself to blame. After doing internet purchases for many years without any real problem (and using a secondary credit card with a low credit limit for internet purchases 'just in case') I became too careless about Internet security, and recently made several online payments recently using my main credit card. While I've used that card before for domestic telephone payments and some internet payments where I'm confident about the processor (eg. university fee payments), I'd usually been cautious about payments overseas (such as AliExpress, Banggood etc.).

However, in the past couple of months I must have used it somewhere that has had their payment database hacked, or else I've managed to get some spyware or something onto my home laptop (despite Mcaffee scans showing nothing untoward) as my main credit card suddenly showed eight foreign internet transactions totalling over $1,000 that I hadn't made. Fortunately I happened to be checking my online credit card transaction listing the day that the fraudulent transactions were processed, so I immediately called my bank to report the issue and they 'blocked' my old credit card and issued a new number (I'll have to wait for it to arrive in 5-10 days before I can activate it and advise several direct debit billers of the change in payment details). I then had to lodge on online form 'disputing' these transactions, and they will sit on my account (although I've arranged to not have to pay them in the next billing cycle) until the dispute is resolved - which can take anywhere from one to six months! Hopefully I won't end up being 'out of pocket' for these fraudulent transactions...

As the transaction descriptions made it easy to track down the online company at which five payments for the same amount had been processed, I decided to also lodge a report with the Australian Cyber Crime website ('ACORN') with the details of the transaction, date, amount, merchant etc. I'm not sure if they will actually pass on the information to the Australian or International Police (the amount involved is 'only' $1,000, but it could lead to a 'gang' systematically using stolen credit card details to make online payments), but at least I've done my bit to fight Cyber Crime. Unfortunately I still don't know for sure exactly which prior (legitimate) online purchase was the one the resulted in my credit card details being stolen/hacked.

Theoretically it should be fairly easy for ACORN/Police/Interpol to request details of the IP address used to make the five purchases (as they were for identical amounts and made on the same date using my credit card details) from the online merchant that processed the fraudulent transactions. Whether or not this leads to a suspect (if they were careless), or just leads to an anonymous redirect is unknown. As the five purchases were from an online MOOG company the authorities may also be able to track the IP/identity of who is now using the purchased game service (I suspect the person/gang that made the five online purchases probably bought new game logins and resold them at a steep discount for cash down at the local pub...). If they can find the end-user they might be able to find out who was selling the 'stolen' goods. Hopefully if the online merchant can cancel the services bought with these fraudulent transactions there will be less difficulty getting the disputed transactions cancelled, compared to if the transactions had been for physical goods that had already been shipped out...

Ah well, I've learned my (potentially expensive) lesson and won't be using my new credit card number for any more online purchases in future. I'll stick to using PayPal (wherever possible) or else using my designated 'low credit limit' credit card if a card is required for making an online payments.
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Thursday 2 July 2015

Net Worth: June 2015

My estimated net worth at the end of June had decreased considerably (-$39,299) compared to the previous month, despite three months' worth of superannuation contributions being deposited into my retirement account during June. The decrease was due to global and Australian stock markets showing weakness during the first half of June, and then having a couple of really bad days at the end of the month due to the 'Grexit' uncertainty.The only positive contribution during June was the continued rise in the estimated valuation of our home, which increased by another $9,328 (+1.54%).

Our three year fixed-rate home loan matured at the end of June, so I transferred $50,000 from my available 'portfolio loan' credit limit to pay that amount off our remaining home loan balance. This was to match the $50,000 payment DW made using funds from the sale of our investment property last year that she had invested in a term deposit until our home loan fixed rate period ended.

During the month I bought a few additional shares in NAB and IFL to add to my existing holdings - the NAB shares were via the rights issue, and the IFL shares were bought after recent bad publicity caused the stock to drop more than 10%. Hopefully in the longer term these will both be sound investments.

Overall, any major future rise in my net worth will depend on whether or not our home gains substantially in value if the area gets 'rezoned' by the local council later this year (for medium density housing around the new hospital site), and when (if) the Australian stock market eventually recovers to pre-GFC levels (unlike the US stock market, the ASX-200 is still considerably below the peak of about 6800 reached during 2007). While I continue to save a large fraction of my salary via superannuation 'salary sacrifice' the amount often seems insignificant compared with the monthly changes in net worth caused by market fluctuations. The 'plan' is that enduring these fluctuations ('risk') will eventually pay off via better returns in the long term compared with less volatile asset allocations.

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Tuesday 2 June 2015

Net Worth: May 2015

Overall my estimated net worth at the end of May had increased slightly (+$5,284) from the previous month to reach a record high of $1,790,460 AUD. Positive contributions came from the increased valuation of our home (but that estimate is based on 12-months average sales figures for our suburb, with the latest figures being for the period ending March 2015. The more current RP Data index for all-Sydney suggests there was a slight drop in average house price during May, which might indicate the current boom/bubble in Sydney real estate is coming to an end), and from a rise in the value of my superannuation account balance (due to a drop in the Australian dollar increasing the unit value of our Vanguard LifeStategy HighGrowth Index Fund investment). These gains were largely offset by a drop in the net value of my geared stock portfolio, which was affected by both a decrease in the stock market during May, and also by a slight draw down on my portfolio loan to repay a $20,000 'balance transfer' I'd taken advantage of (to access some funds at 0% interest rate for six months).

Our 3-year fixed rate home loan reverts to standard variable rate next week, at which time I will pay off $55,000 of the home loan balance (which is not tax deductible in Australia) using some realized gains on one of my hedge fund (OMIP220) investments that is maturing in June and being paid out. That will reduce the market value of my stock investment portfolio by the same amount, so there will be no net effect on my overall net worth (but theoretically reduces my gearing slightly).

During the remainder of 2015 I should be able to start working on the development application for building an extension to the lake house (on my hobby farm), but I will be capitalising those costs (as the cost of the extension should add an equivalent amount to the value of the hobby farm) they will also have no net effect on my overall net worth. But it will mean that a larger percentage of my net worth is tied up in illiquid investments (especially so in the case of my hobby farm, as I expect to pass it on to my sons as part of my 'estate' -- fortunately Australia does not have gift, death or inheritance taxes, so they will only pay capital gains tax if they eventually sell the property for more than the 'cost base' value. Due to the fact that the 'cost base' is no longer adjusted for inflation, long term capital gains are taxed at half the marginal tax rate, which approximates to only paying tax on 'real' gains -- at least up to the point where an asset has more than doubled in value during the holding period).

Once we have paid off a large chunk of our remaining home loan I should have some spare cash flow each month, which I'll use to pay off some of my margin loan balances. With the margin loan interest rate currently around 6.29% and my marginal tax rate for 2015/16 being 32.5c or 33c (depending on whether or not the “Clean Energy” (carbon tax) package of compensation measures gets rescinded as planned), this will give me an effective return of around 4.2% for paying down that tax-deductible debt rather than saving the extra cashflow. Conventional wisdom would indicate the optimum use of the extra cashflow would be to pay off any non-deductible debt (eg. credit card balances or my home loan), but I don't have any credit card balance (I pay off the amount due in full each month) and paying off our home loan would require DW to pay the same amount (as our home and loan are in joint names and we make equal loan repayments), and she has just bought an investment home unit 'off-the-plan' and wishes to save up some funds to be ready to pay settlement costs and stamp duty when the construction is completed towards the end of 2016.

It will be interesting to see when (if) my net worth eventually hits the "two million dollars" mark. Although I am saving about $30,000 of my salary into superannuation each year, the biggest factors affecting my net worth will continue to be changes in the value of our home (especially if our property is rezoned to 'medium density' in August), and how the Australian economy and the stock market perform (affecting my superannuation savings).

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Thursday 28 May 2015

Me vs. BRW "Rich List" 2015

Years ago I picked the cut-off net worth for getting onto BRW magazine's "Rich-200" list (the wealthiest 200 individuals in Australia) as a suitable "benchmark" for evaluating how well my net worth was tracking. As the cut-off more than 100 times my net worth, I divide the annual report's threshold by 100 and compare it to my current net worth as shown below (the graph is on a log-linear scale, as compounding tends to make wealth grow exponentially).

The chart clearly shows how I have been generally tracking quite well against this benchmark, with the exception of 2008 when the GFC caused me to have to liquidate a large part of my geared share portfolio at the bottom of the market. Over the past four years I have been slowly making up ground against the benchmark, probably due to my portfolio being overweight in Sydney real estate and the stock market, whereas many of those on the "rich-200" list have a large part of their wealth tied up in resource companies.

This benchmark is quite challenging due to a couple of reasons:
1. Being limited to the wealthiest 200 Australians, the population growth means that this is slowly becoming a more exclusive cohort
2. As under-performers get dropped from the list, the cut-off is biased towards those with the best investment performance

On the other hand, starting from a relatively low level of net worth means that initially my income was a large percentage of my net worth, and that savings were making a large contribution to my increasing net worth. This effect is slowly diminishing as my net worth grows to a larger multiple of my salary package (currently around 13.7x) and hence the ROI of my existing investments starts to outweigh the increase due to my savings. Of course, once I retire and start to draw down on my savings, rather than adding to them, it will be almost impossible for my net worth to keep pace with this bench mark...

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My Stock and Fund Investment Portfolio going into FY 2015/16

I am no longer an active investor, as I eventually realized that I don't have any exceptional talent for timing the market, nor for picking individual 'winners' - either stocks or fund managers/funds. Hence, my ongoing regular investment/saving plan is:
1. an automatic contribution into superannuation via the compulsory SGL (superannuation guarantee levy, currently 9.5% of pre-tax salary) and an additional $800 of 'salary sacrifice' from each fortnightly pay. Within the SMSF $5000 is automatically moved from our ANZ V2 High Interest SMSF bank account into our investment in Vanguard LifeStages HighGrowth Index Fund.
2. $100 per month investment into the Colonial First State Geared Share Fund via a direct debit by my StGeorge Margin Lending account (with a matching $100 loan amount being invested)
3. $100 per month invested into the Vanguard LifeStrategy HighGrowth Index Fund held

So, overall I am currently saving around 30% of my total pre-tax salary package, mostly via tax-effective superannuation savings.

I had sold off some of my smaller individual stock holdings and some of my Resource Company Investments (when the 'mining boom' was coming to a close) in recent years, so the remaining investments in my geared portfolio are likely to remain unchanged during financial year 2015/16. I recently took up my entitlement to 88 additional shares in National Australia Bank, and IPE Private Equity is likely to continue to decline in market value as they slowly sell off various private company holdings and pay out the proceeds to the shareholders.

Overall the level of gearing is fairly modest (loan:value ratio around 50%), with the total dividend income distributed last year slightly exceeding the interest on the margin loans (hence the portfolio was slightly 'positively geared'). Some of the dividend income is reinvested, so I actually have a slightly negative cashflow and have to use some of my 'take home' pay to cover any monthly margin loan interest payments that aren't covered by the dividends I receive. The dividend paid out by Woodside Petroleum is also likely to be a lot less than was paid out during the past 12 months.

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Thursday 7 May 2015

Slow progress with the 'Lake house' renovations and extension

The prefab house on the 25-acre hobby farm at Lake Wallis my parents transferred to me early last year had become very run-down during the ten years one of my sisters was living there (rent free) and supposedly looking after my parent's herd of alpacas... in reality she appears to have spent most of her time collecting and hoarding junk, which my parents are now in the process of slowly clearing out and either taking to the local tip (at a cost of about $85 per trailer load) or packing up to transport to their larger farm at Inverell (where my sister and the alpacas herd had moved to at the start of last year). Once all the junk has finally been cleared out the old carpet will be removed and the house fumigated before being renovated (new lino floors and patched and repainted walls). My plan is to then submit a DA (development application) to the local council to have a two-storey extension added to the rear of the existing house, so that there will be enough room for us to stay at the farm with my parents during school holidays.

My parents plan on eventually buying my sister a small farm for he to live on, using some of the proceeds from selling off their Inverell farm, and to down-size by moving back to the Lake Wallis farm to live. The balance of the proceeds of the sale of their Inverell farm should help self-fund their retirement for the next few years (they get a small UK pension due to the years my father was in the RAF before moving to Australia in the early 60s, and recently also a small amount of Australian aged-pension, having now spent most of the superannuation my father received when he retired as an airline pilot in the early 1990s). In another few more years time the value of the Lake Wallis farm they gifted to me will no longer be counted in the pension 'assets test', so my parents should then be eligible for a slightly larger Australia pension income to live off. As I am now paying the rates, insurance and maintenance costs for the Lake Wallis house their living costs should be fairly modest by then (provided they are no longer paying for any of my sister's living expenses!). I also plan on moving to Lake Wallis myself when I retire in ten or fifteen years time (unless I get retrenched beforehand), but I doubt my parents will still be living there as my father would be pushing 100 by then (although it is possible, as his Aunt will be celebrating her 100th birthday in a few months' time).

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Net Worth: April 2015

Continued weakness in the Australian stock market saw my geared stock portfolio decline in value, and also resulted in the value of my retirement account (SMSF) decreasing despite two months of employer contributions (SGL and salary sacrifice) being deposited into our SMSF bank account during April. On the other hand the continued boom in Sydney real estate pushed up the estimated valuation for our home (which may be overly conservative due to reasons mentioned last month). I also adjusted the valuation for 'other real estate' (the hobby farm at Lake Wallis) upwards by $11,000 to incorporate the cost of having the pastures 'mulched' and trees within 10m of the farmhouse removed to reduce the bushfire hazard (allowed under the current "10/50" state legislation).

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Net Worth: March 2015

Not much change overall, with gains in my retirement account and home valuation mostly offsetting weakness in my stock portfolio during March. The home valuation is more approximate than usual this month as I missed getting some of the online median sales price data. In any case the home valuation may turn out to be highly conservative, as it is based on median sales data for the entire suburb/postcode area, whereas the value of our house may be boosted if there is rezoning (for medium or high density housing) in the near future due to the construction of a new regional hospital in the vicinity.

Some neighbours on the adjacent main road (opposite the hospital construction site) have already been offered an 'option' to sell their property to a developer for around $2.5 million in two years time (they only get a 1% payment up front). While not everyone has accepted the offer (some are holding out for a higher price, while others don't wish to sell their home at all, or wish to sell and move out immediately rather than having to wait for two years before selling their house), construction of the hospital is already underway and redevelopment on the surrounding area will soon follow. While our house is a bit further away from the hospital site, it is still within the surrounding 'zone' earmarked for strategic redevelopment, and a council decision on rezoning is due very soon. It is quite likely that our house with get rezoned from current standard residential (single dwelling, maximum 8m/2 storey) to medium density (eg. townhouses/villas or blocks of 3-storey flats). DW fondly imagines we will eventually be able to sell in a couple of years for $2.5m or more (compared to the current valuation of around $1.15m), but I will wait and see how the zoning goes and what offers from developers actually eventuate. As the 'family home' isn't subject to capital gains tax in Australia, any windfall profit would be tax-free, allowing to replace our house and still have money left over to invest or add to our super.

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Friday 3 April 2015

Iran deal terminally stupid

After years of sanctions that were obviously starting to bite, Iran finally came to the negotiating table -- and got everything they wanted. The 'deal' will lift the sanctions that were impacting Iran's economy (which some western critics had complained simply punished the innocent population of Iran -- but what better way to incite the population to be disaffected with their leadership and encourage change from within?) and in exchange Iran was not 'agreed' to halt research into developing nuclear weapons, but instead has reached an 'understanding' that includes some limits to the use of its nuclear research facilities and the amount of enriched uranium it can stockpile.

What this means in reality is that instead of the 'worst case' scenario of Iran being theoretically (but never realistically) being able to stockpile enough enriched uranium for a single nuclear weapon 'within months' (but not having the ability to actual build a nuclear weapon for many years to come), we now have a situation where they can continue developing the knowledge and technology required to produce a functional and effective nuclear weapon (which was always going to take several more years or research, and time to steal/buy technology from Russia, North Korea, Pakistan etc.) and can still produce enough enriched uranium for a weapon within a year or so of being ready to make use of it...

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Monday 16 March 2015

Quick, Sell (Lease) the 'poles and wires' before they're not worth anything!

The latest opinion polls suggest that the NSW election is likely to see the coalition remain in government for another term. Theoretically that should mean that their policy to 'sell' (actually a 99-year lease of 49%) the electricity system 'poles and wires' should go ahead, with most of the proceeds going to build other much-needed public assets (ie. infrastructure). Of course, with the minor parties still having enough senators to block any government legislation that Labor is opposed to, just winning another state election isn't a guarantee that this policy will ever get implemented. But it should - if for no other reason that if they wait too long the 'poles and wires' are likely to be entirely worthless within a few decades.

Just as the sale proceeds from selling the electricity generation assets (coal-fired power stations) were eventually much less when the sale went through a decade or so after it was first proposed (due to the move towards alternative electricity generation sources to address the need to reduce greenhouse gas emissions), the value of the existing 'poles and wires' used for distributing bulk generated electricity is likely to plummet when rooftop solar power generation starts to eliminate the need for many houses to remain connected to 'the grid'. Already a house could be self-sufficient in electricity generation if the entire rooftop was covered with standard PV panels (and expensive storage batteries), but developments in PV technology mean that within a decade or so the required set of 20 or so large panels could be replaced by a single panel around 1 square meter in size, and at much lower cost. It would only need improvements in the cost of batteries (or the development of alternative energy storage systems like hydrogen fuel cells, room temperature superconducting magnets etc.) to make it affordable for most houses to be self-sufficient in terms of energy. How much will the old 'poles and wires' be worth then?

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Monday 2 March 2015

Net Worth: February 2015

A significant rise in the Australian Stock market over the past month gave a major boost to my net worth via increases in the valuation of my geared stock portfolio (gearing is fun when the market is rising -- not so much during the GFC) and also a rise in my superannuation account balance. Our house price estimate also managed another slight increase. Overall my net worth hit a new high of over A$1.75 million.

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Thursday 5 February 2015

Net Worth: January 2015

 The three major components of my net worth (my share of our house, my geared stock portfolio, and my retirement savings account) all enjoyed substantial gains during January, pushing my net worth total up by just over 3%. The strength of the Sydney real estate market shows no sign of abating, and with inflation remaining low there is even the prospect of a rates cut by the RBA providing further stimulus to the housing market as a by-product of their attempt to stimulate the economy as the impact of the resources bust continues to drag on economic growth and boost unemployment. In hind-sight it would have been better to postpone selling our investment property for another couple of years, but I'm glad to be free of the hassles of being a land-lord. The Australian stock market is likely to benefit from any economic stimulus provided by a rates cut, as despite recent gains the ASX200 is still well below the pre-GFC levels. While it would be foolish to try and predict how things will develop during 2015, from this point the prospect of achieving a net worth of two million by the end of this year or next seems possible. How likely it is remains anyone's guess. One month (October) of employer superannuation contributions were paid into our SMSF bank account during the month, with the other two monthly contributions for the quarter due any day now (they had to be paid by the end of the month after the end of the Oct-Dec quarter).

As usual I've left unchanged (at $325,000) the initial valuation for the rural property I was given last March as I intend leaving the property to my sons, so any potential capital gains will remain unrealised. I only include it at all as the holding costs (council rates, house insurance etc.) are a drain on my cash flow. While I don't include notional gains in its valuation in my monthly net worth figures (the current monthly valuation estimate is $366,450) I will add any large capital expenditures (such as building an extension to the existing house) to its valuation to 'balance the books'. The monthly valuation estimates for this property are not very reliable in any case, as the source data is movements in the average house sale prices in the nearby township, and not sales data for similar rural 'hobby farm' properties.

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Sunday 25 January 2015

Back from our holiday cruise

After spending a few days at a seaside motel with the family over the Christmas period, I took a couple of weeks of annual leave and we all went on a 13-day cruise from Sydney to New Zealand on the Sun Princess. The total cost was around $10,000 (or about $2,500 per person), which isn't too bad considering that included the travel (to and from New Zealand and between the stops at Milford Sound, Dunedin, Wellington, Napier, Auckland, the Bay of Islands and a couple of other places), the accommodation, all meals (aside from a few snacks and a couple of lunches while in port), and land excursions to Rotarua and around Bay of Islands.

Aside from possibly going on a skiing weekend this year (or next year), and spending the Christmas holidays with my parents either at the rural property I 'inherited' (that is, if the farm house ever gets renovated into a livable condition again) or at a nearby motel (so I can do some work on the farmhouse and farm during the stay), we probably won't take another major holiday for another three or four years. We had been thinking of taking the boys on a tour of Italy/Greece sometime, but as DS1 is already in year 10 this year and starting one HSC subject as an accelerated student, we will now defer this until after he has finished his year 12 (HSC) exams. Considering the high cost of traveling around Europe by car, train or plane and staying in hotels in the major cities, I am now considering doing a cruise instead when we eventually travel there. A 14-day cruise stopping at Rome, Florence, Venice, Athens, Istanbul and several islands looks quite attractive, but not cheap. Ah well, time to start building up my holiday savings account once more...

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Friday 2 January 2015

Net Worth: December 2014

Another good month with the stock market doing well towards the end of December, Sydney house prices continuing to rise (although it looks as if the property market is cooling rapidly, and could dip next year if Australia experiences economic weakness or a mild recession), and our SMSF balance improved due to mostly being invested in the Vanguard High Growth Index Fund, which saw gains due to both the local stock market rise and the drop in the Aussie dollar boosting the value of International stock and property investments.

Hoping for a happy new year of investment returns in 2015!

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Managed to get my SCATT training system working again

One of my hobby/sport activities is target shooting. I mostly shoot 10m air pistol as it is more fun to shoot that air rifle (in Australia shooting with an air rifle jacket on can get very hot and uncomfortable in summer!) and shooting .22 and other caliber semi-automatic pistols for rapid fire and standard pistol events is both more expensive (ammunition costs quite a lot) and less convenient (the air pistol club is close to home and doesn't require onerous 'volunteer' working bee sessions from its members). I also enjoy air pistol events the most of all the Olympic shooting events, as my temperament is more suited to the slow, high precision mode of air pistol shooting (free pistol would also be fun, but that would be a lot more expensive!).

I bought a SCATT Solution system for air pistol training way back in 2000, but I hadn't used it for many years (after we moved house and DS1 arrived I no longer had much spare time for shooting) and I wasn't sure that I would be able to get in working with one the newer Windows computer systems I have on hand nowadays.

The original software (version 2.0) had come on a 3.25" floppy disc and had been installed on a laptop (that I no longer have) running Windows 98. These days I only have one desktop computer that even has a 3.25" FDD (and the serial port required to connect to the SCATT Solution hardware), but that machine is running Windows 7 and I found that the software wouldn't install. I did manage to download the newer software version from www.scatt,com and it fortunately it recognized the old SCATT system once I had ticked the check box “enable legacy (RS-232) devices” in the “Options” menu. Everything is working fine with new 2014 software version and my old 2000 vintage SCATT Solution (a great relief, given that a new SCATT system would set me back around A$1400 and doesn't offer much improvement over the old 'solution' version), so I now should be able to use it for regular training sessions during 2015 and try to improve my scores back up to 'A' grade (my last two club shoot scores were mediocre - 529 and 533).

Searching the web hasn't turned up any useful documentation on how to actually use the SCATT output to improve your scores (although I guess it must be a useful tool, given that around 80%-90% of top international shooters apparently use the system for training), but there were some documents available online that explain what all the graphical outputs (available after a 60-shot 'match' session) actually mean. I guess I'll just commence training regularly using the SCATT and see what effect strength and fitness training (and weight loss) have on my scores and the SCATT plots. I can also try out minor adjustments to my shooting stance and technique and see if any effect is immediately apparent in the SCATT readouts. Hopefully after a few months of regular training sessions I will be able once again shoot a 550-560+ at the club monthly competition, which would put me back in the ball park for winning the 'A grade' group at air pistol competitions, and possibly place in the 'top 10' at an Open event. That would make things interesting, as these days I'm old enough to compete at the Masters Games ;)

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