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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