Saturday, 14 July 2018

Putting the cart before the horse

Instead of working on my DFP assessment tasks, yesterday I compared various business bank accounts that might be suitable for a small start-up. I found that most banks are charging $10 per month for their basic business account, and most have very limited features (for example, the St George one provide a debit card). In the end I decided to apply for a business account with BankWest, as I already have a CC account with them so I didn't need to provide any additional 100-pt identification information. I just logged in using my normal ID and password, and had to provide my ABN then pick which of the business names I was opening this account for. I also selected the option to get a debit Mastercard on the account, and a 'token' so I will be able to authenticate and transfer transaction data into an accounting package (Xero and MYOB are supported). The account has no minimum opening balance or monthly fee, and the debit card and security token should arrive in 5-10 business days. The next step will be to confirm if the data export is compatible with the basic admin module in Midwinter (the Financial Planner software package required by the AFSL that I intend to become an authorised representative of).

I also looked up options available for accepting client payments - it looks like the cheapest option initially will be to setup a Paypal merchant account (free) and just pay the 2.6%+$0.30 fee per online transaction initially. If my business succeeds at some stage it will be worth getting a 'pay here' card reader (A$99) and benefit from a lower (1.95%) transaction processing fee. Again, I'll have to check if the Midwinter admin module works with the Paypal invoicing option and so forth.

This morning I spend a bit of time fiddling with DNS settings to get the domain name I had registered a few years ago with Dotster to 'point' to a test index.html page on my hosting account with GoDaddy. And then wasted a bit more time looking up 'best financial planning website designs'. Quite enjoyable, but not getting my DFP assignments done ;)

Oh well, back to the textbook...

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Thursday, 12 July 2018

How to get a government guaranteed return of 1000% on an investment*

Now that DS1 has turned 18, he could get an effective return of 1000% simply by making an undeducted contribution (after-tax) into his superannuation account this year of $2. This is because the Super co-contribution paid to low-middle income earners has a minimum amount of $20.

However, as the maximum co-contribution amount of $500 will be paid if DS2 makes a contribution of $1000, I'll make sure I give him that amount to put into his superannuation account this FY (while he might get a job to earn some money during the summer vacation, I doubt his top priority will be to lock some of that money away until his retirement!). Even with a return of 'only' 50% is well worth making the effort. And, with around 50 years to benefit from compound interest and a superannuation tax rate of 15% on investment earnings, the $1500 added to his superannuation account balance at age 18 will have a significant effect on the amount he has available to fund his retirement.

* of $2

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Wednesday, 11 July 2018

Correction - enrolling in GradCert in Financial Planning ;)

On the bright side, HR responded very quickly to my request for a 'statement of service' and provided the requested document the very next business day. On the down side WSU admin has then decided that my work experience wasn't "specific enough to financial planning" (despite the WSU handbook stating that one of the options for qualifying for admission to the Masters course was "Successfully completed an undergraduate degree, or higher, in any discipline AND have a minimum of five years general work experience in a related field." - not sure how 20 years experience working for a company that services the financial sector doesn't meet this requirement, but I can't be bothered arguing the point with university admin). They did confirm that I'll now be receiving a full offer (unconditional) to enroll in the Graduate Certificate in Financial Planning instead. So this is not really an issue, as the four courses required for the GradCert are the first four courses out of the twelve courses required for the Masters degree. So it shouldn't end up costing any more or taking any longer to eventually qualify with the Masters degree. In practice all it means is that I will get an extra testamur to hang on the wall, plus I'll have to apply for entry into the Masters degree when I complete the GradCert (and apply for advanced standing/credits for the courses completed).

Anyhow, before this new course commences in September I'll be busy enough finishing off the Diploma of Financial Planning with IIT.

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Saturday, 7 July 2018

DS2 Selective High School result

The results of DS2's selective high school exam/application came out yesterday evening. We had a reasonable idea of how well he might do as he had done a few practice tests at a 'coaching' college last year, so we had not bothered including the top selective HS (James Ruse) in his three choices, as he had very little chance of doing well enough to qualify for a place (plus it would be more than an hour's commute each way from where we live). We had nominated North Sydney Boys HS as his 'first choice', Manly Selective (where DS1 attended HS) as his second choice, and Chatswood HS (which has both selective classes and some non-selective classes) as his third choice (in case he did poorly on the exam due his eczema). His local non-selective HS also has a 'gifted and talented' class available, so he had sat a separate entry exam for that class (and been accepted - we'll now let them know he won't be attending there).

Anyhow, his result wasn't quite good enough to get into North Sydney Boys HS (he didn't even get onto the 'reserve' waiting list, so the cut-off mark must be a couple of marks higher than his score), but he has been offered a place at Manly Selective HS, so that's where he will be attending high school. It is actually the most convenient selective high school from a transport viewpoint, as there is a direct bus that takes about 30 minutes, and the bus stop is only 5 minutes walk from our house. Manly also has a nice campus (not overcrowded) and good facilities with some nice playing fields both on campus and across the road from the school. So, overall, we are very happy that DS2 will be attending Manly. Now I just have to get DS2 to stop wasting so much time playing computer games, and spend a bit more time on something more productive...

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Friday, 6 July 2018

Enrolling in Master of Financial Planning course at WSU

My application to enroll in the Master of Financial Planning course at Western Sydney University has been conditionally accepted (I just have to provide a 'statement of service' to confirm the work experience I listed on my application form before term starts - this shouldn't be an issue, unless our HR department a) takes forever, or b) decides that it isn't company policy to provide this sort of thing). I'm enrolling in Session 4, which starts on 17 September. The course consists of 12 'core' modules (ie. all subject are compulsory, with no electives), and usually take 1.5 years full time, or 3 years part-time to complete. I'll be doing the course part-time and online, so I should be finished sometime in 2021.

The course is fee-paying, which for domestic students is A$24,000 for the Masters degree (I think - this is the cost listed on the WSU website, but they also put the cost of the Postgrad Certificate course (which is the first four modules of the Masters degree) at $12,000. So the quoted cost for the Masters degree might be for student's continuing on after completing the Certficate course?
Similar courses at other Australian universities cost a bit more, plus some of them require a 'relevant' undergraduate degree (Commerce or Accounting), whereas the WSU course only requires an undergraduate degree (any field) plus work experience in the financial industry.

I've ordered the textbook (Financial Planning in Australia: Advice and Wealth Management) required for the first course from Zookal for $120.12 (which includes free delivery). Comparing prices online, the major bookseller Dymocks was selling the older edition for a higher price ($168) and even the University co-operative bookshop is more expensive ($156 or $140.40 for co-op members).

Before this course starts I want to finish of the Diploma in Financial Planning I'm currently completing online at the International Institute of Technology (IIT), and also complete the couple of FinPlan short courses I've just started on Coursera. Looks like I won't have much time to play computer games for the next couple of months... ;)

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Wednesday, 4 July 2018

Free Personal Finance courses starting on Coursera

There are a couple of new personal finance courses available on Coursera that have just started, both of which can be done in 'audit' mode for free (ie. access most of the content, but not some of the assessment tasks that are required to obtain the 'certificate'). 'Financial Planning for Young Adults' is by University of Illinois at Urbana-Champaign,runs for four weeks and ends on the 6th of August.
The second course 'Personal and Family Financial Planning' is from the University of Florida, runs for 9 weeks and ends on the 10th of September.

I've enrolled in both courses in 'audit' mode (free), and I might pay for the verified certificate option (it can't hurt to have a few extra certificates to add to my DFP if I want to become a financial planner eventually).

If you want to complete all the graded activities and obtain a certificate upon completion, the cost either one is A$64.

Both courses cover the basics of personal finance, with the main topics being:

Financial Planning for Young Adults:
Module 1: Setting Financial Goals and Assessing Your Situation
Module 2: Budgeting and Cash Flow Management
Module 3: Saving Strategies
Module 4: The Time Value of Money
Module 5: Borrowing and Credit
Module 6: Investing
Module 7: Risk Management
Module 8: Financial Planning as a Career

Personal and Family Financial Planning:
Week 1: Understanding Personal Finance
Week 2: Financial Statements, Tools and Budgets
Week 3: Managing Income Taxes
Week 4: Building and Maintaining Good Credit
Week 5: Managing Risk
Week 6: Investment Fundamentals
Week 7: Investing Through Mutual Funds
Week 8: Personal Plan of Action
Week 9: Bonus Module

While some of the material will be very US-centric (eg. taxes), most of the topics and general enough to be relevant to everyone.

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Tuesday, 3 July 2018

UberEats Sydney $150 offer

UberEats is offering $150 for new Car or Bicycle drivers that make 40 trips (deliveries) between 3 July and 12 August. So, if you live in Sydney and were thinking about signing up with UberEats, please use referral code ralphm5810ue

I do UberEats deliveries by car, and make around $25 gross per hour during the evening peak times (around 5pm - 8:30pm), although it can be a bit slow Sun-Thu. Best nights are Fri and Sat.

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Monday, 2 July 2018

Net Worth: June 2018

Last month the stock market gained during most of the month, with a slight reversal in the final week. This left my geared share portfolio (+$16,653)and retirement savings (SMSF account +$18,118 or 1.91%)) higher at month's end compared to May. The continuing decline in Sydney house prices was reflected in our suburb's average sale price, which is incorporated in my estimate of our home valuation (-$11,401 or -1.38%). Overall, my net worth rose $23,591 (1.04%) during June.

My geared share portfolio will show reduced volatility going forward, as I decided to sell off my direct share investments held within my margin loan accounts, and use the proceeds to reduce my margin loan balances. I've retained my managed fund investments in my margin loan accounts. I'll have the chore of working out the cost basis for each share sale in order to calculate the capital gain or loss for each transaction. My motivation for the share sales was to realize any capital gains while the current CGT rate still applies. If Labor wins the next federal election they intend to substantially increase the tax payable on long term capital gains.

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Saturday, 30 June 2018

Is dead?

One of the sources of things to read about personal finance on the internet is It is (or at least was) an ad-free aggregator of 'personal finance' blogs. While a lot of the material was pretty lame (I suppose that it true of most blog content), at least it gave one a way to quickly browse through the title and first paragraph of a whole bunch of blogs that were supposed to be about personal finance. I'd usually scroll through the first half-dozen pages to see if there were any posts that looked interesting enough to actually click-and-read.

Unfortunately, since 26 June there hasn't been any new content appearing on Hopefully it is just a technical issue, and not the death-knell of pfblogs. If anyone knows what is going on with, write a comment.

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Wednesday, 27 June 2018

Networthiq and Networthshare

I've been using networthiq to record my monthly net worth summary figures each month for many years, but last month the website wasn't available when I wanted to add my latest data (and apparently it has been having intermittent issues for a while). So I did a quick search for an alternative and found networthshare. There are slight differences in the presentation of data in the two sites, and I haven't yet manually entered data into networthshare (all my existing data was copied across within a couple of weeks of posting a request in their forum), but networthshare may be of interest to anyone currently using networthiq.

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Everything you need to know about personal finance in 1,000 words by C.J. Carlsen

While browsing to see if there were any interesting books in the area of 'personal finance' that I wasn't already aware of, I came a across "Everything you need to know about personal finance in 1,000 words" by C.J. Carlsen. The title was intriguing, and the price ($0 for the Kindle edition) was certainly a bargain. So I spent five minutes 'buying' the free Kindle edition and reading it via the Kindle cloud reader.

Overall, nearly everything in it I completely agree with, with a couple of minor tweaks. The advice to accumulate six months of living expenses before putting money into investment accounts (after paying off any credit card balances and continuing to pay off any credit card balances in full each month) is fairly sound, but rather than simply accumulating this in a savings account (often at very low interest rates), I would look around for a high-interest online savings account. Also, once you have a home mortgage, if there is a mortgage-offset account available, this might be preferable to a savings account.

The chapter on 'investing' is also US-centric, so the references to 401(k)'s, IRA's, SEP's, and 529 plans are only relevant to US readers. For those in Australia the approach would be to max out salary sacrifice limits into superannuation (possible a low-cost SMSF via eSuperfund once you have a sufficient balance to make it cost effective compared to an industry fund). The advice to invest via low-cost Target Date funds also has to be translated into the local alternative - in my case our SMSF invests via the Vanguard High Growth Index Fund.

Overall, I recommend this as a quick read for anyone starting out with learning about personal finance, and it is also a good 'refresher' of the fundamentals for anyone that already knows a bit about personal finance.

I'll include this book in my amazon affiliate booklist (not that I'll get any revenue from this, as its a free book), along with my other favorite books in the area of PF and investing.

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Wednesday, 20 June 2018

Money for nothing, and flights for free

Like many people I like to get something for nothing, so the chance to get enough free 'frequent flyer' points to 'pay' for round trips from Australia to New Zealand for a ski trip for myself and DW was quite attractive. So, last April I Googled "QFF bonus points no annual fee" to see what credit cards were currently offering a) a sizable number of 'bonus points' for obtaining a new credit card and simply using it for my normal monthly expenses, and b) would not cost me anything (no annual card fee for the first year).

The card I decided on was the 'ANZ Frequent Flyer Black' card. The card was offering 75,000 'bonus' points if you got the card and made $2,500 of purchases using the card within the first three months. As I normally put about $2000+ per month on my credit card (for standard expenses such as groceries, utility bill payments, petrol etc.) and pay the amount due in full each month, it would be no trouble simply putting those charges on a different card for a couple of months. The online application took about five minutes to fill in, and, because I included some investment income (dividends) in the financial details, I received a phone call a few days later asking for evidence of the dividend income I'd listed. I simply had to send a pdf statement of the past 12 months worth of dividend payments, sourced from the two share registries that do the admin for most Australia shares.

The card arrived a week or so later, and, as expected, I easily met the required 'spend' amount within the first two months. Now that the 75,000 QFF points have been 'statemented' I just have to wait until they get transferred to my QFF account, and then I'll phone up to cancel that credit card. Meanwhile, since I've met the required spend amount, I've switched back to using my normal credit card.

The 75,000 points will be sufficient to 'buy' two round-trip economy class seats from Sydney-Christchurch (they currently are listed at 36,000). And it cost nothing. Well, almost. I did manage to forget to pay the first monthly statement by the due date (my normal credit card bill gets paid automatically via direct debit from one of my savings accounts), so I ended up paying about $30 in interest. Still, overall it is a very cheap way to fly from Australia to New Zealand!

Once I've cancelled that card I *might* do a similar thing with a credit card from another bank, although at the moment the best offer I can find is 'only' for 40,000 QFF points. Once the ANZ account has been closed for at least 12 months, I could apply for a similar offer as a 'new' ANZ customer again, although it seems slightly unethical.

Aside from costing me a few dollars when I forgot to make the monthly payment (in full) on time, the only 'downside' of this technique is a potential 'hit' to ones credit score. So, if you are about to apply for a major loan (eg. a home loan), then this probably isn't a good idea. And if you don't have a good credit score, you probably won't get approved for such a card anyhow. Also, unless you are used to charging your expenses to a credit card and paying off the balance IN FULL each month, it would be highly inadvisable to start using a credit card just to qualify for some frequent flyer points. Another thing to look out for is any 'service fee' that may be added to bills paid using a credit card (for example, some utility bills add 1% or more to your bill amount if you pay using a credit card). Similarly, Coles and Woolworths don't apply any 'surcharge' for paying for groceries using a credit card, whereas Aldi adds on a small charge for making payment via credit card.

Another thing to watch out for is cancelling your card too soon - before the FF points have actually been transferred into your FF account - such transfers are usually only processed when the following monthly statement gets processed. So, if you pay off and cancel your credit card as soon as the FF points appear in your online transaction listing, they may never arrive in your FF account.

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Friday, 8 June 2018

DW working again (again)

It's been more than a year since DW was made redundant by the multinational company I work for (so far I've still got a job - finger's crossed), and in that time she has only had a couple of short-term periods of employment, and has spent a lot of her time doing various free courses at TAFE and community colleges while applying for jobs. She recently had a couple of interviews with a local company for a part-time admin role, and she has now been offered the position (starting next week). Hopefully she enjoys the work and it leads to a permanent job, possibly evolving into a full-time role over time. The company is located only a short bus trip from where we live, so it is certainly convenient from a commuting point of view.

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Net Worth: May 2018

My geared stock market portfolio declined by almost 10% last month, and the estimated valuation of our home also declined slightly. The value of my retirement savings increased somewhat. Overall my net worth decreased by $16,965 (0.74%) during May.

I've started doing some UberEats deliveries in the evenings as I quite enjoy driving around our local area and I can make around $25/hr gross during the peak 6pm-8pm period. Petrol costs will consume around 20% of the proceeds, but on the other hand it will mean that a portion of my existing car expenses (registration, insurance, servicing) will be tax deductible. Depending on how many evenings a week I feel like doing UberEats deliveries, I could earn around $10,000 pa, which I intend to add to my retirement savings as an 'undeducted contribution'.

I also decided to sell off all my individual stock holdings (held within my CommSec and Leveraged Equities margin loan accounts) this week. After paying off my margin loans (and paying any capital gains tax liability) I'll also invest most of the proceeds into my superannuation account. The trigger for deciding to sell off my shares at this time was the possibility that Labor may win the next Federal election, in which case their proposed changes to the treatment of long-term capital gains might have significantly increased the amount of tax payable.

DS1 turned 18 recently, so I've added him as a trustee and member of our SMSF. Adding his details using the eSuperfund portal was very quick and easy, but resulted in being sent a 103-page pdf file to printout, sign in about 20+ places (all three of us), and also get some identification documents for DS1 certified by JP... Once the paperwork has all been finalised, DS1 will be able to roll-over his existing superannuation account balance (with a retail fund manager) into our SMSF.

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Tuesday, 1 May 2018

Net Worth: Mar-Apr 2018

I've been quite busy at work, especially at the end of the month, so I didn't get around to doing a Net Worth post for March. So here are the snapshots for March and April:

Everything was down in March, with my geared stock portfolio shedding $33,764, and my superannuation account balance losing $14,037. Real Estate continued to 'correct', so the estimated house price (my half) declined by $13,474. Overall my NW decreased by $61,043 (-2.64%) that month.

April was a mixed result, with property prices continuing to weaken, reducing the estimated house price to $830,451 - a drop of $9,069. On the other hand, the local and international stock markets recovered, so my geared stock portfolio net value rose to $229,186 (up $22,305 or 10.78%) and my retirement savings rose to $943,899 (up $24,457 or 2.66%), helped along as usual by the employer SGL contribution and my 'salary sacrifice' contribution.

Overall, my NW declined by -$61,043 in March, and recovered $37,912.

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Thursday, 1 March 2018

Net Worth: Feb 2018

My NW decreased slightly during Feb, almost back to where I was at the end of 2017. Weakness in both the international share market (which affected our retirement savings) and the Sydney real estate market resulted in an overall decline in net worth of -$6,115 (-0.26%). The market recovered some of its earlier losses towards the end of the month, although it showed continued weakness in the final days of the month.

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Thursday, 1 February 2018

New Worth: Jan 2018

My personal net worth increased slightly during January (up 0.45% to A$2,322,494), mostly due to an increase in the value of my retirement savings (up 1.22% or $11,334). My geared stock portfolio ended almost unchanged at the end of the month (up 0.07% or $162), having given back most of the month's gain during the final two trading days. As expected, the estimated valuation for our home decreased during January (down 0.30% or -$2,591), driven by weakness in the Sydney real estate market reflected in average sales prices for our suburb.

While predictions are notoriously inaccurate, especially ones about the future, I anticipate my net worth may end the year in the range A$2.3m-A$2.5m. The lower figure would reflect stagnant house prices during 2018, but not a 'crash', and lack-luster stock market performance being offset by my continued retirement savings. Any significant adverse event (loss of employment, significant downturn in Sydney real estate throughout 2018, or a major stock market crash) could easily see my NW dip below this figure. The upper figure assumes an overall gain of around 7.5% during 2018, which would represent a dollar amount of around A$174,000. While not outside the realms of possibility, I can't see any evidence to suggest that either the property or stock market (or both) will perform well enough during 2018 to achieve that result. It will be interesting to see how 2018 does pan out, and what NW figure I end up with at the end of this year...

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Wednesday, 3 January 2018

Net Worth: Dec 2017

DS1 is mid-way through his European vacation. He got a good enough ATAR to get into his first choice of university course, and has already completed the offer acceptance online. He'll finalize his enrolment details when he returns to Sydney at the end of January, and start preparing to start university at the end of February.

My net worth increased again in December, with my geared share portfolio adding a bit over $10,000 to my net worth, and my retirement savings also increasing by around $10,000. Some of the increase in the estimate of my retirement savings account balance is due to my making a slight adjustment to the calculation formula used to work out the % of the total SMSF balance that belongs to each member. I had previously simply added up the contributions made by DW and by myself, and used the relative % of total contributions to apportion the current balance to each member. The correct method is to calculate the relative effect of each contribution to the current total balance at the time of each contribution. The revised calculation method accounted for most of the increase in my SMSF account balance between Nov and Dec.

The estimated valuation for our home increased slightly, as the median sales price in our suburb rose slightly, bucking the general downward trend in property prices in Sydney. 'Experts' are now predicting a decrease of between 4%-10% in Sydney property prices during 2018, which would make it difficult for my NW to continue to rise during 2018, unless there is a substantial shift in investor focus from real estate to the share market, which might assist my geared share portfolio.

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