Friday 25 February 2022

Russo-Ukraine war

Interesting to see that although the Dow has dropped about 6% since the latest Russian invasion of Ukrainian territory commenced, and the German DAX has dropped about 8%, the Australian market is only down about 2% and was steady today. Perhaps there is an 'on the beach' effect at work? (we might not survive WWIII, but at least we might survive a bit longer than NATO countries, Russia or China).

Anyhow, I feel sorry for Ukraine. It's a bit tough if your long-term survival as an independent country depends on joining a defense alliance like NATO, but the NATO rules prevent a country from joining if there is any 'active conflict' within that country. Just by occupying Crimea and backing rebels in the Donbas region, Putin effectively prevented Ukraine from joining NATO for the past decade or so, and he then used their desire to maybe, someday join NATO as an excuse for launching an all-out invasion in 'self-defense'. A strange combination of Orwellian "War is peace. Freedom is slavery. Ignorance is peace" mentality with the catch-22 bureaucracy of only being able to join NATO if you don't currently need to join NATO.

I can only think that if Sweden and Finland are contemplating ever joining NATO they had better do it asap - otherwise they could find themselves ineligible due to a manufactured internal conflict (e.g. if Putin grabbed the Aland Islands or Gotland, or simply supported some internal conflict to erupt).

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Tuesday 8 February 2022

Annual salary review and bonus

I had my annual 'performance review' meeting with my boss today and got a 'expected results achieved' rating (mostly due to working an average of about 50 hours/week last year in order to get everything done by deadline, even when there was work emailed on a Friday afternoon due by noon on Monday that would require a couple of days to complete!) which earned my a standard bonus amount worth 10.8% of last year's salary. After allowing for tax at my marginal tax rate the bonus will provide around $7K, which I will contribute to my QSuper superannuation account via increasing my 'undeducted' contributions from the current $100 per month to $500 each month. I can't claim a tax deduction for any additional superannuation contributions as I make the maximum concessional contributions via SGL and salary sacrifice.

I plan on building up the balance of my QSuper account from now until I retire (or until I hit the total super balance cap and can't make any additional contributions into super beyond any SGL amounts) and will then purchase a lifetime annuity from QSuper ($100K in a lifetime annuity should provide around $7,500 pa, or if I opt for the 'spouse protection' option that continue to pay the pension after my death for the remainder of DWs lifespan, $6,700 pa). I will keep the remainder of my 'transfer balance cap' in our SMSF in 'pension phase' once I retire, which should provided a sustainable pension of at least 4% of the $1.7m (assuming the TBC has indexed to $1.8m by the time I retire), or $68K pa tax free. That would provide slightly more than my curren 'take home' pay. Having some income from the lifetime annuity guaranteed for life is basically a hedge against longevity risk.

I also received a 2% 'raise' in salary for 2022. Considering the CPI/inflation rate for the 12 months to December quarter 2021 was 3.5%, that 'raise' is actually a 1.5% decrease in salary in 'real' (inflation adjusted) terms. But as long as I keep my job until I choose to retire I'm not too fussed.

Hopefully this year I can get some paying clients for my part-time financial planning business, so it achieves 'break even' by the end of 2022. My 'plan' is to complete a PhD (if I get offered a place) part-time while I am still working full-time, and also slowly accumulate some clients for my financial planning business (aka 'side gig'). Then when I 'retire' from full-time employment I'll continue running my financial planning business for another decade or so. We'll see what happens.

Since my investments can gain or lose $50K in a month, the annual salary bonus and pay rise are relatively immaterial.

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Wednesday 2 February 2022

Net Worth: Jan 2022

My monthly NW estimate has been updated in NetWorthShare for the end of January. Chart is in the side-bar.

Stocks and managed fund investments decreased significantyduring this past month,down -$25,217 (-7.93%) to have $292,661 net equity in my geared share portfolios. Fortunately I sold off a large chunk of my direct share investments on my margin loan accounts (retaining mostly the managed fund investments) and reduced my level of gearing, so my loss was more in line with the overall share markets.

Our estimated house price for January (my half) rose $36,276 (3.25%) to $1,153,045. Most 'pundits' predict that price growth will moderate this year, and could drop slightly next year,

The value of my retirement savings decreased during January to $1,482,122 (down -$62,671 or -4.06%) as it is invested in the Vanguard High Growth fund, which tracked the decline in US and Australian stock markets during January. Overall, my estimated NW decreased to $3,262,332 by the end of January - down by $51,051 (-1.54%).

I track my holiday home/hobby farm (the 'lake house') and my off-the-plan investment property (a one-bedroom apartment) at 'cost' in my monthly NW calculations, however I do a rough monthly estimate of their value, and if that had been included my overall NW would have remainined practically unchanged during January (due to rises in house prices in Forster and unit prices in St Leonards).

Things would get a lot more painful if equities and property were both in decline at the same time.

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