My Networth as at 31 Mar totalled $1,070,988 (AUD), an overall increase of only $4,210 (0.39%) for the month. My stock leveraged stock portfolios increased by a net 3.52% during March, and the estimated valuations for my share of our home and investment property increased 1.42% compared to last month, which is encouraging. The property gains were slightly offset by our mortgage loan balances increasing by a net $1,084 (0.30%) due to our monthly redraw of $3,500. We're redrawing some of our advance mortgage payments to help with our repayments while DW is on maternity leave.
The biggest negative for the month was a sharp drop in the valuation of my retirement account, which wasn't recovered fully by the stock market recovery - possibly some fee or tax liability was paid out during the month. The retirement account balance ended down $6,628 (2.00%) for the month. I'll have to check all the transactions for the month online to confirm exactly what was going on, but the online transactions are a pain to analyse - having half a dozen investment options (mutual funds) in my retirement account, each and every transaction is split into a separate transaction for each investment option. The easiest method is to download the relevant date range and import it into excel, then sort by transaction type and description and total up all the related items for each date to work out the total amounts being deducted for fees, insurance premium, fee rebate, tax etc.
Enough Wealth
Tuesday, 3 April 2007
Monday, 2 April 2007
Demographic Disaster or Hype and Hysteria?
The Australian Treasurer today released an updated "Intergenerational Report", five years after the first report made official the looming demographic disaster facing government finances as the aging Baby Boomer generation reached retirement age, stopped paying taxes and starting drawing on the aged pension. The most interesting aspect from my point of view was the radical change in the projected situation in 40 years time (which is based on expected trends in life expectancy, fertility rates, retirement ages and workforce participation) compared to the previous report. Instead of a projected 50 Billion dollars a year (5% of GDP) budget deficit in 40 years time, the latest projection is for a more modest $35 Billion dollar a year shortfall - a reduction of 40%. This decrease was largely due to a slight increase in the fertility rate (whereas the original report expected the downward trend in fertility to persevere) and a slight increase in the participation rate, especially of older male full-time employees. It makes me wonder what situation will arise if, as is likely, the participation rate increases further. As there is apparently a large proportion of the Baby Boomer generation that has insufficient funds socked away for their retirement, it seems inevitable that more of them will have to continue working beyond their planned retirement age. Perhaps this will end up being a non-event. I'll see what comes out in the next update 5 years from now.
Enough Wealth
Enough Wealth
Dividends, Retirement Accounts and Spending
A couple of dividend statements arrived today - $403.23 from Foster's Group and $324.08 from Australian Pipeline Trust. The Foster's dividend is fully franked (ie. carries a tax credit for the 30% company tax that has been paid), so on my tax return I'll declare both the dividend and the franking credit as income, but get a tax credit for the amount of the franking credit ($172.81). This basically means that I'll only have to pay additional personal income tax on this dividend if my marginal tax rate ends up higher than 30% (ie. in the 40% or 45% range). As I usually reduce my taxable income considerably via the tax deductible interest paid on my margin loans, I'll probably not have to pay any additional tax on this dividend. If my marginal tax rate was lower than 30% I'd get a tax refund for the excess franking credit.
The Pipeline Trust dividend was actually a combination of unfranked dividend of $185.76, a capital return of $69.66 which is not taxable (but which reduces the cost basis of the shares when they are eventually sold and capital gain is calculated), and a trust distribution of $69.66 which gets reported under a different tax item from dividends and has different tax treatment - I don't know exactly what, the details will be in the end of financial year taxation statement from the trust. Overall I prefer the simplicity of a straight dividend to trust distributions, even if they have favourable tax treatment!
I filled in an online application for a self-managed superannuation fund (SMSF) account with esuperfund.com. As its nearing the end of the 2007 tax year (30 June 2007), and a SMSF has to report each year to the tax office, eSuperFund has an offer of $0 annual fee (as well as the usual $0 establishment fee) for the 2007 fund paperwork. This is good, as it lets me get the fund established this financial year and have everything in place to transfer most of my existing superannuation account balance into the SMSF asap. I'll probably leave a small balance in my existing super fund with BT Employer Superannuation, just to keep my existing life and TPD insurance in place. I may even leave my employer 9% SGL contributions and salary sacrifice amounts going into the BT account as the 1% admin fee on these small amounts will not be material. I can always transfer additional amounts into the SMSF later on. My wife will probably transfer her entire balance and arrange for future contributions to go into the SMSF as she has a smaller balance and won't be doing any salary sacrifice while working part-time for the next few years (until DS2 starts school).
Finally, I didn't do much spending today - $39.64 for some grocery shopping, and $26.60 for petrol. I normally fill up the car on a Tuesday as that is generally the bottom of the weekly price cycle, but as there is often an early increase in petrol prices immediately before the Easter long weekend, I decided to fill up today instead.
Enough Wealth
The Pipeline Trust dividend was actually a combination of unfranked dividend of $185.76, a capital return of $69.66 which is not taxable (but which reduces the cost basis of the shares when they are eventually sold and capital gain is calculated), and a trust distribution of $69.66 which gets reported under a different tax item from dividends and has different tax treatment - I don't know exactly what, the details will be in the end of financial year taxation statement from the trust. Overall I prefer the simplicity of a straight dividend to trust distributions, even if they have favourable tax treatment!
I filled in an online application for a self-managed superannuation fund (SMSF) account with esuperfund.com. As its nearing the end of the 2007 tax year (30 June 2007), and a SMSF has to report each year to the tax office, eSuperFund has an offer of $0 annual fee (as well as the usual $0 establishment fee) for the 2007 fund paperwork. This is good, as it lets me get the fund established this financial year and have everything in place to transfer most of my existing superannuation account balance into the SMSF asap. I'll probably leave a small balance in my existing super fund with BT Employer Superannuation, just to keep my existing life and TPD insurance in place. I may even leave my employer 9% SGL contributions and salary sacrifice amounts going into the BT account as the 1% admin fee on these small amounts will not be material. I can always transfer additional amounts into the SMSF later on. My wife will probably transfer her entire balance and arrange for future contributions to go into the SMSF as she has a smaller balance and won't be doing any salary sacrifice while working part-time for the next few years (until DS2 starts school).
Finally, I didn't do much spending today - $39.64 for some grocery shopping, and $26.60 for petrol. I normally fill up the car on a Tuesday as that is generally the bottom of the weekly price cycle, but as there is often an early increase in petrol prices immediately before the Easter long weekend, I decided to fill up today instead.
Enough Wealth
Taking a "sickie"
The cold I caught on Friday went to my chest, so I spent most of the weekend in bed or on the sofa, coughing up phlegm. I called in sick this morning, as I'm still coughing and might as well use one of my days of sick leave to rest and recuperate fully. We get 10 sick days each year, which accumulate if unused, but aren't paid out if you leave work voluntarily or even if you are retrenched. I've probably accumulated more than 50 days of sick leave in my current job as I don't take many sick days. The majority in the past few years have been days off to stay home when DS1 has been sick and had to stay home from school (I alternated taking days off with DW while she was working full time).
One good innovation my company introduced last year was "odd job days" - up to 5 out of the 10 days of annual sick leave can be taken as personal days to complete any "odd jobs" that can only be done during business hours. This was in recognition that a lot of "sickies" are actually taken when people really ill - they need time off for school open days, closing on buying a house, moving house, waiting for the plumber etc. etc. The new scheme is good in that it doesn't disadvantage the "honest" employees who were loath to take a day of sick leave if they weren't actually bed-ridden, compared to those who took a day off after a big night out, or because it was good beach weather. At the same time, the company has got more strict about people who continue to take off too many one day "sickies" - if you repeatedly take off one day "sick" to make a long weekend every month they can ask for a doctor's certificate.
Anyhow, today I'll take it easy around the house, hopefully I can spend some time sorting out my share transaction records while I recuperate.
BTW - there was a magnitude 8.0 earthquake at the solomon islands this morning, so there's been a tsunami warning issued for the entire east coast of Australia. I don't expect a noticeable wave as the shock wave will has spread out considerably by the time it reaches Australia, plus the local seabed topology along most of the east coast isn't conducive to generating large tsunamis. The northern coastline is also protected somewhat by the great barrier reef.
Enough Wealth
One good innovation my company introduced last year was "odd job days" - up to 5 out of the 10 days of annual sick leave can be taken as personal days to complete any "odd jobs" that can only be done during business hours. This was in recognition that a lot of "sickies" are actually taken when people really ill - they need time off for school open days, closing on buying a house, moving house, waiting for the plumber etc. etc. The new scheme is good in that it doesn't disadvantage the "honest" employees who were loath to take a day of sick leave if they weren't actually bed-ridden, compared to those who took a day off after a big night out, or because it was good beach weather. At the same time, the company has got more strict about people who continue to take off too many one day "sickies" - if you repeatedly take off one day "sick" to make a long weekend every month they can ask for a doctor's certificate.
Anyhow, today I'll take it easy around the house, hopefully I can spend some time sorting out my share transaction records while I recuperate.
BTW - there was a magnitude 8.0 earthquake at the solomon islands this morning, so there's been a tsunami warning issued for the entire east coast of Australia. I don't expect a noticeable wave as the shock wave will has spread out considerably by the time it reaches Australia, plus the local seabed topology along most of the east coast isn't conducive to generating large tsunamis. The northern coastline is also protected somewhat by the great barrier reef.
Enough Wealth
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