Congratulations, Prime Minister Abbott

While, as they like to say, "the only poll that counts is on election day", it looks like we won't have to stay up very late on Saturday night to know the election result - so I'll get in early and 'call' the election as a resounding win to the coalition. My guess is about 87 seats will go to Libs-Nats, 60 to Labor, and 3 'other'. As a sweetener the $5 online bet I made about six months ago should add a few more dollars to the small win I made better against the Aussies winning the Ashes series in the UK ;) It will be interesting to see how things pan out over the next term of parliament - if the global economy recovers and Australia gets back to trend growth rates, unemployment could be trending down and the federal budget deficit diminishing, which should put the coalition in a good position to win a second term. From the coalition's points of view, the large deficit, slow growth rate and increasing unemployment rate left behind by Labor should make it easy to maintain the mantle of 'sound economic managers' during their first term(s) in office. The big question will be whether or not the result on Saturday is such a convincing win for the coalition that they are tempted to call a double dissolution early next year in an attempt to gain control of both Houses of Parliament. The trigger could be either the Carbon Tax or Paid Parental Leave legislation being blocked twice in the Senate by the Greens and Labor. While it is unlikely that the coalition can win a clear majority in the Senate in a double dissolution election (given that the Greens appear to have a fairly solid ~10% of the vote), if they win a large enough majority in the Reps next Saturday they may think it is worth taking a punt. ps. I decided I am pretty much a Liberal supporter these days, so I became a 'card-carrying' Liberal Party member last week. As I'm enrolled as a post-grad student I took the opportunity to pay the 'student' membership rate ;) Subscribe to Enough Wealth. Copyright 2006-2013

Net Worth: August 2013

Not much change to our SMSF balance this month as the stock market (Australian and International) was fairly flat overall, despite a couple of rises and dips during the month. And there were no employer contributions deposited into our SMSF this month (due once a quarter). The net value of my stock and real estate portfolios was also fairly constant, but there was a sizeable transfer of funds out of the 'property' column and into the 'stocks' column caused by the sale of our investment property last week. The sale proceeds were used to pay off the loan secured against the investment property, and the surplus funds were used to pay down one of our home mortgage accounts (the variable rate one - the other home mortgage account is on a fixed rate for another year and a half, and the early repayment penalty would be similar to the amount of interest over the remainder of the fixed rate period!), and the remainder used to pay off some of my margin loans. Hence the decrease in the net value of my real estate investments corresponds with the 'increase' in my geared stock portfolio.

The remaining amount shown for 'properties' and 'home mortgage(s)' is my half of these figures. As usual, I don't include assets or liabilities belonging to DW, DS1 or DS2 in my net worth figures.

Assets	$ Amount	$ Diff	% Diff
Stocks *	$148,503	$132,809	n/a
Retirement	$526,183	$2,967	0.57%
Properties	$471,105	-$393,584	n/a
Debts	$ Amount	$ Diff	% Diff
Home Mortgage(s)	$102,371	-$260,643	n/a
Net Worth	$1,043,421	$2,835	0.27%

* the Stocks figure is portfolio value - margin loans

Paying off the investment property mortgage has freed up about 1/4-million dollars of available credit in my 'portfolio loan' account (which is secured against our house title), so I could, in theory, deposit $250K into my leveraged equities margin loan account by drawing down on this loan account, and then purchase another half a million dollars worth of stocks (or managed funds, or index funds) on margin, at a 'modest' LVR of 50% (from the point of view of the margin lender). A bull market over the next decade could see the ASX200 double, as the world fully recovers from the GFC, which would result in a windfall gain of half a million dollars. But on the other hand, a stagnant market over the coming decade (as happened in the 70s) would see me throwing all my available cash flow away simply servicing the debt. And a decline in the stock market would erode my net worth considerably.

I suspect I have reached the limit of my personal risk-tolerance, as I will feel more comfortable using my cash flow to pay down some of my existing margin loan balances, and/or contributing additional amounts into my SMSF. While I won't get rich with that approach, there is more certainty of achieving a comfortable lifestyle for my retirement.  I already have several hundred thousand dollars of 'other peoples money' invested via my geared share portfolio, plus we have a small amount of gearing in our self-managed superannuation fund via our IQ CFD investment. Borrowing even more to invest in the stock market seems too high-risk at this of my working life, and would not leave much room for misadventure (such a ill health or losing my job). I'll leave it to DS1 and DS2 to create a 'family fortune'. ;)

Subscribe to Enough Wealth. Copyright 2006-2013

House Sale Settlement Tomorrow

The sale of our investment property should 'settle' tomorrow, and all going well the balance of net funds should appear in our bank account. The sitting tenants had found a new place recently, and were scheduled to move out yesterday, and today DW will be dropping by the do a final inspection (in case there is any substantial damage to the property which would need to be claimed against the tenants' bond deposit) and collect the keys. Our agent should be handing over all the sets of house keys to the new owners tomorrow.

The net proceeds (after paying off the investment property mortgage and the various selling costs) should be just enough to clear the mortgage on our home and pay the capital gains tax on the investment property sale - although one of our home mortgage accounts is a 'fixed rate' loan that runs for another 18 months or so, and the capital gains tax won't be due until about March 2015.

Being mortgage-free will provide additional cash flow that I shall use to whittle away at some of my existing margin loan balances, and DW will use her extra cash flow and the available equity in our home to borrow and invest in a diversified share portfolio. I tend to favour investing in the stock market via low-cost 'index fund' investments, having had little luck 'picking' individual stocks (or high-cost 'managed' investment funds), but DW wants to be more hands-on, and will 'pick' her own portfolio of 5-10 stocks to invest in.

Subscribe to Enough Wealth. Copyright 2006-2013

Apparently I'm more conservative than I thought...

Being a pro-choice, atheist I had thought I wasn't that much of a conservative, but according to the results of a survey I completed on the ABC's votecompass website my overall viewpoint is more conservative than the NLP!

I suppose that why I've ended up voting for the Liberal Party candidate in most elections despite considering myself a 'swinging' voter ;)

Subscribe to Enough Wealth. Copyright 2006-2013