Net Worth: March 2015

Not much change overall, with gains in my retirement account and home valuation mostly offsetting weakness in my stock portfolio during March. The home valuation is more approximate than usual this month as I missed getting some of the online median sales price data. In any case the home valuation may turn out to be highly conservative, as it is based on median sales data for the entire suburb/postcode area, whereas the value of our house may be boosted if there is rezoning (for medium or high density housing) in the near future due to the construction of a new regional hospital in the vicinity.

Some neighbours on the adjacent main road (opposite the hospital construction site) have already been offered an 'option' to sell their property to a developer for around $2.5 million in two years time (they only get a 1% payment up front). While not everyone has accepted the offer (some are holding out for a higher price, while others don't wish to sell their home at all, or wish to sell and move out immediately rather than having to wait for two years before selling their house), construction of the hospital is already underway and redevelopment on the surrounding area will soon follow. While our house is a bit further away from the hospital site, it is still within the surrounding 'zone' earmarked for strategic redevelopment, and a council decision on rezoning is due very soon. It is quite likely that our house with get rezoned from current standard residential (single dwelling, maximum 8m/2 storey) to medium density (eg. townhouses/villas or blocks of 3-storey flats). DW fondly imagines we will eventually be able to sell in a couple of years for $2.5m or more (compared to the current valuation of around $1.15m), but I will wait and see how the zoning goes and what offers from developers actually eventuate. As the 'family home' isn't subject to capital gains tax in Australia, any windfall profit would be tax-free, allowing to replace our house and still have money left over to invest or add to our super.

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Iran deal terminally stupid

After years of sanctions that were obviously starting to bite, Iran finally came to the negotiating table -- and got everything they wanted. The 'deal' will lift the sanctions that were impacting Iran's economy (which some western critics had complained simply punished the innocent population of Iran -- but what better way to incite the population to be disaffected with their leadership and encourage change from within?) and in exchange Iran was not 'agreed' to halt research into developing nuclear weapons, but instead has reached an 'understanding' that includes some limits to the use of its nuclear research facilities and the amount of enriched uranium it can stockpile.

What this means in reality is that instead of the 'worst case' scenario of Iran being theoretically (but never realistically) being able to stockpile enough enriched uranium for a single nuclear weapon 'within months' (but not having the ability to actual build a nuclear weapon for many years to come), we now have a situation where they can continue developing the knowledge and technology required to produce a functional and effective nuclear weapon (which was always going to take several more years or research, and time to steal/buy technology from Russia, North Korea, Pakistan etc.) and can still produce enough enriched uranium for a weapon within a year or so of being ready to make use of it...


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Quick, Sell (Lease) the 'poles and wires' before they're not worth anything!

The latest opinion polls suggest that the NSW election is likely to see the coalition remain in government for another term. Theoretically that should mean that their policy to 'sell' (actually a 99-year lease of 49%) the electricity system 'poles and wires' should go ahead, with most of the proceeds going to build other much-needed public assets (ie. infrastructure). Of course, with the minor parties still having enough senators to block any government legislation that Labor is opposed to, just winning another state election isn't a guarantee that this policy will ever get implemented. But it should - if for no other reason that if they wait too long the 'poles and wires' are likely to be entirely worthless within a few decades.

Just as the sale proceeds from selling the electricity generation assets (coal-fired power stations) were eventually much less when the sale went through a decade or so after it was first proposed (due to the move towards alternative electricity generation sources to address the need to reduce greenhouse gas emissions), the value of the existing 'poles and wires' used for distributing bulk generated electricity is likely to plummet when rooftop solar power generation starts to eliminate the need for many houses to remain connected to 'the grid'. Already a house could be self-sufficient in electricity generation if the entire rooftop was covered with standard PV panels (and expensive storage batteries), but developments in PV technology mean that within a decade or so the required set of 20 or so large panels could be replaced by a single panel around 1 square meter in size, and at much lower cost. It would only need improvements in the cost of batteries (or the development of alternative energy storage systems like hydrogen fuel cells, room temperature superconducting magnets etc.) to make it affordable for most houses to be self-sufficient in terms of energy. How much will the old 'poles and wires' be worth then?

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Net Worth: February 2015

A significant rise in the Australian Stock market over the past month gave a major boost to my net worth via increases in the valuation of my geared stock portfolio (gearing is fun when the market is rising -- not so much during the GFC) and also a rise in my superannuation account balance. Our house price estimate also managed another slight increase. Overall my net worth hit a new high of over A$1.75 million.

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