Wealth - compare global, act personal

The Credit Suisse Research Institute brought out their second annual 'Global Wealth Report' last month (link to free pdf here). It makes interesting reading, although its a bit depressing as it shows that my personal wealth accumulation has been badly underperforming both global and Australian benchmarks since the GFC. That can probably be accounted for by comparing my distribution of financial and real assets and debt load compared with the national average, as shown below:

This shows that although my financial:real asset ratio is similar to the national average for Australian adults (I hold about 4x the average amount of financial assets and 3x the average amount of real assets ie. property), I have much higher debt levels - 8x the national average (via property mortgages and using leverage for my financial asset investments). Overall, my net worth is 2.3x the average for Australian adults, but that is rather disappointing given my age, qualifications, and even my salary. With such high levels of gearing, my wealth accumulation strategy relies on a return to long-term trend rates of asset appreciation sooner rather than later. Otherwise, the servicing costs on carrying a large amount of debt at a time when asset prices remain flat will mean my wealth continues to stagnate until I'm eventually forced to reduce my gearing levels as I approach retirement.

ps. I haven't updated my net worth figures for the past two months - partly because I was busy doing our tax returns and a back-log of uni assignments, but also because falling Sydney property prices and a declining stock market meant that the results were bound to be disappointing. I'll probably get the figures up to date next week, once my uni exam is out of the way.

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New Worth Update: August 2011

A fourth month of declining net worth. My geared stock portfolio dropped further into negative equity, which meant that our SMSF also had a bad month, as it is mostly invested in the stock market (via Vanguard High Growth Fund and some ASX200 CFDs (IQ)).

The valuations for our Sydney properties also dropped slightly, but so far Sydney property prices are holding up slightly better than in other Australian capital cities.

Assets___________$ Amount______$ Diff_____% Diff 
Stocks_*_________-$52,589____-$11,377______n/a % 
Retirement_______$347,483____-$13,817____-3.82 % 
Properties_______$975,738_______-$533____-0.05 % 

Debts____________$ Amount_____$ Diff_____% Diff 
Home Mortgage(s)_$359,614______-$455_____-0.13 % 

Net Worth________$910,748____-$25,272____-2.70 %

* the Stocks figure is portfolio value - margin loans. As my portfolio value (and margin loan debt) is around $500,000 relatively small movements in the stock market produce huge percentage swings in the net value of my stock portfolio each month.

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Net Worth Update: July 2011

Unfortunately July turned out to be as dismal as May and June. So, if you want any more detailed commentary, just have a look at the May entry again.

My geared stock portfolio dropped further into negative equity, and so far it looks like next months report will be even worse.

Our SMSF also had a bad month, as it is mostly invested in the Vanguard High Growth Fund and some ASX200 CFDs (IQ) which are below our entry price. The next month will be even worse, with the CFD investment getting a margin call today, so I had to transfer some more cash from the SMSF bank account into the SMSF Comsec account.

In addition, this month the valuations for our Sydney properties dropped further, and it looks like property prices in Sydney will remain subdued for a while.

Assets___________$ Amount______$ Diff_____% Diff 
Stocks_*_________-$41,482____-$10,189______n/a % 
Retirement_______$361,300_____-$7,993____-2.16 % 
Properties_______$976,271_____-$7,510____-0.76 % 

Debts____________$ Amount_____$ Diff_____% Diff 
Home Mortgage(s)_$360,069______-$102_____-0.03 % 

Net Worth________$936,020____-$25,589____-2.66 %

* the Stocks figure is portfolio value - margin loans. As my portfolio value (and margin loan debt) is around $500,000 relatively small movements in the stock market produce huge percentage swings in the net value of my stock portfolio each month.

Subscribe to Enough Wealth. Copyright 2006-2011

Some uni 'honours'

JCU must have recently completed some processing of last year's overall results, because in addition to finally receiving a 'Letter of Commendation' (for getting a GPA>=6.0 in 2010), I also got an invitation to join 'Golden Key International Honour Society' for a once-off fee of A$95 (I also paid an extra $19.95 for a GK lapel pin). Apparently the invite was sent via a mailing list provided by JCU of students with a result 'in the top 15%'.

The $115 I paid to Golden Key might be money down the drain - aside from not getting any benefit from the on-campus social activities (as I'm studying via distance education) I'm also not young enough to make use of the professional development or career assistance benefits. From various forum posts it seems that Golden Key is also treated with great scepticism by some students - with doubts raised about how much of the funds raised from membership fees actually goes back to members via services and scholarships, compared to the amount being used for 'admin' and paying salary to the executive officers of this "non-profit" organisation. But I'll be happy enough if I just receive my membership certificate and pin without any hassles. But the fact that the links to the most recent annual report and other regional reports are broken doesn't fill me with confidence about this organisation.

Anyway, I've wasted more than $100 on other silly expenses over the years, and at least this will give me something to put in the 'Awards and Honours' section of my application to enrol in the doctorate program at the end of next year ;)

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