Thursday 31 January 2008

Seven year old saves for his retirement

From his pocket money and money earned busking before Christmas, DS1 had saved up over $350 in his "Happy Dragon" bank account. Today I transferred in some additional money from his high interest online savings account (which holds the money he earned while doing a paper round) so that there was enough to make an online contribution of $600 into the retirement savings account (RSA) he has with AMP.

I'll transfer another $400 before the end of June so that he'll have made a total "after-tax" contribution of $1000 into his superannuation account this financial year. I'm not sure if he'll get the $1500 government co-contribution this tax year, but it's worth making the contribution just in case. Before last year's changes to the tax laws, only employees were entitled to the co-contribution, so he was only eligible while he was earning money from his paper round. However, under the new rules self-employed people are also eligible for the co-contribution, so he should be able to contribute some of the money he earns from busking and get the 150% co-contribution (up to $1500) from the government.

The RSA account only offers a fixed interest option, but the rates are quite good (similar to an online savings account) and there are very low fees. The main benefit of this account is that DS1 was able to open it on his own behalf, which enables him to make contributions that are eligible for the co-contribution. His other retirement account is a so-called "child super" account which I had to open on his behalf, and which is intended for contributions made for him by parents and grandparents. There is an annual limit on how much can be contributed into a child super account, but it has a full range of investment options available, so it's a good choice for his long term retirement savings. Once he reaches 18 it will convert to a standard superannuation account.

Copyright Enough Wealth 2007

Tuesday 29 January 2008

Meandering Along

Nothing much happening around here. DS1 starts the new school year tomorrow, starting Year 3. He attended a two day workshop on fossils and geology at the University of NSW last week, organised by GERRIC (the gifted education department), which he enjoyed a lot. Since I bought him his own study desk for his bedroom a couple of weeks ago it's been easier for him to concentrate on his math and English studies without getting disturbed by DS2, and he's able to finish off his daily study routine in less than half and hour.

I spent the Australia Day long weekend trying to finish off the assessment items for my Diploma of Financial Services (Financial Planning) course, but still have a way to go. The extension period ends this week, and this semester's course notes for the two degrees I'm doing by distance education already arrived last Friday, although semester doesn't officially begin until the week after next. So I have to knock off the outstanding DFS items this week so I can get stuck into my uni studies asap. Falling behind is the kiss of death when doing subjects by distance education, especially now that I have a couple of young kids. It's no longer possible to procrastinate and then catch up by devoting an entire weekend to completing a 5,000 word essay that's almost due. These days I'm lucky to get a couple of hours to concentrate after the kids have been put to bed in the evening after work, which isn't the most productive time.

The two subjects I'm enrolled in this semester are "Interface Usability" for the MIT course, and "Reconceptualising Secondary Education" for the BTeach course. Fortunately there aren't any residential school requirements for either of these subjects, so I don't have to spend a week of annual leave "residing" on campus in Bathurst or Wagga Wagga during the mid-semester break just to attend one or two lectures a day. The BTeach subject assessment is "only" a couple of 2,000 word essays, which sounds a lot easier than it is. With a background in applied chemistry, computer science and chemical engineering, writing essays that are up to scratch for a "arts" oriented subject is a bit of a chore. There are hardly any "facts" (although everything has to be "evidence based"), and every relevant opinion or viewpoint needs to be included, critically evaluated and referenced to death if you're to get more than a bare pass. The MIT subject also has a couple of essays to complete, but they are only worth 50%. The balance of the assessment is a standard 3-hour exam sometime in July.

The fee for the MIT subject was due at the start of February, so I paid the $806 today via BPay from my credit union account. The fee for the BTeach subject wasn't due until March, but I paid the $404 today so I won't have to remember it in a couple of month's time. The BTeach fee is lower than the MIT fee as the teaching course is more highly subsidised by the government via the HECS scheme.

A couple of dividend payments from my CDF share holdings were paid today. One dividend for $2,771.81 was directly credited into my credit union account, and the $481.96 dividend from my other CDF holding was used to purchase 272 additional CDF shares via the DRP. These days I get most dividends paid out as cash and use it to pay a large portion of the interest charged on my margin loans. I have a small number of ongoing DRP reinvestments that were set up several years ago, but these days I don't elect to participate in new DRPs. The small discount to the current stock price and saving on brokerage fees doesn't adequately compensate for the extra paperwork and hassle created by DRPs when completing the capital gains part of my tax return when I eventually sell.

Copyright Enough Wealth 2007

Monday 28 January 2008

The cost of lawn maintenance

I used to use an electric lawnmower to cut our grass. However, because I have hay fever and eczema, I'd put off mowing as long as possible, so the electric mower didn't have the power required to handle long grass. (I also managed to cut through the power cord while mowing once, which is quite dangerous!). I therefore bought a 4-stroke petrol mover for around $300, which has plenty of power to get the overgrown lawn under control, but can be a bit hard to start when it hasn't been used for a couple of months.

DW thought it would be worth the expense to pay for someone to mow the lawn when it got more overgrown than usual a few months ago. But although she managed to get a quote for a "one off" mow, the appointment she arranged wasn't honoured - I suspect that most mowing services are only interested in repeat business.

DW then volunteered to cut the lawn occasionally herself, since she's only working two days a week and enjoys doing a bit of gardening while she's at home with DS2 (she also doesn't suffer from allergies). However, she isn't the mechanical type, so she asked me to buy her a push mower so she wouldn't have to use the petrol mower.

I bought a Chinese-made push mower for DW this afternoon that cost $99, which wasn't too bad a price considering it included a catcher. The European-made version cost $159, excluding a catcher. The catcher would have cost another $50 -- so the European-made push mower would have cost almost as much as I paid for the 4-stroke mower. I bolted the mower together this afternoon, but a small test cut showed that it would only be usable if I first cut the grass down to a reasonable length with the petrol mower, so I had to spend a couple of hours this afternoon getting some of the overgrown grass looking a bit more like a lawn. I didn't get the whole lawn cut, so I'll have to finish it off next weekend, but at least DW will be able to have a "play" with the push mower and see if she likes it.

If nothing else, a push mower provides some good exercise, and we'll save a bit of money not having to buy fuel for the 4-stroke mower. But I won't be selling the petrol mower just yet as I'm not sure how often DW will actually have the urge to push a mower around the garden ;)

Copyright Enough Wealth 2007

Friday 25 January 2008

An interesting week in the market

Well, that was an interesting week as an equities investor. After a huge drop at the start of the week, there was a run of three exceptionally positive days, resulting in the most incredible "bounce" I've seen since I started investing in the 80's.

Looks my decisions this week worked out OK
1. Sold some IPE and shifted the funds into CDF to realise a capital loss. This will avoid having to pay any capital gains tax on the profit I made on trading Centro properties.
2. Didn't panic and sell off any of my stock portfolio, despite signs of panic in the world markets just before the US Fed announced it's rate cut.
3. Added to my existing holding of CDF on Tuesday, at what turned out to be the low for the week. It's since gone from $1.66 back up to $1.85,

I also started trading forex again this week. I'm sticking to small trades ($25,000 position), and have finally worked out how to set up stop-loss pending orders using the CMC Markets interface (it's obvious once you know which icon to click on the trading window), so I'm able to trade "properly" - letting my winning trades run and automatically closing out positions for a small loss when things don't go as expected. I'm setting stops at around 12 points from my entry price, which with the AUD around 0.8840 USD works out to be 1.35%. So far I'm up around $190 this week, but I've still got a long way to get back to my starting kitty. Having put in a total of $5,000 into my trading account, the current balance is only $1,389.

Copyright Enough Wealth 2007

Tuesday 22 January 2008

What to do about Margin Calls

Some readers probably have borrowed "on margin" to fund part of their stock portfolio. A margin loan is basically a loan secured against the value of the stocks in the margin account. The lender will determine the "margin" applicable to each stock, based on it's perceived volatility and liquidity. For example, a blue chip stock that is slightly less volatile than the overall market and is highly liquid (traded in large volumes each day) might be allocated a margin of 80%, whereas a small, speculative company with low capitalisation and daily market volume might be given a margin of only 40% (or 0%). The concept is basically the same as a home loan, where the lender may fund up to, say, 90% of the purchase price of a house. As stock prices fluctuate more than house, lenders require a larger "deposit" to buy stocks on margin. [note: this is how margin lending works in Australia, the situation in the US is similar, but different, with generally lower margins being allowed by the regulator).

Margin lenders may "freeze" borrowing against a particular stock if their clients have a large overall holding in that stock. A more annoying behaviour is when a margin lender suddenly decides to reduce the margin allotted to a particular stock when it announces bad news - the borrower then gets a double whammy from both the drop in the stock price and the reduced margin value of that stock.

In times when the market volatility has increased and the market is down (such as now), margin lenders may even make across the board reductions in the margin values of stocks. This reduces the risk to the lender that the stocks may be worth less than the amount loaned against them, but it's pretty poor customer service as it can precipitate margin calls when the market is down and therefore force stocks to be sold when the price is down. Although the loans are secured against the stocks, the lender would still be able to pursue any outstanding debt with the customer, so decreasing margins when the market gets choppy seems too self-serving.

The ratio of the total margin loan balance to the margin value of the stocks in the margin loan account is known as the Margin utilisation (MU). Assuming margins don't change, the dreaded "margin call" will occur if the value of the stocks in the margin loan account drops to the extent that the margin loan balance is more than the margin loan value of the stocks (plus a "buffer" allowed by the lender). The "buffer" allowed by each lender varies, but is often around 5%. In that case a margin call would be made if the MU went above 105% at any time during trading.

When a margin call is made, the customer has a short time (say, until 5pm the next business day) to get their MU back below 100%. When a margin call is made - DON'T PANIC! There are number of ways to handle a margin call, in order from best to worst:

1. Add some extra collateral to the loan account. This is done by transferring some other stocks you may have (that haven't been used as collateral for a loan) into the margin loan account. Assuming these stocks have some margin value, this will reduce the ratio of the loan amount (which stays the same) against the margin value of the margin loan account (which you have just increased). You'd have to negotiate this transfer with the margin lender as it wouldn't be completed within the usual margin call time frame. You should also check that there won't be any capital gains tax issues resulting from the transfer (some margin lenders require the stocks to be held by a trust account, which can be deemed a change in beneficial ownership and thus trigger a CGT event). Because this isn't an instant process, you're probably better to transfer any "spare" stocks into your margin loan account if you get close to 100% MU, rather than wait for a margin call to occur.

2. Use some cash to pay off some of the margin loan balance. This has a big impact on MU.

3. Use some cash to buy some more stock within the margin loan account. This may be attractive if you are cashed up when the market drops, as it may be a good buying opportunity. However, it won't have as big an impact on your MU as option #2 as although you've paid 100% cash for the new stock purchases, only 70%-80% of the stock value (their margin value) with count in the calculation of your new MU.

4. Sell some stocks to pay off some of the margin loan balance. This has the same effect as option #2 from the lenders point of view, but you will be selling off stocks that have probably dropped considerably in price. You get to decide which stocks to sell, taking into account your CGT issues and which stocks you feel should be retained and which should be ditched.

5. Do nothing. The lender will sell some of your stocks to achieve option #4 as soon as the time limit for the margin call has passed. As you don't get to decide which stock they sell off you may not like the result.

If you have a margin loan account is always a good idea to borrow less than the maximum permitted. For example, if the overall margin allowed for the stocks in your margin loan account is 70%, you may just borrow 50% of the purchase cost. This would mean your MU is (50/70) = 71.4%, and the value of the stocks in your margin loan account would have to drop by 32% before you'd exceed a MU of 105% and get a margin call.

It's also good to check your current position and keep an eye on your margin utilisation. A quick "what-if" calculation will show you how much further the market would have to drop before you started getting margin calls.

For example, at the present time (after today's massive 5% plunge, coming on top of 12 straight days of market decline) my margin loans are as follows:

Account #1
Loan balance $166,819
Account value $282,307
Margin value $209,126
MU 79.8%

A further decline of 24% in the overall market would probably see me get a margin call on this account.

Account #2
Loan balance $121,129
Account value $315,189
Margin value $153,908
MU 78.7%

A further decline of 27% in the overall market would probably see me get a margin call on this account.

Account #2 has a much lower overall margin value compared to the value of stocks in the account because this account holds the $100,000 worth of IPE shares I recently bought. This stock has been allocated 0% margin by the lender.

Overall, I have margin loans of $287,947 with an account value currently around $445,047. An further drop of around 25% in the stock market would see me get a margin call. By that time my equity in the portfolios would have dropped from $309,548 to around $157,100 -- so I'd be pretty unhappy. However, with the market already 22% off it's recent high, that would mean an overall market plunge of around 42%, so I wouldn't be the only unhappy investor around.

Copyright Enough Wealth 2007

Oops, I lost $36,000.00

Another down day on the Aussie stock market - this time around 7%, taking the total decline since it's all-time-high on 1 November to about 22%. The 400+ point drop in the All Ords index translates to a "paper" loss of about $36,000.00 in one day! I try not to dwell what "might have been" if my Index Put options had expired a month later (20 Jan 08, instead of 20 Dec 07), or if I'd made the effort to find and purchase suitable replacement Index Put options before they expired... If I did still have unexpired Put options I could now sell them to recoup the decline in the physical stock market, and use that cash to increase my stock portfolio at these lower prices. Oh well, there's always next time. Note to self - spend the time required to properly compare the cost/benefit of using my CFD account to short the Index vs. buying exchange traded Index Put options vs. warrants. And then get accounts etc. organised so I'm able to make the required trades "next time" the market appears to be overheated and due for a correction.

I bought 6,000 CDF shares today at $1.66, although I probably overpaid since CDF is an ETF that approximately tracks the All Ords index, but was only down about 3% on the day. I bought it using some "spare" margin in my Comsec margin loan account, but that will probably be the last purchase I make as I don't want to gear too highly in case the market falls much further and I get close to a margin call.

Copyright Enough Wealth 2007

Monday 21 January 2008

Property portfolio Update: Jan 2008

The latest monthly sales figures (December) for the suburbs of our home and investment property have just come out. There continues to be a lot of "noise" in the data, with monthly average sales prices being affected by the mix of properties sold in the month, but the general uptrend in prices still continues and looks as if it may be the start of another house price "boom". The monthly gain in average price for the two suburbs we're invested in was 1.1%, and 16.5% year-on-year. Same time last year the year-on-year price change was only 1.2%, and was climbing throughout 2007.

The recent volatility and substantial "correction" in the stock market is likely to result in a net outflow of funds from the stock market, with residential real estate the preferred alternative investment for "mum and dad" investors. This is likely to give a further boost to residential property in Sydney at the middle and top end. However, another interest rate rise by the RBA in an attempt to pull inflation back within it's 2%-3% target band would temper demand. Recent noises by the newly elected Labor government about controlling inflation through a larger Federal government budget surplus of around 1.5% of GDP ($18 billion AUD) rather than the previous Liberal government's "non-inflationary" surplus benchmark of around 1% of GDP, and the banks unilateral increase in home loan mortgage rates of between 0.1% and 0.2% may forestall another 0.25% official interest rate rise by the RBA in February.

Since we have around half of our property mortgages fixed (rather than at a variable interest rate, which is standard in Australia), a modest increase in inflation would actually be of some benefit as it would tend to push house prices up (as replacement costs increased) while the real value of our outstanding mortgage balance would decline. On the other hand, if inflation moderates as expected in 12-18 months time, and home loan interest rates start to decline, this would fuel demand by first home buyers and investors and start to push house prices up more rapidly. Hopefully not precipitating another severe boom-bust cycle.

The graph below shows that the rate of property price increase in our suburbs has taken off since the start of 2007, and the 6-month average of the year-on-year rate of increase has now shot through the normal long-term rate of 6% and is headed past 10% pa. My new worth goal for 2008 assumes an increase in our property valuations of 8%, which may turn out to be conservative. However, this would only partially offset what is shaping up to be a dismal year for the stock market.

It was interesting to read in the 4th Annual Demographia International Housing Affordability Survey that Sydney ranks as the 11th least affordable housing market (of those surveyed), with the median house price being 8.6x the median household income. I'm not convinced that the reports conclusion that unaffordability is mainly due to artificial government restrictions on city expansion. LA was listed as the most unaffordable city they surveyed, yet it has some of the worst "urban sprawl" on the planet. In the case of Sydney there are some natural constraints to expansion - an ocean to the East, a mountain range, national park and urban water catchment to the West, and national parks and rivers to the North and South. In any case, the median house price in some of the western and south-western suburbs of Sydney is relatively low, yet no-one of median income chooses to live there.

Affordability can also be a transient phenomenon from a house-buyers perspective. For example, the rental property we bought almost ten years ago cost $430,000 which was around 4.5x our household income at the time, which according to the surveys criteria is "seriously unaffordable":

Rating Median multiple
Severely Unaffordable 5.1 & Over
Seriously Unaffordable 4.1 to 5.0
Moderately Unaffordable 3.1 to 4.0
Affordable 3.0 or Less

But after ten years the purchase price is less than 3x our household income (when DW is working full-time), and at the same time the valuation of the house has more than doubled.

By the way, the most affordable city on the list was Thunder Bay, Canada. However, with today's temperature in Thunder Bay being a nippy -29 Celsius I'm not about to move there!

Copyright Enough Wealth 2007

Saturday 19 January 2008

Land of opportunity - Australia or US?

It's a widely-held belief that although there is a lot of inequality, anyone can make it to the top in America, no matter how humble their origins. However recently published research by Andrew Leigh of the Australian National University has found that going from rags to riches is more likely in Australia than in the USA, although we are less inclined to believe it. The SMH reported that 12% of Australian boys whose fathers lifetime income put them in the bottom 20% of the population had climbed into the top income bracket in their working lifetime. In contrast, similar data for the US showed that only 5% of sons could expect to make the jump in just one generation. [Sons incomes were compared to their fathers in the study because mothers had historically lower levels of participation in the workforce from which to make comparisons].

Despite the fact that upward mobility is greater in Australia than in the USA, 39% of Australians believe that poor people are trapped in poverty, compared to just 29% of Americans.

It doesn't pay to get too comfortable once you get into the top 20% of income though - the study also found that 17% of sons born to fathers in the richest 20 per cent of the population by income slipped into the poorest 20 per cent later in life.

Copyright Enough Wealth 2007

Thursday 17 January 2008

Asset Allocation: Jan 2008

My Total Assets at the start of 2008 were worth approximately $2,065,876 with debts (margin loans and mortgages) of $932,963, giving a net worth of approximately $1,132,913. The overall level of gearing is a reasonable 45.2%, or a debt:equity ratio of 82.4%.

Overall asset allocation was;

Cash 2.4%
Australian Stocks 40.1%
International Stocks 10.2%
Hedge Funds 5.0%
Property 42.3%

The allocation to property has decreased from around 50% a few years ago, as we haven't bought more property, my savings have been directed into other asset classes, and the Australian stock market had performed strongly over the past four years while the property market was subdued.

I would like to accumulate about 10% of my assets in bond index funds as this asset class is almost non-existent in my portfolio, but it just doesn't seem to make sense for me to invest in bonds in my geared investment accounts where the margin loan interest rate is likely to average more than the bond yield. It would seem more sensible to pay off the margin loans than invest in bonds, but I'm happy with my overall levels of gearing (around 50% in my non-retirement investments), so I'm stuck with investing in equities and hedge funds via my geared investment accounts.

I haven't included relatively small investments I have in agribusiness funds, coins and bullion. I also haven't allowed for any tax liability, mostly because current tax laws will make income and realised capital gains in my retirement account tax free during the pension phase, and if I liquidate my non-retirement holdings during my retirement years my marginal tax rate will be fairly low, and long term capital gains are only taxed at half the marginal tax rate. I also haven't even considered any possible inheritances I may receive during my retirement years.

Copyright Enough Wealth 2007

Wednesday 16 January 2008

Shuffling deck chairs on the Titanic

The Australian stock market was down for the eighth straight day today -- the most consecutive down days for seven years. After today's 2.5% drop the market is now down around 15% from it's all time high, which was set in early November. I decided to sell 20,000 of the 127,000 ING Private Equity (IPE) shares I'd paid around $1.04 for just a couple of months ago. I sold them for $0.865, realising a capital loss of around $3,500. At least this loss can be offset against the capital gain I made dabbling in Centro Properties shares, and any gains I might make if I sold some of my long term stock holdings this financial year.

I don't really want to be selling off stocks when the market is down 15%, but the tax office takes a dim view of "bed and breakfast" trades (where you sell a stock and then immediately buy it back again in order to crystallise a tax loss), so instead I bought a listed Index Fund stock to replace the IPE shares I sold. I bought 10,000 Commonwealth Diversified Share Fund (CDF) for $1.75 each. Each trade cost $29.95 via my Comsec online broker margin loan account, so the net cost of switching from IPE to CDF was $259.90, which will be added to the balance of my margin loan. IPE and CDF are both invested in a diversified mix of stocks (although IPE consists of unlisted, micro-cap companies rather than the broader Australian stock market), so my overall allocation to the Australian stock market is largely unchanged by today's trades.

Aside from eliminating the need to pay any capital gains tax on the profits from my CNP trade, today's trades actually reduced the margin utilisation of my Comsec margin loan account. This was because IPE shares have been allocated 0% margin value by Comsec, whereas CDF shares have a margin value of 70%. This change is largely academic, but it does mean that I could borrow more to fund stock purchases, and it also means that the market would have to drop considerably more before I would get a margin call.

Copyright Enough Wealth 2007

Tuesday 15 January 2008

Is it good to buy when the market is bad?

There always appears to be a good reason to avoid the stock market when it's in decline. Unfortunately those good reasons often turn out to be unfounded, just as the 'logic' behind a bubble market is always found to be insubstantial upon later reflection. After all, Nobel-laureate economist Paul Samuelson observed forty years ago that "the stock market had predicted nine of the last four recessions".

There have been numerous studies showing that very few (if any) people successfully time the market using skill and judgement (a few people will always get lucky when they try timing the market, or picking stocks, and usually write a book about it). And many more studies showing that your asset allocation has a much greater impact on your overall results than either timing or stock picking. However, it's always tempting to try to pick the best time to enter and exit the market. After all, it's all to obvious in hindsight when we could have done really, really well if we'd just bought and sold at the "right" times.

The current rapid drop in the Australian stock market of more than 10% made me wonder if this is a good opportunity to buy some more stocks. Although a rapid market drop actually increases the amount of "risk"(market volatility), it seems logical that if stocks were good value at $100 then they're even better value during a "10% off everything!" sale. Of course if something fundamental has changed to make the company less profitable in the future, then it's more of a clearance sale of shop-soiled seconds ;)

In an attempt to decide whether to buy some more stocks at this time I had a look at the past ten years closing price data for the All Ordinaries Index to see if buying when the market is down 10% or more from it's previous high would have been a good strategy. (Even if this back-testing showed a particular strategy was a winner, it doesn't mean that the same will hold true in the next ten years). I calculated the average 1-year, 2-year and 5-year returns for having bought on any day vs. the returns achieved if you'd only bought on days when the market was 10% or more off it's previous closing high.

bought any day bought only when
market down >=10%
average 1-year return 10.68% 1.83%
average 2-year return 21.12% 5.31%
average 5-year return 46.45% 10.60%

So, it appears that (at least during the past ten years) buying into the stock market on a day when it was at least 10% below it's previous high would have been a poor strategy. It would seem that this strategy would have meant you didn't buy during the extended bull run periods, and when the market was down more than 10% it was often entering into a bear market. Although this is a very superficial look at a limited amount of market data, it has somewhat dampened my enthusiasm for increasing my stock investment in the current market.

Copyright Enough Wealth 2007

Sunday 13 January 2008

Frugal gift ideas: Personalised wall calendars

Vistaprint is offering Wall calendars for sale. I got some free business cards for my parents alpaca farm business as a sample from the US Vistaprint several years ago, and found them to be good quality. If they'd ever sold enough animals to require more business cards I'd have been happy to order them from Vistaprint! I haven't tried out the Australian Vistaprint service yet, but the custom photo desk calendars look interesting as a gift idea for next Christmas. They are only $10.99 each (plus a one-off image upload fee of $7.99, which seems a bit much). Since you can have a different photo image on each month, it would be a nice present to send to my relatives overseas. Being a calendar it's more likely to be useful than sending a personalised mouse pad or mug! You can also add personalised text to individual calendar dates, so I could insert reminders of the kids and other relatives birthdates, anniversaries and so on.

Copyright Enough Wealth 2007

The financial benefits of accelerated learning

DS1 started reading at a relatively early age, and so he started Kindergarten as early as possible rather than waiting another year before starting school. The reasoning was that although he was quite small for his age (and therefore the smallest boy in his class) he would have been bored staying in long day-care five days a week for another year (DW had returned to work full-time by then - at that time it was our company policy to return to full-time work within a couple of years of returning from maternity leave). He hasn't had trouble coping with school, and one benefit of being one of the youngest in his class is that it's practically the same having started a year later but then skipping a grade, but less disruptive.

There appears to be a certain amount of resistance among many parents and teachers against advancing a child, even though studies have shown it can be a good option for gifted students who can otherwise become bored with school.

Aside from the educational benefits of providing an appropriately challenging learning environment for such students, skipping a grade can also have long-term financial benefits for both the parents and child. Since educational costs are tending to increase at a faster rate than inflation, skipping a grade will not only mean that parents pay less in total for K-12 schooling (saving roughly 1/13th), but the costs for the more expensive high school years will be at the previous year's cost level compared to the situation if a grade hadn't been skipped.

The parents and child will both benefit from college costs being paid out one year earlier, hence at lower real price levels. Although this will also mean one less year to save up for college expenses from the time the child was born until commencing college.

Assuming the same rate of progress through college and into full-time employment, the child will benefit from starting to earn a full-time wage one year earlier, so will always benefit from having one extra year of salary rises via experience relative to their age. And whatever age they eventually retire at, they will have had one extra year of earning compared to the situation if they had commenced work a year later. Once you've started work and have a few years of experience, there are very few jobs where being one year younger would actually be a disadvantage!

I don't think that financial considerations should be a factor in deciding whether or not to accelerate a child through school, but it could help decide whether to start a child in Kindergarten as soon as they are ready, or 'keep them back' for another year before sending them off to school. It seems that more and more parents are choosing to start their kids at school as late as possible (here in NSW there is an 18 month age-range allowed for when a child starts school, so most parents can choose to delay the start of schooling for one year if they want), often for no better reason than the mother (or father) wants to child to stay home with them for another year.

It's too soon to tell if DS2 will even be ready and suited to starting school "early", and in his case it will be a more difficult choice as his birth date falls slightly less than one month short of the cut-off date. That will mean that he'll either be one of the older kids in his class if he starts Kindergarten at the standard age bracket, or else we'd have to ask the local school's headmaster to consider letting him commence school when he's one month younger than the standard age-limit.

While it's always possible to provide additional educational and developmental challenges to children without having them skip a grade, it's often more of a challenge to provide such extra-curricula opportunities in parallel to their standard school activities. Plus it can be hard to avoid the potential for boredom in their normal classes (despite all schools having policy around providing for gifted students, there still seems to be more effort and resources devoted to helping struggling students achieve normal proficiency levels than there are to helping the more able students achieve their maximum potential). Overall, I think it's less disruptive to a child to start school a year early (if it suits them) and then progress with the same cohort of students, compared to having them skip ahead a year at a later stage.

What do you think?

Copyright Enough Wealth 2007

Saturday 12 January 2008

Property Outlook

The US housing market is expected to drop by around 10-15% from it's peak before a recovery starts in late 2008 (unless delayed by a recession in the US). In comparison the Australian residential property market is still doing quite well, and even the Sydney market is expected to increase by between 5-15% this year, except from properties in the so-called mortgage belt that will continue to struggle to find any support due to the on-going crisis of affordability in the mortgage market.

The recent round of bank mortgage rate increases in Australia of between 0.10% and 0.20% was attributed to the global fallout of the US subprime meltdown, and will hit hard the "battlers" and "working poor" already struggling to afford home ownership with housing affordability at record lows. If there is another official interest rate rise of 0.25% by the RBA the Australian property market is likely to remain subdued during 2008. In Australia the economy is still growing quite strongly (as measured by the GDP), but there is concern that inflation will nudge above the official target band of 2-3%.

I take a middling view of prospects for interest rates and the property market in Sydney. My ROI targets for this year assume the value of my Sydney properties will increase by around 8% during 2008, and we have approximately half of our home and investment property mortgages at a fixed rate for five years. As the fixed rate is now around 1% less than the current variable rate, we are likely to end up ahead by fixing part of our loans early last year, even if interest rates peak this year and trend downwards in 2009 and beyond.

In the US the Fed is still cutting rates in an attempt to avoid a US recession. But the danger is that inflation could be given a boost. The last thing the economy needs is a return to stagflation, last seen during the last "oil shock".

Copyright Enough Wealth 2007

Friday 11 January 2008

Buy! Buy! Buy! - Maybe...

The Australian market continued to drop today, and the chart looks like a bit of investor panic may be afoot. A risk-averse investor will probably look at the chart at envisage a crash down to 4,500 or below - as bad as 87, or worse.

However, as at 31 December the p/e ration of the AllOrds was 13.97, which is quite modest by historic standards. And the drop over the past two weeks means the market p/e is now down to around 13.20. Of course at times like this people get focussed on potential negatives - the US economy going into recession, India and China growth being choked off in an attempt to combat inflation, global commodity prices dropping from their recent highs. If all these things happen then the profitability of Australian companies would be clobbered - financials, retailers, property and mining. If the "e" in the p/e equation drops, then the p/e ratio would be much higher even at the current market level, meaning it isn't really a bargain. However, if reasonable growth continues in the BRIC economies and the US avoids a technical recession the chances are that buying at the current levels is a reasonable bet.

Copyright Enough Wealth 2007

Net Worth of Personal Finance Bloggers: December 2007

Here's the latest round-up on how some of the various PF (Personal Finance) bloggers who post their Net Worth each month are progressing. It's interesting to see how those will higher net worths are getting clobbered by the stock market 'correction', while those with a modest (or negative) net worth are generally still making progress as a result of their savings.

Monthly Net Worth of some PF Bloggers for December 2007:

Blogger Age Net Worth $ Change % Change
An English Major's Money 23 $21,247.00 $471.00 N/A
Aspire 2 Wealth 2x $24,071.00 $788.00 N/A
Blogging Away Debt 2x -$33,947.00 $2,437.00 N/A
Consumerism Commentary 30 $122,596.00 $1,834.00 1.5%
Debt Free 4 Ever 39 $46,263.00 $794.00 N/A
Enough Wealth 46 $1,138,197.00 -$34,230.00 -2.9%
How I Save Money 27 -$15,524.00 -$57.00 -0.4%
Lazy Man and Money 2x $219,367.00 $4,541.00 2.1%
Map Girl 32 $46,233.00 -$2,546.00 -5.2%
Moomin Valley 42 $452,793.00 $4,283.00 0.9%
My Money Blog 28 $204,759.00 $14,653.00 7.7%
Savvy Saver 27 $229,021.00 $2,188.00 1.0%

nb. Some ages have been adjusted as follows:
exact age provided = listed as given
"20's" = listed as 2x
"early 20's" = listed as 22
"mid-late 20's" = listed as 27
and so on.

If you have any corrections, let me know as soon as possible after the post and I'll edit immediately. If it's more than a few days after the post, email me and I'll make the change the following month.

Note: Most of these figures are in USD, but some are not (eg. mine are in AUD). Also, some bloggers post combined net worth of a couple, others are single, or, like me, only post their personal net worth.

The N/A figures are either a lack of monthly data, or where I've not included % change data because the net worth is less than +/- $100K.

I've had some appreciative comments about this regular monthly post - if you like it, please link to it from your blog, or add a link to EnoughWealth to your blogroll. ;)

Copyright Enough Wealth 2007

Thursday 10 January 2008

Centro investigated by ASIC

After I sold my recently purchased Centro shares for $1.02 they started going back up. Even while the general stock market tanked in the past week, they stubbornly stayed above $1.12, so it looked like I'd got cold feet and sold out too soon. However, today came the news that the corporate watchdog, ASIC, is asking hard questions of the Centro management. Apparently they suspect that Centro is understating the severity of the trouble they're having refinancing their debts. So today the Centro stock price plunged 25c to close at $0.86.

Related Posts: Bought Centro, Sold Centro

Copyright Enough Wealth 2007

Tuesday 8 January 2008

Do as I say, not as I do

On the 10th of December I posted my thoughts that I'd better replace my expiring Index Put Options with some new 'insurance' against a possible drop in the market. I never got around to doing anything about this, and I've paid the price. With my geared stock portfolio every 1 point drop in the All Ords Index is a paper loss of around $100. Since 10 Dec the Index (XAO) has dropped around 500 points, accounting for around $50,000 decrease in my net worth.

It's no good knowing what you should do, if you then don't do it!

Copyright Enough Wealth 2007

Monday 7 January 2008

Net Worth Update December 2007

My net worth as at 31 December decreased by -$34,230 (-2.92%) during the month to $1,138,196 (AUD), due to quite large decreases in all components of my investment portfolio.

The estimated valuation of my share of our real estate assets fell by -$15,809 (-1.94%). The real estate valuations bounce around from month to month, affected by what mix of houses were sold during the month, so it's only the long-term trend that matters. I already have the raw sales data for the January estimate, and this drop was recovered the following month. The balance of my half of the mortgage increased by -$816 to -$363,969 as we continue to redraw some of our advance payments to cover the interest payments while DW is working part-time (until DS2 starts school in a couple of years).

My leveraged stock portfolios decreased by a net -$12,625 (-3.20%) to $382,028. This isn't as bad as last month, but the combined drop over two months ensured I didn't meet my overall net worth target for the year.

My retirement account also decreased, by -$4,980 (-1.52%) to $322,893. I'm still waiting on an employer contribution of around $4,000 to be processed that has been outstanding since September, which would boost the account balance a bit. There's also the slight miscalculation in the 9% SGL employer contribution for six weeks during Nov/Dec that hasn't been corrected as yet. Hopefully these outstanding contributions will appear in the SMSF bank account during January.

I've been estimating approximate monthly ROI (based on change in net worth minus the $30,000 I'm saving each year) since May 2002, and it's interesting to see how well the distribution of monthly returns matches a normal distribution (with average monthly ROI of 1.08% and a std deviation of 2.28%). Distribution of investment returns tends to have longer 'tails' than a true normal distribution, so it wouldn't be surprising to see a gain or loss greater than 6% of my net worth some month.

The long term change in net worth is still close to the fitted 20.3% pa rate of increase, but this will be harder to maintain in future as the contribution of my annual saving is becoming less and less significant compared to the ROI on my existing investment portfolio. I also doubt that 2008 will see overall investment returns of 14.1% and the cost of borrowed funds is likely to exceed 8% this year. As the interest rate available for prepaying annual interest on my margin loans will probably be quite high when it falls due in June, I may not prepay as much this year and instead sell off some stock holdings in the new financial year to reduce my gearing. Then again, I was thinking of doing that last June but decided against it. Having missed the chance to benefit from market timing last year, I run the risk of selling at a market bottom and reducing gearing when interest rates have peaked. So I'll probably just grit my teeth and stick to my long term asset allocation and gearing plan.

Copyright Enough Wealth 2007

Sunday 6 January 2008

Stock Portfolio - Update: Jan 2007

Here's the latest monthly update of what stocks are in my Australian Stock Portfolio. The only changes since the last update are due to a stock split (bonus shares) from CHB (Coca-Cola Hellenic, which mainly serves Eastern European countries), and a DRP of NAB.

Current holdings:

Leveraged Equities Account (loan balance $156,805.59, value $309,135.98). CHB holding increased by 59 shares due to a bonus share issue - the price didn't drop as much as you'd expect from the dilution factor, so this ended up increasing the value of this holding. My NAB (National Bank) holding increased by 7 shares due to the DRP reinvestment.

stock qty price mkt value margin
AEO 1,405 $2.38 $3,343.90 65%
AGK 510 $13.37 $6,818.70 70%
AMP 750 $9.89 $7,417.50 75%
ANN 480 $11.90 $5,712.00 70%
ANZ 1,107 $27.41 $30,342.87 75%
APA 88 $3.60 $316.80 70%
BBI 222 $1.545 $342.99 70%
BBP 197 $2.58 $508.26 60%
BBW 1,241 $1.705 $2,115.91 60%
BEPPA 472 $0.845 $398.84 70%
BHP 748 $40.85 $30,555.80 75%
BSL 781 $9.79 $7,645.99 70%
CDF 7,650 $1.859 $14,221.35 70%
CHB 177 $46.22 $8,180.94 70%
DJS 2,000 $5.43 $10,860.00 70%
FGL 3,751 $6.50 $24,381.50 80%
LLC 481 $16.83 $8,095.23 75%
NAB 330 $37.33 $12,318.90 75%
QBE 1,000 $32.15 $32,150.00 75%
SGM 830 $25.91 $21,505.30 70%
SUN 963 $16.62 $16,005.06 75%
SYB 2,880 $3.97 $11,433.60 70%
TLS 5,000 $4.69 $23,450.00 80%
TLSCA 3,000 $3.15 $9,450.00 80%
VRL 1,500 $3.13 $4,695.00 60%
WDC 851 $19.81 $16,858.31 80%

The drop in value of this account was mainly due to sharp falls in the banks stocks and in property developer companies (due to the problems Centro experienced).

Comsec Account (loan balance $110,888.89, value $345,974.81). The loan balance dropped slightly due to the profit realised by my trade in Centro Properties during December. Tbere were no changes to my overall stock holding during the month.

stock qty price mkt value margin
AGK 240 $13.37 $3,208.80 70%
APA 4,685 $3.60 $16,866.00 70%
ASX 200 $59.00 $11,800.00 70%
BBI 105 $1.545 $162.23 70%
BBP 93 $2.58 $239.94 70%
BBW 1,782 $1.705 $3,038.31 60%
BEPPA 222 $0.845 $187.59 70%
CBA 130 $58.04 $7,545.20 75%
CDF 43,997 $1.859 $81,790.42 70%
IPE 132,000 $0.905$119,460.00 60%
IFL 1,300 $8.52 $11,076.00 60%
LDW 1,350 $6.23 $8,410.50 0%
NCM 300 $37.01 $11,103.00 60%
OST 2,000 $6.20 $12,400.00 70%
QBE 607 $32.15 $19,515.05 75%
RIO 60 $132.07 $7,924.20 75%
THG 4,000 $1.045 $4,180.00 50%
WBC 300 $27.64 $8,292.00 75%
WPL 220 $52.17 $11,477.40 75%

Copyright Enough Wealth 2007

Saturday 5 January 2008

Sick Little Boy

DS2 had a bit of a cough on Friday, lost his appetite and went to bed early witha slight temperature and diarrhoea. We gave him some Paracetamol to ease his temperature, but it was up again during the night and he was still a bit feverish and grumpy this morning so we visited out family GP for a check-up. It appears to be viral rather than bacterial, so we are just continuing with the Panadol every 4 hours and adjusting his diet until he recovers in a day or two. [He was already a lot better this afternoon].

The GP consultation cost $55.00, but since Medicare has been advised to automatically pay the medicare refund of $32.80 by EFT into my bank account, the consult will end up costing $22.20 out of pocket.

There was also a $5.90 expense to buy some infant Panadol drops from the Pharmacy, but as this counts towards my total "out of pocket" medical expenses for the financial year, the 20% net medical expenses tax offset (available for the out of pocket amount above the threshold of $1,500) will give me a small part of this expense back via my tax refund.

The visit to the doctor reminded me that I still had some unclaimed expenses from three appointments with DS1's pediatric asthma specialist last August, October and December. So I visited the medicare office and obtained a cash refund of $300.85 based on the $395.00 expense. The remaining $94.15 (and the $22.20 from today's GP visit) will also count towards the threshold for the net medical expenses tax offset this financial year.

Copyright Enough Wealth 2007

Friday 4 January 2008

US Sub-prime woes hurt Australian Home Buyers

For months the Australian banks have been bemoaning the impact that the global credit squeeze has had on their home loan margins. With borrowers already under pressure from high house prices and the rates increases made by the Reserve Bank of Australia to contain inflation, none of the big four banks were willing to be first to increase their lending rates for fear of losing market share. But today two of the banks finally decided to increase their lending rates independent of any move by the RBA - National Australia Bank increasing it's standard variable loan by 0.12% to 8.69%, and ANZ Bank increasing it's fixed rate loan rate by 0.25% to 8.54%. The one positive of this move may be that the RBA feels less urgency to increase the official rate by another 0.25% when they next meet, as the banks will have done some of the work for them.

Copyright Enough Wealth 2007

Thursday 3 January 2008

Buying New or Buying Used?

Although I can afford to buy new stuff without having to put it on credit, we're not averse to saving money by buying used or freecycled items. For example, we bought a used highchair and child seat when DS2 was born, and I've collected free garden furniture that was being thrown out by neighbours during the quarterly council clean up. (The plastic garden chairs were the same design that we already had, and were in excellent condition, just slightly faded. They're fine for seating extra guests during a BBQ party, and new ones would have looked exactly the same after a few months).

However, sometimes it's worth paying a bit extra to buy new, even if you could save some money buying second hand. For example, DS1 is starting grade three this year, and I want him to develop good studying habits. So far he doesn't get much homework from school, but he has a list of five things to do every day*, which takes him half and hour when he concentrates. This year he will sit the grade three basic skills test (math and English) at school, and in the middle of next year will sit the selection test for entry to opportunity class in grades 5 and 6. At the moment he tries to do his study in the family room, but it is hard for him to concentrate when DW or I are playing with DS2 there at the same time. Therefor we've bought DS1 a Tempo study desk for his bedroom, which I'll assemble tomorrow. It was on special for $299 (normal price is $399), and as it has an in-built filing cabinet and computer shelf it should be suitable for his use throughout high school and even during uni (if he commutes to a Sydney university while living at home).

A second-hand desk would save $100 or $200, but I feel that taking DS1 to the store to select a new desk for him helps show how serious we are about his study, and makes his study time more exciting (we all like getting a new "toy" - even if it is a bit of office furniture!). Getting a second-hand desk with some other kids initials carved in the draws just wouldn't provide the same buzz.

Anyhow, if DS1 does study hard and get into OC for years 5-6, he is more likely to get a full or half scholarship to Sydney Grammar school (one of the better Sydney private schools), which would make it a good investment.

* Read part of a book (currently one of the Hardy Boys series), do 15 minutes music practice (piano, recorder and clarinet), read a few pages of his Macquarie concise dictionary, a few pages of children's encyclopaedia, and do a few pages of "Jump Math" book 3.

Copyright Enough Wealth 2007

Wednesday 2 January 2008

Paying Bills

We all have bills to pay. Most are regular and some happen infrequently. The important thing is to have the money budgeted to pay them, and to pay them on time.

I don't use a precise budget - although many years ago I went through the process of recording all my regular expenses for a year and working out a detailed budget, these days I know what my normal total monthly spend will be, and get enough salary deposited into my credit union account to cover the expenses. The rest of my salary has been 'sacrificed' and gets paid into my retirement account as an additional employer contribution.

I used to pay nearly all my bills via phone or internet using my main credit card account in order to get rewards points which I redeemed for a credit onto my credit card account. As I always pay my credit card balance off in full each month, this was a better method of bill payment than cash or cheque. Unfortunately recent changes by the Australian competition authority meant that some bill payments made by credit card now attract an additional fee from the biller, making it not worthwhile paying those bill using a credit card. So, these days I now pay some bills using my credit card, but others now have to be paid directly from my credit union account using BPay.

I still get my bills sent via mail, as email isn't 100% reliable. I've also had many different email accounts over the years, some of which are no longer in use, so getting bills via email would be a nuisance when I change email accounts. (For this reason I also opt for getting dividend advice sent via mail rather than electronically). I cross as paid any bills setup from automatic payment (by direct debit) and file them away. Those that require payment are stored in my briefcase in order of due date, so I can flick through the bills once a week and pay them via phone or BPay during my lunch break.

If there is an occasional unexpected bill (such a for root canal dental work or a medical checkup) I can transfer some extra cash from my online savings account into my main credit union account to cover the extra amount that month. I don't maintain an 'emergency fund' as such, as I have a significant amount of cash invested online that was borrowed at 0% via a CC balance transfer offer, so I can always draw on that and repay it by liquidating some of my stock or mutual fund investments if needs be.

Copyright Enough Wealth 2007

Blog Performance and Monetization Update: January 2008

This monthly summary post of site traffic and blog earnings is getting tedious to write, so I can only imagine how boring it is for most readers ;) Therefore, this will become an annual post from now on. The previous posts provide a good guide to how traffic and revenue figures may develop for a blog with relatively modest readership, and live traffic data from Quantcast and Sitemeter can be obtained from the links in my sidebar.


Readership had a growth spurt during December as I was invited to join a group of financial bloggers and got some help with using social networking to attract new readers. My google pagerank is still 0, but this hasn't affected the ranking of my blog for relevant search terms in google, so it's only obvious impact has been the lack of PayPerPost opportunities available to me and possibly an adverse impact on my rating with various "top PF blogs" lists (if they use pagerank as an indicator of blog draw). My feedburner subscriptions have plateaued around 70.

My Technorati 'authority' has dropped from 126 back to 114, perhaps other sites have removed links to me in response to my moving my link lists to a sub-page in attempt to resurrect my pagerank. Who knows?

My Alexa rank has dropped to 993,197 due to the recent spikes in visits some days, and the weekly rank figure is 459,838.

Quantcast estimate of my readership is:
Global: 4,048 uniques (~visitors) per month
US: 2,670 uniques per month
My QuantCast rank has improved from 761,374 to 404,259

Despite no longer posting new content to the site it still gets similar visits and pageviews as before. I can only assume that attracts lots of fresh readers who browse through all the archived pages and aren't existing readers looking for fresh posts.

Hopefully I'll be able to achieve 6,000 visitors in during this month:


AdBrite revenue from interstitial ads continued to be around 2c-3c per day, even though I had increased the estimated CPM rate so that AdSense ads get displayed instead of AdBrite most of the time. AdSense revenue was variable, on some days there were many clicks while on other days similar traffic wouldn't result in a single click. I've deleted the intersticial full-page AdBrite ads as they pop up after a visitor has browsed more than a couple of pages and could be annoying - especially as the ad was for an off-topic product!

Newsroom continued to accumulate revenue from display of their feeds, but the amount of revenue is negligible ($1.08 in total - up only 4c this month) and there isn't much content that suits my blog. Newsroom currently pays out monthly by cheque once you hit $50 (which I won't reach for a long while), but will "soon" start making payments via PayPal.

Feedburner revenue continues to accrue very slowly from the ads that get attached to feeds of my post distributed via the IBN group.

Advertisers: USD $270.00 - - -
PayPerPost: USD $443.25 - - -
Blogsvertise: USD $124.50 - - -
SponsoredReviews: USD $ 16.25 - - -
ReviewMe: USD $ 60.00 - - -
AdSense: - - - USD $ 59.99 [$100 threshold]
AdBrite: - - USD $ 36.37* - [$100 threshold]
Newsroom: - - USD $ 1.08 - [$ 50 threshold]
Amazon: - - USD $ 2.71 - [$100 threshold + $15 fee applies]
Feedburner: USD $ 2.12 USD $ 3.96 - -
------------ ------------ ------------ ------------
TOTALS: USD $916.12 USD $ 3.96 USD $ 40.16 $USD $ 59.99
Grand total: USD$1020.23

Increase for month $23.51

As the income from Feedburner and AdSense Ads is proportional to traffic (and click through rate) this monthly income should increase over time. However, the recent increase in traffic from social networking sites hasn't resulted in much of an increase in CTR, so obviously the type of reader visiting the site is important. ie. quality of traffic, not quantity, matters.


Around USD$51.23 pa. The income generated is now significantly more than the out-of-pocket costs of maintaining and promoting the site.

Annual domain name registration with Dotster USD$14.95, plus $10.00 for the redirection required to have my blog hosted by Blogspot but still use my domain name.

PFBlogs "Friends" fee: USD$2.00 per month.

Google AdWords: USD$0.76 for 4 clicks. Budget is set at max. $7.80 per month, but so far only getting around 1 click per month at $0.19 per click.

Copyright Enough Wealth 2007

Planning a second (or third) Career for the over-50s

These days very few people can be sure of having a job for life, and many people will change careers many times while working full time. Changing careers can be tough at any age, but it can be especially challenging for 'mature' workers. While early retirement is the dream of some people, it could turn into a nightmare if you can't really afford to stop working and have to try to find a new job in your fifties. I'm currently studying towards a Master of IT degree that is relevant to my current work, but I'm also doing a Diploma of Financial Services (Financial Planning) and a Bachelor of Teaching degree. These qualifications would be useful if I decide to change careers and become a school teacher or financial adviser. Both of fields seem interesting to me and offer a chance to reduce working hours (and commuting time) somewhat, without too great a cut in pay compared to my current job. It was interesting to see that both these jobs are in the "top 5" listed for the over-50's by CNN Money! The financial adviser apparently has a median salary of around $67,000 and rates a B+ for "meaning" and flexible hours. The public school teacher has a median salary around $47,000 (about the same as the starting salary for a 4-year trained teacher in NSW) and gets a rating of A- for "meaning" and a B for flexible (the long summer vacation helps).

The full list of "top 20" jobs for over-50s according to CNN Money is:
1. Non-profit executive
2. Patient Representative
3. Celebrant
4. Financial Advisor
5. Public School Teacher
6. Residential Real Estate Appraiser
7. College Professor
8. Day Care Centre Teacher
9. IRA Specialist (Tax preparer)
10. Labour Relations Manager
11. Leasing Consultant
12. Lobbyist
13. Medical Records Coding Technician
14. Pension Administrator
15. Religious Educator
16. Department Retail Sales Manager
17. Retail Sales Staff
18. Staff Nurse
19. Tax Accountant
20. Tutor

My current position is interesting enough and sufficiently well-remunerated for me to stick with it for several more years, but I can't see myself working for the same company until I'm 65. So I have a good opportunity to get qualified for other careers that interest me while still working full-time. I can even "try out" teaching via the month-long prac teaching sessions which I'll squeeze into my annual leave from my current job during the next couple of years.

Copyright Enough Wealth 2007

Tuesday 1 January 2008

2007 Stock Market Wrap

The last trading day of 2007 saw the Australian stock market end with the ASX 200 index up 11.8% to 6339.80 points. That was a lot less than the previous three years (19.0% in 2006, 17.6% in 2005 and 22.8% in 2004) but still above the long-term average. The continued boost from the mining boom was offset in the second half of 2007 by concerns about a US recession being caused by the sub-prime loan problems flowing into a general credit squeeze, and hence leading to lower global growth. As there are question marks over whether the recent growth of the China economy is sustainable without a pause to get inflation under control, the outlook for the Australian stock market in 2008 is uncertain. Then again, with China hosting the 2008 Olympics and the US only a 30% chance of going into recession according to some prognosticators, it isn't certain that 2008 won't end up with a better result than 2007.

The broader All Ordinaries index was up 13.8% to 6421 points during 2007 (compared to 19.9% in 2006, 16.2% in 2005 and 22.6% in 2004), but if one includes dividends the accumulation index was up a very satisfactory 16.1%.

Copyright Enough Wealth 2007