My retirement account (SMSF) gained $12,820 (+4.15%) to $321,452. The gain was entirely due to the stock market rise, with our small geared stock investment (7 ASX200 index CFDs, code: IQ) boosting the return. The were no employer superannuation contributions banked during September - I expect the quarterly employer contribution to be deposited sometime during October (around $6,000). I'll then transfer the $8,000 cash currently sitting in the SMSF bank account into our Vanguard "High Growth" index fund investment.
The estimated valuations for my half of our real estate assets (house and investment property) were up only slightly $2,545 (+0.33%) to $783,934 in September, but the latest monthly sales data suggests a larger rise (around $10,000) will be recorded for end of October figures. The Sydney real estate market appears to be in an up-trend at the moment, but that may be affected by the reduction in the First Home Owners grant from this month, and likely rises in official interest rates towards the end of this year. On the other hand, record immigration levels mean that demand continues to exceed supply of new housing, which might lead to another housing bubble/boom. October will see my share of our total mortgage debt increase by about $1,000 due to having to make a redraw to meet our loan interest payments while the rental property remained vacant. Fortunately our agent found new tenants that moved in last Friday. They are 'community housing' tenants, which means they are on the waiting list for Public Housing and only pay 25% of their income to Garrigal Community Housing as 'rent'. We get paid the full 'market' rent amount directly by Garrigal Housing, with the difference being funded by the state government (ie. NSW Housing Department). Hopefully this will mean we get paid the rent in full and on time - I've previously had bad experiences with tenants not paying rent on time despite getting a large rent subsidy from Centrelink. I believe the lease will be for one year with an option to renew for a second year. If we're lucky Garrigal Housing may continue to renew the lease annually and just move new tenants in as needed. The rent amount ($495 per week) is less than we had originally expected, but is OK provided we don't get too many requests for petty repair and maintenance issues (eg. wanting an electrician to replace a light bulb or a plumber to fix a dripping faucet), and if the lease gets renewed for several years.
My stock portfolio gained $21,139 to $47,136 net equity during September (due to the high gearing levels), despite my large holding in IPE continuing to underperform the overall market. That may change if the market consolidates it's gains, company profits recover, and more companies have successful IPOs. Unfortunately my share portfolio value won't return to it's previous 2007 high even if the stock market fully recovers, due to my having had to sell off some of my portfolio to reduce my level of gearing and avoid getting margin calls last March. I don't want to increase my debt by re-gearing as the market recovers, as my previous 'conservative' gearing proved to be too agressive when the market experienced a worse bear market than 'normal'. And there's always the chance that the recent sharp recovery was a "bear trap" or "dead cat bounce".
My current plan is to slowly reduce my margin loan debt over the coming decades, and instead invest any extra savings within my SMSF. Now that SMSF are allowed to invest in Contracts for Difference (CFDs) I can still apply some gearing when investing within the tax-advantaged SMSF environment. Currently investing within the SMSF also has a lower tax rate on capital gains, and the potential to pay 0% capital gains tax if the investments are not sold until my SMSF has shifted into pension mode after I reach retirement age. However, the tax rules applying to superannuation may well change (again) as a result of the Henry Tax Review.
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1 comment:
Sounds like a good good month for you. Way to go! Good luck on your future endeavors!
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