Saturday 11 June 2011

Net Worth Update: May 2011

A bad month for stock investments, with my geared stock portfolio dropping into negative equity. One of my biggest single holdings is a listed private equity fund (IPE), which is trading well below it's supposed NAV, and is worth less than half what I paid for it pre-GFC. With the Aussie economy in the doldrums everywhere except the mining sector, I don't think this investment will "come good" any time soon.

Our SMSF also had a bad month, as it is mostly invested in the Vanguard High Growth Fund (with a large domestic and international (mainly US) share exposure) and also some ASX200 CFDs (IQ) which are back down to our entry price. I bought another 3 of these CFDs last week, in the hope that this is a temporary market correction and we'll see a return to growth in the Australian economy once the Queensland natural disasters impact on the GDP washes through this quarter, which should see some market confidence later in 2011. With the mining boom and very low unemployment levels being sustained for several years now, one would expect market confidence to return at some stage - probably just when most investors have given up and decided stock market returns will remain poor.

Fortunately the valuations for our Sydney properties continue to rise, contrary to the national property market this year, and some areas of weakness in the Sydney market.

Overall my net worth is back down to the level seen at the start of 2011.

Assets___________$ Amount______$ Diff_____% Diff 
Stocks_*_________-$21,661____-$38,326______n/a % 
Retirement_______$376,174________$894_____0.24 % 
Properties_______$987,531_____$17,035_____1.76 % 

Debts____________$ Amount_____$ Diff_____% Diff 
Home Mortgage(s)_$360,295______-$140_____-0.04 % 

Net Worth________$981,786____-$20,256____-2.02 %
* 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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Anonymous said...

How do you come to a monthly valuation of your house? I would have thought that it is difficult to price a property property accurately over a period of time, let alone on a monthly basis as in your net worth report. said...

Since I know what % of the median sales price our houses costs when we bought them, I simply estimate the current valuations using the same % of median sales price. Each month there is an updated median sales figure published for every postcode.

There is some "noise" in the median monthly sales price as the "sample" of houses isn't random - some months might see several multi-million dollar houses sold, which pushes up the median sales price, while other months the sales price will dip if no "mansions" were sold. But the trend is pretty steady.

Over the longer term there is also a bias towards over-estimating the values of our houses, as the median sales price data will include the effect of some existing houses being renovated or replaced by new homes.

Every couple of years we get free "valuations" by local estate agents - which aren't very accurate but help confirm my calculation valuation figures is in the correct "ball-park".

In any event, there's no way to get a 100% accurate of a house current "valuation" as the actual price you get when selling will be affected by how urgent the sale is (how much discount you're willing to accept for a quick sale, and how long you can leave the home on the market trying to get "full value") and also the random factor - whether a buyer who really likes the property happens to be ready to purchase at the time you are selling.