Net Worth: September 2013

A good month for the stock market, despite a sudden drop on the last day due to the US budget imbroglio. There was a slight downward adjustment in my estimate of our home valuation due to the source of the monthly average sales data, but overall Sydney house prices seem to be starting another uptrend despite already being unaffordable for many young local families. The latest explanations include foreign (ie Chinese) investors, and self-managed super funds, driving up prices. But the old explanations of geographic restrictions on available house sites, high local building costs, council red-tape and zoning restrictions all help restrict supply, despite some people expecting a glut of properties as the 'baby boomer' generation starts to sell off the family home to downsize, move to aged care accommodation, or make escape to the country/seaside. I think it is the effect of home loan interest rates being around 5% that is the main driver, and the trigger for a drop of Sydney house prices (at least in real terms) will be when the RBA starts to raise interest rates again when the Australian economy recovers.

Assets	$ Amount	$ Diff	% Diff
Stocks *	$169,191	$20,688	n/a
Retirement	$536,283	$10,100	1.92%
Properties	$458,627	-$12,478	-2.65%
Debts ^	$ Amount	$ Diff	% Diff
Home Mortgage(s)	$102,380	$9	0.01%
Net Worth	$1,061,721	$18,301	1.75%

* the Stocks figure is portfolio value - margin loans. The LVR is around 80% overall.
^ doesn't include the ~$675,000 of investment loans

Despite some trepidation at increasing my level of gearing to invest in the stock market, in the end I decided to borrow $96,000 of the $250,000 available from my portfolio loan account last month, and invested in a dozen Australian stocks selected from the ASX200. Only time will tell if this was bold move to invest close to the bottom of the market, or absolute folly at my stage of life given the volatility of the market so far this century, and the ongoing challenges faced by the developed economies.

Subscribe to Enough Wealth. Copyright 2006-2013