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Sunday, 27 December 2020

Review of this year's Goals, and setting Goals for 2021

I was going to do a post reviewing my actuals for 2020 vs. my goals, but found that I hadn't actually posted about my goals for 2020. So I'll summarize how I went according to what I think my 2020 goals were, and set down my goals for 2021, so I'll have something to check off against when 2021 winds up.

So, what were my goals for 2020 how did I go?

1. Lose weight and get fit (exercise and weight training):

This was progressing nicely up until late Feb when I stopped going to the office (or gym) due to lock-downs and a transition to WFH (work from home). There was nothing stopping me from sticking to my diet plan or walking around the neighborhood, but I found that I tended to stay at my desk more when working from home than I had when I was going into the office each day. WFH means that you get a lot more random IM messages and Skype calls from co-workers (who would normally just catch you at your office desk if they had a question), so I tended to stay at my desk throughout the day. I also wasn't doing the daily 40 minute brisk walk to and from the bus stop. Despite saving a couple of hours each day not having to commute into work, I also ended up with less 'free' time at home as I tended to do more work in the evenings and on the weekends (as everything was set up to be able to work from home), and I had quite a lot more work to do. Given the job market during the pandemic it was hard to say no to additional work tasks, even it meant there was no way to get it all done in a standard 40-hours of work each week.

By December I had put back on most of the weight I'd managed to shed (just 6 kg less than my previous maximum weight), although I've managed to cut back on snacking and junk food for the past few weeks, and didn't overeat during Christmas. I did manage to complete a beginners Kendo course during 2020.

So, during 2021 my goal is to shed the excess weight (again) and actually continue on to achieve my 'ideal weight' (and lean mass). And start regular Kendo training once the Northern Beaches 'lock-down' ends. I'd also like to get back to weight training at the gym 2-3 times a week sometime in 2021, but that will have to wait until Covid-19 is back under control in Sydney (I had thought about starting to go to the gym again in early December, after more than a month of no locally acquired Covid-19 cases in NSW, but then the latest outbreak occurred on Dec 11-16).

2. Continue with my savings and investment plans

This was an easy win, as I automatically save a fixed amount of my pre-tax salary into superannuation (via SGL and salary sacrifice) and have a few $100/mo automatic transfers of after-tax salary into various online bank accounts and investment savings plans.

2021 had a lot more market volatility than I had been anticipating, but I reduced my leverage considerably after the GFC so wasn't too stressed when the market tanked in Feb/Mar. I hindsight I made the correct decision to go risk-off in our SMSF investments in late Feb as the Covid-19 outbreak had spread from China to Italy and was starting to have an impact around the world. Unlike many market crashes this one provided enough warning to allow assets to be reallocated.

We didn't manage to pick the market bottom though, as we were still a bit cautious when we took on some more risk in June. It didn't help that I managed to fill in the switching form incorrectly (I had intended to switch the Bond Index Fund into the High Growth Fund, but instead ticked the box for the Growth Fund). Overall we got through 2020 in good financial condition. DW decided to leave her full time job and retire when they wouldn't let her continue to work from home, but then changed her mind and got a local part-time casual position. She's applying for the odd local full-time position, but with the increase in unemployment due to the Covid-19 recession during Q1/Q2 there will be a lot of competition for jobs.

For 2021 I'll continue with my normal savings and investment plans, but I might shift some of the monthly savings into an investment bond rather than online savings accounts.

I don't have any specific investment performance or NW goals for 2021, as the markets will do whatever they want. Hopefully the real estate market will rise slightly during 2021 and the economic recovery will get underway and support the current stock market valuations. It would be very nice if my SMSF balance was 5-10% higher by the end of 2021.

3. Financial Planning qualifications and study

I had intended to complete the two specialist courses from IIT and the Advanced Diploma in Financial Planning during 2020, as well as progress with my Master of Financial Planning studies, but found that I kept putting off the ADFP and specialist units. I did complete the four MFP subjects I had planned for 2020, but only managed to get one Credit and three Distinctions so won't be on the Dean's List for 2021.

For 2021 I want to complete the ADFP and specialist units during Q1, as well as do one MFP subject, and then complete the remaining two MFP subjects during Q2 and Q4. Unfortunately the final subject I need to complete isn't on offer during Q3, so I'll be completing the Masters degree at the end of 2021, rather than in September, which will delay being able to apply to enroll in a PhD until the end of 2021. I need to get two Distinctions and one High Distinction in the three MFP subjects I do in 2021 in order to graduate 'with honours' (which is my goal).

4. Financial Planning business

Well, I still don't have ANY financial planning clients. I had planned on starting to cold-call a few local numbers each evening during 2020, but due to Covid-19 I put that plan on hold and only had a few enquiries that didn't result in any business. Overall I'm just glad that I'm doing this 'start-up' business as a side gig and am not paying rent on office space.

My 'plan' for 2020 is to get my first few paying clients - ideally a hand-full of clients that would provide sufficient revenue to at least cover the $15,000 pa in fees to stay registered as a financial planner.

5. Full-time job

I'm still at the same job I've had for over 20 years (although the original company was taken over by a multinational a few years ago), so I hope I keep my job during 2021. My 'plan' is to stay at this company until at least 2023 so I can arrange financing for the off-the-plan unit I purchases last year (due for completion in Q2 2023).

So, my goal for 2021 is simply to keep my job!

It will be interesting to review these goals next Christmas and see how things have gone during 2021.

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Monday, 21 December 2020

Playing timing roulette with our SMSF - hoping there isn't a "Santa Claus rally" this year

After selling our Vanguard Growth and Conservative Fund investments, it took four business days for the cash to arrive in our ANZ bank account. Fortunately the funds were cleared, so I could start the process of investing the cash back into our long term asset allocation of Vanguard High Growth Fund immediately. Unfortunately I can only BPay $100,000 per day, so it will take about two weeks to shift from 100% cash back to 100% Vanguard High Growth Fund (roughly - we already have about 1.5% of the SMSF total funds sitting in the High Growth Fund from our regular monthly investment plan, and will retain about 2% in cash to cover DWs pension payments and any tax bill due during 2021). I had thought it might take until 12 Jan to get the entire $1.59 million put back into the High Growth Fund, but fortunately the daily limit also applied to weekends, so I should be able to finish off all the required BPays by 1 Jan. Basically we will end up with a two week period of 'dollar cost averaging'.

This means that we will have quite a lot of our SMSF tied up in cash during a two week period, so it will be a 'lucky dip' whether we end up better or worse off than would have been the case if we had been able to switch investment options on the same day (as was possible under the old Vanguard account administration system). So far it looks like the Au and US share markets *might* have a bit of weakness during the xmas/new year period, so we *might* end up actually benefitting from the unavoidable delays involved in switching the asset allocation around. Fingers crossed that the markets drop for the next week or so, and then recover by the time the BPays have all been processed - getting an extra 1% or 2% return on our $1.6m SMSF investments would be a nice xmas present ;)

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Friday, 18 December 2020

Covid-19 outbreak in our area

We live in the Northern Beaches region of Sydney, but not particularly close to the Avalon suburb where the latest 'outbreak' of Covid-19 has occurred over the past two days. We've gone from living in a State that has gone from having zero locally acquired cases for about two months, to having 28 cases diagnosed in just the past two days, all apparently coming from an overseas case escaping the quarantine process on 11 December. Compared to the US and most of the world Australia is still the 'lucky country' in relation to how this pandemic is going (more due to geographic isolation and good public policy and execution of enforcement measures than 'luck' though), but this incident reinforces just how infectious Covid-19 is, and that you can't really relax mitigation measures such as mask-wearing in public and social distancing even when there have been no known local cases for more than a month. Things can't get back to 'business as normal' until 90% of the population has been vaccinated (which isn't likely to be completed until late next year).

There has been a good response to government requests for everyone to get tested that had been to any of the locations that have known cases, or if they have possible symptoms, and the contract tracers are doing great work to identify 100% of the contacts of anyone that tests positive. But we won't know for a couple of weeks how large this outbreak develops before it is brought back under control. I had planned to drive up to our lake house and visit my parents with DS1 and DS2 for a long weekend after NYE, and then for DS2 to stay with his grandparents for three weeks during the summer school holidays. But unless this outbreak gets stamped out within the next two weeks I'll probably cancel our visit and wait until the April school holidays to visit my parents at the lake house/hobby farm at Lake Wallis. No point putting my 89 year old father and 85 year old mother ask risk needlessly.

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Thursday, 17 December 2020

More pain for existing retail investors with the new Vanguard Australia online accounts - switching no longer exists

After taking almost a month to get online access after issues having my id confirmed, I had expected that the new online system would allow transactions to be completed online -- after all, my second Vanguard account (that is linked to a margin lending account) could not get online access under the new system supposedly because of this online transaction functionality (the margin lender needs to approve all transactions).

However, when I decided to rebalance my existing SMSF Vanguard investments from the Growth and Conservative options we had shifted into back in June into the High Growth option we have as our long term asset allocation, I found that for existing retail investors they have removed the ability to 'switch' between investment options via a form, and you instead have to sell the existing units and then purchase the new units. Unfortunately, for existing retail (old fund) investors, the online 'sell' button simply takes you to a link to download a pdf form that has to be filled in and lodged via the online messaging service.

The 'sell' form also doesn't let you 'switch' the sale proceeds into a different Vanguard fund -- so you instead have to have the proceeds paid out to you bank account. The first time I submitted the form our signatures (done using a mouse) were not accepted, so we had to print out the pdf form, sign it in pen, scan it, and then lodge the scanned form using the online messaging.

It then takes 3-5 business days for the funds to arrive in our bank account.

So, the form we scanned and submitted on Friday was 'acknowledged' on Friday, then transaction was processed on Monday (using the Monday closing unit sell price), and the funds didn't arrive in our SMSF bank account until Thursday.

In the meantime I'd checked on how I'd be able to invest the bank funds back into the desired Vanguard investment option (we currently have an automatic $2,000 monthly investment into the High Growth option via BPay). Turned out that the maximum daily amount via online banking was $10,000/day, and this increased to $100,000/day if I setup the banking App on my phone and voice authentication.

So, once the funds had cleared into our bank account I went up to our local physical bank branch to see about doing a one-off BPay of the entire $1.59m we wanted to invest in the High Growth option. Turns out that maximum $100,000/day BPay via the App is the maximum possible via BPay. To do a larger amount would required paying $180 to arrange for a bank transfer direct from our bank account to the Vanguard bank account. The problem with that is there isn't any information about investing via EFT to Vanguard's bank account - they only mention doing BPay investments for existing retail fund investors...

So, I'm left with having to make a daily $100,000 BPay payment from our SMSF bank account to our Vanguard High Growth Fund investment. And you can't set up recurring BPay's using the App/voice authentication, so I'll have to do this every work day from now until mid January (as the daily limit isn't available on weekends or public holidays).

I can only hope that 'dollar cost averaging' from cash into the Vanguard High Growth Fund over the next three weeks doesn't end up costing us much compared to the old 'switch' that was able to be done using the same day's selling and buying unit prices for the funds being switched from and to...

All in all, the new Vanguard online system for existing retail investors is a total pain in the butt.

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Saturday, 12 December 2020

Well, dah!

You know nothing about the stock market, share trading, or finance in general.

But some guy has made a motser trading CFDs - and he assures his followers its totally safe - it's basically a 'sure thing'. Just copy his trades exactly and you can't go wrong!

This sort of trading makes buckets of money for the CFD platform, as they get paid for each trade that is executed, whether it makes or loses the investor money, so they pay actors a lot to "sell" the concept. And if Alec Baldwin says its a good thing, it must be! After all, he does a great impression of Trump.

So why not go ahead and invest? Why not even borrow some money off your parents, or "invest" the money you had saved up for your wedding? You'd make even more money! Right?

This article in the SMH explains the recent trend in 'copy trading' and the dodgy CFD providers who provide it.

All I can say is - remember these truisms:

"a fool and his money are soon parted"

"if it sounds too good to be true, it probably isn't"

"those who do not learn from history are doomed to repeat it"

"history doesn't repeat itself, but it often rhymes"

People have been losing money to 'get rich quick' schemes since money was invented. Many of the people who lost their life savings investing in the Mississippi scheme in 1719 probably did so because they copied others who appeared to be making a fortune, as would have many of the folk who lost money in the great Tulip mania of 1637.

If there is one positive from this sort of financial stupidity, it is that it explains why there will always be income and wealth disparity in the world - as long as people are free to make choices for themselves, and some people are complete idiots.

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Wednesday, 2 December 2020

End of November "12% solution" portfolio changes

My "12% solution" portfolio did well during November, due to the general market bullishness. For the end of November to signal was to say invested 60% in IWM (iShares Russell 200 ETF (All Sessions)) and 40% in JNK. This was the same as last month, so I don't need to do any trades this month, which helps reduce trading costs.  Unfortunately when I was looking at the costs of trading a "12% solution" using my IG markets account I had overlooked the fact that there would be a quarterly account keeping fee. This will have a negative impact on the overall performance compared to the "theoretical" 12% solution portfolio performance, so the $10,000 I've allocated to testing this asset allocation was probably insufficient. I won't be increasing the size of this portfolio though, as I also want to make an investment in a GenLife Insurance Bond to try out it's use for estate planning purposes. I'll write a post about that once I've made my investment as I'm still working out the details on how to implement exactly what I have in mind.

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Net Worth: NOV 2020

My monthly Net Worth calculation has been updated in NetWorthShare as at the end of November. The stock markets recovered strongly during November, due to the combination of the US election producing a clear result and the positive announcements regarding successful Covid-19 vaccine trials. This boosted both my geared share portfolio (up $21,346) and my superannuation (up $60,833). Our estimated house price was unchanged for the month, but the Sydney residential real estate market is showing signs of strength, and a few forecasters have started predicting rises over 2021 and 2022. Hopefully the valuation of my investment unit will be higher than the 'off the plan' price by the time construction is completed in 2023 and I have to get a mortgage to pay the balance of the purchase price. My net worth figure increased by $82,486 (3.12%) overall, to $2,725,974. It's always nice to have a positive month where my NW increases by more than my annual after tax salary ;)

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