Saturday, 10 September 2022

Door dash update

Well, I've been doing occasional Door Dash delivery 'shifts' for about 8 weeks now. I've Dashed mostly on Friday or Saturday evenings during the peak activity time (around 5:30-8:30pm), aside from a couple of occasions where I did a few hours Dashing after dropping DS2 off at a sports competition/training (and had a few hours to wait around).

I've found that Dashing in my local 'zone' is reasonably good. There are a couple of adjacent 'zones' that sometimes pay slightly more 'bonus' during their promotional periods (where you get an extra dollar or two on top of the standard delivery fee), but one of them in quite sparsely populated, so you end up doing a lot more driving to pickup and then deliver an order. Longer trips pay slightly more, but that isn't any more than you would get spending the equivalent amount of time doing shorter jobs, so the hourly rate is about the same, but the extra distance means a much higher fuel expense. The other area is more built-up, but that means you often have to park a long distance away from the pick-up location (and waste time walking from the car and back) and also often have trouble finding a parking spot close to the delivery address. So my 'home area' is pretty much a 'goldilocks zone' for getting a decent amount of work, ease of parking, and less fuel expended.

Overall, during the past 8 weeks I've done some Door Dash delivery work on 15 days. I was off sick one weekend, so I've generally be doing two nights each week. Each session has averaged 2.75 hours, during which time I've driven an average of 54 km and made 5.13 deliveries, and earned an average of $75.53 during a session. So the average hourly gross income was $27.54 per hour, or $1.54 per km travelled. I've estimated the net income (after income tax, GST, and fuel costs) is around $23.53 per hour. The effective tax is lower than my marginal tax rate due to the business use of my car making a large chunk of the car expenses (insurance, registration, servicing and depreciation) tax deductible.

I'm on track to earn around $6,000 pa (after tax and expenses) if I continue to do a couple of three hour 'shifts' each week for the rest of this FY (up to 30 Jun 2023). I don't want to do more, as that would involve working on the less profitable days, or doing some morning or lunch time 'shifts'. I also need to stay within the annual km allowance on my cheap 'limited km' car insurance policy. I quite enjoy driving around for a few hours in my Jag, so the 'work' is quite enjoyable (a LOT less stressful than my 'day job'). It will also leave me free on Mon-Thu nights after I finish my full-time work to be able to do a couple of hours of 'cold calling' prospecting for local clients for my financial planning business.

The hourly rate (in theory) for my full-time 'day job' works out to be $54.36 per hour. I say 'in theory' as although I am 'officially' expected to work 37.5 hrs/week I usually end up doing some work in the evenings and on weekends when things get hectic. So I probably average around 45-50 hrs/week. So my effective pay rate could be as little as $40.76. So Door Dashing pays about 50%-60% of what I earn in my 'day job'. If I ever get some clients for my financial planning business the basic fee will be around $1,000 for about 10 or so hours work to produce a Statement of Advice. After associated expenses of around $250 the net revenue will be around $75 per hour. However, I also have fixed costs of around $12,000 pa, which will take a large chunk out of that (especially if I don't have many clients!). I figure I'll need at least 15 or so clients each year just to cover running costs, and as a part-time financial planner I could service up to 50 clients pa. So, my maximum revenue as a part-time financial planner would be around $26,000 pa for about 10 hours/week client work. Or $26/hour (very similar to what I can earn as a Door Dash driver!). There would be a lot of unpaid hours spent prospecting /finding clients as well. Of course this is just fee revenue for providing financial plan/SoA services. If I am engaged for ongoing services I would receive a similar (or slightly lower) 'hourly rate' for ongoing services and annual review, but would also receive a fee based on 'assets under management' (AUM) of 0.25%. If the average client had $100,000 invested this would provide additional revenue of about $250 pa per client, or possibly $12,500 additional revenue, which would move the hourly rate closer to what I earn in my 'day job'.

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Friday, 2 September 2022

Applied to do PhD at ACU, and enrol in courses for CFP (via FPA) and FChFP (via AFA/Kaplan) certifications

I may be crap at marketing and have no clients for my financial planning business, but I'll be damned if I don't end up as the most overqualified financial advisor in Australia! ;)

Having complete my MFinPlan coursework last year, I did a couple of 'specialist' courses via Kaplan Professional (one in Margin Lending and the other in SMSF Taxation and Regulation).

Since WSU declined my application to enrol as a PhD candidate (they wanted me to first complete a MRes degree which would take four years part-time and cost around $30K), I decided to apply to enrol as a PhD candidate at some other Australian universities. First cab off the rank was ACU (Australian Catholic University). I'm not religious and ACU isn't a "top tier" university, but ACU does have a suitable school of Business and one of their campuses is conveniently located only ten minute bus ride from the Sydney office of my full-time employer (although I've been 'working from home' for the past couple of years, and probably won't have to go into the office more than one day a month in the immediate future). The application will apparently take around 8 weeks to be assessed, so I'll find out if I get accepted towards the end of this year. If I'm not accepted I'll apply to some other Australian universities (an advantage of doing a PhD in Australia is that the university fees would be covered by a fee offset scholarship under the Australian Government's Research Training Program).

I'm not sure if/when I'll commence a part-time PhD, so in the meantime I decided to enrol in the CFP (Certified Financial Planner) program available from FPA (Financial Planning Association of Australia). Completing the MFinPlan degree means that I was given exemption/advanced standing for the CFP1-4 courses, and will only have to complete one course (CFP C) - the 'capstone project', which is basically preparing a Statement of Advice for a complex 'case study'. And then pass the four hour multiple choice certification exam (the 'pass mark' is 80% I think, and in July the overall pass rate for the CFP exam was 66% - so it is probably about as easy/difficult as the FASEA exam was). I'll probably enrol in CFP-C at the end of this year, depending on what else I am doing at the time. There is also a relevant experience requirement (2 years full-time or 4 years part-time), so I probably won't be able to get the CFP designation until after I have built up a bit of a 'client book'.

I also put in an application with Kaplan Professional to enrol in the AFA's FChFP (Fellow Chartered Financial Practitioner) certification program. Apparently there is automatic exemption/advanced standing granted for two of the four required courses if you have completed CFP1-4 already, so I'm hoping that having completed the MFinPlan degree (which gave me advanced standing for CFP1-4) I'll also get exemption from the courses AFA3 and AFA4, and only have to complete courses AFA1 (Business Strategy for Financial Advisers) and AFA2 (Client Experience Strategy). That would save me both time and money, and avoid rehashing coursework that was already covered in my MFinPlan coursework.

I was prompted to apply to enrol in the FChFP courses now, as the AFA and FPA just announced that they intend to 'merge' into a single new professional association covering financial planners in Australia (I'm currently a member of both associations). The merger seems like a good idea, as there was quite a bit of overlap in the services/goals of the two associations, and because the 'pool' of registered financial advisers in Australia has shrunk considerably over the past few years due to increased regulation and the requirements to pass the FASEA exam and meet the new educational requirements. The new association (which will be dominated by the FPA) plans to maintain the CFP certification, but will phase out the FChFP certification program (while continuing to 'recognise' the certification). So if I want to get the FChFP designation I had to start soon!

The FChFP courses aren't too expensive ($1,200 each) and the two courses I will need to do cover more practical/applied material relating to running a financial planning practice than what the CFP courses or my MFinPlan degree covered. Not sure how worthwhile the FChFP designation will be (I'm sure my clients won't know or care), but as I'm already a Fellow of the Royal Astronomical Society and a Chartered Chemist, being a Fellow Chartered Financial Practitioner seemed like cool post-nominal to add to my current list ;)

DFP BAppSc GDipAppChem GDipAppSc MAstron MFinPlan FRAS CChem JP(NSW)

That bloody PhD is proving to be elusive though !

***** update *****

Turns out that Kaplan is no longer accepting new enrolments for the FChFP courses, so I won't be doing that certification. Coincidentally I received a reminder email to renew my AFA subscription the same day I found out that the FChFP certification was no longer available - so there really isn't much point spending $500 or so to renew my AFA membership, especially as the AFA is likely to be absorbed by the FPA by the end of this year.

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Net Worth: AUG 2022

My monthly NW estimate has been updated in NetWorthShare for the end of August. Chart is in the side-bar.

Stocks and managed fund investments value was flat over the month - rising during the month but then selling off sharply during the past week due to hawkish comments by the US Fed chairman regarding inflation and interest rate rises. My 'Stocks' figure was only down $476 (-0.18%) to $267,365 net equity. This month I moved the value of my Perth Mint online depository bullion holdings from 'Stocks' into 'Other Assets' (which previously just included my gold and silver proof coin collection valued at bullion valuation), and I also added in the value of my art investment via Masterworks into the 'Other Assets' category.

Our estimated house price for August (my half) was flat at $1,166,000 due to there being no reported change in median house sales prices in our suburb.

The value of my retirement savings dropped slightly to $1,396,713 (down -$8,352 or -0.59%) by the end of August.

Overall, my estimated NW decreased slightly to $3,170,251 over the past month - down by $4,749 (-0.15%). 

'Other real estate' includes my off-the-plan investment apartment and my hobby farm at 'cost'. Other mortgages includes the amount that will be due on settlement for my off-the-plan apartment in late 2022. If I was tracking the estimated market value of my lake house/hobby farm and the likely increase in the value of my off-the-plan apartment since I paid the deposit, my NW would have improved slightly overall (by around +$4,500) during August (rural NSW property prices lag Sydney, and are still rising slightly). Any rise of drop in estimated NW of less than $10K is probably well within the 'error bars' due to the uncertainty associated with valuation of assets such as real estate, art work, coin collections etc. Including an estimated price increase for the off-the-plan investment unit and hobby farm would add around $709,851 to my posted NW figure. Including DWs assets and liabilities would add around $1,385,589 net to household NW, so if I was tracking total household NW it would currently be around A$5.266MM.

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Wednesday, 31 August 2022

DS2 started his first proper job

DS2 is in Year 10 and recently picked his subjects for Year 11 (and hence what he will be studying for his HSC exams/ATAR score for uni - English (with Extension 1 and possibly Extension 2), Mathematics (with Extension 1), Software Design & Development, Economics, and Business Studies). Unlike DS1 he has cut back on a lot of his previous extracurricular activities - dropping out of piano lessons and Judo classes (he still does Kendo) and not wanting to bother doing the Duke of Edinburgh awards via school (which involves some volunteering, skills activities, and some weekend/short camping/hiking trips). He has a girlfriend and is quite keen on Volley Ball (the school junior team he is in won the zone final and will be competing in the District comp next term) and he seems to spend a lot of time chatting with friends via Discord and playing online games (how he manages to still get good grades at school is a mystery).

He has reached the age where he would like some extra 'spending money' and decided that earning $10-$20 doing a bit of busking on the weekends just wasn't adequate. Unfortunately the local newspaper has gone 100% digital, so a 'paper round' was no longer an option. He had a brief go at letterbox 'junk mail' delivery last year, but decided that spending many hours over two evenings each week collating bundles of hundreds of flyers into individual sets (OK, I actually ended up doing most of the collating!) to be delivered, and then spending 3-4 hours walking around a local suburb delivering the individual sets was too much time and effort for only earning around $50-$60. I've frequently regaled him with my tale of working on weekends at a market garden for only 60c an hour when I was in high school - but for some reason I think that gave him the impression I was an idiot, rather than the intended example regarding the value of hard work.

So he dropped the delivery job and decided to get a job at McDonalds instead (the minimum wage of around $15/hr for his age group is a lot better than the 'piece work' rate paid for letterbox delivery work). In his first attempt (last year) he got through two rounds of interviews with McDonalds, but was then never offered a position (probably due to having limited shift availability at that time, plus the reduced staffing needs during the Covid pandemic lock-downs). He recently applied again, and this time he was offered a position and did his first 'training shift' (3 hours) last Tuesday. In future his shifts will be at the local Maccas that is only a five minute walk from our house, but for this initial training session he had to attend a specific McDonalds store that is about 30 mins drive from our home. I drove him there, and since it wasn't really worth driving home again when I'd have to return to pick him up a few hours later I did a couple of hours of Door Dash delivering in that area while he was doing his 'shift'.

DS2 expects to do two or three 4-hour shifts every week, so he should earn around $180 per week for about 12 hours work. He's agreed to only spend 25% (roughly) of his wages on "everyday" spending (games, movies, whatever he fancies) and to save 50% (roughly) for longer-term goals eg. saving up for an overseas trip when he finishes his HSC exams (I bought DS1 return airfares for a trip to Europe when he finished the HSC, but he had to cover his own spending on backpacker accommodation, train fares, food etc. and will do the same for DS2 as a 'graduation present'), a new laptop computer, a second-hand car when he starts uni, etc. After a bit of "negotiating" (aka disagreement) DS2 agreed that the final 25% of his earnings should be invested, with $1,000 being contributed into super as an undeducted personal contribution (so he will receive the $500 government co-contribution). Depending on how much he actually earns, that might be around half of the agreed 25%. Once he has put aside $1,000 for his annual super contribution we'll have another chat about where he might invest that portion of his wages.

As he will also receive the mandatory 10.5% employer contributions into his superannuation account (he already has about $9,000 is his superannuation account due to 'child super' contributions I had made over the years) he will end up adding around $2,500 to his super balance each year, which is quite significant considering it will then compound for around five decades before he retires ;)

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Wednesday, 24 August 2022

Bought a teeny weeny bit (0.013%) of a George Condo painting

After an initial online 'interview' back in July regarding joining with a reduced minimum investment of US$5,000 I still hadn't got around to making an initial investment, although I had been tempted by one of the paintings that was advertised via an email offer a few weeks ago.

Then a 'special offer' came through inviting me to invest as little as US$500 in the painting 'Ecstatic Figures' by George Condo. The painting's "offering price" is $3,885,000 with the shares IPO price $20 each. So I ended up paying US$500 for 25 shares, plus there was a $20 processing fee. For simplicity I just paid this via a credit card, and the total cost ended up being A$758.76. For a 0.013% stake in this painting ;) Interestingly the SEC Filing stated that the minimum investment amount was $15,000 but they could vary the maximum and minimum investment amount 'on a case by case basis' at their sole discretion. According to the filing Masterworks bought this Condo from a private seller for $3,500,000 on 22 July 2022.

Masterworks has previously sold one Condo painting for an annualized return to investors of 31.7% net of all costs and fees. And the historic price appreciation for 'similar works' is 18.6%.

I'll probably add to my Masterworks 'portfolio' over time, depending which paintings are on offer and catch my eye. The amount invested is trivial, so it will be a low risk way of monitoring how this 'investment in art' actually performs over time. If nothing else, it is a bit of fun.

I thought this painting was quite nice - I could at least tell it was a crowd of people, the colour scheme seems coherent (to me), and stylistically it reminds me of Picasso (but what do I know about art).

Masterworks has several paintings by George Condo in their Portfolio, including:

'Staring into Space' $1,760,000 Est. price change 49.4%

'Gargantua' $1,650,000 Est. price change 33.8%

'The Age of Reason' $2,997,000 Est. price change 11.6%

'Listening to Voices' $3,330,000 Est. price change 14.5%

'Mary Magdalene' $644,000 Est. price change 49.4%

'Transparent Figures' $3,413,000

'Ecstatic Figures' $3,885,000

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Tuesday, 2 August 2022

Net Worth: JUL 2022

My monthly NW estimate has been updated in NetWorthShare for the end of July. Chart is in the side-bar.

Stocks and managed fund investments improved slightly, but as I have eliminated my use of gearing and moved some of my investments into cash in preparation for settlement on my off-the-plan investment apartment at the end of this year, my 'Stocks' figure was only up $5,060 (1.93%) with $267,841 net equity.

Our estimated house price for June (my half) was down (-$12,956) to $1,166,000.

The value of my retirement savings recovered most of last month's losses to end the month at an estimated  $1,405,065 (up $71,166 or 5.34%).

The bullion value of my proof gold and silver coin collection decreased slightly, down -$1,266 (-4.72%) to $25,452 due to an overall decrease in gold and silver spot price during July.

Overall, my estimated NW recovered somewhat to $3,175,000 over the past month - up by $62,273 (2.00%). If I was tracking the estimated market value of my lakehouse/hobby farm and the likely increase in the value of my off-the-plan apartment since I paid the deposit, my NW would have improved by a further $18,000 or so during July.

I started doing a few evenings of Doordash deliveries during the month, earning $294.64 gross. 

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Sunday, 31 July 2022

Buying some WEAT and CORN

I decided to transfer another A$500 into my Superhero trading account and use the funds to buy some Teucrium WEAT and CORN ETF units. Global food shortages and price increases seem likely given inflation, population growth (still increasing despite there also being a problem with population decline and aging demographics in most developed countries, and even Russia and China), the impact of the Russia-Ukraine war on grain shipments this year, and grain production next year (due to impact on productivity (fertilizer availability and cost) and production (hard to focus on farming in Ukraine during a war)), and climate change impacts.

The Teucrium ETFs seem to be a reasonable way to gain some exposure to grain as a commodity. The Teucrium Wheat Fund (WEAT) provides investors an easy way to gain exposure to the price of wheat futures in a brokerage account, and the Teucrium Corn Fund (CORN) provides investors an easy way to gain exposure to the price of corn futures in a brokerage account.

I had no real reason to invest in both funds rather than invest twice as much in one of the two funds, aside from it being better to diversify than not, as a general rule. I placed the order on Sunday, so I don't think it will be filled until Monday (I'm not sure what the trading hours are for my time zone).

These ETFs have been in an uptrend for the past two years, and had spiked higher at the outbreak of the Ukraine war on 24 Feb, but have since dropped back to the long term trend line, so appear to offer reasonable value at current prices, assuming the long term price appreciation for grains continues.

There seems to be reasonable potential for more upside given previous high prices about a decade ago.

This isn't any sort of recommendation to invest in WEAT or CORN, just an update on a small trade I recently did 'for fun' (to be honest, a $500 investment won't have a noticeable impact on my NW whether it shows massive gains or losses).

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Wednesday, 20 July 2022

Thinking of dabbling in unitized art investing

I had seen some online adverts and reviews for the  investment scheme, and Moomin had made some investments via Masterworks. I've recently added some regularly small investments into gold, silver and platinum to my overall asset allocation, and thought that also putting a small allocation of future investment funds into art might also be good idea (or at least no worse than my previous forays into agribusiness investments (that went bust), unlisted pre-IPO internet company GEM in 1999 (which went bust before getting to IPO stage, just before the boom), and various 'good story' small cap stocks (such as Aerodata, Holyman Ferries, etc.) that turned out to be not as good in reality as the company annual reports had anticipated). Due to the upcoming settlement of my off-the-plan apartment investment I might not have a large amount of free cashflow to invest, but I thought I might as well 'apply' to join Masterworks and find out some more about the process.

I filled in the online 'application' and, probably due to indicating I was thinking of investing up to $20,000 in the first 12 months, was 'fast tracked' to arrange an on-boarding 'interview' (aka 'sales pitch') later that evening (1am Sydney time was a convenient 10am local time appointment for the allocated Masterworks 'adviser').

The phone interview was reasonably low pressure (I wasn't pushed into making an initial investment straight away, although that was definitely suggested several times as a good way to 'get started'), and I clarified a few questions about the initial mark-up when artworks purchased by Masterworks are unitized and the investment processed via the SEC (the mark-up or "true up" as Masterworks calls it is around 5-8%, which doesn't seem too outrageous as there are costs involved in researching, selecting, acquiring the artwork and then setting up the investment offer). Ongoing annual fee is 1.5% (which is similar to many specialist active investment funds or niche investment funds), and Masterworks retains 20% of any realized profit when the Artwork is eventually sold (the remaining 80% of the profit is distributed to unit holders).

The 'normal' minimum investment amount is currently around $15K USD, but can be varied according to your situation (Masterworks wants to attract new investors, but reasonably affluent ones). In my case an initial $5K USD investment was suggested, which seems reasonable to 'get started'. At the moment I've deferred taking the initial plunge, as I want to digest the details of the current handful or artworks on offer (Masterworks brings on maybe 1-2 new artworks every month or two, and the units are available until the investment is fully subscribed - which can vary from a few days (or hours) for a 'hot' artist like Banksy, or be a few months).

One thing I'm slightly uncomfortably with is the fact that Masterworks decides when (and if) to eventually sell the artwork. The stated 'suitable' investment timeframe is 8-10 years (due to it being a volatile/risky asset class), but recently sales have often occurred after a holding period of only a few (2-3) years. My concern is that Masterworks, while always purchasing artworks that they expect to make a profit, would be tempted to sell artworks that rapidly appreciate as expected (as this will make investors happy, provide Masterworks with a healthy 20% of the profit, and provide great average annual return data to spruik and grow their AUM and annual fee revenues) and might hold onto poorly performing artworks indefinitely. That way mistakes and poorly performing (e.g. artists that fall out of fashion) art can be 'hidden' by never selling at a loss and realizing negative returns. While still proving Masterworks with an annual 1.5% management fee. Indeed one of the 'welcome emails' mentions "a low probability of any price declines over the last 25 years".

This is similar to the way active fund managers keep (and advertise) funds that perform well, but close down poorly performing funds (often citing lack of investor interest as the fund shrinks due to poor returns and investors making withdrawals from underperforming funds). Once a fund is closed the data no longer appears in fund managers 'available funds' performance charts, ratings etc.

In Masterworks case it would be the most successful investments would be sold fairly quickly, providing examples of great annualised returns, but 'dogs' would be left quietly sitting in investors accounts and never sold. The "Net Annualized Track Record" is for the overall 'portfolio' of 119 purchased artworks and is a mix of actual realized prices for sold artworks, and Masterworks estimates of the value of artworks still retained.

However, this isn't any worse than investing in artworks directly. You always have considerable holding expenses (if you insure your artworks) and considerable selling costs (if you sell via an auction) and uncertainty about the value of the 'investment' until it has been sold. And on the plus side, investing via Masterworks allows you to make a relatively small investment to get an interest in an artwork that would otherwise be out of one's price range.

I've yet to work out the technicalities of making the first investment - I'll setup another appointment when I feel ready to make my initial investment (you can't just transfer some funds into your 'account' and then make a unit purchase online. Apparently all investments are done with the assistance/via your investor relations manager). There will be some bank fees (and FX cost) to send the USD amount via a wire transfer. But it shouldn't be a huge cost - my bank charges $50 for an AUD transfer to a foreign currency, plus there will be an exchange rate 'spread' of up to 4% (I'll have to check what the actual costs will be - Moomin apparently used OSX for the money transfer). Sending $5,000 USD via Western Union would currently cost me around A$7,350.

I don't intend to make artworks a significant percentage of my overall asset allocation, so I've yet to decide if making a relatively small investment will actually be worth the time and bother compared to the likely impact on my overall NW performance. Another factor is that the investment is in USD, so you are also getting a currency speculation along with you underlying asset performance.

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Sunday, 17 July 2022

Boredom 'Gig Economy' Job

As I don't have any tertiary studies at the moment (haven't applied to any other unis for a PhD candidature since WSU declined my application) and I haven't enrolled in the course I will need to do to qualify to sit the CFP exam, I decided to apply to become a Doordash delivery driver to do some part-time 'gig economy' work in my 'spare time'. I used to do some Ubereats deliveries (before the pandemic) and quite enjoyed driving around. Since I gave my old Ford Escape to DS1 as a 21st birthday present, I now only have the 2002 S-type Jag to drive around in (not that I've done much driving since I transitioned to working from home) and I only have limited km (10,000 pa) comprehensive insurance for that car (it was a lot cheaper than unlimited km coverage).

I applied to Doordash just before I came down with the 'flu, so only started driving yesterday evening for the first time. I did about 2.5 hrs from start to finish (a bit longer than the time I was logged into the DD app, as I had to drive home when I logged off) and earned $64.51 making 5 deliveries while logged in for 2hr 13 mins. Of course you have to allow for expenses (petrol and car running costs) and taxes, but it is still an OK casual job for time that I would be otherwise just spend sitting at home watching youtube or old movies on TV ;)

I didn't do another session today as I was feeling a bit 'off' after getting both my free 'flu vaccination and my 4th 'winter booster' for Covid yesterday afternoon (and I still have a slight cough from the 'flu I caught two weeks ago - probably a bit of a chest infection). I'll probably do another three-hour stint tomorrow night during the 6-9pm 'peak period'.

Using the Doordash App wasn't quite as intuitive as the UberEats App - you have to 'exit' out of the driving directions to see the pick and delivery details when arriving close to your destination - which made me park a bit further from the destination that I would have if I'd seen the street address while approaching the destination. And the delivery process also included taking a photo of where you left the delivery (although this may be a new requirement caused by most customers requesting their order be left at the door, rather than handed to them). I also only achieved 60% 'on time or early' rating, as the food wasn't ready to pick-up for 2 of the 5 locations (and apparently you can also get offered tasks after others have declined them, which means less time remaining when you accept the job). Overall the App was quite easy to use. Not sure about the 'scheduling' requirement though, as I currently have 'Top Dasher' status as a new driver for the first month (normally you have to have done 200+ deliveries and 100+ in the previous month, meeting various KPIs, to get 'Top Dasher' status. As a 'Top Dasher' you don't have to pre-schedule a time block to gain priority for available jobs, so you can just log in to 'Dash' at any time and should get some work (during peak times).

One nice feature of Doordash vs. UberEats is that you set a home location/area and the jobs will all be within that area (unless you choose to change area that you are logged in), so a sequence of jobs won't take you further and further away from your starting point (which sometimes happened when using UberEats, as it offers you jobs close to wherever your previous delivery took you).

One bad feature of Doordash is that the App seems a lot less mature and more 'buggy'. After my first session I had some Earnings accumulated, but the App required some 'additional information' before being able to make the weekly payment (due on Monday). I had to use to online 'chat' feature on my laptop to find out how to be able to enter my bank account details for payments (it required shutting down the App, uninstalling it, reinstalling it, and loggin back in before the 'bank details' icon would let me enter my details. The App's Earnings page is still showing that I need to etner more details -- although it then takes me to the banking details screen (which is now showing the bank account details I had entered). So I have no idea if I'll receive payment on Monday or will need to have another chat session with Doordash help...

I plan on doing up to three sessions (Fri, Sat and Sun nights) of 3 hours or so driving whenever I'm not busy (and it isn't raining!), and I expect to earn around $32/hr and travel around 54 km during a 3-hour session. I had previously logged my actual mileage, fuel and other vehicle expenses while doing UberEats deliveries and using my car for business use for my financial planning business, but it turned out that the pro-rata actual expenses method provided less of a deductible amount than simply using the ATO's standard 78c/km deduction for work-related car travel. So I will simply claim 78c/km for the mileage done doing Doordash deliveries.

I don't know how often I will actually end up doing evening deliveries, but the maximum would be 3x3-hr sessions (Fri,Sat,Sun) per week, and up to 50 weeks per year (allowing for a few rainy days where it isn't worth doing deliveries). So based on this maximum figure, the annual results might be:

Maximum 8,100 km pa = around $14,400 pa income

-$6,320 tax deduction for car expenses (at 78c/km)

= $8,080 taxable income, taxed at a marginal rate of perhaps 32.5c/$

= $2,630 additional income tax

Hence, maximum net income after taxes would be $11,770 if I do 3x3 hrs every week.

Petrol for my S-type Jag costs around 31c/km travelled, so fuel expenses would be $2,510 pa.

Hence, actual cash income (after tax and fuel) would be $9,260 (around $20.58 /hr).

I probably won't approach this maximum figure, but any amount will help fund the negative cashflow likely to result from my investment unit once I have settled at the end of this year and mortgage interest payments and expenses exceed rental income.

I'm also hoping to acquire some clients for my financial planning business this year, but but so far it has been a slow process to find any prospects or convert them into clients. I might start doing 'cold calling' of local residents for 3-hrs in the evenings that I'm not doing Doordash deliveries (the 'cold calling' regulations permit calls before 8pm on weekdays, so calling from 5-8pm Mon-Thu would be possible. I'm still working on extracting a listing of local phone numbers from the online 'white pages' phone directory and 'washing' it against the 'do not call' register. (DS1 wrote some software to automatically skim data for a list of surnames in local postcodes, but I need to get him to show me how to run it for myself as he wrote it in C# (my attempt in python didn't work) and I haven't used C# since I did my GradDipAppSc (Industrial Math & Computing) degree in 1995!

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Saturday, 16 July 2022

A Tale of Two Bloggers

One of the PF bloggers I follow is Moomin as he is located in Australia and we met briefly when he was in Sydney when he returned to Australia from the US several years ago. It is interesting (to me) to compare our NW progress, as we both publicly track our NW using Networthshare (although he tracks combined household NW in USD terms, whereas I track my personal NW (excluding DWs NW) in AUD terms). I grabbed screenshots and did a simply offset to remove the impact of gifts/inheritance, and the result is quite similar - probably due to us both have a signficant exposure to AU and international stock markets as part of our asset allocations. Although Moomin is a professional economist and makes more exotic/sophisticated investments than me these days.

 Moomin is several years younger than myself, and has a younger family, so he is actually doing quite a bit better than myself an on age adjusted basis (and at the current USD-AUD exchange rate), but the general trend and impact of global events is quite similar. One difference is that I was making significant use of gearing via margin loans up until 2007, so the impact of the GFC was more obvious on my NW than on Moomins. On the other hand, I have stuck with simply index fund investing for my superannuation investment, whereas Moomin makes use of much more sophisticated investment vehicles (due to his expertise as an investor and economist) which has produced superior results compared to my basic approach in recent years, but appears to have been more exposed to the market decline in recent months.

Another difference is that I shifted our SMSF out of Vanguard High Growth Fund and into a mix of Vanguard Diversified and Conservative Funds in Feb 2018, so avoided the worst of the pandemic-induced market crash. I have a larger % of my NW tied up in real estate (our home and the lake house I was gifted), which probably accounts for Moomin's relative out-performance during 2019-2021.

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Sunday, 10 July 2022

Boredom trading

I've had the 'flu for a week and didn't feel like doing much CPD study, my Kaplan assignment on SMSFs, or anything else of much purpose, so I've been watching some youtube miscellany. One of the channels I've quite enjoyed was Jack Broe, was has an interesting background (ESL teacher in S Korea, then USAF missile silo operator, and more recently left the USAF to pursue other interests. He does a bit of trading on the US stock market and recently bought put options on the Nasdaq in the expectation that the current market downtrend would continue for a while. Of course as soon as he had opened his short position the markets recovered a bit, so he's down a bit atm but hopeful he will end up 'in the black' before his options expire in a few months.

I thought I might similarly short the Nasdaq with a tiny bit of 'play money' so I transferred A$100 into my superhero trading app, converted into about USD$68 and placed a market order for about $68 worth of SQQQ (ProShares UltraPro Short QQQ ETF). The US market is currently closed, but latest bid/ask price was around $49.90. I'm not sure if there is fractional trading on this ticker, but I should end up with either 1 SQQQ share for around $50, or else whatever fractional amount of SQQQ my $68 buys.

Of course it won't matter much whether I make or lose money of this A$100 trade, but it is nice to have a bit of a 'flutter' (my version of gambling I suppose) now and then. The only other holding in my Superhero trading account is the 3.17305 units of iShares US Aerospace and Defence ETF (ITA.US) I had bought in early January. After initially rising for a few months it then dropped and recently recovered slightly, so overall I'm down by about -6.5% on that trade. If I make a small profit on the SQQQ position over the next 6-12 months I'll probably close out the SQQQ position and add the funds to my ITA holding for the long term. I'd probably dollar cost average more into my ITA investment via a regular savings plan, but I won't really have much 'spare' cashflow to invest once I settle the purchase of my off-the-plan investment apartment at the end of this year and need to fund mortgage repayments.

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Saturday, 2 July 2022

Net Worth: JUN 2022

My monthly NW estimate has been updated in NetWorthShare for the end of June. Chart is in the side-bar.

Stocks and managed fund investments suffered from significant US and local market declines during this past month, but as I had eliminated my geared shared investments my 'Stocks' figure was only down -$6,026 (-2.24%) with $262,781 net equity.

Our estimated house price for June (my half) was down (-$17,101) to $1,178,956 with the Northern Beaches area of Sydney finally starting to reflect the general weakness of the Sydney real estate market. Apparently units (apartments) are coming back into favour as the move towards suburban houses that was apparent during the Covid-19 epidemic and lock-downs starts to unwind. Hopefully this means that the value of my off-the-plan investment apartment will hold up reasonably well over coming years. Rents are also starting to rise, which should help offset rising mortgage interest rates (which will have a large impact on my cashflow position once the apartment construction is completed and I have to pay the balance of the purchase price using a $900K mortgage or my available home equity line of credit).

The value of my retirement savings decreased significantly during June (due to the increased local and international stock market weakness) to $1,333,899 (down -$87,994 or -6.19%)*. Looks like I won't be reaching the $1.7m TBC any time soon. Good thing I was already planning to keep working full-time until about 70, and then do another decade or so as a part-time financial planner.

Overall, my estimated NW decreased by roughly a year's salary to $3,112,727 over the past month - down by -$109,926 (-3.41%).

As I have completed my MFinPlan degree and my PhD enrolment application at WSU wasn't accepted (I'll try applying to some other local unis) and I don't have any clients for my part-time financial planning business yet, I have a bit of spare time these days in the evenings and on the weekend. I've joined a local gym to shed some of the excess weight I've put on while working from home, and yesterday I applied to become a 'Doordash' delivery driver (I used to do UberEats deliveries, which was quite fun, but they required a recent model car and comprehensive car insurance, whereas Doordash can be done using my 2002 S-type Jag with the basic insurance cover I have). I might do a few hours of 'Doordash' delivery driving on Friday and Saturday nights (peak period) to earn some extra $$$ to help boost my cashflow - at least until I see how the finances work out with my investment apartment next year (I'm not sure how 'negatively geared' and cashflow negative it will turn out to be). Having some extra regular income for the rest of 2022 might also help with my mortgage applications at the end of the year.

*edit: turned out our SMSF investment probably wasn't down quite as much in June as I initially calculated - there was a sizeable distribution paid out on 30 June which wasn't reinvested in additional units until 1 Jul. Although the unit price dropped on 1 Jul to reflect this, the actual unit price used for the reinvestment ($1.6855) doesn't seem to match any of the 1 Jul unit pricing:

01 Jul 2022 $1.7002 $1.6974 $1.6988
30 Jun 2022 $1.7666 $1.7636 $1.7651

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Thursday, 16 June 2022

Bought some Platinum

I recently watched a video that pointed out that Platinum was relatively 'cheap' compared to the traditional ratio of platinum to gold spot price (I had, indeed, grown up in a period when platinum was generally as expensive as gold, or even slightly more expensive). The was some discussion regarding why the Platinum price might have dropped relative to gold (such as no longer used as much in catalytic converters, and the relative difficulty/cost of using platinum for working the harder metal for coins, jewellery etc.). But I recall similar conjecture that the price of silver would plummet with the transition from silver-based photographic use to digital photography, and the fact is that platinum was always harder to work into jewellery than the much softer gold, but that didn't affect its pricing.

So, I decided to increase my monthly 'savings plan' contributions into my Perth Mint online depository account by $100 each month, and purchase ~$100 of unallocated Platinum in addition to my existing monthly purchases of ~$100 of gold and ~$100 of silver.

Unfortunately you can only set up an automatic purchase plan for gold and silver. For platinum purchases you have to log in during trading hours and manually place an order. So although my $300 gets automatically deposited around the 15th of each month, and the gold and silver purchases are processed automatically at the close of business on the first business day each month, I'll have to remember to log in around the 16th of each month (as soon as I get confirmation that the $300 has been deposited) and place a manual order.

Aside from inconvenience of having to manually place the platinum order each month, the manual order also charges the standard 1% transaction fee, whereas the automatic purchase plan transactions are charged a reduced 0.5% fee.

Theoretically adding a third 'precious metal' to my bullion investment *should* provide some diversification benefit i.e. reduced volatility in the value of my bullion investment while retaining the overall performance of 'bullion' as an asset class. Whether adding some platinum to my gold and silver holdings affects the performance of my 'bullion' investment positively or negatively in practice will of course depend on the relative performance of the three metals. I think that there is a least a chance that the relative value of platinum to gold will see 'reversion to the mean' in the long term (but that could either mean the platinum price increases, OR that the gold price falls).

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Tuesday, 14 June 2022

Markets crash and burn

While I still have a large exposure to Australian and global stock markets via my SMSF investment, it doesn't have any gearing and is invested for the 'long term' so I can be fairly sanguine regarding market gyrations. But I am glad that I decided to sell off most of my stock market based investments (to free up cash in preparation for 'settlement' on my investment apartment towards the end of this year)  at the end of April and  eliminated my margin loans.

I probably won't have any free cashflow for the next few years (my apartment will probably be 'negatively geared' for quite a while, especially if mortgage interest rates rise significantly), but there may be a good opportunity to start investing back into the stock market once the current cycle 'bottoms out'.

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Thursday, 2 June 2022

Net Worth: MAY 2022

My monthly NW estimate has been updated in NetWorthShare for the end of May. Chart is in the side-bar.

Stocks and managed fund investments suffered from modest US and local market declines during this past month, and I had liquidated most of my directly held share and managed fund investments, so my 'Stocks' figure was down -$17,323 (-6.05%) to have $286,130 net equity. The markets rose somewhat during the latter half of the month, so I probably performed worse than the market during May. I expect I will have some realizd capital gains this FY, which will result in a tax liability.

In reality only about $58K remains invested stock and managed fund investments outside of my superannuation, but the reported 'stocks' figure in NetWorthShare includes the net cash position plus the equity in my 'off-the-plan' unit (via deposit and prepayment of stamp duty). It ended up sitting in my 'stocks' category due to having paid for the deposit and stamp duty using my 'portfolio loan' which was normally used to fund share investment purchases (or capital into my margin loan accounts), so after paying off most of that debt the net balance is left sitting in my 'stocks' category. I should probably split this between the 'cash' and 'other real estate' categories, but it has no impact on my overall NW calculation, so I can't be bothered making the reporting adjustment.

Our estimated house price for May (my half) was unchanged at $1,196,057 as there was no update to the data available for our suburb this month. There is still a mild decline in Sydney real estate underway, but our suburb's reported data had been bucking the trend in recent months, so no net change is probably a reasonable estimate for this month. I won't be surprised if there is a 10%-15% decline in estimated value over the next 1-2 years, but it is hard to 'predict' (guess) such future price movements.

The value of my retirement savings decreased during May (due to the local and international stock market weakness) to $1,421,893 (down -$25,763 or -1.78%). Overall, my estimated NW decreased slightly to $3,222,653 by the end of May - down by -$44,312 (-1.36%).

As I have paid off my margin loans and portfolio loans I won't be funding interest payments each month, so I should have some surplus cashflow and slowly build up my cash reserves during the remainder of 2022. At the end of this year I will need to get a mortgage to fund the balance of my 'off-the-plan' investment unit purchase, so the more cash and less debt I am holding when I apply the better. If I can't get a mortgage I would have to fund the transaction using my 'portfolio loan' which has an interest rate about 3% higher than a standard mortgage, so I'd obviously prefer to get approved for a property mortgage!

Any lift in interest rates to fight inflation will obviously also be painful, but one positive of inflation is that it should, eventually, push up building costs (which eventually drives higher prices for existing property also) so the value of real estate *should* keep pace (roughly) with inflation, whereas the mortgage debt will be unchanged, falling in 'real terms' (or relative to the value of the property, to look at it another way).

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Friday, 20 May 2022

Economics - a really 'soft' science

Economists like to think of economics as a 'science' but although it uses a lot of graphs, numbers and statistics it is firmly rooted in psychology and crowd behavior which means any one event often has several competing theories trying to explain what has happened, and none of them may be very 'correct' (think of it like curve fitting a fourier transform to past data points - you can get many equations that will fit the past data points very precisely, but none of those equations will make a good prediction of future data points).

For an example of how woeful economic predictions can be in practice, have a look at Statistica's predictions out to 2026 for Turkey that were published at the end of Nov 2021:

Turkey GDP projection:

Turkey Inflation projection:

One gets a sense of just how insanely optimistic the Author Aaron O'Neill was in the commentary about Turkey's economy "By 2030, Turkey is estimated to be one of the countries with the highest gross domestic product worldwide."

Of course, reality has already diverged widely from the four year forward projections made less than six months ago:

Turkey actual GDP data isn't available as promptly, but it looks likely to turn out more like this: 

considering how inflation has been taking off in 2022:

Turkey actual inflation:

Now, inflation may suddenly drop and GDP pick up in Turkey so that the '2026' predictions turn out to be accurate, but I doubt it.

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Monday, 16 May 2022

DS1 left the nest

DS1 finished his IT degree at the end of 2020 and started working at the Sydney office of a large local IT startup that has grown into a significant international online during the past decade. His starting salary was similar to my current salary, and after a year at work he has received a promotion already earns more than me ;) He wanted to purchase an investment property in Sydney, but prices were too high for any decent property to be within his borrowing capacity, so he purchased a rental property in Brisbane late last year. He had a short holiday (two weeks) in the US in April and when he got back he moved out of home to live in a shared apartment with two of his high school friends. It is closer to his workplace than our house (reducing his commuting time by about 30 minutes each day) and it will also be good for his social life to be living closer to the city.

DS2 us currently in year 10 High School, so has another couple more years before his HSC exam and then (probably) will also do an IT degree like his older brother. So he'll probably be living at home for at least another 6-7 years. He'll probably be moving out around the same time I retire from full-time employment.

My parents are in the process of putting their rural property up for sale, and have decided that they probably won't be moving into the lake house property as it is a bit far from the nearest shops and doctor, and a long (>1 hr) drive from the nearest decent hospital. This would be an issue as mum's eyesight isn't good enough for driving these days, and my dad has also had a few 'dizzy spells' that make driving inadvisable. They *might* move into my 'off-the-plan' investment property in Sydney when it is completed in late 2022/early 2023. I would have to charge them the going 'market rent' (so that the loan interest and other expenses are still tax deductible and the rental income will be taxable). It would probably be a 'good fit' as they will have plenty of cash available to pay rent after they have sold their current property, and as they are both around 90 years old they won't have too worry too much about making their money last (they also get the full Age Pension). The apartment is only a few minutes walk from local shops and restaurants and a major hospital. It is also only a few minutes walk from a train station and will also be a few minutes walk to the new metro station when it opens in a couple of years. As it will only be three train stops (two metro stops) to the Sydney CBD, it will be very convenient if they want to visit museums, art galleries etc. in the city.

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Friday, 6 May 2022

Degearing my stock market positions

As I think I mentioned in my monthly NW update, I decided to liquidate my stock market and mutual fund investments in my St George and Commsec margin lending accounts, as I was concerned that the market may be at the start of a significant bear market/correction phase due to a combination of high inflation, rising interest rates, Covid lockdown impact on Chinese economy, and Russo-Ukraine war impact on global food supplies, etc. All of which could negatively impact global GDP and stock markets over the next 1-2 years. Borrowing at relatively high margin loan interest rates (with interest rates rising) doesn't make much sense in a bear market.

I had sold off my speculative investments in oil (OOO.AX ETF) and food/agribusinesses (FOOD.AX ETF) as the price hadn't moved in the direction I had anticipated at the start of the Ukraine invasion, and as I had decided to ungear overall, I thought I might as well close out those positions. To sell the Vanguard International Index Fund and Diversified High Growth Fund holdings on my St George margin lending account I had to fill in a St George form requesting the Redemption of those managed funds, which SGML then forwarded to Vanguard Australia for execution. That redemption appears to have been processed on 3 May, although the funds haven't cleared yet.

To sell the Colonial First State Geared Global Share Fund holding on my Comsec margin lending account I had to fill in the redemption request from from CFS (which meant filling in the PDF form, printing it, physically signing it, then taking a photo to send as a PDF to Comsec ML for action). I got a response from Comsec enquiries the next day stating that the form was dated more the 12 months old so couldn't be processed. Upon checking it turned out I had put my birthdate in the signature section instead of the current date (D'Oh!). I had been in a rush to fill in the PDF form to email it to DW at her workplace so she could print it out for my signature (as I don't have a printer at home). So I then had to change the signature date and initial that change, take another photo/PDF image and email the updated form to Comsec ML. It doesn't appear to have been processed as yet, so the redemption price will be lower due to the recent slump in the US and local share markets. Fortunately the CFS mutual fund investment was only about $55K whereas the Vanguard mutual fund investments were about $115K, so at least I got the larger holding sold off at the better price.

I'll use the sale proceeds to pay off any remaining margin loan amounts (probably keeping a few hundred dollars sitting in the  ML 'cash' accounts to keep these margin loan facilities active in case I want to invest again in future), and pay off the balance of my St George portfolio loan (that had been used to fund the initial deposit and stamp duty when I bought my off-the-plan investment apartment a couple of years ago). Any residual cash I'll leave in my 'high interest' online savings account (currently paying 0.45% interest) until I need cash to 'settle' my off-the-plan apartment purchase when construction is completed at the end of this year or early next year.

I'll retain my long term investments in the Vanguard High Growth Fund inside out SMSF, as I don't plan to retire for at least 5-7 years, so may as well ride out any market gyrations. I also will retain my current investment allocations in my Investment Bond (as that is intended as a very long term investment to form the core of a testamentary trust investment upon my death).

It will be interesting to see how the markets perform over the next few years. I suspect the US market and European markets will see significant declines, which might also drag down the Australian share market. There may be a good 'buying opportunity' in a few years time if/when markets bottom out. A comparison of the S&P500 US index and the Australian All Ords index shows that often when there is a major correction in the US market the Australian market gets pushed down well below the long term trend line, which suggests it is often a good time to buy into the Australian stock market at the tail end of a major correction in the US share market.

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Tuesday, 3 May 2022

Net Worth: Apr 2022

My monthly NW estimate has been updated in NetWorthShare for the end of April. Chart is in the side-bar.

Stocks and managed fund investments suffered from US and local market declines during this past month, down -$16,494 (-5.45%) to have $286,130 net equity in my geared share portfolios. I am in the process of liquidating most of my geared share and managed fund investments outside of superannuation, as the market seems poised for a substantial bear market due to the war, rising inflation and interest rates, and impact of severe Covid lockdowns in China. I can't see much upside potential and I might need liquidity when my off-the-plan investment unit construction is completed towards the end of this year and I need to access funds for settlement (and might not be able to arrange a mortgage). This reduction in geared stock portfolio holdings will be reflected in next month's data.

Our estimated house price for April (my half) rose $30,057 (2.58%) to $1,196,057. There is still a mild decline in Sydney real estate but our suburb reported some price appreciation during the month.

The value of my retirement savings decreased during April due to the stock market weakness to $1,447,656 (down -$40,922 or -2.75%). Overall, my estimated NW decreased slightly to $3,266,965 by the end of April - down by -$25,613 (-0.78%).

However, if I was including price movements in my holiday home (lake house) and the estimated value of my off-the-plan apartment my NW would have slightly increased.

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Thursday, 28 April 2022

Stacked some silver

I normally just have a regular $200/mo savings plan with Perth Mint Online Depository to purchase $100/mo of silver and $100/mo of gold at a 0.5% premium to the spot price. It is one of the cheapest ways to add some precious metals to my overall investment portfolio as there is no fabrication, shipping or storage costs involved. However, there is still something nice about holding physical gold and silver. But as I already have some piedfort proof gold coin sets and some miscellaneous 1oz silvers coins and 'bars' I normally don't both to buy physical bullion products due to the fabrication and other costs.

But the rectangular silver 1oz 'dragon' bars are just so pretty I had to buy one:

I was toying with the idea of buying a 'tube' of 20 coins, or even a 'monster box' of 200 coins (which would cost around A$8,000) but in the end I decided to just buy one coin to admire. The 'premium' above the 'spot price' is pretty horrendous:

1oz coin             A$40.51

shipping             A$17.50

bullion insurance    A$ 0.75

credit card fee      A$ 0.77

TOTAL                A$59.23

This includes A$1.63 GST, which doesn't apply to my online depository account bullion purchases.

At the time of purchase the spot silver price was around A$32.90, so buying the physical 1oz coin cost an 80% premium over the spot price. And about 60x the "face value" (which is $1).

Not a very sensible 'investment' but I can afford this once a year as a frivolous expense for fun.

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Sunday, 24 April 2022

Gotta love Kogan marketing to its 'loyal customers'

My 12 month prepaid mobile phone plan was due to expire in a few days, so my plan provider Kogan conveniently sent me a 'special offer' via SMS. I simply had to reply with coded "PROMO" to get 180GB (15 GB per 30 days) for 'only' $175.

However, being a suspicious person (and having had really poor/dodgy customer service from Kogan previously) I logged in to my Kogan account to see what standard plans were currently available. Turned out I could get a 200 GB (17 GB per 30 days) for $150 as one of their standard offerings.

So the special "SMS promotion" was to pay $25 more and get 20GB less data allowance. Wow!

Conventional marketing theory is that it costs a lot more to gain a new customer than it does to retain an existing customer, hence the typical discounts offered to existing customers to stay with their current provider (the only normal exceptions to this marketing 'rule' appears to be banks, electricity and insurance companies, who often offer special 'honeymoon' rates to attract new customers, but then charge existing customers full ticket price to renew - the assumption being that many customers are too lazy (or the comparisons too complex) to bother switching to a new provider). Kogan appears to have taken this assumption to a whole new level by not only charging existing customers the full normal price for renewing, but to send them a 'special offer' that will actually cost them more than normal!

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Wednesday, 20 April 2022

Did a bit of refinancing

I did a bit of provisional enquiry about getting 'pre-approval' of an investment property mortgage for the off-the-plan apartment I "bought" a few years ago. Construction is due to be completed Q1 of next year, but I have seen some information indicating that it may be completed by the end of this year. Whenever it is finished a completion notice with be sent to my solicitor and I'll have only a month or two to get an inspection done (to identify and defects that need rectification) and a valuation done so I can actually apply for a mortgage.

The government tightened up the rules around 'interest only' loans and also tightened the lending criteria that lenders have to apply when evaluating investment loan applications. Based on the feedback I received I may have trouble getting a mortgage for the full amount due at settlement. There is $900K required at settlement, so if I can't get a mortgage (for at least a substantial part of that amount) I may have to liquidate some of my geared investment portfolio (which would provide around $300K net, but will incur a capital gains tax liability - so I might delay that until I know whether or not I can get a mortgage. On the other hand the Australian share market is currently at near-highs, so there is a risk of a market correction if the Ukraine war expands to involve NATO directly, so CGT might be the lesser of two evils. Hard to know). I also have another $200K available on my home equity line of credit ("portfolio loan") and DW has $450K available on her sub-account which I could draw on (and just make the interest payments). So I can fund the apartment purchase without a mortgage on the apartment, but the interest rate would be considerably higher.

Currently an investment mortgage has an interest rate of between 2% and 3% pa, depending on whether it is interest only (slightly high interest rate than on a standard P&I mortgage) and if it is variable rate, or fixed (for 1, 2, 3, or 5 years) for an initial period before reverting to the standard variable rate.

In comparison, our 'portfolio loan' has an interest rate of 4.98% (but is essentially "interest only" which means the cashflow impact won't be worse than making repayments on a P&I loan). It's not a particularly attractive interest rate, but then again our home loan interest rate is also quite high (3.61%). We'd "shop around" for a better mortgage rate and refinance the home loan, except that our outstanding home mortgage balance is quite modest (around $40K) so the interest rate doesn't have that large an impact, and because the "portfolio loan" might not be available if we pay off the home mortgage (and the bank no longer offers that sort of financing, due to the changes in government lender criteria mentioned above).

So, in case I end up having to finance the balance of the purchase price of the investment apartment using the "portfolio loan" I took up a "special offer" from Citibank to borrow up to 80% of my $60K unsecured 'line of credit' facility at an interest rate of 2.9%pa fixed for three years. At the end of that period I'll have to pay off the balance in full, or it will revert to the normal 20.49% (!) interest rate.

Despite the interest rate being 2.9%, there is also a 'minimum monthly payment' of around 1% of the balance (so I have to repay around $500/mo - mostly loan principal). It will still save me interest for the three year 'special rate' period, as I have used the balance transfer to repay some of my existing 'portfolio loan' balance, so I save the interest differential (4.98%-2.90%). Tand he interest saving is about $1,000 pa initially, but will slowly drop as the minimum payments will be funded from the 'portfolio loan' so around $6,000 pa will shift from the 2.90% rate back to the 4.98% rate each year during the three year 'balance transfer' period.

A mortgage 'pre-approval' would only be valid for three months, and I can't get an approval until the apartment valuation can occur (when construction is completed), so I won't know until the end of this year if the funding for the investment apartment will end up with an interest rate of around 2% or 5%, or somewhere in between (if I can get a small mortgage with low LVR, and fund the rest with the proceeds of my investment portfolio sale, the Citi 'balance transfer' loan, and the residual via the 'portfolio loan').

The average total return on the apartment (rental income + capital gain) should be higher than the loan interest and outgoings (strata levy, insurance etc.), but the interest rate on the loan(s) used to fund the purchase will directly impact how profitable (or how big a loss) this investment turns out to be. Every 1% change in loan interest rate will translate to $10K pa.

Of course with inflation currently running quite high, a general increase in interest rates will also have a big impact on my 'bottom line'. The exact impact is slightly complicated by the fact that the loan interest is tax deductible (via 'negative gearing'), and that the new apartment should also have a significant tax deduction from the 'depreciation schedule'. The net impact will be to reduce taxable income (taxed at my marginal tax rate) and 'convert' it into long term capital gains (which, under current tax rules, will be taxed at half my marginal tax rate).

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Friday, 1 April 2022

Net Worth: Mar 2022

My monthly NW estimate has been updated in NetWorthShare for the end of March. Chart is in the side-bar.

Stocks and managed fund investments increased strongly during this past month, despite the Russian invasion of Ukraine (and likely impact on global economy due to sanctions, impacts on wheat, fertilizer and oil exports from the region) up $5,964 (2.01%) to have $302,624 net equity in my geared share portfolios. I bought some oil (OOO.AX) and Global Agribusiness (FOOD.AX) ETFs within my Comsec Margin Loan account, as the war is likely to push up prices of oil and food during the coming months and year or two. At least in theory.

Our estimated house price for March (my half) rose $2,591 (0.22%) to $1,166,000. Prices have stopped rising in Sydney and our suburb had minimal price appreciation during the month.

The value of my retirement savings increased during March to $1,488,578 (up $38,550 or +2.66%) due to strong local and US stock markets during March. Overall, my estimated NW increased to $3,292,578 by the end of March - up by $46,931 (+1.45%).

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Thursday, 24 March 2022

Bought some Oil (OOO)

I keeping with the war profiteering theme, I decided to buy into an oil ETF on my margin lending account. Of course oil would have been a great investment back in 2020 when it bottomed out at $25 a barrel, and with the current price around $120 being close to the previous peak it certainly doesn't seem cheap. But, given the likely impact of the Russian invasion of Ukraine on Russian oil sales and then on their oil production, it seems like oil could remain in an uptrend for quite a while yet.

Apparently the exit of western companies from Russia will leave a large gap in the expertise required to continue to operate their eastern oil fields that sell product to China. And in the west, sanctions and war impact on tanker access to Russian ports will prevent production that normally flows to Europe being sold elsewhere. In the worst case production may have to be scaled down to the extent that it has impacts on the pipeline and oil field infrastructure in Siberia, which would take years to reverse.

Anyhow, there seems more potential for global oil supplies to be restricted further rather than getting back to 'normal' in the short term, so the oil price could continue to rise. This may be a short term trend rather than the longer term impact on food production and prices, but this is probably quite a speculative play.

I bought about $10,000 worth of OOO.AX using some of my remaining margin loan capacity. The BetaShares Crude Oil Index ETF-Currency Hedged (synthetic) OOO.AX enables investors to gain exposure to the performance of the crude oil included in the S S&P GSCI Crude Oil Index Excess Return without the need to invest in the futures market or take physical delivery of the commodities.

Overall my Commsec margin loan portfolio is now quite highly geared and risky (with fairly low maximum LVRs applying to the three investments):

Investment                      Units        Price        Value            LVR

CFS Geared Global Share Fund    38,898       $1.5759      $61,299.88       35%

BETASHARES GLB AGRICULTURE ETF   1,200       $8.40        $10,080.00       60%

BETASHARES CRUDE OIL INDEX ETF   1,000       $9.95        $ 9,950.00       35%

The value of these holdings is likely to be very volatile, so I will have to keep an eye out and be prepared to close out the positions if things start to go pear-shaped. Another risk is that Commsec could suddenly change the LVR on one of more of these risky investments, which could trigger a margin call even if the unit price doesn't drop too much.

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Tuesday, 22 March 2022

Bought some FOOD.AX

Although I had sold off most of my direct share investments recently (to simplify my record keeping and tax returns) I couldn't resist having a bit of a bet that the Russian invasion of Ukraine will create global food shortages in the short-medium term, due to the fact that Russia and Ukraine both export a large fraction of the world's food and fertilizer supplies. Both countries will suffer reduced production and exports due to the war - Ukraine due to the direct impact of the invasion, and Russia due to the economic sanctions imposed on it in response.

So, I just placed an order for about $10,000 of a global agricultural index fund listed on the Australian stock market. The investment objective of the BetaShares Global Agriculture Companies ETF - Currency Hedged (FOOD.AX) is to provide an investment return that aims to track the performance of the Nasdaq Global ex-Australia Agriculture Companies Hedged AUD Index, before taking into account fees and expenses.

There has already been a substantial run-up in the stock price since the start of the war, and it has risen another 4% since I first thought about buying the stock on Friday. But I'm reasonably confident there is potential to outperform relative to the broader stock market over the next 1-2 years. The amount of any potential gain or loss is rather trivial  on a $10,000 investment (I only had about $15,000 lending capacity on my margin loan account, and didn't want to go 'all in' and risk a margin call), but it will be interesting to see if the price moves as I expect over the next 1-2 years.

I do feel a bit guilty about potentially making a profit as a result of a war, even if indirectly. At least I made a donation to a Ukraine relief charity last month, so 'on balance' I don't feel too morally bankrupt making this investment.

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Tuesday, 1 March 2022

Net Worth: Feb 2022

My monthly NW estimate has been updated in NetWorthShare for the end of February. Chart is in the side-bar.

Stocks and managed fund investments increased slightly during this past month, up $3,999 (1.37%) to have $296,660 net equity in my geared share portfolios. This change is affected by some cash movements noted below. I have no clear view of how stock markets may perform over the next 1, 5, 10 years - there appear to be plenty of potential risks (aging demographics in many countries, increasing inflation, hence increasing cash rates, reduction in globalization, war in Ukraine, war spreading beyond Ukraine, conflict over Taiwan, impacts of global warming (direct effects, and/or costs of mitigation of impacts or decarbonization of economies), ongoing pandemic impacts, etc.) but the timing and scale of their impacts are unclear.

Our estimated house price for February (my half) rose $10,634 (0.90%) to $1,163,409. Prices rises have dropped off rapidly, with the overall Sydney market declining slightly in February, and our suburb showing little price appreciation during the month.

The value of my retirement savings decreased again during February to $1,450,028 (down -$32,094 or -2.17%) as it is invested in the Vanguard High Growth fund, which tracked the decline in US and Australian stock markets during February. Overall, my estimated NW decreased to $3,245,647 by the end of February - down by $16,685 (-0.51%).

I received an insurance payment for the replacement value of two firearms that were damaged beyond repair when my garage was inundated during a severe storm a few years ago. This added $9,035 to my 'Stocks' figure (as my bank account balance is included in the overall share portfolio valuation). On the other hand a quarterly PAYG tax instalment of $9,744was paid from our SMSF bank account at the end of February, reducing our SMSF valuation and hence my Retirement savings figure (my share of our SMSF is currently around 71%). I also decided to make a spouse superannuation contribution of $3,000 into DWs super - I will get an 18% tax rebate ($540) on the contribution.

My father received an inheritance of around $25,000 from his Aunt who passed away last year at age 104. He is in the process of renovating his farm property at the moment (intending to sell it and move into the lake house he gave me several years ago, where I pay the rates and insurance, so my parents living expenses should reduce considerably). I had lent him $5,000 last year to pay for some of the renovations, so he used part of his inheritance money to repay me, which also added to my Stocks figure. Hopefully they sell the property before rural real estate prices in NSW start to decline.

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Friday, 25 February 2022

Russo-Ukraine war

Interesting to see that although the Dow has dropped about 6% since the latest Russian invasion of Ukrainian territory commenced, and the German DAX has dropped about 8%, the Australian market is only down about 2% and was steady today. Perhaps there is an 'on the beach' effect at work? (we might not survive WWIII, but at least we might survive a bit longer than NATO countries, Russia or China).

Anyhow, I feel sorry for Ukraine. It's a bit tough if your long-term survival as an independent country depends on joining a defense alliance like NATO, but the NATO rules prevent a country from joining if there is any 'active conflict' within that country. Just by occupying Crimea and backing rebels in the Donbas region, Putin effectively prevented Ukraine from joining NATO for the past decade or so, and he then used their desire to maybe, someday join NATO as an excuse for launching an all-out invasion in 'self-defense'. A strange combination of Orwellian "War is peace. Freedom is slavery. Ignorance is peace" mentality with the catch-22 bureaucracy of only being able to join NATO if you don't currently need to join NATO.

I can only think that if Sweden and Finland are contemplating ever joining NATO they had better do it asap - otherwise they could find themselves ineligible due to a manufactured internal conflict (e.g. if Putin grabbed the Aland Islands or Gotland, or simply supported some internal conflict to erupt).

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Tuesday, 8 February 2022

Annual salary review and bonus

I had my annual 'performance review' meeting with my boss today and got a 'expected results achieved' rating (mostly due to working an average of about 50 hours/week last year in order to get everything done by deadline, even when there was work emailed on a Friday afternoon due by noon on Monday that would require a couple of days to complete!) which earned my a standard bonus amount worth 10.8% of last year's salary. After allowing for tax at my marginal tax rate the bonus will provide around $7K, which I will contribute to my QSuper superannuation account via increasing my 'undeducted' contributions from the current $100 per month to $500 each month. I can't claim a tax deduction for any additional superannuation contributions as I make the maximum concessional contributions via SGL and salary sacrifice.

I plan on building up the balance of my QSuper account from now until I retire (or until I hit the total super balance cap and can't make any additional contributions into super beyond any SGL amounts) and will then purchase a lifetime annuity from QSuper ($100K in a lifetime annuity should provide around $7,500 pa, or if I opt for the 'spouse protection' option that continue to pay the pension after my death for the remainder of DWs lifespan, $6,700 pa). I will keep the remainder of my 'transfer balance cap' in our SMSF in 'pension phase' once I retire, which should provided a sustainable pension of at least 4% of the $1.7m (assuming the TBC has indexed to $1.8m by the time I retire), or $68K pa tax free. That would provide slightly more than my curren 'take home' pay. Having some income from the lifetime annuity guaranteed for life is basically a hedge against longevity risk.

I also received a 2% 'raise' in salary for 2022. Considering the CPI/inflation rate for the 12 months to December quarter 2021 was 3.5%, that 'raise' is actually a 1.5% decrease in salary in 'real' (inflation adjusted) terms. But as long as I keep my job until I choose to retire I'm not too fussed.

Hopefully this year I can get some paying clients for my part-time financial planning business, so it achieves 'break even' by the end of 2022. My 'plan' is to complete a PhD (if I get offered a place) part-time while I am still working full-time, and also slowly accumulate some clients for my financial planning business (aka 'side gig'). Then when I 'retire' from full-time employment I'll continue running my financial planning business for another decade or so. We'll see what happens.

Since my investments can gain or lose $50K in a month, the annual salary bonus and pay rise are relatively immaterial.

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Wednesday, 2 February 2022

Net Worth: Jan 2022

My monthly NW estimate has been updated in NetWorthShare for the end of January. Chart is in the side-bar.

Stocks and managed fund investments decreased significantyduring this past month,down -$25,217 (-7.93%) to have $292,661 net equity in my geared share portfolios. Fortunately I sold off a large chunk of my direct share investments on my margin loan accounts (retaining mostly the managed fund investments) and reduced my level of gearing, so my loss was more in line with the overall share markets.

Our estimated house price for January (my half) rose $36,276 (3.25%) to $1,153,045. Most 'pundits' predict that price growth will moderate this year, and could drop slightly next year,

The value of my retirement savings decreased during January to $1,482,122 (down -$62,671 or -4.06%) as it is invested in the Vanguard High Growth fund, which tracked the decline in US and Australian stock markets during January. Overall, my estimated NW decreased to $3,262,332 by the end of January - down by $51,051 (-1.54%).

I track my holiday home/hobby farm (the 'lake house') and my off-the-plan investment property (a one-bedroom apartment) at 'cost' in my monthly NW calculations, however I do a rough monthly estimate of their value, and if that had been included my overall NW would have remainined practically unchanged during January (due to rises in house prices in Forster and unit prices in St Leonards).

Things would get a lot more painful if equities and property were both in decline at the same time.

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Friday, 21 January 2022

Equities markets off to a shaky start in 2022

Looks like I *might* have made the correct decision to sell off my margin loan portfolio last week - the share markets are looking decidedly shaky at the start of 2022. The prospect of rising interest rates to combat/avoid inflation also makes longer term bonds a bad investment, and Australian real estate looks likely to weaken during 2022/23. Overall it might be a good time to just accumulate cash for a while.

We will remain in our long term asset allocation within our SMSF, and I have quite a lot of my NW tied up in real estate via our home, the lake house I *inherited* from my parents, and also the investment apartment I bought off-the-plan a couple of years ago that will be completed early next year. So my overall asset allocation remains 'high growth' despite the prospects of a couple of bad years coming up.

I won't be surprised if my NW is lower at the end of 2023 than it is at the moment. But at least I won't have to worry about getting a margin call if the stock market tanks.


I got an email notification that my CityIndex CFD trading account had dropped below 100% position coverage. I wouldn't have to put in more cash or close out a position unless the cover dropped below 50%, but it prompted me to review the positions (SPDR S&P ASX200 CFD and iShares MSCI Australia Index Fund that is denominated in USD) - they were both considerably down, due to a relatively high level of gearing inherent in CFDs.  At yesterday's close my overall A$1,306.48 initial investment was down by -A$298.07 (or 22.8%). I had initially opened these positions as long term 'ride the index' geared plays, but I decided I might as well go more 'risk off' and close out these positions. I sold out of the SPDR S&P ASX200 this morning (the Australian market was down about -0.7% after initially dropping 1%) and I will close out the iShares CFD position once US trading opens tonight. I might just xfer the cash out of this CFD trading account as the amount of money involved is relatively trivial and just creates more work at tax time for essentially no material benefit. If I start working on a PhD this year part-time I will have plenty of other things to keep me occupied!


I also got an email regarding the 12% solution portfolio. It states that although the strategy is based on only doing an end-of-month switch (if required), David Alan Carter does track the various indicators throughout the month and decided to alert subscribers of what he calls a "provisional pick" because the indicators had now started to indicate as shift of asset class (from QQQ to SHY (short term bonds)) rather than just a switch between funds within the same asset class. He notes that this could change by the normal end-of-month decision point if equities markets recover, but thought he'd let subscribers know.

He wrote "Obviously, this is a judgement call. And because every investor is in a different life situation and has a different tolerance for risk, I can't offer a specific recommendation."

Seems like a bit of pro-active "don't blame me if you lose a lot of money, I don't give recommendations, just information" PR to me.

Anyhow, I'm glad I decided to close out my 12% solution experimental portfolio last month, so I ended up with a small profit.

It also highlights that while it would be more cost effective to track this strategy with a larger position that I used for my experiment (which would reduce the relatively high trading costs), you would have to be comfortable with the higher volatility (risk) that generally accompanies higher potential/expected returns.

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Friday, 14 January 2022

Reduced my Geared direct share investments

While I normally don't try to "time the market", I occasionally succumb to temptation when it seems there is lots of downside risk and little upside potential. I did that with our SMSF investment in Feb 2020 (when we switched from Vanguard 'high growth' to a 50:50 mix of 'conservative' and 'bond' funds just before the developing global pandemic started to impact share markets around the world) and then again later in 2020 (when we slowly moved back into our long term 'high growth' fund allocation when markets had settled down and started to recover).

I've been watching the markets (at least the Australian stock market) trend fairly flat for the past 6 months, with occasional dips and rises as day-to-day news impacted sentiment, but over that time we've slowly moved from the prospect of interest rate rises to combat the possibility of rising inflation, to a more certain hike in interest rates around the world as inflation appears to have increased on a more persistent basis than the temporary 'spike' that was initially expected to die down.

We also have various potential negative events sitting in the wings - the Russia-Ukraine-NATO/US tension, the China-Taiwan- everybody tension, the Turkey-economic reality tension, any of which (or none) could 'blow up' unexpectedly and trigger a substantial market decline.

Overall, there seems more downside risk than upside potential for the next year or two, so I decided to close out my direct share investments on my Commsec margin loan account. The value today was about $6,000 (around -3.0%) less than it was worth at the end December, but I decided to sell out so I can pay off the $32K margin loan and use the remaining cash to pay off a chunk of my portfolio (home equity) loan.

I retained my investment in the Colonial FirstState Geared Global Share Fund, and we are still fully invested in our SMSF, so it is only a slight overall reduction in market exposure to eliminate the modest amount of gearing I currently had.

I'll have to pay a chunk of capital gains tax on the realized gains, but after suffering a serious hit to my net worth via my geared share investments back in 2007/8 I've decided to trust my 'gut' a bit more and take action when it seems there is considerable downside risk and little upside potential after a period of strong market gains. It is contrary to my 'buy and hold' strategy as a 'long term' investor, but as it is limited to only eliminating the use of gearing I feel it is only prudent.

We'll see how things turn out during the remainder of 2022 and during 2023... I'll either be glad I reduced my level of gearing, or regret 'bailing out'.

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