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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