Monday 29 May 2023

Bought some RBTZ for my Superhero portfolio

My 'play' portfolio (where I dabble in a bit of 'active' stock/fund picking -- and usually get it wrong) hasn't performed particularly well since I started trading last year. The portfolio is down 4.64%, and would have been a lot worse if I hadn't closed out my SQQQ position in January. The agriculture produce ETFs haven't done as well as I had expected -- with CORN down 2.52% since I bought it in August '22, and WEAT down by a massive 23.94% in the same period. The only investment that has made a slight profit is the iShares U.S. Aerospace & Defense ETF (ITA) which has gained a modest 3.26%.

The Superhero account had USD$164.89 (proceeds from closing out the SQQQ position, and some minor dividend payments) cash doing nothing, so I decided to speculate on and AI ETF. My initial pick was the THNQ ETF, but that doesn't appear to be availble to trade using the superhero app, so the next best ETF I could find was RBTZ which is an Australian Betashares ETF. So I transferred my USD available funds back into AUD, ending up with A$248.62 available to invest. (The foreign exchange fee was about 1%). I've placed a 'market' order to purchase RBTZ, which will be filled when trading resumes. Last price for RBTZ was A$12.59, but the price I get could be higher or lower than that. Overall my portfolio in the Superhero trading app is:

The price of RBTZ has already shown a spectacular rise over the past 8 months, so I might just be getting in before a major correction, but this sector does seem to have considerable potential in coming years.

BTW, if anyone is thinking about opening a trading account with Superhero, using this link with provide a bonus of $10 worth of Tesla shares if you deposit $100 within 30 days of opening the account:

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Friday 12 May 2023

Australian retirement expectations

An interesting article in The Inside Adviser based on some consumer research by Vanguard Australia.  It found that working age Australia's would like a retirement income of $99K and retirement age of between 59.5 (18-34 year olds) to 61.5 (35-54 year olds), where those actually approaching retirement (age 55+) expect to retire at age 64.9 on average. And those already in retirement have a more modest retirement income expectation (only $68K).

The article indicates that this discrepancy may be due to several factors - such as unrealistic expectations, lack of clarity regarding wants and needs during retirement, concerns about cost of living increases (eg recent rent increases) etc.

I suspect there may simply be uncertainty regarding tax imposts during retirement. For example, if you make $99,000 a year living in Australia as a wage earner, you will be taxed $24,622. That means that your net pay will be $74,378 per year, However, under current legislation, self-funded retirees receiving a pension income stream from superannuation in 'pension phase' would not pay any income tax on that part of their retirement income. From 1 July 2017, the total amount of super you can transfer into a tax-free retirement account is capped. This is called the transfer balance cap and is currently $1.7MM. The general transfer balance cap is reviewed each financial year and indexation occurs in line with the consumer price index in $100,000 increments, so is expected to rise to $1.9MM from 1 July 2023. If you're drawing a retirement income stream from your super, then the investment earnings are exempt from tax, including capital gains. This tax exemption on investment earnings also applies if you commenced the income stream due to permanent incapacity.

Of course the is legislative risk associated with superannuation (just look at recent proposal to increase tax rate on 'earnings' of superannuation amounts above $3MM), so younger retirees may not be counting on receiving any superannuation pension income 'tax free' in future.

In any case, having expectations of high retirement income levels and early retirement age may not be a bad thing if it encourages saving for retirement -- it is probably better to be able to retire earlier than expected and with a higher level of retirement income than having to work longer than desired and/or ending up with insufficient retirement income. However, if the higher expectations don't lead to taking action to meet the 'requirements' it is simply setting oneself up for disappointment. I doubt that most people bother evaluating whether or not they are 'on track' to achieve their retirement expectations. They simply pick a figure and hope for the best.

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Monday 1 May 2023

Net Worth APR 2023

Chart updated to end of April in sidebar.

Stocks/cash increased $4,760.(2.70%) to $180,807.

Retirement savings (SMSF etc) increased by $27,822 (1.87%) to $1,515,113.

Est. of Home valuation (my half) decreased by -$18.137 (-1.72%) to $1,036,445. Overall Sydney real estate index had not dropped during April, so it must be specific to the Northern Beaches part of Sydney. RBA is 'expected' to keep interest rates on hold for another month, waiting to see the impact of the previous rises on household spending (mortgage repayments take a month or two to reflect changes in the overnight cash rate), The monthly estimate of 12-month inflation rate for Australia has dipped to 6.3%, lower than the 'consensus' forecast of 6.5% and significantly lower than the inflation rate figures for Jan (7.4%) or Feb (6.8%). This is the third straight month of decreasing annual inflation rate, and the lowest monthly figure since May 2022. If inflation keeps trending downwards it could be approaching 4% by the end of 2023 and interest rates could remain on hold for the remainder of this year. The 'big four' Australia banks are predicting either one more 0.25% rise (CBA) before interest rates peak, or that interest rates have already hit their peak for this tightening cycle. The banks are predicting between one and four 0.25% rate cuts to follow in 2024 (but such 'predictions' are incredibly unreliable). My guess is that rates may remain on hold until inflation approaches the 3% upper bound of the RBA target band (2%-3% inflation), and that real estate prices in Sydney may be flat for the next couple of years (which would mean a further 5%-10% decline in real terms),

Other real estate (my 'lake house' and the investment apartment) decreased by -$25,176 (-1.21%) to $2,058,506 reversing the estimated increase of last month. 

The outstanding balance of the investment property mortgage remains at $1MM (the loan is 'interest only' for 5 years). Interest rate is currently 5.79%.

Other assets (my online depository bullion account and Perth Mint, and the bullion value of my gold and silver proof coin collection) increased by $1,146 (3.19%) to $37,108.

Overall, NW decreased by -$9,587 (-0.25%) to $3,835,979 during April.

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