Monday 22 April 2024

End of Week 10 of '90 day transformation challenge'

Seemed to hit a bit of a 'plateau' this past week. I did two weight training sessions at the gym, and on two other days did a stint on the waterrower, plus I did quite a lot of daily walking - averaging 19,640 ste[s [er day. I also stuck to my planned caloric deficit and macros, averaging 1,554 cals/day with an average of 162 cals/day of protein and 29% of the overall calories from carbohydrates and 27% from fat. Due to the increased amount of walking, the average calculated caloric deficit vs BMR was -1,256 cals/day. Howver, my weight loss for the week was only -0.9 kg and my body fat (according to the bathroom scales) actually increased by 2.2% from a week ago! Comparing the 7-day average weight and BF% for this past week vs the previous week gives a slightly more positive outcome -1.3kg change in average weight and -0.34% in average body fat reading. I suspect the normal week-to-week calculated changes were thrown off by getting woken up unusually early Sunday morning, so I only had 5 hrs sleep. That might have thrown off the morning weigh-in results somewhat. Anyhow, I won't change my diet or exercise routine this week, just keep sticking to 'the plan' and hope to see more typical results next week.

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Wednesday 17 April 2024

Exercise snapshot

I've gotten into a routine of doing my daily walking in multiple blocks of 2K to 4K steps in a 15-30 minute sessions. Spread throughout the day this makes it quite easy to achieve my goal of at least 14K steps/day (up to around 20K on some days). I went to the gym for weight training yesterday, as I am now losing 1 - 1.5 kg/wk fairly consistently, but would like to rmitigate the lean mass loss from the current ~25% of the overall weight loss to under 20%. And the only way to achieve that is to do regular weight training sessions to achieve muscle hypertrophy. On the days I don't go to the gym for weight training I will do one (or more) 5 min 'high intensity' sessions on my Waterrower to boost aerobic fitness and VO2max. My performance is (so far) improving with each day of rowing, but I still tend to run out of 'puff' after about 5 mins (around the 1.4 km mark). Hopefully this will slowly improve until I can do the 2km distance in under 7 mins. Apparently the Waterrower is about 15% faster than the Concept2 machine used for competition events (and WR times), so achieving 2km in 7 mins on the Waterrower would still be considerably slower than the WR for the 60-64yo male category of around 6.5 mins.

I remembered to wear my Fitbit watch while rowing today, so did a record of a 5 minute rowing session and the start of a walking session about 30 minutes later:

It was interesting that my 'resting' heart rate while sitting in my home office working was around 72-78 bpm prior to the rowing session, but after the rowing it only dropped back to the 88-94 bpm range. This is why doing HIIT training is good for weight loss, as boosts your metabolism long after the brief exercise period has ended. The indoor rowing HR falls into the 'hard' exercise intensity band (for my age bracket), while the walking is 'light' exercise (which is good for fat loss without losing muscle mass).

While weight training my heart rate tends to sit in the 115-135 bpm range, which would be 'moderate' to 'hard' intensity for that hour or so.


I plan on sticking to this exercise routine from now on. But I will increase my caloric intake as I approach 80kg to slowly transition into 'maintenance' mode (this has been my biggest issue when previously losing weight -- I would tend to revert to 'ad libitum' eating after finishing (or giving up on) a diet, with snacks and junk food leading to a rapid regain of excess weight.

In the long term I hope to stick around 76-80kg body weight with around 12%-15% body fat, and ideally would do this on a modest 15%-20% 'CRON' (caloric restriction with optimal nutrition) food intake (for the possibly lifespan benefits). Just keeping to a healthy BMI and doing regular exercise will be a major improvement.

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Monday 15 April 2024

End of Week 9 of '90 day transformation challenge'

Diet and walking was on track during the past week, resulting in a -1.3 kg change in weight for the week, and a -1.3% reduction in body fat percentage. The diet and walking resulted in an average daily caloric deficit (compared to estimated BMR) of -1,206 kcals/day on average during the past week. The charts of weight loss per week vs. average daily caloric deficit show an almost perfect match with the predicted loss of 1kg/wk for a 1,000 kcals/day (7,000 kcals/wk) deficit for the weeks where my diet was 'ongoing'. There was a higher rate of weight loss during the first weeks, and the week immediately after I had paused my diet and exercise regime due to my BPV episodes. The higher rate of weight loss can be explained by the usual 'water weight' loss that usually occurs when a diet commences (and overall bulk of food consumption decreases).

I still haven't resumed going to the gym for weight training sessions yet -- my new Waterrower arrived on Tuesday, so I did rowing sessions on Wed, Thu, and Sun instead of going to the gym. This week I'll try to doing rowing on the 'rest' days when I don't go to the gym for weight training. While indoor rowing is a good 'full body' workout, it is only 'bodyweight' and is more limited by aerobic capacity than muscle exhaustion. So far I have only managed to do one or two 6 minute sessions on the rower, covering 1.3km in about 260 seconds. Despite 'only' being 1.3 km, this pace is still about 30% slower than the WR pace for the 2km event for the 60-65yo age male open category, so I'll need to first improve my aerobic fitness and endurance to be able to row 2km at a decent stroke rate, and then (hopefully) improve my technique and strength to slowly improve my time for the 2km indoor row. The rowing can be quite strenuous, so I'll start wearing my fitbit watch while rowing so I can keep an eye on my maximum heart rate.

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Saturday 13 April 2024

FFMI calculation

Watching a youtube video about weight loss and body building by Dr Michael Israetel I found a reference to FFMI (Fat-free Mass Index) calculator at that lets you enter current body measurements and get an estimate of your (theoretical) drug-free genetic potential for lean muscle mass. At my age my maximum muscle potential will be considerably less than this, but it is good as a guideline.

My current measurements entered into the app are: (male, metric units, goal is lean muscle mass for fat reduction from 30% to 14%):

*height 176 cm

*weight 106 kg

*wrist circumference 19 cm

*ankle circumference 26 cm (unusually thick - and I measured my smaller leg - the other has some odema)

*torso circumference 115 cm

*upper arm circumference 41 cm

*forearm circumference 34 cm

*neck circumference 42 cm

*thigh circumference 59 cm

*calf circumference 43 cm

Calculated Results:

Lean body mass left to gain 14.6 kg (need to do more weight training!)

Fat mass left to lose 17.3 kg (more if I don't add the above muscle)

If I don't put on any lean mass, this means losing about 32 kg of fat to reduce weight to 74kg, which is about right). Ideally I can add some lean mass, especially on my thighs.

Evaluation of current physique and possible improvements are:

Neck 6% overdeveloped

Torso 3% overdeveloped (probably overestimated due to fat on my chest and back)

upper arms: perfect (I doubt this as I need to shed fat and gain muscle here)

forearms 4% overdeveloped (again, probably inflated due to excess body fat)

thigh 11% underdeveloped (I've noticed my thighs are not as thick as when I used to do weight training -- need to use the leg extension machine more)

calf 2% underdeveloped (more time doing calf raises)

Potential gains:

Torso max 125 cm (more chest and lat work needed)

Upper arm 46 cm (more bicep curls and tricep work)

Forearm 37 cm (some forearms curls)

Neck 45 cm (shoulder shrugs?)

Thigh 75 cm (definitely need more leg work)

Calf 50 cm (more and heavier calf raises)

Max natural bodyweight 103.3 kg. Normalized FFMI 24.2 (24.9 is upper limit drug-free for most people's genetics) Max natural recorded is 28.0

The app provides a cool visual summary of the above results:

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Monday 8 April 2024

End of Week 8 of '90 day transformation challenge'

Only did about 10K steps/day for the first two days of the week, but then picked up and by the end of the week the average daily step count was on target. My average daily protein and % calories from fat and carbs was also what I am aiming for. However, I didn't go to the gym to do weight training at all during the past week, which resulted in my weight continuing to drop but my % body fat not decreasing. Overall my weight loss have been about 72% fat and 28% lean mass, so I really need to restart my regular weight training to preserve muscle mass while in caloric deficit.

My progress so far:

         Body Recomposition       Averages (per day)

Week#    Wt (kg)    Body Fat %    cals    g prot    % carbs    % fat    steps/day

1        -3.4       -1.1%         1,348     85      35%        39%      11,118

2        -1.0       -0.4%         1,378     92      39%        31%      12.126

3        -2.3       -0.8%         1,528    121      27%        26%      12,358

4        -0.1       -0.5%         2,223    122      41%        30%       6,459

5        +1.1       +0.4%         2,457    117      51%        29%       1,107

6        -3.1       -1.2%         1,856    114      50%        22%      10,550

7        -0.9       +0.2%         1,782    153      40%        28%      14,293

8        -1.1       -0.0%         1,594    157      29%        26%      15,770

DS1 didn't want the elliptical machine, so we just shifted it into the garage for the time being, so I'll have room in the loungeroom for the Joroto Waterrower when it arrives. The M280 model I bought comes with bluetooth (BLE) connectivity and FTMS (Fitness Machine Service) device support, so I am hoping to be able to data log workout using python on my laptop. After trying to find some existing examples for people who had already developed code for this (to closest I could find was specific to certain models of stationary bike machines), I resorted to asking ChatGPT to "write a python script to connect to a FTMS device using bluetooth" and it came up with a script to connect using pygatt and print the received data. Apparently all I will need to do is specify the MAC address of my FTMS device (the waterrower). We'll see if it works. If it does, I should be able to run the python script within excel to import the data during an exercise session and chart relevant details (eg. heartrate, stroke rate, distance etc.). If I can't get the python working in excel I can always do the required charting in python using matplotlib or similar.

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Friday 5 April 2024

Bought a rowing machine

The gym I go to for weight training has stationary bikes, stair walkers and treadmills, but doesn't have any rowing machines. I quite like indoor rowing and would like to replace the elliptical machine I have sitting in my lounge room (that I never use). So I decided to buy a Joroto Water Rowing Machine after seeing it was relatively affordable ($600) and was available with a $100 discount and free shipping on Amazon. It has a nice oak finish, so will fit in quite nicely with the decor of the lounge room. And I'll be able to watch TV while rowing.

I was inspired by reading about Richard Morgan, who started rowing in his 70s and at age 93 was four times master world champion indoor male rower. I don't expect to set any records (although entering the Pan Pacific Masters Games being held at the Gold Coast in November this year would be fun), but it will be interesting to see how my 2,000m times compare with the relevant world records (male, <75kg class):

Age    <75kg    Open

60-64  6m24s   6m20s

65-69  6m46s   6m33s

70-74  6m55s   6m44s

75-79  7m24s   7m07s

80-84  7m40s   7m26s

85-90  8m13s   7m54s

DW has been asking me to sort out (throw out) a whole lot of old uni notes and miscellaneous electronic knick-knacks that are cluttering up my 'home office' as it encroaches into an area where she has an exercise mat and would like to rearrange the furniture there and make it into more of a 'sitting room' and exercise area. So I think I'll have to make sure I finish doing the clean-up this weekend and also ask DS1 if he wants a free elliptical machine (as long as he takes it away this weekend!) when he visits on Sunday. That way when the new rowing machine arrives in a week or two DW is less likely to complain about me having bought a new 'toy' to clutter up the house ;)

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Tuesday 2 April 2024

Net Worth - MAR 2024

Chart updated to end of March in sidebar.

Stocks/cash increased $11,724 (+4.81%) to $255,683.

Retirement savings (SMSF etc) increased by $55,047 (+3.19%) to $1,783,193 in line with the market trend and our asset allocation.

Est. valuation of our home (my half) increased by $1,036 (+0.09%) to $1,140,089. The 'Other real estate' (my 'lake house' and the investment apartment) increased by $6,069 (+0.29%) to $2,114,079.

The outstanding balance of the investment property mortgage remains at $999,993 during the 'interest only' period of the mortgage. Another ~4 years remain of the 'interest only' period. During that time I will accumulate as much cash as possible in the offset account to reduce the effective loan balance.

Other assets (my online depository bullion account at Perth Mint, and the bullion value of my gold and silver proof coin collection) increased by $3,528 (+9.28%) to $41,560.

Overall, NW increased by $77,404 (+1.81%) to $4,342,611 during March.

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Monday 1 April 2024

End of Week 7 of '90 day transformation challenge'

Maintained a good daily step count on most days, and tweaked my meals to include a bit more protein and reduced carbs slightly to keep the overall caloric deficit sufficient to continue losing weight.

My progress so far:

         Body Recomposition       Averages (per day)

Week#    Wt (kg)    Body Fat %    cals    g prot    % carbs    % fat    steps/day

1        -3.4       -1.1%         1,348     85      35%        39%      11,118

2        -1.0       -0.4%         1,378     92      39%        31%      12.126

3        -2.3       -0.8%         1,528    121      27%        26%      12,358

4        -0.1       -0.5%         2,223    122      41%        30%       6,459

5        +1.1       +0.4%         2,457    117      51%        29%       1,107

6        -3.1       -1.2%         1,856    114      50%        22%      10,550

7        -0.9       +0.2%         1,782    153      40%        28%      14,293

I did a reasonable amount of walking on all but two days last week (my average step count for the other five days was actually 16,001) but was a bit busy at work (due to the shortened week due to the Easter 'break' -- still had the same amount of work to get completed, but one less day to do it in) so ended up not going to the gym at all. I actually felt like going for some weight training, but ended up having to choose between  doing more walking to hit my step count daily target, or else go to the gym for weight training, due to the extra time in the evenings getting work tasks finished off. As my main focus is weight loss (I am doing to weight training to try and preserve as much lean mass as possible) I prioritized walking last week. I should be able to make it to the gym as planned next week, although I might suddenly have to spend some extra time on my PhD confirmation of candidature report and presentation (I did OK on my 'rehearsal' presentation last week, but have a few statistics areas to brush up on, and some additions to make to the report and powerpoint presentation. I don't know when the CoC presentation/meeting will be scheduled -- I could get an email invite from the HDR office at any time).

Although I lost weight last week my body fat% seemed to stay fairly constant. Although I didn't do weight training I think it is more likely just due to my scales not being particularly accurate for measuring body fat -- I've noticed that there can be a 1%-2% variation is you just get off and on again within a few minutes, so I only use the average weight and % fat taken over a 5-day period to estimate changes in lean mass.

I was hoping to be able to not lose any lean mass while reducing body fat, but the figures suggest that my weight loss is around 75% fat and slightly under 25% lean mass. However, changes in water retention can also affect the body fat readings, so I am not too concerned at this halfway point in the transformation challenge. I'll stick with my meal planning and walking, but want to ensure I do at least two full-body weight training sessions each week from now on. By the end of the 13-week challenge I hope to have lost around 20 kg of weight but only 4kg or less of lean mass.

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Monday 25 March 2024

End of Week 6 of '90 day transformation challenge'

Managed to get back into the diet routine and get in more daily walking, but I only felt well enough to go to the gym for a moderately light full body weight training session only Sunday.

My progress so far:

         Body Recomposition       Averages (per day)

Week#    Wt (kg)    Body Fat %    cals    g prot    % carbs    % fat    steps/day

1        -3.4       -1.1%         1,348     85      35%        39%      11,118

2        -1.0       -0.4%         1,378     92      39%        31%      12.126

3        -2.3       -0.8%         1,528    121      27%        26%      12,358

4        -0.1       -0.5%         2,223    122      41%        30%       6,459

5        +1.1       +0.4%         2,457    117      51%        29%       1,107

6        -3.1       -1.5%         1,856    114      50%        22%      10,550

At least I am back on track. I still need to tweak my meal plan a bit to include more protein and less carbs -- probably have to switch my 'brunch' from cereal to some lean meat and vegetables (same as I have for dinner). The average daily step count for the past week was dragged down by still not walking much at the start of the week, but in the last two days I managed to get in >14K steps/day, which I want to maintain from now to the end of the '90-day transformation challenge'. After the challenge ends I'll try to keep up this level of walking until the end of the year, by which time I should have reduced my weight close to my 'ideal' BMI. I am managing to not have my first meal until close to noon each day, and have a fairly early dinner (finish eating by about 7pm), so on average I have been 'intermittent fasting' on roughly a 7:17 daily ratio of eating vs 'fasting' hours. I'm not all that hungry when I wake up, so having a late 'brunch' in place of breakfast isn't a problem, and having an early dinner makes it easy to stick to two main meals a day. By the time I start to feel a bit like having another evening meal it is already close to bed time, so it isn't hard to not eat outside my planned hours.

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Tuesday 19 March 2024

End of Week 5 of '90 day transformation challenge'

My 'progress' so far:

         Body Recomposition       Averages (per day)

Week#    Wt (kg)    Body Fat %    cals    g prot    % carbs    % fat    steps/day

1        -3.4       -1.1%         1,348     85      35%        39%      11,118

2        -1.0       -0.4%         1,378     92      39%        31%      12.126

3        -2.3       -0.8%         1,528    121      27%        26%      12,358

4        -0.1       -0.5%         2,223    122      41%        30%       6,459

3        +1.1       +2.2%         2,457    117      51%        29%       1,107

Last week didn't go as planned. My BPV (benign positional vertigo) got worse, to the extent that I would get dizzy just walking around the house. So I decided against going to the gym every time I was 'scheduled' to go last week. It did seem quite a bit better yesterday and today, so I *might* go to the gym tonight for some light weight training (before all my progress from the first few weeks is undone). I still probably won't do any treadmill work at the gym, but am trying to ramp up my daily step count again this week, after almost doing noth9g last week.

I had an ultrasound of my liver due to the elevated liver enzymes in my blood test results. Turns out I have one gall bladder stone (not causing any problems) but also have a slightly enlarged liver and 'moderate' fatty liver disease. As I don't drink alcohol it will be due to 40 years of being overweight and too sedentary. No medical drug treatment, but the recommended response is to 'lose weight and exercise more'.

Fatty liver disease decreases life expectancy in males by about 4.4 years, so I really need to get serious about reducing my BMI and getting regular exercise every week, and daily walking.

Enough said. Back to the diet plan and lots of walking right now!

ps. I checked with 'doctor google' and "a reduction in body mass index (BMI) of 5% is associated with a 25% relative reduction in liver fat as measured by magnetic resonance imaging (MRI)" So getting my BMI down from 38 to 34 (about a 10% decrease) during the 'transformation challenge' (if I reach my goal of 105 kg by mid-May) might help cut my liver fat by up to 50%. Of course getting down to my ideal BMI of about 24 by the end of this year will have even greater health benefits (hopefully),

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Monday 11 March 2024

End of Week 4 of '90 day transformation challenge'

My progress so far:

         Body Recomposition       Averages (per day)

Week#    Wt (kg)    Body Fat %    cals    g prot    % carbs    % fat    steps/day

1        -3.4       -1.1%         1,348     85      35%        39%      11,118

2        -1.0       -0.4%         1,378     92      39%        31%      12.126

3        -2.3       -0.8%         1,528    121      27%        26%      12,358

4        -0.1       -0.5%         2,223    122      41%        30%       6,459

Last week was a bit of a set back. After doing an intense workout session at the gym on the Sunday night, getting quite fatigued and sweating profusely during the 2.5 hr session, I had trouble sleeping and woke up around 5am. I felt quite unsteady walking to the bathroom and had a 'syncope' episode and collapsed. Fortunately I didn't hit my head on the bathtube or any sharp corners, but did bang my head a bit on the tiled floor. I had a bit of a headache the next day, and a sore neck for a couple of days. DW made an online booking to see a local GP the next day, and he did a quite check-up as I had been experiencing some vertigo at random times for the past couple of years.

He thinks the fainting was unrelated to the ongoing vertigo, and was probably just caused by dehydration and fatigue. He did order a full panel of blood tests, which all came back normal (including cholesterol and blood sugars), but my liver panel results were slightly above the normal range. So I'll have to get an ultrasound scan of my liver next week to check there is no issue with my liver. The vertigo is most likely just due to BPPV due to particles in the inner ear - most likely to RH ear as I had some damage due to an ear infection while on a scuba diving trip in my 30s, and have some hearing loss in that ear. If that is the cause simply doing the Epley maneuver might help address the issue.

Anyhow, as I wasn't feeling 100% last week I had a couple of 'refeed' days, got some extra sleep, and only had one light session at the gym during the week. I plan on getting back to my normal diet and walking routine this week, but will probably take things a bit easier during my gym sessions from now on.

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Sunday 10 March 2024

Accumulated Annual and Long Service Leave valuation - should I start 'cashing out' some unused leave?

As I have mentioned once or twice previously in monthly NW estimates, another 'asset' I have that I don't bother to include in my monthly NW estimates is my accumulated unused annual and long service leave entitlements. Any accrued amounts when I eventually resign/retire will be paid out using the current salary rate. I currently have balances of 1,076 hrs Annual Leave and 518 hrs of Long Service Leave. At my current hourly rate this is equivalent to roughly $91,572. One factor I was recently reminded about is that while annual leave and long service leave used during the normal course of employment are subject to the SGL (superannuation guarantee levy) which is currently 11.00% of salary, and will rise to 11.50% of salary from July 1 2024, and then the 'final' rate of 12.0% from 1 July 2025, any accumulated unused leave that is "paid out" upon resignation/retirement is NOT subject to SGL.

So, while I was initially planning to continue to just use public holidays and some portion (usually about two weeks) of my annual leave entitlement each year until retirement, and then retire at the start of a new FY (to minimize income tax on the final lump sum payment) and have all my unused leave "paid out", it might be better to instead take 3 months of long service leave at some point while still working, so I receive the additional 11-12% SGL. I will probably have to wait until I have a change of roles at work, as I currently do tasks that are required every week, and for whom no-one else has been trained to do in my absence. Apparently some of these tasks will be eliminated via automated processes during the next twelve months, at which time I may be assigned more of a project role involving Lean Six Sigma process improvement tasks. Which will probably allow more flexibility to take periods of annual of long service leave between 'projects'?

My company also has a policy to allow up to two weeks of accrued annual leave to be 'cashed out' each year, subject to approval by manager and HR. Due to my taxable income being significantly reduced due to negative gearing with my investment rental property, any 'cashed out leave' from 1 Jul 2024 (under the revamped 'stage 3' tax cuts) will be taxed at 30%, which would likely be the applicable tax rate if I instead accumulated more unused annual leave. While my pay rate is likely to increase roughly in line with CPI from now on, using the extra after tax payment to add to my mortgage offset account will effectively earn significantly more than the inflation rate. I also think that 'cashed out' annual leave will also be treated as normal salary and therefore benefit from receiving SGL contributions, adding another 11.5% or 12.0% in net financial benefit by 'cashing out' rather than being paid out upon retirement.

So it is probably a better financial decision to not accumulate any additional unused annual leave, but instead 'cash out' two weeks of annual leave each year, to maintain the current level of accumulated leave entitlement, and receive the extra SGL contributions into my superannuation savings.

I'll lodge an initial request to 'cash out' two weeks of annual leave, and if it is approved, confirm that there is a commensurate amount of extra SGL contributed into my company superannuation account that month.

** update: the annual leave 'cashout' was processed last week and the payslip confirmed that SGL was paid on the cashed out leave payment. So I'll continue to 'cash out' as much leave as possible each year from now on.

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Friday 8 March 2024

Investment Bond Performance Update - FEB 2024

My latest quarterly contribution into my investment bond has been processed per the recently changed asset allocation. The overall allocation is still different from my new settings, as I only instructed the new fund allocations to apply to new contributions and to the annual 'rebalance' (that should happen at the end of May. The performance since I started the investment bond in Jan 2021 had not been looking too impressive, but that was due to the overall market being fairly flat from Jan '22 to mid '23. But the recent market strength has improved the average ROI considerably -- it is now sitting at 7.41%pa, apparently after fees and taxes. The investments within the IB are taxed at a nominal rate of 30%, but due to franking credits and some 'tax effective' accounting magic (apparently IB can deduct capital losses against income, which probably relates to the fact that IB do not get the 50% CG discount that normally applies to 'long term' CG). The reporting from the IB isn't too impressive (just an 'additional investment statement' when a new deposit is processed, and an 'annual statement' at the end of each financial year. You can check the current balance and asset allocation online, but it doesn't show charts or performance data. So I've entered all the individual fund transactions into a free 'sharesight' account, and that lets me see the overall progress, portfolio value chart (monthly data points), and more detailed daily price charts for each individual fund that the IB portfolio holds.

It shouldn't be too much trouble keeping sharesight updated - there will only be four purchase transactions to enter when each quarterly deposit is processed, plus some transactions when each annual rebalance is performed.

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Thursday 7 March 2024

Trading Accounts update

I haven't done an update on how my 'trading' accounts have performed since the end of December, so here is a quick status update.

Superhero App account:

A$284.05 This is 19 units of BetaShares Global Robotics and Artificial Intelligence ETF RBTZ.AU. Currently total return is +18.93%.

US$4,144.94. This is split across 7 investments:

6.51767 units of GOOGL.US Avg cost $139.0917. Last price $131.40

5.9521 units of AMZN.US Avg cost $152.3059. Last price $173.51

2.54349 units of BRK.B.US Avg cost $356.4197. Last price $403.96

1.46934 units of QQQ.US Avg cost $408.3466. Last price $438.79

5.0124 units of CORN.US Avg cost $24.2299. Last price $19.48

14.75716 units of WEAT.US Avg cost $8.2299. Last price $5.06

US$0.27 sitting in cash.

3.17395 units of ITA.US Avg cost $106.2101. Last price $129.53

Currently total return is 6.29%

Moomoo trading account:

Basically this is just 'day trading' the VAS ETF.

Currently the open position is 57 units of VAS bought at a notional $96.44 (I had previously bought at $94.55 but the price hit my 'take-gain' price target and still appeared to be in an up trend, so I notionally 'closed' that position and recalculated new stop-loss ($95.48) and take-gain ($98.37) price targets for the current trade. Latest closing price was $97.04.

Overall my current account value is $5,679.94 having made an overall profit of $632.31 (+8.96%) since I started trading on 26 Jul 2023. I have had 11 trades that made a gain, and 11 trades that made a loss, which is the 50:50 win:loss ratio I was hoping for. My stop-loss and take-grain price targets are set at 2% profit or -1% loss. So, with a trading position of around $5K, this mean I *should* make $100 on a profitable trade and lose -$50 on  losing trade. With a 50:50 win:loss ratio that should result in an average overall profit of around $25 per completed trade.

In reality I initially had trouble keeping positions open that were profitable (selling before the price target) when I got nervous, and once kept a position open when it dropped through the stop-loss price target (as it *seemed* to be bouncing off the bottom at a price that seemed like a technical support level). I have finally got a bit better at keeping trades open until they either hit the stop-loss or take-gain price target, and then close out the losing trades and either closing out the winning trade (if the trend seems to be weakening) or keeping it open after booking a 'notional' sale and calculating new price targets. I also had a couple of losing trades exceed my stop-loss due to gapping at the open, when I wasn't able to close out the position at my price target.

Overall, so far the trading results have been:

The positive results in both accounts are likely due mostly to the overall 'bull market' trend, so it will be interesting to see how I fare during a bear market period. The superhero account is intended to just be a long term investment to see how these 'picks' perform over 5-10 years, but the moomoo trading account should see my positions close out when the market starts to drop, and I generally should not be opening new positions in a general down trend (but the might be a few 'dead cat bounce' periods that fool me into placing a losing trade). We'll see how well my 'trading rules' perform in reality.

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Monday 4 March 2024

Do me a favour?

For my PhD research I will be gathering some survey results. One of the channels I might use for some aspects of my research is a 'survey sharing' platform called 'SurveySwap'. You earn credits (to use to 'pay' for having your own survey done by suitable members) by completing the survey of other platform users.

Anyhow, if you have a survey you would like done by a random sample of respondents (or just want to help me get some credits that I can use to 'buy' survey responses for my PhD project), you can join up using the link below. If you join and fill in one survey, you will get 15 'credits' and so will I -- win-win ;)

You help other users by answering their surveys, and they will answer yours in return!

We both get 15 credits if you sign up with this link:

ps. My survey will probably 'cost' about 15 credits per response, which would cost about A$10 if I bought 'credits'. So any assistance in getting some free 'credits' will be of great help. Poor student and all that ;)

Image from

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End of Week 3 of '90 day transformation challenge'

My progress so far:

         Body Recomposition       Averages (per day)

Week#    Wt (kg)    Body Fat %    cals    g prot    % carbs    % fat    steps/day

1        -3.4       -1.1%         1,348     85      35%        39%      11,118

2        -1.0       -0.4%         1,378     92      39%        31%      12.126

3        -2.3       -0.8%         1,528    121      27%        26%      12,358

So after the usual rapid weight loss in the first week due to water loss with lower food bulk, the progress in week 2 was rather modest (and disappointing) given the extra exercise activity and caloric deficit. But in the third week my progress was more rapid with considerable weight reduction and commensurate reduction in body fat. I managed to increase my average daily protein intake to about what I think is required to support the amount of weight training being undertaken, without increasing total caloric intake too much. This shifted the macros balance so that a considerably lower percentage of the total calories is coming from carbs and fat.

I didn't quite hit 15K steps on any day last week, but managed to get in over 12,500 steps on three days. The overall average daily step count increased slightly, but I still need to focus on this a bit more. I did my three gym sessions and total weekly exercise volume increased from 39,175kg to 48,790kg.

I did a rough estimate in change in lean body mass using 5-day averages of weight and % body fat to calculate an estimate of 5-day average lean body mass. Plotted against the change in body weight it looks like I am doing a reasonable job so far at body recomposition (fat loss without lean mass loss). Hopefully I can get my weight down to around 100 kg by the end of the 13 week 'transformation challenge' while keeping my lean body mass around 74kg. This would mean a final body fat % of around 26%. Still a lot more than I ultimately would like to achieve (12%-15% body fat), but would be great progress over a 3-month period. I think the drop in estimated lean mass in the first week (from 75kg to about 74kg was likely due to reduction in retained water (which counts as 'lean mass'). Lean mass seems to have stabilized in weeks 2 and 3.

Body weight is on the LH scale and estimated lean mass is on the RH scale.

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Sunday 3 March 2024

Insurance cover

Moomin has been reflecting on his mortality and considering the need for some liquid cash to cover immediate financial needs 'if anything happens'. He has most of his financial assets invested productively, so not a huge amount sitting around in a cash 'emergency fund' or his mortgage offset account. So I suggested that is what life insurance (and possibly Trauma or Critical Illness, and/or Income Protection insurance is for).

Moomin posted that he has 180K death cover via his employer superannuation, so I decided to check what my current level of 'default' cover is (there is a set premium which provides 'units' of cover, that decrease in dollar terms as you get older). Currently my death cover is only $46,450 (with the $12.59 premium paid by my employer) and the TPD cover is for the same dollar amount, but the monthly premium paid by my employer is $29.88. Not a huge amount of cover, but enough to cover our basic household expenses for about one year.

I currently have 99 days of accumulated sick leave, 69 days of accumulated long service leave, and 143 days of unused annual leave) and I have some Income Protection Insurance via my Employer's superannuation fund (my employer subsidizers the admin fee and refunds the insurance premiums - currently $56.87 per month). The IP policy has a 90-day waiting period and two year benefit period - so it would currently provide income replacement to age 64.25 if I had a health crisis tomorrow. Between sick leave and LOI insurance my salary is pretty much guaranteed to continue to 'normal retirement age' in the event of 'critical illness' or total and permanent disability.

The unused annual and long service leave will get 'paid out' if I get retrenched or reach retirement, so I am happy to accumulate most of that leave (I usually only take a week off at Christmas time). As the pay out would be calculated using the current salary rate, the value is pretty much inflation adjusted. My NW estimate should probably include the current value of the unused vested leave - which is current worth about $88K.

Aside from life insurance, my super would get 'paid out' to my dependent beneficiary (DW) in the event of my death. Since DW and DS1 are the other trustees in our SMSF, getting my super paid out in the event of my death should be quite rapid -- they should just have to fill in a form and provide a copy of a death certificate to be able to sell off some of the SMSF investments and then transfer out cash from the SMSF bank account to DWs personal account (although for tax purposes DW might be better off getting a reversionary pension - I'll have to check into this when I turn 65 and move my SMSF account into pension phase. (ps. I'm not sure how DWs SMSF pension phase account is setup - whether or not there is a reversionary pension option).

Overall  feel my insurance cover is adequate, as in general I 'self insure' by having a reasonably high NW. Having several investments that can be sold and 'cashed out' within a few days also makes the need for insurance cover less important. The biggest financial inconvenience if I died unexpectedly would be that DW would have to sell off the investment rental apartment to clear the mortgage, or else use some of my superannuation death benefit to pay off the investment property mortgage. There won't be any urgency to make any decision, as there is enough money sitting in the offset account to cover about two years of mortgage payments. She might do that, move into the apartment and then sell our home and make a 'downsizer' contribution into her super? I won't be around to know or care, and she is quite capable of making her own financial decisions (even if they probably aren't the same as I would make).

ps. In terms of contemplating one's own mortality, it is probably more productive/useful to take action regarding diet and exercise than reviewing insurance coverage and how 'liquid' one's financial assets are ;) Insurance is just another 'risk mitigation' tool, and poor BMI and fitness is another 'risk' that should be addressed. Easier said than done though -- transferring money from one account to another is a lot quicker and easier than shifting 10kg of fat into lean mass!

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Friday 1 March 2024

Net Worth - FEB 2024

Chart updated to end of February in sidebar.

Stocks/cash increased $3,243 (+1.35%) to $243,959. (This isn't as much as you would expect, because I lump my various cash accounts into the 'stocks' category -- my 'liquid' cash in various accounts is about $184,452.31. Most of it is sitting in my mortgage offset account, so effectively 'earns' 6.54% by reducing the monthly interest charged on my investment property mortgage).

Retirement savings (SMSF etc) increased by $49,646 (2.96%) to $1,728,146 in line with the market trend and our asset allocation.

Est. valuation of our home (my half) increased by $776 (0.07%) to $1,139,053. The 'Other real estate' (my 'lake house' and the investment apartment) increased by $13,270 (0.63%) to $2,108,010.

The outstanding balance of the investment property mortgage remains at $999,993 during the 'interest only' period of the mortgage. Another 4 years remain of the 'interest only' period.

Other assets (my online depository bullion account at  Perth Mint, and the bullion value of my gold and silver proof coin collection) increased by $376 (1.00%) to $38,032.

Overall, NW increased by $67,313 (1.60%) to $4,265,207 during February.

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Tuesday 27 February 2024

End of Week 2 of '90 day transformation challenge'

I've been sticking to 'the plan' for my lifestyle change (less junk food and more exercise) since the 'Pro Physique 90-day transformation challenge' started on 12 Feb. My main goal was to cut out all junk food, reduce daily calories by 'intermittent fasting' (not having breakfast and having a 'brunch' around noon, then having dinner before 7pm) and try to get enough protein intake to try to increase muscle mass by doing weight training 3 days/week, despite being in overall caloric deficit. I've also aimed to get in at least 10,000 steps/day on the 'rest' days. I've found the easier way to accumulate sufficient steps each day was to simply get up and do a ten minute walk around my 'home office' every hour or so during the day.

The first week I only did two gym sessions -- I had been only going once a week (and skipping some weeks) for the past year, so I was quite exhausted at the end of the second session and had sore muscles for a couple of days. By the second week I was already getting adapted to the workouts, as was able do all three planned sessions without getting too 'wasted' (and I didn't have any muscle soreness the following day). Each session I've increased the weights slightly and added another exercise or a few more sets, so the total 'volume' (kg) per session has been rapidly increasing. I expect the rate of increase will slow dramatically over the next few weeks. The gym sessions involve 20 mins on the treadmill to warm up, then half of my resistance training, another 20 mins on the treadmill to let my muscles recover a bit, then a final group of weight training exercises, before finishing off with a final 20 mins on the treadmill. The total session lasts just under 2 hrs (I go just before 9pm when the gym is fairly empty) and consists of about 1 hr on the treadmill and about 45 minutes of weight machines.

Overall I'm fairly happy with my progress so far:

         Body Recomposition       Averages (per day)

Week#    Wt (kg)    Body Fat %    cals    g prot    % carbs    % fat    steps/day

1        -3.4       -1.1%         1,348     85      35%        39%      11,118

2        -1.0       -0.4%         1,378     92      39%        31%      12.126

The main changes I still want to make are to increase my protein intake to around 150g/day while not increasing caloric intake too much -- so I there will be more chicken breast and broccoli, and less fillet steak and cereal in my immediate future. And I want to try to get closer to 15,000 steps/day.

Based on my caloric deficit I should continue to lose around 0.8 kg/week, and by ensuring adequate protein intake and sufficient weight training I should be able to avoid losing any muscle mass (and might even gain a small amount). Perhaps losing 1kg/wk of fat and putting on about 0.2 kg/wk of lean mass? At the end of the 13 week 'challenge' the change in average body fat % should allow me to do a rough calculation of the change in lean body mass vs. overall weight change.

Anyhow, its 9pm and time to head off to the gym...

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Saturday 17 February 2024

Deferred Lifetime Annuity Annual CPI adjustment

I logged into my Deferred Annuity account to check if the annual cpi adjustment had been made. The purchase date (after a bit of a delay processing my initial online application) was 6 Jan 2023. The initial $10,000 purchase was for a lifetime annuity with the monthly payment start deferred until age 99 (I initially picked 100, but it turned out that 100 was maximum allowed age for the first payment date, so I had to start receiving payments prior to age 100). The annuity has no spouse benefit and no cash-out option, so it will be (is?) worthless (to me) if I die before 6 Feb 2062. But I still thought it was worth a gamble as my great-aunt lived to 104, my parents are both alive (in their 90s) and two of my grandparents lived to 94. And who knows what medical advances may extend healthy lifespan during the next 40 years? Life expectancy in Australia has been increasing by 3 months per year since the start of the 20th century, although maximal lifespan hasn't been increasing as much (generally maxmimum lifespan seems to be limited to around 110 or so except in very exceptional cases).

Anyhow, the initial monthly payment amount was $3,722.92 ($44,675.04 pa) and is supposed to be indexed annually to increase with the official CPI figure. The new monthly rate is now showing when I log into my online account - as $3,922.99 ($47,075.88 pa) which is in line with the September Quarter 2023 annual cpi rise (5.4%). I had expected it to increase by the December Quarter figure, which just came out as being 4.1%. So I am glad that the increase used the September Quarter figure (which was the latest one available as at the anniversary date).

One positive thing about having a deferred annuity that will provide enough to cover my basic retirement income needs from a fixed age (99) is that I *could* calculate my retirement savings to be fully consumed by that age ( the old "die with zero" retirement spending strategy), without any concern that I might 'outlive' my retirement funds. But it isn't really an issue for me, as I expect the initial minimum withdrawal rate of 4% from age 65 when I move my SMSF account balance into 'pension phase' will be more than enough to cover this (while I am still working I will either recontribute this 'pension' payment into my QSuper account (I want to build it up to $600K by age 70 so I can purchase a 'Lifetime Pension' from them - which should provide around $44,416 (with no spouse benefit option selected), and/or use it to pay off my investment property loan while I am still working. The QSuper Pension isn't indexed to inflation, but does have an annual adjustment based on how the underlying Balanced Investment Fund. The past 10 year average performance has been 7.5%, so this *should* mean an average annual increase of 2.5% over the past ten years. During that period inflation averaged about 2.7%, so the adjustment may be roughly in line with cpi during my retirement.

Basically the $600K Lifetime Pension purchase at age 70 should cover my minimum retirement income needs in perpetuity, so any payments I receive from age 99 onwards from the Deferred Annuity would simply be a bonus. I would have to live to at least 101 to get a decent ROI on the $10K Deferred Annuity 'investment', but the ROI would become very impressive if I lived as long as my great-Aunt ;)

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Thursday 15 February 2024

Another attempt at lifestyle change

One of my most frequently failed goals is to shed the extra weight I've had since high school, and to make regular exercise a part of my daily routine. I was slightly overweight in high school (78kg) and not very active (although I did do some soccer, judo and comp tennis, and did my bronze medallion and bronze cross lifesaving qualifications). I gained weight during university, and then slowly put on more weight over the years, despite being interested in healthy eating (CRON) for longevity and did some occasional activities (SCUBA diving, skiing, hiking etc.), but not part of a daily routine.

There have been several times when I've stuck to my 'healthy eating' plan for 6-12 months and gone regularly to the gym, but overall the weight slowly increased over the years of having a sedentary office job and not much interest in exercise for fun. (having extremely bad eczema getting 'hot and sweaty' was never a fun time for me). My last serious attempt to reach my 'ideal' weight (around 75 kg) and go regularly to the gym three times a week was well underway just before Covid began. Then the combination of occasional 'lock-downs', gym closures and working from home undid all the good work in fairly short order, and it has been a struggle to get back into the routine of sticking to a meal plan and doing regular walking and gym sessions.

So, this week I began a '90 day challenge' via the Pro Physique 'New Year New Start Transformation Challenge'. Paying $50 to join up and posting a (very embarassing) photo for 'day 1' was a good motivation to get started again -- and this time it will have to be for the rest of my life. No more snacks and lollies for me!

Anyhow, my basic 'plan' is:

<1,800 kcals/day -- and using 'intermittent fasting' to not eat after 7pm then delay 'breakfast' until noon. Having a 'brunch' instead of breakfast and lunch helps keep the total daily calories in check. I'm also aiming for >100g protein/day, and <15% fat, but need to replace some more carbs with protein to meet that target.

Do daily walking (around the house) of at least 10K steps/day. Doing a short stint every hour as a break from staring at the computer screen is good - but I just need to remember.

Go to the gym for some weight training 3x per week, and do '5BX' at home on the 'rest' days. I had been going once a week to the gym, so this week I'm adding in a second session, and will start three sessions a week from now on.

I'm expecting to be able to lose about 10kg during the 90 day 'challenge', and should be able to get down to my 'ideal weight' by the end of this year. Looking at my weight over the past 20+ years it is certainly 'doable', but the trick will be to stabilize once I hit my 'ideal weight'. I have a bad habit of going back to 'ad libitum' eating with a lot of junk food and lollies as soon as I stop focussing on tracking my food intake and exercise is minute detail.

ps. There is a correlation between my wt and nw, but correlation is NOT causation! Both are simply due to time/age.

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Wednesday 14 February 2024

Why the first $1X is the hardest - further musings

Many people (including myself) had written (or done youtube videos) about why 'the first $100K is the hardest', and Charlie Munger famously said that investing your first one hundred thousand dollars is the most difficult part of creating wealth. It all boils down to the effect of compound interest, which according to Albert Einstein: “Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”

But the effect of compound interest isn't restricted to the first $1 million -- it works exactly the same regardless of the order of magnitude (multiples of $10 million, multiples of $100 million, multiples of $1 billions etc.)

I did a quick excel illustration of this, using a fairly typical savings/investment rate of $10,000 pa and an after tax investment return of 7%pa. Of course achieving a 7% return is easier said than done -- using a tax efficient vehicle (eg. superannuation or 401K) is important for 90% of the population aspiring to their first $1 million, and explains why 'the rich' tend to relocate to a 'tax haven'. And to have any hope of getting 7% real returns you would have to be risk tolerant and accept considerable volatility (eg. invest in equities rather than bonds or cash).

The results show that while earnings and savings rate are important while you are accumulating multiples of $100K (or even more so if aiming for multiples of $1K or $10K), income becomes largely irrelevant once you are past your first $1 million (hence the real reason why 'the rich get richer' without seeming to have to do any personal exertion -- unless you are at the very top of a lucrative career (eg. movie star, sports no.1 or similar) once you have a few million invested, your personal income is irrelevant).

The number of years to move from your third million to fourth million is practically the same number of years needed to move from your third $100 million to fourth $100 million, or from your third billion to fourth billion...

It also shows why nearly everyone is on a lifelong struggle to aspire to become a 'millionaire' -- as we are nearly all starting from $0 at age 20ish, and can aim to save and invest 10%-30% of somewhere around average income during our working lives (of 40 or so years). And why anyone born with a 'silver spoon' (eg. a $1M trust fund or seed capital provided by a wealthy family) will either blow the lot or be a financial success even if they do nothing but leave their investment sitting in an index fund and earn enough to pay the bills.

Unfortunately most people either just earn enough to 'get by' (often relying on welfare to make ends meet) and don't save anything at all, and a large percentage of those that do earn more than average income just increase their spending ('lifestyle creep') rather than boost their savings and investment rate. This is why despite the 'magic' of compound interest, the median net worth of households in most countries has 'flat lined' over many decades, rather than increasing exponentially.

It doesn't bode well for 'closing the gap' between the 'top 1%' (or 10%, or 25%) and the 'average' person. Compulsion (such as the Australian Superannuation Guarantee Levy) is about the only way to 'force' most people to accumulate wealth during their working lives -- and most people prefer to have the 'choice' to spend their earnings as they see fit -- even if it results in perpetual financial struggle for most people.

Mathematics is a cruel mistress.

ps. One thing I do find odd is that the exponential growth of wealth seems to break down once you get to billionaire status --rather than continuing to grow exponentially, it seems to transition to a linear growth rate beyond a certain point. I can't imagine that lifestyle/expenses can continue to rise exponentially, so it seems more likely that beyond a certain point it gets more difficult to find suitable investment options (or perhaps the mega-rich just become ultra-conservative and invest mostly in cash and bonds once they have a billion or more?).

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Tuesday 13 February 2024

Annual salary review and bonus

Another year, another pay rise lower than inflation, not to mention in comparison to the rise in AWOTE (average wage). I received a 2.5% pay rise, same as last year. Considering inflation was 4.1% in 2023 and 6.6% in 2022 that means my salary has decreased by 5.3% in real terms during the past two years.

Fortunately at the stage of working life I am happy enough to just earn enough to pay the bills while SGL continues to slowly add to my retirement savings, and my investments can be left to (hopefully) slowly grow.

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Saturday 10 February 2024

Investment Bond Asset Allocation Factor Tilt Analysis

Since 'tilting' a vanilla index fund asset allocation to those factors that apparently add excess performance (small vs large market capitalization, values vs growth stocks, etc.) I decided to do a rough estimate of whether or not my current Investment Bond asset allocation has any 'tilt', and if so. is this in the direction(s) that should (theoretically) provide some excess return over the long run.

I looked up each of the four funds using Morningstar, and got the 'style' breakdown from the portfolio risk tab. Using the new weightings that will apply to my asset allocation for future contributions and the annual rebalancing (which will move my IB portfolio to the new asset allocation at the end of May), I calculated the overall 'small vs large' and 'value vs growth' metrics for my chosen asset allocation.

I then looked at the overall allocation to equities (about 90%) and split that into Australia (about 37% of the total allocation to equities) and Global ex-Au (about 63% of the total allocation to equities), to get a 'benchmark' based on suitable indices (the ASX All Ordinaries Index, and the MSCI International (ex Au) Index), and got the style breakdown for each of these indices from Morningstar and calculated the style of a suitable overall benchmark (index) using the 37:63 split.

The results show that my chosen asset allocation is about 50.2% value vs 48.8% growth, compared to the benchmark (index) allocation being about 48.1% value vs 51.9% growth. The figures are not very precise, as Morningstar breaks down the style in Value/Blend/Growth, so for factor comparison I simply assumed that the 'Blend' stocks are 50:50 Value:Growth on average.

The results also show that my IB asset allocation is about 82.4% large vs 16.6% small. compared to the benchmark (weighted index) allocation being about 88.0% large vs 12.0% small. Similar oversimplification of Large/Medium/Small into just Large/Small was done for the purpose of a rough analysis using the available (free) data.

Overall, my chosen Investment Bond asset allocation appears to be 'tilted' about 10% SML (small minus large) and about 5% more towards value.

Looking at the 5-year historic returns for the four funds in my Investment Bond (after fees and taxes), the overall 5-year weighted return for my chosen mix of funds is 8.49% (annual rebalancing might actually improve this slightly over time?).

In comparison the Weighted Benchmark 5-year return after fees was 10.74%. Allowing for the internal tax rate for the Investment Bond being around 25% (it is supposedly slightly less than the headline 30% tax rate, due to some tax optimization efforts - but it is hard to get exact data) this would mean an after fees and taxes 5-year historic return of about 8.06% for the relevant benchmark (index). So, in theory, over the past 5 years my chosen asset allocation has produced about 0.43%pa excess return due to the 'tilt' towards small and value.

An extra 0.4%pa return can have a major impact over the long term due to compounding. It isn't certain that having a 'tilt' towards factors that are believed to provide enhanced returns will pay off in the future -- value stocks have underperformed vs growth stocks over the past decade. But at least my chosen asset allocation is 'tilted' in the (theoretically) 'right' direction ;)

Having some internal gearing included in my asset allocation should also provide a small boost to long term returns (at the expense of having higher volatility). I've seen discussions of back-tested results that claim a portfolio using 5-factor 'tilr' achieved an average of 0.35% excess return over the very long term. It will be interesting to see if my Investment Bond performance over the next 10-20 years outperforms the weighted index (after adjusting for IB tax rates) by 0.3%-0.4% pa. We'll see.

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Monday 5 February 2024

Fiddling around with my Investment Bond Asset Allocation

I started my Generation Life Investment Bond ('LifeBuilder') investment at the end of 2020, with an initial deposit of only $1,000. The initial investment was processed on 6 Jan 2021, so that is the 'anniversary date' for calculating the '10 year rule' basis for any withdrawals being 'tax free' (although the internal tax rate is around 30%, so this isn't really much of a boon unless your marginal tax rate is over 30%). If you withdraw prior to year 8 the capital gain is taxable (but you will get a 30% tax credit, so it might be worth making an early withdrawal if you tax rate is less than 30%).

Anyhow, my initial investment was allocated equally between the Dimensional World 70/30 Fund and the Vanguard High Growth Portfolio Fund. I made four additional $500 contributions into the account during the first year, so the 'base' investment amount was $3,000. Therefor the maximum investment (without resetting the '10 year' counter) was 125%x$3K = $3,750 for the second year. I made one $500 investment and three lots of $1,080 in the second year to come in just under that limit.

In year three I made one contribution of $1,080 and three contributions of $1,198 to come in just under the max allowed limit. I also decided in June 2023 to switch the investment allocation to include some Perpetual Geared Australian Share Fund, as I wanted to reduce the overall allocation to cash and bonds, and include some internal gearing (although from the performance of the Geared Fund to the benchmark, the fees and interest on borrowed capital makes this a rather dubious proposition). At this point my Asset Allocation within the Investment Bond was 20% Geared Australian Fund, 40% DFA World 70/30 Fund, and 40% Vanguard High Growth Fund.

This year I have setup automatic quarterly contributions of $1,460.62 to exactly hit the maximum contribution target ($5,842.50) for year four. I also did a review of the overall historic performance for my current asset allocation over the past one, three and five years. My actual overall performance to date is currently 5.08% pa, but as I still in the early stages of making contributions, the performance isn't of great concern at this stage. The historic performance of my current asset allocation was 9.16% for the past 12 months, 6.16% for the past three years, and 7.21% for the past five years. All performance figures are after fees and taxes.

As I want to use the Investment Bond to slowly build up a portfolio to form the basis for a long term Family Trust, I am not too concerned about volatility, but more interested in the potential long term average performance. For that reason I decided to tweak the asset allocation once more (hopefully the last time!) and have now changed the allocation to 20% Perpetual Geared Australian Share Fund, 20% Dimensional World 70/30 Portfolio, 25% Vanguard High Growth Portfolio and 35% iShares Wholesale International Equity Index Fund.

The historic return data for this new asset allocation is 11.64% for the past year, 7.71% for past three years, and 8.49% for past five years. Historic performance is not a reliable indicator of future performance, and chasing high returns is always fraught with recency bias, but overall I am happy to have reduced the Cash allocation from 0.47% to 0.30%, the Australian and Global bond allocation from 15.66% to 8.33%, and Australian and Global property exposure from 0.95% to 0.47%. The overall gearing level has remained at 10.3%, and the allocation to Australian and Global Shares has shifted from 43.94% Australian/38.99% International to now be 33.73% Australian/57.17% International.

I'll probably let this allocation remain unchanged for the next 10 or 20 years and see how things are going when I'm retired and using the Investment Bond as a sink to store any excess retirement income. If the asset allocation can average 7% or more after fees and taxes I'll be delighted.

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Saturday 3 February 2024

HEAS for fun and profit

The Home Equity Access Scheme (HEAS) is a Federal Government program runs by Services Australia to provide older Australians who are Pension age (67) or older with voluntary access to a non-taxable loan from the government, secured against unencumbered Australian real estate (usually the family home). It was initially intended to provide Australian pensioners living off the Age Pension with a way to unlock some of the equity in their family home without having to sell the home and downsize, or else take out a commercial reverse mortgage (which often had relatively high costs and interest rates, and could result in someone owing more than their property was worth, if there was a housing market crash). The costs (stamp duty, conveyancing etc) of down-sizing, and the risks (and cost) or taking out a commercial reverse (home equity) loan had encouraged some pensioners to stay in their family home and fund their retirement with no other source of income than the Age Pension. Because the family home (principal residence) is not counted as a financial asset under the Age Pension assets test, there were some instances where an elderly couple would be struggling to managed on the Age Pension income while living in a multi-million dollar property, often with high council rates and other expenses.

Originally introduced in 1985 as the Pension Loan Scheme (PLS) to assist 'assets test' Age Pension recipients, it was expanded in 1997 to include 'income tested' age pensioners, then renamed as HEAS on 1 Jan 2022. It is available to those eligible for the Age Pension (ie. Australian residents aged 67 or more), but does not require qualification to receive any Age Pension (ie. the assets and income tests do not apply). The  maximum loan amount (MLA) is a fairly complex calculation equivalent to an age-based fraction of the value of the property, but essential means you can borrow up to 25% to 35% of the value of the property. The loan can either be taken as one (or two) lumps, and/or via a fortnightly regular loan amount.

Unlike a commercial reverse mortgage, the legal costs are modest (around $500) to establish the loan, the interest rate is very competitive (currently 3.95%pa, vs. a commercial reverse mortgage product currently charging 9.20% from one provider). There is also a 'no negative equity guarantee' on the government-backed HEAS loan -- once the MLA is reached interest will continue to accrue and compound, but even if there is a major drop in home prices, the loan is secured only against the property title. So, even if the loan balance was more than the value of the property when you die, the loan would be cleared entirely from the proceeds of the property sale.

When taking the HEAS loan via fortnightly regular payments, the maximum payment amount is 150% of the Age Pension payment. If you receive the full (or part) Age Pension, the HEAS payment can only 'top up' the total amount of Age Pension and HEAS payment each fortnight to a maximum of 150% of the Age Pension amount. If you choose to take one (or two) lump sum HEAS payments, you can only do one lump sum of one year's worth of 150% of Age Pension each time (ie. each lump sum is for a maximum of 1.5x the annual amount of Age Pension).

While it seems like quite a good scheme (for those wanting to access some of their home equity to provide retirement income), it hasn't been all that popular: by August 2022 it was being utilized by over 6,000 older Australians, compared to only 768 in 2019.

In our case, DW might utilize the HEAS to provide some additional retirement income once she turns 67. I estimate she could receive around $13,000pa from age 67-85, before her HEAS loan balance reached the MLA. This would supplement the SABP pension payments from her self-managed super balance.

I might also utilize the HEAS loan scheme, but I might use the fortnightly amounts to invest via dollar cost averaging (DCA). As the HEAS loan payments are not taxable income, I can start this even while still working. Provided the investment ROI is greater than 3.95% after tax, it should be a fairly low-risk instance of investing using 'other people's money (OPM).

It will be 5 years before DW and I can apply for the HEAS. And I would probably have to clear our home title (currently being used as collateral for the investment apartment mortgage) before we can apply. But this looks like a useful service for self-funded retirees such as ourselves. Of course there is the usual legislative risk that the government could suddenly change (or cancel) the scheme at any time, so it may no longer be available by the time we could make use of it.

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Thursday 1 February 2024

Net Worth - JAN 2024

Chart updated to end of January in sidebar.

Stocks/cash increased $7,615 (+3.27%) to $240,716.

Retirement savings (SMSF etc) increased by $25,722 (1.56%) to $1,678,500 in line with the market trend and our asset allocation.

Est. valuation of our home (my half) decreased by -$1,296 (-0.11%) to $1,138,275. The 'Other real estate' (my 'lake house' and the investment apartment) increased by $1,795 (0.02%) to $2,094,740. So overall the real estate asset class had negligible impact to my NW during the past month.

The outstanding balance of the investment property mortgage remains at $999,993 during the 'interest only' period of the mortgage. Another 4 years remain of the 'interest only' period.

Other assets (my online depository bullion account at  Perth Mint, and the bullion value of my gold and silver proof coin collection) increased by $582 (1.57%) to $37,656.

Overall, NW increased by $34,418 (0.83%) to $4,197,894 during January.

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Friday 26 January 2024

Labor's proposed change to the legislated 'stage 3' income tax cuts

Having had two previous 'stages' of income tax reform legislation targeted mostly at low and middle income earners, the previously legislated 'stage 3' tax cuts were intended to finally provide some simplification of the rather complex range of 'tax brackets' used in Australia, and pushing the top tax bracket (45% income tax + 2% medicare levy, which, when you spend 'after tax' take-home pay on practically anything that isn't unprocessed food, will then have another 10% GST charged).

The 'stage 1' tax cuts were in response to the risk of a recession due to the Covid pandemic, and was a temporary tax offset targeted only at low and middle income earnings. Then 'stage 2' introduced a permanent tax offset of between $455 and $700 for low and middle income earners, cutting out for those earning more than $66Kpa.

The 'stage 3' tax cuts were intended to simplify the tax brackets by eliminating the 37% tax bracket and reducing the 32.5% to match the standard company tax rate of 30%. Instead of the 37% tax rate applying to income above $120Kpa, the new 30% rate would have applied up to $200Kpa. To a large extent this was simply bringing the tax brackets back in line with the multiples of average income that had applied before inflation and 'bracket creep' had steadily moved more and more people into the higher tax brackets.

However, although Labor made a 'pledge' to honour the 'stage 3' tax cuts if they won office at the last election, giving a tax cut to 'the rich' rather than the Labor support base was going to be politically appealing to a Labor government. Hence the last minute decision to 'adjust' the legislated 'stage 3' tax cuts less than 6 months before they were due to come into effect from 1 July 2024.

The 'adjustment' is actually quite politically savvy, as it provides a new round of significant tax cuts to a large group of low and middle income workers who are Labor's traditional support base, but still provides a tax cut to higher income earners -- so Labor can go with the catch phrase 'everyone gets a tax cut!'. The new 'stage 3' tax regime even comes at 'no cost' to the overall budget (compared to the original 'stage 3' plan), as it simply slashes the tax reduction that would have benefitted those earning over $150Kpa, and instead redistributes the tax saving to low and middle income workers.

Although I'm not in favour of governments breaking promises (especially ones that they had explicitly vowed to not break, in order to win an election), this change is actually not too bad. The worst aspect is that it will retain both the 30% tax rate and the 37% tax rate. One of the best results of the original 'stage 3' plan was that it would combine these tax brackets into one, and make the rate the same as the business tax rate.

MLC put out a nice graphic clearly showing who the 'winners' and 'losers' are going to be from this revision of the 'stage 3' tax reform:

Directing the tax cuts towards the lower income cohort will likely also provide a bigger economic boost, as it will provide a much larger relative boost to discretionary income at the lower income levels.

Personally I might even benefit from this revised tax cut by around $804pa, whereas I would have seen no benefit at all under the original plan, especially as my taxable income is considerably reduced by my negatively geared rental property investment.

In the long term it will also provide a boost to my retirement income - although the superannuation pension will be tax free, any significant income from investments or realized capital gains would have been taxable -- so a reduction in the tax rates applicable at lower levels of taxable income might be helpful.

The retention of the 37% tax bracket applying to taxable income above $135Kpa will also mean that my investment in an Investment Bond may be more tax effective in the long run that it otherwise would have been.

Even DS1, who recently gained a promotion and pay rise (to around $140Kpa), won't be adversely affected (in the short term) by this change. But a few more years of promotions and pay rises will see this impact him.

Basically the extra tax paid by someone earning $200Kpa will be used to fund the Labor tax cuts being handed out to five Labor voters on average wage.

Of course a successful professional can always either take their skills to an overseas job market where income tax levels are more reasonable. Or else use a business structure to ensure their personal taxable income stays within the 30% tax bracket and additional company income is taxed at the 30% company tax rate and used to invest in business property or grow the business. So a 'tax the rich' strategy can be counterproductive to long term economic development -- but most politicians never look beyond the next election cycle.

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