Much of investing performance comes down to patience and a long-term outlook. Overtrading will kill you with fees (but your broker will love you), and trying to time the market is almost guaranteed to reduce your performance. However, I still enjoy monitoring my net worth, and it lets me feel like I'm "doing something" when all my investments are in place and just need to be left alone.
I've just started recording my net worth info using www.networthiq.com. I already I track my networth daily using a spreadsheet (data from various online accounts daily). I used to use Quicken, which was great for budgeting and handling the calculations for Capital Gains Events (ie. share sales) as it handled individual lots very well. But since getting married and starting a family I didn't have the time to keep Quicken regularly updated, so I've had to manually do CGT calculations at tax time each year.
I've installed the 2006 version of Quicken (it was free with last month's Money magazine), and so far I'm keeping up to date. Entering 20 years of share transactions will be this years major project! I'm still working out how to record my property and mortgage info in Quicken, but getting it to only count half of these values in my networth report (I only want MY networth, and the property investments and mortgages are in joint names with my wife).
I also want to write some PERL scripts that will automatically login to all my online accounts and grab the relevant daily information and display in one place - this will save me logging into half a dozen accounts each day!
Anyway, although it's a bit redundant I'll update monthly data from Jan '03 to the present into NetWorthIQ over the next few weeks so it can be easily displayed for this blog. I'm not sure that it will be of any practical use to anyone, but in the Blogosphere I think having an 'Open Wallet' gives you cred. It's always nice to know where someone writing about investing is 'coming from'.
Sunday, 6 August 2006
Friday, 4 August 2006
For those with kids
Just thought I'd jot down some notes about what I've been doing regarding my son's finances. He's turned 6 and is already quite money-wise. He enjoys earning some money busking at the Art Gallery with his recorder, and used to do a local paper round [with a lot help from dad the taxi service/heavy lifter]. As all his basic living expenses are taken care of and $3 per week pocket money, he manages to save 100% of his earnings! At his age and net worth he'd definitely be classed as a PAW (nb. see the millionaire next door for a great read and to find out the difference between PAWs and UAWs)
There whole area of money and kids can be quite complex here in Oz - especially as there is such a low threshold for 'unearned income' (around $1400 pa) beyond which a massive marginal tax rate of around 66% applies!
A couple of good things that you might not be aware of
1. Gifts don't count, so little Johnny doesn't have to include pocket money, xmas money from Grandma etc. on his tax return (you HAVE applied for a tax file number of his behalf, haven't you?)
2. Beware of investing too much in stocks etc. on his behalf - if he gets more than $1400 in dividends etc. he'll pay a fortune in tax (it's to avoid you putting all your money in your kids names to minimise tax). Anyhow, these days superannuation is such a good deal that you'd be better socking spare money into your super than your kids investments. If he does invest in shares, select those that have a Bonus Share Plan (so they don't issue dividends) would be a good way to accumulate more shares without earning taxable income. There will be a larged capital gain when he eventually sells the shares though - the Bonus Shares have a zero cost base.
3. EARNED income is treated entirely differently to unearned income - normal adult tax rates apply, so, basically earning $5,000 a year on a paper round didn't make him liable for any tax. Also, any interest or dividends on EARNED income that has been invested is also taxed at the normal adult rates - so make sure you he has separate bank accounts, Chess share HIN etc. My son has one St George Happy Dragon account where he saves his pocket money etc., where the interest will be considered unearned income, and he also has a separate Online banking account which is ONLY used to receive his paper round wages by direct payment. Any interest on this account can be thus be included when calculated the earned income total for his tax return.
4. He has a so-called "child super" account used for retirement investing in his name. Superannuation is another way to invest that avoids any issues with high taxation - super is only taxed at 15%, even for kids. The Macquarie account he uses is invested in a 50/50 mix of International Equities and Geared Local Shares - which is quite risky (volatile) but should give high returns over his long,long investment horizon (54 years till retirement!).
5. He also has second PERSONAL RSA (retirement savings account) with AMP so he can make personal undeducted contributions into superannuation and be eligible for the annual government "co-contribution". For each annual personal undeducated superannuation contribution of $1000 he receives the $1500 as a government co-contribution! A pretty good immediate return of 150%!
There whole area of money and kids can be quite complex here in Oz - especially as there is such a low threshold for 'unearned income' (around $1400 pa) beyond which a massive marginal tax rate of around 66% applies!
A couple of good things that you might not be aware of
1. Gifts don't count, so little Johnny doesn't have to include pocket money, xmas money from Grandma etc. on his tax return (you HAVE applied for a tax file number of his behalf, haven't you?)
2. Beware of investing too much in stocks etc. on his behalf - if he gets more than $1400 in dividends etc. he'll pay a fortune in tax (it's to avoid you putting all your money in your kids names to minimise tax). Anyhow, these days superannuation is such a good deal that you'd be better socking spare money into your super than your kids investments. If he does invest in shares, select those that have a Bonus Share Plan (so they don't issue dividends) would be a good way to accumulate more shares without earning taxable income. There will be a larged capital gain when he eventually sells the shares though - the Bonus Shares have a zero cost base.
3. EARNED income is treated entirely differently to unearned income - normal adult tax rates apply, so, basically earning $5,000 a year on a paper round didn't make him liable for any tax. Also, any interest or dividends on EARNED income that has been invested is also taxed at the normal adult rates - so make sure you he has separate bank accounts, Chess share HIN etc. My son has one St George Happy Dragon account where he saves his pocket money etc., where the interest will be considered unearned income, and he also has a separate Online banking account which is ONLY used to receive his paper round wages by direct payment. Any interest on this account can be thus be included when calculated the earned income total for his tax return.
4. He has a so-called "child super" account used for retirement investing in his name. Superannuation is another way to invest that avoids any issues with high taxation - super is only taxed at 15%, even for kids. The Macquarie account he uses is invested in a 50/50 mix of International Equities and Geared Local Shares - which is quite risky (volatile) but should give high returns over his long,long investment horizon (54 years till retirement!).
5. He also has second PERSONAL RSA (retirement savings account) with AMP so he can make personal undeducted contributions into superannuation and be eligible for the annual government "co-contribution". For each annual personal undeducated superannuation contribution of $1000 he receives the $1500 as a government co-contribution! A pretty good immediate return of 150%!
What goes up...
Well, the Reserve Bank has done to expected and raised interest rates by 0.25%, and talk has now turned to anticipation of another increase in November.
Of course, no-one really knows what will happen - just before the previous rate rise the consensus opinion of the "experts" was that rise would be the last. Reading the commentary in the financial press is a bit like watching a herd of cattle stampeding this way and that.
In reality, interest rates are not particularly high, now just approaching the level they peaked at in the last rate tightening phase, and probably not likely to go much higher. With the US economy slowing and the Chinese economy overheating, it's quite possible that in another year we'll be fearful of a resources-bust lead recession!
Anyhow, with housing construction at very low level, vacancy rates dropping and prices levelling out in the eastern states, it's probably a good time to start looking around if you intend to buy a rental investment property before the next housing boom starts.
Personally I'm a bit over-weight in property, with a large home loan balance outstanding (variable rate) and a considerable outstanding mortgage remaining on an investment property (which is on a five year fixed rate interest only loan). But it's still interesting to look at how unit prices are tracking in the suburbs of Sydney - some recently completed units near Epping Station caught my eye. If the price is right these may be attractive once the new rail line through Nth Ryde is soon completed.
Of course, no-one really knows what will happen - just before the previous rate rise the consensus opinion of the "experts" was that rise would be the last. Reading the commentary in the financial press is a bit like watching a herd of cattle stampeding this way and that.
In reality, interest rates are not particularly high, now just approaching the level they peaked at in the last rate tightening phase, and probably not likely to go much higher. With the US economy slowing and the Chinese economy overheating, it's quite possible that in another year we'll be fearful of a resources-bust lead recession!
Anyhow, with housing construction at very low level, vacancy rates dropping and prices levelling out in the eastern states, it's probably a good time to start looking around if you intend to buy a rental investment property before the next housing boom starts.
Personally I'm a bit over-weight in property, with a large home loan balance outstanding (variable rate) and a considerable outstanding mortgage remaining on an investment property (which is on a five year fixed rate interest only loan). But it's still interesting to look at how unit prices are tracking in the suburbs of Sydney - some recently completed units near Epping Station caught my eye. If the price is right these may be attractive once the new rail line through Nth Ryde is soon completed.
Tuesday, 1 August 2006
Money for blogging?
While blogging about wealth creation, it's natural to ponder the possibility of making some revenue at the same time. When I joined blogger.com I was offered a sign-up to Google adsense. Theoretically, when lots and lots of people start reading this blog, some will click on the google ad links, and I'll get paid a pittance.
So far? In 12 days I recorded 30 page views, with a *huge* spike of 8 hits the day after I mentioned this blog in a post to mymoneyblog. However, there hasn't been a single click yet, and while google doesn't advertise the payment rate I expect it's in the order of cents per THOUSAND clicks, so I certainly won't be getting get rich that way ;)
However, there are lots of other methods that *could* earn revenue from a blog - see How to Make Money with Your Blog Site for some of them.
Over time, I may try some of the ideas from this blog and see if any of them work in practice!
Meantime, the most important thing will be to blog something that is interesting enough for you to come back regularly and read ;)
So far? In 12 days I recorded 30 page views, with a *huge* spike of 8 hits the day after I mentioned this blog in a post to mymoneyblog. However, there hasn't been a single click yet, and while google doesn't advertise the payment rate I expect it's in the order of cents per THOUSAND clicks, so I certainly won't be getting get rich that way ;)
However, there are lots of other methods that *could* earn revenue from a blog - see How to Make Money with Your Blog Site for some of them.
Over time, I may try some of the ideas from this blog and see if any of them work in practice!
Meantime, the most important thing will be to blog something that is interesting enough for you to come back regularly and read ;)
Subscribe to:
Posts (Atom)