I've had an Amex card since I graduated from Uni in the early 80s and started my first full-time job. Back then my "everyday" credit card (a National Bank Bankcard) was only accepted by merchants in Australia and New Zealand, so the Amex card was a useful adjunct to travellers cheques when I went on a holiday abroad (it was also a bit of a yuppie status symbol, at least in my mind). However, these days my Visa card is accepted by more merchants than the Amex card when travelling overseas, and I only use my Amex Gold card to charge my $150 monthly health insurance premium. I plan to pay off the balance in full each month, but a couple of times I've mislaid the bill and been slugged with a $20 late payment fee. This month I not only hit with a $20 fee for forgetting last month's bill, but the annual fee has increased to $185! So, it's about time I made the effort to arrange for my insurance to be charged to my Visa card and finally got around to closing the Amex account. Anyhow, these days the "gold" card is pretty down-market and definitely not worth the cost.
Copyright Enough Wealth 2008
Saturday, 19 April 2008
Friday, 18 April 2008
A day of big spending
Ever since I bought a new Dell desktop PC last year my wife and son have taken over use of my older Toshiba laptop. It had gotten to the stage that they would complain when I had to take the laptop to work for a couple of days. I had been thinking of buying a new Dell laptop for a while - aside from having better performance than the older laptop it would also have built-in Wi-Fi which I think may come in handy when we're travelling around Europe on holiday in August. The theory being that it will be easy to find Wi-Fi hotspots to access the Internet, and safer to login to my investment accounts using my own laptop than making use of Internet cafes. Dell Australia had a basic laptop with Vista Home Basic on sale for $749 which I was thinking of buying, and today Emailcash had an offer to get a $200 discount on a slightly higher spec Dell laptop which normally sells for around $899. After adding a slight upgrade to the sound system, the laptop I finally bought today cost around $720 - still slightly cheaper than the lower spec machine I'd had my eye on. As with all computer purchases the trick to avoiding buyer remorse will be to now not browse through any computer sale catalogues for the next 12 months - otherwise I'm sure to see a higher performance laptop on sale for a lower price before I leave for my vacation!
By coincidence I also bought a 1 TB external HDD from Aldi for $300today. Although I've found USB drives very handy for moving files between my various home PCs and work, they don't quite have enough capacity to store everything I might want to access. And although I do back up my most important files onto DVD, I don't do it as often as I should, and don't have a very good filing system. Having a 1TB HDD that can connect to any of my PCs using the USB port will enable me to keep backups of all my files in one central location, and will also make it easy to take all my files with me when I go on holiday to my parent's farm a couple of times a year.
It's just as well I don't spend a grand on computer gear every day!
Yes, I did choose the purple colour for the laptop ;)
Copyright Enough Wealth 2007
By coincidence I also bought a 1 TB external HDD from Aldi for $300today. Although I've found USB drives very handy for moving files between my various home PCs and work, they don't quite have enough capacity to store everything I might want to access. And although I do back up my most important files onto DVD, I don't do it as often as I should, and don't have a very good filing system. Having a 1TB HDD that can connect to any of my PCs using the USB port will enable me to keep backups of all my files in one central location, and will also make it easy to take all my files with me when I go on holiday to my parent's farm a couple of times a year.
It's just as well I don't spend a grand on computer gear every day!
Yes, I did choose the purple colour for the laptop ;)
Copyright Enough Wealth 2007
Tuesday, 15 April 2008
Can I afford to retire?
Well, yes and no ;) I ran some numbers through Excel to see what situation I'd be in if I retired today, compared to "early" retirement when I turn 56, "normal" retirement at age 65, or "late" retirement at age 71. I made some fairly simplistic assumptions as follows:
start with my current net worth,
an assumed ROI of 8% (after tax - a large chunk of NW is tax-sheltered in SMSF or family home)
an assumed inflation rate of 3%
constant current salary and savings rate (not adjusted for inflation, so probably conservative) retirement income of 75% of my current pre-tax income
If I quit paid employment tomorrow, my investments (excluding my family home and minus a lump sum to pay off the home mortgage) would yield a net income of around $25,000pa (using a "sustainable" 4% pension rate), or $50,000 (using a withdrawal rate of 8%, which invokes longevity risk and would leave no estate for my heirs). Probably a good thing that I'm not planning on quitting tomorrow, and that I have adequate Death, TPD and loss of income insurance in place ;)
If I choose to "retire" (stopped all paid employment) at the relatively young age of 56 I should be able to consume my retirement savings at the rate of 75% of my current pre-tax salary (adjusted for inflation) indefinitely, and may have an estate of around $6m (in today's dollars) to leave the kids (and grand kids) by age 95. I'm probably being overly optimistic with the life expectancy assumption - although I had two grandparents live until 94, the average of all four grandparents was 82, which happens to be mid-way between my current age and the world's longest verified lifespan. Then again, my parents are both quite healthy in their mid-70's, and medical science is pushing out life span's in the developed world by around 2 years per decade at the moment, so it's not completely unfeasible.
If I "retire" at the standard age of 65 I should be able to consume my retirement savings at the rate of 75% of my current pre-tax salary (adjusted for inflation) indefinitely, and may have an estate of almost $10m (in today's dollars) to leave the kids (and grand kids) by age 95.
I was somewhat surprised to find that delaying retirement to 71 and consuming my retirement savings at the same rate of 75% of my current pre-tax salary (adjusted for inflation) indefinitely, would only increase the residual estate to around $11.5m (in today's dollars) by age 95. I think this is because my retirement at 65 would only require a pension rate slightly above 3% of my investible net worth, so delaying retirement beyond 65 wouldn't have a huge impact on my estate.
I haven't included any possible inheritances in my calculations, as I think my parents and other elderly relatives are quite entitled to spend all their money on themselves, and may wish to leave any bequests to charities rather than their relatives.
Copyright Enough Wealth 2008
start with my current net worth,
an assumed ROI of 8% (after tax - a large chunk of NW is tax-sheltered in SMSF or family home)
an assumed inflation rate of 3%
constant current salary and savings rate (not adjusted for inflation, so probably conservative) retirement income of 75% of my current pre-tax income
If I quit paid employment tomorrow, my investments (excluding my family home and minus a lump sum to pay off the home mortgage) would yield a net income of around $25,000pa (using a "sustainable" 4% pension rate), or $50,000 (using a withdrawal rate of 8%, which invokes longevity risk and would leave no estate for my heirs). Probably a good thing that I'm not planning on quitting tomorrow, and that I have adequate Death, TPD and loss of income insurance in place ;)
If I choose to "retire" (stopped all paid employment) at the relatively young age of 56 I should be able to consume my retirement savings at the rate of 75% of my current pre-tax salary (adjusted for inflation) indefinitely, and may have an estate of around $6m (in today's dollars) to leave the kids (and grand kids) by age 95. I'm probably being overly optimistic with the life expectancy assumption - although I had two grandparents live until 94, the average of all four grandparents was 82, which happens to be mid-way between my current age and the world's longest verified lifespan. Then again, my parents are both quite healthy in their mid-70's, and medical science is pushing out life span's in the developed world by around 2 years per decade at the moment, so it's not completely unfeasible.
If I "retire" at the standard age of 65 I should be able to consume my retirement savings at the rate of 75% of my current pre-tax salary (adjusted for inflation) indefinitely, and may have an estate of almost $10m (in today's dollars) to leave the kids (and grand kids) by age 95.
I was somewhat surprised to find that delaying retirement to 71 and consuming my retirement savings at the same rate of 75% of my current pre-tax salary (adjusted for inflation) indefinitely, would only increase the residual estate to around $11.5m (in today's dollars) by age 95. I think this is because my retirement at 65 would only require a pension rate slightly above 3% of my investible net worth, so delaying retirement beyond 65 wouldn't have a huge impact on my estate.
I haven't included any possible inheritances in my calculations, as I think my parents and other elderly relatives are quite entitled to spend all their money on themselves, and may wish to leave any bequests to charities rather than their relatives.
Copyright Enough Wealth 2008
Sunday, 13 April 2008
An Elite Credit Card with a difference
The select-credit-card.com website has an information centre that provides some useful information about the usual CC topics such as new credit products, credit repair post bankruptcy, credit bureaus and bad credit. However, it also has some more esoteric information that you might not find elsewhere. For example, this Elite credit cards page provides some information about the Sotheby's World MasterCard and the Sotheby's World Elite MasterCard, which are definitely not your "typical" credit card offering. Do you earn well into the six figures? Fancy buying expensive art works to decorate your penthouse, inviting your friends along to the best museums free of charge, take a helicopter tour or rent a mansion in Europe? Well, if so, this card may be just what you are looking for.
I can't imagine that many multi-millionaires shop around for their next credit card using the Internet, but perhaps their personal assistant or accountant will come across this website while surfing the 'net on company time. Anyhow, it's interesting to read about some of the products and services available to those living at the top end of the wealth distribution curve. I may not be in the position to justify paying $85 annual fee for this card (I also couldn't get one since I'm not a US resident), but I can imagine some people would like having the card in their wallet (it looks a bit more up-market than the usual MasterCard from AnyBank). However, the Elite version (available by invitation only) is really only suited to those for whom money is no object, and are happy to pay $395 a year for "personal" services such as:
I don't think I'll ever be rich enough to want such services, even when my assets (net worth?) exceed the US$2 million which is apparently required to get an "invitation" :)
Copyright Enough Wealth 2008
I can't imagine that many multi-millionaires shop around for their next credit card using the Internet, but perhaps their personal assistant or accountant will come across this website while surfing the 'net on company time. Anyhow, it's interesting to read about some of the products and services available to those living at the top end of the wealth distribution curve. I may not be in the position to justify paying $85 annual fee for this card (I also couldn't get one since I'm not a US resident), but I can imagine some people would like having the card in their wallet (it looks a bit more up-market than the usual MasterCard from AnyBank). However, the Elite version (available by invitation only) is really only suited to those for whom money is no object, and are happy to pay $395 a year for "personal" services such as:
- 24/7 concierge and travel consultation
- Complimentary Business Class companion international air tickets
- Upgrades from Economy to Business Class on international air travel
- Global airport lounge access
- Upgrades and amenities at 700+ top hotels, resorts, spas, lodges and villas
- Complimentary shore excursions on 400+ luxury cruises annually
I don't think I'll ever be rich enough to want such services, even when my assets (net worth?) exceed the US$2 million which is apparently required to get an "invitation" :)
Copyright Enough Wealth 2008
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