I just got notification from QBE that they have more money than they know what to do with, so they're discontinuing the dividend reinvestment and dividend election (bonus share) plans.

Aside from having to send in my bank details (again!) so that dividends can be direct credited, I'm not too fussed. DRPs used to be a good deal in the days when they were issued at a discount to the prevailing share price, but they were always a pain to keep track of for CGT calculations (even more so under the old indexation method). These days they're mostly issued at the prevailing price, so you don't get much benefit apart from saving brokerage fees. A few companies round UP to the next whole share, which can be great value for small shareholders with only a couple of thousands shares in the company - getting 8 shares instead of 7.13 can boost the dividend yield substantially.

However, this will affect my sons holding in QBE shares. He was in the Bonus Share Plan, so he didn't get any dividend to declare on his tax return (but he would later pay CGT on the entire value of the BSP shares when sold, as they are deemed to have had zero cost basis). Now he'll be getting taxable dividends to include on his tax return. Luckily he will be under the income threshold where paying the exhorbitant 'child' tax rates cuts in, and he'll get the franking credits refunded, so it's not all bad news.

My first attempt to do a 0% balance transfer from my new Coles Source card was a flop - apparently a Citibank Redicredit account is not acceptable.

I'm a bit unhappy that the customer service dept. had sent out a letter on the 11th confirming that my transfer request had been processed, but then ever informed me that it had been reversed. (I only found out when I checked my account online this morning).

Anyhow, I tried again this morning - this time with a transfer to my NAB VISA credit card, which I use for paying all my rates, bills etc. (I get lots of Fly Buys. points that way, without any extra spending). As I put through around $2000 per month on this card and pay off the balance in full each month, a $6,000 transfer from the Source card will mean I can pay $2000 extra off my Citibank LOC account for the next three months. I used the LOC to fund some end of tax year deductible investments, so the interest is tax deductible, but it's still worth reducing the outstanding balance by using the 0% transfer money.

When the 0% offer period ends in Feb '07 I'll just pay it off with some spare funds I have sitting in an HSBC Serious Saver account.

We'll see if the balance transfer works properly this time...

If it does, Virgin Money is currently offering a 0% balance transfer for new customers, so I may have a go at that one next. As I've already got all my Margin Loan limits and home loans established, it doesn't matter if I have a few extra credit applications on file.

Had a nice, cheap evening out tonight. Vanguard Australia had arranged for Dr. Burton Malkiel to give a talk in Sydney. There was quite a good turnout, and the setting was great - in the Ballroom of the Westin Hotel in Sydney.

If you've read his famous book "A random walk down wall street" (and the Vanguard product brochures) there was nothing new in the one hour session. But the professor is a very entertaining speaker, and it gave my wife a quick overview of efficient market theory and how it suggests index funds are a good 'core' choice for your portfolio.

Afterwards I bought a new copy of the book, and had it signed by the Author. I also got to ask the Vanguard officials how come the US parent has low, low fees (around 0.25%) while the Australia version starts at 0.9% and only gets cheap (0.35%) for amounts above $100,000 that are invested in a single fund. With Dr. Malkiel predicting single digit returns are likely in the future, an extra 0.5% fee off your 9% total return will have a big impact over time. The suits from Vaguard said that the Australian Fund is smaller than the US one, but that they were "looking into" the fees. I won't be holding my breath. In the US "no load" funds can only charge a certain maximum for advertising before they can't call themselves "no load" - here there's no such rule, so I think the current Vaguard Australia customers are paying for the companies growth strategy.

All in all, a very economical and enjoyable night out.
ps.
Total costs (2 persons)
Lecture - free
Parking - $4 at Pyrmont (a healthy walk through Darling Harbour to the city)
Entrees and drinks before - free
Dinner afterwards - $17 (OK, it was actually 2x take-away)

total = $21.00!

Well, it had to happen. With the proliferation of online savings accounts all offering the same high interest rates, some of them are struggling and going under.

I'm not too fussed as I also have an ING direct online account which I tend to use more anyway. The Esanda one gave me $25 when I opened the account - the main reason I opened it. Probably a lot of other folks did the same thing.

When announcing the closure they informed me that their parent company (ANZ bank) has already opened an ANZ online account for me! But I'll NOT be taking up their kind offer to activate this account by taking in 100 pts of ID to an ANZ bank to open a regular bank savings account with them - they charge $5 per month in fees!

As the ANZ online account ONLY works with an ANZ bank account, it's not really competitive with ING, which lets you link to ANY existing bank or credit union account that you have.

Well, if you write a blog you obviously want to be read - so pfblogs.org seems a good idea.

I'm not so keen about the need to pay $2 a month if you want to be a "friend" and get a better ranking in the blog posts listings - apparently you used to just have to give them a mention and add a permanent link to become a "friend".

There is also a commercial (with ads) version pfblogs.com - I would have expected THAT one would be the one to charge to become a "friend"!

Well, it's that time of the year again. I did my wife's tax return last weekend (using eTax) and she got her refund deposited into her account on Friday! I've now started the annual grind of doing my taxes. Once you've done your own return a few times, it's fairly straight forward, just need to check on any relevant changes and spend the time to add up all dividends, deductible expenses etc. Well worth a couple of hours effort to save the cost of a tax preparer.

As a wage slave my return is fairly simple, but having some direct share investments can be a headache when you sell them and have to report for the Capital Gains Tax item - especially if you've acquired them in odd lots via DRPs and maybe sold some of your holding previously. I used to enter all trades and dividends into Quicken, and it was great for being able to select which lots of a share to deem as being sold. However, I haven't had time to keep Quicken updated since I married in '99, so I've had to manually track through all trades for shares I've sold to calculate capital gains info the last few tax returns.

Hopefully now that I've started using Quicken 2006 I'll be able to add in all the info for my current holdings over the next few months.

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'.

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%!

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.

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

Although, from a wealth accumulation viewpoint, you're generally better off spending your spare time on continuing education than wasting it trying to get small amounts of money for free, you sometimes need 'downtime' just vegging out in front of the TV, listening to music, or, in my case, getting a trickle of money for nothing. (It also helps subsidise the cost of the broadband connection).

Many US blogs (eg. mymoneyblog) have quite a bit of information about using a 0% APR credit card transfer offer to access to free money which is then invested to earn some interest when deposited into a savings account. In Australia things are a bit different - your credit card apps don't drop your credit rating (this isn't any), but they do appear on your credit report, and, more importantly, if you're honest in your application, there is a limit on the total line of credit you'll be able to get (based on your income and existing repayments). Also, in Australia, these interest free offers often only run for 6 months (compared to 1 year in the US) and you can only get the balance transfer from an existing credit card or other account - you can't simply get a check for the transfer amount as seems to be possible in the US.

For these reasons, I took a while to figure out a way that would make the 0% offers available in Australia work in a similar way to the US - and I think I've found a way. I'll outline the "PLAN" today, and we'll see how it actually works out...

Before, we start, let me remind everyone that I'm not giving any financial advice here (I'm not allowed!), just blogging what I'm doing myself. If you want to try it yourself, it's entirely your own choice, and you'll need to do your own investigations into the risks involved.

Now, my plan:
1. Open a new Coles Source Mastercard (currently with a bonus $20 giftcard offer) [http://www.source.com.au/MasterCard/ColesGiftCard/] or any similar card offering a 0% balance transfer offer (and no annual fees) - I got one with a reasonable credit limit without any problems.
2. In the specific case of a Coles Source MC - I bought $30 worth of groceries at Coles to earn a 4c/L fuel discount voucher AND qualify for the gift card offer.
3. I'll now pay off the purchase amount so I don't have a balance on the card (otherwise it would be charged interest while I have a balance transfer amount on the card)
4. When I send in the 100 point identify check form, I'll apply for a balance transfer to my RediCredit account with Citibank.
5. As I currently have a balance owing on the Citibank account (for some margin loan interest prepayment) I'll be saving 11.99% interest on the balance transfer for 6 months. If I didn't have any current debt on the Citibank account I could draw a cheque to myself and deposit it into an online savings account earning around 5.85%
6. Don't purchase anything using the Coles MC while the balance transfer amount is owing - otherwise you'll pay the normal interest charges until the balance transfer amount has been paid off in full.
7. Before the 6 months interest free period ends I'll pay off the balance transfer amount owing on the Coles MC - either with cash I've got sitting in a savings account, or I could pay off using my Redicredit account (back to square one).

The end result - we'll see. But, hopefully, I'll have saved 11.99% interest on the balance transfer amount for 5-6 months. Assuming a balance transfer of $6,000 this will be worth around $350 - not bad for around 20 minutes work.

Hi. I'm Ralph. I started my personal finance blog Enough Wealth back in July, and I'm now setting up this blog to serve as a mirror/backup site (with links to the original posts) and to make use of the extra features not available on blogspot - mainly some stats and CATEGORIES.

I post every day, and will add the latest post title with a link to the original post stored on Enough Wealth - you can either read my blog there, or, you may prefer to browse past posts here, where they are categorised.