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Archive for November, 2007

New Blog Location

November 10th, 2007 at 07:49 am

I originally started using savingadvice to mirror my blogger site, as it offered 'categories', which wasn't available on the old blogger. However, it did have some drawbacks, mainly less ability to customise the blog template, and the fact that savingadvice gets revenue from google adsense ads using MY content.

The new version of blogger (came out late last year) supported categories, so the only reason I kept this blog going as a mirror site was because it appears that I have different readers here than I do at my main site enoughwealth.com. However, recently I became worried that having "duplicate" content on the two sites might be bad for my google pagerank, so I started only posting the first part of each post on savingadvice.com, with a link to the the full post on enoughwealth.com

Ever since doing that, the new posts have been getting deleted shortly after I've published them! I feel that this is a bit much, especially as there doesn't seem to be any stated policy against this, and I haven't been sent any notification that this is happening, or why.

So, I've decided to only blog on my main site from now on. I invite you to continue reading EnoughWealth at http://enoughwealth.com

Regards

ps. We'll see if this post survives, or gets purged by the mysterious SavingAdvice content police.

Make Hay While the Sun Shines

November 4th, 2007 at 03:12 am

Besieged by the non-stop promotion of the consumer life-style everywhere we look and everywhere we go, many people are struggling to cope with consumer debt and the pressure to live a lifestyle that is, to be honest, beyond the means of their available income. However, if you look back at how our grandparents are earlier generations lived, we are currently living in a "golden age". To quote an article in the SMH:

"A couple of decades ago, the language of prosperity was almost like a foreign language ... Now, phrases like full employment, stock market highs and the commodities boom roll off the tongue.

Across the board, jobs are plentiful, wages are high and individual wealth continues to rise. There's no doubt this is a golden age of prosperity - possibly the best of economic times Australia has experienced.

And there's no doubt, either, that the economy is surging. The latest figures for the June quarter showed annual growth of 4.4 per cent, the highest for three years. Non-farm GDP growth, which removes the impact of the drought, was at its fastest in almost 13 years at 5.2 per cent."

At the same time, looking forward there are problems with "the limits to growth" that could quite possibly make living conditions much more difficult for our descendants. The apocalyptic prophesies of Malthus and, much more recently, the "club of Rome" turned out to be wrong (or at least premature). But the more recent concerns about climate change (whether or not they are caused by human activity) could mean we run into problems supplying food and water at reasonable cost to everyone. And the commodity boom has some chance of turning out to be a supercycle (or a "peak" in production of many commodities, not just oil) which could lead to ongoing real price increases in resources.

Therefore, there is a least some chance the our current economic situation is just about "as good as it gets". If so, we'd better make the most of this opportunity to build up of families wealth so we have some store of wealth put aside to tide us, or our kids and grandkids, over where the hard times come again. Make hay while the sun shines, for there may be some hard winters ahead for our descendants.

Copyright Enough Wealth 2007

Some great posts

November 4th, 2007 at 03:09 am

Trent, over at The Simple Dollar has done three great post in succession:
1. Dealing With Professional Burnout Without Quitting Your Job
2. Revisiting The Happiness Scale
3. A Financial (and Personal) Commitment For November

The only trouble is I don't think I can apply his good advice myself. For example, I'm currently less than enthused at work, and Trent's post offers some great tips for recapturing enthusiasm for your current job. However, the aspects of my job that I find least enjoyable happen to be the ones my boss wants me to focus on! And my company isn't so large that there are any other suitable positions I could transfer to for a change of scenery. In this situation Trent's advice is to update my resume and look for another job. But, realistically, I couldn't get the same or higher pay if I changed jobs. I'm also not feeling energetic enough to want to start over at a lower paid position and put in the hard yards required to get promotions and pay rises. I did that ten years ago when I started at my current company, when I was still single, and I can't see myself working late evenings and coming in to work on the weekend for unpaid overtime now that I have a wife and two small kids. So, I think I'll just soldier on in my current position, focus on taking an overseas holiday with the family next year, and plan on eventually changing jobs when I complete my GradDipEd qualification and a suitable teaching position becomes available close to home (or in the area I'd like to move to for my retirement).

The second post (about the happiness scale) is also very interesting. But, unlike Trent, the three times I can recall my happiness state getting close to "10" were all quite expensive and not easily replicated:
1. on my honeymoon,
2. on a scuba diving cruise in the coral sea
3. on a cross-country skiing/camping trip in the Snowy Mountains.
Focusing on small daily pleasures and keeping my happiness score above zero is more my style.

The third post regarding Trent's commitments for November is more inspiring. We can all benefit from making "to do" lists, and posting them on a blog helps turn a wish list into a commitment. My list of things to do before the end of the year includes the following:
1. Get my tax return completed and lodged. And get my GST transactions log up to date so future tax returns will be easier.
2. Measure and order a replacement pool fence. Install it.
3. Do some garden improvements. And landscape the pool area. Maybe even build a garden pond and put in some Koi.
4. Complete the remaining assessment items for my current GradDipEd and DFS(FP) enrollments.
5. Lose 10kg and exercise more - so far this year my weight loss goal is the one that has given me the most trouble.

Fortunately my financial goals tend to take care of themselves now that I have my savings and investment plans in place. I do spend a few minutes each morning updating a spreadsheet with my various account balances (I like graphs), but aside from the occasional bit of paperwork for a stock takeover or SMSF admin task my investments are running on autopilot.

Copyright Enough Wealth 2007

Net Worth Update October 2007

November 4th, 2007 at 03:07 am

My net worth as at 31 October decreased by -$3,590 (-0.31%) during the month to $1,158,905 (AUD), largely due to a decline in the estimated valuation of our real estate assets. The real estate valuations bounce around from month to month, affected by what mix of houses were sold during the month, so it's only the long-term trend that matters. The balance of my half of the mortgage increased by another -$929 to -$363,063 as we continue to redraw some of our advance payments to cover the interest payments while DW is working part-time (until DS2 starts school in a couple of years). My leveraged stock portfolios increased by a net $2,816 (0.68%) to $416,955, but would have been around $5,000 (1.2%) higher except that my large block of IPE shares went ex dividend on Wednesday. My retirement account increased by $2,785 (0.85%) to $332,322. This figure is also a bit understated (by around $4,000) due to a delay in the processing of my employer's contribution for the month of August.

Copyright Enough Wealth 2007

Tax Return Overdue

November 4th, 2007 at 03:05 am

I spent lunchtime at work sorting out what stocks had been sold during the last financial year, and it turned out that they'd only been a handful of them. Unfortunately two of them didn't have complete information in my capital gains transactions log (I only started back-filling all the missing data earlier this year). This meant that I had to wade through the paperwork files for my past seven returns this evening to find the information relating to DRPs over that period.

When I checked with my dad this evening he told me that his accountant hadn't been able to complete the tax return for the farm partnership, so I'll probably have to use an estimate when I lodge my return, and then lodge a ammendment request later on when the correct figure is known. This is a nuisance as my taxable income also has to be reported on DW's tax return as it affects the calculation of any family tax benefit she may be entitled to.

I didn't get my tax return completed this evening. I still have to work our the capital gain made on one US stock holding (in my "Little Book that Beats the Market" portfolio). And I also haven't pulled together all the income and expenses data for my sole trader business (it started out as a website design business but these days most revenue comes from this blog ie. not much). Which reminds me - once I've finished my tax return I also have to lodge the annual BAS statement for my "business". I'm having a day off work on Friday, so I'm hopeful that I'll be able to get everything finished off that day. If I'm really lucky dad's accountant might have the partnership tax figure ready by then. I'll probably have to pay a $110 fine for lodging a late tax return, but there won't be any penalty interest as I expect to be due a small refund (due to our rental property being vacant for a few months last Christmas time). Hopefully there won't also be a fine for DW's late return or my overdue BAS statement...

Copyright Enough Wealth 2007

Strike While the Iron is Cold

November 1st, 2007 at 08:28 pm

Back on the 12th of August I posted my thought that it might be a good time to buy some stocks for DS2. At that time the All Ords Index had dropped sharply to 5,965.2 - since then it has rebounded at today was at a new all time high of 6,808.2 (a gain of 14%). Goes to show that you never can tell which way the market will move in the future, but you can be 100% certain where it has been. Looking at a long term plot of the stock market accumulation index, buying when the market had dropped 15% below its recent long-term trend line would almost always turn out to be a good buying opportunity.



However, there are a few problems with this as an investment strategy:

1. When the market has rapidly dropped more than 10-15% you're always worried that it's the start of a bear market that could last several years. As in this case - I delayed buying any stocks for DS1, and could very well never get another opportunity to buy in at those prices.

2. You have to have some spare cash to invest when such opportunities arise - this generally would either mean that you've been sitting on a large cash allocation during a bull market (which would have cost you significant profits), or you'll need to borrow more to invest. And increasing your margin loans when the market has dropped is often very difficult, as it the time when you are most likely to be close to getting a margin call.

Looking at the chart the other thing that comes to mind is that I need to buy some more XAO put options when my current ones expire in December! Although the p/e of the Australian stock isn't out of line with historic averages, and company profits are continuing to grow, the chart does look remarkably similar to previous bubbles - and even just thinking "this time it's different" sends a shudder down my spine.

Copyright Enough Wealth 2007