I got an email from wealthcreator.com.au a few days ago announcing the launch of their "investment shop". The email included a $15 evoucher as a Christmas gift. So I checked out what was on "special" and found that the "The Bullseye Investment System, - Audio Tapes & WorkBook" was on clearance sale for $24.00 (RRP $240). After applying the discount this ended up costing me just $9.00 (there's free shipping on courseware, presumably because the profit margin is usually quite large on these products) - a 96.25% "saving".

The "Bullseye Investment System" course comes on 6 audio cassettes (my car doesn't have a CD player), so it will be good to listen to on the 1-hour drive to or from work. According to the marketing guff "The Bullseye System is designed to help eliminate poor investment choices, identify superior investment opportunities, maximize profit potential, minimize risk, and simplify portfolio monitoring."

My "Little Book that Beats the Market" Portfolio had a poor month, with several of the stocks dropping significantly. As my version of the "Little Book" strategy is to hold each stock for 18 months after purchase, then sell it and replace it with a new pick (unless its still in the short list), the monthly valuations won't really mean anything during the accumulation phase. Even once I start "rolling over" my holdings the annual returns won't show how well this strategy is performing - as it's meant to be a long term strategy. Hopefully after ten years I'll have some idea if it's achieving the target ROI of 15%. As this portfolio is being built entirely with borrowed funds, the ROI has to at least exceed the loan interest rate (around 8%) to be considered a "success" in the long run).

One reader has asked if this portfolio is hedged - the answer is "no" as I have no idea if the AUD will rise or fall vs. the USD over the long term (10+ years), and I'm not going to complicate things further by trying to guess the short term currency movements. Hedging without trying to actively "trade" currencies would just add another 1%+ pa to the costs of running this portfolio in the long term.

TRANSACTIONS THIS MONTH

BOUGHT: 300 shares in OMNIVISION TECHNOLOGIES [OVTI] on 13 Nov @ $16.47 - total cost USD$5,006.00 including $65 brokerage.

BOUGHT: 320 shares in EQIP SYSTEMS [EPIQ] on 11 Dec @ $15.65 - total cost USD$5,073.00 including $65 brokerage.

SOLD: No sale this month (portfolio is in accumulation phase - US$5,000 purchase each month for 18 months)

When selecting which stocks to buy I've been keeping clear of commodity (mining & oil) stocks as I think the "e" in their p/e rations may start declining within the next 18 months if commodity prices moderate as production increases meet demand.

PORTFOLIO PERFORMANCE:

I'm currently ahead by 6.86% (AUD$3,109.52) after deducting an additional $65 per stock holding for selling costs, but not allowing for loan interest expenses or dividends received.

Symbol 52-wk Range P/E Trade Shrs Trade Date Price Paid Commission Holdings Value Gain
HRB 19.80 - 25.75 24.95 23.55 200 28-Jun-06 24.16 130.00 $6,029.57 -286.18Down $286.18 Down 4.53%
MOT 18.66 - 26.30 12.35 20.71 265 24-Jul-06 18.98 130.00 $7,025.73 456.89Up $456.89 Up 6.96%
MSFT 21.46 - 30.23 24.13 30.19 200 21-Aug-06 24.64 130.00 $7,729.63 1,290.98Up $1,290.98 Up 20.05%
ASEI 36.03 - 93.86 26.89 65.81 100 18-Sep-06 49.51 130.00 $8,424.76 1,956.67Up $1,956.67 Up 30.25%
PWEI 18.15 - 38.16 4.32 34.75 150 13-Oct-06 33.29 130.00 $6,672.85 150.36Up $150.36 Up 2.31%
OVTI 13.45 - 34.49 11.09 14.49 300 13-Nov-06 16.47 130.00 $5,565.03 -890.42Down $890.44 Down 13.79%
EPIQ 14.31 - 23.40 8.52 17.02 320 11-Dec-06 15.65 130.00 $6,972.29 431.22Up $431.22 Up 6.59%
Total (AUD): - - - - - - - $48,419.86 3,109.52Up $3,109.50 Up 6.86%

nb. The average gain reported above is spurious as each stock has a different holding period, and the current prices have been automatically converted into AUD, while the buy/sell commissions I entered into Yahoo! portfolio haven't been converted. I'll start tracking ROI more accurately once I'm fully invested at the end of the first 18 months.

DW thinks I have a "gift" for spotting lost coins - whenever we're walking along the footpath and there's a coin lying on the ground, invariably I'm the one that spots the coin. Today I was throwing out some trash at the food court and spotted 25c change someone had left with their rubbish on the takeaway food tray. Another contribution to DS1's money box It got me wondering just how much loose change is discarded by mistake and ends up in the land fill every day.

I always love reading about a good scam - luckily I've never* been sucked in myself by one of these dodgy schemes, and the more of them you read about, the better you get at picking them. A good listing of some of the more common scams is here.

* Well, I did almost sent in some of my Paypal account details once in response to an phishing email - there are lots of emails purporting to be from Paypal that either request you to "confirm" your account details, "reactivate" your account, or pretend that your paypal account has paid some money to a company you've never heard of. In each case, they're just phishing for you account info. Unfortunately, these emails often look just like a real Paypal email, complete with the corrects fonts, content, layout, logos etc. and although you can often tell by the senders address, or the URL links to (such as http://paypal.dodgyco.com/paypal.htm) sometimes it's very hard to tell without some higher level internet snooping ability. These days I just ignore ALL emails that purport to be from paypal, which means I never get to read any newsletters or official notification emails. I really wish that email was NOT free - if there was a small charge (say 5c) to send an email, 99.9% of all spam and phishing emails would disappear as it wouldn't be profitable any more.

Well, today was my birthday. Overall it was an enjoyable day and fairly economical day. I had the day off work (my company gives everyone an extra day of "birthday leave" each year, which is very nice of them), and I spent the morning driving DS1 to an appointment at the Children's hospital for a check-up with his immunologist (he has food allergies and eczema). As the specialist consult and "skin-prick" allergy testing was all covered by medicare, this didn't cost me anything (Well, technically my 1.5% medicare tax levy paid for it). There will be some out of pocket expense for his latest medications, but not today

I had some bread rolls and turkey slices from the supermarket for lunch ($9.89) - but there's about half the turkey and bread rolls left over to take for lunch at work tomorrow, so it was fairly economical.

We then visited the Borders bookstore and browsed through a few books after lunch. My wife had a coffee and I ended up buying a $9.95 science book as another Christmas present for DS1, so this wasn't as cheap entertainment as it usually is. On the way home we dropped by my parents so they could say "happy birthday" and Mum gave me another birthday gift (a back-support car seat cover - at least it's useful). My parents had previously already given me a book, a 1oz silver coin (which I'd asked for) and an electronic knick-knack (a "joke master" - which I'll probably never use) for my birthday. DW gave me a wipe-off 2007 calendar as a token gift, which will also be of use.

Dinner was a pork fillet and some pumpkin, plus a couple more of the bread rolls from lunch. Next will be some free-to-air TV (Numb3rs and Survivor) before an early night (we have to leave early tomorrow for DS1's recorder concert rehearsal before school).

As my net worth has been bobbing *just* over the $1M mark this week, this is how a "millionaire" spends his birthday!

NCN did an interesting post that listed how much he had earned so far, and how much he could have saved up by now (if he'd saved 10% of his income every year) compared to what he's actually accumulated (starting a couple of years ago).

I thought I'd run through the same process myself, just for interest:

"How much money have I made during my lifetime."

Here are the details. I'm almost 45, and I've worked since I was about 14 (part-time during high-school doing a paper round, market gardening, storeman & packer and music tutor, and then during uni vacations working in a pencil factory). The breakdown:

Year Salary
1974 200
1975 300
1976 400
1977 500
1978 1000
1980 2000
1981 2000
1982 2000
1983 5000
1984 14000
1985 16000
1986 18000
1987 20000
1988 22000
1989 24440
1990 27926
1991 31985
1992 34695
1993 37678
1994 38509
1995 38924
1996 38924
1997 40481
1998 41695
1999 39047
2000 40286
2001 55714
2002 58093
2003 66261
2004 68249
2005 73602
2006 75810

These are rather rough estimates (but pretty close) for the early years. I got my first "real" job in 1984 working as an "engineering trainee" while finishing off my first degree.

So, how much money have I made, in salary, over the past 32 years? $935,719. Now, for some folks, that's not much money, and for others, it's a lot of money. Whatever you think about the amount you have to admit that it is a pretty decent chunk of change. To continue with NCN's method of analysis... Where would I be if I had SAVED 10 percent of my salary, at say 8 percent interest, per year. And how does this compare to where I'm actually at. Let's run the numbers:
Ten Percent End Of Year
20 21.60
30 55.73
40 103.39
50 165.66
100 286.91
200 525.86
200 783.93
200 1,062.65
500 1,687.66
1,400 3,334.67
1,600 5,329.44
1,800 7,699.80
2,000 10,475.78
2,200 13,689.85
2,444 17,424.55
2,793 21,834.53
3,199 27,035.67
3,470 32,945.58
3,768 39,650.45
3,851 46,981.46
3,892 54,943.77
3,892 63,543.06
4,048 72,998.46
4,170 83,341.39
3,905 94,225.78
4,029 106,114.73
5,571 120,621.02
5,809 136,544.75
6,626 154,624.51
6,825 174,365.37
7,360 196,263.61
7,581 220,152.18
At the end of the 32 year period, I would have had 220,152.18 in my retirement account. Not bad. Instead, I have about 304K, as I've been putting in more than 10% and have averaged more than 8% by investing in the "high growth" funds available in my retirement account. Now, for the sobering reality. Ready? If I NEVER put another dollar into retirement, but left that 304K to grow at 8 percent, how much money would I have in, say, 20 years when I'm ready to retire?

Over $1,026,000.

Yep, that's right. I've saved around 10 per cent of my income while working, and in another 20 years I should have over $1,000,000 dollars in my retirement account, without ever saving another cent.

Wow! Now, as you can see, I have "low-balled" my estimates. I assumed a VERY modest amount of savings, and a very, very modest rate of return, which is why I actually have 38% more in my retirement account than this model predicts. If I just stick with the conservative 8% return and don't contribute any more I STILL would have over 1 MILLION dollars in my retirement account. This shows how important time is.

In reality, I'm now saving around 20% of my salary into my retirement account and will continue to do so. Assuming I earn to same amount for the next 5 years and then take a pay cut when I take up a high school science teaching job, I'll end up with $1,401,207 at 65. The recent Australian tax changes mean that my retirement account earnings are only taxed at 15% and the final benefit, taken as either a lump sum or a pension, will be tax free. So this should be enough for a comfortable retirement. In fact, based on my current spending and the fact that I won't have a mortgage when I retire, I'll probably have more income than I need and will be able to increase my savings rate when I'm "retired". I suppose at that time I'll have to consider myself a "professional" investor. After I've completed my teaching qualification and Master of IT I may enrol in the Master of Finance course my wife is currently doing so I can officially call myself a "pro"

My other assets (around $700K) will continue to be invested in real estate and stocks, even after I retire, so this should provide a sizable estate for my two sons and their heirs. I've already set up retirement accounts for each of them, so they should end up with a comfortable retirement even if they never contribute anything to their retirement accounts.

It's amazing what you can achieve on a "modest" salary via a regular savings plan and sensible investments over the long haul.

Here's the regular round up on how the various PF bloggers who post Net Worth each month are progressing.

Leave a comment if I've missed yours out!
Monthly Net Worth of PF Bloggers for NOV 2006:

Blogger Age Net Worth $ Change % Change
Accumulating Money 2x $43,141.79 $2,732.33 6.8%
Consumerism Commentary 30 $67,376.57 $3,536.90 5.5%
Enough Wealth 44 $991,692.00 $686.00 0.1%
Financial Freedom 30 no Nov data no Nov data N/A
Ima Saver 6x $1,376,481.00 N/A N/A
It's Just Money 32 $152,126.94 $1,611.45 1.1%
Lazy Man and Money 2x $181,501.19 N/A N/A
Make love, not debt 2x -$74,995.01 $1,816.84 2.4%
Making Our Way 37 $613,426.28 $4,961.04 0.8%
Mapgirl 32 $33,602.00 -$921.00 -2.7%
My Money Blog 28 $119,111.00 $5,127.00 4.5%
My Money Path 29 $102,480.00 $2,220.00 2.2%
My Open Wallet 37 no Nov data no Nov data N/A
New Age Personal Finance 31 $142,106.77 $8,922.50 6.7%
Savvy Saver 27 $217,449.00 $4,130.00 1.9%
nb. Some ages have been adjusted as follows:
exact age provided = listed as given
"20's" = listed as 2x
"early 20's" = listed as 22
"mid-late 20's" = listed as 27
and so on.

Finally a new tenant has been found for our investment property - the rent was lowered back to the previous rate ($400 per week), so this means that we haven't raised the rent for a couple of years now. It's more important to have a tenant than hold out for an extra $10 a week. The new tenants have only signed a 6 month lease, but will stay on thereafter on an ongoing basis (4 weeks notice is required to terminate after the lease period ends). I'm hopeful that they may stay for several years as they have no kids (yet) and seem happy enough with the property and location.

My wife seems to have lost a bit of interest in being a "landlord" now that the property market has been stagnant for a couple of years, and because having no tenants for over three months was stretching our finances a bit. She was also a bit shocked by the costs of plumbing repairs and getting the place recarpeted and new kitchen lino last year (even though I meet all the "miscellaneous" costs of this investment - we just split the loan repayments 50:50).

The "experts" in the local papers are predicting rents will increase 5%-10% in Sydney over the next 12 months due to more people renting due to high property prices and a drop off in the construction of new housing due to the lack of capital gains in the past couple of years. We only just took out a 5 year fixed rate loan for the investment property last year (the variable rate is already higher than the fixed rate we got, so this will probably work out well for this 5 year term), so we won't be looking to sell the property for at least 4 years. Hopefully by then rents will have picked up and interest rates dropped a bit which should rekindle interest in property investment and trigger some price appreciation. The long term rate of price appreciation in Sydney is around 6% pa, so hopefully after two years of flat or decreasing prices, we may see a gain of 20%-30% from present levels by the time we want to sell the property in '11 or thereabouts.

If we do sell the investment property I'll be happy to invest in property via listed property trusts in future.

The free credit report I'd requested on 31st October still hadn't arrived, so I rang up Baycorp to check. After confirming my details the CSR advised that it had been emailed on the 9th November (funny how to free report which can "take up to 10 days" to send, was emailed EXACTLY 10 days after I'd faxed in my request). As I hadn't received the report I asked the CSR to check what email address they had sent it to - sure enough, even though my email address had been printed clearly in block letters they had managed to data enter a typo and send the report to some other address (Hopefully that email address is not in use by anyone - the password security on the emailed report is simply to enter my DOB, which I'm sure is available online somewhere).

As it was their stuff up, the CSR promised to immediately despatch a new report, and it turned up in my email about 10 minutes later. The end result was that ended up getting a free copy of the "premium" report (normally $27). There's not much to the report - as I haven't made any late payments there was only my current and previous address, and a list of 12 credit enquiries made over the past 5 years or so. It all looked pretty much as expected. I certainly wouldn't bother paying for this report.

I've been a fan of electronic bill payments (either using my CC on the phone or internet, or using bPay to direct debit my bank account) since it became available. But I must admit that electronic bills and statements have never appealed to me. Using free email accounts from netscape or yahoo means that there's always a danger that your emailed statements may disappear - especially using netscape, where your emails get deleted if you don't access your account for 30 days. Also, having to print them out to file them could cost me time and money - whereas getting the paper ones mailed to me costs them money.

So, as most electronic statements (dividends, bank statements etc) would be emailed to you I've always said "no thanks" - up to now. However, I may accept the electronic statement offer I recently got from ING. Firstly, they will store your statements on their site (permanently according to their ad), so I can access it any time via the 'net, and if my electronic statements ever went missing they should retrieve my data for me at no cost (since it's stored on their server).

The second reason is that they currently have a competition for converting to electronic statements - with three $2000 prizes up for grabs.

The past month ended up flat with good gains in my stock portfolio and retirement account being offset by a drop in the valuations of my real estate assets:
* Average property prices decreased, dropping my property equity by $19,155 or 2.60%,
* My stock portfolio equity went up another $21,865 (7.25%) and my retirement account also increased slightly - by $335 to $301,981 (up 0.11%).

My Networth as at 30 Nov now totals $991,692 (AUD), an overall increase of just 0.07%.

I doubt that I will break through A$1,000,000 before the end of this year - property could go either up or down, and my US share funds are getting impacted by the decline in the USD vs. AUD.

personal finance, investment, wealth, stocks, real estate, saving

A group of charities has banded together to recommend people use a free online financial planning program called MoneyMinded that has helped 15,000 Australians gain control of their finances. A recent evaluation by RMIT University found that 93 per cent of those who used it had changed their spending habits, drawn up a budget or made other positive changes.The charities are urging people to complete the program's 45-minute planning and saving course that showed how to make a family money plan. Among other things the program helps people differentiate "between items they need and items they want when shopping". Such education is desperately needed by low and middle income families - a recent survey of 400 Sydney families by Wesley Mission found almost one in four had never prepared a budget.