This morning my short position of $50K AUD/USD spot at 0.8244 wasn't looking too bad - although the price had gone as high as 0.8308 a couple of times, in the morning it had dropped to around 0.8372 and from the 1 month plot it was looking like it might drop back further and erase my losses on this trade. Unfortunately while I was at work a lower than expected unemployment figure of 4.4% came out (general expectation had been steady at 4.5%) which meant the chances of another interest rate rise later in the year increased. I'm not sure exactly why this translated into an immediate 0.5c gain in the AUD, but it did - so in the afternoon at work I could see the AUD bobbing around 0.8315-0.8325, but I was willing to hang on for a bit longer. However, around 5pm the AUD started appeciating rapidly against the USD, so I rang home and got DW to close out my position at 0.8334, crystallising a US$450 loss!

Of course the AUD started dropping back slightly shortly after I'd bought back my $50K position. This evening it has been oscillating between 0.8310 and 0.8335, so I made a few $50K sells above 0.8322, and buys around 0.8312. In three trades I made back US$100, but I still have a lot of work to do to make back the $450 I lost by sticking with a bad position for the past three days.



I'm currently short AUD$100K at 0.8320, as the AUD is close to recent all time highs, and, having gone up over 1c in the past few days, it has a good chance of dipping back to below 0.8320 in the next few hours. If it doesn't, and starts going above 0.8330 again I'll have to close out at another loss, as I'm not game to leave my positions open while I'm asleep or at work after this recent fiasco.

I haven't posted about my forex trading for a couple of days because I'm sitting on an open short position that is in the red. Having made several trades which I closed out once my losses exceeded my planned stop-loss of $100, only to see the price move in my favour shortly afterwards, I decided that I wouldn't close out my position this time. The theory being that while the AUD/USD was bouncing up and down within a trading range, a position opened somewhere near the middle of the trading range should eventually become profitable if I held on long enough.

Of course, having sold $50,000 AUD at 0.8244, after a run-up from previous lows around 0.8200, the AUD then rose slightly and, despite dropping slowly over the next few hours didn't drop enough to make it worthwhile closing out my position. I then decided to go to bed and see what had happened by morning. Of course the worst case scenario resulted - with the AUD appreciating strongly while I was asleep. Sticking to my new "plan" to just ride out this setback until the AUD dropped back down, I've now been watching the AUD hover around the 0.8280-0.8300 region for a couple of days.



My email box is getting full of margin call and liquidation warnings from CMC Markets every time my cash balance drops below the required 1% margin. But I'm not too fussed if they liquidate my position as I'll only lose $1,000 maximum (my initial account balance). And this would only happen if the AUD goes above 0.8360, which would be close to a 17-year high.

Meanwhile, my real investments are all doing nicely - my "Little Book" Portfolio of US stocks is doing quite well with the annualised ROI getting above 20%, even after deducting the exhorbitant buying and selling costs. My Aussie stock portfolio is also doing very well, with the local market hitting new all time highs, which is also boosting my retirement account. And my real estate is also moving up again, now that the Sydney housing market is starting to recover.

BTW - my sitemeter stats for enoughwealth.com registered a huge spike today. All from a mention of one of my posts on The Simple Dollar"! I usually get around 50 visitors each day - so far I've already had 126 visitors in three hours!

The cheque for my $34,000 withdrawal of money from my retirement account arrived today. As it was an undeducted, unrestricted, non-preserved component of my super account balance there wasn't any tax deducted and I don't expect it to be subject to any income tax (although the Eligible Termination Payment statement that accompanied the cheque looks like its something that has to be attached to this year's tax return). I emailed the payroll office at work a few days ago to organise a salary sacrifice increase to $1600 per fortnight next financial year, so I'll be using the $34,000 as supplementary income for the next couple of years. For that reason I think I'll just leave it in the high interest online account with my Credit Union (earning 6.10%) and transfer $650 each fortnight into my main Credit Union account where my pay gets deposited.

A dividend payment notice arrived today from David Jones for a fully franked interim dividend of $180, with a $77.14 franking credit.

So far this financial year I've received the following dividends from my Australian share portfolios:
UnFranked Franked Franking Credit TOTAL
FY 06/07 $1,607.90 $10,408.32 $4,460.68 $16,476.90

When I started out in my first full-time job out of uni, I was saving around 25% of my gross salary, of about $10K pa in today's money. This obviously had a huge impact on how fast my net worth increased - in the second year my savings alone boosted my net worth by around 100%, and the relative impact of how much you save is massive when you first start out.

These days I save around 35% of my gross salary - as my salary has increased I've tended to spend roughly the same amount on "needs" and not increased my consumption of "wants", so I'm able to save a bigger slice of my salary. However, now that my net worth is around $1.15m this years "savings" will only add 2.6% to my net worth. It's still worth saving, as it helps boost my overall rate of increase in net worth from what can be achieved from my investment income and capital gains, but it's not hugely significant any more.

My contributions into my superannuation account are similar. The 9% employer contribution and my 13% salary sacrifice add around 4.5% to my retirement account balance - nice, but these days my asset mix and investment returns are getting to be much more significant that saving a few more percent of my salary.

I intend to boost my savings into my retirement account via salary sacrifice for the next couple of years, but that is in order to arrange my income and investments in the most tax efficient manner rather than a need to boost my savings rate in order to meet a retirement target.

In a few more years the impact of my savings will be negligible on my net worth, but I still intend to save the same amount. Why? Several reasons:
1. I intend to live of the same amount during retirement as I currently spend, so any increase in spending now will have a large impact on how much I need put aside to fund my retirement years.
2. I enjoy my current lifestyle and don't actually enjoy "wasting" money. I used to spend more on books, hobbies etc. but I now have more than enough "toys" to last the rest of my life.
3. One of my more nebulous goals is to leave create the basis of a "family fortune" - although it will take more than one generation to accumulate significant wealth based on modest living and sensible investing rather than a establishing family business empire.

So the answer for me is "never", but I suspect that this isn't the answer for most people.

The Australian Treasurer handed down the annual budget tonight, and, as expected in an election year, there are some generous handouts to "middle Australia" (ie. swinging voters). Those of personal interest are:
* A "one off" doubling of the government superannuation co-contribution for the 05/06 financial year. This means that DW and DS1 (who both made $1000 undeducted contributions into their superannuation accounts that year), will get a total of $3,000 in co-contribution, rather than the expected $1,500.
* Tax cuts at the "bottom end" starting from 1 July 2007. The threshold for the 30% rate has been increased from $28,000 to $30,000, and the low income earners tax rebate has increased from $600 to $750, which means anyone with taxable income less than $30K will pay 0% tax on the first $11,000 of income (the 15% tax rate normally applies above $8,000).

Having recently withdrawn $34,000 of unrestricted, undeducted, non-preserved money from my superannuation account (prior to the rule changes taking effect on 1 July), I'll now be able to salary sacrifice a large fraction of my salary for the next two years. This will
a) save tax on the sacrified amount (super contribution tax rate is 15% rather than the income tax rate of 30% which would otherwise apply)
b) reduce my taxable income down to around $30,000, so I'll be eligible for the $1,500 government superannuation co-contribution if I make a $1,000 undeducted super contribution (it may even end up being $3,000 if this year's "one off" increase ends up being repeated!)
c) substantially reduce our combined family taxable income so we are eligible for some Family Tax Benefit payments.

The others changes won't immediately affect us, but the childcare rebate changes should be good once DS2 starts preschool in a couple of years.

I'm still not sure if selling my Qantas shares last Friday for $5.39 was a great move, or a real dud. QAN has been in a trading halt all day today. The company which mounted the takeover (APA) has apparently not decided what they're going to do, or if their takeover bid really did fail to make the 50% control required for the bid to get a two week extension. Initially they announced on Friday night that they had failed to get 50% acceptances by the deadline. Then they convinced a US hedge fund to sell at least half their stake, pushing APA over the 50% mark, but after the deadline for acceptances had passed. Over the weekend the takeover review board didn't allow an exception to the deadline, so the bid appeared to have definitely failed. Then today there was talk that apparently the offer document included a clause stating that partial acceptances were not allowed, and would be deemed to be a full acceptance, so the takeover *might* have actually achieved the required 50% before the deadline - but no-one is sure, and applying this clause would probably end up in the courts.

Meanwhile, the Australian government has sent Qantas a "please explain" memo regarding a possible breach of the legislation that requires foreign ownership of Qantas to be less than 50%. Apparently with all the share trading in the past few days, much of it controlled by foreign hedge funds, this rule may have been broken. If so, Qantas has to go through all the transactions and reverse out enough done by foreign parties to get back to the 50% limit.

Hmmmm... no matter what does eventually happen to the takeover bid and the listed share price, I think I am better off having sold out after all.

After a call to the CMC Markets helpdesk I got the CFD trading software running under Vista using XP compatibility mode, and everything seems to be going OK. The wireless network router and USB adapter didn't arrived today, so I don't know how setting that up will work out. Meanwhile though, I'm having problems running both Firefox and Explorer. Firefox freexes up ("not responding") every time I try loading my blog site (although it loads perfectly well using the same version of firefox on my laptop running XP), and on a couple of occasions Explorer has tried to "connect" to the internet when it is launched, even though the internet is already available (as I have the CFD displaying live data in the background).

I'm not sure if the fix will end up being upgraded versions of Firefox and IE, or a fix to Vista. I've also had one "blue screen of death" event, even though only application (the CFD trading app) was running at the time. As I haven't changed anything from the initial configuration of Vista that came with the new PC from Dell, it looks like these problems may be with Vista itself.

Vista looks very pretty, but so far I'm not overwhelmed by the reliability.

After posting about the large bill the plumber had sent for some recent work ($850+), I received a number of comments prompting me to negotiate the amount with the plumber. Although I'm normally reticent about arguing about charges (I hate haggling), I thought I had nothing to loose in at least discussing my concern with the plumber. It took a while for the plumber to finally call back after I had left a message querying the bill, but, in the end, he called to say that he could see me point of view (although they had spent the amount of money charged in finally getting the work completed) and I should just send in a cheque for whatever amount I thought was reasonable. This was a good move on his part, as we have had work done on both our home and rental property so he wouldn't want to loose our business. Also, when left up to me I didn't want to be unreasonable about the bill, so I ended up just knocking $100 off the orginal invoice amount. So, thanks to all those who commented - you saved me $100!

Another easy $120 came in the form of gift vouchers I earned for scanning the barcodes of snack food items in my grocery shopping for a survey company during the past year or so. The scanning didn't really take any extra time or effort while packing away the shopping at home, so it was easy money. Unfortunately the survey company has now terminated the home scanning program.

Here's the latest round-up on how the various PF (Personal Finance) bloggers who post their Net Worth each month are progressing.

Monthly Net Worth of PF Bloggers for APR 2007:

Blogger Age Net Worth $ Change % Change

So far the new PC is going well. I got my cable modem working and registered the McAffey security suite that I'd bought with the system (15 month rego). I then had a go at installing the MarketMaker CFD trading software that we use for our forex trading. After downloading the installer .exe I tried running it - no go. However, having a background in chemical engineering as well as computers, I knew enough to try the "if it doesn't work give it a kick" approach - I simply ran the installer .exe a second time. Vista somehow recognised that the app needed to be run in "compatible" mode, and this time the installer ran OK. Then the fun began...

Unfortunately MarketMaker is written as a whole lot of java code, and every time you launch the app it first checks for updates, which it will install before allowing you to login (it also only loads additional modules as you use various features). Every time I tried running MarketMaker it simply stopped midway. After emailing CMC Markets help regarding any tricks getting their software to run under Vista, I browsed through their help FAQs and noticed the bit about having to configure any firewall to allow three programs to both send and receive data via the internet. (I remember this happened on my laptop - but in that case I was running Norton security, and in "learn" mode it automatically prompted me to flag these programs as "trusted" when they tried to transfer data via the internet). I managed to find where the relevant firewall settings were configured, but, MarketMaker still fails to run properly. I'll have to wait until Monday and see if I get a reply from the helpdesk - I may also have to phone them while I'm at the PC at home - hopefully they answer the helpdesk phone outside business hours!

Meanwhile the cable modem is back with the laptop. I'll shift it to the new PC again on Monday if the Belkin wireless router and USB adapater arrive on schedule during the day. If I get the wireless network working I can then leave the cable modem permanently connected to the desktop PC, and run MarketMaker on the laptop until I get it working under Vista.

Once I get the wireless network and MarketMaker app working I'll do a full system backup onto a DVD, so I can restore to this "basic" configuration. I usually dive straight in and start loading heaps of software onto a new PC, but this time I want to be more methodical about what I load on, and also take the time to sort out all my personal data files and copy them to the new PC in an organised structure.

The new PC/Vista will run dual screens, so I may hunt around for a very cheap, small LCD screen to add on - that way I can leave the forex trading window running on the second screen to keep an eye on our trades, while using the main screen for blogging etc.

We missed out on the big slide in the Aussie dollar yesterday (it was caused by the RBA announcing that inflation was lower than expected last quarter and had a good chance of staying under control for the next 12-18 months). DW was out of the house during the day and by the time she got home and started trading the dollar had already dropped to around USD$0.8190. I did a $50K trade when it spiked up to 0.8212, and for a while it was looking good as the AUD slide back down to 0.8202 - I was holding on hoping it would go back down to previous intraday lows of around 0.8175 or so. However, it slowly began to climb back up, and I eventually closed out at 0.8208, making just USD$20 on the trade.

The Qantas takeover offer by APA closed a little while ago (7pm AEST). The offer price was $5.45 cash per share, but I chose to sell my shares on market this morning for $5.39, even though this also meant having to pay $128.95 brokerage (1.1%). My reasoning is that there is a risk that the offer will lapse, as it requires 70% to succeed, and at least 50% by 7pm tonight in order to be able to extend the offer period a further 2 weeks. As of this morning APA reported having 35% of Qantas. They might make their target (they'll announce the final figure during this weekend), but, if they fail there's no guarantee that a higher offer would be forthcoming. If that happened the share price could easily drop back to under $4. As I was happy to take the offer price, I prefer a bird in the hand to a bird plus 12c that might get away...

Sell QAN QANTAS Airways 09/05/2007 2,175 $5.39 -$11,594.30

One of those pleasant days when everything worked out nicely
- I didn't spend anything today,
- The stock market was up 13 points, which meant my geared Australian Stock portfolio was up around $2,000,
- I did one forex trade, selling $50K AUD/USD spot at 0.8254 and closing out at 0.8243, making a $55 profit.*
- My US Stock Portfolio is up, currently having a calculated annualised return (XIRR) of 19.55%

Of course, not all days are like this, so it's good to savor them when they occur.

* A slight fly in the ointment was the fact that immediately after I closed my position the AUD dropped further to 0.8227 - if I'd held on for another few minutes I could have made an extra $85 profit, which would have moved me closed to an overall break-even position in my forex trading account. Then again, the last time I was too greedy when trading I ended up with no profit at all.

A quiet couple of days - DW has been hogging the laptop trading forex madly. After some big losses she clawed back almost to her previous high, before having another bad day today. She's still up a couple of hundred dollars overall, but has been up $700 on a couple of occasions. As my CFD trading account is currently in the red, I'm not in too much of a hurry to trade.

Meanwhile my new Dell PC arrived - plugging all the bits and pieces together went without a hitch, although I had one D'Oh! moment when I was wondering why the bluetooth wireless keyboard and mouse weren't working when I turned on the screen and PC. After rechecking the setup instructions I noticed that you had to turn on the mouse and keyboard, not just insert the batteries! I'm not sure how long the batteries last in wireless mouses and keyboards - especially if I don't bother to turn them off when not in use.

I tried plugging my Optusnet cable modem into the new PC, but the internet setup wizard couldn't find the service. I'll check what the settings are on my laptop configuration, but if I can't work it out I'll have to call the Optusnet service desk tomorrow after work.

The wireless network router and USB adapter kit hasn't arrived yet from Mitec. Hopefully it will come in the next couple of days (it was on back order and expected to take 5 days from last Friday). The payment via Paypal was initially confirmed, but then the "eCheque" transfer from my bank account into Paypla failed (Paypal reports it as "insufficient funds" but it's actually because my ING online account will accept online deposits from anywhere, but will only transfer funds out into the original bank account I used to setup the INGdirect account). I expect Mitec will send me an invoice if they ship the order. If the order status changes to cancelled, I'll try to call their service desk to arrange alternate payment. I would have done this today, but their web site has a notice that they often don't answer the phone, and recommend contacting them via email. This payment issue is too complex to fix via email tag, so I'll wait and see whether they invoice me or if I have to contact them to make payment.

I received a dividend cheque from Ludowici for $195.75 with a $83.89 franking credit. As I've put in a request to redraw the undeducted, unrestricted, non-preserved $34,000 from my superannuation account, I won't be selling off my stock portfolios for a couple of years. I already have some put contracts on the All Ords Index in place to protect against any major declines in the Australian stock market between now and December, so I'll review my situation towards the end of the year.

The Australian stock market was down the last couple of days, but today it rebounded over 1% to set yet another "all time high".

My Networth as at 30 April totalled $1,116,129 (AUD), an impressive overall increase of $45,141 (4.21%) for the month. My stock leveraged stock portfolios increased by a net 5.10% during April, and the estimated valuations for my share of our home and investment property increased 2.10% compared to last month, continuing the mild uptrend that began last month. The property gains were slightly offset by our mortgage loan balances increasing by a net $1,082 (0.30%) due to our monthly redraw of $3,500. We're continue redrawing some of our advance mortgage payments each month to help meet our mortgage repayments while DW is on maternity leave for another two months. Unlike last month's big drop in the valuation of my retirement account, this month my retirement account balance went back up $10,919 (3.37%).

So far this year my Net Worth has gone up by $83,346 (8.07%), which is 59.53% of my goal for the entire year.