Enoughwealth's Personal Finance Blog

I admit to being a big kid when it comes to taste in entertainment* - I enjoy TV shows like Dr Who, Hyperdrive, Torchwood, Lost, Stargate, Star Wars... in fact anything with little green men and some flashing blinking lights (which reminds me of Flying High 2). I also enjoy reading SF and fantasy novels, so I've enjoyed reading the Harry Potter series so far, but I'm too stingy to pay for a hardcover copy when they are first released. The latest book in the HP series went on sale this morning, so I did my usual trick of standing around the book section of the local department store and read the first 88 pages of Deathly Hallows while DW took DS1 to the clothing section to buy him some school socks. I'll probably take about a week to get through the whole book, reading it for half an hour in various book shops and department stores during lunch hour and on the weekend. I don't feel too guilty about not buying the books - I have bought the DVDs of the movies as they have gone ex-rental, as the whole family enjoys watching them several times. I'll probably buy a boxed set of the entire series in paperback in a couple of years - by which time DS1 will be old enough to enjoy reading them.

The different approaches to selling the Potter book taken by various booksellers is quite interesting too. The Dymocks book store always takes pre-orders, sells the new release at full RRP (around A$44) and ran out of stock by lunchtime (there's a note in the window saying that more stock will arrive next week). I'm amazed that anyone buys the book from them - the Big W department store has lots of copies in stock, as does the Myer department store, and both are selling the same book for under $30. I'm also amazed that Dymocks ran out of stock this morning - the same thing happened when the sixth HP novel was released. I can only imagine that head office controls how many copies they can get hold of.

* I also like medieval wind ensembles and illuminated manuscripts, so I can pretend to have posh tastes if needs be.

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Enough Wealth 2007

I took a day of annual leave today - in theory to have some quiet time while DS1 was at school to sort out my paperwork for my tax return. I didn't get as much done as I'd hoped - I had to call ps146 in the morning to do a "role play" assignment via telephone as part of the DFS(FP) course I'm doing, so I didn't get started on sorting and filing until after lunch. And then DW had to go to the school early in mid-afternoon to collect DS1 as he had a bit of a chest cold which had triggered an asthma attack. He had a mild temperature (~1 deg) when he got home, but he seems OK this evening. He's still a bit wheezy and having puffs of Ventolin every few hours, but hopefully going to bed early and a good night's sleep will seem him better by morning.

Anyhow, I did manage to add up all the interest payments I'd received last year. Aside from a couple of joint accounts (where I have to include half the interest on my tax return, but the accounts are actually used exclusively by DW these days) I had a total of nine interest bearing accounts in use last year. A couple of them are linked to my margin lending accounts, and some were online accounts used to earn interest on my 0% CC balance transfer arbitrage activities. All together I earned a total of $1,783.98 in interest last financial year. I'll probably end up paying 30% income tax on that interest. Although I had various tax deductions (superannuation salary sacrifice, margin loan and rental property interest) to reduce my taxable income, I also received some unplanned capital gains during the year due to takeover activity affecting my stock portfolio. I still estimate that my total taxable income will end up within the 30% tax rate band.

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Enough Wealth 2007

It seems a bit odd doing a book review about a book written in 1898, but

"Everybody's Guide to Money Matters: with a description of t... is actually a fun read. It's amazing how much things have stayed the same, such as cheque writing procedures, and yet the anachronistic references tickle my fancy. For example, the reference to reducing the government debt accumulated during the last great war seems familiar - until you realise that it's the Battle of Waterloo being referred to! I can recommend having a read through this book for fun. And, being a free ebook from the gutenberg project, the price is right

Copyright Enough Wealth 2007

Well, the first anniversary of EnoughWealth has arrived. I enjoy blogging about personal finance, and enough people read this blog to make it seem a worthwhile hobby, so the stats are largely irrelevant. Then again, I like to see readership trending upwards, and it's interesting to see which posts are most popular and which attract the most comments. I've combined the stats for the two sites that post my blog - they are mirrors of each other but seem to draw from different readership pools. The logs show very little referral from one site to the other, so the amount of double counting in the stats is negligible.
YTD:
# Posts: 474
# Visitors: 37,524
# Hits (Page views): 97,267
nb. This data doesn't include July and August 2006, and only partial data for
September 2006 as I didn't install sitemeter until late September 2006.


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Enough Wealth 2007

The answer of course is personal, as it depends on what type and how much cover you decide you need. For interest I added up my main insurance costs to see how much I'm paying:
Cover $ Policy Type Premium /mo
$400,000 Death or TPD $89.84
$62,340 pa Loss of Income' $59.81''
Private Hospital $151.45'''
Car CTP $27.58
$340,000 House & Contents $82.93
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TOTAL COST /month $411.61
Notes:
' 2 year waiting period applies, paid until age 65
'' Premium is tax deductible
''' After government premium discount has been applied

The recent tree fall that could easily have destroyed our rental property shows the value of insurance, but I wish it was possible to buy insurance "direct" from the insurer and get the commisions rebated - most insurance policy premiums pay a large chunk of the first years premium and a considerable trailing commision to the insurance broker who "sold" you the policy.

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Enough Wealth 2007

Just in case anyone is interested in what stocks are in my Australian Share Portfolios, here's the latest update. Don't take this as any sort of stock recommendation though - a lot of these stocks have been sitting in my portfolio for over a decade, and I'm just too lazy to go through the entire portfolio and try to work out which stocks are worth keeping and which should be ditched. Aside from laziness there are a few other reasons not to tidy up my portfolio:
* Selling stocks would realise capital gains, which would not only reduce the amount of capital invested, but would reduce the amount of family allowance DW gets this year by boosting our combined taxable income.
* The number of stocks in my portfolio means that I'm pretty much diversified out individual stock risk and am left with market risk. These days I tend to think that stock selection is too hard (even most professional fund managers don't beat the index most years) and when I want to add to my portfolio I just buy some more CDF shares (a low-cost index ETF). I do occasionally get bored and buy a particular stock, such as my recent dabble in IPE options, but the amount is trivial and is more to alleviate boredom that to try to boost my portfolio performance.

Current holdings:[font=courier]
Leveraged Equities Account (loan balance $158,711.04, value $314,560.04)
stock qty price mkt value margin
AAN 295 $15.17 $4,475.15 70%
AEO 1,405 $1.95 $2,739.75 65%
AGK 510 $16.00 $8,160.00 70%
AMP 735 $10.41 $7,651.35 75%
ANN 480 $12.48 $5,990.40 70%
ANZ 1,107 $29.47 $32,623.29 75%
BHP 748 $38.17 $28,551.16 75%
BSL 781 $11.55 $9,020.55 70%
CDF 6,943 $1.83 $12,705.69 70%
CHB 118 $51.08 $6,027.44 70%
DJS 2,000 $5.52 $11,040.00 70%
FGL 3,751 $6.31 $23,668.81 80%
LLC 481 $18.58 $8,936.98 75%
NAB 323 $40.08 $12,945.84 75%
QBE 983 $30.70 $30,178.10 75%
SGM 830 $28.57 $23,713.10 70%
SUN 963 $20.52 $19,760.76 75%
SYB 2,880 $4.12 $11,865.60 70%
TLS 5,000 $4.67 $23,350.00 80%
TLSCA 3,000 $3.19 $9,570.00 80%
VRL 1,500 $3.24 $4,860.00 60%
WDC 783 $19.69 $15,417.27 80%
WDCNB 68 $19.10 $1,298.80 80%

Comsec Account (loan balance $109,743.99, value $232,038.86)
stock qty price mkt value margin
AGK 240 $16.00 $3,840.00 70%
AAN 139 $15.20 $2,112.80 70%
APA 4,644 $4.28 $19,876.32 70%
ASX 200 $51.20 $10,240.00 70%
CBA 130 $55.95 $7,273.50 75%
CDF 43,997 $1.89 $83,154.33 70%
IPEO 59,000 $0.06 $3,540.00 0%
IPE 8,000 $1.06 $8,480.00 60%
IFL 1,300 $10.70 $13,910.00 60%
LDW 1,350 $8.30 $11,205.00 0%
NCM 300 $24.35 $7,305.00 60%
OST 2,000 $6.99 $13,980.00 70%
QBE 607 $30.73 $18,653.11 75%
RIO 60 $97.50 $5,850.00 75%
THG 4,000 $1.115 $4,460.00 50%
WBC 300 $26.40 $7,920.00 75%
WPL 220 $46.54 $10,238.80 75%
{/font]

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Enough Wealth 2007

DS1 has been enjoying going to Judo training on Monday nights for the past three weeks, so tonight we formally signed him up. Membership of the State Judo association cost $60pa, his Judo-gi (uniform) cost $65 and the club fee for training is $45 per month. I think the class is quite good value for money. There are usually only three kids in the Junior class (a bigger class runs on Wednesday night at the Olympic Centre, but it's too far to travel unless DS1 gets very serious about his training) so he gets lots of attention from the instructor. He's the smallest in the class, but he's very enthusiastic and isn't put off by his larger training partners. Aside from being great exercise, Judo training is good for learning discipline and focus, and can provide some self-defence benefits (as long as you don't kid yourself that it's much use against an armed threat!). One advantage of this sport for DS1 is that competition is based on weight grades, so he can aspire to do well if he trains hard and has ability, even though he's quite small for his age.

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Enough Wealth 2007

I stopped my posts about day trading Forex as I'd given up in disgust after losing $3,000 fairly rapidly. The last trade was especially annoying as I'd gone long the AUD at around 83.15c US and had been liquidated when the AUD dropped to below 82.70c on a sharp dip. It only traded a few points below the liquidation price before bouncing back up to above 83c, and since then has trended strongly upward to over 86c.

Since my original plan had been to buy the AUD vs USD when it was around 82c, but had lost my capital trying to day trade short runs up and down, it was disappointing to end up sitting on the sidelines with less than $250 in my trading account and not having enough margin to benefit from the strength of the AUD.

I finally decided to transfer another (final) $1000 into my trading account and take a small ($25,000) long position on the AUD. I figured that since I have around US$75,000 of stock in my "little book that beats the market" portfolio that is unhedged, I can't really loose by doing this. If the AUD does continue to rise against the USD the gains from my Forex trading will offset the currency losses from my US stock portfolio and vice versa. Although the effective interest rate on keeping a position open is around 7%pa the current run up in the AUD is so strong that the interest cost is negligible.

BTW - with the AUD around US$0.868 my net worth is breaking through one million in USD.

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Enough Wealth 2007

My theory about the IPE options was correct, the IPE share price went up another 3c to $1.08, so the IPEO price also went up around 3c. However my order for 70,000 IPEO at 2.7c was only partially filled (only 5,000 shares) and I doubt that the remainder of the order for 65,000 additional options will get filled at that price. By the close the highest bid was at 3c with the lowest sell bid at 7c. The last sale was at 6c, so I would have done really well if my order had been filled at the market open.

It was only after the market had opened up around 1% this morning that I realised I should have made the IPEO order 'at market' rather than 'at limit', but for such volatile penny stocks it's usually a bit too risky to place 'at market' orders.

Anyhow, since I already had 54,000 IPEO stock options with todays small addition I now have 59,000. Todays price rise gave me a quick $590 profit on just this small stock holding. The last NTA reported for the IPE shares was $1.23 after tax as at 13 July, so the stock price could easily continue upward now that some positive sentiment seems to have developed.

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Enough Wealth 2007

Last year I bought some shares in a private equity company

(IPE) because it was trading at a discount to it's float price of $1.00 when it was largely sitting on cash in the bank plus some general stock market investments. Since the general market had gone up since it's IPO it had a book value above $1.00, so it seemed like a sure thing. So far, so good, and I've made a bit of money with the stock now trading at around $1.05.

The odd thing is that I also bought some options on this stock, which entitle purchase of the stock at $1.00. The options expire in October, so they should still have some time value, and with the stock now trending up they should be worth at least the stock price - $1.00. However, IPEO is still trading well below the price I would expect, at around 2.5c/3.0c. I already have 54,000 of these options, but I think I'll buy another parcel, just in case the underlying stock keeps going up towards $1.10 or above, which should push to options to around 10c.

We'll see how it turns out.

Copyright Enough Wealth 2007

This month I selected Aspreva Pharmaceuticals (

ASPV) from the current MagicFormula listing to add to my "Little Book That Beats The Market" Portfolio of US Shares (100% geared). I placed an order to buy 200 ASPV @ market (around $18.70). My US Stock Portfolio current situation is listed in the sidebar. I won't have to transfer any funds into my account to settle this month's stock purchase as one of my previous stock picks was taken over, so I have over $5,000 USD cash sitting in my account at the moment.

My portfolio has been hovering around an annualised ROI (XIRR) of 20% in recent months, although my current net gain is only 8.35% as I'm still slowly building up my portfolio (towards a total of 18 stocks accumulated at the rate of one new stock purchase each month). My success criteria is to achieve a return greater than the cost of funds invested (borrowed as part of a "Portfolio loan" from St George bank, so the interest rate is the standard variable home loan rate, around 7.25%), and my long-term target is to achieve a ROI of 10-20% pa.

After I'm fully invested with a portfolio of 18 stocks this December (approx. US$90K) I'll start to sell off the oldest holding each month and replace it with a new pick from the current MagicFormula list. Rather than rolling over the exact amount realised from each sale into a new stock, I'll invest 1/18th of the current portfolio value, adding in some extra cash when needed. That way I'll be investing roughly equal dollar amounts each month.

Copyright [url=http://enoughwealth.com]Enough Wealth[url] 2007

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

I'm quite enjoying the Diploma of Financial Services (Financial Planning) coursework from ps146.com. There are 80 assessment questions to complete within 4 months, so far I've done the first three. The subject matter in the first course is quite general, but serves to fill in any gaps in your knowledge, especially the finicky details like exactly what is the difference between general and personal advice, and how that translates into what obligations are restrictions apply.

The folder of course notes for the third subject (Superannuation) only arrived today - apparently the delay was due to updating the material to include the "Simpler Super" rule changes that came into effect on 1 July. It looks as if that is the most detailed of the subjects, as there are a lot of specific conditions that impact on how superannuation is taxed and when contributions and withdrawals are allowed. Since DW and I are trustees for our own SMSF this will be a useful subject.

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Enough Wealth 2007

I got my annual salary review letter yesterday and it turned out I got a 3% increase. Nothing spectacular, but it's slightly more than the past 12 months inflation rate so I can't complain. DW returned to work from maternity leave a couple of weeks ago - just in time to also get the annual rise of 3%. She had originally planned to return to work at the end of July but her boss advised her to return to work a few weeks earlier so that she'd not miss out on the annual rise. As a one-off rise it's not that substantial, but it will boost all future year's pay by 3%.

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Enough Wealth 2007

My net worth as at 30 June dropped by $12,554 during the month to $1,149,990 (AUD), largely due to 12 months prepayment of $13,425 interest on one of my margin loan accounts. My leveraged stock portfolios decreased by a net -2.80% last month due to the overall weakness in the stock market. Whilst the estimated valuations for my share of our home and investment property increased slightly I decided to retain the previous month's valuation as I have indicative figures for the next month showing that this was just a temporary blip in average sale price for our suburb, and prices will have reverted to the previous level by next month. The overall property equity decreased slightly due to our mortgage loan balances increasing fractionally (by 0.03%) due to our monthly redraw of $2,000. The valuation of my retirement account also decreased slightly during June (-0.24%) as it is largely invested in domestic and international stock funds.

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Enough Wealth 2007

No real surprises here, the opinion of the readers of this blog appear to be in line with historical returns of the stock market over ten year periods. If anything, the responses show a slightly more optimistic view of likely returns over the next ten years than professional pundits consider likely.



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Enough Wealth 2007

Next Wednsday will be my first fortnightly pay of the new financial year, so I expect the annual salary letter was distributed at my workplace last week while I was on leave. So, tomorrow I should find out what sort of pay increase I've received. The recent national minimum wage case awarded a 1.7% rise and the average weekly wage was risen by around 3.5% in the past 12 months. Since I haven't had a change in job description in the past year I expect a rise of between 2.5% and 5%. Since even a 5% rise in salary would only have the same impact on my financial position as an extra 0.35% return on my investment portfolio, the impact of my wage rise will be more emotional than fiscal. If I get a minimal rise of 2.5% or less I'll probably feel a bit unappreciated, especially since I only got the standard across the board rise of around 3% last year. A larger rise would make me feel appreciated at work. That's one of the challenges faced by employers - any large wage rise has only a transient impact on employee morale and motivation, but has an ongoing impact on the cost of the payroll and the company's bottom line.

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Enough Wealth 2007

My subscription version of Quicken 2006 Personal Plus expires in a couple of days. I'd got it free with a copy of Money magazine last year but never really used it much. I used to enter all my financial transactions into Quicken back in the mid 90s, but I no longer had to time to enter everything regularly once I got married. I want to start recording my transactions in detail again, especially my stock transactions, so I'll need some software, but I'm not sure if I'll pay for the 2007 version of Quicken Personal Plus or try something else. I had a look at expensr.com but it doesn't seem to cater for stock transactions (at least not in the detail I'm used to with Quicken). I ordered the 90-day free trial CD of Quicken 2007 Personal Plus, so I'll try it out and see if it's worth buying or not.

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Enough Wealth 2007

Probably not, but the financial institutions would. Aside from the amounts I owe on our property mortgages and stock portfolio margin loans, I have the following unused credit limits available:
Credit Cards
#1 $9,250 @ 18.99%
#2 $23,000 @ 17.49%
#3 $8,000 @ 14.74%
#4 $45,000 @ 11.99%
#5 $17,000 @ 13.74%
#6 $27,000 @ 12.99%
#7 $20,000 @ 15.95%

Mortgage redraw available
$50,800 @ 7.37%

Portfolio Loan (like a HELOC)
$138,000 @ 7.47%

Stock Portfolio Margin Loan available cash amounts
#1 $85,985 @ 9.15%
#2 $34,859 @ 8.90%
#3 $60,170 @ 8.85%

Overall approved credit available:
$519,064 @ 9.97% average interest rate

It's interesting to see how much the standard rates on my various credit cards vary. Of course most of these cards aren't in use - they were only used for 0% balance transfer arbitrage and have no outstanding balance. The one CC I use for all day-to-day bill payments and shopping usually has a monthly balance of around $2,000-$3,000 which is paid off in full each month.

The margin loans limits are also just for making a cash withdrawal (ie. 0% margin value), if they were used to purchase stocks the available funds would be 2-3x the listed amounts.

I only use credit to purchase investments, and nothing too speculative, but it's easy to see how someone could get into a LOT of trouble if they were to suddenly make use of the credit that is on offer to make "lifestyle" purchases... Of course the lenders aren't too worried since most of this lending would be secured against real estate or company stock, with the maximum possible LVR getting to around 75%-80% if I maxed out my credit.

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Enough Wealth 2007

Medical expenses can consume a large chunk of ones cashflow, and also have tax implications. Firstly, medical insurance. In Australia there is universal public health coverage. A 1.5% medicare levy is charged based on your taxable income (there are some exemptions and reductions for special cases such as low income households) which contributes towards the cost of public health in Australia. There is also a medicare levy surcharge (MLS) of an additional 1% of taxable income is charged when your income is above the threshold and you don't have private hospital insurance. The threshold for an single taxpayer is $50,000 and varies for different family types. For example, DW and I have 2 children, so our MLS threshold is $101,500. In previous years when DW and I were both working fulltime we would have had to pay the surcharge if we didn't have private hospital insurance. So the monthly insurance premium of $144.20 was good value as it was close to what the surcharge would have cost anyhow. This year our combined taxable income will be a lot less (around $60,000) as DW is working part-time and also salary sacrificing around half of her wage into superannuation, and I am salary sacrificing around half of my wage as well. As the monthly insurance premium has increased to $151.45 we could save $1,817.40 by cancelling out insurance. We'd have to take up coverage again when DW resumes fulltime work. However, I don't think I'll cancel the insurance as it is very useful if you ever need "elective" surgery (otherwise you'll be on the public hospital waiting list, which can be very long).

The second tax aspect of medical expenses is the Net medical expenses tax offset. Net medical expenses are the medical expenses you have paid less any refunds you got, or could get, from Medicare or a private health fund. You can claim a tax offset of 20% – 20 cents in the dollar – of your net medical expenses over $1,500. There is no upper limit on the amount you can claim. For example, our total medical expenses on GP visits, specialist consultations and tests, pharmaceuticals, dental work and optical costs was $7,191 in the past 12 months. Our total refunds from medicare and our private hospital cover was $1,340 for this period, leaving us "out of pocket" to the tune of $5,851. This means I can claim a tax rebate of 20%x($5,851-$1,500) = $870.20, which is better than nothing. So it's important to keep all receipts for pharmacy, dental and optical expenses as medicare only has a record of the expenses that you claimed a refund for (mainly GP and specialist doctor and hospital costs).

Although it would be interesting to know the ratio of our health expenses to the benefit we've received from medicare and our private hospital insurance, it's not easy to calculate. For one thing the medicate levy only pays for part of the governments expenditure on public health. A larger amount comes out of consolidated revenue. Also, aside from the obvious medicare refunds that you have to apply for, there is an inbuilt subsidy for medicines via the PBS (Pharmaceutical Benefits Scheme) which isn't printed on pharmacy receipts.

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Enough Wealth 2007

I lodged our claim with the insurance company last night regarding the tree damage to our rental property. The CSR told me to call the Sydney office this morning to confirm that the assessor would inspect the damage today. When I called they had the claim recorded, but advised that a builder would be sent to inspect and quote first, and that it wouldn't happen today. The tennants have been good sports about the whole thing so far, but are complaining that it's a bit cold with a hole in the loungeroom roof just covered with a plastic sheet. If it takes too long to get the roof fixed (or we get heavy rain before the repairs are done) I suspect the tennants may just give notice and move elsewhere.

At 8am the repair man from the water company phoned to ask if I knew where the water meter was located. I had to admit that I had no idea - I knew where the tap was to turn off the main water supply, but hadn't noticed the meter (it's usually next to the control valve). The tennants later said that the broken water pipe (ripped up when the tree was uprooted) had been repaired by an emergency crew the night before, so I'm not sure why the water company was looking for the meter the next morning - perhaps to check how much water had been lost while the pipe was broken?

During the day we went into town to convert our home loan from principal and interest (P+I) to interest only for the next ten years. DW will be working part-time until DS2 starts school, so we need to reduce the home loan payments in the meantime. We also spent a hour and a half (!) at the family assistance office filling in paperwork to apply for family tax benefit payments. Hopefully we'll get a letter in a couple of week confirming the payment amount, but it's just as likely that we need to spend more time during business hours providing some extra paperwork that they forgot to request this time around.

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Enough Wealth 2007

I was enjoying a nice relaxing afternnon at home when the phone rang. The nextdoor neighbour of our rental property asked "Do you know that there's a big tree fallen on top of your house?" [our rental property]. It was news to me. So, we all jumped into the car and drove over to our property to inspect the damage. The tree was bigger than the house and had just missed landing on the house and flattening it completely. As it is, few large branches have gone through the roof, and the lounge room was full of debris.

Luckily the tennants weren't home at the time - they usually park their car where the trunk of the tree landed. As no-one was home at the time I'm a little disappointed that the tree didn't drop two metres further to the left, in which case it would have entirely demolished the house. The house is insured for aroung $385,000, which would have gone a long way towards building a nice, new house on the block. As it is, I guess that the house is probably repairable, so we'll just get the inconvenience of getting repairs done and end up with the same 50-year old house as before.

Apparently the tree fell over in a strong wind gust around 2pm this afternoon. All the heavy rain in the past month has made the ground very wet and spongy, so any strong winds are likely to make lots of tree uproot. When we got to the property at 4:30pm and saw the damage I called the local State Emergency Service (SES). The SES volunteers arrived within 15 minutes and will clear off the branches embedded in the roof and cover the gaping holes with a tarpaulin (to keep out any rain).

When we got back home at 5:30pm I called our insurance company to lodge a claim. The assessor should inspect the property tomorrow and let us know if the tenant can stay there while repairs are made, or has to move out, and the extent of the damage. Our insurance also covers loss of rent, but I've no idea what happens if the tennat decides to just give four weeks notice and move our (their 6 month lease expired last month).

I'm also not sure if the insurance will cover the cost of getting the main body of the tree removed, or just the actual house repairs. Best case we'll be out of pocket for the $100 excess. Worst case we'll also have to pay for getting the tree removed, landscaping the damaged rockery, lose some rent while the property is getting repaired, etc. etc. That's why, since no-one was home at the time, I'd have preferred the tree to land square on the house and demolish it completely.

My Alexa ranking is hovering between 800,000 and 900,000. Although there's probably some bias in the stats due to higher uptake of the Alexa Toolbar in some countries compared to others, it's still interesting to see that this site has more users from the US and Canada than Australia, and that as many users come from Coatia, Sweden and Vietnam as come from Australia! Anyhow, if you use IE for you browsing, and wish to download the Alexa toolbar, the link above will provide it. The main benefits of using the Alexa toolbar are:

* real-time information about the sites you visit.
* helps identify phisher and scammer sites
* Alexa's Related Links helps find related information

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Enough Wealth 2007

It's a pity that I already have several online savings accounts and mututal fund investments, because the new offering from rabobank looks very attractive. They offer an online savings account with no fees or minimum balance with an interest rate of 6.6%, and from this account you can invest in wholesale mutual funds for a low entry fee of only 0.75% (compared with up to 5% entry for retail funds going direct or via a planner, or 0% for a retail fund investment via a discount broker). They are offering 0% entry fee, but only until the end of July. But the 0.75% fee is still good value as it gives access to wholesale funds (which usually charge lower management fees than their retail fund equivalents) with a minimum investment of only $250.

I'd try out this account and fund investment option if I didn't already have more accounts than I know what to do with. They do offer the account for use with a DIY Superannuation account (SMSF), but I'll have to check carefully how their costs and range of available funds compares with accessing mutual fund investments via e*Trade (I already have an e*Trade account setup for use with our SMSF). One benefit of making out SMSF mutual fund investments via e*Trade is that eSuperFund (which administers our SMSF) has access to transaction data from our e*Trade account. If we invested for our SMSF via Raboplus we'd have to send copies of all the relevant financial info to eSuperFund each year.

I was also thinking about opening a Raboplus account for DS1 and/or DS2, but unfortunately you can't open a raboplus account if you're under 12, so the kids will have to make do with their St George bank accounts and Commonwealth Bank 'dollarmite' savings accounts. It's funny how some banks and Superannuation funds have no problem with opening accounts for a minor (with an adult having authority to operate the account), while others either don't handle accounts for minors at all, or insist on the account being opened in the name of the adult trustee(s).

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Enough Wealth 2007

Sydney prices for established homes in the more desireable suburbs have tended to increase by around 6% in the long term. After the boom in prices between 1998-2003 we've now had several years of flat prices. According to Australian Property Monitors there will be a 5% increase in property prices in the next 12 months. This agrees with the recent increases observed in average home sales prices in the two suburbs where we have our home and rental property. There have also been reports that the boom in Western Australian house prices over the past three years (driven by the commondity/mining boom) has come to an end, so I expect house prices in WA and NT to be flat or decrease in the next 12 months and house prices in Sydney to increase by more than 5% - perhaps as much as 10%. This will be good news for my net worth as DW and I have equal shares in around $1.4m of real estate with about $0.7m of mortgage debt. With a mix of variable and fixed rate loans, our overall mortgage interest rate is currently around 7.25%, so an increase in house prices of 10% would boost our home equity by 12.75%.

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Enough Wealth 2007

Three out of the four modules for the Diploma of Financial Services (Financial Planning) arrived by Australia Post parcel delivery today, which is pretty good service considering I only enrolled in the course online on Thursday. The modules look fairly interesting, and the assessment items seem fairly straight-forward. In the first few assessment items you only have to read through the material provided and regurgitate the material in your own words. You have to pass all the assessment items with a mark of "100%" (ie. get the answer correct), but if you stuff up the answer you get sent back some "feedback" on where you went wrong and can resubmit.

The one missing module is the one on Superannuation. I'm not sure if this parcel was just delayed and will arrive by post tomorrow, or if ps146.com is in the midst of revising the course due to the changes to superannuation regulations that apply from 1 July. I don't think that they revise and update the material too often, some of the "background reading" material is at least 18 months out of date. It can't be too long before it arrives as you are only allowed four months from date of enrollment to submit all the assessment items (although you can get a couple of months extension for an extra $150 fee).

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Enough Wealth 2007

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In past years I've made investments into agricultural schemes. Aside from the 100% tax deducibility of the inital investment, ongoing annual management fees, land rent and insurance premiums are tax deductible each year. Eventually I'll hopefully get a reasonable return on these investments in timber (hardwood for wood chips and teak for sawn logs) and sandlewood (for incense). Although this sort of investment provides income tax deferral rather than 'converting' income into capital gains, it is still worthwhile as you get to benefit from the returns generated from the investment of the deferred tax amounts, plus tax cuts in recent years have meant that my marginal tax rates will be lowered when the investments produce income than would have been the case in the years when the initial investments were made. In addition I'll be able to use this income to help cover living costs in future years, so I'll be able to salary sacrifice more of my salary into retirement savings than would otherwise have been the case.

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Enough Wealth 2007

DS1 is on school holiday for the next two weeks. I booked him in to a "bridge building" course which will be run next Monday and Tuesday afternoon at the NSW University by their GERRIC (Gifted Education Research Resource and Information Centre) department. The course only runs for a total of 6 hours, and costs over $100, but could be money well spent if it stimulates DS1 to do well at school. I'm not even sure if DS1 is "gifted" as such - he started independent reading when he was just turned 4 and is doing well in his reading and math as school even though he's one of the youngest in his class. But on the other hand we had an "assessment" done by a phsychologist at GERRIC when he was three (when he'd started reading), but at that age he was very shy and didn't assess as particularly exceptional. I'd get him assessed again (now that he's older and more confident with strangers), but at $500 an assessment it's too much money to waste. Anyhow, it can't hurt to expose him to a group of kids his age that are gifted - it may motivate him to excel. And if nothing else, spending a couple of afternoons designing and building model bridges sounds like fun.

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Enough Wealth 2007

The next large deduction item on our annual tax return is the expenses for our rental property. As it is owned in joint names with DW, we work out the total deductible expenses using the ATOs worksheet for rental properties, and divide each item in half to include on each of our personal tax returns (Australia doesn't have joint filing, although many government benefits such as Family Tax Benefit are based on the combined income of couples). The deductions for rental properties are fairly standard, such as interest on the mortgage loan (make sure you don't include any amount of your payments that is actually principal repayment), cost of repairs, council rates, land tax, water rates and insurance. Some other expenses associated with purchasing a rental property (such as solicitors fees, loan stamp duty etc) are deductible for the first five years after purchase, with 1/5 of the total expense being claimed each year.

If you only had the property available for rent for part of the year (either bought it during the tax year, or had the property off the market for part of the year) you can only claim a pro-rata fraction of the expenses. The ATO also takes a dim view of claims for expenses where the property wasn't really available for earning a rental income. An example would be where a holiday property is used by the owner during the peak rental season.

Another trap to watch out for is claiming deductions for repairs that are actually improvements. Improvements can't be claimed as an expense, but are taken into account as part of the cost base of the property when you eventually work out capital gains when the property is sold.

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Enough Wealth 2007