Enoughwealth's Personal Finance Blog

This month I selected AVICI Systems (

AVCI) from the current MagicFormula listing to add to my "Little Book That Beats The Market" Portfolio of US Shares (100% geared). I bought 520 AVCI @ market (around $9.52). My US Stock Portfolio current situation is listed in the sidebar.

My portfolio had recently reached an annualised ROI of over 24%, but in the last few days it has dropped back slightly to currently have an XIRR=22.84%. 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.

Enough Wealth

I had a look through the available index CFDs from CMC Markets and couldn't find one for the Shanghai Market. The closest appears to be the HK33 Index. I was planning to trade that Index but the chart hasn't updated since mid-morning Monday, so I'm not sure if this index is trading or CMC Markets has suspended it due to the big falls in the Chinese Market this week?

Anyhow, I instead went back to trading the AUDUSD spot rate. The AUD had risen sharply in the past couple of days on speculation that good economic figures, low unemployment, increasing job vacancy ads, and a slight recovery in the housing construction industry might push the Reserve Bank towards increasing our interest rates another 0.25% tomorrow morning. I personally doubt that there is enough inflationary pressure yet to warrant another rise - after all inflation has dropped back within the target range, and so far there hasn't been any evidence of wage pressures resulting in a general wage breakout. I discovered that I can manually edit the $ amount being traded - rather than just $50K or $100K I can enter a $25K trade. So I sold $25K of the AUD at 0.8330 yesterday evening. As usual when I go short the AUD kept increasing today, so I've lost a bit on this trade so far, but at least it was only costing me $2.50 a point with this size position. The AUD has reached close to the 22-year high this evening, so I sold another $25K at $0.8370. I now have a total short position of $50KAUD at an average price of $0.8350. I'll leave this position open and see how the price reacts when the Reserve Banks decision is announced tomorrow morning. Hopefully if there is no rate rise the AUD will drop back slightly...

Enough Wealth

Although we have a clothes dryer, DW still prefers to dry clothes on the line when the weather is fine. When we bought our house it came with an extending clothes line attached to the remaining upright post of an old broken "Hills Hoist". The extending line has not been very easy to use as the bar attached to the old clothes hoist wobbles and makes the clothes lines sag. So DW finally took a trip to the local hardware superstore to check on new clothes hoists. The traditional Hills Hoist costs around $250 and is made in China, so she's decided to go with a cheaper brand that costs $150 (and probably also comes from China). It comes with a ten year warranty, so it should last ten years and pay for itself via the electricity saved by not using the clothes dryer very often. It also helps reduce greenhouse gas emissions, as our electricity mostly comes from coal-fired power stations.

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Readership continued to increase during May, with the bonus of enoughwealth.com site getting a big one-off boost from a specific mention and link to my site by one of the more popular personal finance blogs in the middle of May, which provided an extra 350 or so visitors on the day of the post. This spike trailed off rapidly and readership stats were back to normal after a couple of days. Hopefully some of the visitors liked what they read and have become part of the loyal band of regular readers who return day after day.

Cumulative visits (for sites enoughwealth.com and enoughwealth.savingadvice.com combined) passed through 25,000 during May. With monthly visits now above 6,000 EnoughWealth might reach a total of visitors by September, and has a chance of hitting the magic 100,000 mark by the end of this year!



After a period of initial rapid growth in visitor numbers from launch until Dec 2006, I stopped submitting posts to the various "carnivals" that are available each week. Coupled with a lull in producing daily posts in early January this produced a noticeable loss of momentum in gaining readers. Posting at least once a day in the last few months seems to have helped build up readership more quickly again.

I initially created the mirror site (hosted on savingadvice.com) late last year due to problems with "old" blogger at that time. Since then I've migrated to the "new" blogger, which is much more reliable, and setup the enoughwealth.com domain to redirect to the posts hosted by blogger. There are consistently about double the readers attracted to the enoughwealth.savingadvice.com site each month (eg. 2,910 in May compared to 2,018 visiting my "custom" domain. Hopefully if I resume promoting the enoughwealth.com domain via "carnival" submissions this month I may be able to increase readership of that site. The only reason I prefer readers to visit the enoughwealth.com site is because that site is monetized (savingadvice.com allows limited editing of the sidebar content). The only significant amounts of blog revenut have come from the odd sponsored post (PayPerPost and ReviewMe). With low readership numbers the amounts accumulating each day from AdSense and AdBrite are only 1c - 3c. The exception to this was few days after the mention by xxx which boosted my AdBrite revenue to over $1 per day, at which level ad revenue becomes worthwhile.

My Technorati rating is stuck around 30, as I haven't been requesting links from other sites for the past few months. My Alexa rank is slowly improving - hopefully it will be below 900,000 soon! A hearty thankyou to those of my regular readers who visit using the Alexa toolbar, marked this blog as a "favourite" in Technorati or added a link to enoughwealth.com on your website

Enough Wealth

We had a set of photos taken at our local Pixie Photo studio when DS1 was a baby. Although we have plenty of photos taken by family members. the ones taken in a studio have a certain something that comes from good lighting and professional posing. At the time a "package deal" cost around $100 for a set of various photos and sizes.

Now that DS2 is around the same age we again went to Pixie Photo for the same sort of photos for our enlarged family. The special offer this time was just for one basic photo for $10.95. While we were there we had a series of other pictures taken of the two boys. In the end we selected several of these extra photos in various formats, for a total cost of $490 !!! This really is a lot of money for half a dozen photos, but you can't compare the quality of these photos to your regular snapshots. I figure that you have to spend your money on something, and as a "once off" expense it's worth it for something that will become a family keepsake.

Enough Wealth

It was a perfect day in Sydney for the start of Winter - clear, blue skies, a light breeze and a temperature around 25C. I enjoyed a 20 minute brisk walk around the nearby landscaped gardens of a luxury apartment complex, in the process avoiding gym fees such as the $25 a week fee charged by the "boutique" gym conveniently located opposite where I work.

For lunch I had one turkey fillet and one lean ham bread roll. The turkey and ham cost around $12/kg on special, and the bread rolls were a steal at 12 for 99c! Plus an apple from a 1.5kg bag that cost $4.98. All up, lunch cost around $1.70 and was moderately healthy.

I still haven't entirely eliminated drinking diet coke uring the day at work - but at least the 2L bottle was on special for $1.90 instead of the regular price of $3.10. I've managed to cut down from 2 bottles/day to 1, substituting one bottle of coke with a 1.5L bottle of filtered tap water, which costs almost nothing.

I tend to get the urge to snack around 4 o'clock in the afternoon, so next week I'll start bringing a banana to work each day to have as an afternoon snack. At $4.98 per kg they're not cheap at the moment, but it's still cheaper (and lots healthier) than a mars bar or other junk food.

Enough Wealth

I currently have around A$40K of "0% balance transfer" funds borrowed on BankWest and HSBC credit cards. The money is invested at 6.1% and isn't due for repayment until the end of the year, which provides a nice little passive income stream after the initial paperwork and making arrangements for automatic payment of the monthly minimum via B-Pay. I'd previously done similar CC arbitrage using my Virgin Money and Coles credit cards. But it looks as if the era of "free money" may be coming to an end in Australia. There have been fewer of these 0% balance transfer offers appearing in recent months, and yesterday a new CC offer "to the householder" arrived in the mail from HSBC. Interestingly, although it advertised 0% APR on balance transfers for 6 months, there was a 2.5% "settlement fee" imposed, which hadn't applied to previous offers. The fine print also mentioned that this fee would be added to the account at the start of the 6 month period and would accrue interest at the normal rate (around 12% pa). This means that during the 6 month 0% period you would effectively have paid around 2.8% pa on this money, making the after-tax profit for investing the funds in an online high interest account negligible. Once you take into account the risk of additional fees if you miss a monthly payment for any reason, or don't pay off the remaining balance before the 0% period ends, it seems that CC arbitrage is no longer worth the effort - at least with this HSBC card offer. I'll keep an eye out for new CC offers to see if this is the start of a general trend by all the lenders, or just a foible of HSBC.

Enough Wealth

I didn't trade recently (I don't have enough money in the account!) but today I transferred another A$1,000 into the account so I can trade next week if an opportunity arises. I'm a bit wary of AUDvsUSD forex, although I may short the AUD if it still relatively high on Monday - apparently the latest rise is based on speculation that the Reserve Bank may raise interest rates at next week's meeting. I think this is unlikely, which should result in a still pull-back after the announcement on Wednesday morning. Then again, I could be wrong as usual

The real reason I've topped up my trading account is to try to short the HongKong33 if (when?) the current bull run ends. Given the huge gains in the past 2 years, and the sudden 6% drop this week in reaction to the Chinese government raising brokerage fees in an attempt to cool the market, I expect that there will be a substantial correction in the HK index in the near future. The market recovered this weeks drop within a couple of days, so the speculators are currently still very bullish, but there's a limit to how long such a bubble can inflate. The trick will be to not set a short position too early and lose all my trading capital while the bull run continues.

Enough Wealth

My Networth as at 31 May totalled $1,162,544 (AUD), an impressive overall increase of $46,415 (4.16%) for the month. My leveraged stock portfolios increased by a net 4.06% last month, and the estimated valuations for my share of our home and investment property increased 3.91% compared to the previous month, showing an acceleration of the mild uptrend that began earlier this year. The property gains were slightly offset by our mortgage loan balances increasing by a net $1,082 (0.32%) due to our monthly redraw of $3,500. Although we'll continue redrawing some of our advance mortgage payments each month to help meet our mortgage repayments after DW returns to work part-time, the amount required will reduce to only $1,000 per month. The valuation of my retirement account went up only slightly during May (0.72%).

So far this year my Net Worth has gone up by $129,761, which is 92.68% of my goal for the entire year! It's a pity that this rate of increase is unsustainable. At the current exchange rate of 0.828 USD to the AUD, my Net Worth is US$962,587 - so my milestone is to pass the one million mark in US dollars. If both the AUD and Sydney property prices keep rising, I may reach this in the next month or two.

Enough Wealth

One of the benchmarks I use to evaluate the progress of my net worth is to compare it to 1% of the amount required for entry to the annual Business Review Weekly "Rich List" of the 200 wealthiest Australians. Last year the cut-off was A$130m. This year it has leap up to A$180m, largely due to the mining boom and surging financial services sector. This represents an increase of 38.5% in just 12 months.

By comparison my net worth increased from A$847K to A$1.033m during 2006 - an increase of "only" 22%. So, it seems that I'm not keeping pace with the Maga-Rich at the moment. This is largely due to the fact that nearly half my net worth is tied up in Sydney real estate, which has been in the doldrums for the past couple of years, and my stock portfolio is a bit underweight the mining sector. But overall I'm still pretty pleased with the performance of my investment portfolio.

Anyhow, although the cut-off point for entry to the Rich List rose by 38%, the estimated total wealth of the people making the list only increased by 27% from A$101.5b in 2006, to A$128.6b today. It appears that while accumulating wealth get easier after you've made your first million, it starts to get harder again after the first billion - those at the top of the Rich List (excluding the miners) are growing their wealth less rapidly than the others in the list.

Enough Wealth

The

Air Car runs on compressed air, managing speeds of 68 mph (109 kph) and has a range of 125 miles on one tank of air. A duel-fuel version that can use petrol-powered compressor in the country would have a range of up to 2,000 miles between refills.

The tank can be filled for around $2.00 (but only at specially equipped gas stations), or can be plugged into your home power socket to fill the tank in around 4 hours.

I'd love to see an off-road version developed based on the old Haflinger AWD vehicle (I have an old haflinger that is patiently waiting restoration). Combined with a removable air tank (so you could recharge one tank using solar power while driving with the other), I think this would be the perfect "post apocalypse" transportation. And while waiting for WWIII you could drive it around town

I had planned on selling off my portfolio of Australian stocks during the next financial year to reinvest the proceeds within our SMSF, but I've decided against this course of action as the realized capital gains would minimize the benefits of shifting the investment into the tax-sheltered SMSF. Instead I'll just salary sacrifice a large part of my salary into super each year (up to the A$50K deductible contributions limit). Since I'm not planning on selling off my portfolio in the next year I've decided to prepay 12 months interest on the bulk of my margin loan balances, so that I can take the usual tax deduction this financial year. For my Comsec loan I've sent in the paperwork to prepay $100K out of the $116,612.16 loan balance, at an interest rate of 8.75%. If I have any spare income during the year (eg. from takeovers) I'll pay off the remaining $16K of variable rate loan remaining. I'll also prepay $120K of the $150K loan balance on my Leveraged Equities margin loan before the 30th June.

For the next two years I'll be supplementing my salary income with the $34K I withdrew from my superannuation account. This will allow me to salary sacrifice at a high rate for those two years. After that time I'll look at slowly selling some of my Australian stock portfolio each year to allow me to continue salary sacrifice into our SMSF. If I get enough pay rise in the next couple of years to offset the amount I wish to salary sacrifice, I'll retain the existing stock portfolio holdings until I retire, at which time I'll have a very low assessable income (under the new Simpler Super rules pension income isn't taxed after you turn 60) and I could then sell off a portion of my holding each year without accruing much CGT liability. Until 75 I would still be able to contribute the proceeds into super while drawing a pension. After 75 I wouldn't be able to contribute into my own super, but I could start to contribute any excess funds into the super accounts of DS1 and DS2. Under current rules up to $150K a year of undeducted contributions could go into each of their accounts each year. As they will be in their 30s by that time I don't expect that they would be contributing that much into their super accounts yet.

All this planning assumes that the superannuation tax rules don't change much in the next 30 years - a most unrealistic assumption! This plan will obviously have to be updated as the rules and our financial situation changes over time.

Current holdings:
Leveraged Equities Account (loan balance $150,000.00, value $316,303.73)
stock qty price mkt value margin
AAN 295 $15.22 $4,489.90 70%
AEO 1,405 $2.04 $2,866.20 65%
AGK 510 $15.32 $7,813.20 70%
AMP 735 $10.01 $7,357.35 75%
ANN 480 $12.00 $5,760.00 70%
ANZ 1,107 $28.78 $31,859.46 75%
BHP 748 $31.06 $23,232.88 75%
BSL 781 $11.27 $8,801.87 70%
CDF 6,943 $2.02 $14,024.86 70%
CHB 118 $51.01 $6,019.18 65%
DJS 2,000 $5.13 $10,260.00 65%
FGL 3,751 $6.27 $23,518.77 75%
LLC 481 $19.82 $9,533.42 70%
NAB 316 $42.40 $13,398.40 75%
QAN 2,175 $5.06 $11,005.50 70%
QBE 983 $31.56 $31,023.48 75%
SGM 830 $27.08 $22,476.40 70%
SUN 963 $21.16 $20,377.08 75%
SYB 2,880 $4.37 $12,585.60 70%
TLS 5,000 $4.78 $23,900.00 80%
TLSCA 3,000 $3.31 $9,930.00 80%
VRL 1,500 $3.20 $4,800.00 60%
WDC 783 $20.77 $16,262.91 75%

Comsec Account (loan balance $116,612.16, value $229,848.59)
stock qty price mkt value margin
AGK 240 $15.32 $3,676.80 70%
AAN 139 $15.23 $2,116.97 70%
APA 4,644 $4.22 $19,597.68 70%
ASX 200 $48.39 $9,678.00 70%
CBA 130 $55.03 $7,153.90 75%
CDF 43,997 $2.02 $88,873.94 70%
IPEO 54,000 $0.019 $1,026.00 0%
IPE 8,000 $0.995 $7,960.00 60%
IFL 1,300 $10.25 $13,325.00 60%
LDW 1,350 $7.81 $10,543.50 0%
NCM 300 $21.68 $6,504.00 60%
OST 2,000 $6.52 $13,040.00 70%
QBE 607 $31.60 $19,181.20 75%
RIO 60 $94.55 $5,673.00 75%
THG 4,000 $1.02 $4,080.00 50%
WBC 300 $26.03 $7,809.00 75%
WPL 220 $43.68 $9,609.60 75%


Changes to portfolio since last update:

I sold my Qantas shares on the market for $5.39 on the last day before the takeover offer closed. I guessed correctly that the APA offer would fail to reach the required acceptances to proceed, and over the next few days the QAN share price dropped, as had been expected. However I had expected the price would drop to under $5.00. In fact the stock price has since increased after the Qantas management released an upbeat assessment of their prospects, and is now trading around $5.60. The proceeds of the sale reduced my loan balance below the $150K I had prepaid interest on for this financial year, so Leveraged Equities automatically moved the surplus amount into the linked Cash Management Account so I'm at least getting some interest on this bit of borrowed money.

My AMP holding increased by 15 shares due to a dividend reinvestment. I no longer enrol in DRP for new stocks I buy as there is little if any price discount and the hassles of keeping records for CGT calculation outweighs the benefits. I simply use dividends to help pay the interest on my margin loans.

My QBE holding increased by 17 shares due to a dividend reinvestment.

My SUN holding increased by 113 shares due to a Share Purchase Plan offer I took up.

My SYB holding increased by 32 shares due to a dividend reinvestment. This company is currently subject to a take over offer, which pushed the price up from $3.70 to $4.37. As the offer is a cash plus stock mix I may decide to sell my holding on the market rather than accept the offer.

I happened to come across the website for

Shearwater Capital the other day. Their investment approach seems sensible and their published fees reasonable, but that isn't what caught my eye. I was more interested in their model portfolios and using the data on the 20-year performance to evaluate the effectiveness of gearing as an investment strategy.

Looking at their "Aggressive" portfolio (80% stocks/20% bonds, which is similar to my target asset allocation) you have a Twenty Years Annualized Return of 12.3% with a Thirty Three-Year Model Annualized Standard Deviation 11.8%. The "Very Aggressive" portfolio (100% stocks) has a Twenty Years Annualized Return of 13.7%, but the Thirty Three-Year Model Annualized Standard Deviation shoots up to 14.6%.

This shows that, as can be expected from modeling of the efficient frontier of a portfolio composed mainly of stock and bonds, the optimum return-risk outcome is achieved from a portfolio comprised mostly of stocks, but with some bonds included. The mix within the stock component is usually around 60% domestic:40% foreign, although in various ten-year periods you would have done better with the opposite ratio (so a 50:50 split may be a good bet).

Moving from the "Aggressive" to "Very Aggressive" asset mix boosted returns by 11.38%, but the "risk" (variability of returns, as measured by the Standard Deviation) increased by 23.73%.

For this reason, if you are seeking higher returns over long time periods, it seems a better strategy to use gearing of an "Agressive" portfolio, rather than moving to a "Very Agressive" portfolio.

Taking the Twenty Years Annualized Return of the "Very Conservative" portfolio (100% bonds) as a proxy for the interest rate cost of gearing (via margin loans or a real-estate backed investment loan such as a HELOC), one can make a rough estimate of the Twenty Years Annualized Return and Thirty Three-Year Model Annualized Standard Deviation that would result from a 100% geared (50% LVR) "Aggressive" portfolio:
20-year 33-year
Annualized Annualized
Return Std Devn
Ungeared "Aggressive" 12.3% 11.8%
Estimated Cost of Loan 5.9% 2.4%
Estimated 100% geared 18.7% 23.6%
Estimated 22% geared 13.7% 14.4%
Ungeared "Very Aggres." 13.7% 14.6%

Using gearing could therefore increase your average returns by 52.03% at the cost of increasing standard deviation by 100%. This is somewhat better than shifting your asset allocation from "Agressive" to "Very Aggressive". However, the absolute "risk" has increased 100% compared to 23.73%, so the strategy of making use of 100% gearing ratios should probably be called "Hyper Aggressive". A more modest use of gearing (say, 22%) would produce similar average return as a "Very Aggressive" asset allocation, but with a slightly lower standard deviation.

It was interesting to see that the returns for the 100% geared "Aggressive" portfolio are very similar to the long-term increase in value of my own investment portfolio. When I started out I didn't use gearing and had a more conservative asset allocation, but this was offset by the relatively large impact my savings had at that stage. These days my savings have a more modest impact on my overall increase.

One final note, when using gearing the cost of funds (interest rate and any annual fees) can have a major impact on the long-term performance of this strategy, so it is worth shopping around.

Enough Wealth

What happens if you save "too much" for your retirement, as a recent MSN Money Article suggested was a possibility following conventional financial planning "rules of thumb" such as the 4% retirement withdrawal rate? Nothing too disasterous it turns out - just an accumulation of wealth and a perpetual income stream for our descendants, and/or a legacy to leave to one's favourite charity.

Plugging some "typical" figures into a retirement savings planner from AMP, it turns out that someone on a reasonable salary of $50K from 20-65, who saved the 9% SGL plus an extra 3% via salary sacrifice would end up with a retirement income of $33,333 that would last well beyond their expected life span - until the ripe old age of 150 years!

Calculator data entered:

Current retirement savings $ 0
Your age now years: 20
Your expected retirement age years: 65
Expected annual contribution increase: 3%
Expected rate of return before retirement: 8%
Expected rate of return after retirement: 7%
Expected annual inflation rate: 3%
Current gross annual salary $ 50,000
Your yearly contribution: $ 0
Your employer's yearly contribution: $ 4,500
Yearly retirement income required (% of current salary): 65%

Output:
Amount saved upon retirement $ 2,217,233 ($ 586,322)
Which would provide the required retirement income of $33,333 until age 94, which is considerably more than the expected life expectancy (81 years for a male).

But wait, just saving an extra 3% of salary each year via salary sacrifice (ie. pre-tax) would result in the following:
Output:
Amount saved upon retirement $ 3,086,723 ($ 816,249 in today's dollars)
Will last almost indefinitely (until over 150!)

Any higher savings rate would result in the retirement account actually accumulating wealth during retirement at a rate greater than 65% of pre-retirement income, so you would leave a perpetual income stream for your descendants.

In reality you're unlikely to get a steady 8% return pre-retirement and 7% during retirement, even if you invest in an asset allocation that is expected to average these rates. Similarly, inflation won't stay at 3%. For these reasons most people will choose to be conservative in their modelling, and the chances are good that you'll end up with an even larger perpetual income stream, plus the ability to draw a larger income stream during your retirement years.

Enough Wealth

The area in which we have both our home and our investment property (coloured green in the diagram below (adapted from a recent

SMH article) is surrounded by suburbs where the average house price is now over A$1m. This is quite reassuring as in Sydney it seems that the higher-priced suburbs have been the most resilient in the recent property downturn, and over time experience the greatest gains. Apparently while it is hard for the average worker in Sydney to afford a house with average prices approaching the half-million dollar mark, executives working for investment banks are awash with cash and snapping up any multi-million-dollar houses that come up for sale.



Enough Wealth

Canadian Financial Stuff has a post Retirement? Not Likely for me that seems to suggest that only the baby boomer generation will be lucky enough to get to enjoy a real "retirement". I must admit that I think this view comes from a perception that most modern consumers combine of lack of taking ownership for their own retirement funding with an inflated expectation of what lifestyle retirement should offer them. From personal experience "retirement" has been enjoyed by most people in the developed countries for the past couple of generations, and isn't about to disappear for anyone that makes a serious effort during their working lives to fund their retirement years:

My grandfather was a plumber, retired at 65 and lived on the UK government pension until he died at age 92 - 27 years of "retirement".

My father was an pilot, retired at 58 and lives as a self-funded retiree. He's 75 and going strong - so far 17 years in "retirement".

I'm a scientist/middle manager, and will probably be able to "retire" any time after 58, though I'll probably choose to work 'til 65 or 70, and then spend my time managing my investments. Hopefully I get to spend 20-30 years in retirement.

My kids already have retirement funds setup by me, and adding a thousand dollars a year into their accounts from birth until 18 will mean they're very likely to be able to "retire" any time after 58 that they choose, without having to sock too much away during their working lives. I've no idea how long they'll spend retired. Advances in health care may extend their healthy lifespan so much that retirement is postponed indefinitely by choice. Adding just a few extra years to your working life makes it MUCH easier to accumulate enough for a very comfortable retirement lifestyle - just compare the results you get from any retirement calculator with a retirement age of 60 vs. 65 or 70...

I think the only thing stopping many people in the current and future generations in the developed world from having a comfortable retirement will be "consumption inflation". Like locusts many modern consumers gorge on current consumption and put nothing aside for their own retirement.

Another aspect is that people these days often aim for a "lifestyle of the rich and famous" in their retirement. In my grandparents day all you needed for a "comfortable" retirement was a one bedroom house with a roof that didn't leak, enough money for food and utilities, and membership of the local library and church. Throw in a radio and a small garden to tend and they were more than happy. These days this existence would be labelled as living "below the poverty line"!

Enough Wealth

Yesterday I discussed saving money by buying good quality, used computer hardware. Computer software is another area where there is a huge saving to be made by not buying the latest and best. Today I bought three computer games for my new PC - Doom III, European Air War and Lords of the Realm III. As these originally came out several years ago, they were available brand new from the store for prices of $5, $10 and $20. Two of them work just fine under Vista, although European Air War had a glitch with the mouse when running, so I'll have to check if there's a patch available. Overall, these are still great fun, and I can't see the point of buying the latest releases that are on sale for $70 or more.

Enough Wealth

After yesterday's fiasco trying to get a clearance sale 17" LCD monitor from DSE, today I decided to check the yellow pages for suppliers of used computer equipment. There was one located close to our home, so I called them to check on prices for 2nd hand monitors. They quoted $20 for a 17" CRT, $50 for a 15" LCD and $90 for a 17" LCD. They only had a CRT in stock, so I decided to pick that one up at lunch time and drop it off home for DS1 to be able to use his old PC again over the weekend, while he's still very enthusiastic working through the Kid's programming tutorial in QBasic.

Although the CRT was ex-lease, it was in excellent condition and the picture quality is superb. As his PC is located on a PC workstation unit there is plenty of room for the CRT on top of the computer, so an LCD really wouldn't have been any advantage. I asked the supplier to contact me when an LCD screen does become available, as I'd still like to add a second screen to my Dell PC in my loungeroom, so I can track CFD trading on the small screen while playing games or browsing the pf blogs on the main screen.

They also have ex-lease computer systems available from time to time, so I'll eventually pick up a "new" 2nd-hand PC for DS1 to use when he's getting towards high school age. Although I've been guilty in the past of buying bleeding-edge technology and paying top dollar for the latest computer gear, it's really much more sensible to buy ex-lease equipment in good condition that is only a couple of years old.

Enough Wealth

The setup and configuration of the Belkin Wireless Router attached to my cable modem and Dell PC went *relatively* painlessly. After moving the cable modem from my Laptop to the Dell and checking that it was working OK (after power cycling the modem to get it to recognise the new system), I simply plugged the modems ethernet into the Belkin router and connected the router to the Dell PC using the supplied ethernet cable. The internet worked on the Dell via the router, so I then connected the supplied Belkin configuration webpage and setup security settings for my router. The router rebooted with the new settings and everything was working OK on the Dell.

Next I installed the Belkin software on my Laptop and was able to then connect the USB adapter. I had to muck around a bit getting the network connection working (initially it found a Linksys wireless network with a signal strength of 40%, which soon dropped off and disappeared. I guess this was a Wi-Fi network from one of the neighbours!). After a bit of mucking around and a reboot of the Laptop my Belkin network was identified and the Laptop showed that the connection to the router was working, but not the connection to the internet. A few cycles through powering everything down and up again, and rebooting the laptop eventually got everything working OK. It seems that the Norton Security only recognised and permitted the new network connection when I rebooted the Laptop after the connection to the network was working OK.

Eventually everything was working OK, with both the Dell and the Laptop having access to the internet. Now my only problem is why Firefox loads enoughwealth.com OK on the Laptop but freezes up every time I try to access that page on the Dell (Firefox accesses other websites via the Dell fine). Oh, and the fact that every now and again Vista seems to lose the cable modem internet connection and can't reconnect (it seems to be trying to do a dial up to a cable connection!) - so I have to power cycle everything to get things working again. And that the version of IE that came preinstalled on the Dell includes to Google toolbar, and when I installed the Alexa toolbar it seems to be doing strange things (its seems to be referencing a blank 'page' above the main browser page, rather than getting info on the page you're currently viewing...

Anyhow, overall it's been one of the less painful network setups I've done (then again the last one I did was an mixed PC and mac ethernet wired network ten years ago - things have got more plug 'n play since then).

Enough Wealth

DS1 needs a new monitor for his old PC, and I would like to add a second monitor to my new Dell PC, so I checked out what monitors were available from local electronics shops via the internet. I thought it was my lucky day when I saw that Dick Smith Electronics have a 17" HP LCD monitor on clearance sale for only $90 (this size LCD monitor is usually around $300 in Sydney). The website listed the Warringah Mall "Superstore" as an outlet that had some in stock, and I phoned them from work this afternoon to confirm that they still had some in stock. After checking the front desk advised that there were three in stock at the moment (4pm), so I decided to go there straight after work to buy one or two of these monitors (DSE is open until 9pm on Thursday nights).

When I got there and enquired in the computer section about the monitor, I was told that in fact there was only one broken monitor in the repair section, and that the other two were "missing" ie. stolen. When I complained about the fact that I'd been told over the phone that there were three in stock I was told that their inventory system didn't adjust for broken or pilfered stock! I told them that they should tell the front desk that this item wasn't available. The best they could do was to promise to pass on my complaint to the Computer Section manager.

This really pissed my off, and I will phone the store again tomorrow to see how many of these monitors they say are available then. If they still advise three are in stock I'll contact the store manager or owner and make another complaint. I've had bad experiences with inventory control at another Dick Smith Electronics store previously. When a game that I wanted that was on special was out of stock in one store I got them to phone around and see if it was available in another outlet. They finally tracked one copy down in another store, and that store "put it on hold" for me in the stockroom. However, when I drove all the way there to collect it later the same day the game was nowhere to be found! It was only after waiting for half an hour and eventually getting three different staff to search the stock room that it was finally located "on the wrong shelf"!

I have a sneaking suspicion that whenever DSE has some bargain items on sale, the staff tend to put some aside in the back room for their friends to buy the next weekend. Either that or the company has a "bait and switch" policy in operation.

While I was at the Mall I went in to a different electronics store (JB Hi-Fi) and purchased the Belkin wireless router and USB adapter I need to connect both my new PC and my old laptop to the internet via my Optus cable modem. I had ordered the same gear online from Mitec.com.au last month, but it never arrived, and Mitec stopped taking new orders on the 12th, so it seems that they are going out of business. They haven't replied to my email enquiry about my order, so I'm assuming that it will never arrive.

Hopefully setting up the wireless router and getting my internet to work over the wireless network will not be too much of a hassle this evening...

Enough Wealth

Many people like to lend a helping hand if they are able, especially when it comes to close family members. But financial assistance may be ineffective if you don't fully understand the situation of the person you've helping out, and how they'll react to their new situation. When you're helping out relatives you don't want to pry into their finances, but I'd advise making the effort to make discrete enquiries, even if it seems a bit awkward.

As an example, my grandfather changed jobs shortly before he was due to retire (in order to move back to the region his wife and he had lived when they were young). Unfortunately this meant that he didn't qualify for a pension from the company he had worked at for over thirty years, and instead had to rely on the government old age pension. As my grandparents didn't own their own home, my father decided to buy a house for them to live in, thinking that this would substantially boost their living standard in retirement. Later on, one of my grandparents had to move into a nursing home for several years while other other one continued to live in the house my father had bought them. It was only after my grandparents had both passed away that my father found out that the nursing home fees would have been paid for by the government if my grandparents had no substantial assets. However, because of my father's generosity they had managed to save a substantial portion of their government pension for many years (without telling anyone), apparently hoping to leave something to their kids and grandchildren. This had meant that they were required to pay the nursing home fees themselves, until all their savings had been used up. So, due to a lack of communication my grandparents hadn't gained any benefit from my father's financial help (if they'd spent part of their pension on rent they wouldn't have had to pay the nursing home fees), and the end result was simply that my father's money was tied up in a country house that didn't appreciate at all in value, when it could have been more effectively invested elsewhere.

Enough Wealth

Nostalgic references to "the good old days" have long been a bit of a joke (eg. see "The Good Old Days Skit" from the 'At Last the 1948 Show', 1967*.) But just how good we have it these days compared to our grandparents time (and before) was again brought home to me when I was browsing through the latest annual HILDA** report and came across this data on how much time off work Australian full-time workers typically had in 2006. Looking at those workers who had been in their current job for more than 1 year (and were thus entitled to the usual 20 days paid annual leave), the typical full-time worker took 16-days of paid leave, plus another 3 days of paid sick leave and a couple of additional days of "other" paid leave (eg. workers compensation). This means that, combined with the 10 days paid public holidays we have, the average Australian full-time worker worked around 229 days in 2006. (And they also accumulated 8.3 weeks of "long service" leave if they stayed in the same job for ten years.)

With the average working week being around 37 hours in Australia, this means full-time workers clocked up a total of 1,695 hours in paid work during 2006. This translates to spending 29% of their waking hours in paid work during their working years. With the average retirement age being around 58, this means a "typical" worker might work a total of just over 15% of their total "waking hours" during their entire lifetime, assuming they started full-time work at 20 and lived until 72. Of course, some people work at lot more than 37 hours a week, and don't take time off work for holidays - but the HILDA figures show that as many people took more than 20 days leave in 2006, as took less than 10 days leave.

Some people may still think that this is a large chuck out of their valuable time, but most people get some enjoyment from their work, even if it is just from the social contact with co-workers. In comparison, my grandfather started working "down the pit" in South Wales when he was 15. In those days you worked a twelve hour shift at the coal-face, had to walk for an hour before and after work to even get to the coal face, plus time spent walking from home to the mine. Oh, and they also worked a six-day week with only Sundays off and few (if any) public holidays. No wonder he jumped at the chance to do a plumbing apprenticeship in London when he got the chance!

If nothing else, history provides a sense of how well off people are these days (at least in the developed countries).

Enough Wealth

** The Household, Income and Labour Dynamics in Australia (HILDA) Survey report from Melbourne University.

* Just in case you don't have a copy of "The Golden Skits of Wing Commander Muriel Volestrangler FRHS & Bar" handy, I'll append it here - its only 2 and a bit pages out of a 128 page book, so we'll call it "fair use" for educational purposes, shall we?

The Good Old Days Skit
by MV, Marty Feldman, Graham Chapman and Tim Brooke-Taylor; 'At Last the 1948 Show'. 31 October 1967

It is sundowner time at a tropical paradise. Four north-countrymen, in late middle-age and tuxedos, sit contemplating the sunset. A dusky waiter pours some claret for one of them to taste.

Joshua ...Very passable. Not bad at all.

The waiter pours the wine for the rest of them, and departs.

Obadiah ...Can't beat a good glass of Chateau de Chasselas, eh, Josiah?

Josiah Aye, you're right there, Obadiah.

Ezekiel ...Who'd have thought ... forty years ago ... that we'd be sitting
here, drinking Chateau de Chasselas ...?

Josiah Aye! ... In those days we were glad to have the price of a cup of tea.

Obadiah Aye, a cup of COLD tea ...

Ezekiel Without milk or sugar.

Josiah OR tea ...

Joshua Aye, and a cracked cup at that!

Ezekiel We never had a cup ... We used to drink out of a rolled up newspaper.

Obadiah Best we could manage was to chew a piece of damp cloth.

Josiah But y'know ... we were happier in those days, although we were poor.

Joshua BECAUSE we were poor ... My old dad used to say, 'Money doesn't bring
you happiness, son.'

Ezekiel He was right! I was happier then and had NOTHING. We used to live in
a tiny old tumbledown house with great holes in the roof.

Odadiah A house! You were lucky to have a house. We used to live in one room,
twenty-six of us, no furniture, and half the floor was missing. We
were all huddled in one corner, for fear of falling.

Josiah You were lucky to have a room! We used to live in the corridor.

Joshua Ooooh! I used to DREAM of living in a corridor. That would have been a
palace to us. We lived in an old water tank in the rubbish tip. We were
woken up every morning by having a load of rotting fish dumped on us.
House, huh!

Ezekiel Well, when I said HOUSE ... it was only a hole in the ground covered by
a couple of foot of torn canvas, but it was a house to US.

Odadiah We were evicted from our hole in the ground. We had to go and live in
the lake.

Josiah Eee! You were lucky to have a lake. There were over 150 of us living in
a small shoe box in the middle of the road.

Joshua A CARDBOARD box?

Josiah Yes.

Joshua You were lucky. We lived for three months in a rolled-up newspaper in a
septic tank. We used to get up at six, clean the newspaper, eat a crust
of stale bread, work fourteen hours at the mill, day-in, day-out, for
sixpence a week, come home, and dad would thrash us to sleep with his
belt.

Obadiah ... Luxury! We used to get out of the lake at three, clean it, eat a
handful of hot gravel, work twenty hours at t'mill for twopence a month,
come home, and dad would beat us about the head and neck with a broken
bottle, IF we were LUCKY.
A pause.
Josiah ... Aye, well, we had it TOUGH. I had to get out of the shoebox at
midnight, lick the road clean, eat a couple of bits of cold gravel,
work twenty-three hours a day at the mill for a penny every four
years and when we got home dad would slice us in half with a bread-
-knife.
A longer pause.
Ezekiel Right ... I had to get up in the morning at ten o'clock at night half
an hour before I went to bed, eat a lump of poison, work twenty-nine
hours a day at t'mill and pay boss to let us work, come home, and each
night dad used to kill us and dance on our graves, singing.
A very long pause
Joshua ... Aye, and you try and tell the young people of today that, and they
won't believe you.

DS1 has a keen interest in computers and is a good reader for his age (7), so I thought I'd have a go at teaching him computer programming. I quite like QBasic as a programming tool as its very quick and easy to type in a few lines of code and immediately run it to see what happens. There wasn't QBasic installed on my laptop (running Windows XP) so I downloaded QBasic.zip off the internet. Microsoft made QBasic public domain last century, so there are plenty of places to download it, here for example. Next step was to find a suitable programming tutorial for a seven year old. One that seems quite good is QBASIC Programming for Kids by Ted Felix. I helped DS1 work through the first six chapters last night, and he was so keen that he then sat down and read through the remainder of the 55-pages of the book on his own before he went to bed! Tonight he worked through Chapter 7 and I then gave him a simple programming assignment based on the first 6 chapters to help reinforce yesterday's lessons. Here's his first "very own" computer program:

CLS
INPUT "Enter your name: ", Name1$
INPUT "Enter your mothers name: ", Name2$
DO
PRINT Name1$, "loves ", Name2$
LOOP

DS1 seems to love computer programming - kids are empowered when they can do something "grown ups" do, and the computer has infinite patience while he slowly picks out the commands on the keyboard and fixes his typos. DS1 also loves to play the game LUDO with his grandparents, so I've told him we'll work together on a project to create his own computerised version "QUDO" once he's worked his way through all the exercises in the QBasic tutorial. QBasic has sufficient ability to handles graphics and sound to make such a project feasible, and the way Ted Felix has organised the tutorials provides an "object oriented" and structured approach to programming. (He doesn't even mention the dreaded "GOTO" command except in reference to error handling!).

All in all, provided you already have a computer, you can provide your kid with a good entry-level course in computer programming for $0. Ted recommends kids start off with LOGO first, and then progress to QBasic when they're around ten. DS1 had no trouble leaping straight into QBasic, but his reading is a couple of grades ahead of his class average, so most kids would probably enjoy this course when they're 8-10 years old.

Later on there are plenty of more advanced tutorials available on line that can be used to learn game design, 3D graphics, animation etc. When the limits of QBasic are reached it is easy to migrate to Visual Basic.

Enough Wealth

Setting up my home network with my new Dell PC is taking longer than expected. I had ordered a Belkin Wireless router and USB adapter combo for $112 from an online supplier, and originally had a delivery ETA of 5th May. After that date had come and gone I chased up the supplier and was advised that the new ETA for the equipment to arrive from their wholesaler was 18th May. As it still hadn't arrived last Friday I thought I'd check with their online order tracking service to see if there was an updated ETA for delivery. The tracking page gave a "page not found" error (a *very* bad sign), so I went to the companies home page. Apparently they stopped taking new orders on the 12th May, and are working their way through old orders that are outstanding. I sent another email checking on the status of my order, and hope to get a reply tomorrow. At least my initial payment for the order (via Paypal) never was finalised - Paypal initially confirmed my payment, but then cancelled it three days later when the "eCheque" money transfer from my bank account into Paypal was declined (I'd forgotten that I can only transfer funds from my Paypal account into my bank account, not vice versa). This means that possible outcomes are:
1. I get sent the equipment and the supplier never gets around to invoicing me because they're going out of business.
2. I get sent the equipment and they invoice me for the outstanding balance - which I'll be happy to pay by CC once I have the goods.
3. I never hear from them and end up having to buy the wireless router from some other supplier.

None of these options are terrible - although I'd like to have setup my home network a couple of weeks ago. If the original payment via Paypal had gone through OK, I'd be in the unhappy position of having paid for goods and never receiving them. Trying to get money refunded by Paypal is a financial adventure I'm happy to do without.

Enough Wealth

The $200 I transferred direct from my Credit Union account into my new ANZ "V2 Plus" account that was recently set up to receive contributions into our Self-Managed Superannuation Fund (SMSF) has disappeared (temporarily I hope). Although there's often a three day "hold" on funds transfers between different financial institutions in Australia, this is usually manifest as a difference between the "account balance" and "available balance" figures for the destination account ie. the funds immediately disappear from the source account, and generally appear in the destination account the next day, but aren't available until the three day holding period expires. It seems odd that the $200 I transferred last Thursday hadn't appeared at all in the ANZ account yet - if it doesn't turn up tomorrow I'll have to phone ANZ to try to work out where the money has gone. It raises an interesting side issue - at least when transferred funds appear immediately but are "unavailable" you still earn interest on the money during those three days. With funds that disappear for three days someone else must be earning interest on my money in the interim.

Enough Wealth

Lucky 13! I dived back into forex trading with the last $700 out of my initial $2000 kitty. I lost a quick $135 on a sudden move the wrong direction, then bought the AUD at 0.8251 which was close to the bottom of recent trading ranges. I hung on through a couple of down turns to under 0.8200, but today the bottom dropped out of the AUD (or the USD suddenly gained support - I never know which until after the event), and CMC Markets automatically liquidated my position when my account balance dropped to less than US$200. I can't trade even a $50K position with a balance under A$500, so I won't be trading for a while, if at all. My initial plan was to "play" with $1000, but I soon had to add in another $1000 in order to trade, after my initial quick losses. If I add further funds in I'm in danger of throwing good money after bad - and developing a gambling addiction! The total loss of $2000 isn't material to my overall net worth, but it is still significant (and unpleasant). I took me a lot longer to decide to spend $1800 on a new computer system than it took to lose a bigger amount day trading. Day trading is definitely playing with fire.

Enough Wealth

I don't know where the expression comes from originally, but I'm sure most people have heard that "the first million is the hardest". The funny thing is that when you're starting out on the road to accumulating wealth, it somehow seems to be a bit of a put down - you think it's just a throw-away line of the mega-rich, along the lines of "Let them eat cake!" Of course, it's easier to save once you have a million dollars and are living on easy street!

However, once you get closer to having $1m net worth you realise that this truism, like so many in personal finance, does actually encapsulate some fundamental truths.

Some reasons why it really is true that "the first million is the hardest":
* When you start out, your income is generally at the lowest point of your working life. So even saving 25% of your gross income will only build up your net worth very slowly. For example, I started full time work on a salary of under $20K, so saving 25% of my gross salary only added $5,000 to my net worth over one year.
* When you start out you generally know very little about investing. Even if you study some economics and financial analysis subjects in High School or University, you often won't gain a practical knowledge until you've been "hands on" investing for several years. When I started saving I was focused on bank savings accounts, and slowly progressed through government savings bonds, term deposits, and later into shares and property investment.
* When you're starting out you have smaller amounts to invest. This makes many avenues of investing unavailable or uneconomic. Although things are much better these days than when I started out - the advent of the internet and discount brokers has made many more types of investment accessible to beginners.
* Once you have a substantial investment portfolio built up, the "passive income" flowing from your investments becomes a large component of your "savings" in relation to your salary income. However, this only holds true if you stick to "reinvesting" your investment income, rather than using it to supplement your lifestyle spending.
* Some aspects of financial planning such as asset diversification and efficient asset allocation ("efficient frontier") only become applicable when you have larger amounts to invest.
* Any "emergency" that causes you to dig into you savings will have a much larger impact on your net worth when you are starting out. Conversely it is much more important to pay for various types of insurance when you are starting out - for example, starting a family it is important to have life insurance in case the main bread winner dies unexpectedly. Later on, the expensive of life insurance may be avoidable if you have paid off the mortgage, the kids have left home, and you have built up an investment portfolio.

Looking back to when I started out saving it was incredibly hard for very little result. For example, in High School I would work 9 hours at a market garden weeding or sorting and rebagging potatoes (ie. removing the stinking rotten ones, washing off the others and rebagging the remainder for sale). I earned around $10 for the whole days work, and spend $1 on lunch and $1.20 on busfares to and from work. In the end a whole day of my life resulted in adding less than $8 to my net worth. However, that initially stage of developing my finances provided a basic understanding of the value of money, and provided the "seed capital" required to start saving and investing. If you try to take a shortcut from McDonalds worker to property tycoon you are liable to end up another Casey Serin.

Enough Wealth

After completing the 100-point identity check for DW and myself at the ANZ bank nearest my workplace, I checked with our payroll department on what paperwork was needed to start making the employer SGL payments into our new SMSF. I was advised that it would be best to get the new details entered into the pay system now, but my employer would prefer to not commence payments into the SMSF until the new financial year (ie. after 1 July) so that it was easy to reconcile this years payments. This is fine by me, it just means that we can't send in the paperwork to exit DW from the old BT Superannuation fund until after all this years payments have been processed. As I'm going to leave some money in the old fund in order to retain my life insurance policy, I can still send in the form for making my partial fund transfer next week. Meanwhile I did a $200 direct payment into the new SMSF bank account from my credit union account, just so they'd be some financial details reported for the SMSF this financial year. I want to check out what the member reporting looks like.

I was a bit interested in how various payments made into our SMSF through the one ANZ bank account could be identified by eSuperFund - ie. which member the contribution belonged to, and whether the payment was a deducted or undeducted contribution, employer SGL payment or salary sacrifice. I rang the eSuperFund help line and they advised that the deposit should note which member the deposit was from in the lodgement reference, and that employer contributions should be identifiable because they would be regular deposits from the same source. Anyhow, at the end of the year eSuperFund will send us a contributions summary for the trustees (DW and I) to check for accuracy before it is finalised. They also mentioned that it would be possible to check these details online in future, but that this was still "in development". This is another risk with moving from the BT fund into our own SMSF managed by eSuperFund - if eSuperFund ever went out of business we may find that the required record keeping hasn't been up to scratch. Hopefully tha annual compliance checks by the ATO will ensure that everything is meeting the required minimum standards.

The next step is to check what investment mix DW and I currently have in our BT superannuation accounts, and decide on what combined asset allocation we want in the SMSF, and how to meet this allocation - eg. direct share investments or CFDs, ETFs, actively managed mutual funds, index funds or whatever. One drawback of using the SMSF for DW and myself is that the assets are all managed in a "pool", and just split into member balances pro-rata the contributions into the SMSF. This means that we have to decide on the investment mix jointly as trustees, rather than being able to choose our individual investment mix as we do in our existing BT funds. This isn't a big problem as we have similar risk tolerance and investment time-frame. In practice, the SMSF balance will comprise around 80% or more my contributions, and I enjoy doing paperwork more than DW, so I'll probably make the investment selections and just get my choices approved by DW.

Enough Wealth

The 70,000km service was done (needed new front brake pads) and the faulty alternator replaced with a reconditioned one. All up, the bill came to A$818. I hope that this alternator lasts until we get rid of this car when it reaches 150,000km or 2013, whichever comes last. By that time DS2 will be ready to go on camping trips etc. and the Festiva will be getting too small to transport two adults and two teenage boys. We'll probably replace it with a used Subaru Forester. Hopefully we can get one in good condition, with low kms, a couple of years old for around 60% of the new car cost.

Enough Wealth

I should rename these posts "Disasters in Day Trading"

After holding on to a AUD/USD short position that I'd opened at 0.8323 for more than a day, while the price bobbed up and down within a few points of my entry price, the AUD suddenly dropped down rapidly to 0.8305 late last night, then levelled out at 06/07. As both DW and I had short positions open I woke her up to ask if she wanted me to close out her position. She got up to have a look at the chart and, after a bit of hesitation, decided to close out at 0.8306 at a good profit on this trade.

I was impatient for her to decide and make her trade, as I then had to log out of her account, and wait for the MarketMaker app to close down, before I could log into my account to close out my position. Unfortunately the AUD rebounded to 0.8311/13 before the trading software was open with my account on the screen. I thought about still closing out at this price, which would have made me a $100 profit on the trade, and possibly then going long on the AUD to gain from any continued increase back to its previous trading level of around 0.8323. In the end I decided that this may just be a temporary upwards jig in a general down trend, as has often happened before, so I kept my short position open, waiting for the AUD to drop back down towards 0.8300 (which would have made back my losses from the previous day's trading).

Instead the AUD continued back to its earlier level of 0.8322/24 so I left my position open expecting the AUD to level of at this level and possibly drop again later in the evening. At that stage the chart looked like there was a slow downwards trend in place. I shut the trading window while I did some blogging, then went back a short while later to check on the spot price. Shock! Horror! The AUD had continued to climb rapidly, and was sailing through 0.8341, 0.8342, 0.8343... I was now down $200 on this trade and it looked like this could be one of those vertical moves of nearly 100 points. At this stage I lost my nerve, and, after holding my trade open for over a day, closed it out at 0.8343. I immediately bought the AUD at this same price, hoping to make back some of my losses if the strong uptrend continued for a while. Of course, the AUD immediately reversed direction and started dropping, so I closed out that position at a small loss. After watching for a little while it looked as if the upward spike in the AUD had definitely lost all momentum, and the AUD was drifting lower, and started to drop a bit faster. I then went short the AUD again (I should have not closed out in a panic in the first place! D'Oh!), only to see the AUD regain some ground. At this stage I gave up in disgust, closed out my position (again), and went to bed.



Today the AUD has slowly drifted back down to yesterday's low of 0.8308, so if I had not bothered watching the screen last night and just kept my position open for 2 days instead of one day, I'd have actually made a good profit, rather than losing $255 in three losing trades in a row. My trading account is now down below $1,000 (after I transferred in a second $1,000 last week - bringing my total trading kitty to $2,000) so I can only trade A$50K rather than $100K. I think I'll just watch the market for a while before I attempt another trade. It will take a long time to claw back my losses. Trading is good fun, but it's turning out to be expensive entertainment.

Enough Wealth