Google Plus

Google finally opened Google Plus to anyone who wants to join rather than by invitation only. So I joined to see what it was about. I get this one even less than Facebook so far. It invites me to add names to circles, but I get no indication of whether people I know are already on Google Plus. I'm mystified. I guess I'm "doing it wrong". Any enlightenment?

Rome

I was just invited to come and talk in Rome. But I turned it down. I think I will have done enough traveling for the year and I don't feel particularly expert in the specifics that they are interested in. I don't see it adding a lot professionally in other ways. It's more like a training session for the participants (from developing countries) from what I can understand. It's a pity because I like Rome and I have a friend I could visit there and even in theory visit family from there. But that's a big trip and would take me away from Snork Maiden for a long time and she isn't very keen on that. So, I think I'll stay home this time. I expect only to get more such invites in the future.

Consulting

How much should I charge as a consultant? My employer allows us to spend 20% of our time on consulting. So I figure I should take my salary + employer retirement contributions and divide by 4*52 days to work out a daily rate. And add on any expenses too, of course. Snork Maiden thinks that is too low. And it seems to be lower than what one of my colleagues quoted. I'm not really interested in making money from this project but more about developing a long-term relationship with the client which would be valuable in terms of science and policy impact. I wouldn't really spend time consulting for a purely commercial client as I think we don't need the money. Unless they offered a really large amount of money of course :)

Four Years in Australia

We arrived in Australia four years ago today. From today Snork Maiden can apply for Australian citizenship, though now she doesn't seem to be in so much of a hurry to do that now. She just got a visa to visit the US (Australian citizens don't need visas) so won't bother with the citizenship until getting back from the US. We're still living in the same apartment as we were when we got here. We're now earning a lot more money but our net worth is about the same due to the financial crisis that intervened. I got a permanent job though Snork Maiden hasn't yet. There is still plenty of demand to hire her on a temporary basis for the next couple of years. But she hasn't looked for a permanent position outside her current employer and they are taking their time. Lots else has happened in the last four years too. We got married. We've travelled to Europe and Asia and around Australia. We've had people come visit here...

Cambria to Offer More Actively Managed ETFs

Cambria manages the GTAA ETF. Manager Mebane Faber also writes an interesting blog. Now they have filed with the SEC to offer more ETFs.

Getting on Track for a Sustainable Retirement: A Reality Check on Savings and Work

A recent paper by Wade Pfau really overturns some standard ideas about retirement planning. The usual story includes picking a "number", planning how much you need to save to get to the number and starting early with saving in order to benefit from compounding interest. This table from the paper:



shows what percentage of final retirement assets could be explained by accumulated wealth a given number of years before retirement for a bond-stock portfolio simulated over the last century or so for the US. Even with an all bond portfolio only 43% of final wealth could be explained by accumulated assets 10 years from retirement. For stock oriented portfolios very little of the variation could be explained. It's all down to the luck of the market returns in the final 10 years. So tracking net worth doesn't really help much in telling you how much you'll have to retire on after all... Early compounding doesn't make much difference because there isn't much wealth to benefit from compounding.

So what does Pfau recommend? Calculating a minimum safe savings rate based on age, accumulated assets, and allocation. For someone of 55 years old who has saved 4 times their salary and wants to replace 50% of their salary and retire in 10 years and has 60% in stocks, the minimum safe savings rate is 52% of income! For a 50% chance of success of achieving a sustainable retirement only an 18.2% savings rate is needed. Having more wealth earlier does help reduce these rates. Not because of compounding but just in terms of piling up more savings. There are more analyses in the paper of the effect of retiring later etc.

Superannuation Trends

This is a graph of our three Australian superannuation (retirement accounts). The green is Snork Maiden who has now been working for four years and accumulated $A50k. The blue is my current account where I worked one part-time job in 2009-2010 and then a full time job from the beginning of 2011 and accumulated about half as much. The red is the account from when I worked in Australia previously that is heavily invested in Australian stocks. So it fluctuated dramatically through the GFC and the recent market correction. The accounts that are currently accumulating were little affected by market fluctuations. They are also much more diversified.

How Much Money Should You Give as a Present if You are Invited to a Wedding?

If you ever wondered how much money to give as a gift at a wedding, there is an "app" for that if the wedding happens to be in Israel. Unfortunately the link is in Hebrew (I can read it...). I wonder if there are similar sites for other countries?

Snork Maiden said that in China RMB 1000-2000 would be expected, which sounds like a lot of money to me as RMB 2000 could be a month's wages for a factory worker or even a new graduate.

Moominvalley August 2011 Report

Six losing months in a row now... The accounts for the month look like this in USD terms:



Non-investment income was very high as was spending. This was a triple pay month - we get paid every two weeks as is the norm in Australia and every few months there is a month with three payments. Also my pay rose as I took on my new position.

But in USD terms we lost 7.25% this month against an MSCI World Index loss of 7.26%. We're now down 9.31% for the year in USD terms while the MSCI has lost 4.19% for the year so far. The Australian Dollar fell back a little to USD 1.07 and so Australian Dollar returns were "only" -4.67%.

Expenditure was very high at $9,743. But a third of this was another long haul plane ticket I bought which I should be reimbursed for (I still need to be reimbursed for my trip to India). Core expenditure was still high. There was about $1000 of medical and dental expenses. We'll get reimbursed about $200 for those.

As a result net worth fell USD 27k to USD 520k and fell AUD 11k to AUD 487k. Due to buying shares asset allocation was pretty much unchanged for the month as stocks fell.

Was There a Lost Decade?

An interesting article in the NY Times about whether investors should have had a lost decade - losing money over the last ten years or for the first decade of the 21st Century. The author argues that if you were properly diversified then you wouldn't have lost money. So I decided to check it out based on the data I have collected. I have been keeping accounts and returns on investment in a spreadsheet since 1996, so I have several years of data shown in the graph above. As at the end of last year the S&P 500 had a very meagre positive return over the previous decade. It's a little better now because it is coming off a lower base in 2001 in the tech crash. After inflation you would have lost money investing in the index. The MSCI World Index though had a return of 3.07% and would have about broken even after inflation. I was a little ahead with 4.31%. Right now I'm at 4.57%, MSCI at 3.77% and the S&P500 at 1.52%. So the author's point about diversification holds up. Back in the depths of the GFC all three were losing money. If you had a lot of relatively safe bonds you might have been above water. Not if you had a lot of Australian Dollars which fell dramatically in value in the crisis. So it depends what period you pick exactly, what result you get.