Monday, November 14, 2011

More Liquidity

With potentially large expenditures in the next year or two we need to have more liquidity. So going forward I'm going to focus discretionary saving more on short-term investments and paying down debt. Our automatic investments will continue as before at $5000 plus a month. Just over $A3,000 per month going into superannuation (after the 15% contribution tax) and $A2,000 a month into managed funds.

Show of Confidence in Qantas?

It looks like the chairman and a bunch of other directors of Qantas went out and bought shares on the market. It's nice to see a vote of confidence in the company from the board. But really 100,000 shares at $1.60 each is not going to be much of an investment for Leigh Clifford given that he was previously CEO of Rio Tinto. Anyway, the stock price is up a little this morning on this news (as I can't see any other reason apart from the positive performance on Wall Street on Friday).

Saturday, November 12, 2011

Invest in Multifamily Houses in Jersey City?

I saw an ad in the Australian Financial Review today to invest in the US Masters Residential Property Fund. I already invest in US property through the TIAA Real Estate Fund, which does include apartment complexes but not small multi-family or single family houses like this fund does. The supposed advantages are a high yield relative to investing in single family homes in Australia, the low price of housing currently in the US, and the high value of the Australian Dollar. The fund is not hedged, so if the Australian Dollar falls the value in AUD terms will go up. Also it is cheap to borrow in the US, though currently the fund is not borrowing. The management fee is about 1.6% per year. There are a few possible downsides:

1. The fund is currently trading at $1.64 on the National Stock Exchange (formerly the Newcastle Stock Exchange), but it's NAV is $1.54.

2. The application fee amounts to 4%. Combined, this means that you lose more than 10% of your money right away.

3. Selling units would mean trading on the NSX. Neither CommSec nor Interactive Brokers trades on this exchange.

4. All the houses bought so far are in Jersey City, which isn't very diversified. At least it isn't Michigan I guess...

Point 3, rules out buying units in the market unless I was to set up an account with Macquarie say... So I think I'll pass on this. What US REITs invest in this investment class that I could buy through my Interactive Brokers account?

Of Course Compulsory Super is a Cost to Employees...

A reader asks the Sydney Morning Herald:

"Q The money that an employer ''compulsorily contributes'' to my super * comes from where? Is it my money contributed on my behalf by the employer, or is it the employer's money, begrudgingly contributed to my super because the government orders it?"

and the answer:

"A The contribution is a cost to employers and, although contributed on behalf of the employee, is not a cost to them unless they are employed under a salary-packaging arrangement."

While this might be legally correct it is absolutely not correct from an economic point of view. It reminds me of the claims back in 2000 from the government that the GST (=value added tax) wasn't a tax on business but just a tax collected by businesses from consumers for the government. If employers didn't have to make 9% contributions to super they would pay workers higher nominal wages by the same amount (presuming that workers value super and extra salary the same and so labor supply was unaffected which wouldn't be quite true). It is very much forced saving by workers. That doesn't mean there is anything wrong with it. It is a kind of behavioral economics policy - forcing people to save in their own interest because they wouldn't do enough of it otherwise.

* Super(annuation) is the retirement account system in Australia. Employers must by law contribute a minimum 9% of the stated salary on top of the salary actually paid to a superannuation account. This will be rising to 12% if current legislation is passed.

Tuesday, November 08, 2011

Security Clearance

If you ever have to do a security clearance - at least in this country - these are some of the things you'll need:

1. Everywhere you ever travelled overseas down to the months for the last 10 years and by year for previous years. And for your spouse too.

2. Addresses with proof in the form of utility bills for last ten years.

3. Everywhere you worked with months and times you weren't working for the last ten years.

4. Birth certificate etc. of course

5. You can get away with minimal info on your parents and your spouse's parents.

They'll also want to know all the accounts you have and their value and your credit card numbers etc.

Luckily I can provide all the info more or less. So that's a good reason not to throw things away...

This is the lowest level clearance so I can be granted free access to a federal government department. Working for a university is not working for the government. It's a public sector non-profit or something...

Sunday, November 06, 2011

Vice Chancellor of University of Queensland was Paid More than $1 Million

The Vice Chancellor (i.e. President) of the University of Queensland is resigning. But what shocked me in the story was that he was paid over $1 million! And his deputy was paid almost $1 million. Recently there was a controversy that the head of the Reserve Bank had an increase in salary to $1 million and that several other public officials saw increases to around $800k. The Prime Minister gets less than $400k and government department heads were in the $400k or so range. A full professor gets $145k base salary with more senior and star people up to $250k (Laureate Fellows get this much). My impression was that a Dean would get around $200k and so I assumed that the VC would be in the $400k range. But apparently not. Or is it just Queensland? Apparently this is not unique. Ian Young got about $900k at Swinburne and so presumably gets much more now he moved to ANU.

Friday, November 04, 2011

Australia is the Richest Country in the World by Far

When measured in terms of median wealth per individual in US Dollars at $220,000. Switzerland is richest in terms of mean wealth per individual. Both facts are in the Credit Suisse Wealth Report.

(HT: Enoughwealth)

Wednesday, November 02, 2011


Yes our rate of return in USD was 15.01% for October which is a record. But it was largely due to the rebound in the Australian Dollar. In AUD terms we only made 5.61% and in currency neutral terms 8.57%. And after 7 months of losses in AUD terms it doesn't get us back to where we were either. And now Greece seems to have gone crazy and called a referendum on a deal which would have written off a large amount of their debt. I didn't think Greece would end up exiting the Euro. But at this rate it might. I still think the Euro project as a whole won't be reversed. Anyway, here are this month's accounts in USD:

A gain of $87k in net worth. $30k came from foreign currency movement. $40k from core investment returns and $23k from salary, tax refunds, and retirement contributions. Spending was at $5,672. It seems that $5,000 is the new normal for spending. Net worth is at $551k or AUD 519k.

Tuesday, November 01, 2011

Moominmama Portfolio Performance October 2011

Finally a positive month... The MSCI World Index gained 10.74% for the month while the S&P500 total return index gained 10.93%. But the portfolio only gained 4.85%. Beta is estimated at 0.49 so this is roughly what you'd expect to see. Alternative investments lost money while equities actually outperformed the indices.

My preliminary estimate is that we gained more than 15% in USD terms in October.