Sunday, October 28, 2012

Update on Incompetent TD Ameritrade Moves

Finally, I got the money I withdrew from my TD Ameritrade Roth IRA over to Interactive Brokers. It took a while because my bank account with HSBC was transferred to First Niagara and I had to update the details and confirm the account etc.

Now today I get a new e-mail from Ameritrade:

"We previously communicated to you that your Retirement Account with TD Ameritrade would be impacted by a new business policy requiring the account to be closed due to your country of residence. Upon further review, it has been determined that your Retirement Account, ending in xxxx, will no longer be impacted by this policy. Trading ability has been restored to your account, and you are no longer required to transfer or liquidate the account. We are sorry for any inconvenience this may have caused you, and are sure that you have questions. Please feel free to contact us regarding any questions or concerns at 800-669-3900 or simply reply to this message.

Sincerely, xxxx"

That is crazy! They seem very incompetent. I e-mailed them back to make sure my account is closed as I have already sold everything (and paid brokerage fees for that! Selling a mutual fund cost $50) and moved my money to another broker! At least I don't need to pay capital gains tax as the account lost money. There was just under $10k in the account and officially in Australia I am meant to pay tax on it so I wasn't that upset to have to close it. IB couldn't open a new Roth and so the money is now in a regular brokerage account.

Sunday, October 07, 2012

Saving More Each Month than I Earned as a Graduate Student in a Year

As a relatively old PF blogger :) I've occasionally mentioned that young people shouldn't worry too much about saving for retirement and should enjoy life. Of course, if you are earning a high salary when you are young then go ahead and save. But there is no sense in depriving yourself if your income is low and expected to increase. I just realized that our average saving (not counting investment returns) per month is now more than I earned in a year as a graduate student twenty years ago. I earned between $9k and $10k a year back then (around 1992). Yes, prices have probably about doubled since then, and the Australian Dollar is extremely strong now which makes our current savings particularly high in US Dollar terms, but then let's say we save in 3 months what I earned in a year in real terms and we would not be wrong. Back then I was spending more than I earned then but not dramatically so. I ended up with a negative net worth of about $11k. I expected to certainly earn more in the future than I was then and so thought this was entirely justified. On the other hand, my Dad told me I should be saving money. Of course, maybe that was because he was lending me money :) * I think the investment in my graduate education has certainly paid off. Of course, it might not have but it was hard for me to imagine that I wouldn't be earning a lot more in some job in the future.

But, I think you'll find that most people save the most for retirement in the years leading up to retirement despite all the rhetoric from the financial management industry about starting early and compounding. There is a good reason for this - their income is highest here and for most people other life expenditures are maybe declining (buying a house, having children). The latter isn't the case for us, of course. We are still looking at buying our first house.

* About $9,000 by the end. I was studying in the US as a foreign student so my ability to work while studying was very limited and I depended on what the university would pay me as a grad student. After I paid off my credit card bills in 1995 I started to pay him back. I owed about £5k when he cancelled the loan after he sold some art works he inherited 25 years earlier.

Tuesday, October 02, 2012

Moom's Taxes 2011-12 Edition

After doing Snork Maiden's taxes my final investment tax statement arrived and I could do my taxes:

It's a huge contrast to my 2010-2011 taxes (Follow through to earlier years and it is even more dramatic):

  • My salary has almost tripled.
  • Interest is almost 10 times as high.
  • Foreign source income is a fraction of what it was (2010-11 included foreign employment income).
  • Deductions are similar though I am now attributing some expenses to my mutual funds which I previously attributed entirely to stock investments.
  • Gross tax has quadrupled and net tax is about 6 times higher with almost three times the tax rate, now at 29.51%.
I'm expecting a rather small tax refund, barely offsetting the extra tax that Snork Maiden owes. I used to get massive refunds. I actually used up some of my CGT loss carry-forward this year, taking it down from $82k to $80k! That's a tax asset worth about $30k, which we don't include in our regular net worth spreadsheets. Maybe I should.

Monday, October 01, 2012

Moominvalley Monthly Report September 2012

Financially, things went OK again this month. We hit new net worth highs in both Australian and US Dollar terms of $A678k (+$19k) and $US705k (+23k). The Australian Dollar was pretty stable, up 0.5 US cents.

Our rate of return was 2.94% in USD terms versus 3.19% for the MSCI and 2.58% for the S&P500. In Australian Dollar terms we made 2.40%. The monthly accounts (in US Dollars) look like this:

This was a very high spending amount as Snork Maiden gave $A5,000 to her mother and also bought a ticket to China ($A1,400). I also bought a ticket for a trip next month, though my employer is paying most of it, I'm paying $A600. Taking all of this out we still spent $5,000, which I guess is the new normal. We did go to Western Australia and spent quite a bit there on car hire, restaurants etc.

The monthly accounts show that we earned $13.5k in salaries etc. . Retirement contributions were $2.8k. Total investment returns were $20.0k. There was very little change in the portfolio over the month as all asset classes made money. I did withdraw $A1000 from one of Snork Maiden's mutual funds to add to the house-buying fund. That fund reached $A131k up from $A126k despite transferring $A6k from this account to China ($A1000 is spending money for Snork Maiden there).