Friday, October 18, 2013

And in US Dollars Too

As the Australian Dollar has risen strongly in the last few days, it has pushed us over the 1 million US Dollar mark, at least intra-month, too.

Saturday, October 12, 2013

Moom's Taxes 2012-13 Edition

My taxes are not so much changed from last year as things have settled down a lot now, compared to our first few years in Australia:
Salary (no employee super contributions so that is the actual salary) was up 12.3%. Interest up dramatically due to our house buying fund. Dividends and managed fund distributions up more modestly. Deductions were down on the whole. Tax payable up 19.4% due to lower deductions and the increase in Medicare surcharge etc. as a result after tax income didn't rise as much.

I expect to pay $1440 extra tax. I actually increased my CGT loss carry-forward this year, taking it from from $82k to $83k! That's a tax asset worth about $31k, which we don't include in our regular net worth spreadsheets.

Snork Maiden's Taxes 2012-13 Edition

I've finally done our tax returns for this year. First, is Snork Maiden's taxes. Blogpost on last year's taxes in order to compare with this year. In Australia there is no such thing as a joint tax return but increasingly married couples have to enter data in their tax return on their spouses finances as more things are being assessed on a household basis such as the Medicare Surcharge Tax. So, actually I need to do them at the same time. Anyway, here is a summary for Snork Maiden:

Her salary is actually higher than this. Employee superannuation (retirement) contributions are not counted in the taxable income - so-called "salary sacrifice". They amounted to about $A10k. Salary was up 11.5% on last year and taxable income including investments was up 12.5%. Distributions from managed funds and capital gains were up dramatically. I also compute a real income number before and after tax (up 15.2%) that puts back in some of the deductions which are purely imaginary. For example, long-term capital gains are taxed at half the rate of ordinary income but instead of using half the tax rate, half the capital gain is deducted from taxable income.

It looks like she owes about $500 extra tax this year.

Update on Interactive Brokers

E-mail from IB this morning telling us Australian investors who have margin loans with them that we have to close out our margin loans by 11th November. This follows the previous e-mail saying that we couldn't open any new positions until we paid off the loan. So, I will be transferring money to the US to pay off the loan. I plan to use Ozforex for this. They do say that they hope to be able to offer margin loans to Australian customers again with 6 months.

Lots of Nice Head and Shoulders Patterns in the Markets

It looks like the US markets are expecting a US default or something despite the rise in stock prices over the last two days. Of course, if the crisis is really solved the market will likely go higher but if not, it will play out as a classic textbook technical analysis pattern. My favorite indicators are also pointing down:

Sunday, October 06, 2013

Investment Returns Since the Financial Crisis

Following up on yesterday's post comparing global, US, and Australian index rates of return and my own investment performance, today's post looks at the period after the low in the stockmarkets in March 2009. I also compare everything properly in both USD and AUD terms. First, in US Dollar terms:
Initially I tracked the ASX200 very closely coming out of the low but then gradually got pulled down by the lower performance of foreign shares. In the last year the ASX has underperformed foreign shares and that too seems to drag on our performance. Seem to be getting the worst of both worlds rather than the best! In AUD terms things look a bit different (just use the AUD/USD exchange rate to convert everything to AUD values):
Foreign shares performed poorly coming out of the financial crisis. Since mid 2011 they have outperformed Australian shares and as a result I've underperformed the foreign indices in that period.

Saturday, October 05, 2013

10 Year Rates of Return: ASX200 vs MSCI, SPX, and Moom

Another way of showing just how extraordinary the performance of the Australian stockmarket has been in the last couple of decades. I've posted this graph before, but now I've added the rate of return of the ASX200 index, which is the 200 largest stocks by capitalization on the Australian share market:

Returns are the average annual rate of return over the 10 years previous to the date marked. The ASX almost hit 15% per annum over ten years at one point! This maybe isn't a fair comparison as Moom, MSCI, and S&P500 are returns in US Dollars and the ASX200 is the return in Australian Dollars. ">Again you can see that I track the MSCI pretty closely.

Thursday, October 03, 2013

Investment Performance Against 4 Different Indices

BigChrisB sent me the ASX200 Accumulation Index data he had collected and I have now measured my investment performance since 1996 (monthly data) against it and compared that to the other indices I've been tracking performance against:

The table shows that you get very different performance figures depending on which index you benchmark against. First the MSCI World Index in USD terms and using the US risk free rate to do the standard CAPM regression analysis. In other words, I measure my investment returns in US Dollars too. Estimated beta is 1.23 - a 1% change in the index is associated with a 1.23% change in my portfolio. Alpha is 0.44% which means I am beating the index on a risk adjusted basis. My monthly percentage rate of return is most correlated with the returns of this index. R-Squared is 0.74 which means that 74% of the variation in my rate of return is explained by the changes in the index. Results are quite different when I measure my rate of return and that of the index in Australian Dollars. The R-Squared is only 0.39, beta is much lower, and alpha is a little negative. Switching back to US Dollars my correlation with the S&P 500 is worse than with the MSCI but I underperformed the index by 1.6% per year, risk adjusted. Finally, in comparison to the Australian ASX 200 index and measuring things in Australian Dollars I underperformed by 3.89% a year, beta is 0.89 and R-Squared is 0.51. The ASX has been a fantastic performer over this period of time:

This explains why I benchmark against the MSCI in USD terms even though I live in Australia.

Tuesday, October 01, 2013

Moomin Valley September 2013 Report

The main news this month was passing the one million Australian Dollar net worth mark. In other news, I spent two weeks this month in Northern Europe, but that hasn't had any impact on the figures after I deducted the refundable component to get "core expenditure", which was only $3,900. This month's accounts in US Dollars, as usual:

Current other income was a little higher than usual due to the refund I got for the European trip. I have the answer to last month's question as to why Snork Maiden's pay was a bit higher than expected. She got promoted one notch on the pay-scale but this happened after the regular union negotiated pay rise kicked in on 1 July though it was retroactive to 1 July.

The Australian Dollar rose this month to  93.41 US cents, which boosted investment returns in USD terms. As you can see from the table about 2/3 of USD investment returns were exchange rate gains.

I still have to file tax returns for both of us. I actually got a letter from the ATO telling me I was running out of time. I thought that was cheeky given the deadline is the end of this month.

One Million Australian Dollars

We reached the long-awaited million Australian dollar net worth level. We aren't quite at a million US Dollars yet. It was back in 2007 when we first crossed a half million Australian Dollars mark for the first time and in 2008 we briefly touched half a million US Dollars. In between there was a global financial crisis, a marriage, and a move to Australia... well in reverse order... attempts to make a living as a trader, being unemployed, and then getting back onto the career track at a higher salary than before:
I actually thought yesterday when the Australian market was falling 85 points (1.6%) that we wouldn't remain above the line at the end of the month. Actually, the Geared Share Fund fell 3.3% on the day but was still up 5.5% on the month.

So the numbers come in at $A1.026 million or $US 958k. Rate of return for the month was 8.63% in USD terms or 3.5% in Australian Dollar terms. The MSCI gained 5.2% and the S&P500 3.14%. More accounting details to come.