Projected Net Worth in February 2015

If everything goes to plan this is roughly what our balance sheet would look like, using NetWorthIQ's format, by the end of February (in US Dollars):

Made an Offer on a House

After three years of looking for a house and participation in three auctions, I finally made an offer on a house, not through the auction process (This house was auctioned but didn't sell at auction). I think all our friends and family thought we would never buy... The price agreed on is $A740k ($US605k). It's part of a townhouse complex but is a freestanding house and has a "reserve" on two sides and a neigboring house on only one side. It has great views. It's a bit further from the city center than we would really like and less land area than we would like - only a very small garden area. but houses in this condition and size, with more land, nearer the center, and without intrusive electric power poles, which Snork Maiden doesn't like, are very expensive or maybe one a year comes along at a reasonable price range which we could bid on at an auction.

Now the legal/financial wheels begin to turn.

Murray Report on the Australian Financial System and Superannuation

The findings of the Murray review of the Australian financial system have been released. I am most interested in their recommendations for superannuation (retirement accounts). Of course, there is no way to know yet what recommendations the government (or future governments) will take on board. This just adds to the uncertainty surrounding super. I had been thinking that now I am 50 years old, as soon as we buy a house I would start making after tax ("nonconcessionary") contributions to super. This is because once you retire there is no tax on superannuation earnings and it is only 10 years till I am 60 and could withdraw money. Though pre-tax contributions ("concessionary" - actually they are taxed at 15% instead of your marginal rate) are limited to $35k per year, you can contribute up to $150k per year after tax. But if they actually withdraw the advantageous tax status of super and worse still if they end up forcing people to take an annuity instead of being able to access their money as they like then I wouldn't want to put any extra money in super at all. The review recommends making annuities a default option, which people will have to opt out of, but I can imagine it becoming compulsory. So, for now, even when we have bought a house I wouldn't plan on adding any extra non-concessionary contributions to super. And yes I sold Qantas too soon :(

Moomin Valley November 2014 Report

The Australian Dollar fell by more than two US cents this month from 87.89 to 85.23 US cents. The MSCI World Index rose 1.72%, the S&P 500 rose 2.69%, but the ASX200 fell 3.25%. In Australian Dollar terms we lost 0.46% and in US Dollar terms 3.47%. So we strongly outperformed the Australian market and strongly underperformed the global markets. Australian stocks and private equity performed very badly with the exception of Qantas and Medibank. Both Snork Maiden and I bought shares in the Medibank float - we should have about 7000 shares between us. On Monday, after the close of the month, I sold out of Qantas. It's been a rollercoaster ride. A price of above $2 seemed good for taking profits. Foreign stocks and the Winton Global Alpha Fund both did well.

As a result, net worth rose $A5k to $1.286 million (new high) and fell $US30k to $US1.096 million. The monthly accounts (in AUD) follow:


Current non-investment income (salary etc.) was a little above normal at $14.6k and retirement contributions were $3.2k as normal. Spending was $8.1k which is high but a lot less than last month! Still, that means that we managed to save $6.3k from current non-investment income. A big expense was a hotel bill for where I was staying in Europe on a business trip which should get refunded. On the other hand, because I accidentally paid this month's rent early, we didn't have to pay any rent this month and these two items just about cancelled each other out. So, the adjusted "core expenditure" is about the same as unadjusted expenditure. We spent some money on traveling in Europe and on the dentist (root canal) and that about explains the high spending this month it seems.

Half a Century

Today is my fiftieth birthday. It feels like quite a milestone. This morning I was sitting in a presentation with a colleague from a unit I used to work in who when I asked him how things are going said: "This is my final year, I'm retiring"... so after discussing that for a bit I told him it was my 50th birthday today. He said he was working too hard to celebrate back in 2000. It's probably the halfway point in my adult life, though you never know how long you are going to live, of course, we can just rely on life expectancies and how long our parents lived.

Careerwise, I think I need to be a bit less like this guy - "my strategic plan is to say yes to everything" and more like this guy. Two of the bloggers I follow. I find it hard to say no, though I am doing it more and more. Early in your career I do think you want to say yes a lot, but then you need to start to get more selective or you'll never get anything good done. You need to decide what to invest time in. I've been fairly successful. Three years ago I was appointed full professor and I am a reasonably well known researcher in some circles. I'm happy with some of my research, but I still think I could do much better work.

I got my PhD at age 29, but in a lot of other ways I've been a late developer. Since my fortieth birthday I achieved one major typical life goal - getting married (six years ago now) but at 50 I still don't have children, have never owned a house etc. I guess these goals were never that important to me or I actually was opposed to them. If you follow the blog, you'll know we are still pursuing those two goals. We probably have achieved the goal of financial security, though it could still all unwind if things go really wrong. I'm definitely not a risk averse person. I have come quite a way though from the crisis point in 2008. I made the right decision to refocus on my academic career.

Moominvalley October 2014 Report

The Australian Dollar rose slightly this month from 87.35 to 87.89 US cents. The MSCI World Index rose 0.3%, the S&P 500 rose 2.44%, and the ASX200 rose 4.43%. In Australian Dollar terms we gained 2.02% and in US Dollar terms 2.65%. So we slightly underperformed the Australian market and gained against the global markets. Most asset classes gained with hedge funds, private equity, and Australian small cap stocks falling.

As a result, net worth rose $A26k to $1.281 million (new high) or $US30k to $US1.126 million. The monthly accounts (in AUD) follow:

Current non-investment income (salary etc.) was above normal at $20.5k. This was due to tax refunds and a very large Medicare benefit.* Retirement contributions were $3.2k as normal. Spending was $19.4k which I think is a record. We spent $12.7k on health care - for an IVF cycle. It turns out it didn't work, so maybe we will be spending this again in a couple of months.

Still we managed to save $717 from current non-investment income. We gained $25k on investments.

* Australia has a hybrid public health care, private insurance, and user pays health system. At least for out-patient services we typically get the government contribution as a cash payment to our bank account.

Didn't Buy

We participated at another auction today and again ended up not buying. Someone bid $850k to open the bidding but then dropped out after that. There were three serious bidders. Most of the time it was just me and a guy whose partner had told the agent at the first showing that if someone made a bid before the auction he should let her know. I went as high as $1,017,500. The other guy bid $1.02 million and then suddenly a third guy behind us jumped in with $1.025 million. The next bid was $1.03 million and then the third guy said $1.04 million and that was the final price. The valuation we got was $950k.

Moominvalley September 2014 Report

The Australian Dollar fell sharply this month from 93.43 to 87.35  US cents. The MSCI World Index fell 3.20%, the S&P 500 fell 1.40%, and the ASX200 fell 5.38%. In Australian Dollar terms we lost 1.97%  and in US Dollar terms 8.38%. So we beat the Australian market but lost badly against the global markets. All asset classes apart from hedge funds lost money with private equity down the worst (4.06%) closely followed by Australian large cap (3.87%) and Australian small cap stocks (3.41%).

As a result, net worth fell $A12k to $1.254 million or $US88k to $US1.095 million. I first hit $US88k in net worth in December 1999. Now we can lose that in a month... Our largest ever monthly decline in USD terms was in October 2008 at $90k. This is the second largest in dollar terms. The monthly accounts (in AUD) follow:



Current non-investment income (salary etc.) was about normal at $13.8k. Retirement contributions were $3.2k. Spending was $5.5k which is about average. We managed as a result to save $8k from current non-investment income. We lost $25k on investments.We got $1k in tax credits from non-retirement investments for the month. That's a thousand dollars less tax to pay in the next tax return.

Moom's Taxes 2013-14 Edition

I have now completed my own tax return - this goes really fast when you have a good system in place. Looks like I should also get a refund. My salary is only up 3% on last year and my taxable income by 6% but my real after tax cash income (counting realised capital gains and losses in the year they happen) is up 18%. Dividends, franking credits etc. are all up steeply too.

Previous years:

2012-13
2011-12
2010-11
2009-10
2008-9
2007-8

Snork Maiden's Taxes 2013-14 Edition

So, I just finished doing Snork Maiden's tax return for this tax year:
The tax year runs from 1st July to 30th June in Australia. The good news is that she should get a tax refund this year. This is because we now got private health insurance. Income is again up by about 10%. Investment income is up by a lot more than salary as are tax credits derived from investment income. The figures ignore employer and employee contributions to superannuation (retirement account) which amount to a lot of extra income.

Here are the reports on Snork Maiden's taxes for all previous years:

2012-13
2011-12
2010-11
2009-10
2008-9
2007-8

Supplementary Section Instructions Only Available as html?!

Apparently you can't even download a pdf of the supplementary tax return instructions. Instead you have to go through all these webpages.... There is a pdf of the main instructions (and hard copies at ATO offices) but not of the supplementary instructions. Why? If someone knows where they are please let me know!

Ordered Another Valuation

I asked the bank to order a valuation on another house. This one is going to cost more than the previous one that we didn't end up buying. But there will be very little work needed to be done if we buy it, so we can afford to pay more. I think the house is a little on the large size, but Snork Maiden disagrees. It's in a different neighborhood a few kilometers further from the center (near this other one we bidded on last year). Despite finding that valuations aren't much use, I think this time we can use it as a basis for talking to the bank guy about raising the maximum amount we can borrow. I am now thinking to put 20% down (up from previously thinking 10%) after rerunning the numbers on a larger downpayment versus paying mortgage insurance, which you have to pay if you put down less than 10%. So, I am also ramping up the size of the Moominhouse buying fund. It's currently at $182k with a target of $250k (up from $150k).

P.S. 4pm

The valuation came in at $950k with a range of $920-$980k. We had guessed about $1 million. Anyway, so now we are going to discuss with the bank how much we can really borrow.

Get Your Credit Score

You can now get your credit score for free in Australia, something that has long been taken for granted in the US. My score was 998 which is in the excellent band, which ranges from 833 to 1200.

Moominvalley Monthly Report August 2014

The Australian Dollar rose a little this month to 93.43 US cents. The MSCI World Index rose 2.25%, the S&P 500 rose 4.00%, but the ASX200 rose only 0.62%. Our Australian Dollar performance was close to the latter gaining 0.58% (1.05% in US Dollar terms). All asset classes apart from private equity gained with Australian small cap and US stocks doing best. By the way, you can get an up to date asset allocation here.

Net worth rose $A19k to $1.266 million or $US22k to $US1.183 million. The monthly accounts (in AUD) follow:



This month there is a new column and row to take into account housing investment activities separately from spending or other investing. So costs incurred in the housing hunt will be accounted for here. We seem to be out of the race for the house I bidded on this weekend, but the search continues.

Current non-investment income (salary etc.) was  above normal at $15.7k due to some extra payments. Spending was $4.7k which is lower than average. We managed as a result to save $10.6k from non-investment income. We gained $6.9k on investments.

Auction Day

So today was the auction day for the house we were interested in buying. At this point we haven't bought it...

So we got a valuation that cost us $330 and they produced a value of $770k. But when we were meeting with the mortgage guy at the bank he said that the bank could do a valuation for $50 and if we go ahead with the purchase the fee will be waived as they do this as part of the loan approval process anyway. So we got that valuation too. The median of that appraisal was $800k with a range of $760k to $840k. So I went into the auction with an limit of around $860k in mind. The highest I got to bid was $850k and then the next bid was $865k. The auctioneer was not accepting smaller increments. As we were still below the reserve price I then decided not to push the price higher on the gamble that the owner wouldn't accept this higher bidder's offer and the house will return to market with a listed price. It turns out that the owner's reserve price was $970k but they are willing to go down to $950k but the other bidder would only go up to $870k. So, I expect the house will either be listed now at $950k or taken off the market and the owner will try again at the beginning of 2015 just before the current tenancy concludes.

Independent Valuers

So, we are thinking of getting a valuation on the house. The price of this service varies widely. These local guys charge $330. Herron Todd White - "the largest valuer in Australia" - charges $660. Is this a case where it makes sense to go with the cheaper service or is there some extra quality or service that is worth paying double for?

Gearing Up for Housebuying Again

So, this weekend we went to see several houses in different parts of the city. We are following up in more detail on the one in the picture. The location is convenient to public transport with a position on top of a hill looking out over trees to a mountain - you could almost be out in the bush, apart from the traffic noise at the back of the house. It is the most expensive block in this suburb though it has been subdivided in two in what is called here a dual occupancy. The remaining block is still just over 1000 square metres. The house looks best from the street side, as in the picture. Inside is another story and there may be some structural issues with foundations at the back. The house has been rented presumably to students at my university for the last 20 years. Current rent is $570 a week. But that is only one of the two apartments the property is divided into. The apartment is rented till early next year though the second apartment is unoccupied. I think the price has to be over $700k as the land value is at least $550k. Auction is at the end of the month.

I have a previous history with this house. Fifteen years ago my girlfriend lived there, though we weren't together very long and I didn't visit that many times as a result. It was strange to come back again now. Looks like they didn't do any renovation in all that time apart from redesigning the front garden.

Snork Maiden talked to a colleague to see if they can recommend a builder to assess the potential renovation. Turns out the people who live in the second house on the block are friends of her colleague whose children go to the same school as his children.

Monthly Spending

The graph shows our monthly spending each month since moving to Australia. I've taken out some business related expenditures that get refunded - so this is the same as the core expenditure I report in my monthly reports. You can see that the first year we were frugal and expenditure stuck around or just under the $A4,000 per month level. After that there are lots of spikes associated with travel and other larger expenditures and gradually the average has moved up to about $A6,000 a month currently. Note that $A2,150 a month is our rent. All the numbers are nominal, not adjusted for inflation.

Moominvalley July 2014 Report

Another monthly report... Much of this month was spent travelling and then catching up on work when I got back. I don't post here much because I don't do much trading or make many new investments nowadays. And I put most of my blogging effort into my professional blog. So there are mostly only these monthly reports, reports on tax returns, and occasional new investments etc. Of course we are investing plenty of money into funds and stocks we already own trying to keep in line with our diversified strategy.

The Australian Dollar fell a little this month to 93 US cents. The MSCI World Index fell 1.18%, the S&P 500 fell 1.37%, but the ASX200 rose 4.40%. We gained 1.74% in US Dollar terms and 3.15% in Australian Dollar terms. So we didn't beat the Australian stock market but did much better than the world markets. Net worth rose $A56k to $1.247 million or $US37k to $US1.160 million. The monthly accounts (in AUD) follow:

Other income is non-investment income. It was far above normal this month at $27.9k as we got three salary payments this month and there were refunds and rpepayments for business travel spending. Spending was $9.3k with $6.6k of that not refundable. That's not bad considering that both of us were traveling internationally for part of the month. We managed as a result to save $18.7k from non-investment income. We gained $37.5k on investments with $6.8k of that contributed by foreign exchange gains.

Moomin Valley Monthly Report June 2014

A belated monthly report. As June is the end of the financial year for tax purposes in Australia a lot of data only comes in a few weeks after the end of the month and so the June report is usually delayed. The Australian Dollar rose just over a US cent this month. The MSCI World Index rose 1.93%, the S&P 500, 2.07, and the ASX200 lost 2.22%. We gained 0.82% in US Dollar terms but lost 0.59% in Australian Dollar terms. So we beat the Australian stock market but not the world markets. Net worth rose $A7k to $1.189 million or $US22k to $US1.121 million. The monthly accounts (in AUD)follow:

Other income is non-investment income. It was above normal this month at $19.9k as refunds for business travel spending continued to come in. Spending was $7,593 with $6,345 of that not refundable. That's not bad considering that both of us were traveling internationally for part of the month. We managed as a result to save $12k from non-investment income after dis-saving last month. Spending so far this year is $54k in total compared to $49k last year. Core spending is actually down from $44k to $41k. I expect less spending in the second half of the year unless we finally buy a house or something like that.

We lost $7k on investments. Tax credits on non-retirement accounts (the main delayed item) were $2,396. This year's total tax credits are at a record level:

Despite this, my preliminary tax calculation for this year is showing me owing about $300 (after already pay $50k in taxes) and I suspect that Snork Maiden will also owe extra tax though I haven't calculated her tax return yet at all.

Moomin Valley Monthly Report May 2014

The Australian Dollar barely changed this month. The MSCI World Index rose 2.21%, the S&P 500, 2.35%, and the ASX200 0.68%. We gained 1.73% in US Dollar terms or 1.57% in Australian Dollar terms. So we beat the Australian stock market but not the world markets. Net worth rose $A19k to $1.182 million or $US19k to $US1.099 million. The monthly accounts (in AUD now) follow:

Other income is non-investment income. It was above normal this month at $18.3k as refunds for business travel spending began to come in. Starting in two weeks, I will be travelling around the world, first stop is New York City. Spending as a result was at a record level of $19.1k. But "only" $12.0k of that was "core expenditure". Refunds should cover the other $7k eventually. Last year core spending hit $14k in May. As a result we dissaved from regular income (-$0.8k).  We gained $18.2k on investments. The asset class that did best this month was hedge funds at 4.64%, followed by private equity at 2.9% and commodities at 2.11%. All asset classes gained. The worst was Australian small caps at 0.12%.

You can track our net worth gain and some asset class breakdown on NetWorthIQ. It's interesting to look back at the picture 10 years ago.

Man 3 Eclipse Update

Back in 2008 I invested in a capital guaranteed managed futures fund called Man 3 Eclipse. This didn't turn out to be a great investment but it wasn't that disastrous either. However, other investors it seems have not been impressed by the fund's underperformance and have redeemed their shares. As the fund got smaller, late last year the directors decided to stop investing in active investment strategies and switch to 100% deposits in Australian Dollars. The fund was issued for a fixed period  maturing on 29 April 2016. A feature of the fund was a ratchet that locked in profits under some conditions. Currently the value at maturity is guaranteed to be at least $1.0554 for every dollar invested. The actual net asset value per share is $1.0414.If we assume that the fund will earn 2% per annum from now on then the value at maturity will be about $1.08. But my understanding is that if you redeem shares early then you only get $1. So this is a guaranteed 4% rate of return per year assuming they can earn 2%. The main negative possibility is that fees chew up the interest yield. If they do then we still get back at least $1.0554. Based on that I will keep my money in the fund. It's only $8,000 anyway...

So far, my investment in the Winton Global Alpha fund is much more successful. It's up about 5% since I invested.

New Investment

A new investment - Cadence Capital Limited - another Australian listed investment company that basically runs a hedge fund in listed structure. They have long and short investments, potentially leverage or net cash, performance fees - all the standard hedge fund features. And it is exchange traded and pays franked dividends... They use a combination of fundamental and technical analysis. Currently the fund is selling for slightly less than net asset value but has performed very well in the past. It has strongly outperformed the Australian index even after fees. Initial position is 10,000 shares, but imagine that will increase over time. I estimate alpha relative to the ASX 200 of 9.43%, which is really high. Beta is 0.75.

Moomin Valley Monthly Report April 2014

I was just thinking this morning that we need to increase net worth by $3,000 each month now just to compensate for inflation. 

The Australian Dollar was pretty stable this month. The MSCI World Index rose 1.00%, the S&P 500, 0.74%, and the ASX200 1.77%. We gained 0.89% in US Dollar terms or 0.80% in Australian Dollar terms. So we beat the world markets but not the Australian stock market. Net worth rose $15k to $1.163 million in Australian Dollars or $US15k to $US1.080 million. The monthly accounts (in AUD now) follow:

Other income is income not from investments or retirement contributions. It was normal this month at $13.5k. Spending was very high this month at $9.8k but after adjustments it was an average $5.8k. We saved only $3.7k from regular income. 

We gained $9.2k on investments. The asset class that did best this month was real estate and the worst private equity.

Moominvalley March 2014 Report

I am wondering whether to continue this blog as the only thing I have posted recently are these monthly reports and now we are above US$1 million dollars in net worth and things seem to be mostly smooth sailing it is not so interesting. I originally started the blog partly to help me be more responsible with trading as I had to report monthly on what was happening. I haven't done much trading since the GFC. Also, it was a way for Snork Maiden to read about our financial situation, which she pretty much totally leaves up to me to take care of. It doesn't seem that Snork Maiden reads the blog much any more either. And I am guessing that at these levels of net worth and income it is not something that a lot of the people reading PF blogs will be able to relate to. Many of the bloggers who used to report detailed numbers dropped them after they became a success in PF terms and relatively wealthy. Anyway, I haven't quite given up yet and I see that the posts do get a few views still, so here is another monthly report.

The Australian Dollar increased further this month from $US0.8933 to $US0.9274. This depressed gains in net worth in Australian Dollar terms. Stock markets rose a little. The MSCI World Index rose 0.50%, the S&P 500, 0.84%, and the ASX200 0.29%. We gained 3.02% in US Dollar terms and lost 0.77% in Australian Dollar terms. So we beat the world markets but not the Australian stock market. Net worth rose $5k to $1.148 million in Australian Dollars and rose $US43k to $US1.065 million. The monthly accounts (in AUD now) follow:

Other income is income not from investments or retirement contributions. It was normal this month at $14.6k. Spending was low this month at $4.3k but after adjustments it was an average $5.5k. As a result, we saved $10.3k from regular income

We lost $8.8k on investments. $5.1k of the loss was due to the rise in the Australian Dollar. The asset class that did best this month was hedge funds, but that is because I did some trading in shares of Platinum Capital. Private equity was the only other asset class with a positive return.

Moominvalley February 2014 Report

The Australian Dollar rebounded this month from $US0.8742 to $US0.8933. This depressed gains in net worth in Australian Dollar terms. Stock markets rose strongly. The MSCI World Index rose 4.88%, the S&P 500, 4.57%, and the ASX200 4.97%. We gained 5.49% in US Dollar terms and 3.24% in Australian Dollar terms. So we beat the world markets but not the Australian stock market. Net worth rose $43k to $1.143 million in Australian Dollars and rose $US60k to $US1.021 million. So, we are finally a US Dollar millionaire household! The monthly accounts (in AUD now) follow:


Other income is income not from investments or retirement contributions. It was normal this month at $14.2k. Spending was high this month at $7.6k with $6.8k in core non-work related expenditure. In other words, not including stuff that we will get refunded. As a result, we saved $6.5k from regular income. Retirement contributions were on the high side as we both got a third retirement contribution this month. Pay and retirement contributions are paid here every two weeks in Australia, so some months have three salary payments or retirement contributions. They don't coincide as there is usually a delay with the retirement contributions being paid into the superannuation fund.

We gained $35k on investments. There was a loss due to the rise in the AUD of $2.6k. The main investment gains this month were in large cap Australian stocks, which gained 4.4%. Private equity is the only asset class where we had a loss. I also repurchased shares in Platinum Capital and early in month switch a little money into the CFS Geared Share Fund. Later in the month I rebalanced Snork Maiden's CFS account. So our allocation to large cap Australian stocks and hedge funds increased with the allocation to all other asset classes falling.

Moomin Valley January 2014 Report

As I said in the annual report, the data in these monthly reports will be by default in Australian Dollars from now on. The Australian Dollar is now worth quite a bit less than a US Dollar and I think about our finances mainly in Australian Dollars of course, so it makes sense to report in Australian Dollars. The Australian Dollar fell further this month from $US0.8928 to $US0.8742. This depressed gains in net worth in US Dollar terms. Net worth fell $1k to $1.099 million in Australian Dollars and fell $US21k to $US961k. The monthly accounts (in AUD now) follow:

Other income is income not from investments or retirement contributions. It was normal this month at $15.4k. Spending was about average this month at $6.0k with $5.3k in core non-work related expenditure. In other words, not including stuff that we will get refunded. As a result, we saved $9.4k from regular income. Retirement contributions were also at the typical monthly rate.

We lost $15k on investments. There was a gain due to the fall in the AUD of $2.8k. Most of the loss was in retirement accounts. The rate of return for the month was -1.36% in AUD terms or -3.41% in US Dollar terms. The MSCI lost 3.98%, the S&P500 3.46%, and the ASX 200 lost 3.03% - the first two indices are in USD terms and the latter in AUD. So, we beat the market. Actually, I am recently seeing better performance on market declines than has been the case in the past.

I sold some shares in Platinum Capital as they are overvalued and some international share fund units. I bought some shares of Clime Capital and other Aussie stock funds. Overall this resulted in a bit of de-leveraging as cash continued to pile up and I reduced debt. Total leverage fell from 32.9% to 30.1%. Looking a the returns on asset classes, large cap Australian shares lost 2.43% and large cap US stocks 2.3%. By contrast, hedge funds (mainly Platinum Capital) gained 3.21%.

Moomin Valley Annual Report 2013

This year was much like 2012 career- and personal life-wise. Financially, the main difference is that the Australian Dollar fell from $US 1.0392 to $US 0.8928. This means that though it was another strong year for underlying investment returns, net worth in USD grew much more slowly than last year and in AUD terms much faster. In AUD we went from $759k to $1.097 million. In USD terms from $789k to $980k.

These are the annual accounts that sum each of my monthly reports for the year in Australian Dollars:

 

Non-investment income was up partly because of pay rises but also because I got some extra pay for taking on additional responsibilities at work. My pay will actually fall in 2014 as that has now ended. Also, there was quite a bit of work related expenditure refunds (see below). Investment income was twice as much this year as last partly because the portfolio was growing and investment returns were 25.6% this year vs. 16.9% last. It is hard to imagine that they will be this good again in 2014. As a result comprehensive income came in at $444k. Remember that this is an after tax result (mostly - investment earnings are computed pre-tax), also that $162k is locked up in retirement accounts.

Spending was at a record level of $88k. About $11k of this was work related etc. spending that was refunded. We did a lot of travel and recently started private health insurance. I estimate that if we were maximally frugal we could have spent just $49k, which is the item marked "needs" above.

As a result, net worth rose $339k. Saving from regular income was $109k.

Moomin Valley December 2013 Report

The Australian Dollar fell further this month from $US0.9124 to $US0.8928. This depressed gains in net worth in US Dollar terms. Net worth increased $4k to $980k In Australian Dollars we reached $1.098 million, up $A29k on last month. The monthly accounts (in USD) follow:


Other income is income not from investments or retirement contributions. It was high this month at $18.8k because both of us got three pay checks this month. Spending was normal this month at $4.8k ($A5.3k). As a result, we saved $14k from regular income.

We lost money on investments - $11.6k - mainly due to the fall in the Australian Dollar and an underlying gain of only $6.5k. Rate of return for the month was -1.19% in USD terms or +0.98% in Australian Dollar terms. The MSCI gained 1.76%, the S&P500 2.53%, and the ASX 200 gained 0.79% - the first two indices are in USD terms and the latter in AUD.

This month I subscribed to the Platinum Capital rights issue for $A7.75k, this was the largest investment move of the month. Every month we automatically add $A1k to each of mine and Snork Maiden's Australian managed fund accounts and save around $3k in superannuation (retirement) with our employers funds. I also added $3k to Snork Maiden's managed fund account - added equal amounts to property securities and fixed interest funds to rebalance things. So then the remaining saving was in cash. Strong investment performers this month were Platinum Capital (PMC.AX) and IPE.AX. The worst performing investment was Qantas. The Winton managed futures fund had a second positive month. So far, so good. Private equity, foreign stocks, and hedge funds were the best performing asset classes, while Australian stocks were weak. Next year, I think I will report our monthly accounts primarily in Australian Dollars as that is how we think about them and it seems that the Australian and US Dollar will get further apart still. Coming soon: our annual review.

Managed Accounts Finally Above their Pre-GFC Investment Values

Two of my Mom's managed accounts - one in US stocks and one in international stocks are finally worth a bit more than the amounts we invested in 2007 and 2008 in what were retrospectively ill-timed moves and in one case with a manager who turned out to be have serious issues down the track. Like going out of business issues. This is why it has taken so long to get back above what was originally invested despite the strong performance of U.S. stock indices for a while now. Several funds in her main account are also still losing money. They are all the commodities/futures funds investments and several emerging markets funds (Brazil, India). But this month the portfolio hit a new high, though numbers aren't very accurate as I only update data on spending accounts once a year or so. Investment return this month was 1.25%.

2013 Outcome and 2014 Forecast

In Australian Dollar terms we came in above the top of 2013's predicted range for net worth of $A700k-$A1 million with a final net worth of $A1.098 million. In US Dollar terms the forecast was $500k-$1 million and we ended at $US980k, very close to the top of the range. For this year, my most optimistic forecast is $A1.4 million, which assumes that the Australian Dollar falls to 85 cents and the stock market does well again. The least optimistic forecast is $A1 million which assumes a significant fall in the market and the Australian Dollar at 75 cents. The corresponding US Dollar range is $US1.19 million to $US0.75 million.