Saturday, January 31, 2015

Continuing to Recover from the Financial Crisis

This month profits on non-retirement accounts finally exceed the previous peak in June 2007 (in AUD terms at least). Of course, adjusted for inflation that is still a big loss, hence the title of this post. In retirement accounts the pre-crisis peak was $A108k in August 2007. This was exceeded for the first time in February 2013 and we now stand at over a quarter million dollars in cumulative profit this month. The retirement account numbers are post-tax. Cumulative profits on non-retirement accounts are only just over $A80k.

Thursday, January 22, 2015

This is What Buying a House Looks LIke

Each time we tried to buy a house at auction we moved the necessary deposit money into our checking account from this account. The three attempts should be pretty clear on the chart - one in early 2013 and two in late 2014. Then finally we are actually buying a house, but not at auction. You can see the initial 10% deposit money coming out of the account (though the seller actually agreed to 5%) and then the rest of the 20% downpayment and the stamp duty tax - we have to pay a 3.7% tax to the state government to buy a house... The latter really slows people down from buying and selling houses and encourages people to extend, improve, or knock down and rebuild their existing house.

Tuesday, January 20, 2015

Signed Mortgage

Today we signed all the mortgage documentation at the bank to borrow $A592k....

Friday, January 16, 2015

Paid Deposit

I delivered the 5% deposit check for the house to the lawyer this morning and she expects the deal will be locked in today or Monday. Then we sign the mortgage loan documents at the bank and the countdown to "settlement" starts. I had been planning to do a proper economic accounting for the house, but it is getting very complicated and I think I might take a really simple option instead. This would treat principal payments like today's deposit and the capital component of mortgage payments as saving and everything else as just consumption spending. And I won't try to compute a rate of return for this asset. Any gain in value above the amount saved into the asset will be a gain in net worth but won't be included in reports on our investment performance.

Monday, January 05, 2015

Super Funds Make 7.5% in 2014

Says this article in the Australian. We made 12.5% on our retirement accounts this year in Australian Dollar terms. Overall return on all assets was 9.2% against a 4.01% gain in the ASX 200. Diversification away from Australian shares helped this year. OTOH the MSCI gained 4.71% in USD terms, while we lost 0.11% in USD terms overall.

Moomin Valley Annual Report 2014

The accounts for this annual report follow the same format as those in my monthly reports. Here are the accounts in Australian Dollars:

I've also added the change from last year. Salary and similar non-investment income was up 9% and spending was up 45% but investment income, saving, and, therefore, change in net worth are all down on last year. Because the US Dollar rose very strongly this year, the picture is worse in USD terms:

Investment income was negative because foreign exchange losses totalled $US93k, while core investment income was $87k.

Spending was by far at a record level. I don't expect this to be a permanent high level in the future, but definitely the trend is up.

2014 Outcome and 2015 Forecast

Last year I forecast that net worth would optimistically reach $A1.4 million and pessimistically hit $A1 million by the end of 2014. The US Dollar range was $US1.19 million to $US0.75 million. The result for this year turned out at $A1.33 million (USD 1.09 million). The Australian stockmarket didn't perform that well, the Australian Dollar fell to 81 US Cents and we spent a record amount. Therefore, the result was below the most optimistic projection.

So, now is time to forecast for 2015. Buying a house complicates things  even more. The optimistic projection is $A1.65 million or USD 1.33 million assuming the Australian Dollar only declines to 80 US Cents. The most pessimistic scenario is that the Australian Dollar falls to 70 US Cents, the stock market falls by 20%, and the value of our house falls to $A700k. In that case, we would have $A1.15 million or USD 800k.

Moominvalley Monthly Report: December 2014

The Australian Dollar fell by another 3.5 US cents this month 81.71 US cents. The MSCI World Index fell 1.89% and the S&P 500 0.25%, but the ASX200 rose 0.51%. In Australian Dollar terms we gained 2.63% and in US Dollar terms lost 1.67%. So this was a rare month where we outperformed both the Australian and international markets. All asset classes in our portfolio apart from hedge funds gained with private equity doing best. Medibank Private was again a good performer.

As a result, net worth rose $A44k to $1.330 million (new high) and fell $US9k to $US1.087 million. The monthly accounts (in AUD) follow:

Current non-investment income (salary etc.) was very high at $27.5k as were retirement contributions at $4.9k. This was a three paycheck month. Also we got some big medical and work-related reimbursements. Spending was extremely high at $19.5k due to medical related expenses. Still, that means that we still managed to save $8.0k from current non-investment income.

I'll do an annual report next.