Saturday, January 07, 2017

2016 Annual Accounts: Graphs

So here is how the last year looks on a graph in the context of everything since 1996:

The blue line is the sum of the other three lines. After flatlining last year, things took off again this year. Medium term balance is liquid assets, the green line is retirement accounts. Both of these and housing equity increased. Markets performed well this year and we saved more.

This graph provides a slightly different view, breaking things down according to savings and profits. I don't break down housing equity into the two components as it's not worth it yet...

Though we are making savings outside of retirement accounts and housing equity - the blue line is rising - the slope is much shallower than before we bought a house and had a baby. So, a lot of this year's increase came from profits. In the long run we have done much better with retirement than with current accounts in terms of profits.

The next graph shows actual monthly non-retirement savings since 1996 and a 12 month moving average:

I have truncated the axis at -$15k but we dissaved $53k in January and $118k in February 2015 as we bought the house. After the big transfer of savings to but the house, savings recovered, but to a much lower level than recent years. They are at about the level around when we moved from the US to Australia. Savings have been high in the last couple of months. How well they will behave this year depends on some potential major expenditure on the house that I will discuss soon on the blog.

Wednesday, January 04, 2017

2016 Annual Accounts

This is our annual account - the sum of each of the monthly accounts I've posted - in Australian Dollars. First a reminder about how these accounts are laid out: Current account is all non-retirement account and housing account income and spending. Then the other two are fairly self-explanatory. But housing spending only includes mortgage interest. Property taxes etc. are included in the current account. There is not a lot of logic to this except the "transfer to housing" is measured using the transfer from our checking account to our mortgage account...

We earned $158k after tax in salary, business related refunds, medical payment refunds, tax refunds etc. We earned (pre-tax including unrealised capital gains) $58k on non-retirement account investments. Total current after tax income was $216k. We spent $77k, $71k of that was "core spending". (I always regard business expenses that are refunded as non-core, but also some one-off things).

$9k of the investment income was tax credits. These increased our after tax "other income" but are also counted as part of the pre-tax investment income. So, they have to deducted to get things to add up to the change in net worth. Finally, we transferred $45k in mortgage payments to the housing account.* The change in current net worth, was therefore $85k. Looking at just saving from non-investment income, we saved $36k.

The retirement account is a bit simpler. We made $45k in after tax contributions and the value rose by an estimated additional $54k in pre tax returns. $6k was the estimated tax on that and so the increase in net worth was $93k. Taxes are just estimated because all we get to see is the after tax returns. I do this exercise to make retirement and non-retirement returns comparable.

Finally, the housing account. We spent $20k on mortgage interest. We would have paid $25k in mortgage interest if we didn't have an offset account. I estimate our house is worth $21k more than I did last year based on recent sales in our neighbourhood. After counting the transfer of $45k into the housing account housing equity increased $40k of which $19k was due to paying off principal on our mortgage.

In total net worth increased by $217k, $100k of which was saving from non-investment sources.

Comparing 2016's accounts with the very exceptional 2015 accounts, we saved 56% more and net worth increased by 34% more. Salary and other current income was down as we would expect in a year that Moominmama didn't work (she went back to work yesterday). Of course, she got a lot of maternity and other payments and so current income was only down by 15%. Invesment income was up 18%. Expenditure was down 41% and even core expenditure was down by 18%.

* $5k of this is actually interest we saved by having money in our offset account. I count this as investment earnings and so to balance the books I need to count this as spending on the housing account and need to record a transfer between the current and housing accounts.

Tuesday, January 03, 2017

December 2016 Report

This month saw a big jump in net worth as stock markets were strong, our spending relatively low, and non-investment earnings high. Here are our monthly accounts (in AUD):

Spending (not counting mortgage) was moderate at $4.8k. Salaries, tax refunds etc. added up to $16.1k (after tax). I received some payments from a consultancy firm I did some work for. More is coming. After taking into account the mortgage payment of $3.7k (which includes implicit interest saving due to our offset account - the actual mortgage payment was almost $600 less than this) - which shows up as a transfer to the housing account, we saved $7.5k on the current account. We made $5.5k of retirement contributions, as last month there were three paychecks and there is a delay in getting the superannuation contributions, and saved a net $1.8k in added housing equity. Net saving was, therefore, $14.9k across the board, which is roughly the same as last month but very high by recent standards.

The Australian Dollar fell from USD 0.7386 to USD 0.7229. The ASX 200 gained 4.38%, the MSCI World Index gained 2.20%, and the S&P 500 1.98%. We gained 3.96% in Australian Dollar terms and 1.75% in US Dollar terms. So, we again underperformed both the Australian market and  the international markets. The best performer in dollar terms was again the CFS Geared Share Fund, which gained $22.5k followed by Clime Capital (CAM.AX), which gained $4.9k. The only investments to lose money were the China Fund and the CFS Developing Companies Fund, which was down $0.8k. Every asset class gained. Many of our investments are at all time highs in terms of cumulative profit: CFS Geared Share Fund, Unisuper, PSSAP, Platinum Capital, CFS Diversified Fund, Clime, TIAA Real Estate, Generation Global Fund, Boulder Income Fund, 3i, and Woolworths.

As a result of all this, net worth rose AUD 70k to $1.715 million (a new high) or USD 24k to $US 1.239 million.