Restrictions on Withdrawing Cash at Interactive Brokers

If you move money to Interactive Brokers through the American banking system, they put a hold on your money so that you can't withdraw it to another bank for 44 days. This works in a very strange way. If you have more than the amount on hold in US dollars you can obviously withdraw that excess money in US Dollars. But if you want to withdraw money in Australian Dollars you also have to have more than that amount in Australian Dollar cash! Well, this is what an IB representative just told me to explain why I can't withdraw any money in Australian Dollars despite having cash in that account, including cash I received from dividends that absolutely wasn't transferred from a US bank.

This will slow down my financial restructuring plan. I don't want to buy that many Australian Dollars all at once, though I could use futures contracts to retain exposure to the US dollar... but for psychological reasons I find that harder to do. And I would have to sell the US corporate bonds I bought to do it. The only thing that I really want to do that is time bound is to make a non-concessional contribution to superannuation before the end of the financial year. I guess I will sell some Australian managed funds to come up with the money.

Bitcoin

I thought it was time to buy Bitcoin when I heard that CBOE was dropping Bitcoin futures contracts. Supposedly, when everyone hates something, it's the time to buy it. I have also seen research, which argues for a big rise in Bitcoin. I set up a simple trading model and it confirmed that I should go long now. I got approval to trade CME Bitcoin futures on Monday. Looking at the stochastic oscillator on the chart above, I thought there would be a bit of a pullback and put in an order yesterday to buy at $4000 when the futures were trading at $4140 with a stop at $3845. I went to a meeting and when I came out  I saw Bitcoin was at $4700. So, trying to be too clever, I missed the boat. The problem is that the stop is still the same according to my trading model. One contract is 5 Bitcoins. I don't want to risk USD5000+ on this trade. So, I will need to wait, probably a couple of weeks before the stop will change and I can place a trade with acceptable risk. The alternative risk is that Bitcoin continues to go higher from here. But after yesterday, I really want to stick to the model and not try to be clever.

This is one of three more "macro" trades that I am thinking of doing. At the moment, I don't have the time to do the research to fix my shorter term trading model.

Reduced Incentive to Access Superannuation as Early as Possible

Currently, Australian superannuation earnings are taxed at 15% and 10% for capital gains while you are in the "accumulation" phase (before you retire). When you retire you can switch up to $1.6 million of assets into pension mode and then the earnings are taxed at 0%.* The downside is that then there is a minimum payout ratio every year which increases with age. Unlike the U.S., there is actually no requirement to make any withdrawals from super. But making withdrawals is incentivized by the reduction in tax rate.

But if you have shares that pay franking credits, you can use these franking credits to offset the 10-15% tax. You might not pay any net tax on your super fund in the accumulation phase. When you switch to pension mode you will get cash refunds of the franking credits.**

Labor plans to abolish these refunds of franking credits. This means that there may actually be no net change in tax due when switching from accumulation to pension mode. The incentive to switch disappears. This means that if you have assets outside super you probably should spend them first in retirement as they are relatively highly taxed. Only if you run out of such assets, should you access your super.

* Any excess remains in accumulation mode.
** You might even get some cash refunds in accumulation mode if you have enough shares paying franked dividends.

Planning Permission Refused

I got an email today from the city planning office that the development in our neighbourhood that I had objected to was refused planning permission. The plan violated many individual rules, but basically the developers were trying to cram too much development into a small space. They planned on 56 town houses and commercial space and 12 apartments in a 5 storey building. The development occupies the two greenish blocks on the map:

You can see the size of townhouses and houses in the neighboring development (yes, we live there) to get an idea of how crammed this development was planned to be.

I objected to the height of the 5 storey building, which we would see from the front of our house, largely blocking our existing view to a wooded hill. Only 7 members of the public had filed written objections to the original plan despite wide advertising by the government of the application and consultation sessions in the neighborhood. I was the only person who wrote an objection against the revised plan the developers submitted.

I have been surprised how much work the developers have been doing on site. Apart from demolishing the existing office buildings, they have done most the excavation for underground car parks and then started building individual underground garages for the townhouses on the east of the site. They also recently installed a big yellow tower crane on site. How could they submit a plan that violated so many rules and then invest so much money on the basis of such a flawed plan. Will they have to change the work they have already done or will they get away with it? They have a month to appeal the decision, or they will need to submit a new plan.