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.