Local Auction

There was an auction today of another free-standing house in our complex. Smaller and without a view but it is at the end of the row, so not as hemmed in by neighbors as many of the houses are here. This time there was bidding interest. The house sold at $A600k with three active bidders. The original price in 2008 was $A459k. That is a 30% uplift. Our house cost $A650k in 2008 and we bought for $A740k at the end of 2014, a 13% uplift. Of freestanding houses in the complex bought since the beginning of 2014, which have sensible prices in the database (i.e. not zero or something else low), we paid the lowest uplift. However, the uplift is very strongly negatively correlated with the original sale price. Based on a regression of uplift on original price for all houses sold excluding ours in that period, the uplift on ours should have been 20%. Date of sale is not statistically significant. So, I'll rerate the carrying value of our house up to $A780k.

August 2016 Report

Here are our monthly accounts (in AUD):

Spending (not counting mortgage) was low at $4.5k. Again, no large and exceptional purchases this month.  Salaries etc. added up to $10.6k. 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 about $500 less than this) - which shows up as a transfer to the housing account, we saved $2.4k on the current account. We made $3.6k of retirement contributions , and saved a net $1.6k in added housing equity. Net saving was, therefore, $7.7k across the board.

The Australian Dollar was fairly stable falling from USD 0.7598 to USD 0.7520. The ASX 200 fell 1.55%, the MSCI World Index rose 0.39%, and the S&P 500 rose 0.14%. We lost 1.25% in Australian Dollar terms and 2.26% in US Dollar terms. So we outperformed the Australian market and underperformed the international markets.

The best performing investment (in total dollars not RoR) was the PSSAP superannuation fund, which gained $1.9k followed by Oceania Capital Partners, which gained $1.5k. The worst performer was the CFS Geared Share Fund, losing $17.3k followed by Platinum Capital, losing $4.3k. The best performing asset class was AUstralian small caps, which gained 2.64% and the worst hedge funds, which lost 2.79%.

As a result of all this, net worth fell AUD 8k to $1.592 million or fell USD 19k to $US 1.197 million.

July 2016 Report

This was a good month all round - both strong investment performance and moderate spending. Here are our monthly accounts (in AUD):

Spending (not counting mortgage) was low at $4.6k. No large and exceptional purchases this month.  Salaries etc. added up to $10.4k. Snork Maiden is again earning money - this are payments at the minimum wage she is receiving from the government through her employer while on maternity leave. I think there about 3 months of those. We decided to receive those now in the new financial year to minimize her taxes by spreading her maternity pay over two financial years.

After taking into account the mortgage payment of $3.6k - there were three mortgage payments this month (and which includes implicit interest saving due to our offset account - the actual mortgage payment was about $420 less than this) - which shows up as a transfer to the housing account, we saved $2.2k on the current account. We made $3.1k of retirement contributions , and saved a net $1.6k in added housing equity. Net saving was, therefore, $6.9k across the board.

The Australian Dollar rose from USD 0.7433 to USD 0.7598. The ASX 200 rose 6.29%, the MSCI World Index 4.34%, and the S&P 500 rose 3.69%. We gained 5.27% in Australian Dollar terms and 7.61% in US Dollar terms. So we underperformed the Australian market and outperformed the international markets. The best performing investment (in total dollars not RoR) was, not surprisingly, the Colonial First State Geared Share Fund, which gained $34k. Unisuper and PSSAP gained $9k and $7k, respectively. There were lots of other strong performers. IPE,AX was the worst performer losing $750. All asset classes gained, with Australian Small Caps the best at 6.54%.

As a result of all this, net worth rose AUD 72k to $1.600 million or rose USD 80k to $US 1.216 million.

Colonial First State closed new applications to their retail First Choice Investments platform. This made me realise that the minimum investment for the wholesale version of this platform is now only $5,000. I had thought it would be $100k per fund or something like that. Management fees are lower for the wholesale platform. As a result it absolutely makes sense to move my CFS superannuation account to this platform. Probably, moving our managed (mutual) funds will result in capital gains tax bills. As I mentioned last month, I have a large carried over capital loss, of more than $60k. I estimate that moving all my managed funds will result in a capital gain of $50k. So, I would still have a capital loss carryover. Yes, this has an opportunity cost as it brings nearer the day that I would have to pay capital gains tax. The actual bill would be $12k. The value of funds is $222k. It would, therefore, take around 8 years to pay off in terms of lower management fees. But I figure that if I keep the funds "forever" it is worth it and if I sell at some point in the nearer future I will have to pay CGT anyway. Also, if Labor get into government next time, they are likely to raise the capital gains tax rate.

For Moominmama (formerly Snork Maiden), the number of years to pay off the tax hit is shorter and this year her tax rate (due to maternity leave) will be lower than other years. So, that's a no brainer.

Just need to find time to meet with someone at the bank and discuss all the details. Probably will wait a couple of months as workwise this is a crunch time in the next couple of months.

Is John Mauldin Saying He Isn't an Accredited Investor?

John Mauldin writes a newsletter Thoughts from the Frontline. In the latest issue he suggests that his net worth is only 1/2 million dollars - the average net worth of him and Bill Gates would be $40 billion but his net worth has 5 less zeros... He is 67 years old. He also markets hedge funds. Apparently, he wouldn't be able to invest in them himself. Or maybe he got the number of zeros wrong.

2015-16 Financial Year Return

Clime report that the average Australian balanced fund returned 2.5% for 2015-16. They argue that this was achieved largely from bonds. We returned 3.18% with an equity tilted portfolio...

Sold Out of Aurora

I finally sold out of Aurora Dividend Income Trust (22,389 shares). It hasn't been performing that well and the news around the management of the company doesn't sound good. I made a total of $1,385 profit since first buying into the fund in 2009, which is about half of the amount of the franking credits the holding has generated ($2,588). That together with all the cash distributions they paid out means I can book a $6,371 capital gains loss on closing the position. I gained a total 23% return on this investment, which is 3% a year. However, returns have been zero since I doubled the size of my position in 2013. I like franking credits, but I think there are better ways to earn them. I bought 9,719 shares of Platinum Capital instead. It's returned an average 9.2% p.a. over the same period. It's also marginable.