Journey to 90 million

December 2017 Net Worth Performance Review

2018-01-09T09:18:00.001+11:00

As I mentioned in my June 2017 Net Worth post, I will be popping back in periodically to update my net worth on this blog. As I mentioned in that post I have been spending far more of my time working on my net worth and improving it rather than writing about it and I think the results are really paying off.

December 2017 Net Worth: $1,300,000

When I first started tracking my net worth in July 2011 I had a net worth of $120,000. For it to have grown 10x in 6.5 years absolutely blows my mind.

Before I get into the nitty gritty here are the high level numbers for December:

As you can see I haven't really had any change in my liabilities over the year and the increase from $880,000 to $1,300,000 was entirely driven by the increase in my assets over the year.

However as I mentioned in June there are a few things going on in the assets column that I should highlight:

There is a lot happening in the assets column so I thought I would explain the large moving parts and why things have moved the way that they have:

Controlled Investment Assets: +$50,000 (+17%)

My controlled investment assets are exactly what they sound like - they are the assets where I actively choose the investments and the timing of any entry or exit - I like to think of it as my 'active portfolio'.

The stock market during the year was incredibly strong and the 12% increase in the value of my stock portfolio probably doesn't do the performance justice as I have been selling stock throughout the year and holding it in cash as I find it harder to find investment opportunities.

The uninvested cash component is significantly higher as I have USD holdings which I am waiting to transfer back to Australia but the US dollar has been quite weak and I'm not keen to lock in 10%+ losses from currency alone.

Restricted Investment Assets: +$80,000 (+62%)

This was an area where I really didn't expect to do so well during the year however the performance of my retirement accounts as well as well as restricted employer grants have continued to do remarkably well.

I don't really control the investments in these accounts and I view it far more as a passive account that is going to do what it is going to do with little input from me.

Non Investment Assets: +$300,000 (+35%)

My non investment assets are where a significant amount of the net worth gains have come from this year however there is one quirk I should point out straight away. Until June 2017 I recorded my principal place of residence at cost however this didn't accurately reflect my net worth position given how much my property had gone up in value so I took to using the average of 3 different property valuation apps and averaging these.

The increase in the value of my home from $480,000 to $710,000 drove a significant amount of my net worth increase. Honestly the value increase wasn't that large - a better comparison is probably with I recorded in my June 2017 Net Worth update post - at that point 6 months ago my home was valued at $640,000 so I saw a $70,000 increase in the last 6 months which is insane. House prices in my city have been going crazy for a while now and it's just started to get to the area in which I live.

My non investment cash holdings were a genuine cash increase during the year as my wife and I save for a new, larger home in a better neighbourhood. I hate seeing lazy cash and I now have more cash than the value of my offset account but we haven't found our next home quite yet.

How financially free am I?

As outlined in June my goal is to earn $100,000 p.a. (in 2016 dollars) in investment income. In 2017 dollars that equates to ~$102,500.

In order to earn this $102,500 I require $2.9m in total net assets (including home value). I currently have a $1.3m net worth and so I am $1.6m short of achieving financial freedom.

This compares to being $1.8m short at June 2017 so I am chipping away at this goal reasonably quickly.

Wrapping up...

Writing these posts always make me think about what I'm doing and where I could be doing better so I may come back and write a few very specific posts about what I have done to improve certain aspects of my net worth on a slightly more regular basis.

June 2017 Net Worth Performance Review

2017-07-03T09:36:00.000+10:00

After years of consistently writing posts on this blog you may have noticed that the blog suffered a rather sudden and silent death. Whilst I never intended to just disappear there was a very deliberate reason I stepped away from blogging...

While I love blogging about financial topics and personal finance, I found that I was spending far more time talking about finance and investments rather than taking control of my own financial life.

It doesn't mean that I was not doing the things I was saying that I was doing. There was just a lot of "this month I will do x, y and z" and honestly a lot of that stuff never got done.

In addition to this I decided that I needed to concentrate far more on my career and my time at home got taken up with a new addition to our family.

However I still kept tracking my net worth...

Just because I wasn't writing posts on it every month doesn't mean I let my focus on my net worth and financials fall by the wayside...

Actually with all the time I freed up by not having a posting schedule (and by giving up my industry blog that I started as well) I found that I had far more time to dedicate to my own personal finances. I still track my net worth every month and I my plans have evolved significantly since the last time I posted on here.

I'm going to go through a quick summary of my net worth, the changes that have happened over the last year as well and then will cover quickly what my new plans look like.

June 2017 Net Worth: $1,130,000

I finally cracked the $1 million mark a few months ago however this had as much to do with how I measured my net worth as improvements in my savings and investing focus and outcomes. Before I get into the nitty gritty details here are the highlights:

As you can see I have managed to increase my assets significantly over the last year while holding my liabilities flat.

My liabilities are fairly basic - I have a home loan, some credit card debt (which is rolling and I pay it off every month) and some tax liabilities which come due once a year.

My assets are far more complex and over the last year I've spent some time re-working how I think about my assets. Historically I just broke them into categories like shares, property, cash etc. I now take a more nuanced view of my assets which you can see below:

The differences in totals are due to rounding at various asset classes but don't worry my numbers add up on my spreadsheet.

Now that we can see what is actually going on in my asset portfolio we can have a discussion about what I've actually been doing and changing.

Investment assets

Broadly speaking my investment assets fall into two categories that you can see above. Controlled investment assets and restricted investment assets.

Restricted investment assets include my retirement accounts (the majority) and employer restricted shares. I have little to no control over these and I don't add excess amounts to these accounts so let's set them to one side for the moment.

Controlled investment assets are where I've been concentrating my efforts and in the last year these accounts increased by ~60,000.

My investment holdings have done really well in the last year especially post the election of Donald Trump in November last year (who would have thought?!). I have been selling out shares which have performed particularly well as well as holdings which I am no longer particularly close to
Years ago my parents gave me some managed funds and I've held onto them for years. However they were incredibly high fee and didn't really outperform the market after tax so I recently sold them and am slowly reinvesting them back into index ETFs and select individual stocks
Uninvested cash is cash that is sitting there for investment purposes but which I haven't found a home for yet. I don't like this cash balance to get too high and it is sitting a little higher than I would have liked. Most of this is in USD and I'm waiting for the exchange rate to come back before bringing it back

The largest increases in my asset base have been in my non investment assets whose total value increased ~$240,000 over the year

The Principal Place of Residence as the name suggests is my home. Historically I valued this at the amount I paid for it and a few years ago I increased it from $440,000 to $480,000 when the bank did a revaluation. More recently I've been using a selection of apps which track the market value of my home. Tracking this at historic value may have been conservative but it actually belied the level of equity I had to draw on and the exposure I had to the property market so I've been using market values. My home property market has been on a tear for the last few years which is the cause of the large increase in my home value
My non investment cash holdings is the cash we are saving to buy our new home with. It offsets most of my liabilities (my home loan) and will be used to pay for our new home. As we are looking to buy a new home in the next year or two this is where we have been concentrating most of our savings efforts

Financial Freedom Targets

When I first started this blog in 2011 I was in my mid 20s and I wanted to be rich. Not just comfortable but rich. In fact as you can tell from the title of this blog I wanted $90m and I was willing to do anything to get there.

Over time my priorities have changed. I value lifestyle and living a full life as far more important than I used to and as such my financial priorities have changed as well. I discovered the FIRE (financial independence retire early) community and a lot of what they had to say inspired and motivated me.

Now I'm not looking to retire particularly early but financial independence and having investment income to cover my living expenses sounds pretty appealing to me. It gives me the flexibility to perhaps pursue a life where I earn slightly less but perhaps get to live a little more.

So I started with a target:

My target is to earn $100,000 p.a. (in 2016 dollars) from investment income

This would cover the lifestyle that I currently live with a bit of a buffer and would allow me to be comfortable even without a job.

I then back solved what this would require in terms of assets:

Obviously this is incredibly dependent on your assumptions and I'm not going to set out all of my assumptions and asset allocation mix here. But basically:

My income target of $100,000 requires $2.8m of total assets (including a home value) in 2016 dollars

Now why do I keep mentioning 2016 dollars? Because inflation eats away at the spending power of your money. $100,000 today is not the same as $100,000 15 years from now.

Accounting for inflation my 2017 asset target is $2.9m and importantly these numbers are net. Meaning I have all my debt paid off. So I'm aiming for $2.9m this year and my net worth is $1.1m which means:

I am currently $1.8m short of achieving financial freedom

This seems like a huge amount to be short by but once you consider that I can save and invest at above inflation rates then I should be able to achieve this target over time

So am I back for good now?

Well...no. I found that being able to concentrate on my investments and career has really started to pay dividends for me and given it's working for me I'm going to continue with it.

That being said my aim is to update my progress on these big goals on occasions. Given that it is a slow moving target I'm currently thinking semi annually seems about right.

August 2016 Net Worth: $800,000 (+1.5%)

2016-09-01T10:21:00.002+10:00

When I last updated my net worth I listed the 4 major things I wanted to do during the month with my investment portfolio. They included:

Get my individual stock holdings down to 10 (from 11)
Progressively transfer stock holdings into my wife's name for tax reasons
Work out what I want to do with my managed funds
Move cash and stock progressively out of my Interactive Brokers account

I managed to get exactly none of this done and actually did very little in August at all on the savings and investment front. Why did I get so little done? Frankly work was so busy for me during the month that I spent the whole month just trying to get enough sleep and not burn myself out.

I now have more time so will be working on doing some of that this month. One thing that I am planning on doing this month (which ticks several of the boxes above) is selling index funds that I hold in my Interactive Brokers account and buying them in my wife's name:

Given the shares are held in the name of interactive brokers I don't get the benefit of the franking credits of Australian index funds (costs me 1% p.a.)
I have a capital loss on some of these funds so the transaction costs are far lower than would normally the case
I get the benefit of having the earnings taxed in my wife's name going forward.

It's a no brainer and I'm just putting things into place so I don't get burned too badly from market moves while I buy and sell in different accounts.

So if I did nothing this month how exactly did I manage to get an increase of $12,000 in my net worth? There were a couple of bit things which really benefited me including:

The vesting of my employee share plan
Continued saving into my employee share plan and superannuation plan
A positive share market move which helped increase both my share portfolio and superannuation valuations
Small increases in my home loan savings account and a pay-down of my credit card bill

August was the first month where I got to a net worth of $800,000!

Direct Share Investments (+$13,700)

Although the rising share market significantly resulted in the valuation of my shares increasing significantly, the real benefit came from the vesting of my employee share plan. Cash moved from being a restricted investment into shares.

I will be looking to sell these shares very soon as they have performed well since listing. I'm also not going to make the same mistake I made last time and will convert my currency straight away. I may lose the benefit if the currency falls further but I get the locked in gain of my employee share plan discount.

Other Investment Assets (-$5,400)

The largest fall in my other investment assets was associated with the vesting of my employee shares. However this was offset to some degree by the increased savings into my superannuation. In the coming month I should have more restricted investments vest into direct shares however I will be looking to sell these and put some towards my home savings.

Other Assets (+$3,000)

The increase in other assets was the savings we managed to do during the month towards our new home. Given the very high credit card bill we had during the month we actually didn't have a lot of spare cash to save.

Liabilities (-$300)

We managed to decrease our credit card bill by $1,300 this month which was offset by the increased tax liability that resulted from the vesting of my employee share plan.

Our credit card bill is something that my wife and I have been chatting about recently. It has remained stubbornly high and a significant part of my wage goes to paying it off each month. It's strange though because we are living pretty frugally at the moment and we really feel like it should be lower than it is.

It is amazing how much of our credit bill is just spent on unavoidable expenses like groceries, insurance payments, fuel and other items which are hard to cut down on. My brother and his girlfriend have managed to save (on incomes that are half of what we make) an incredible amount of money by living at home and sharing expenses with parents (and getting a free ride on things like home insurance payments). It really goes to show how much harder it is to save when you are not living at home!

July 2016 Net Worth: $788,000 (+3.5%)

2016-08-01T11:03:00.002+10:00

My net worth is up pretty significantly this month however other than saving a decent amount into our home loan offset account I didn't actually do all that much which is a little disappointing.

I still have plenty to do with respect to my personal finances before I'm in a position where I'm happy to just sit back and let my investments do their thing. These are just some of the things that I'm looking to do:

Get my individual stock holdings down to 10 individual stocks (currently at 11).

I've been doing quite a lot of work on this and have managed to narrow what I hold
This does not mean that I only want to hold 10 securities. I'm willing to hold far more than that in broad based index funds but those are pretty much set and forget type investments that I don't need to think about all that much
I want to hold at maximum 10 individual stocks. Any more than this and I honestly do not have enough time in the day to do them justice and I end up not knowing enough about the stocks I own

Progressively transfer stock holdings into my wife's name

I currently hold most of my share investments in my name which is incredibly inefficient from a tax point of view (given that she is in a lower income tax bracket)
As I sell shares over time I want to move more and more into her name

Work out what I want to do with my managed funds

Several years ago my parents gave me a portfolio of managed funds and they have slowly been growing over time
However they are quite high fee and they do tend to create tax issues for me each year so I need to work out what I am doing with these

Move cash and stock progressively out of my interactive brokers account

Interactive Brokers is a great platform if you are looking to trade frequently
My investing methodology has been changing over time and I am far more a buy and hold forever type of person...interactive brokers isn't great for this especially given the inability to participate in DRPs or receive franking credits

I could keep going however these are just a few of the larger things I need to do to get my portfolio into shape over time. Some of these I just need to sit down a do a bit of work and others I can only do opportunistically.

However that's enough about the future plan...let's see how I've actually performed this month.

July was a bit of catch up month after a dreadful June...

I've outlined below how I performed in different areas

Direct Share Investments (+$12,600)

This was largely just a catch up from June where my direct share investments were down $12,900. Not a lot happened this month however I did receive some dividends which are sitting in my cash accounts and which need to be reinvested in direct shares.

I'm currently sitting on about $15,000 in cash which I'm looking to deploy. I missed a real opportunity in the panic that was created by the Brexit vote and I'm kicking myself for not getting in and buying when the opportunity was there.

Other Investment Assets (+$7,800)

This category continued to perform quite well driven by my superannuation balance bouncing back, additions to my superannuation account by my employer and continued contributions to my employee share plan.

I have about $900 sitting in cash accounts waiting to be invested in alternatives. I am mulling about whether to put this into coins or to let it build and then buy some artwork or some other alternative investment like that.

Other Assets (+$8,500)

The increase in our other assets this month was basically contributions to both our home loan offset account as well as cash which is sitting in there waiting to be deployed to other accounts (like my share accounts or alternative investments). I wouldn't expect increases to be this large going forward.

Liabilities (+$2,200)

My liabilities balance increased this month as we spent more on our credit card on various expenses including renovations and other more personal type expenses. Our credit card balance hasn't been this high in quite a long time and I would hope to bring it down more around the $4000 mark going forward.

Outlook

Whilst I haven't gotten my financial situation to exactly where I would like it to be, it is a whole lot more ordered than where it was a year ago. I am finding that having a plan and working towards it leads to much more consistent decision making on my behalf.

That being said I still have plenty left to do. This month my goals are to:

Get my taxes in order and file them in September
Sell a portion of my employee shares
Sell at least one more share to get my individual share count down to 10
Re-invest a portion of the cash in my share trading accounts if the opportunity arises

June 2016 Annual Report

2016-07-12T09:04:00.001+10:00

This post is one I really enjoy writing every year. I love looking back on the year and assessing how I did and also looking at what I wanted to achieve.

In some ways the last year has been a little boring on the financial front. I have been building cash so that my wife and I can look at buying our new home so I haven't been as active with my investments as I was in the first few years of this blog. However this year I have been doing a lot on the personal front and in cleaning up my share portfolio which had grown incredibly unfocused.

I will look at most of these points in detail below and this post is going to be one of my longer ones so feel free to skip to whatever section interests you most (I've tried to signpost it as well as I can)

Annual Net Worth Performance: +$200,000

Over the year to June 2016 my net worth increased from $561,000 to $761,000 and although this is a spectacularly large increase there are a few reasons why this is a one off which I will discuss below. However even excluding these one offs my wife and I managed to do really well this year especially given the amount we have been doing in our personal lives including:

Getting married
Going on two overseas holidays
Doing some expensive renovations on our home

Although the net worth performance over the year looks pretty amazing there are a few one offs I should probably call out here:

In 2015 I had adjusted my net worth down to account for the fact that we would have to spend a significant amount on our wedding and honeymoon so these big expenses didn't actually impact our net worth
At our wedding in July last year our guests were incredibly generous (especially our parents) and this boosted our net worth by ~$30,000
We had our home revalued in August last year by the bank and this added another $40,000 to our net worth over the year

However even allowing for this we still managed to do very well over the year. Before I go into the details of what we did over the year it may be worth looking at how I have done since I started writing this blog over 5 years ago.

The power of continuous saving really does work...

In my first net worth post in July 2011 I had a net worth of $124,000 and 5 years later my net worth stands at $761,000...an increase of $637,000 which is mind blowing in quite a short period of time. Now I'm no investment or savings guru...but the power of saving as much as I can every single month and having shorter term goals which feed into a larger goal has really worked for me.

My net worth has grown at a cumulative average growth rate of 43.8% p.a. and although some of this has to do with the value of my investments increasing most of it was actually just working to increase my income and focus on my expenditures.

As my life has changed so has my asset mix

Looking at how my asset mix has shifted over time is really interesting as it basically shows what my focus has been in my life at various points in time.

In 2012 I had just bought my first investment property and all my assets basically centred on this one property. After that I focused on increasing my cash balance a little so that I had a buffer in my investment property but for a few years my focus really became on balancing my investment portfolio particularly towards shares.

In 2016 my real focus has been on saving for a new home and for this reason the cash component of our investment portfolio has stepped up considerably. I would expect this to continue increasing over the next 2 -3 years as we look to build a cash buffer sufficient to buy our new home while holding on to all of the other investments that we currently own.

Cash now forms 25% of my portfolio and the increase in my property valuation in the last year has meant that the proportion of my portfolio in property has remained relatively flat.

Shares and superannuation account for a smaller part of my portfolio this year because although I have been adding to them periodically they haven't been my focus and the returns over the last year have been so volatile that they actually account for less than you may imagine at first.

Looking back...and looking forward

When I wrote my annual review post at this time last year I said that by June 2016 I wanted a net worth of $700,000. For the first time since I started writing these annual goals and posts I actually achieved my goal and beat it by close to 10%!

I honestly don't know what to expect from the coming year but I'm willing to set a goal and make it an aggressive one:

By June 2017 my aim is to have a net worth of $900,000

I don't expect to have any one off large impacts on my net worth this year so it's all going to be me....so how do I want to achieve it? Well this implies a net worth increase of $140,000 and I want this to be made up of:

A $100,000 increase in my cash balance
A $15,000 increase in my superannuation balance
A $25,000 increase in the value of my share portfolio

June 2016 Net Worth: 761,000 (-1.5%)

2016-07-06T11:25:00.002+10:00

I thought I would start this post with a quick thank you to those who still read this blog 5 years after it first started. I know that I am posting less than I used to and it has gone from being a blog which disseminated some (hopefully) useful financial knowledge to pretty much a pure personal financial blog.

I know I've explained it before but I thought it would be worth recapping why I decided to post less. Most of us only have a finite amount of time in the day and I had to decide how to spend mine. Instead of posting on this blog (and indeed on other blogs which I write) I decided to scale that back and spend time actually investing and trying to get ahead financially. There were plenty of things which I had planned to do financially which, frankly, were never getting done and I was spending hours each week writing blog posts.

I decided that a better use of my time was to focus on my business of investing. Unfortunately this has meant that I have far less time to post here.

With that being said I do still enjoy tracking my financial progress and it does allow me to take stock once a month of where I am at. This month I will also do an annual review of how I have performed over the last year (I will upload that post in a few days time).

June 2016 was a tough month...

I don't think I'm the only one that had a tough month this month with markets going into a nose dive on the back of the unexpected Brexit vote. My share investments tend to be higher risk and have a higher beta and my financial performance suffered significantly as a result.

Here is a summary of where I ended the month...

Now let's see where I took most of my pain this month...

Direct Share Investments (-$12,900)

This was a pretty painful result and losing just over 5% of my portfolio in one month is not something I hope to experience all that often. So what drove the major falls in my portfolio?

The Brexit obviously had an impact on all my share valuations
The strong appreciation of the Australian dollar over the month versus the US dollar hurt my US dollar investments and some US cash I have been holding onto waiting to change once the currency moved in my favour
My deferred compensation in my employers stock was significantly affected as that stock valuation dropped much more significantly than the market

Honestly I'm looking through the fact that I have had such a significant set back in my portfolio value and am using the fact that I am incredibly long cash to use this as a buying opportunity in the market. I'm avoiding stocks which may genuinely be affected by Brexit considerations but trying to buy things that are selling off on general 'sentiment' type issues.

Other Investment Assets (-$2,300)

The fall in the market post Brexit also significantly impacted my superannuation balance. This was offset by continued employer contributions to my superannuation fund as well as my employee share plan.

Other Assets (-$500)

My wife and I continue to save a significant amount of our take home wage towards our new home fund. However at the same time we have been doing renovations on our current home and this month we did a big laundry renovation which set us back about $4,000 which we paid for in cash. This was offset on the other side by the elimination of our future liabilities bucket.

Liabilities (-$4,000)

My credit card balance moved marginally however the biggest change this month (as discussed above) was the elimination of my future liabilities balance.

Originally I was planning on topping up this balance for things like starting a family and further renovations that we would be undertaking but then I realised that actually these were just part of life. They weren't like saving for a new car or for a wedding and honeymoon or a large holiday. Those you have the effect of building up a lot of cash which then gets spent in one hit so you want to account for this in the future.

As a result I have decided to keep my future liabilities balance at 0 and only add to it if I can see a large expense coming up in the future.

Outlook

The first week of July has been pretty bleak with stock values continuing to fall. I haven't yet taken advantage of the buying opportunity that has arisen because even though stock values fell significantly they are not at the significantly depressed levels they were at in January when I made some pretty timely purchases.

I am also trying to rationalise my investment portfolio to a manageable number of individual stocks so will continue to do that at the same time as looking for new investment opportunities.

May 2016 Net Worth: $773,300 (+2.5%)

2016-06-01T09:30:00.000+10:00

I continue to honestly be surprised at how my net worth continues to rise month on month. My wife and I have been talking about finances a lot this month. As crazy as it sounds this is the first time in my life I have felt any anxiety about money at all.

Why am I feeling anxiety when I am doing pretty decently for my age (for those of you who don't know I just crossed the big 30 a few months ago)? Housing is the reason. My wife and I are saving for a new house and housing in the state I live in is incredibly expensive. I keep going round and round in my head the different options:

Do I sell some investment assets to be able to afford a better home?
Do I compromise on where I live to buy something more affordable?
Do I buy something more expensive and keep the investment assets but leverage myself more?
Do we go for the area we want but perhaps not the house that we want?
Can I afford to take extra leverage if I'm the sole bread winner and we have kids?

Obviously in a world with limited resources where I am not a multi-millionaire these are all very real questions and questions that lots of people ask...it's just my time to ask and go through these issues.

Why do I raise all of these issues in a post about my net worth? I haven't been tracking my net worth performance this month all that closely and given the stress I have been feeling with the above questions it was a relief and pleasant surprise to see things continue to go well.

So how did I actually do this month?

My net worth performance breaks down as follows (note that totals may not add exactly as there are formulas which round everything to the nearest $100)

Let's walk through some of the major movements this month...

Direct Share Investments (+$1,300)

My share portfolio did remarkably well over the month for several reasons including a general increase the value of the stock market, a falling A$ increased the value of my US$ stock holdings which are a reasonable large portion of my portfolio and stock specific reasons which individual stocks I bought outperformed (finally) for the actual reason I bought them.

So with all these things going in my favour why didn't the value go up more? Good question. The reason is that I took the opportunity to sell some stocks that I had been holding for a long period of time and which had run quite a long way and I no longer felt confident in holding them. These stocks were worth about $5,000 and although I will reinvest them in shares they went into my cash accounts.

Other Investment Assets (+$6,500)

I continue to invest in my employee share plan however the large move this month was actually my superannuation. In January I moved out of a rather conservative default position and moved my stocks so that they were far more leveraged to international and Australian equities.

That move really hurt me for a few months as the stock market tanked however the falling A$ and the increase in the value of the share market and international stock markets has really helped this perform over the last month.

Other Assets (+$12,400)

As I mentioned above, part of this performance was driven by the fact that I sold some shares and put them into cash while I wait for an opportunity to buy more stocks however the larger part of the movement was actually a significant savings effort by my wife and myself for a deposit for our new home.

My wife particularly has been saving like a fiend. I think she is currently saving ~75% of her income and she is really focused on buying a new home in a few years.

Liabilities (+$1,300)

Although our liabilities went up this month this was to be expected as our credit card bill last month was artificially low. This month we actually had a few large expenses including car maintenance costs as well as gas and power bills and council rates come due.

The increase was offset by the fact that our future liabilities balance decreased for the cost of some work that we are doing on our home.

Outlook

Finding time to do everything I need to do for finances is proving to be the biggest problem that I have. One of the reasons I don't blog much any more is that I am spending so much time actually sorting through the finances associated with

Getting my stock portfolio back on track
Financing and supervising our renovations
Saving for our new home and cutting out expenses where possible

Next month I'm going to do a larger review of my portfolio and set out my goals for the following year.

April 2016 Net Worth: $754,400 (+2.0%)

2016-05-02T15:01:00.001+10:00

I was surprised how well I performed this month. I actually spent a fair amount of time this month working on our personal finances and sorting out some admin problems we had (including spending about 2 hours speaking to my superannuation fund to make sure that there weren't any admin errors).

This month we focused a lot on trading and not a lot on investing. I'm hoping to get back into investing more aggressively over the next few months.

Let's have a look at the breakdown in performance this month:

Direct Share Investments: +$700

My share investments went all over the place this month. At one point during the month they were up significantly and then the market took a dive and then recovered again. At the end of everything I ended up virtually flat which was a little disappointing.

I saw some opportunities this month but I didn't have the available cash in my share investment account to take advantage of these opportunities. I am kicking myself for not taking a risk and taking money out of my home loan account but things can move in any direction so I decided to play it safe instead.

Other Investment Assets: +5,400

My superannuation balance increased by $3,900 this month through both valuation increases and through my regular monthly contribution. I'm starting to see the benefit of my allocation switch earlier in the year. Also within this category was my regular monthly contribution to my employee share plan.

Other Assets: +$7,600

My wife and I managed to save a significant amount to our offset account towards our next home. We are currently sitting a little below the $300,000 mark in this account which has 2 benefits...not only are we that little bit closer to our next home but it also means that we are paying very little in interest each month which allows us to save cumulatively faster (the power of compounding in reverse)

Liabilities: -$800

The only change this month was a lower credit card bill and if I'm going to be honest it was artificially low. I have a bunch of large expenses waiting to come through (including some car maintenance expenses) so this should reverse next month.

Outlook

The coming month could be a large one in terms of bills with several large maintenance expenses coming up as well as a large renovation bill as we are building a new laundry. We are going to be doing a lot of the work ourselves to keep the cost down however we are still likely to face quite a large bill by the end of the month.

This renovation will also take up all the renovation budget we have left in our future liabilities fund so I'm probably going to look at topping this up after I do the annual mid year review in July.

March 2016 Net Worth: $739,900 (+2.7%)

2016-04-01T09:30:00.000+11:00

This month was a pretty good month...I managed to get away for a 2 week break overseas and also to do pretty well in terms of my net worth performance.

Instead of a long rambling summary I thought I would get straight into the numbers. Below I have included a detailed breakdown of my net worth performance.

In line with the new way I disclose my net worth and the extra detail provided I thought I would address each of the major categories in turn.

Direct Share Investments: +$7,800

I didn't invest anything new in the share market this month and the total gain was due to positive share market moves. Given the real pain I have taken over the last few months this was a welcome relief.

Most of these gains came from industrial type stocks. I made quite a large move into resources and oil exposures while the price was falling and given the low oil price these bets haven't paid off for me yet. I'm currently considering investing more in this space but am a little gun shy at the moment

Other Investment Assets: +$4,500

Although there are several categories within the other investment assets class and I have broken them out above, in several categories the values did not move and it was not worth breaking these out individually.

I typically only update my managed fund valuations once or twice a year...I probably should do this more often but this was a gift from my parents years ago and honestly I don't look at it very often
I'm running out of coins that I want to buy so am considering branching out and looking at other alternative investment classes

The gains this month were purely from my automatic contributions to my superannuation (and the positive valuation movements there) as well as my monthly contribution to my employee share plan.

Other Assets: +$1,900

I didn't change the valuation of my principal place of residence (I have only done this once when the bank changed their valuation) so the only movement this month was the movement in the value of my cash accounts.

I was honestly surprised that I had a positive outcome this month as I withdrew $4,000 for my overseas holiday however I had prepaid much of my holiday and I wasn't spending anything while I was overseas and this helped the balance increase over the month.

Liabilities: -$5,400

The positive movement in my liabilities balance was almost entirely driven by the fact that I was overseas for half the month.

My credit card balance only moved up marginally (and this was a month where my car registration payments fell due
My future liabilities came down as I had accounted for the fact that I would be going overseas when I made the plan to do so

Outlook

Last month I hoped to get back to my high water mark of $727,000 from January and I blew through this. Looking forward I want to focus more on my existing portfolio while trying to control expenses a little bit more. Recently my wife and I have become a little slack on this and we are spending more and more and our credit card bill is starting to get to a level where we are saving far less than we should be.

This month I am targeting a net worth increase of $5,000.

February 2016 Net Worth: $720,300 (-1.0%)

2016-03-01T09:30:00.000+11:00

This was my first negative month in 7 months which is a pretty good run rate when you think about it but I have a bit of an embarrassing fact to admit...I totally screwed up last month's net worth which actually did terribly...as in the worst performance I have ever had.

It was only because an error on my part that I thought I actually had a decent performance. The error in last month's performance was due to a share consolidation that I had missed. Basically the error was as follows:

I have ~$4,000 worth of Hello World, an Australian listed travel agency
Hello World did a 1 for 6 share consolidation which raised the price 6x
I should have just adjusted the shares I held by the same amount but because I missed it (and my share prices populate) I looked like I had $24,000 worth of shars
January's net worth was actually overstated by $20,000...instead of an increase of $13,000 I should have seen a decrease of $7,000 to $707,000

Why did I outline this? Because I actually did reasonably well this month in increasing my net worth to $720,100 and my explanations wouldn't have made sense in the context of a falling net worth.

February 2016 Net worth...the detail

As with last month's net worth performance I decided to increase my net worth disclosure and provide a little more detail which should make it easier to follow:

As I discussed above the big movement in performance was the direct share investments which fell from ~$245,000 to $231,000 but this was almost entirely driven by the error in the share count post the share consolidation. Without this effect my share portfolio actually did rather well in the month.

Other significant effects on my net worth this month included:

The vesting of my employee share plan which gives me a 15% gain immediately on vesting. This year I decided to bite the bullet and sell the shares as soon as they vested. I sold some old parcels that I had which were technically at a loss so there shouldn't be any tax implications. This explains why I'm sitting on so much more cash than I was last month.
A significant reduction in my credit card bill. I genuinely can't remember the last time I got to the end of the month and my credit card bill was below $3,000! And it's not like it was a low expense month either... on this bill was a water bill, a rates bill and my car registration renewal!
A small increase in my alternative investments. I made a series of investments in coins this month. I'm running out of place to store them so am thinking that I need a more defined strategy for this investment
A decrease in my superannuation balance which was caused by me moving too early out of defensive stocks and into the stock market. Hopefully this proves to be the right decision over time because I don't want the first time I took control of my superannuation to be a negative!

The coming month should see some reasonably big swings in my net worth driven by our annual overseas holiday. Although I provide for this in my future liabilities balance and have cash set against these my wife tends to contribute quite a lot to these holidays so my performance looks better because it appears that I'm spending less. We also tend to spend savings on our holidays while we are still earning cash from our day jobs (the job of being full time employees!)

I'm hoping to get above the high watermark set last month although a $7,000 increase is always a challenge.

January 2016 Net Worth: $727,400 (+1.7%)

2016-02-03T10:32:00.001+11:00

You may have noticed that over the last few months I have really dropped off on my posting schedule. I have not uploaded any goals for this year and I haven't really been updating you on what has been going on in my financial life.

Originally this is because I was developing a new financial blog concept. This blog was originally set up when I wanted to be rich and take over the world. Since I started this blog however many things in my life have changed including my perspective on life.

I sat down and did some really hard thinking and worked out that...you know what? I don't know what I would do with $90 million that I couldn't do with $5 million and what I want with the $5 million is more freedom rather than toys. The only extravagance I would spring for is Business class airline seating (seriously!).

If I'm going to be honest with you I don't really know what I want anymore. I'm in this odd place where I'm remarkably comfortable but I'm not really sure what comes next. I'm not financially "free" yet and I'm going to keep working towards this goal but I haven't yet nailed down what a 'perfect' life would look like and until I do my goals are in a little bit of limbo.

With that out of the way - I will (for the foreseeable future) still be updating my net worth on this blog. When I work out what I want to do next you will be the first to know.

January 2016 Net Worth...the detail:

I have been thinking about providing a little more detail in these net worth updates for a while and I thought I would start this month. In coming months I may tweak exactly how I do this but let me know what you think anyway.

This month was a real roller coaster in terms of net worth. I started the month at $714,000 and at one point was well below the $700,000 mark before I rebounded towards the end of the month.

During the month the following things moved the dial significantly:

I invested directly into the share market when it was getting hit pretty hard. I probably pulled the trigger a bit early on this as the market has continued to slide however I'm not unhappy with this decision
My wife and I continued to save into our home loan offset account (disclosed above as a Cash account) as we are saving for our new home. We are aiming for a $500,000 deposit before we buy the new place
I changed my superannuation structure so it was more heavily weighted towards shares and away from defensive sectors. I still believe the decision was right although my timing was terrible and this hurt me over the month
I topped up my investment in my coin collection for the first time in a long time. I've built up $1,000 in available alternative investments and will be looking to deploy this in the coming months
I continued to invest in my employee share plan (disclosed as restricted investments)

These days market moves tend to move the dial far more than things like savings and expenses however my expenses have gotten out of hand recently. As a result I have started tracking my expenses every day again.

This time I've made life easy for myself and I'm using an app and the results are really interesting. I am going to keep tracking this for another 2 months before I make any large changes.

December 2015 Net Worth: $715,000 (+2.1%) and Goal Tracker

2016-01-01T09:30:00.000+11:00

Another month and another year have gone by and I'm incredibly happy with house this month and this year have panned out. Not everything has gone to plan especially in relation to this I couldn't control (like the stock market) however having a plan in place for my own personal finances helped me whether some pretty tough conditions to come out far ahead of where I originally thought I would be.

Enough of the nostalgia and onto the numbers. Below I have provided the usual summary of my net worth however I have gone into far more detail than I usually do on my goal tracker given I have just completed my goals for the year.

Net Worth: $715,000 (+2.1%)

	Value	% Change
Assets	$1,121,000	+1.1%
Liabilities	$406,000	-0.7%
Net worth	$715,000	+2.1%

This month I had hoped to increase my net worth to $705,000 so I was pleasantly surprised to see it increase far more than that. Some of the increase was driven by large factors but a lot of it was just grinding along and following the plan I have laid down for myself.

Some of the key factors which affected this month's performance included:

The allocation of part of my bonus

Last month my bonus was paid and I saw a really large step up in my net worth. Due to timing issues however I couldn't actually count all of my bonus last month because I didn't know the value of certain non listed securities I would be issued
This month I got allocated these securities and on an after tax basis it added approximately $4,000 to my net worth

Continued saving into my offset account

One of my savings goals for 2015 was to save for our next home and so every month my wife and I continue to save a portion of our income towards this goal
We are also renovating our current home at the moment so unfortunately the net impact is not always as large as the amount we actually save

The share market picked up slightly and I put more cash to work when it was down

Over the month the share market picked up slightly however it was a rocky ride. When it was particularly low I bought some resources index funds. So far that was the correct decision to make but the the whole market is incredibly volatile at the moment and I have no idea where it is going to go from here

Continued saving into my employee share plan...but no savings into superannuation

My employee share plan continues to be a valuable automatic savings tool for me and due to my wage increase in the last month (unfortunately it was only around the rate of inflation this year) I actually contributed more this month than in the previous months
Due to a quirk in the superannuation rules my employer didn't actually make a superannuation contribution this month as I hit my contribution cap for the quarter when my bonus was paid. This happens every December and is a bit of a pain

Future liabilities decreased to $11,000 from $13,500

My future liabilities decreased this month as I continued to renovate the house. I may have to top this up soon as our plans have significantly expanded compared to what we had originally planned

Over the last 12 months my net worth has increased by $147,000 which is pretty mind blowing especially given that in that time I bought my sports car, got married, went on my honeymoon, moved into and furnished a full house and had a ton of other expenses. There were a couple of big one off increases that helped this performance (including a revaluation of my home). I am incredibly happy with this performance and if I'm going to be completely honest the higher I go the less important the actual number becomes...but that is something for another post.

December 2015 Goal Tracker

Wow...I've finally gotten to the last goal tracker for this year. Some of my goals for 2015 I met and exceeded while others fell a little short. The summary is below and then I thought I'd do a brief roundup of each of the goals in turn.

Goal	Dec 15	2015 Total	2015 Target	Remaining	Achieved?
#1: Get Married	+$0	$5,000	$5,000	$0	YES
#2: Honeymoon	+$0	$20,000	$20,000	$0	YES
#3: Home Deposit	+$4,750	$83,647	$40,000	$0	YES
#4: Emergency Fund	+$833	$10,000	$10,000	$833	YES
#5: Share Portfolio	+$10,953	$259,209	$276,000	$16,791	No

Goal #1: Get Married (Cost: $5,000)

I had done most of the saving for this goal before the year actually started and I just had the final hump to cross and I did that quite quickly which was very pleasing
For anyone that is interested we ended up spending just over $40,000 on our wedding

Goal #2: Fund Honeymoon (Cost: $20,000)

I hadn't really started saving for my honeymoon at all before the year started but my then fiance and I devised a plan so that we could save for this in as short a time period as possible and we stuck to this as each month went by
We ended up spending just over our budget on our honeymoon which I was pretty pleased with

Goal #3: Save for our new home (Cost: $40,000)

Given all the other things we had to save for this is what I thought was an achievable amount to aim for when it came to saving for our new home
We far exceeded this and ended up saving nearly $84,000 due almost entirely to the very generous wedding gifts we received from our family and friends

Goal #4: Establish an Emergency Fund (Cost: $10,000)

I've never really felt the need for an emergency fund however as I am starting to settle down I thought this would be something that we would need over time and it was best to have it right up front
$10,000 should cover us for about 2 months of expenses should we both lose our jobs or it can cover any large unexpected hiccoughs along the way without actually hurting our investment plan
I'm glad that I have saved for this...I don't think it needs to be any larger for the moment and I no longer need to save for this going forward

Goal #5: Earn a 15% rate of return on my portfolio (Portfolio value of $276,000)

This is the one goal I missed by quite a long way for several reasons. Firstly I de-emphasised this when my wife and I decided that buying our next house should be our priority so other than my employee share plan I didn't contribute anything additional to shares
Secondly the Australian share market absolutely crapped itself over the year and I was hurt pretty badly by being in high beta stocks
This is all part of investing in the share market and my emphasis in the current year will be on cleaning up my portfolio and treating it like a business in it's own right.

November 2015 Net Worth: $700,000 (+5.9%) and Goal Tracker

2015-12-01T09:30:00.000+11:00

I love bonus month! It's the one really big cash inflow that I have during the year and this year was no exception. Bonus month helped my net worth jump almost 6% to hit the $700,000 mark for the first time.

Crossing these milestones is always a bit of a strange experience. I technically know that I am building wealth but my life doesn't feel any different. I'm still doing exactly the same thing day to day but the effect of compounding seems to be accelerating the process.

Net Worth: $700,000 (+5.9%)

	Value	% Change
Assets	$1,109,000	+2.7%
Liabilities	$409,000	-2.3%
Net worth	$700,000	+5.9%

This month my net worth increased $39,000 and there were a couple of huge factors that led to the increase. For once most of it was actually expected (as opposed to hitting me from nowhere) but it was still pleasing to see everything running as expected.

My bonus got paid in the month

My annual bonus forms a significant part of my income and it was paid this month. I'm not going to go into the specifics of exactly how much it was but a good chunk of the increase this month was the bonus payment
Part of my bonus is deferred for the next few years (although part of this gets paid out every October so if you read my post last month you will have seen a significant uplift from that)
Tax is also taken out of my bonus payment automatically...given that it is taken out at close to the top marginal rate, I'm losing 50% of my bonus almost straight away
Even with all these mitigating factors it was still nice to see a significant step up in the amount of cash I had on hand

I paid my tax bill during the month

I had an absolutely massive tax bill this month...I owed the government more than $8,000!
Most of this was due to my trading in shares and as I generate profits on my share portfolio I keep track of the capital gains tax I have owing which forms part of my liabilities above
Although I paid out a significant amount in cash this month it actually didn't affect my net worth all that much as my liabilities stepped down by a similar amount

My investment portfolio continued to perform well

My investment portfolio did rather well this month increasing by almost 2% over the month
I also continued to contribute to my employee share plan and my employer continued to make superannuation payments on my behalf
My investment portfolio (including my superannuation) represents approximately half of my net worth with the rest being the home I live in and the cash I am stocking away from my next house

My credit card balance remains stubbornly high

One of the few disappointing aspects of this month's performance is how stubbornly high my credit card bill remains
We are doing renovations on our home at the moment and everything we buy goes on the credit card...I think this is an area my wife and I probably need to focus on going forward.

When I look back
at last month's post I thought I was being pretty optimistic with a net worth goal of $690,000 for the month. I am really happy to have outperformed that target. So what is my goal for the end of the year? Well Christmas is always an expensive time of the year so I'm not going to be too aggressive. If I can increase my net worth to $705,000 I'll be pretty happy.

November 2015 Goal Tracker

Last month I busted through my savings target for my new home and I continued to add to that this month. Unfortunately given there is only one more month left in the year I don't think I'm going to get my 15% return on my share portfolio for the year. Honestly I probably could have redirected some cash from my home loan into my share account but I'm in the middle of refocusing my share portfolio and I didn't want to force myself to have to park cash somewhere.

Goal	Nov 15	2015 Total	2015 Target	Remaining	Achieved?
#1: Get Married	+$0	$5,000	$5,000	$0	YES
#2: Honeymoon	+$0	$20,000	$20,000	$0	YES
#3: Home Deposit	+$18,500	$78,897	$40,000	$0	YES
#4: Emergency Fund	+$833	$9,167	$10,000	$833	No
#5: Share Portfolio	+$6,910	$248,256	$276,000	$27,744	No

A new direction for myself and this blog...

2015-11-11T09:30:00.000+11:00

Writing this post is actually reasonably challenging because what I am writing about is a work in progress and I have not actually completed yet but instead of going completely dark on the blog I thought I would let you guys know what I have been up to.

So let's deal with first things first...

Why haven't I been writing blog posts?

Not writing blog posts for a blogger is the best way you can think of to kill a blog and I had this experience a few years ago when I was going through a tough patch and blogging and finance were not the foremost thing going on in my life. Thankfully this time that is not the reason I stopped writing.

The fact is that I used my honeymoon to reassess what was important to me and what I wanted and needed to be spending my time on. I love writing this blog and have loved writing it since my first post in 2011. That hasn't changed at all.

I stopped writing as many posts because I came to the realisation that it was taking time away from things I needed to be doing more. At one point I was writing 1 - 2 posts per day on this blog. Each posts would take at least 45 minutes to write and some which required more research took considerably longer. I was happy to do it too but given that it was taking ~4 hours of my week it needed to be assessed alongside all the other things I could be doing with my time.

What I needed to do therefore was to work out exactly what I wanted to do with my life and importantly what the most productive thing I could be doing with my time.

What do I want to do with my life?

Getting away from my regular life for an extended period of time while I went on my honeymoon was one of the best things I have ever done. It allowed me to really think about what I wanted to do with my life. It clarified a few things for me including:

1. I really do like what I do for a living...and there aren't many things I'd quit this job for

I'm incredibly lucky in that I really do love my job. Sure there are times when it gets tedious and boring but I'm not one of those people who dream about starting their own business so that they can escape from their job.

I'm also lucky in that my job pays incredibly well. I would love to supplement it with a small side business but I don't think I'd ever quit my job to pursue something else full time.

2. Speaking of that side business...

If you have been reading this blog for a while you would know that starting my own business is something that I have been looking at doing for an incredibly long time. I actually got one off the ground...it was a blog called Banker's Pitch and I put a ton of time and effort into it...and you know what? It was starting to go pretty well.

But I lost the passion for it. I was never enamoured with being an Investment Banker. There is a reason I quit and even though I could continue writing posts no the topic for years to come it was a chore...actually it felt a little like how most people feel in their jobs. They are good at it...but it bores them to tears.

So am I giving up on running my own business completely? Well not entirely...you see I had been thinking about it all wrong.

3. I started focusing on doing what I'm good at...

Doing what you're good and what you love is probably as good a combination for business success as anything I can think of. Add in experience and expertise and...well things are looking far more rosy. You know the problem I had?

I was going after business ideas where I was NO different from everyone else trying the same thing. I'm not the best writer or blogger on this planet and although I love reading articles online I actually tend not to join communities and be particularly active in them.

I'm not particularly good at marketing but I spent a long time looking into import and ebay businesses. I did a ton of research which was really geared to people like me...people who were starting out and learning how to make their way in these worlds.

But then I had one of those "aha" moments. There is something that I'm good at and that I think I have a competitive advantage in. Even better I have a ton of experience in it. What am I talking about? Investing in shares. The crazy thing is that I already have almost a quarter of a million dollars invested in shares but I never treated it like a business. It was something I did when I had a bit of spare time or when an idea popped into my head.

4. Investing in shares isn't a real business is it?

Investing is absolutely a real business. If you want to do it you can do one of two things...set up your own investment fund or become a day trader. If (like me) you're quite happy at your day job and you want to do it on the side then you can do this to...but you still need to put the time in.

My time wasn't focused at all. I spent so much time doing other things (including this blog and Banker's Pitch) that I was barely spending 1 hour a week on a business I already have a lot of money invested in.

5. So why investing in shares?

So why have I decided on something so specific? Why not something more broad? Why don't I write a blog about investing in shares?

I thought about all these things and there are some pretty specific answers

I have no real experience in other asset classes. There are always people who will understand property better than me as well as fixed income and physical commodities or alternatives. Shares though...that's my bread and butter and I understand that pretty well.
I thought about writing a blog about share investing but the thing about blogs is that you need to be a good marketer. You are essentially selling your knowledge and if you are just doing it for free then it isn't a business

So that's the new plan...focus on my investment portfolio. Treat it like a real business. Skill up to fill the gaps that I have in my knowledge and build my wealth that way. Perhaps it's not the type of business I first imagined when I set down this path but with a bit of time to think about it...it's the one that makes most logical sense.

What is going to happen with this blog?

This blog isn't going to go anywhere. It's still going to be here and I'm still going to update my net worth every month and perhaps include posts on some other goals every so often but it isn't going to be the same musing pad for all things personal finance that I had used it for before.

Breaking the habit of blogging about everything related to finance that comes to mind is actually going to be reasonably challenging...I have been doing it for so long that I constantly think about potential new topics and posts but I'm going to remain focused on this new path for a while.

Although I'm not going anywhere I still wanted to thank everyone for all their support and encouragement!

October 2015 Net Worth: $661,000 (+3.4%) and Goal Tracker

2015-11-02T09:30:00.000+11:00

Apologies to everyone for my absence from the blog for a significant amount of time. I went on my honeymoon for just over 5 weeks and although I have been back for about 3 weeks now I have made some major changes in my life (which I would love to share with you guys and I will do so in an upcoming post) which mean that I am now spending far less time blogging than I used to be.

These net worth posts will continue into the future though so if that's what you come to this blog for...have no fear!

Net Worth: $661,000 (+3.4%)

	Value	% Change
Assets	$1,079,000	+2.6%
Liabilities	$418,000	+1.3%
Net worth	$661,000	+3.4%

This change represents two months of net worth progress and although it pales in comparison to previous months where I really had gangbuster returns there was actually quite a lot going on under the hood. The 3.4% increase above actually represented an $22,000 increase in my net worth and given the changes I'm going to outline below...I'm actually pretty happy with that!

Below are just a few of the items which affected my net worth over the last 2 months:

We paid for our honeymoon expenditure out of savings...but we continued to earn our wages at the same time

My wife and I had fully funded our honeymoon through a years worth of savings. I had accounted for the upcoming expenditure as a 'future liability' and so the cash saved for this honeymoon never really formed part of my net worth
However while we were away for 5 weeks we didn't really spend any money that wasn't part of this savings AND we continued to each receive our wages
This meant that we had far more cash in the bank when we returned than we originally anticipated
We put all of this extra cash towards our home loan

My bonus shares vested this month...however this was a net negative

As part of the bonus I receive from work I receive shares which I am not allowed to sell for a period of time
I account for these shares as part of my net worth as I have no intention of leaving this job
However there is a tax impact of actually being granted these shares and I don't know the impact of this until they actually vest
This actually had a significant negative impact on my net worth this month

**I created new future liabilities and paid off some old ones**

The introduction of my future liabilities really helped me smooth out the effect of large expenditures and give me a more accurate idea of how my decisions about the future affected my net worth
This month I got a benefit of $4,000 in my net worth because I didn't spend as much as I thought I would on my honeymoon
However I also created some new future liabilities

My wife and I decided to get a cat and I know pets can cost money...especially with unexpected vet bills so I have set aside an additional $2,000 for potential pet related liabilities
Additionally we have already planned and decided on our next holiday for next year and although it will not be as extravagant as our honeymoon I am still setting aside a liability of $8,000 for this honeymoon

The net effect of this is that my future liabilities provision increased $6,000 to $14,000

Other small factors continued to have a large effect

Not everything which affects my net worth has a large effect and this month a lot of small things built up into a reasonably big positive:

My share account and superannuation account grew reasonably well this month adding a net $8,000
I continued to save towards my employee share plan
I paid down a huge amount on my credit card

There are so many moving parts it is actually hard to keep track much less forecast where I would end up. In my last net worth post I had hoped for a net worth of $645,000 at the end of September and although we are at the end of October this is still a far better spot than I thought I would be in.

Next month is once again going to be hard to predict. I will be getting my bonus as well as having to pay some serious money to the tax office. Bonus months are typically pretty large for me so I'm going to go large and say I'm working towards a net worth of $690,000.

October 2015 Goal Tracker

I didn't expect to bust through my home deposit savings quite so quickly. Two months out from the end of the year and with my bonus still left to go I am incredibly pleased with the progress I have made on this front. Although it looks like it will be reasonably easy to smash my share portfolio target with the cash I am managing to save I am actually taking the time to reorganise my portfolio so I'm not making any large investments soon.

Goal	Oct 15	2015 Total	2015 Target	Remaining	Achieved?
#1: Get Married	+$0	$5,000	$5,000	$0	YES
#2: Honeymoon	+$0	$20,000	$20,000	$0	YES
#3: Home Deposit	+$23,750	$60,397	$40,000	$0	YES
#4: Emergency Fund	+$833	$8,333	$10,000	$1,667	No
#5: Share Portfolio	+$2,636	$241,346	$276,000	$34,654	No

What blogs do I read?

2015-09-21T15:36:00.000+10:00

Today I thought I would share with you the types of places where I get my information from. We all read different blogs, columns and digest information differently. We have all stumbled across great blogs while googling for something entirely different.

Today I'm going to share with you some of the awesome things that I have found on the world wide web.

Personal finance blogs I follow

There are a few personal finance blogs that I follow out of sheer curiosity about what these people are doing and how they are doing it. I don't normally follow them to 'learn' anything but it is amazing the types of things that you can pick up and the ideas you can get from seeing what other people do.

Blogs I regularly check are:

Asset Grinder
2million blog
When I am looking to see what several people are doing and their progress I check this list

Investing in shares: what do I read?

I confess that when I invest in shares I rarely use blogs. I work in the finance industry and have access to information that most people don't so tend to use that information first. That being said there are a few things that I read reasonably consistently:

Jeremy Grantham's newsletter

Property Investing...where do I pick up my information?

I do not keep on top of the property investing world as much as I should. My investment property has been very much a set and forget type investment however every so often I look up advice. When I do there is only one real place I go to. Note that this is an Australian specific investment forum but the advice from other landlords is great.

Somersoft Forums

Blogs I read about blogging

I love blogging. I never thought of myself as a writer but after more than 4 years of writing this blog for little compensation I realised that it is something I really like to do. However I'm not very good at it...especially around things such as monetisation, search engine optimisation and marketing. As a result I need to research it quite a lot.

Some of the sources I use include:

How do I have time to read all of this information?

The blogs I listed above are ones I use on a regular basis. I will read some of them daily and others weekly. So how do I have time to keep up with all of them?

The simple answer is that I try and minimise my wasted time. If I'm on the train I will read a blog. While walking to and from the station or washing the car or cleaning the house I'll be listening to a podcast.

I still make time for entertainment but I try and avoid those time sucks (Facebook I'm looking at you!) where I used to seem to lose hours!

Do you have any reading sources you can recommend for me? Is there anything you particularly like or follow?

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Up, Up and Away

2015-09-04T18:26:00.000+10:00

So I finally did it! I finally got married (after posting about it for literally years) and I just wanted to let all of you know and thank the significant number of readers who contacted me to give me friendly advice about the whole process and who also emailed to wish me well. It really meant a lot.

Today I'm off on my honeymoon which will encompass 5 countries in Europe over 5 weeks . I've never been to Europe so I'm SUPER pumped for this.

Why haven't I been posting as often?

For regular readers you may wonder why I have not been posting frequently and basically it came back to something that I mentioned in my 2015 Annual Review. I have a ton of posts that I could write about and indeed I actually have about 10 posts sitting in my drafts ready to go...but I have been thinking of re focussing this blog into something else.

I'm not 100% sure where I'm going to end up but it will almost certainly be blogging and definitely blogging about finance! I'm just trying to work out what I can write about that will make a difference to other people's lives.

Hopefully a completely break over a month in Europe will help me clarify exactly what I will be doing in the future...but until then thanks once again for all the support and hopefully I'll get to tell you all about the trip when I get back!

August 2015 Net Worth: $639,000 (+8.0%) and Goal Tracker

2015-09-01T09:30:00.000+10:00

This month was massive for me. I crossed the $1 million mark in terms of assets and my net worth crossed the $600,000 mark for the first time.

One of the interesting things about updating my net worth every month is that I totally ignore the larger numbers...I'm far more interested in how I'm performing month to month...but occasionally when I cross a bit milestone like $1 million in assets...that's pretty exciting!

So how did I do it and what changed? Well read on below for details.

Net Worth: $639,000 (+8.0%)

	Value	% Change
Assets	$1,052,000	+6.3%
Liabilities	$412,000	+3.8%
Net worth	$639,000	+8.0%

This month was absolutely crazy for me. I took a massive hit in my share portfolio as global share markets sank to their lowest levels in 4 years. However offsetting that was a large increase in the value of my property. I will go through this and more in my detailed explanations below.

I refinanced my property loan and the bank increased the valuation of my property substantially

I bought my investment property in late 2010 and since then I have been recording the value of my property at it's initial purchase cost ($440,000). I was never tempted to update the value of the property because in all honest property is such an illiquid asset that you can never know the true value. I thought the best way to be conservative was to keep the value as it was.

I still believe that is the best option when it comes to illiquid assets however this month I refinanced my loan (after moving into the property and seeing the savings that I could have from it). The bank revalued the property at $480,000 (a $40,000 increase in the valuation) and allowed me to leverage up my property once again to 80%.

I took the extra cash that the bank had given me and stuck it in my offset account. I did this for tax reasons but economically it made no difference. The benefit to my net worth was from the $40,000 increase in the valuation of the property. I also managed to reduce the interest rate I was being charged from 4.76% to 4.20% which will save me well over $1,000 over the course of a year.

My share portfolio took a MASSIVE hit over the month

The last month was not pretty if you were a share market investor. The market fell significantly and the value of my shares fell by approximately $15,000. I took this as a buying opportunity. I had been selling out of shares in the last few months and this month I got back in in a big way.
I probably went a bit early and didn't get the absolute bottom but I'm well ahead on the prices I purchased at.
The problem I face, however is that I am so heavily invested in the market that even investing a significant amount of cash at low prices doesn't make up for the pain I feel in the fall.
I'm not disenchanted though and if more buying opportunities arise I am going to take them

Additional cash received from wedding gifts

I mentioned that last month we received significant gifts for our wedding. This month I banked some more cash from our wedding. We can't believe how generous our friends and family were and this has really given us a leg up financially.

Having gone through the experience I would highly recommend asking for cash gifts for your wedding especially if you have already lived out of home and don't actually need all that much to set up a house!

Renovating and my honeymoon have increased my credit card balance and reduced my cash...but that's what my future liabilities balance was for!

My credit card balance at the end of the month was close to $11,000 which is higher than it has ever been before. This was entirely driven by spending on the renovations my wife and I are doing on our home.
Additionally I transferred an additional $10,000 to our travel visa debit card for use on our honeymoon
I had provided for both of these expenses in my future liabilities balance and over the month this reduced from $29,000 to $8,000

In addition to all of these there were a bunch of small moving parts including my wife's birthday which cost me far more than I first imagined, investment in my employee share plan and superannuation as well as a host of other things which pale in comparison to the factors mentioned above.

In the coming month I have no idea what is going to happen. I'm going to be away on my honeymoon and who knows what markets are going to do! I am going to hopefully build some cash as I have used quite a bit over the past few months. If I can get to a net worth of $645,000 over the month I would consider that a great outcome!

August 2015 Goal Tracker

Last month I was bemoaning the amount of cash I had sitting on the sidelines waiting to be invested in shares...well it's not sitting there any more! It's fully invested now.

In addition it is actually getting quite a bit harder to track how much I am actually saving for my home deposit given it is both my wife and I depositing and withdrawing from this account. I'll work out a new system soon enough!

Goal	Aug 15	2015 Total	2015 Target	Remaining	Achieved?
#1: Get Married	+$0	$5,000	$5,000	$0	YES
#2: Honeymoon	+$0	$20,000	$20,000	$0	YES
#3: Home Deposit	+$15,147	$34,147	$40,000	$5,853	No
#4: Emergency Fund	+$833	$6,667	$10,000	$3,333	No
#5: Share Portfolio	-$2,618	$238,710	$276,000	$37,290	No

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July 2015 Net Worth: $592,000 (+5.6%) and Goal Tracker

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Deconstructing why and how we pay our taxes

2015-08-20T10:58:00.000+10:00

Every year around this time of the year my mind turns to tax as I start to do my own taxes. I often grumble about taxes but I also realise that taxes are a necessary evil. Any discussion about taxes and tax policy is filled with self interest and people looking out for themselves.

It is so hard to have a neutral discussion about taxes without people feeling that they are hard done by. Low income tax earners point to the tax breaks that high income tax earners get and high tax payers point to the proportion of the tax system that they are funding. Neither is wrong either...the tax system is far from perfect.

So what is the answer?

I recently saw a discussion piece by Vice News on this very topic and although it is very US centric the issues it discusses have a much broader appeal. I found it incredibly enlightening and the people on the panel were experts in their field, able to leverage off each other for one of the best discussions on a complex topic that I have ever seen.

I cannot recommend this piece highly enough...enjoy!

I'm a high income earner...and this is why I have NO problem with the Warren Buffett Tax

2015-08-06T09:30:00.000+10:00

A few years ago I started writing a whole heap of posts on politics. It is something I'm really interested in but this wasn't the best venue for it so I swore off it. My "no politics" rule is still in place but I do talk about tax quite a lot on this blog and I thought today I would focus on why I don't really have any objection to the Warren Buffet rule that politicians are currently considering.

What does the rule say?

Basically the rule says that high income earners should be paying their fair share in taxes. In the Australian context this has been expressed as anyone earning above $300,000 should have a minimum average tax rate of 35% regardless of any deductions they may have.

Why is it called the Warren Buffet rule? Well it was proposed by legendary investor Warren Buffet who argued that legally the tax he paid was less than his secretary which seemed crazy and not right to him. He proposed this rule as a way of plugging a lot of loopholes at once.

This isn't actually as bad as it sounds

In Australia if you were earning $300,000 per annum and had no tax deductions you would be paying tax of approximately $117,000 which is about 39% and you would be in the top marginal tax bracket of 49% (including the medicare levy and the budget repair levy).

Now it doesn't sound like it would take a lot to get your tax rate down to 35%...but it actually isn't as bad as you think. For someone earning $300,000 their minimum tax payable would be $105,000. Under the current tax rates this means they would actually be getting taxed as if they were earning ~$276,000 which still gives you a hefty $24,000 in deductions.

But let's be honest...these measures aren't aimed at people earning $300,000. Let's look at someone earning $1 million. If they had no deductions they would be paying $460,000 in tax. The proposal says that they should pay $350,000. They are still allowed $224,000 in deductions before they hit the minimum barrier.

Aren't I disadvantaged by a proposal like this?

Honestly the reason I decided to write this piece was not because I think it is the right thing or policy (which I do) but it's because the people that need to speak in favour of proposals like this when it is a good idea are those that are earning high incomes.

Does it disadvantage me? Honestly...no. I pay my fair share in tax and I don't try and overly tax plan what I do. I don't skate close to the line and I just checked my last year's tax statement and I actually did pay 35% of my income in tax (even though I earn significantly less than $300,000). If I earn less than $300,000 and am paying 35% in tax....why is someone earning more than me entitled to pay less tax?

I'm not asking this question in a legal sense. Of course if you can legally avoid tax you should do so! That's the whole point of tax planning and I don't think tax planning is a bad thing. You shouldn't pay more tax than you have to.

BUT there are always going to be loopholes that people miss and that politicians don't want to fix for one reason or another. A blanket rule helps insure that people can still pay less tax and minimise their tax but not take the system for a ride.

Why do I like the rule so much?

Why do I like the Warren Buffet rule enough to break my 'no talking about politics' rule? Simply because it is neat, effective policy which is being slammed by those who have a very clear interest in keeping the system as it is.

Why is it neat? Well everyone is going to have some legitimate deductions and those legitimate reductions are probably going to increase as your income goes up (for a variety of reasons). The Warren Buffet rule doesn't get rid of deductions, in fact it doesn't really change the tax code at all.

Feel free to use all the deductions you want but there is a cap. There is a point at which you should still be contributing to the system and a point at which people who are earning significantly less income than you shouldn't be paying more tax than you.

If the rule is designed well you could have unused deductions carrying forward into future periods. Maybe a high income earner will never pay more than 35% and maybe that's where structuring takes us but at least they are still contributing to society and the system that we are all a part of.

Have I missed something?

Look I'm not claiming to have analysed this situation perfectly. Maybe I've missed something. Maybe there is something behind all the furor. Can you see something I haven't? Is there some reason why this isn't a good idea?

One reason I've seen touted is that high income individuals will just move overseas. I don't buy this argument. Tax rates are already lower in places like Hong Kong and the Middle East. If people were going to move for tax reasons they would have already done so,.

But is there something else? I would love to hear what you think!

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July 2015 Net Worth: $592,000 (+5.6%) and Goal Tracker

2015-08-03T09:30:00.000+10:00

My net worth increased by ~$32,000 and although I'd love to say it was because of some incredible investing on my behalf the answer was actually far simpler than that. I got married during the month and we asked for cash gifts to help fund our honeymoon and people were far more generous than we could have imagined.

There were other incremental positives as well. The share market bounced back after it's atrocious month last month and I slowly started to pay off my credit card debt. There were also other swings and roundabouts which I will go into further detail about later.

In this month's round up I also look at the goals we managed to tick off during the month and I start to track the goals that I set at last month's 2015 Annual Review.

Net Worth: $592,000 (+5.6%)

	Value	% Change
Assets	$989,000	+3.4%
Liabilities	$398,000	+0.3%
Net worth	$592,000	+5.6%

Those are some pretty big moves and unlike last month where there was a lot going on, this month the result was impacted by some pretty big one off numbers:

We deposited the incredibly generous gifts people had given us for our wedding

Both my wife and I lived independently before getting together and so we already had 2 households worth of stuff before getting married. We didn't really need more 'stuff' so we asked people for cash gifts
People were far more generous than we could have imagined and it actually funded a significant portion of the wedding
We actually haven't opened all of our gifts yet so this will continue to have an impact next month

My share portfolio had quite a strong month

When you look at my goal tracker below it will look like my share portfolio went backwards. Actually this was just me taking cash out of share account (which was sitting there in cash) and moving it into my home offset account
I'm thinking about ditching Interactive Brokers (for reasons I will go through in a later post) and so I didn't need my cash sitting in that account
The value of my shares increased by ~5% over the month and while still not at May's level it is significantly stronger than last month (contributing $5,000 to my net worth increase)

Continued contributions to my employee share scheme and superannuation

You may wonder why I continue to call these out month after month when it so automated
The fact that these savings mechanisms are so automated are their beauty - I continue to save and I never see the money before it goes into the savings so I'm not tempted to 'wait for a better' moment
My employee share plan vests reasonably soon so this should provide a positive impact on next month's result

My credit card balance remains incredibly high

There are still wedding expenses coming through on my credit card balance. In fact I hit my $12,000 limit both this month and last month and I had to pay down my credit card in the middle of the month which I don't normally do
Last month it was primarily wedding expenses and there were still $4,000 worth of expenses in this month's bill but moving expenses and renovations on our home is the majority of the increase (see my comments below about the renovations)

I added a new Future Liability

This month should have seen a huge decrease in my Future Liabilities balance as I finished paying off my wedding but I added a new Future Liability...a renovation / home improvement budget
The investment property my wife and I moved into needed some significant TLC and I hadn't really invested much into maintaining the property over the last 5 years
It needed a new coat of paint, new cupboards, a new fence and it was begging for a new laundry. In addition we also needed to buy some new furniture as the house was significantly bigger than our old apartment
As a result we gave ourselves a $10,000 budget (from our honeymoon gifts) to do most of this work
I'm hoping this doesn't blow out but so far we have been pretty good and are doing most of the work ourselves. I will do a post on this in the coming weeks

The coming month should be quite strong in terms of net worth performance and I'm hoping to break through the $600,000 net worth mark for the first time which will be incredibly exciting. I'm also hoping to bust through that $1 million asset number (although that seems unlikely at the moment!)

July 2015 Goal Tracker

I don't think I've ever had to reset goals because I achieved them too fast before but I may just have to do that. My share account has $25,000 sitting in cash on the sidelines (which I haven't included) so when that gets invested I will be well on my way to hitting my share portfolio target!

It's exciting being able to focus again on investments after being sidetracked by my wedding. My honeymoon is also coming up but that is fun to plan and does not take up nearly as much time as the wedding planning.

Goal	Jul 15	2015 Total	2015 Target	Remaining	Achieved?
#1: Get Married	+$0	$5,000	$5,000	$0	YES
#2: Honeymoon	+$0	$20,000	$20,000	$0	YES
#3: Home Deposit	+$19,000	$19,000	$40,000	$21,000	No
#4: Emergency Fund	+$833	$5,833	$10,000	$4,167	No
#5: Share Portfolio	-$4,336	$241,328	$276,000	$34,672	No

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June 2015 Net Worth: $561,000 (-0.9%)

June 2015 Annual Report

Why did investment loan interest rates just rise?

2015-07-30T09:30:00.000+10:00

Recently I wrote about how this was the golden age for mortgages, how the current rate environment couldn't last and how you should think about refinancing your home loan to save you thousands of dollars. I thought interest rates would increase at some point but I certainly didn't predict it would happen this fast.

If you're an Australian investor you may (or may not) have noticed that the interest rates on your mortgage jumped significantly last week. That's because most of the major banks (led by ANZ and CBA) increased their investor loan variable interest rates by 0.27%.

Unlike most rate rises and falls this was not driven by a change in the Reserve Bank's cash rate nor was it driven by external costs of funding. It was caused by the financial regulator (APRA) deciding to slow down the growth in lending to investors which have been driving a bubble in Australia.

Who does the rate change affect?

The rate change affects you if your loan is classified as an investor loan on your banks books. If you're loan is classified in correctly (as mine is as I just moved into my investment property as an owner occupier) then you really need to refinance your loan or get the status of your loan changed.

If you are an owner occupier this change makes no difference to you at all. In fact you are probably a little bit better off as the banks compete even harder for your business. When I get it all settled I'll describe the fun I've had refinancing my loan (I can't believe the discount I got).

Note that NAB is the exception to this rule. NAB's systems are such that they cannot just raise the interest rate on investor loans while keeping owner occupier loans constant. They made the assumption that most investors actually have interest only loans and so increased the interest rates on these loans while leaving principal and interest loans the same.

Is there more to come?

Honestly because it is regulatory driven it is hard to say. APRA has been making comments about lending growth to investors for some time. This is the first time that any bank has changed it's lending policies as a result of instructions from APRA.

Further if you look at the new bank capital rules coming into play it looks like the change will be structural and permanent. Investors will no longer be able to borrow at the same rates as owner occupiers because banks will be required to hold more capital against these loans.

One change that may also come in the future is the possibility that banks will start charging for offset accounts. This has not yet been mentioned by any bank or in the press however the new capital rules mean that this could be a reality in the future.

So what should you do?

Getting stung with a price hike never feels good. It may make you feel marginally better to realise that everyone is in the same boat as you (although the fact that owner occupiers still get great deals has to burn a little).

There isn't much you can do about the price hikes if you want to stay at one of the major banks. The regional banks (Bank of Queensland and Bendigo Bank) are not as badly hurt by the capital changes as the majors are and their investor growth has been far more muted so you may want to consider them if you are considering refinancing your loan (note this is true as at the time of writing but may change into the future).

There may be some scope for you to game NAB's systems a little. If you are an owner occupier with an interest only loan at NAB (like I was) then you need to move it right now. You are getting screwed when you really shouldn't be. If you are an investor with a principal and interest loan perhaps NAB is a place you should think about moving your loan (although at some point they could bring their lending practice into line with the other major banks).

If you've been sitting on your loan for a few years and haven't done anything about it then this is definitely the time to start thinking about refinancing it.

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Why I gave up my Investment Property and moved into it as my own home

2015-07-27T09:30:00.000+10:00

A few years ago I asked the question: 'Should move into my investment property?'. It didn't make the greatest financial sense and in fact it didn't grant me the lifestyle I was looking for as a young, single bachelor.

Fast forward 3 years and all that has changed. I'm now married and my wife and I we made the decision to move into my investment property...it was the right thing for us to do at this time.

So what changed?

When my wife and I sat down to work out where we wanted to live when we got married we actually decided to keep the investment property as an investment and to move into another rental as we saved for our own place.

This is not what my wife wanted. Unlike my outlook on life her every decision is not dictated or influenced by financial considerations. She wanted to live in her own home with a garden. She didn't mind where it was either.

I was far more picky. I couldn't be more that 45 minutes from the city, I wanted it to be in a decent area, close to public transport and to amenities. Unfortunately most of the houses which combined decent land size and good areas were well out of our price range...hence the decision to rent.

One concession I did have to make was that we would be in our own home by the time we were looking to have kids. The property market is so hot in Australia at the moment and buying another property in this kind of environment is definitely not what I was looking to do!

That being said I made that concession because my wife really doesn't push me all that much in terms of financial issues and this was one thing she was adamant about.

Fate intervened unexpectedly

You may remember that last year I had a mild panic attack when I raised my rent on my tenants and they never responded...had I just lost amazing tenants by being too greedy? All was well though because on the date the rent increase came into effect they just started transferring the new rent amount.

This year I knew something was up when they didn't sign a new lease even though I offered them the ability to sign a one year lease at exactly the same rent they were on last year. Sure enough a few weeks before my wedding they gave their notice of intention to vacate and their due date to move out was 4 days after my wedding.

Deciding whether to move in became purely a financial decision

My rental property is great and I've always been glad that I bought a suburban family home however it is not a 10 year house either for my wife or myself. I'm not the biggest fan of the area and my wife wants more land to garden.

What it is though is a perfect interim place to live. Somewhere we could live for 3 or 4 years while we save and look for our next place.

So the decision became...is it worth getting another tenant in and us find another place to rent for a shorter period of time or do we give up the rental income and tax deductions and move into our own place?

Pros of moving into the rental

I needed to do quite a bit of work on the property and doing this while tenants are in there is quite difficult

Things like repainting and carpeting as well as replacing a fence have all been on the things to do list for years and being there myself will help me get this done

Putting off buying another property for a few years

Earlier I mentioned that I was incredibly wary about the current state of the Australian property market. If we hadn't moved in the pressure to buy a place from my other half would have been intense! I have managed to push this inevitability back 2 to 3 years

The rent I was receiving on the property was approximately $40 a week less than what we were looking to spend on a rental

Normally the interest deductibility of your investment loan would needed to be counted in this valuation however my property was positively geared so I wasn't actually getting any benefit from this.

Cons of moving into the investment property

It was an area that I wasn't too keen on living in.

The area the investment property is in is great if you are raising a family but it is useless if you want things like convenience to the CBD, cafes etc. However given my wife and I are looking to start a family soon the family aspect of it suddenly becomes far more compelling

It reduced the imperative to save hard for our own home.

I think people save for a variety of reasons. My wife is brilliant at saving if she has something to save for. My major concern was thay by living in our own home already thay she would not have the same motivation to save. If I'm going to honest this is still a concern and I'm testing ways to keep us on track

All the repairs and expenses that are part of home ownership are no longer tax deductible.

This is a very real downside and it bit me in the backside almost as soon as I moved into the house
I suddenly had to paint, fix fences and repair burst water pipes all without the benefit of being able to claim the expenses back on tax. Some of the bigger jobs I will keep receipts for and add it to the capital value of the property (and depreciate it later when it goes back to being a rental) however smaller jobs I will no longer be able to deduct.

After weighing up all these pros and cons we decided to move into the property...so what swayed it for us?

So why did we decide to move into the Investment Property?

Although we came to the same conclusion my wife and I reached the decision to move into the investment property for quite different reasons:

I saw it as a financially neutral decision which allowed me to put off buying into a hot property market for a few years. The risk to this approach is that we take our foot off the wealth building accelerator because we are comfortable.
My wife saw it as an ability to get into our own home ahead of children which provided stability. The risk from her point of view is that we don't actually move after a few years and she doesn't get her garden.

I'm learning that relationship finances is as much about finding common ground even if they are for completely different reasons rather than always compromising what you you both want.

So what do you think about my decision to move into my investment property? Would you have done something different?

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June 2015 Annual Report

2015-07-22T10:49:00.000+10:00

The last year saw so many changes in my life and as I look at the financial impact of these changes it really struck me once more that you can't look at your financial life without examining your whole life.

Your financial life and position is a direct reflection of the whole life that you choose to lead. As a very simple example if I had not been preparing for a wedding this year I probably would have had significantly more saved towards my house. That being said if I wasn't looking at getting married in the short term I probably wouldn't be looking at saving for a house.

This was a transition year for me. It was a year where things other than finances took centre stage and I didn't mind that...the work I had done over the past 4 or 5 years had put me in a position that a bunch of life changes were not going to significantly impact my life.

For those of you who read my blog regularly you may have noticed that I plan my financial goals with a December year end but I do my annual review on a June year basis. This is purely a matter of history. I started this blog in June 2010 and the logical time to do an annual review seemed to be a year after that point. I have thought about changing that several times however it always provided a useful midpoint review of both my goals and my progress.

Goals: Achievements and progress

As this review straddles two years I will be looking at 2 years worth of goals, achievements and challenges.

Goal	Achieved?	Amount Spent
Buy a Sports Car	YES	~$17,000
Get Engaged	YES	~$11,000
Get Married	YES	~$43,000
Big Honeymoon	NO	~$4,000
Save for new Home	NO	$0

As I mentioned in the introduction this year was a year where things other than finances took centre stage. Last year was a year where I did all those things which I had been putting off for years so in this goal and progress tally you see less about building net worth and more about enjoying life. I managed to buy my sports car, get engaged and get married all within the last 12 months. Yes it set me back more than $70,000 but would I change anything...not a chance!

That doesn't mean that I wasn't saving and investing at the same time...it's just that by comparison those were not taking center stage. In case you were wondering I also managed to contribute $5,000 to my emergency fund and ~$20,000 to my share account in the last year.

Portfolio and Investment review

Over the last 12 months my net worth increased from $503,000 to $561,000 at the end of the financial year. The less than spectacular performance this year was almost entirely driven by the fact that for the year before that I had been saving cash to pay for an engagement ring, a wedding and a sports car without ever having accounted for the fact that eventually I would have to pay this cash out to actually purchase the things I was looking to buy.

I started accounting for these future cash expenses (which I called "future liabilities) in January 2015 and you can see a dip in the green net worth line below at this time. Going forward I will be accounting for big upcoming expenses when I plan them.

The chart below is one which I update every year and which tracks my progress from the beginning of my blog. When I started the blog I think I would have hoped that my progress would have been faster and that I would be closer to the $1 million mark already. That being said, so much has happened including a change of job and career (to one which pays less), getting married and moving out (which hurt my savings rate substantially) and starting to enjoy life a bit more all of which combine to make my life better...but my net worth not as high as it could have been.

I'm still incredibly happy with where I am and I'm excited to be able to put my head down and concentrate on building wealth now that a lot of big expenses are behind me.

I've intentionally been changing my asset portfolio split over time. In 2012 I had 74% of my assets in property and 12 % in shares. In 2013 property made up 61% of my portfolio and shares made up 18% and you can see the progress of my asset classes in the charts below.

The shift away from property has been intentional and partly mechanical. My heavy weighting to property because I had bought a single large asset (my investment property). Some people want most of their assets to be in property and so intentionally skew their portfolios in this direction. In my case it was purely a matter of having a lumpy asset come into my portfolio and then over time re-weighting the rest of my portfolio.

I account for the investment property at purchase cost (admittedly the price has not really moved over time so it's not like I'm sitting on a giant windfall that I should be accounting for) and as I have saved and invested into other asset classes the property has become less important within my portfolio (admittedly it is still nearly half of all my assets).

Over time I will continue to re-weight this portfolio. For a description of what I want to do with it see my 'goals going forward' section below.

Blog review

90 million blog has also celebrated another anniversary and is now 4 years old which is a huge milestone for me!

A year ago I split the blog into two parts - this blog remained a personal finance and personal journey blog whilst the information I had uploaded about Investment Banking over the years was spun out into a new blog: Banker's Pitch

The original plan was to redesign and refocus this blog completely including a new home, a new name and a new look. However starting Banker's Pitch took me far longer and was far more effort than I originally imagined.

Another year has passed and I'm still using the old design however my goal in the next few months is to completely overhaul the look and feel of this blog. I still haven't settled on a new name for the blog (90 million hasn't really reflected my goals for a while now) so any ideas would be much appreciated.

In terms of readers the blog looks something like this:

Year	Sessions	Pageviews
2012 - 2013	12,533	23,536
2013 - 2014	14,185	32,301
2014 - 2015	7,953	17,679

As you can see the number of people reading the blog has decreased significantly. A significant part of this was the moving of the investment banking traffic to Banker's Pitch but there was also a significant decrease in my native blog traffic.

There are a heap of reasons why but they are mostly my own fault. I used to post up to twice a day (and this decreased to once a week in the last year). Honestly I was burned out trying to do too much (which I wrote about at the start of the year) and this blog was the one thing that took a hit in order to keep me sane.

On the upside though I have really built some great friendships over the last year with people who read this blog. I have had long email chats and even a couple of face to face meetings with people who read the blog which is something I never thought would come from the blog. I'm going to be putting more effort into it in this coming year and hopefully soon you will be seeing a completely new and different look.

Goals going forward

In years gone past this was the point where I had my mea culpa moment and reset unrealistic goals that I was unlikely to achieve. For once this is not the case. I am currently tracking very well to my 2015 goals as you can see below:

Goal	2015 Total	2015 Target	Remaining	Achieved?
#1: Get Married	$5,000	$5,000	$0	YES
#2: Honeymoon	$20,000	$20,000	$0	YES
#3: Home Deposit	$0	$40,000	$40,000	No
#4: Emergency Fund	$5,000	$10,000	$5,000	No
#5: Share Portfolio	$245,664	$276,000	$30,336	No

That being said a few readers have suggested breaking my net worth goals down into smaller bite size pieces each year. This is a brilliant idea and sometime I encourage everyone to do.

By June 2016 I want a net worth of $700,000

This is a massive increase on 2015 however I think I can do it. In terms of where I want the extra ~$140,000 to come from, I am looking for it to come from the following areas:

Cash: +$100,000
Stocks: +$20,000
Property: +$0
Superannuation: +$15,000
Debt: - $5,000

The build up in cash is likely to continue for the next few years as I save for another home. I'm targeting $400,000 in cash within 3 years. Why so much? Well my wife and I have decided that we would like her to be a stay at home mum. With my single income we have worked out that we can support approximately $750,000 in total mortgage debt without experiencing any mortgage stress.

Now I'm not about to go out and buy a $1.1m property...but we are going to draw down my investment property loan for the deposit on the new house (approx $350,000) and we will then be looking to buy an $800,000 home for ourselves. To my American friends reading this blog...unfortunately this amount doesn't get you all that much in an Australian capital city. We want a 4 bedroom home with a garden within about 45 minutes of the city and this is what you end up spending.

In terms of my share portfolio I will not be contributing more from my wage into the portfolio above my employee share plan (10% of my wage). What I am going to do is to continue to look closely at my portfolio and actively manage it. I really started doing that in the last half of the year and I've started to see some good results. I'm currently sitting on a pile of cash that is waiting to be invested so there is plenty for me to do on this front.

My superannuation account is something I have been very lazy with over the years and the ability to tax defer investments I would be making anyway is something I'm definitely looking to take advantage of. I have previously rationalized (with myself) that I wouldn't do this while I was in a cash build up phase however the logical place for this to come from is my share investment account.

This will also be a big year for my blogs. I'm going to give Banker's Pitch one more year to be profitable and successful. After this point I'm going to focus my efforts elsewhere. This blog is my baby though and even if no one continued to read it I would continue to write it. That being said I want much more focus on this blog and I will be looking to shake things up in the coming year.

A final note

I wanted to send out a massive thank you to all of you who have been sharing this journey with me. Hopefully I have been adding some value to your financial journey. Thank you for all the emails and messages of support and advice throughout the last year.

This year was also the first time I met some of you in person or chatted over the phone. That was a giant step for me give how nuts I am about privacy...but the world didn't cave in and I made some great new friends so thank you.

If you ever want to chat to me shoot me an email and I promise I'll try and respond. I'm hoping the next year will be as awesome as this year and I look forward to sharing it with you all!

You may also be interested in:
June 2014 Annual Net Worth Review
2013 Net Worth Financial Performance Summary
2015 Financial Goals
June 2015 Net Worth: $561,000 (-0.9%) and Goal Tracker

June 2015 Net Worth: $561,000 (-0.9%)

2015-07-16T10:30:00.003+10:00

After an incredibly strong performance last month, this month saw my net worth slip by almost 1% driven almost entirely by an incredibly weak Australian share market. In this post I'm going to highlight what happened to my net worth this month, what drove most of the chances and where I am heading in the future.

In the coming week I will also upload my annual performance review which tends to give far more detail about how my portfolio is structured. My apologies for the late posting of this month's net worth. I was on leave from work (and my computer) for a few weeks as I was getting married and moving home...I will also post more about what is happening on the personal front soon.

Before I take a deep dive into my performance this month let's have a look at the headline numbers.

June 2015 Net Worth: 561,000 (-0.9%)

	Value	% Change
Assets	$957,000	-1.5%
Liabilities	$396,000	-2.3%
Net worth	$561,000	-0.9%

There were so many things going on this month and I could honestly write thousands of words dissecting every line item however I will spare you the boredom and outline the major things which affected my net worth.

My share portfolio fell ~5% during the month (~$258,000 to $246,000)

This month removed all the gains I had last month and even more. The Australian market absolutely tanked this month on a combination of downgrades, worse economic data and European fears around Greece all contributing for a shocking end to the year
I should have taken advantage of the falling share market however preparations for my wedding took over and I just sat on the sidelines watching my portfolio fall

The actual payment of wedding expenses all happened during this month

I have a pretty high limit on my credit card ($12,000) and I don't think I've ever run so close to the limit for so long
Last month I paid my credit card down to $2,200 however this month I got so close to the limit that I had to pay it down by $4,000 during the month (which hurt my cash balances) to end the month at $8,400

My future liabilities balance reduced significantly as I paid off wedding expenses (~$41,000 to $26,000)

At the start of the year I decided to account for the fact that I had all this cash sitting in my account to pay for my wedding, honeymoon and sports car. This made my net worth look significantly better than it actually was and I added a liability which offset this cash
As I started to pay for wedding expenses the liability reduced significantly
The reduction actually more than offset the outflows because my fiance (now wife) was paying a significant share of these

Given my share portfolio has grown to a significant part of my net worth I'm not surprised that I occasionally get months like these. Perhaps I could have been more aggressive in taking advantage of the fall in share prices but the market hasn't returned to where it was so there are plenty of opportunities still available.

June 2015 Goal Tracker

Boom! Another goal accomplished this month. My upcoming honeymoon has been fully funded and saved for. Further I am halfway to having a decent emergency fund in place. My share portfolio took a real hit this month but everything I can control is going really well.

At this rate I'm going to achieve my goals well before the end of the year and then I need to work out what comes next.

Goal	Jun 15	2015 Total	2015 Target	Remaining	Achieved?
#1: Get Married	+$0	$5,000	$5,000	$0	YES
#2: Honeymoon	+$5,336	$20,000	$20,000	$0	YES
#3: Home Deposit	+$0	$0	$40,000	$40,000	No
#4: Emergency Fund	+$833	$5,000	$10,000	$5,000	No
#5: Share Portfolio	-$12,422	$245,664	$276,000	$30,336	No

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