Wednesday, 31 August 2011

August 2011 Net Worth - $174,000 (+36%)

Assets: $542,000
Liabilities: $368,000
Net worth: $174,000

The significant increase in my net worth for August was due to my work bonus getting paid into my bank account as well as a small inheritance which I received.

Both of these amounts are still in cash though I am looking to increase my equity market exposure as my investments (net of any gearing) are still 50% property, 30% interest bearing securities and 20% equities.

I'm expecting a small bump to my net worth next month when I (finally) get around to doing my taxes.

Monday, 15 August 2011

Discounts on financial products

One the weekend I realised that I needed to renew my landlords protection and house insurance. Looking at the renewal amount I was surprised at how high the insurance cost was (~$840 which was a 30% increase from 2010).

I was not surprised that there was an increase given how hard insurers got hit with the floods that affected Queensland however 30% seemed outrageous especially given that I live in a area which never has flood problems etc. I therefore got a quote from another insurer and then took it back to my insurer who lowered the cost significantly.

This got me thinking about where else I was paying fees or costs that were too high. Since then I have renegotiated my bank account keeping fees (now paying nothing instead of $5 a month - same account - same everything...just no fees) and will be getting onto my phone next.

The moral of the story is that you can get significant savings (i'm already above $150 p.a.) for very little effort - just have to get out there and ask.

Monday, 8 August 2011

Market volatility - Buy, sell or hold?

With the unprecedented amount of volatility in the market many people are torn about whether to buy more in the market, to sell or just to stay on the sidelines and see what happens.

So far I have stayed on the sidelines though if the market gets down to the levels it was at on Monday / Tuesday last week I will start to buy. My (relatively conservative) picks are
  1. Commonwealth Bank of Australia (ASX:CBA): A bank with almost no international exposure or funding requirements and with a pure exposure to the resilient Australian economy. Based on the current share price of A$47.10 this implies an LTM dividend yield of 6.79% this bank is returning more than most high yield accounts and just reported a record net profit of A$6.4 billion (US$6.7 billion). CBA fell to ~A$43.50 last week which implied a yield of 7.4% and if it gets down to those levels again I will buy in for sure
  2. S&P 500 Index (ASX: IVV): You may wonder why I've put the ASX version of the S&P500 instead of just the regular US verison. The answer is simply the Australian exchange rate (which benefits me as an Australian). The S&P500 in A$ terms is now close to 10 year lows. When the price of the ETF dipped below $110 last week this was the all time low reached by the index. If you have any faith at all in the US economy this is a great buy for Australians. There is an in built protection as well in the exchange rate which is trading well above the long run average of 0.80 (currently 1.04).
Given how strongly the markets are recovering there are not the same options as last week. I may stay on the sidelines a little bit longer until the crazy volatility hits the market again and I can pick up stocks on the cheap.

Tuesday, 2 August 2011

July 2011 Net Worth - 128,000 (+3%)

Assets: 485,000
Liabilities: 357,000

Net worth: 128,000

The increase in net worth was less than expected due to negative movements in the value of my stock portfolio (especially from my U.S. holdings which now make up ~50 - 60% of my portfolio).

Credit card debt as also up after a trip overseas however cash spend was down during the same period which allowed for a greater than expected level of investment.

Tax returns and bonus payment next month should significantly increase August's net worth.