Lately I've been keeping track of the Australian dollar for a few reasons. Not because I'm going on a holiday overseas but for more mundane reasons such as investing. We bought Apple shares a few weeks back and have yet to add Google stocks into our portfolio. Travelling overseas more frequently would be nice, of course =)
I've been checking out a site that has a few popular currencies readily converted. As an example, let us use today's AUD foreign currency exchange rate, 1 AUD buys $0.71 USD.
Calculating the return on investment (ROI) on foreign owned stock involves:
1. Calculating the ROI on the actual stock
2. Calculating the ROI on the stock taking into account, the stock price movement and the currency conversion movement
Bear with me as I dislike rounding up or down when doing my calculations. It's a bit confusing to explain because, firstly it involves working out returns as per usual, and then converting the return to your local currency. Let us ignore brokerage fees as it will just complicate this, however note that brokerage fee will reduce your ROI.
1)Calculating your foreign stock purchase:
Buying the foreign stocks:
If you have $10,000 AUD to buy Apple stocks at yesterdays closing price of $115.21 USD, AUD to USD exchange rate is 1 AUD buys $0.71 USD
$10,000 AUD*$0.71= $7,100 USD
$7,100 USD/$115.21 = 61 Apple (AAPL) stocks, rounded down
Total cost of AAPL portfolio is precisely 61*$115.21 USD = $7,027.81 USD
Total cost of $7,027.81 USD = $9,898.32 AUD
So if you have $10,000 AUD to buy AAPL stocks at $115.21 USD, you can afford to buy 61 stocks at $115.21 USD and it will cost you $9,898.32 AUD
A)Calculating the ROI on the actual stock:
If for example next week, AAPL's price appreciated to $120 USD and $1 AUD depreciated to buying only $0.69 USD, let's calculate the ROI:
ROI on AAPL stock without currency movement is 4.157%:
$120 USD-$115.21 USD = $4.79 USD increase per stock
$120 / $115.21 = 4.157% return
B) Calculating the ROI on the stock taking into account, the stock price movement and the currency movement:
So if AAPL price went up to $120 USD and the AUD depreciated to $1 AUD=$0.69 USD, the ROI is 7.176%
Your portfolio in AUD is now worth $10,608.69:
(61 AAPL * $120 USD)= $7,320 USD
$7,320 USD/ $0.69 = $10,608.69 AUD
$10,608.69AUD / $9,898.32 AUD = 7.176% ROI
So the total return on investment after accounting for stock and currency movement is 7.176%
Monday, September 21, 2015
Wednesday, September 16, 2015
Is It Worth Outsourcing Home Maintenance?
There have been many days where I have deliberated over whether to hire a house cleaner or a gardener for our garden. Time is valuable right?
A regularly weekly cleaner would cost $100 to $150 per week. A regular gardener would cost $100-$150 per month. A four week month would optimistically cost $500 extra and pessimistically $750 extra on the higher range of fees.
In the end, we've always decided to veto that option and do everything ourselves in our 'spare' time. $500 per month could be better spent elsewhere was our conclusion. What ended up happening was that we have been so busy working and spending our spare time with family and friends that the 'spare' time was never allocated to gardening. We clean the house as a priority but the garden was neglected.
Sure it has been mowed regularly and looks great when freshly mowed and the edges trimmed but after a few weeks, the weeds have popped up in the lawn and we can see how disastrous our lawn is.
Onion weeds are growing prolifically in the garden bed (previous owner didn't lay weed mats underneath the mulch) and the bindi and clover is smothering our lawn. Can't even call that a lawn! Those three set of weeds are collectively the worse to have. The onion weeds grow from a bulb which splits off into piles of little bulbs. the bindi and clovers have adventitious roots that will just spread like pumpkin plants. Wherever the vines touch soil, a root will set.
When we first moved into the house, I wrote a post about big houses and the endless hours of cleaning and gardening. Two years later, nothing has changed haha. I would love to turn the entire weedy lawn into an edible garden, however Mr SMG is into the sculptured garden look (when it has been mowed and the weeds pulled out).
Lately I've had enough so I have spent about 30 minutes on daily gardening! After work, 15 mins. Before sunset, another 15 to 30 minutes. 3.5 hours to 4 hours gardening weekly. Could my time be better spent? Yes but it has its upsides =) Been outside in the warm Spring air and doing a bit of physical activity is relaxing.
Think I'd rather take that $500-$750 per month and spend it elsewhere. And work on convincing Mr SMG to let me convert all our lawn into an edible garden...
Loving our garden in Spring:
A regularly weekly cleaner would cost $100 to $150 per week. A regular gardener would cost $100-$150 per month. A four week month would optimistically cost $500 extra and pessimistically $750 extra on the higher range of fees.
In the end, we've always decided to veto that option and do everything ourselves in our 'spare' time. $500 per month could be better spent elsewhere was our conclusion. What ended up happening was that we have been so busy working and spending our spare time with family and friends that the 'spare' time was never allocated to gardening. We clean the house as a priority but the garden was neglected.
Sure it has been mowed regularly and looks great when freshly mowed and the edges trimmed but after a few weeks, the weeds have popped up in the lawn and we can see how disastrous our lawn is.
When we first moved into the house, I wrote a post about big houses and the endless hours of cleaning and gardening. Two years later, nothing has changed haha. I would love to turn the entire weedy lawn into an edible garden, however Mr SMG is into the sculptured garden look (when it has been mowed and the weeds pulled out).
Lately I've had enough so I have spent about 30 minutes on daily gardening! After work, 15 mins. Before sunset, another 15 to 30 minutes. 3.5 hours to 4 hours gardening weekly. Could my time be better spent? Yes but it has its upsides =) Been outside in the warm Spring air and doing a bit of physical activity is relaxing.
Think I'd rather take that $500-$750 per month and spend it elsewhere. And work on convincing Mr SMG to let me convert all our lawn into an edible garden...
Loving our garden in Spring:
Thursday, September 3, 2015
Reverse Mortgages Suck: Don't Use a Reverse Mortgage If Other Options Exist
After seeing the option of reverse mortgages being mentioned in the papers too frequently as an option for 'asset rich retirees who are income poor', I just have to put my thoughts out there for those who are investigating reverse mortgage as an option.
Don't take out a reverse mortgage if you can avoid it.
You have probably spent the past twenty to thirty years paying off your mortgage where the first ten to twenty years was all interest payment and barely any principle. Do you really want the amortisation to work against you again in the last decades of your life when you should be enjoying life?
With reverse mortgages, there are no repayments, loan interest is added onto the principal amount borrowed to be paid off when the property is sold. The debt will grow fast. It will be interest debt compounded with interest charged on interest.
Compound interest works in your favour when you put your savings in the bank. Interest charges compounded year after year will destroy the equity in your home when it's left to accumulate in the typical reverse mortgage structure.
Ever heard of a loan amortisation schedule? I really recommend looking it up if you haven't.
When someone buys a property and takes out a mortgage, the first few years of payments will be almost all interest and barely any principle. Most people's eyes will glaze over when they read about an amortisation schedule and the break down of interest to principle in a monthly repayment. Let me illustrate with an example:
Scenario: Jack and Jill takes out a mortgage for $300,000. Principle and interest. 30 year term. Interest rate of 5%.
1.Principal and interest monthly repayments = $1610.46 ; interest=$1250.00, principal=$360.46
2. After 195 months (just over 16 years!) = P+I monthly repayment =$1610.46; interest=$802.88, principal=$807.59. The monthly repayments will now start eroding your loan principal faster and faster from 195 months
3. After 360 months (30 years)= P+I monthly repayment =$1610.46; interest=$6.68, principal=$1603.78. Loan is finally repaid
With a reverse mortgage, you would replay that scenario backwards! Where the 360 month(30th year) redraw from the mortgage of $1610.46 means $1250.00 is the interest charge and you effectively get only $360.46 to spend out of that $1610.46.
But you don't need that much? But you won't be redrawing for that long? It doesn't matter how much or the time frame of the redraw, the amortisation schedule is an eye opener and you are really giving your future, older self a hard time if you take out a reverse mortgage because the interest charge compounded on interest will erode your equity.
You could live to 100 years old and beyond. You could be homeless. I'm not even being dramatic. It's just the way the maths work. So don't take out a reverse mortgage if you have other options or you can avoid it. Just thought I would analyse that for anyone who is trying to do research because it is such a detrimental option but it is being bandied about in the news as an attractive option with no draw backs mentioned or high lighted.
I haven't come across a single article in mainstream news yet that highlights and objectively analyses the pros and cons of reverse mortgages. Only the benefits are discussed.
Don't take out a reverse mortgage if you can avoid it.
You have probably spent the past twenty to thirty years paying off your mortgage where the first ten to twenty years was all interest payment and barely any principle. Do you really want the amortisation to work against you again in the last decades of your life when you should be enjoying life?
With reverse mortgages, there are no repayments, loan interest is added onto the principal amount borrowed to be paid off when the property is sold. The debt will grow fast. It will be interest debt compounded with interest charged on interest.
Compound interest works in your favour when you put your savings in the bank. Interest charges compounded year after year will destroy the equity in your home when it's left to accumulate in the typical reverse mortgage structure.
Ever heard of a loan amortisation schedule? I really recommend looking it up if you haven't.
When someone buys a property and takes out a mortgage, the first few years of payments will be almost all interest and barely any principle. Most people's eyes will glaze over when they read about an amortisation schedule and the break down of interest to principle in a monthly repayment. Let me illustrate with an example:
Scenario: Jack and Jill takes out a mortgage for $300,000. Principle and interest. 30 year term. Interest rate of 5%.
1.Principal and interest monthly repayments = $1610.46 ; interest=$1250.00, principal=$360.46
2. After 195 months (just over 16 years!) = P+I monthly repayment =$1610.46; interest=$802.88, principal=$807.59. The monthly repayments will now start eroding your loan principal faster and faster from 195 months
3. After 360 months (30 years)= P+I monthly repayment =$1610.46; interest=$6.68, principal=$1603.78. Loan is finally repaid
With a reverse mortgage, you would replay that scenario backwards! Where the 360 month(30th year) redraw from the mortgage of $1610.46 means $1250.00 is the interest charge and you effectively get only $360.46 to spend out of that $1610.46.
But you don't need that much? But you won't be redrawing for that long? It doesn't matter how much or the time frame of the redraw, the amortisation schedule is an eye opener and you are really giving your future, older self a hard time if you take out a reverse mortgage because the interest charge compounded on interest will erode your equity.
You could live to 100 years old and beyond. You could be homeless. I'm not even being dramatic. It's just the way the maths work. So don't take out a reverse mortgage if you have other options or you can avoid it. Just thought I would analyse that for anyone who is trying to do research because it is such a detrimental option but it is being bandied about in the news as an attractive option with no draw backs mentioned or high lighted.
I haven't come across a single article in mainstream news yet that highlights and objectively analyses the pros and cons of reverse mortgages. Only the benefits are discussed.
Wednesday, September 2, 2015
Be Fearful When Others Are Greedy and Greedy When Others Are Fearful
"Be Fearful When Others Are Greedy and Greedy When Others Are Fearful" is Warren Buffet's famous quote.
The market is really taking a dive currently due to the woes in China. Mr SMG and I have been accumulating stocks over many years now. I'm rather impervious to the ups and downs of the market emotionally. When it's taking a dive like right now, I just want to buy more stocks. I've been blogging publicly for six years now and all my investing strategies, thoughts and opinion has been there for the public to read and critique. So far, so good, really good.
The huge volatility that we see in the stock market over recent years have been in part due to economic reasons, swing traders, technology such as online trading, the ability to short stocks instantaneously and the average and ordinary Mum and Dad investors out there reacting out of fear. Margin loans and activated stop losses further compound the volatility.
Central Banks, politicians and investors tend to turn the other way when it comes to acknowledging the intrinsic problems such as the US federal deficit and the Japanese deficit ballooning as opposed to shrinking or that most nations are struggling with growth, however, people get richer so there's simply more and more money out there being ploughed into investments.
Over the duration of the GFC subprime crisis I picked up a lot of stocks at ridiculously cheap prices. I haven't had time to follow the news intensely these last two years, so I'm not as well versed this time around in terms of forecasting how long the downturn will be for and when the recovery is expected, however Buffet's adage has worked perfectly to our benefit in the past and I fail to see why it wouldn't apply over the next hundred years. Warren Buffet is the investment version of the economist Adam Smith.
Jessica Irvine published an article in the Sydney Morning Herald where she quoted Roger Montgomery, the private fund manager of $800 million worth of funds. "We've been a net buyer...we purchased some additional shares in Challenger and iSentia. Globally, we purchased some more Apple...When they're on sale, you get a bit more excited. Although you have to be selective- the outlook has deteriorated."
Montgomery is quoted as a follower of the value investor, Benjamin Graham who is famously quoted saying, "choose (sic: stocks) them the way you would buy groceries, not the way you would buy perfume...Individuals who cannot master their emotions are ill-suited to profit from the investment process." That is, don't be driven by emotion but be driven by values and the business/stock fundamentals.
Personally, I really dislike the whole doom and gloom mentality and those who constantly spruik that the sky is falling. If you keep banging on about the crash, doom and gloom happening, eventually you will be right. But meanwhile, miss out on the gains. If you had waited for property to crash 40% like how some economists were forecasting during the GFC, you would have sat on the sidelines while property has been appreciating in value. The Sydney median property price was approximately around $600k during the GFC and now the Sydney median property price is over $1m.
What 40% crash? Short of pulling out that $400k from your back pocket, you could now be renting for life.
Another doom and gloomer quoted by Irvine is Damian McBride, former adviser to British Prime Minister Gordon Brown, "Get hard cash in a safe place now-don't assume banks and cash points will be open, or bank cards will work...do you have enough bottled water, tinned goods and other essentials at home to live a month indoors? If not, get shopping." McBride appears to be watching too many seasons of The Walking Dead. One month only? Is there some sort of miraculous recovery after one month? Life goes back to normal after one month? All you'll end up doing is sitting on your boring old cash on the sidelines and when the market bounces up again eventually, you'll end up missing the entry points and back to where you started, over paying for stocks just to enter the market again.
There is substantial difference between the market volatility during the GFC and the market volatility right now triggered by the Chinese stock market and their trading conditions. In the US, the GFC sub prime crisis was triggered by many shifty and dodgy practices such as junk bonds being rated AAA, collapse of investment banks holding these sub prime, poorly rated AAA bonds, pension funds collapsing due to investing in sup prime loans, the ability of US mortgage home owners able to walk away from their mortgages without future repercussions like how the banks in Australia can pursue mortgage debts.
Approximately 1% of Chinese stocks are being held by foreigners. The global economy is affected if the Chinese economy is depressed due to the negative wealth effect on the Chinese population(if people have lost money in the stock market, this will negatively affect consumption which will affect economic growth which will affect the stock prices). If China reduces their demand for raw, mined resources, this will affect the world. However, this will be a gradual process and not instantaneously like investment banks in the US having their portfolio revalued during the sub prime.
Having illustrated all that, does McBride expect banks around the world to collapse simply because Chinese shareholders have lost money? Or that Chinese consumers will spend less? China is a net exporter (unless things have changed since I have been out for these last two years) and thus, their economic growth and GDP is still hugely influenced by worldwide consumption of nations such as the US.
There are so many rich and wealthy investors out there. Can you really see them parking their stash of millions and billions in term deposits and cash for the next decade? They have so much money that ultimately it will find its way back into property and shares.
That's SMG's take on this Chinese stock market crisis. The outlook isn't exactly rosy but it's not at McBride's doom and gloom level either where anyone should be liquidating their stake in everything and pulling their funds out of the bank. His sort of 'advice' is what compounds problems and create liquidity crises and the collapse of banks by creating run on deposits.
The market is really taking a dive currently due to the woes in China. Mr SMG and I have been accumulating stocks over many years now. I'm rather impervious to the ups and downs of the market emotionally. When it's taking a dive like right now, I just want to buy more stocks. I've been blogging publicly for six years now and all my investing strategies, thoughts and opinion has been there for the public to read and critique. So far, so good, really good.
The huge volatility that we see in the stock market over recent years have been in part due to economic reasons, swing traders, technology such as online trading, the ability to short stocks instantaneously and the average and ordinary Mum and Dad investors out there reacting out of fear. Margin loans and activated stop losses further compound the volatility.
Central Banks, politicians and investors tend to turn the other way when it comes to acknowledging the intrinsic problems such as the US federal deficit and the Japanese deficit ballooning as opposed to shrinking or that most nations are struggling with growth, however, people get richer so there's simply more and more money out there being ploughed into investments.
Over the duration of the GFC subprime crisis I picked up a lot of stocks at ridiculously cheap prices. I haven't had time to follow the news intensely these last two years, so I'm not as well versed this time around in terms of forecasting how long the downturn will be for and when the recovery is expected, however Buffet's adage has worked perfectly to our benefit in the past and I fail to see why it wouldn't apply over the next hundred years. Warren Buffet is the investment version of the economist Adam Smith.
Jessica Irvine published an article in the Sydney Morning Herald where she quoted Roger Montgomery, the private fund manager of $800 million worth of funds. "We've been a net buyer...we purchased some additional shares in Challenger and iSentia. Globally, we purchased some more Apple...When they're on sale, you get a bit more excited. Although you have to be selective- the outlook has deteriorated."
Montgomery is quoted as a follower of the value investor, Benjamin Graham who is famously quoted saying, "choose (sic: stocks) them the way you would buy groceries, not the way you would buy perfume...Individuals who cannot master their emotions are ill-suited to profit from the investment process." That is, don't be driven by emotion but be driven by values and the business/stock fundamentals.
Personally, I really dislike the whole doom and gloom mentality and those who constantly spruik that the sky is falling. If you keep banging on about the crash, doom and gloom happening, eventually you will be right. But meanwhile, miss out on the gains. If you had waited for property to crash 40% like how some economists were forecasting during the GFC, you would have sat on the sidelines while property has been appreciating in value. The Sydney median property price was approximately around $600k during the GFC and now the Sydney median property price is over $1m.
What 40% crash? Short of pulling out that $400k from your back pocket, you could now be renting for life.
Another doom and gloomer quoted by Irvine is Damian McBride, former adviser to British Prime Minister Gordon Brown, "Get hard cash in a safe place now-don't assume banks and cash points will be open, or bank cards will work...do you have enough bottled water, tinned goods and other essentials at home to live a month indoors? If not, get shopping." McBride appears to be watching too many seasons of The Walking Dead. One month only? Is there some sort of miraculous recovery after one month? Life goes back to normal after one month? All you'll end up doing is sitting on your boring old cash on the sidelines and when the market bounces up again eventually, you'll end up missing the entry points and back to where you started, over paying for stocks just to enter the market again.
There is substantial difference between the market volatility during the GFC and the market volatility right now triggered by the Chinese stock market and their trading conditions. In the US, the GFC sub prime crisis was triggered by many shifty and dodgy practices such as junk bonds being rated AAA, collapse of investment banks holding these sub prime, poorly rated AAA bonds, pension funds collapsing due to investing in sup prime loans, the ability of US mortgage home owners able to walk away from their mortgages without future repercussions like how the banks in Australia can pursue mortgage debts.
Approximately 1% of Chinese stocks are being held by foreigners. The global economy is affected if the Chinese economy is depressed due to the negative wealth effect on the Chinese population(if people have lost money in the stock market, this will negatively affect consumption which will affect economic growth which will affect the stock prices). If China reduces their demand for raw, mined resources, this will affect the world. However, this will be a gradual process and not instantaneously like investment banks in the US having their portfolio revalued during the sub prime.
Having illustrated all that, does McBride expect banks around the world to collapse simply because Chinese shareholders have lost money? Or that Chinese consumers will spend less? China is a net exporter (unless things have changed since I have been out for these last two years) and thus, their economic growth and GDP is still hugely influenced by worldwide consumption of nations such as the US.
There are so many rich and wealthy investors out there. Can you really see them parking their stash of millions and billions in term deposits and cash for the next decade? They have so much money that ultimately it will find its way back into property and shares.
That's SMG's take on this Chinese stock market crisis. The outlook isn't exactly rosy but it's not at McBride's doom and gloom level either where anyone should be liquidating their stake in everything and pulling their funds out of the bank. His sort of 'advice' is what compounds problems and create liquidity crises and the collapse of banks by creating run on deposits.
Thursday, August 27, 2015
Happiness is...
"You know, you only live once and we really ought to make the most of it and we ought to be happy", says Bill Bryson, the famous author.
He dives into life, "I'm intensely interested in all the things. I pick up the paper and immediately I want to know everything there is to know..." I Just love his attitude to life.
This has nothing to do with PF. It's another random post musing and mulling over life.
Thus far in this life, I have met two people who have been unhappy with their life. Always sad and prone to regret something that they have or haven't done.
Prone to introspection and self reflection, I have thought about why some people are so unhappy with their life to the extent that they are miserable and discontent. I think about the wonderful brevity and transiency of youth being wasted on the young and unappreciated.
We can choose to live our life in contentment and happiness or we can choose to live the very same life that we are given in discontent and unhappiness. Which one will you choose?
I love RAKs. The random acts of kindness from strangers who help you carry heavy items, who give way to you in peak hour traffic, who smile at you, who offer you to proceed ahead of them in check out lines because they have a full trolley. Who get up and stand so that you can sit down. The list is fortunately endless =)
So I thought I'd start my weekend off with what happiness is to me and I hope if you are reading this, you will also start your weekend off with a list of things that make you happy and appreciate the beauty of life =)
1. Spring is coming, cold Winter dreary days are becoming more infrequent. Our garden is bursting into life with Tibouchinas, Daisies, Clivias and Arum Lillies, herbs popping up from seeds and buds of the Hydrangea blooming. Makes me happy:
2. Celebrating the joys of this winter by going on ski trips with family and friends makes me happy (except for the long queue for lifts lol). Check out the beautiful and awesome vista:
3. Being able to find time to cook and indulge in food fantasies makes me happy:
Bean sprout salad:
Pickling baby cucumbers in a sugar, salt vinegar mix and throwing in some chillies and coriander seeds for variation:
Pickling long green chillies:
Madly creating and throwing together variations of salads even though it's winter:
3. Making time to blog again =)
4. Really enjoy the old skool way of charcoal barbecuing compared to just using the gas barbeque all the time =) :
He dives into life, "I'm intensely interested in all the things. I pick up the paper and immediately I want to know everything there is to know..." I Just love his attitude to life.
This has nothing to do with PF. It's another random post musing and mulling over life.
Thus far in this life, I have met two people who have been unhappy with their life. Always sad and prone to regret something that they have or haven't done.
Prone to introspection and self reflection, I have thought about why some people are so unhappy with their life to the extent that they are miserable and discontent. I think about the wonderful brevity and transiency of youth being wasted on the young and unappreciated.
We can choose to live our life in contentment and happiness or we can choose to live the very same life that we are given in discontent and unhappiness. Which one will you choose?
I love RAKs. The random acts of kindness from strangers who help you carry heavy items, who give way to you in peak hour traffic, who smile at you, who offer you to proceed ahead of them in check out lines because they have a full trolley. Who get up and stand so that you can sit down. The list is fortunately endless =)
So I thought I'd start my weekend off with what happiness is to me and I hope if you are reading this, you will also start your weekend off with a list of things that make you happy and appreciate the beauty of life =)
1. Spring is coming, cold Winter dreary days are becoming more infrequent. Our garden is bursting into life with Tibouchinas, Daisies, Clivias and Arum Lillies, herbs popping up from seeds and buds of the Hydrangea blooming. Makes me happy:
Bean sprout salad:
4. Really enjoy the old skool way of charcoal barbecuing compared to just using the gas barbeque all the time =) :
5. Eating an entire box of Krispy Kreme donuts all by myself without giving a single thought to how fatty or cholesterol laden the fatty blobs of goodness are =)
Overall, spending precious time with family and friends makes me happiest. Being able to indulge in interests and hobbies makes me happy. Being able to work as much as I like makes me happy (workaholics can rejoice). Learning something new everyday makes me happy.
I hope this inspires you to think about the things that makes you happy too. I feel so blessed in this life to have such amazing and wonderful family, friends and acquaintances from work and in the wider social context. Life is too short to be grumpy and unhappy =)
Thursday, August 20, 2015
We Bought Apple Stocks: Apple Inc Nasdaq: AAPL
We bought a few thousand dollars worth of Apple stocks (Nasdaq: AAPL) on 23rd July this year. (Sorry have had to edit some figures out due to privacy issues, ironic given this is a public blog =) )
My first direct international stock purchase and what an experience. The amount of paperwork that I had to complete just to get to that stage.
I won't even mention that I wanted to buy Google Class A stocks but due to the broker stuffing up, I didn't get my order executed before their price kicked up after reporting positive results. Sigh. $16k worth of profits and gains down the drain.
Why did we buy Apple and want to buy Google? Those two stocks have always been on my to-do and to-buy list for years and years! If we had bought them years ago, we would have been multi-millionaires from just holding two stocks. This guy I once knew(let's call him Mr Cantankerous because he really is cranky and a cantankerous type of guy) shared his opinion with me, saying that he believes Apple Inc has had its heydays and the glory days are pretty much over.
My opinion is that this is still early days yet for technology. Apple and Google are well placed for future technological development and they both have such good business models for producing revenues and future growth potential from innovations. They create their own market simply due to their mammoth size and the free marketing they both receive. I could launch into the technicalities but let's leave that for another day before this post is too long.
Apple is the largest capitalised stock in the world at $655 billion. With over 200 billion dollars in cash savings. Cash savings! Ridiculously good savings. Now if only shareholders can all unite and request a special dividend...
Being an international stock for us, there are two market forces at play affecting returns.
1) The stocks' price volatility (AAPL stock prices swinging up and down)
2) The foreign currency volatility (AUD weakening and strengthening against the USD)
I'm not one to be concerned about any of these short term fluctuations. In the long run, Apple is innovative just like Google, the history of these two companies having split their stock several times over the years is ample evidence. A pessimist would be at this point saying that history is not indicative of future performance, that is certainly true. However, after having regretted not buying either Apple nor Google over these years on multiple occasions, I am over regrets and will roll the dice on buying these two stocks this year.
Seriously $200 billion in cash savings which exceeds the GDP of Peru and the Czech Republic, it exceeds the total net worth of Bill Gates, Mark Zuckerberg, Jack Ma and Warren Buffet combined (cnbc.com 2015). I'll be happy to sit on our Apple stocks for the long run and see where it takes us. I've never been the type to dwell on short term volatility in stocks or the property market if I'm not day trading or in the business of trading properties. I am all about the long run and the next 30 years. This strategy has worked very well for us across both asset classes over the past few years.
Currently AAPL'S chart is not looking illustrious(see above price chart) =) but it's a long term holding for us that we have added to our portfolio. I'll keep readers posted on its performance and how it is going for SMG with the two market forces at play.
The United States is heading into a monetary policy tightening cycle (raising rates) so the AUD will be crumbling further as investors switch back to the greenback. There will be interesting days ahead =)
The dividend yield for AAPL is rather low, however we are pursuing capital gains and not dividend yield. That's the goal with this AAPL acquisition =)
Wednesday, August 19, 2015
Open Letter to Fuji Xerox: Thank You For Your Amazing Response!
It's notoriously known that people like to give negative feedback and whinge on the internet. Positive feedback is a lot rarer. So I consciously like to give positive feedback and reviews on good service from businesses and from staff.
Fuji Xerox and your support team for warranty. You have outdone yourselves.
If I buy another printer in future, it will be one from your company.
I bought a Fuji Xerox multi function printer two years ago and it started printing pages in magenta.
Despite our best efforts in troubleshooting the issue(trying new toners, re-installing software and drivers, rebooting and unplugging and re-plugging, trying to print with different laptops, trying to print from different applications etc), the printer was still printing pages heavily magenta in colour.
The printer was out of warranty, however after multiple attempts at troubleshooting from Mr Talented SMG, the problem remained and it was a write off. I was very happy that Fuji Xerox acknowledged that we had a unique issue that it was no fault of ours.
They sent me a brand new replacement printer that is even more awesome than the outgoing one that I had. Scans pages in seconds! Faxes pages in seconds. Being laser, the printed pages roll out as if they were participating in a downhill snowboarding race =)
So this is my open letter of thanks to you, Fuji Xerox. Because I know all companies keep track of what is being said about them online. And I want you to know what a pleasure it has been dealing with your support team and the outcome of our printer issues.
Author of SmartMoneyGuide.blogspot.com.au
SmartMoneyGuide Traffic and SEO
That is positive feedback and why this blog is still on my mind after these two years of barely posting.
All time page views is at 555,679. Over half a million visits and views. I guess it's not that much compared to a large site where the bloggers are actively working on growing traffic. But compared to the days when I first started and got excited when I got 10 unique visitors lol. And then 500 visitors lol. And they weren't family and friends back then because I never let any of them know that I had a blog! It was a little hobby of mine.
I have approximately 265 posts so 555,679 views on only 265 posts. Imagine the traffic if I had 2000 posts. If you blog and wish to grow your site, the more posts you write, the more visits, the less potential bounce and the more repeat visits. It's a positive cycle. I dont' really think about traffic when I blog though. It's more about exploring my ideas, my creativity and my interest in personal finance and how it can help us obtain that illusive financial freedom at a younger age, than waiting to retire at 65 years old.
Much has been happening in my life and investment wise. I hope to take readers through some of the exciting changes and investments that I have made recently and plan to make. If readers had taken action on my thoughts and posts from two years ago when I wrote about property, they would have been millionaires too.
Forecasts and expectations have been realised and I'm happy to say that I haven't dished out bad advice ...yet lol.
SEO wise, the more I write, the more visitors and the more networking, the more visitors. But organic growth on this site is pretty good and even though I rarely posted these last two years, Google has been favourable with directing traffic to this site. Thanks Google!
But Google will keep sending traffic if the post is relevant, informative or of use to someone. So I'm glad that readers have found interest and this site of use. I hope to write more often. I know I always say that but I will =)
Here's to the last of 2015 with a bit more bang.
Friday, May 8, 2015
What Is Land Banking? Is It A Good Property Investment Strategy?
Land banking generally refers to the practice of buying land for investment purposes in the hopes or with expectations that the land will increase in value (capital price appreciation).
Whether it's a good or bad strategy really depends on:
1) Where the land is located and whether there is any likelihood of growing demands for that piece of land or that the land will be rezoned into higher density usage and therefore increase in value
2) The land's current or potential future use for income producing purposes
Growth in demand for land can result from subdivisions for housing estates, for industrial or commercial use and so forth.
I thought it's worth writing a post on land banking because it can seriously cripple your cash flow if you don't research the land before you buy and you don't prepare for the purchase from an accounting and tax perspective simultaneously.
Failure to ensure that your land investment can produce an income as soon as possible will mean that all your related expenses won't be immediately tax deductible in that current financial year.
In NSW, Australia, if you buy land for investment purposes and the land is not producing any income, then all expenses such as loan interest, council rates, body corporate rates, water, maintenance and repair fees (such as repairing fences) cannot be claimed each year as tax deductions. They are added to the base cost of the land to reduce capital gains tax when the property/land is ultimately sold.
If you wish to buy land for investment purposes, the best strategy is to find one in a growth location (easy to say, hard to execute or else we'd all be billionaires), ensure that it can produce income in some shape or form so that your expenses are deductible in the year that they are incurred(this is very important from a cash flow perspective) and then cross your fingers in the hope that it will increase in value if you haven't done your research.
Some of our friends have practiced land banking rather successfully. They were delving into council development application plans, town plans, zoning plans and researching which rural areas were designated for growth corridors.
I do know someone who land banked unsuccessfully years ago. She bought a cheap piece of land in the bush that had no water, no sewerage, no power, no house, was rocky and dense with shrubbery and trees. Not only was it very difficult and very expensive to build a house due to the terrain of the land, but it was impossible to convert the land use to market gardening agriculture even if you bulldozed all the trees.
So building any housing structures were out, using the land for market gardening agriculture was out and using the land for grazing cattles or sheeps was impossible and unfeasible due to the terrain. What happened was that the land didn't produce any income, so she paid years and years of bank interest on the mortgage, paid fence repair fees and council rates faithfully without being able to claim anything as a tax deduction. The land was also in the middle of nowhere so there were no subdivision plans, no development plans and no demand for it so it didn't appreciate in value. It was only until she sold it years later, with no capital appreciation, that she was able to claim all the expenses that she had incurred over the years.
When evaluating whether land banking is a good investment strategy or not, given the right research and due diligence and forward taxation planning, it can be a good strategy. And if you fail to do any due diligence or research or planning, it can be a very poor one just like the one I mentioned above.
Whether it's a good or bad strategy really depends on:
1) Where the land is located and whether there is any likelihood of growing demands for that piece of land or that the land will be rezoned into higher density usage and therefore increase in value
2) The land's current or potential future use for income producing purposes
Growth in demand for land can result from subdivisions for housing estates, for industrial or commercial use and so forth.
I thought it's worth writing a post on land banking because it can seriously cripple your cash flow if you don't research the land before you buy and you don't prepare for the purchase from an accounting and tax perspective simultaneously.
Failure to ensure that your land investment can produce an income as soon as possible will mean that all your related expenses won't be immediately tax deductible in that current financial year.
In NSW, Australia, if you buy land for investment purposes and the land is not producing any income, then all expenses such as loan interest, council rates, body corporate rates, water, maintenance and repair fees (such as repairing fences) cannot be claimed each year as tax deductions. They are added to the base cost of the land to reduce capital gains tax when the property/land is ultimately sold.
If you wish to buy land for investment purposes, the best strategy is to find one in a growth location (easy to say, hard to execute or else we'd all be billionaires), ensure that it can produce income in some shape or form so that your expenses are deductible in the year that they are incurred(this is very important from a cash flow perspective) and then cross your fingers in the hope that it will increase in value if you haven't done your research.
Some of our friends have practiced land banking rather successfully. They were delving into council development application plans, town plans, zoning plans and researching which rural areas were designated for growth corridors.
I do know someone who land banked unsuccessfully years ago. She bought a cheap piece of land in the bush that had no water, no sewerage, no power, no house, was rocky and dense with shrubbery and trees. Not only was it very difficult and very expensive to build a house due to the terrain of the land, but it was impossible to convert the land use to market gardening agriculture even if you bulldozed all the trees.
So building any housing structures were out, using the land for market gardening agriculture was out and using the land for grazing cattles or sheeps was impossible and unfeasible due to the terrain. What happened was that the land didn't produce any income, so she paid years and years of bank interest on the mortgage, paid fence repair fees and council rates faithfully without being able to claim anything as a tax deduction. The land was also in the middle of nowhere so there were no subdivision plans, no development plans and no demand for it so it didn't appreciate in value. It was only until she sold it years later, with no capital appreciation, that she was able to claim all the expenses that she had incurred over the years.
When evaluating whether land banking is a good investment strategy or not, given the right research and due diligence and forward taxation planning, it can be a good strategy. And if you fail to do any due diligence or research or planning, it can be a very poor one just like the one I mentioned above.
Tuesday, May 5, 2015
Don't Expect Results If You Don't Invest In Yourself
I am constantly surprised and baffled as to why some people just don't spend time on upgrading or improving their knowledge and skills.
Today was a classic case of people falling in the typical bell curve.
I had enrolled in a LF Forklift Licence course so that I could be licenced to drive a forklift around on my parent's farm and be covered by liability insurance in case I drive into something as a worse case scenario.
There were five of us in the class. Upon registration, we were told (and if you weren't told that, it was in the student handbook that you had to print out):
1. Print out your forklift training manuals
2. Read the training manuals beforehand a few times
3. Complete the questions in the manual
4. Complete the questions in the self assessment without looking at the manual and hand that copy into the training centre
5. Bring sufficient identification so that you can participate in the class
Today, this is what happened:
Person 1: Didn't bring sufficient ID. He lost his wallet a few weeks ago and brought in unopened utility letters and letters from the bank. (I was agog that they were not opened, as if he just grabbed them out of the letterbox). He didn't even know what type of letters they were but they didn't qualify. He didn't read the training manual beforehand and didn't complete the questions and didn't complete the self assessment that was to be handed in.
Person 2: He didn't read the training manual, didn't complete the questions, didn't complete the self assessment that was to be handed in. His written English wasn't that great according to his friends, but I'm surprised he didn't make triple the effort to learn the manual beforehand to compensate for his lack of written English skills.
Person 3: He didn't even print the training manual, let alone read it! He didn't complete the questions or the self assessment that was to be handed in. It's almost as if he just paid for the course, and then turned up on the day, ignoring everything else he was told.
Person 4: The only one on the top end of the bell curve. He not only printed two copies of the training manual, he had read the training manual beforehand so knew almost all the answers, he had completed the self assessment to be handed in and brought sufficient ID.
Person 5: Me haha! Of course I'd be at the top end of the curve ;p My practical forklift driving skills may be at the bottom end, but I did what I was able to do. I printed the manuals, I read beforehand, completed the questions, completed the self assessment, brought enough IDs and knew almost all the answers as well. Can't be too modest, right?!
Seriously though, I understand that driving a forklift can be considered a blue collar job but whether you are in a blue or a white collar job shouldn't distinguish how much effort you put into learning or obtaining skills. If any of my friends in the white collar industry (bankers, lawyers, IT consultants, programmers, accountants, dentists etc) had to obtain their forklift licence, I can say with 100% confidence that they would have followed the directions absolutely by the book.
They would have turned up on the day with 100% ID, printed off their training manuals and read it a few times, highlighted relevant points, made notes, completed all questions and if they couldn't complete the self assessment without looking at the answers, they would have studied the manual again. I can't say with confidence that they would pass the practical aspect of driving a forklift(without having practice) but I can say that they would have invested effort into achieving as much as they could to help themselves pass.
I have friends across various retail industries and professions, and I know we all fall into some section of the bell curve despite some denying that the bell curve doesn't exist. Probably for that reason, statisticians still have work and why we had to learn probability analysis.
But today, it was such a classic example of the typical bell curve that I thought I would write about it. It's been a long time since I was in such disbelief that people can turn up to a class and licence test without doing any preparation whatsoever and didn't follow any instructions or do any reading beforehand. I was just amazed.
Today was a classic case of people falling in the typical bell curve.
I had enrolled in a LF Forklift Licence course so that I could be licenced to drive a forklift around on my parent's farm and be covered by liability insurance in case I drive into something as a worse case scenario.
There were five of us in the class. Upon registration, we were told (and if you weren't told that, it was in the student handbook that you had to print out):
1. Print out your forklift training manuals
2. Read the training manuals beforehand a few times
3. Complete the questions in the manual
4. Complete the questions in the self assessment without looking at the manual and hand that copy into the training centre
5. Bring sufficient identification so that you can participate in the class
Today, this is what happened:
Person 1: Didn't bring sufficient ID. He lost his wallet a few weeks ago and brought in unopened utility letters and letters from the bank. (I was agog that they were not opened, as if he just grabbed them out of the letterbox). He didn't even know what type of letters they were but they didn't qualify. He didn't read the training manual beforehand and didn't complete the questions and didn't complete the self assessment that was to be handed in.
Person 2: He didn't read the training manual, didn't complete the questions, didn't complete the self assessment that was to be handed in. His written English wasn't that great according to his friends, but I'm surprised he didn't make triple the effort to learn the manual beforehand to compensate for his lack of written English skills.
Person 3: He didn't even print the training manual, let alone read it! He didn't complete the questions or the self assessment that was to be handed in. It's almost as if he just paid for the course, and then turned up on the day, ignoring everything else he was told.
Person 4: The only one on the top end of the bell curve. He not only printed two copies of the training manual, he had read the training manual beforehand so knew almost all the answers, he had completed the self assessment to be handed in and brought sufficient ID.
Person 5: Me haha! Of course I'd be at the top end of the curve ;p My practical forklift driving skills may be at the bottom end, but I did what I was able to do. I printed the manuals, I read beforehand, completed the questions, completed the self assessment, brought enough IDs and knew almost all the answers as well. Can't be too modest, right?!
Seriously though, I understand that driving a forklift can be considered a blue collar job but whether you are in a blue or a white collar job shouldn't distinguish how much effort you put into learning or obtaining skills. If any of my friends in the white collar industry (bankers, lawyers, IT consultants, programmers, accountants, dentists etc) had to obtain their forklift licence, I can say with 100% confidence that they would have followed the directions absolutely by the book.
They would have turned up on the day with 100% ID, printed off their training manuals and read it a few times, highlighted relevant points, made notes, completed all questions and if they couldn't complete the self assessment without looking at the answers, they would have studied the manual again. I can't say with confidence that they would pass the practical aspect of driving a forklift(without having practice) but I can say that they would have invested effort into achieving as much as they could to help themselves pass.
I have friends across various retail industries and professions, and I know we all fall into some section of the bell curve despite some denying that the bell curve doesn't exist. Probably for that reason, statisticians still have work and why we had to learn probability analysis.
But today, it was such a classic example of the typical bell curve that I thought I would write about it. It's been a long time since I was in such disbelief that people can turn up to a class and licence test without doing any preparation whatsoever and didn't follow any instructions or do any reading beforehand. I was just amazed.
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