Planning For Retirement In Your Twenties Is Never Too Early

When you are in your twenties, setting goals such as saving for retirement is really unfathomable to most. The better goal would be to think that you are saving to give yourself choices and freedom in life. 

To enable you to give the finger to any ass* who really disrespects you along the way and not have to faint financially from the repercussions. To be able to travel anywhere at a whim without having to work out a savings plan or put it on the credit card because you are moneybags.

I received an email a while ago from another blogger and personal finance writer, Marianne Ahlmann. It's probably a copy and paste job to many other blogs, however, I thought the questions were interestingly posed:

Good afternoon, 

How is your Monday going? I'm Marianne with Personal Capital, a company helping people achieve financial success through technology. I came across Smart Money Guide as I was looking into how young adults can take more control of their money and lives. 

Your 20s are typically the perfect time to start planning for retirement, but sometimes life gets in the way. What did you do successfully in your 20s, or if you could go back in time, is there anything you would have done differently to ensure a better financial future sooner in life? In a post on Smart Money Guide, I would love to hear your thoughts on how you built your financial safety net in your 20s--and how young adults can start now if they haven't already. 
Let me know if you'd be interested in sharing! 

Sincerely, 
Marianne Ahlmann Content and Social Media 

Thought it would be worth expanding on the financial questions asked. Personally, I would say it's been an amazing investment journey and there has been lots of lessons and strategies evolving over the years. I had a head start considering my educational background in school was heavily weighted into economics, business, maths and English. At 16, I met a super intelligent guy who was an economist at the Reserve Bank of Australia and he sparked off a life long interest in economics and financial maths.

Upon leaving school, I obtained double degrees in Accounting(B.Accg) and also Applied Finance(B. App Fin). And post University, I finished my CPA. Both Mr SMG and I started saving and investing the moment we left University. We bought into non-performing managed funds. We bought blue chip stocks in the ASX100 which paid dividends twice per year, we bought real estate. We leveraged using the bank's money. We both did that individually until our paths collided and then we combined our assets and the combination of joint finances really took off. 

I'm a pragmatic type of person. Every action has its consequences. If you save and invest from your twenties, of course you will have assets and most likely be a millionaire, probably many times over, by the time you retire. If you are a spendthrift and blow everything you earn, of course you are likely to be a pauper, struggling financially and living some sort of financial nightmare.

Based on my own personal experience, let's cover the things I have learnt and what you can do in your twenties to ensure a better financial future:

* Build multiple sources of passive income streams as early as you can. If you're not working, your money is still working hard for you
* Embrace leverage and good debts, borrow more money to invest in more property and shares
* Don't listen to the naysayers and the doom and gloomers, do your own thing and buy when you can afford
* Diversify across asset classes. The various asset classes usually have alternating cycles so when one, such as the stockmarket is in the doldrum, the other such as real estate is experiencing growth. Many investors will pull their funds out from one class and invest into a different asset class. They don't like dumping their funds into bank deposits and cash accounts to earn 0.01% per annum interest. Gross interest of 5% yields 3.5% after tax on the average 30% tax rate and after head line inflation of 2.5-3.5%, your funds have experienced zero growth and zero capital appreciation. 
* Save as much as you can and buy assets as early as you can, use leveraging and investment/mortgage loans to grow your wealth faster (only as much as you can afford to borrow and commit to)
* Don't buy managed funds unless you wish to have your funds consumed by the investment banks. The entry, management and exit fees will erode your funds.
* Learn about assets, liabilities, investment terminologies and strategies as early in life as possible
* Read lots of investment books, read financial news, learn financial maths about how to calculate returns, ratios, mortgages, how to compare returns
* Keep learning and building on your knowledge every single day. Do not stagnate. Do not let your knowledge erode
* Do not let swindlers and scamsters take your money and run, if it's too good to be true, it is
* No one cares about your money more than you do. Not the financial adviser, the mortgage lender, the banker, the accountant, the lawyer or solicitor, your friends or your family. Lend only what you can afford to write off and don't expect to be repaid what you have loaned out.
* Embrace technology and use it for investing, for learning, for managing your portfolio.
* Don't overstay at any particular company
* Watch out for fees and charges. As Jack Bogle, the Father of Index Funds has been quoted, the "miracle of compounding returns is overwhelmed by the tyranny of compounding costs"
* Travel slightly more because now commitments are so intense that it's almost impossible to get away (have travelled a couple of times to Cananda, US, Japan, Hong Kong, Singapore, London, France, Germany, Italy, New Zealand but wish I could have travelled a bit more, but can't complain)

In 2013, I wrote a post about pro-property enthusiasts posting about regrets and what they would have done ten years ago with what they know now. Here is part of the post below. If you(or we) had bought as much property as possible, we would all have been several more millions better off and closer to financial freedom.

The real estate boom in Sydney from 2013 to now 2015, has been incredible. I wrote in 2013 that our house would have costed $100k more back then, today, our house would cost about $500k-$700k more to buy. And that's just two years. Imagine trying to save up $250k to $350k after tax per year. Here is the extract from my post two years ago which I obtained from Somersoft forumites:

*  "buy something, for goodness sake. Get into real estate. Be careful- but not so careful as not to buy...If someone was going to buy another property, I would be suggesting, as Rolf de Roos does, to at least aim to look at 100 properties.I'm not sure about his other figures- but, at least, if you look aim at looking at 100 properties, you'll start to get at some ideas of good vs bad value"

*  "Get a real education, a financial education. Read as many books on financial topics as you can...Your borrowing capacity is not a problem (if you know the rights things and speak to the right people)"

* "Educate myself on all things financial, Property, Tax, shares etc...Invest as early as possible as time is the essence of good investing...Do not be suckered into public or media hype or fear...Device a plan and stick to it...Keep all things in perspective...By(sic: buy) all the property you can! "now"!!!!!!!!"

* "If I was to give myself advice for 10 years ago it would probably be to put into practice the principles from the book The Richest Man in Babylon."

* "FINANCIALLY – Educate yourself. Don’t follow the crowd. Take a chance now and then. MORALLY – Stubbornly believe in your abilities and be good to those less fortunate.For one thing I would have hugged and kissed my mum a lot more often and not taken her for granted."

* "1. First, last, foremost: Educate yourself financially, friend. Read some good books, it's not really difficult, get to know the basics and understand how this money stuff works!! Learn, learn, learn so you can work smarter, not harder. 2. Spend less. Those doodads add up. Did you know you can afford a property on what you spend on lunches/coffees/etc? 3. Use 1 and 2 to buy effective investments. Buy property now. Don't wait to 'save up the deposit', don't wait 'to pay off your mortgage'. Use the house equity & buy now. Balance negative geared with positive cashflow."

* " I would have got into property and not share traded or bought into managed funds like I did then!! That is for sure!" [Must have been burnt by the stock market]
* "What I would do differently if I could go back would be to purchase a property as close to the beach or city as possible, take interest only loans for 90% of purchase price (and pay the LMI), wait 6 - 12 months to see the effect on my cashflow and use surplus savings from my income to fund the next purchase....quite a conservative strategy but one that would have me sitting on at least 5 properties that as a group would be putting cash in my pocket and worth substantially more than my purchase costs. I would have my current accountant preparing my tax returns and give me advice on how to structure investments."

* "I wish I had read the book E-Myth by Michael Gerber back then. The best book for business owners I have read... I invest in what I know, which is real estate and I always have a plan "B", my what if it doesn't work plan. I have written goals, a business plan and I let those around me know what they are and try to keep them focused on them also. Being part of a great network is a very big help, I now know the advantage of franchises although I had never before been an advocate."

* "*make sure you are armed with information     *develop your strategy and then make a move     *don't blindly follow the advise of someone else     *don't be complacent, know what's going on at all times     *use the rental income to your advantage     *do everything possible to avoid selling."

* " 1. Invest whilst you are living at home with your parents. It would seem to be the easiest way      to gain a good foothold for achieving financial independence.    2. Buy property that you can rent out, not land. I bought land at the age of 21, with the              intent of building my future home on it in X years time. Would have been much smarter to buy      a rental property, especially one I could live in later, perhaps.    3. Obtain financial education - not from your parents because more likely than not their              "advice" will be ultra-conservative and keep you in the rat race (but you still gotta love your          parents).    4. Get into the habit of saving a'la Richest Man in Babylon. Material possessions are not             everything.    5. Balance your life and your work, and value your health."

* "Don't waste your time on jealousy. Sometimes you're ahead, sometimes you're behind. The race is long and, in the end, it's only with yourself...Get to know your parents. You never know when they'll be gone for good. Be nice to your siblings. They're your best link to your past and the people most likely to stick with you in the future. Understand that friends come and go, but with a precious few you should hold on. Work hard to bridge the gaps in geography and lifestyle, because the older you get, the more you need the people who knew you when you were young."

* "Keep going with your plan. It works out. Don't get scared as the numbers get bigger." 

 Anyway, I do love reading the financial and personal advice that the forumites gave and it is true, your family and friends are very precious. Appreciate and love them and let them know. Life is just too brief.

And that concludes this mammoth post. I sincerely hope that this post will help and contribute to someone's life in a beneficial way. I am always forever grateful to the generous community out there posting up and sharing freeware, shareware, widgets, apps and knowledge. I am hoping to do my part too with beneficial contributions.

How To Calculate Return On Investments (ROI)On International Stocks

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% 

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:

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. 

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.

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 =) :

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 =)

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 =)

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

It's been a long time since I have posted regularly and I apologise for that. Google Analytics show that last month page views as you can see is at 7,091 with visitors looking at a few pages instead of 'bouncing' off after landing. I see visitors returning for repeat visits, so thank you for appreciating my writing and my thoughts.

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.

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.