November saw a partial recovery in net worth with gains in equities compounded by adverse currency movements. The end result was a 3.45 percent increase in net assets.
For the year to date, the portfolio is down 2.17 percent. The adjusted change from when I retired in September 2013 is a 23.94 percent increase. Hong Kong liquidity stands at 39.77 months of estimated outgoings, significantly increased from the start of the year's 26.68 months due to net asset sales and a new mortgage loan. The sharp decline from last month was due to paying for a new car.
Here are the details:
1. my Hong Kong equities rose. There were no transactions this month;
2. my AU/NZ equities were were down ... again. There were no new transactions;
3.my equity ETFs were up (India, Hong Kong and China) in line with the local markets;
4. my position in silver was more or less unchanged. I am considering selling my silver and investing the money in equities for additional income;
5. all tenants are paying on time and all properties are let;
6. the AUD and NZD were up against the USD/HKD;
7. my position in bonds remains modest. There were no additional purchases this month. Recent interest rate increases have pushed the holding values of some of my bonds to below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. I have a margin facility in place and my carry trade is doing its thing and generating a small amount of additional income;
8. expenses were moderate as I paid for some travel expenses.
My HK cash position rose during the month due to full occupancy on the properties and a number of dividends being received. I currently hold 39.77 months of expenses in HKD cash or equivalents (up from 26.68 months on 1 January).
Total household gearing ((debt+accruals)/assets) is 8.9% of total assets – lower than last last month due to the car purchase and reduction of the offsetting accrual. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end and I do not net off cash. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised.
Friday, November 30, 2018
Monthly Review – October, 2018
October saw a sharp decline in net worth with losses in all asset classes compounded by adverse currency movements. The end result was a 4.9 percent decline in net assets.
For the year to date, the portfolio is down 5.10 percent.
Here are the details:
1. my Hong Kong equities fell ... a lot There were no transactions this month. At month end I purchased a few more shares in Sinopec (HK:386);
2. my AU/NZ equities were were down. There were no additional purchases this month;
3.my equity ETFs were down (India, Hong Kong and China) in line with the local markets;
4. my position in silver fell slightly. I am considering selling my silver and investing the money in equities for additional income;
5. all tenants are paying on time and all properties are let;
6. the AUD and NZD were down against the USD/HKD;
7. my position in bonds remains modest. There were no additional purchases this month. Recent interest rate increases have pushed the holding values of some of my bonds to below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. I have a margin facility in place and my carry trade is doing its thing and generating a small amount of additional income;
8. expenses were low.
My HK cash position rose during the month due to full occupancy on the properties and a number of dividends being received. I currently hold 43.6 months of expenses in HKD cash or equivalents (up from 26.68 months on 1 January).
Total household gearing ((debt+accruals)/assets) is 9.38% of total assets – more or less flat from last month. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end and I do not net off cash. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised.
For the year to date, the portfolio is down 5.10 percent.
Here are the details:
1. my Hong Kong equities fell ... a lot There were no transactions this month. At month end I purchased a few more shares in Sinopec (HK:386);
2. my AU/NZ equities were were down. There were no additional purchases this month;
3.my equity ETFs were down (India, Hong Kong and China) in line with the local markets;
4. my position in silver fell slightly. I am considering selling my silver and investing the money in equities for additional income;
5. all tenants are paying on time and all properties are let;
6. the AUD and NZD were down against the USD/HKD;
7. my position in bonds remains modest. There were no additional purchases this month. Recent interest rate increases have pushed the holding values of some of my bonds to below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. I have a margin facility in place and my carry trade is doing its thing and generating a small amount of additional income;
8. expenses were low.
My HK cash position rose during the month due to full occupancy on the properties and a number of dividends being received. I currently hold 43.6 months of expenses in HKD cash or equivalents (up from 26.68 months on 1 January).
Total household gearing ((debt+accruals)/assets) is 9.38% of total assets – more or less flat from last month. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end and I do not net off cash. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised.
Wednesday, October 03, 2018
Monthly Review – September, 2018
September saw another decline in net worth with losses in all asset classes compounded by adverse currency movements. The end result was a 0.73 percent decline in net assets.
For the year to date, the portfolio is down 1.01 percent. The adjusted change from when I retired in September 2013 is a 25.46 percent increase. Hong Kong liquidity stands at 43.2 months of estimated outgoings, significantly increased from the start of the year's 26.68 months due to net asset sales and a new mortgage loan.
Here are the details:
1. my Hong Kong equities fell. There were no transactions this month;
2. my AU/NZ equities were were down slightly. I purchased some additional shares in Grange Resources (ASX:GRR) and purchased some shares in Auswide Banking (ASX: ABA);
3.my equity ETFs were down (India, Hong Kong and China) in line with the local markets;
4. my position in silver rose slightly. I am considering selling my silver and investing the money in equities for additional income;
5. all tenants are paying on time and all properties are let;
6. the AUD and NZD were down against the USD/HKD;
7. my position in bonds remains modest. There were no additional purchases this month. Recent interest rate increases have pushed the holding values of some of my bonds to below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. I have a margin facility in place and my carry trade is doing its thing and generating a small amount of additional income;
8. expenses were moderate as I paid for some travel expenses.
My HK cash position rose during the month due to full occupancy on the properties and a number of dividends being received. I currently hold 43.2 months of expenses in HKD cash or equivalents (up from 26.68 months on 1 January).
Total household gearing ((debt+accruals)/assets) is 9.38% of total assets – more or less flat from last month. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end and I do not net off cash. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised.
For the year to date, the portfolio is down 1.01 percent. The adjusted change from when I retired in September 2013 is a 25.46 percent increase. Hong Kong liquidity stands at 43.2 months of estimated outgoings, significantly increased from the start of the year's 26.68 months due to net asset sales and a new mortgage loan.
Here are the details:
1. my Hong Kong equities fell. There were no transactions this month;
2. my AU/NZ equities were were down slightly. I purchased some additional shares in Grange Resources (ASX:GRR) and purchased some shares in Auswide Banking (ASX: ABA);
3.my equity ETFs were down (India, Hong Kong and China) in line with the local markets;
4. my position in silver rose slightly. I am considering selling my silver and investing the money in equities for additional income;
5. all tenants are paying on time and all properties are let;
6. the AUD and NZD were down against the USD/HKD;
7. my position in bonds remains modest. There were no additional purchases this month. Recent interest rate increases have pushed the holding values of some of my bonds to below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. I have a margin facility in place and my carry trade is doing its thing and generating a small amount of additional income;
8. expenses were moderate as I paid for some travel expenses.
My HK cash position rose during the month due to full occupancy on the properties and a number of dividends being received. I currently hold 43.2 months of expenses in HKD cash or equivalents (up from 26.68 months on 1 January).
Total household gearing ((debt+accruals)/assets) is 9.38% of total assets – more or less flat from last month. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end and I do not net off cash. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised.
Wednesday, August 29, 2018
Monthly Review – August, 2018
I am running the end-of-month numbers two days early due to travel schedules.
August saw a decline in net worth with losses in all asset classes compounded by adverse currency movements. The end result was a 1.71 percent decline in net assets.
For the year to date, the portfolio is down 0.38 percent. The adjusted change from when I retired in September 2013 is a 26.38 percent increase. Hong Kong liquidity stands at 43.1 months of estimated outgoings, significantly increased from the start of the year's 26.68 months due to net asset sales and a new mortgage loan.
Here are the details:
1. my Hong Kong equities fell. I made additional purchases of CK Holdings (HK:1) and opened a position in China Everbright (HK:257) when the stock fell after announcing a heavy rights issue. I also sold the underperforming Anhui Express (HK:995) and reinvested the proceeds and a bit more in Yue Xui Transport (HK:1052) which appears to have better growth prospects;
2. my AU/NZ equities were were down slightly. I purchased some additional shares in NZ Refining (NZX: NZR);
3.my equity ETFs were down (India, Hong Kong and China) in line with the local markets;
4. my position in silver was down. I am considering selling my silver and investing the money in equities for additional income;
5. all tenants are paying on time and all properties are let;
6. the AUD and NZD were down against the USD/HKD;
7. my position in bonds remains modest. There were no additional purchases this month. Recent interest rate increases have pushed the holding values of some of my bonds to below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. I have a margin facility in place and my carry trade is doing its thing and generating a small amount of additional income;
8. expenses were high (again) as I put down a deposit on a car – which I don't need but would like.
My HK cash position rose during the month due to the new mortgage loan being greater than the new investments. I currently hold 43.1 months of expenses in HKD cash or equivalents (up from 26.68 months on 1 January).
Total household gearing ((debt+accruals)/assets) is 9.39% of total assets. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end and I do not net off cash. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised. The increase from last month's figure is due to a combination of the new mortgage loan and a fall in asset values.
August saw a decline in net worth with losses in all asset classes compounded by adverse currency movements. The end result was a 1.71 percent decline in net assets.
For the year to date, the portfolio is down 0.38 percent. The adjusted change from when I retired in September 2013 is a 26.38 percent increase. Hong Kong liquidity stands at 43.1 months of estimated outgoings, significantly increased from the start of the year's 26.68 months due to net asset sales and a new mortgage loan.
Here are the details:
1. my Hong Kong equities fell. I made additional purchases of CK Holdings (HK:1) and opened a position in China Everbright (HK:257) when the stock fell after announcing a heavy rights issue. I also sold the underperforming Anhui Express (HK:995) and reinvested the proceeds and a bit more in Yue Xui Transport (HK:1052) which appears to have better growth prospects;
2. my AU/NZ equities were were down slightly. I purchased some additional shares in NZ Refining (NZX: NZR);
3.my equity ETFs were down (India, Hong Kong and China) in line with the local markets;
4. my position in silver was down. I am considering selling my silver and investing the money in equities for additional income;
5. all tenants are paying on time and all properties are let;
6. the AUD and NZD were down against the USD/HKD;
7. my position in bonds remains modest. There were no additional purchases this month. Recent interest rate increases have pushed the holding values of some of my bonds to below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. I have a margin facility in place and my carry trade is doing its thing and generating a small amount of additional income;
8. expenses were high (again) as I put down a deposit on a car – which I don't need but would like.
My HK cash position rose during the month due to the new mortgage loan being greater than the new investments. I currently hold 43.1 months of expenses in HKD cash or equivalents (up from 26.68 months on 1 January).
Total household gearing ((debt+accruals)/assets) is 9.39% of total assets. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end and I do not net off cash. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised. The increase from last month's figure is due to a combination of the new mortgage loan and a fall in asset values.
Tuesday, July 31, 2018
Monthly Review – July, 2018
July saw a recovery in net worth with gains in all asset classes (apart from a small loss on commodities) with neutral currency movements. The end result was a 2.59 percent increase in net assets.
For the year to date, the portfolio is up 1.09 percent. The adjusted change from when I retired in September 2013 is a 28.19 percent increase. Hong Kong liquidity stands at 36.29 months of estimated outgoings, significantly increased from the start of the year's 26.68 months due to net asset sales.
Here are the details:
1. my Hong Kong equities rose. I made additional purchases of HSBC (HK:5) and ND Paper (HK: 2689) at the end of the month;
2. my AU/NZ equities were were up slightly. There were no new investments;
3.my equity ETFs were up (India, Hong Kong and China) in line with the local markets;
4. my position in silver was down. I am considering selling my silver and investing the money in equities for additional income;
5. all tenants are paying on time and all properties are let. However, I had three tenants end tenancies in July. One subsequently changed their minds and signed a new lease. The other two properties were released to new tenants at slightly higher vacancies. While the combination of vacancies, agency fees and repairs hit the cash flow for the month, the damage was about as low as could be expected;
6. the AUD and NZD were flat against the USD/HKD;
7. my position in bonds remains modest. There were no additional purchases this month. Recent interest rate increases have pushed the holding values of some of my bonds to below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. I have a margin facility in place and my carry trade is doing its thing and generating a small amount of additional income;
8. expenses were high as I paid some of the expenses for our family's summer holiday and pre-paid an air ticket to New Zealand for later thing month;
My HK cash position fell slightly during the month. I currently hold 36.29 months of expenses in HKD cash or equivalents (up from 26.68 months on 1 January).
Total household gearing ((debt+accruals)/assets) is 8.76% of total assets. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end and I do not net off cash. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised. There is some additional netting in this month's gearing figure due to the new mortgage – this will be cleaned up in the August review.
New mortgage: the last payment on one of my mortgages was made in June. After much debate and a more-protracted-than-I-expected application process, I have taken out a new mortgage for 30% LTV (20 year HIBOR linked - currently 2.3% with a cash back payment). The proceeds have been drawn down and transferred to a securities account. Some was invested in the additional HSBC and ND Paper shares mentioned above. The rest remains to be invested.
For the year to date, the portfolio is up 1.09 percent. The adjusted change from when I retired in September 2013 is a 28.19 percent increase. Hong Kong liquidity stands at 36.29 months of estimated outgoings, significantly increased from the start of the year's 26.68 months due to net asset sales.
Here are the details:
1. my Hong Kong equities rose. I made additional purchases of HSBC (HK:5) and ND Paper (HK: 2689) at the end of the month;
2. my AU/NZ equities were were up slightly. There were no new investments;
3.my equity ETFs were up (India, Hong Kong and China) in line with the local markets;
4. my position in silver was down. I am considering selling my silver and investing the money in equities for additional income;
5. all tenants are paying on time and all properties are let. However, I had three tenants end tenancies in July. One subsequently changed their minds and signed a new lease. The other two properties were released to new tenants at slightly higher vacancies. While the combination of vacancies, agency fees and repairs hit the cash flow for the month, the damage was about as low as could be expected;
6. the AUD and NZD were flat against the USD/HKD;
7. my position in bonds remains modest. There were no additional purchases this month. Recent interest rate increases have pushed the holding values of some of my bonds to below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. I have a margin facility in place and my carry trade is doing its thing and generating a small amount of additional income;
8. expenses were high as I paid some of the expenses for our family's summer holiday and pre-paid an air ticket to New Zealand for later thing month;
My HK cash position fell slightly during the month. I currently hold 36.29 months of expenses in HKD cash or equivalents (up from 26.68 months on 1 January).
Total household gearing ((debt+accruals)/assets) is 8.76% of total assets. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end and I do not net off cash. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised. There is some additional netting in this month's gearing figure due to the new mortgage – this will be cleaned up in the August review.
New mortgage: the last payment on one of my mortgages was made in June. After much debate and a more-protracted-than-I-expected application process, I have taken out a new mortgage for 30% LTV (20 year HIBOR linked - currently 2.3% with a cash back payment). The proceeds have been drawn down and transferred to a securities account. Some was invested in the additional HSBC and ND Paper shares mentioned above. The rest remains to be invested.
Monday, July 02, 2018
Mid-year review
One the last few months an escalation of the "trade war" between the US and its trading partners has pushed equity prices down, rising interest rates have cut the value of bonds and the rising USD has knocked the HKD value of non-USD/HKD investments. YTD we are down 1.08% on our mark to market investments and would be ahead if the current values of our investment properties were taken into account.
Like most investors, I find it painful to watch the value of my investments decline and have to remind myself that it is the income stream from my investments that matters – not the day to day fluctuations in value and, as long as I am accumulating assets, lower prices are actually good for me.
Although it is not entirely an apples-to-apples comparison because (i) I have reformatted the way I calculate my gross and net income streams and (ii) some dividends which were paid in July 2017 have been paid in June this year, my net income from investments is considerably higher than for the same six month YTD period last year. After adjusting for the timing differences and for loss of income from some shares which were sold, I expect my total net income for 2018 to be at least 5% higher than last year. If I back out the small amount on consulting income I received last year (this year zero), the increase in income from investments should be more like 8%.
Looking ahead, I can see increased costs from 2019 onwards as my younger daughter moves from a heavily subsidised public school in Hong Kong to join her elder sibling in boarding school. This should be partially offset by the completion of my university studies in mid-2019. Looking a bit further ahead, we have two mortgages which will be paid off in early 2020 and mid-2021 which will make a huge difference to our cash flows. The maturity dates for our remaining mortgages are much further out.
Which brings me back to the present where the HSI is down YTD and some shares are starting to look more attractively priced. With that in mind, I have taken out a new small twenty year mortgage on one of our apartments and will look to reinvest the proceeds for (hopefully) yields higher than the interest rate I am paying on the loan. Total household gearing will still be below 10%.
Short version: as I approach the 5th anniversary of my retirement, our finances are in good shape.
Like most investors, I find it painful to watch the value of my investments decline and have to remind myself that it is the income stream from my investments that matters – not the day to day fluctuations in value and, as long as I am accumulating assets, lower prices are actually good for me.
Although it is not entirely an apples-to-apples comparison because (i) I have reformatted the way I calculate my gross and net income streams and (ii) some dividends which were paid in July 2017 have been paid in June this year, my net income from investments is considerably higher than for the same six month YTD period last year. After adjusting for the timing differences and for loss of income from some shares which were sold, I expect my total net income for 2018 to be at least 5% higher than last year. If I back out the small amount on consulting income I received last year (this year zero), the increase in income from investments should be more like 8%.
Looking ahead, I can see increased costs from 2019 onwards as my younger daughter moves from a heavily subsidised public school in Hong Kong to join her elder sibling in boarding school. This should be partially offset by the completion of my university studies in mid-2019. Looking a bit further ahead, we have two mortgages which will be paid off in early 2020 and mid-2021 which will make a huge difference to our cash flows. The maturity dates for our remaining mortgages are much further out.
Which brings me back to the present where the HSI is down YTD and some shares are starting to look more attractively priced. With that in mind, I have taken out a new small twenty year mortgage on one of our apartments and will look to reinvest the proceeds for (hopefully) yields higher than the interest rate I am paying on the loan. Total household gearing will still be below 10%.
Short version: as I approach the 5th anniversary of my retirement, our finances are in good shape.
Financial Review – June, 2018
June saw a fall in net worth with declines in all asset classes (apart from small gains in Au and NZ equities in local currencies) compounded by adverse currency movements. The end result was a 3.85 percent increase in net assets.
For the year to date, the portfolio is down 1.08 percent. The adjusted change from when I retired in September 2013 is a 25.37 percent increase. Hong Kong liquidity stands at 38.96 months of estimated outgoings, significantly increased from the start of the year's 26.68 months due to net asset sales.
Here are the details:
1. my Hong Kong equities fell. I made a small additional investment in Cheung Kong Holdings (HKEX: 001);
2. my AU/NZ equities were were down. I made a small additional investment in Colonial Motor Company (NZX: CMO);
3.my equity ETFs were down (India, Hong Kong and China) in line with the local markets;
4. my position in silver was down;
5. all tenants are paying on time and all properties are let. However, three tenants will move out in July. I have secured replacement tenants at slightly higher rents for two of the properties and the third is on the market;
6. the AUD and NZD were down against the USD/HKD;
7. my position in bonds remains modest. There were no additional purchases this month and one bond matured – proceeds were applied to a partial repayment of my margin facility. Recent interest rate increases have pushed the holding values of some of my bonds to below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. I have a margin facility in place and my carry trade is doing its thing and generating a small amount of additional income;
8. expenses were high as I paid for an air ticket for a recent trip to New Zealand later this year and some of the expenses for our family's summer holiday;
My HK cash position fell slightly during the month. I currently hold 38.96 months of expenses in HKD cash or equivalents (up from 26.68 months on 1 January).
Total household gearing ((debt+accruals)/assets) is 8.81% of total assets. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end and I do not net off cash. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised.
For the year to date, the portfolio is down 1.08 percent. The adjusted change from when I retired in September 2013 is a 25.37 percent increase. Hong Kong liquidity stands at 38.96 months of estimated outgoings, significantly increased from the start of the year's 26.68 months due to net asset sales.
Here are the details:
1. my Hong Kong equities fell. I made a small additional investment in Cheung Kong Holdings (HKEX: 001);
2. my AU/NZ equities were were down. I made a small additional investment in Colonial Motor Company (NZX: CMO);
3.my equity ETFs were down (India, Hong Kong and China) in line with the local markets;
4. my position in silver was down;
5. all tenants are paying on time and all properties are let. However, three tenants will move out in July. I have secured replacement tenants at slightly higher rents for two of the properties and the third is on the market;
6. the AUD and NZD were down against the USD/HKD;
7. my position in bonds remains modest. There were no additional purchases this month and one bond matured – proceeds were applied to a partial repayment of my margin facility. Recent interest rate increases have pushed the holding values of some of my bonds to below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. I have a margin facility in place and my carry trade is doing its thing and generating a small amount of additional income;
8. expenses were high as I paid for an air ticket for a recent trip to New Zealand later this year and some of the expenses for our family's summer holiday;
My HK cash position fell slightly during the month. I currently hold 38.96 months of expenses in HKD cash or equivalents (up from 26.68 months on 1 January).
Total household gearing ((debt+accruals)/assets) is 8.81% of total assets. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end and I do not net off cash. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised.
Thursday, May 31, 2018
Financial Review – May, 2018
May saw a small increase in my position with gains in my equities largely offset by weakness in the AUD, NZD and bonds. Silver was more or less flat for the month. The end result was a 1.21 percent increase in net assets.
For the year to date, the portfolio is up 2.07 percent. The adjusted change from when I retired in September 2013 is a 29.47 percent increase. Hong Kong liquidity stands at 38.13* months of estimated outgoings, significantly increased from the start of the year's 26.68 months due to net asset sales.
Here are the details:
1. my Hong Kong equities rose. There were no transactions this month other than taking a trivial loss on the IPO of Good Doctor;
2. my AU/NZ equities were were up. I sold my shares in Caltex (ASX: CTX) after becoming concerned about increased headwinds and losing some conviction in management's strategy. Purchased the shares more or less trebled between 2009 and 2015 but have gone sideways over the last three years. I reinvested the sale proceeds in AGL Energy (ASX: AGL) which offers a higher dividend;
3.my equity ETFs were up (India, Hong Kong and China) in line with the local markets;
4. my position in silver was more or less unchanged;
5. all tenants are paying on time and all properties are let. However, one long standing tenant will move out at the beginning of July so I will have a vacancy and the inevitable repaint/repair/agency expenses then. A second tenant has also given notice;
6. the AUD and NZD were down against the USD/HKD;
7. my position in bonds remains modest. There were no additional purchases this month. Recent interest rate increases have pushed the holding values of some of my bonds to below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. I have a margin facility in place and my carry trade is doing its thing and generating a small amount of additional income. However, the spread between the interest earned and the interest paid has narrowed to about 2.1% and will likely narrow again as interest rates increase further;
8. expenses were high as I paid for an air ticket and hotel accommodation for a recent trip to New Zealand;
My HK cash position fell slightly during the month. I currently hold 38.13* months of expenses in HKD cash or equivalents (up from 26.68 months on 1 January).
Total household gearing ((debt+accruals)/assets) is 9.27% of total assets. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end and I do not net off cash. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised.
*The liquidity number reported for April, 2018 was a typo.
For the year to date, the portfolio is up 2.07 percent. The adjusted change from when I retired in September 2013 is a 29.47 percent increase. Hong Kong liquidity stands at 38.13* months of estimated outgoings, significantly increased from the start of the year's 26.68 months due to net asset sales.
Here are the details:
1. my Hong Kong equities rose. There were no transactions this month other than taking a trivial loss on the IPO of Good Doctor;
2. my AU/NZ equities were were up. I sold my shares in Caltex (ASX: CTX) after becoming concerned about increased headwinds and losing some conviction in management's strategy. Purchased the shares more or less trebled between 2009 and 2015 but have gone sideways over the last three years. I reinvested the sale proceeds in AGL Energy (ASX: AGL) which offers a higher dividend;
3.my equity ETFs were up (India, Hong Kong and China) in line with the local markets;
4. my position in silver was more or less unchanged;
5. all tenants are paying on time and all properties are let. However, one long standing tenant will move out at the beginning of July so I will have a vacancy and the inevitable repaint/repair/agency expenses then. A second tenant has also given notice;
6. the AUD and NZD were down against the USD/HKD;
7. my position in bonds remains modest. There were no additional purchases this month. Recent interest rate increases have pushed the holding values of some of my bonds to below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. I have a margin facility in place and my carry trade is doing its thing and generating a small amount of additional income. However, the spread between the interest earned and the interest paid has narrowed to about 2.1% and will likely narrow again as interest rates increase further;
8. expenses were high as I paid for an air ticket and hotel accommodation for a recent trip to New Zealand;
My HK cash position fell slightly during the month. I currently hold 38.13* months of expenses in HKD cash or equivalents (up from 26.68 months on 1 January).
Total household gearing ((debt+accruals)/assets) is 9.27% of total assets. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end and I do not net off cash. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised.
*The liquidity number reported for April, 2018 was a typo.
Monday, April 30, 2018
To remortgage or not?
The last payment on one of my mortgages is due to be paid in June this year. The net cost of borrowing is currently around 2.3% which compares favourably with the margin facility currently costing about 2.9% (and compounding monthly), the yield on good quality short term bonds at around 4-5% and there are many equities which offer yields above 4%.
The other factor in favour of taking out a new mortgage is that the only storage space available for the title deeds is a filing cabinet at home – there is no room in my safe deposit box. I understand that lost title deeds cannot be replaced effectively making the property unsellable and unmortgageable. Taking out a new mortgage mitigates that risk.
The negatives are (i) the interest rate is a floating rate and will cost me more as interest rates rise and (ii) it's a P+I mortgage which will have an impact on cash flow. That said, it's a small property and the mortgage will be correspondingly small.
I'm currently inclined to take out a mortgage for a relatively small amount ... assuming the bank will lend to someone with no employment income.
The other factor in favour of taking out a new mortgage is that the only storage space available for the title deeds is a filing cabinet at home – there is no room in my safe deposit box. I understand that lost title deeds cannot be replaced effectively making the property unsellable and unmortgageable. Taking out a new mortgage mitigates that risk.
The negatives are (i) the interest rate is a floating rate and will cost me more as interest rates rise and (ii) it's a P+I mortgage which will have an impact on cash flow. That said, it's a small property and the mortgage will be correspondingly small.
I'm currently inclined to take out a mortgage for a relatively small amount ... assuming the bank will lend to someone with no employment income.
Financial Review – April, 2018
April saw a small rebound in my position with gains in my equities largely offset by weakness in the AUD, NZD and bonds. Silver was more or less flat for the month. The end result was a 0.34 percent increase in net assets.
For the year to date, the portfolio is up 1.09 percent. The adjusted change from when I retired in September 2013 is a 28.19 percent increase. Hong Kong liquidity stands at 48.36 months of estimated outgoings, significantly increased from the start of the year's 26.68 months due to net asset sales.
Here are the details:
1. my Hong Kong equities rose. The only transactions this month were purchasing a small shareholding in ND Paper (HK: 2689) and subscribing for shares in the IPO of Good Doctor (results of application not known);
2. my AU/NZ equities were were up, largely due to gains in New Zealand offsetting declines in Australia. I added some additional shares in Marsden Maritime Holdings (NZX: MMH) to the portfolio;
3.my equity ETFs were up (India, Hong Kong and China) in line with the local markets;
4. my position in silver was more or less unchanged;
5. all tenants are paying on time and all properties are let. However, one long standing tenant will move out at the beginning of July so I will have a vacancy and the inevitable repaint/repair/agency expenses then;
6. the AUD and NZD were down against the USD/HKD;
7. my position in bonds remains modest. I added one additional 3 year USD bond to the portfolio – this is intended to be a replacement for a bond that matures in June. Recent interest rate increases have pushed the holding values of some of my bonds to below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. I have a margin facility in place and my carry trade is doing its thing and generating a small amount of additional income. However, the spread between the interest earned and the interest paid has narrowed to about 2.1% and will likely narrow again as interest rates increase further;
8. expenses were low with no major items being incurred this month. In contrast, next month will have high expenses as I will be booking and paying for several travel related expenses;
My HK cash position fell slightly during the month. I currently hold 48.36 months of expenses in HKD cash or equivalents (up from 26.68 months on 1 January).
Total household gearing ((debt+accruals)/assets) is 9.35% of total assets, with the increase from last month due to borrowing to buy a bond. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end and I do not net off cash. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised.
For the year to date, the portfolio is up 1.09 percent. The adjusted change from when I retired in September 2013 is a 28.19 percent increase. Hong Kong liquidity stands at 48.36 months of estimated outgoings, significantly increased from the start of the year's 26.68 months due to net asset sales.
Here are the details:
1. my Hong Kong equities rose. The only transactions this month were purchasing a small shareholding in ND Paper (HK: 2689) and subscribing for shares in the IPO of Good Doctor (results of application not known);
2. my AU/NZ equities were were up, largely due to gains in New Zealand offsetting declines in Australia. I added some additional shares in Marsden Maritime Holdings (NZX: MMH) to the portfolio;
3.my equity ETFs were up (India, Hong Kong and China) in line with the local markets;
4. my position in silver was more or less unchanged;
5. all tenants are paying on time and all properties are let. However, one long standing tenant will move out at the beginning of July so I will have a vacancy and the inevitable repaint/repair/agency expenses then;
6. the AUD and NZD were down against the USD/HKD;
7. my position in bonds remains modest. I added one additional 3 year USD bond to the portfolio – this is intended to be a replacement for a bond that matures in June. Recent interest rate increases have pushed the holding values of some of my bonds to below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. I have a margin facility in place and my carry trade is doing its thing and generating a small amount of additional income. However, the spread between the interest earned and the interest paid has narrowed to about 2.1% and will likely narrow again as interest rates increase further;
8. expenses were low with no major items being incurred this month. In contrast, next month will have high expenses as I will be booking and paying for several travel related expenses;
My HK cash position fell slightly during the month. I currently hold 48.36 months of expenses in HKD cash or equivalents (up from 26.68 months on 1 January).
Total household gearing ((debt+accruals)/assets) is 9.35% of total assets, with the increase from last month due to borrowing to buy a bond. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end and I do not net off cash. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised.
Thursday, March 29, 2018
Financial Review – March, 2018
March saw a further erosion of January's gains with declines in my equities compounded by weakness in the AUD. Bonds, silver and the NZD were more or less flat for the month. Positive cash flows from investments, were not enough to offset the mark-to-market losses and the end result was a 1.70 percent decrease in net assets.
For the year to date, the portfolio is up 0.82 percent. The adjusted change from when I retired in September 2013 is a 27.84 percent increase. Hong Kong liquidity stands at 41.74 months of estimated outgoings, significantly increased from the start of the year's 26.68 months due to asset sales.
Here are the details:
1. my Hong Kong equities fell. The only transaction this month was subscribing for and selling one board lot (2,000) shares in Most Kwai Chung in its IPO for a small profit;
2. my AU/NZ equities were were down, largely due to declines across the board in Australia and Fletcher Building in New Zealand. There were no transactions this month;
3.my equity ETFs were down (India, Hong Kong and China) in line with the local markets;
4. my position in silver was more or less unchanged;
5. all tenants are paying on time and all properties are let. I had to fork out for a pointless window inspection this month (delayed by an uncooperative tenant);
6. the AUD was down and the NZD flat against the USD/HKD;
7. my position in bonds remains modest. Recent interest rate increases have pushed the holding values of some of my bonds to slightly below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. I have a margin facility in place and my carry trade is doing its thing and generating a small amount of additional income. However, the spread between the interest earned and the interest paid has narrowed to about 2.1% and will likely narrow again as interest rates increase further;
8. expenses were low with no major items being incurred this month.
My HK cash position fell slightly during the month. I currently hold 41.71 months of expenses in HKD cash or equivalents (up from 26.68 months on 1 January).
Total household gearing ((debt+accruals)/assets) is 8.79% of total assets. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end and I do not net off cash. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised. In March, total debt declined but the gearing ratio increased due to declines in asset values.
For the year to date, the portfolio is up 0.82 percent. The adjusted change from when I retired in September 2013 is a 27.84 percent increase. Hong Kong liquidity stands at 41.74 months of estimated outgoings, significantly increased from the start of the year's 26.68 months due to asset sales.
Here are the details:
1. my Hong Kong equities fell. The only transaction this month was subscribing for and selling one board lot (2,000) shares in Most Kwai Chung in its IPO for a small profit;
2. my AU/NZ equities were were down, largely due to declines across the board in Australia and Fletcher Building in New Zealand. There were no transactions this month;
3.my equity ETFs were down (India, Hong Kong and China) in line with the local markets;
4. my position in silver was more or less unchanged;
5. all tenants are paying on time and all properties are let. I had to fork out for a pointless window inspection this month (delayed by an uncooperative tenant);
6. the AUD was down and the NZD flat against the USD/HKD;
7. my position in bonds remains modest. Recent interest rate increases have pushed the holding values of some of my bonds to slightly below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. I have a margin facility in place and my carry trade is doing its thing and generating a small amount of additional income. However, the spread between the interest earned and the interest paid has narrowed to about 2.1% and will likely narrow again as interest rates increase further;
8. expenses were low with no major items being incurred this month.
My HK cash position fell slightly during the month. I currently hold 41.71 months of expenses in HKD cash or equivalents (up from 26.68 months on 1 January).
Total household gearing ((debt+accruals)/assets) is 8.79% of total assets. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end and I do not net off cash. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised. In March, total debt declined but the gearing ratio increased due to declines in asset values.
Thursday, March 01, 2018
Financial Review – February, 2018
February saw a partial reversal of January's gains with declines in my equities, bonds and commodities being compounded by declines in the AUD and NZD. Positive cash flows from investments, were not enough to offset the mark-to-market losses and the end result was a 2.75 percent decrease in net assets.
For the year, the portfolio is up 2.21 percent. The adjusted change from when I retired in September 2013 is a 29.65 percent increase. Hong Kong liquidity stands at 42.01 months of estimated outgoings, significantly increased from the start of the year's 26.68 months due to asset sales.
Here are the details:
1. my Hong Kong equities fell. I sold some of my shares in China Gas (HK:384). This has been my most profitable equity investment since I resumed buying equities in 2009. Between the partial sale proceeds and dividends, I have had my original investment back several times over and still hold about half the number of shares originally purchased. It was simply a case of having too much money in one share. I have partially reinvested the proceeds in a few more shares in HSBC and a transfer to Australia (see below);
2. my AU/NZ equities were were marginally down. With the weakening AUD, I transferred some money to Australia and purchased shares in Inghams (ASX: ING) which offers an expected yield above 5% and whose board is considering capital management options after a fabulous first half result. I have also spent some of my NZD on additional shares in NZ Refining (NZX: NZR) again, based on the very attractive yield on offer – over the next 14 months I should receive two final and one interim dividend which I expect will collectively be about 10% of the current share price with expectations of higher dividends in following years once the 2018 maintenance shut down is completed;
3.my equity ETFs were down (India, Hong Kong and China) in line with the local markets;
4. my position in silver fell slightly;
5. all tenants are paying on time and all properties are let. I had several maintenance bills this month and will have to fork out for the pointless window inspection next month (delayed by an uncooperative tenant);
6. the AUD and NZD were were down against the USD/HKD. I shifted some money to Australia in response;
7. my position in bonds remains modest. Recent interest rate increases have pushed the holding values of some of my bonds to below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. I have a margin facility in place and my carry trade is doing its thing and generating a small amount of additional income. However, the spread between the interest earned and the interest paid has narrowed to about 2.1% and will likely narrow again as interest rates increase further;
8. expenses were high due to the completely unnecessary purchase of an antique map.
My HK cash position fell slightly during the month. I currently hold 42.01 months of expenses in HKD cash or equivalents (up from 26.68 months on 1 January).
Total household gearing ((debt+accruals)/assets) is 8.77% of total assets. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end and I do not net off cash. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised.
For the year, the portfolio is up 2.21 percent. The adjusted change from when I retired in September 2013 is a 29.65 percent increase. Hong Kong liquidity stands at 42.01 months of estimated outgoings, significantly increased from the start of the year's 26.68 months due to asset sales.
Here are the details:
1. my Hong Kong equities fell. I sold some of my shares in China Gas (HK:384). This has been my most profitable equity investment since I resumed buying equities in 2009. Between the partial sale proceeds and dividends, I have had my original investment back several times over and still hold about half the number of shares originally purchased. It was simply a case of having too much money in one share. I have partially reinvested the proceeds in a few more shares in HSBC and a transfer to Australia (see below);
2. my AU/NZ equities were were marginally down. With the weakening AUD, I transferred some money to Australia and purchased shares in Inghams (ASX: ING) which offers an expected yield above 5% and whose board is considering capital management options after a fabulous first half result. I have also spent some of my NZD on additional shares in NZ Refining (NZX: NZR) again, based on the very attractive yield on offer – over the next 14 months I should receive two final and one interim dividend which I expect will collectively be about 10% of the current share price with expectations of higher dividends in following years once the 2018 maintenance shut down is completed;
3.my equity ETFs were down (India, Hong Kong and China) in line with the local markets;
4. my position in silver fell slightly;
5. all tenants are paying on time and all properties are let. I had several maintenance bills this month and will have to fork out for the pointless window inspection next month (delayed by an uncooperative tenant);
6. the AUD and NZD were were down against the USD/HKD. I shifted some money to Australia in response;
7. my position in bonds remains modest. Recent interest rate increases have pushed the holding values of some of my bonds to below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. I have a margin facility in place and my carry trade is doing its thing and generating a small amount of additional income. However, the spread between the interest earned and the interest paid has narrowed to about 2.1% and will likely narrow again as interest rates increase further;
8. expenses were high due to the completely unnecessary purchase of an antique map.
My HK cash position fell slightly during the month. I currently hold 42.01 months of expenses in HKD cash or equivalents (up from 26.68 months on 1 January).
Total household gearing ((debt+accruals)/assets) is 8.77% of total assets. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end and I do not net off cash. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised.
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