Sunday, December 07, 2014

Cash flow - not an issue

In the post on the first anniversary of my retirement I commented that the current break even cash flow was not as good as it looked because of the effect of the special dividend from HWL (HK:13) and only taking two holidays instead of three this year. Without the special dividend and with three holidays scheduled for 2015, income from investments will fall a little short from meeting all of our cash outflows.

I have spent a bit of time playing with my spreadsheet and concluded that that assessment was unduly pessimistic - the short fall is a very small one. I will finish my master's degree next year and will stop paying course fees after that - this is more or less enough to wipe out the deficit. In the short term, part time incomes of either myself or Mrs Traineeinvestor or the return of my remaining capital from firm will also more than cover the shortfall. In fact, if we continue with both part time arrangements through to mid-2015 then, with the capital return, we are good for about four years. It is possible that rising dividend levels over those four years will deal with the issue after that. Reinvesting more of the cash currently held (in addition to the carpark just purchased) will also help. In the longer term, the mortgage on our home will be paid off in about seven years and cash flow will be strongly positive from then on.

Lastly, if things get tight, there is plenty of room to cut our expenses without having much effect on our standard of living. We can also shift non-income producing assets into income producing ones if we have to.

Financial Review - November, 2014

November was a poor month for my investments.

Net worth declined.  Asian equities appreciated slightly, but not sufficient to overcome the decline in my Australian/New Zealand equities and commodities and adverse FX movements. Expenses were moderate.

Here are the details:

1. my Hong Kong equity portfolio appreciated in line with the local market. There were no transactions this month;

2. my AU/NZ equities fell. I added shares in New Zealand Refining to the portfolio; equity ETFs were higher (India, Vietnam, Hong Kong and China) in line with the local markets. There were no new purchases;

4. my commodities fell. Silver is my only position;

5. the properties are at full occupancy and all tenants are paying on time. However, I will have at least one vacancy just before Chinese New Year in 2015. There were no repairs this month. I completed the purchase of a car parking space in the building where we live. It has already been rented out;

6. currency movements were negative with falls in the NZD and the AUD;

7. my position in bonds remains small;

8. expenses were moderate;

9.there were no transfers to Mrs Traineeinvestor this month.

My cash position fell slightly. I currently hold 35.2 months of expenses in HKD cash or equivalents.

For October, my net worth fell by 0.6%. The year to date increase is 4.46%.