Friday, January 16, 2015

2015 - Moving Forward

So we are into the third week of the New Year before I get around to articulating what I intend or hope to achieve this year.

The financial side is obviously important and it would be a very nice outcome if our assets could continue to generate sufficient returns to pay the household expenses and beat inflation. Given that asset prices are generally high (excepting H shares and commodities), there is a reasonable chance that this will not happen. However, so long as cash flows from rents, dividends and interest more or less meet our expenses we will still be doing okay and we still have two part time incomes as back up and the comfort of knowing that all our outstanding P+I mortgages are slowly being amortized away.

On the non-financial side, I have given myself four main objectives:

1. in 2014 my fitness was impacted by a nagging injury (plantar fasciitis) and another health issue. I am really hoping that those issues are now behind me and I can get back to the kind of level where I can sign up for the HK marathon in 2016;

2. finish the novel I am writing (including all editing). I had hoped/intended to finish it last year but for one reason or another, I got a lot done but fell six or seven chapters short of finishing a rough first draft;

3. finish the MFA. It's been a lot of fun and a very rewarding start to my retirement and I will miss the interactions with the faculty and other students, but it will be good to finish it and move on to the next project;

4. continue spending time on volunteer activities - I've enjoyed all of them so far and get a bit of a buzz about "giving back" so I'll continue with all of them.

Financial Review 2014

A little late, but here is the financial report for 2014.

In short from a financial year it was a year that I could live with but still remained disappointing.

Annual return on my net assets without property adjustments: 3.41%
Annual return on combined household net assets with property adjustments: 7.6%

The actual returns would be a bit higher as the above numbers include (i) income from our part time jobs and (ii) all our household expenditure during the year. Since our returns were higher than expenses + inflation, this is acceptable

The two factors which were most significant to portfolio performance in 2014 were:

1. what I didn't have - almost no exposure to the well performing US and European markets

2. currencies - with considerable exposure to the AUD and NZD which declined against the HKD

There is a lesson in diversification there.

Thursday, January 01, 2015

2014 - review of objectives

In January 2014 I set myself a list of objectives for the year.

Unfortunately, 2014 was a rather disappointing year in most respects, due in part to circumstances beyond my control and in part to my own actions (or inactions). Here are the lacklustre details:

1. financially 2014 was a very average year - total return on my portfolio was enough to cover living expenses and more or less match inflation. The biggest drag on performance was the weakness in the AUD and, to a lesser extent, the NZD. On the positive side (i) I didn't do anything really stupid with my finances and (ii) expenses were reasonably well controlled;

2. fitness was a big fat negative - the "minor" foot injury of early January turned into a case of plantar fasciitis that took several months to remedy after I rather stupidly tried to keep running on it;

3. the degree has been a lot of fun - I am on track to complete the degree requirements by mid-2015. While I am a long way from being one of the better students in my intake, I have enjoyed studying an unfamiliar area, rewiring my ageing brain and getting to know a lot of interesting and new people. One of my tasks for 2015 is to line up my next project;

4. I failed to complete a first draft of my novel by year end - close but no cigar. In part because of time spent on the degree and in part because of an unexpected distraction which chewed up a lot of time in October - December (and which is still on going). The good news is that it is sufficiently advanced that a final version including editing will be completed by the end of 2015;

5. the miscellaneous housekeeping was a bottomless pit of tasks that resembled a hydra - overtime I completed one job, two others would raise their ugly heads. Currently outstanding: three lots of completely unnecessary window inspections, one application to boarding school, one passport renewal, one lost tax return to replace, follow up questions for my complaint to the Data Privacy Commissioner against a cold calling real estate agent who refuses to delete my personal data or to stop calling me, figure out Apple's useless Time Capsule being a few among the many items in the "to do" pile.

Hopefully 2015 will be a better, more productive and distraction free year.

Financial Review - December, 2014

December was a poor month for my investments.

Net worth declined.  Asian equities fell slightly, Australian/New Zealand equities appreciated slightly as did commodities and FX movements were unfavourable. Expenses were moderate.

Here are the details:

1. my Hong Kong/China equity portfolio fell with declines in my two biggest investments (China Gas and Hutchison) dragging down the portfolio . There were no transactions this month;

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

4. my commodities rose slightly. 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. I received a big bill for an overseas property (water pipe into the property needs to be dug up and replaced);

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 34.9 months of expenses in HKD cash or equivalents.

For October, my net worth fell by 1.0%. The year to date increase is 3.41%.

I will do a year end report in the next few weeks. I have over provided for tax which would lift the number very slightly but otherwise, it would appear that in my first full year of retirement, the portfolio has more or less generated sufficient returns to meet our living expenses and to match inflation. The biggest single contributor to the poor performance was the decline in the AUD and NZD against the HKD - if my currency of account had been the NZD our household net worth (which includes Mrs Traineeinvestor's assets and property market to market so not a perfect comparison) would have appreciated more than 20%.