Net Worth Update – Nov 21 $1,235,918 (-$1,236)
Net Worth Update – Nov 21 $1,235,918 (-$1,236)

Net Worth Update – Nov 21 $1,235,918 (-$1,236)

October saw us being lifted out of lockdown, and the ability to spend money again. This has taken a hit on my savings rate.

Overall my net worth went down, but only slightly; 0.10%. This is due to my new car being delivered and writing it off and not contributing it to my net worth. I don’t class modern cars as assets, and it is no different to me buying a new TV.

The reason why my net worth didn’t drop as much? I had a large saving account that is not tracked in my net worth, basically a free write off account. Also, I was able to sell my car for way more than I purchased.

I listed my old RAV4 for $16,000. Thinking this was a reasonable price for my car, seeing I bought it three years ago for $17,000. I had no joke of a lie, over 100 inquiries about the car. The next morning, I listed it for $19,000 and sold it 2 hours later. Maybe I should have been greedy and listed it for more?

On the blog this month I have written an in-depth guide on how I set up my banking system.

What I found worth reading/watching:

Is Hyperinflation Coming? by Cullen Roche

What’s driving the boom in Australian property prices? | Four Corners
a shorter preview of the Four Corners episode

Raising Interest Rates.

There is a large gathering of thoughts that the cash rate will start to be increased earlier. The Reserve Bank of Australia has said that they will not increase rates until 2024. But with Australia and the world bouncing back out of lockdown, the RBA will have no choice but to revise its statement.

At the end of September Australia’s weighted median CPI reached 2.1%. This is now in the RBA goal of 2-3% annual inflation. This has come a lot quicker than expected, mounting more pressure for future rate increases. This sudden increase in inflation is mostly due to a very hot property market at the moment, seeing anyone who owns property become wealthier, while those without property make it even more difficult to jump on the ladder.

Despite the popular central bank narrative that rates wouldn’t rise, they are doing just that in nations around the world. First, it was developing nations raising rates to protect their currencies and stave off inflation. Then nations in the former Soviet bloc such as Poland and the Czech Republic were forced to raise rates.

But more recently inflationary and interest rates pressures have begun to significantly impact how rate hikes are being priced in the developed world. And this has occurred far more quickly than many are comfortable with.

So what does the future of Australian increasing rates look like?

Firstly I do not have a crystal ball and can not see in the future. But that doesn’t stop other people from betting on futures. The markets have started to price a 0.25 per cent rate increase for June, August, October and November next year.

If the market is correct, we could see the market rate sitting at 1.20 per cent from 0.10 per cent in a year. I wonder what this would do to people who have borrowed to the hilt??

It will be interesting to follow over the next year with inflation now affecting the economy. I would like to hope that the market prediction is not correct, however, now is probably the time to ensure your financial ship is in order. If you don’t manage the increase of debt flowing into your ship, you will quickly see yourself underwater.

Now for Octobers Net Worth Update:

Portfolio Goal:

It’s my goal to reach $1,250,000 by March 2022. I also want to further diversify out of real estate into shares, either by another Equity builder loan or cash purchases. With this goal of reaching 150,000 by January 2022.

Net Worth Summary

Cash Reserves: Cash took a hit as predicted with a loss of $7,990 to a total of $75,912

Share Portfolio: $124,153.

After September’s poor performance, we had the comeback I was predicting. All my holdings increased back to levels seen in August apart from Medibank.

Vanguard Australian Shares Index$67,631gain of $1,837
Magellan open class$22825gain of $83
JB Hi Fi$12,637gain of $1,509
Nearmap$9,731gain of $1,974
Medibank$5,696loss of $208
Santos$2,499gain of $49  

I did see dividend income in October: $1,006

  • VAS                        $1,006  

This was an overall gain of $6,252

Real estate: Equity worth $703,952, Rental income of $1,893.

This is a conservative estimate by the bank, and what I would feel comfortable selling at if I had to sell tomorrow.

Rental income of $2,020

Rental expense:

  • Mortgage Interest: $919
  • Fees: $126
  • Insurance: $85
  • Rates $364

This month the investment property was positively geared by $526

Superannuation: $357,027

This is updated bi-annually.

Net worth total: $1,235,918

Overall, a change of $1,236 or 0.1 % led to a net worth decrease.

Income vs expense: $1325 Saving (18% saving rate)

This was not a good month for my spending. This month a lot of bills were due, council rates, water, and electricity. I also received my new car this month, adding to the cost of window tinting and buying other car-related expenses. Plus being the first month out of lockdown has seen us out and about more.

Income:

  • Salary: $7005

Expense:

  • Spending $4137
  • Home Loan: $1543

October Goals Review:

  1. Get back into some form of exercise post lockdown – I have been walking 5km during my lunch break
  2. Finalise car finance – this has been achieved with the added benefit of selling my old car.
  3. See net worth grow by $3,000 at the minimum – not achieved
  4. Write one article on the Blog – achieved.

November Goals:

  1. Increase my saving rate to above 40%
  2. Purchases some more shareholdings
  3. Do some research into Crypto investing (or more like gambling)
  4. Maintain my exercise

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