EK Portfolio Analysis (DEC24)
EK Portfolio Analysis (DEC24)(YE)
EK Portfolio Analysis (Adj KD-KMA)(DEC24)(YE)
Since we’ve purchased our Property in DEC21, we’ve increased our Net Worth by 400K in 3 years. If we account for the significant Mortgage Interest Rate increase, currently at 6.79%, our Net Worth increased by 315K over the 2 years. Our annual average annual increase in Net Equity is about 135K-to-155K+.
Kathy doesn’t get paid Bonus until the end of June. If we look at our Net Equity increase between JUL-DEC, this would exclude KBonus. JUL24-DEC24, our Net Equity increased by 69K. DEC24 excludes KD/KMA of 61K, so that explains why the NE variance is only about 10K comparing to JUN24. Using 145K as the annual average, we’re at 69K/145K=48% YTD.
JUN24, we finished at 1.128M, so 1.128M+.145K=1.27M is our Target by JUN25.
Our NSR% is about 65%-to-70%. No changes to our current lifestyle. Based on Kathy’s Net Salary, NS should be about 90K/annually. However, we also use these funds to cover our international trip for the year, which is about 7.5K-to-10K, so this isn’t our true NS. It’s just a metric. So if we exclude our international trip of 10K, that’s 90K-10K=80K for NS, so we’ll use this as our baseline. 145K-80K NS=65K in +NE. If we analyse this further, KSuper Super Guarantee (SG) is 27.5K. 65K-27.5K KSG=37.5K in +NE, which should represent CA.
To calculate the actual growth, our PPM+PPE=350K. ING Offset averages 135K. Total Prepaid Mortgage=350K+135K=485K. Mortgage Interest Rate is 6.79%, so 485Kx6.79%=33K/interest saved. 37.5K+33K=70K in growth. Using backward math, 33K/485K=6.8%, 1.136M-485K=651K. 651K-27.5K=632.5K. 37.5K/632.5K=6%.
As we continue to increase our Net Worth annually, our YoY Equity % Increase decreases. We’re averaging about 13%-to-20% YoY the past 4 years. I know that eventually once we hit 2.5M+, our YoY Equity % Increase would average under 6%. However, if we true-up our Equity Increase to 10%, that would be 250K+/annually. Our why and purpose doesn’t require this amount, and we’ll be content with what we have, so we’ll stop recording our YoY% once we reach 2M.
Our Asset Allocation %, we now have about 4 Core Assets: AU Super (28%), ING Offset/PPM (31%), Property (27%), and AU Equities (7.5%). KFI-BInvT is about 61K, or 5%. The hardest part in Asset Allocation % is when our Net Worth increases. For example, if we start with the end in mind, say 2.5M by 2030, what would we like for our Asset Allocation % to look like to minimize risk and maximize return? Let’s see. AU Super: 625K (25%), ING Offset/PPM: 625K (25%), Property: 625K (25%), and AU Equities: 625K (25%) by 2030 when Kathy turns 50. I’ll give Kathy the flexibility to transition to part-time work by then or by the time B’s in College, so we’ll utilize AU Equities and ING Offset/PPM.
As for Brandon’s Trust, Brandon would be 15 years old, so still not ready for College yet. I’ll continue to manage his Trust account until he’s ready. Currently at 61K. Not sure if all students would be qualified for HECS-HELP for Uni, but I’ll target 125K by 2030. Will let Brandon decide how he plans to utilize the funds once he’s ready.
Further assessment regarding 3M by 50, we’re averaging +150K/annually in equity. 5 Years would be +150K*5 Years=+750K. Current Equity is 1.136M. Total 1.136M+750K=1.9M. 1.9M-3M=(1.1M). (1.1M)/5 = (220K)/annually to cover. It looks likely investing in Investment Property would be the main solution. Using an Investment Property of 800K as an example, assuming growth at 4%, that’s +32K. Rent at 3.5% yield would be +28K. That’s about +60K/annually. (220K)/60K=3 properties. We have 1. So target 2 more. We’ll be focusing on neutral gearing, so coming up with the necessary down payment and having sufficient funds in the Offset Account would be our main priority.
