End of Year Spruce Up

We are nearing the end of the year and I’m starting to fidget. Spring has just rolled into summer and Christmas is imminent. I looked into my daughter’s room the other day and said it was time she moved some things on to new homes’ to make way for the Christmas presents she is bound to receive. While I might be headed towards minimalism, it is certainly not contagious in my household. Unfortunately. I am endlessly trying to get her to move things on, give them away or sell them but I fail almost every time. That just leaves me to wander around the rest of our house seeing what things of mine I can move on to other people instead. But I can only rehome so much so that leaves me to look at other areas that need a bit of tidy up and a spring clean.

I spend a lot of time at my computer and my “household spreadsheet” (it needs a far more awesome name that reflects the wealth of information it holds) is often open and I’m always inputting new earnings, savings and expenses and generally tinkering around with it, changing colours, changing headings etc. I moved it from paper to my computer in April 2015 so I now have a couple of years of very accurate data which shows me exactly how much we are spending and saving. It is a thing of beauty!

Under a different tab I have all of our investments listed showing how much the balance of them is changing each month and these all add up to tell me our net worth. And it was while I was looking at this that I thought perhaps it was timely that I have a bit of a financial spring clean. Thats a book title right there!

You see I have a few investing leftovers that I kind of always mean to clean up, but never quite get around to it and the first one on my list was Bonus Bonds. Now, I’ve blogged about Bonus Bonds (Bonus Bonds The End! - The Best Baby Shower Gift EVER!) before and I think they have a place for savers, especially when you are first starting out. They helped me become a regular saver by putting money away into them each week or month and that helped me form a savings habit. And I won some prizes too which acted like a faux interest payment. I now like to think of Bonus Bonds as a ‘gateway investment’ into bigger things and I have always kept an account with them “just in case”.  

“Just in case what exactly Ruth?” I asked myself this week.

NOTHING has happened in the last year to make me think “QUICK QUICK QUICK, I must buy Bonus Bonds! So I think it’s time I cleansed it from my spreadsheet. I kept $100 sitting in there and guess what, all this time later $100 is still sitting there, it has not won ZIP so I simply logged in and cashed them in with a couple of clicks. Two days later the money was back in my bank and I instantly swiped it out and put it into my savings account. I should have done it ages ago!

Scrolling my eye down my list of investments I’m thinking investing SHOULD be about numbers, math and cold hard facts but let's face it we all have emotions and they sure can get in the way when we are trying to make rational decisions sometimes.

Here is a list of currents investments.

Here is a list of currents investments.

I’m happy with my Meridian shares, they are not returning as well as my Index Funds are but they do provide a regular dividend payout of about $1,000 a year PLUS I like the company itself and that is important to me. Our Simplicity KiwiSaver Growth accounts are ticking along well so nothing to change there, I’m just consistently putting money in each week to get the free government money each year. Our bank accounts are well, you know, bank accounts! Not particularly exciting either but are doing their job adequately, they are Kiwi owned too which is a bonus. My SmartShares are also ticking along nicely, I put regular monthly contributions into them by automatic payment and also lump sums when cash is available, so that’s all good too. I’m also happy with my Term Deposit. It matures at Christmas time, so that is another $1,000 I’m expecting to receive back and I’ll decide then where to invest that money - it won’t be into more worldly goods for my house, a.k.a crap I don’t need, I can tell you that much!

I like how I have gotten myself to a point where I cast my eye down my list of investments and just mentally tick things off and think “yep, sorted, that’s fine, nothing to do here”.

BUT then I get to my GOLD and things change. I have know for a while now that something needs to change here but I’m procrastinating. Again.

I really like owning gold. It’s so tangible, unique and so darn pretty. Mostly everyone has some money sitting around, but not many have gold.  I’m not going to lie to you, I’ve gotten myself emotionally involved with this investment. I just really like the stuff and enjoy the fact that I have something tangible to show for all of my investing efforts, and that it is not just a number on my spreadsheet. And have I mentioned that it is really pretty? OK, so I have. But when I look at the returns of my other investments gold has sunk to the bottom of the list. With a clunk... because it is surprisingly really really heavy!

I can hold an ounce in my hand and know its worth about $1800 if I sold it today. I have six ounces and I have even taken them out so I can look at them while I think about writing this blog! I so badly want to keep it that the prettiness of it is clouding my judgement.

It's so shiny and really pretty.

It's so shiny and really pretty.

But here are the facts: My spreadsheet tells me that I ended up paying $1910 per ounce. So that little row of gold in the picture cost me $11,460. In the time I have owned it the price has yo yoed up and down and an email to Mike at Morris and Watson who I purchased it off tells me they would give me $1800 per ounce for it today, that’s $10,800 in total. That is a LOSS for me of $660. The math does not lie, I’ve picked myself a really shiny, really pretty but at this point in history ultimately a dud investment.

As much as I really enjoy the experience of having gold I am running out of reasons to hold onto it because it is not growing my wealth at all, exactly the opposite actually, and by keeping it I am missing out on better returns somewhere else. I enjoy the interest and dividends I receive from my other investments and I know that compound interest is such a powerful tool in investing. And I always reinvest my dividends and interest payments so my pool of investments just keeps on building. But not with gold. I can’t keep it just on looks alone.

Like Bonus Bonds were a gateway investment, gold has been the same for me.

I have heard from a lot of people lately, by email, who are just discovering this personal finance community and just starting on the path to financial independence. This blog today is to show myself and them that investing is a long journey of discovery. You don’t wake up one morning and know everything you need to, it’s an evolution of learning and you get better at it over time. Sometimes things don’t work out how you planned, so you pivot and try something else.

Bonus Bonds were great to get me started and to teach me to consistently pull money away from my bank account and save it. It taught me that out of sight and out of mind works well for me and that money pretty quickly builds up if I save consistently.

Gold on the other hand has taught me to follow graphs and watch how volatility in the market can have an instant impact on investments. Owning it around a US election was interesting as uncertainty pushed the price up but then later as things calmed down the price dropped back again and has made it quite clear to me that the gold price is heavily impacted by fear, uncertainty and the rate of our dollar. Every time North Korea tests a bomb and trump twitters back at him, gold jumps.

But at no point will it ever give me a dividend or interest payout and it is looking unlikely that the value is headed upwards. I always knew it was a hold and wait investment but it turns out I’m impatient!

Therefore Warren Buffett’s rules on investing are about to be broken by me yet again!

Rule 1. Never lose money

Rule 2. Never forget Rule Number 1

Now, it was not my intention to lose money Mr Buffett, it takes me ages to earn it after all, so I’m not frivolous by any stretch. I did my homework prior to buying it and I’ve done a whole lot more learning since owning it. So, this week, I’ve sold four of my six ounces and now have $7,200 to invest somewhere else.

How do you sell gold I hear you ask? Well, as luck would have it the company I bought it off, Morris and Watson, were passing through to visit my friend Roy the jeweller in Clyde: deCort Design, so I enjoyed a chat over a coffee with Michael at Oliver’s in Clyde (lovely spot and a must visit). I had only every spoken on the phone or by email so it was fantastic to meet in person. What impressed me most was the fact that he had a BRIEFCASE with a combination lock, which added an air of mystery to an already interesting man! Over coffee he looked at their current buy price, which fluctuates throughout the day, and he offered me $1800 per ounce. I’m pretty confident I was his smallest transaction of the week. I gave him my bank details, handed over four ounces of my pretty gold and he gave me a receipt. $7,200 was in my bank account by dinner time. What an incredibly interesting way to spend an hour on a sunny Thursday afternoon. Such fun!

So, I can confirm that you can turn your gold into cash pretty quickly when required. I have kept two ounces and have not ruled out buying more in the future. You never know!

So, what with the difference between their buy and sell price I lost $440 in total in my gold owning experiment but given the new rules the IRD has bought in on taxing gold, I should be able to make some of this back because I made a LOSS. I will let my accountant work this one out next year because in all honesty I have NO IDEA! My jeweller friend Roy texted me a short while later to tease me that the gold price had risen. “#### (golly gosh)”, I said!

Where is this $7,200 headed now, what part of my spreadsheet will it be added to?

I’m bumping up our savings account a little, (this is our emergency fund), the rest will be drip fed into my Index Funds over the next couple of months, just $1,000 into each per month so I can average out my buy price, until it’s all invested.

And as for the final couple of columns on my spreadsheet, any spring cleaning required? Bitcoin is my husbands “thing” these days and this is the first time he has become actively interested in where our money is invested. So, that’s his baby and because at the moment I’m hearing, on a regular basis, “holy s**t our Bitcoin is up 80% today”, I’ll just let him keep having a go! He is really enjoying learning about cryptocurrencies, something that I’m not as interested in if I’m honest.

The house we own is still a constant topic of conversation, mostly driven by me. I would like to sell it and buy something worth less. I would like to release some of the cash we have tied up in the house so we can invest it elsewhere and then derive an income from those investments and work a little less and go running in the hills a little more. Jonny is, shall we say less keen while our daughter is HORRIFIED. The Christchurch earthquakes taught us first hand what having a big chunk of your money tied up in one whare can do, it took us about two and a half years for our insurance claim to settle and for us to be paid out. That’s a long wait. Once again our house makes up about 75% of our investments and that is nowhere near diversified enough for my liking! So, that’s an ongoing discussion...

And the cars? I don’t count them in our net worth, others do. I keep a figure in the back of my mind as to what they are worth but there is no need to sell so I don’t count them as an asset at all really, although technically I know I probably should.

There you have it, my spring clean is complete and I feel better for it!

I believe that what I’m left with is a solid foundation that should hopefully set me up with a smooth investing ride in 2018 with everything on autopilot and set to go.

We are all fallible, we are all allowed a few mistakes but the fact remains that I have done a lot of things RIGHT with our investments and our net worth spreadsheet backs this up because our TOTAL is higher today than it was last year, so apart from a few blips things are headed in the right upwards direction.

Who knows what next year will bring, gold will probably shoot up, that’s Murphy’s Law! Lots of pundits are predicting an overdue drop in markets or a market correction, time will tell. It’s bound to happen at some point but I feel well placed to ride it out. And I have to say, that with another year of investing and learning under my belt I still get super excited about being involved in it. The key for me is still just steady drip feeding of money into our investments on a weekly and monthly basis with NO LET UP and every week I continue to learn something new. Investing is a great hobby to have, make sure you try it!  

Happy Saving!


How to rock a good spreadsheet...

How to rock a good spreadsheet...

Becoming Minimalizzy

Becoming Minimalizzy