Monthly Portfolio Report – February 2024

I cannot fix on the hour, or the spot, or the look, or the words, which laid the foundation. It is too long ago. I was in the middle before I knew that I had begun.

Jane Austen, Pride and Prejudice

This is my eighty-seventh monthly portfolio update. I complete this regular update to check progress against my goal.

Portfolio goal

My objective is to maintain a portfolio of at least $2,870,000. This should be capable of producing an annual income from total portfolio returns of about $99,000 (in 2024 dollars).

This portfolio objective is based on an assumed safe withdrawal rate of 3.45 per cent.

A secondary focus will be achieving the minimum equity target of $2,300,000.

Portfolio summary

Vanguard Lifestrategy High Growth Fund$831,824
Vanguard Lifestrategy Growth Fund$42,936
Vanguard Lifestrategy Balanced Fund$76,298
Vanguard Diversified Bonds Fund$88,886
Vanguard Australian Shares ETF (VAS)$508,369
Vanguard International Shares ETF (VGS)$699,816
Betashares Australia 200 ETF (A200)$299,113
Telstra shares (TLS)$2,036
Insurance Australia Group shares (IAG)$7,855
NIB Holdings shares (NHF)$8,784
Gold ETF (GOLD.ASX)$140,016
Secured physical gold$22,089
Bitcoin$1,066,628
Raiz app (Aggressive portfolio)$22,467
Spaceship Voyager app (Index portfolio)$3,919
BrickX (P2P rental real estate)$4,543
Plenti Capital Notes Market Loan$5,000
Total portfolio value$3,830,579
(+$396,399)

Asset allocation

Australian shares30.7%
Global shares28.5%
Emerging market shares1.2%
International small companies1.5%
Total international shares31.1%
Total shares61.8% (-18.2%)
Total property securities0.1% (+0.1%)
Australian bonds1.9%
International bonds4.1%
Total bonds6.0% (+1.0%)
Gold4.2%
Bitcoin27.8%
Gold and alternatives32.1% (+17.1%)

Presented visually, the pie chart below is a high-level view of the current asset allocation of the portfolio.

Pie chart of allocation

Comments

This month there was extremely strong continued forward movement in the financial independence portfolio, with a growth of around 11.5 per cent, or just over $396,000.

This represents the largest monthly expansion in the value of the portfolio on record in percentage terms, and by far the largest absolute dollar value increase.

The past five months have exceeded the sustained growth experienced in the last few months of 2020, and into 2021. The past twelve months have add more than a million dollars to the portfolio.

By contrast, towards the beginning of the journey it took fully ten years – between 2007 to 2017 – to accumulate and grow the portfolio by one million dollars.

Chart - Monthly Portfolio Value

A further similar perspective is that the portfolio, without any contributions, grew this month by more than an entire six years of accumulation and growth from mid 2007 to mid 2013.

In this exceptional month, the story of portfolio growth was dominated by a surge in the value of Bitcoin – by approximately 47 per cent.

Global equities continued to deliver growth, with international equities appreciating by 4.0 over the month. Australian shares were comparatively more modest in their overall performance, delivering an increase of around 0.9 per cent.

Bond holdings in the portfolio fell around 0.4 per cent, and once again, small gains in the value of gold holdings (0.7 per cent) offset these losses.

Continue reading “Monthly Portfolio Report – February 2024”

Monthly Portfolio Report – January 2024

There are years that ask questions, and years that answer.

Zora Neale Hurston

This is my eighty-sixth monthly portfolio update. I complete this regular update to check progress against my goal.

Portfolio goal

My objective is to maintain a portfolio of at least $2,870,000. This should be capable of producing an annual income from total portfolio returns of about $99,000 (in 2024 dollars).

This portfolio objective is based on an assumed safe withdrawal rate of 3.45 per cent.

A secondary focus will be achieving the minimum equity target of $2,300,000.

Portfolio summary

Vanguard Lifestrategy High Growth Fund$811,421
Vanguard Lifestrategy Growth Fund$42,151
Vanguard Lifestrategy Balanced Fund$75,377
Vanguard Diversified Bonds Fund$89,232
Vanguard Australian Shares ETF (VAS)$503,637
Vanguard International Shares ETF (VGS)$672,613
Betashares Australia 200 ETF (A200)$296,854
Telstra shares (TLS)$2,153
Insurance Australia Group shares (IAG)$7,652
NIB Holdings shares (NHF)$9,768
Gold ETF (GOLD.ASX)$138,996
Secured physical gold$21,987
Bitcoin$727,092
Raiz app (Aggressive portfolio)$21,940
Spaceship Voyager app (Index portfolio)$3,766
BrickX (P2P rental real estate)$4,541
Plenti Capital Notes Market Loan$5,000
Total portfolio value$3,434,180
(+$114,667)

Asset allocation

Australian shares33.8%
Global shares30.7%
Emerging market shares1.3%
International small companies1.6%
Total international shares33.6%
Total shares67.4% (-12.6%)
Total property securities0.1% (+0.1%)
Australian bonds2.1%
International bonds4.5%
Total bonds6.6% (+1.6%)
Gold4.7%
Bitcoin21.2%
Gold and alternatives25.9% (+10.9%)

Presented visually, the pie chart below is a high-level view of the current asset allocation of the portfolio.

Pie chart of allocation

Comments

This month the financial independence portfolio continued to grow, increasing by around $114,000.

As a result, the portfolio continues to track at the highest level it has ever reached. In the last days of the month, growth in equity values also meant the secondary objective of a minimum equity portfolio of $2.3 million was also met.

The portfolio grew by 3.5 per cent across the month, with the four past months alone having increased the total size of assets under management by over $500,000.

Chart - Monthly Portfolio Value

The drivers of the positive monthly performance were two-fold. Global equities increased in value by 5.3 per cent, while Bitcoin rose in value by 5.8 per cent.

By contrast, Australian equities returned a modestly positive performance (of 1.4 per cent), when payments of dividends are included.

Portfolio bond holdings produced small losses, of around 1.1 per cent. This was more than offset by an appreciation in the value of gold ETF holdings.

This month saw US equities continue to perform strongly, due to receding fears of a domestic recession, and the continued appreciation of the seven largest technology focused stocks. These ‘magnificant seven’ have significantly outperformed broader benchmarks of medium and smaller listed US firms. In turn, US equity market outperformance of international markets is at the highest level seen in decades

Continue reading “Monthly Portfolio Report – January 2024”

Portfolio Income Update – Half Year to December 31, 2023

Passed years seem safe ones, vanquished ones, while the future lives in a cloud, formidable from a distance.

Beryl Markham, West with the Night (1942)

Twice a year I prepare a summary of total income from my financial independence portfolio. This is my fifteenth portfolio income update since starting this record. As part of the transparency and accountability of this journey, I regularly report this income.

My primary goal is to maintain a portfolio of at least $2,870,000 which is capable of providing a passive income of around $99,000 (in 2024 dollars).

Portfolio income summary

InvestmentAmount
Vanguard Lifestrategy High Growth (retail fund)$14,139
Vanguard Lifestrategy Growth (retail fund)$629
Vanguard Lifestrategy Balanced (retail fund)$727
Vanguard Diversified Bonds (retail fund)$140
Vanguard Australian Shares ETF (VAS)$9,914
Vanguard International Shares ETF (VGS)$6,896
Betashares Australia 200 ETF (A200)$6,442
Telstra shares (TLS.ASX)$45
Insurance Australia Group shares (IAG.ASX)$114
NIB Holding shares (NHF.ASX)$180
Plenti/Ratesetter (P2P lending)$100
Raiz app (Aggressive portfolio)$190
Spaceship Voyager app (Index portfolio)$0
BrickX (P2P rental real estate)$21
Total Portfolio Income – Half-Year to December 31, 2024$39,537

The chart below sets out the distributions received on a half-yearly basis from the financial independence portfolio over the past eight years.

Chart - Half-Yearly Portfolio Income
Continue reading “Portfolio Income Update – Half Year to December 31, 2023”

Fair Upon the Straits – Reviewing the Portfolio Goal and Investment Plan

The sea is calm tonight.
The tide is full, the moon lies fair
Upon the straits

Matthew Arnold, Dover Beach

This recorded journey towards financial independence started seven years ago, with an initial objective of building a passive income of $58,000 per annum by July 2021.

Since that time, goals have evolved and changed, with the most recent target being achieved from March 2023 onwards, as well as temporarily before that.

Each year in early January I spend time reviewing my investment goals and how I plan to reach them.

This longer post talks about reflections arising as part of this annual review, updates my portfolio goal including the measures and assumptions I will assume, and discusses how I will approach the closing stages of my financial independence journey through 2024 and potentially beyond.

The aim each year is to have a clear written record of the objectives, approaches and reasoning underlying the plan, to serve as a reference point through the year to come. The process also enables the updating of plans and assumptions for changes in circumstances, thinking, as well as available data and evidence.

The full tide on the voyage to financial independence

This year represents a different task to many of those faced before. Last year, the challenge was to rebuild after the most substantial falls in dollar terms that that portfolio ever experienced.

For 2024, however, the task is to build on the tentative and contingent achievements of the past twelve months – in particular, the passing of the portfolio goal, and the secondary target equity level in the portfolio.

While this tide is full the immediate tasks are two-fold.

  • First, to provide for a reasonably assured passive income which is consistent in real after-inflation terms with the target chosen.
  • Second, to set aside the reserves of cash that will be essential to movement to potential reliance entirely on investment returns and the application of the safe withdrawal rate to the portfolio over an extended multi-decade period.

While the tide is currently full, it can of course turn – quite easily.

The past two years have been an object lesson that arbitrary numerical targets can be exceeded, only for markets to fall back sharply. This is simply what markets do, at times.

So all the plans for the year must bear this caveat: that with a turn of fate, the primary task may revert to what it has before, restoration and achievement of the overall portfolio level, and an equity target.

Continue reading “Fair Upon the Straits – Reviewing the Portfolio Goal and Investment Plan”