…all human wisdom is summed up in these two words, ‘Wait and hope’
Alexandre Dumas, The Count of Monte Cristo
This is my one hundred and first 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 $3,000,000. This should be capable of producing an annual income from total portfolio returns of about $103,500 (in 2025 dollars).
This portfolio objective is based on an assumed safe withdrawal rate of 3.45 per cent.
A secondary focus will be maintaining the minimum equity target of $2,400,000.
Portfolio summary
| Vanguard Lifestrategy High Growth Fund | $872,847 |
| Vanguard Lifestrategy Growth Fund | $44,907 |
| Vanguard Lifestrategy Balanced Fund | $79,365 |
| Vanguard Diversified Bonds Fund | $92,975 |
| Vanguard Australian Shares ETF (VAS) | $587,322 |
| Vanguard International Shares ETF (VGS) | $758,819 |
| Betashares Australia 200 ETF (A200) | $315,276 |
| Telstra shares (TLS) | $2,403 |
| Insurance Australia Group shares (IAG) | $10,402 |
| NIB Holdings shares (NHF) | $8,208 |
| Gold ETF (GOLD.ASX) | $230,121 |
| Bitcoin | $1,647,888 |
| Raiz app (Aggressive portfolio) | $25,543 |
| Spaceship Voyager app (Index portfolio) | $4,247 |
| BrickX (P2P rental real estate) | $4,443 |
| Plenti Capital Notes | $84,000 |
| Total portfolio value | $4,768,766 (+$210,243) |
Asset allocation
| Australian shares | 27.0% |
| Global shares | 24.5% |
| Emerging market shares | 1.0% |
| International small companies | 1.3% |
| Total international shares | 26.8% |
| Total shares | 53.8% (-26.2%) |
| Total property securities | 0.1% (+0.1%) |
| Australian bonds | 3.3% |
| International bonds | 3.4% |
| Total bonds | 6.7% (+1.7%) |
| Gold | 4.8% |
| Bitcoin | 34.6% |
| Gold and alternatives | 39.4% (+24.4%) |
Presented visually, the pie chart below is a high-level view of the current asset allocation of the portfolio.
Comments
This month the portfolio recovered from two months of losses, and posted overall gains of $210,000, growing around 4.6 per cent.
This growth was dominated by a recovery in the price of Bitcoin, which grew by 14 per cent through the month. Together with further growth in the value of gold holdings, this overshadowed relatively trivial gains in the overall equities component of the portfolio.
As global markets assessed the changing economic picture around the implementation of, or exclusions from, US tariff changes, equity markets encountered substantial volatility. Capital markets as well, including US Treasuries, experienced higher levels of daily movements.
Gold also continued its strong growth, and the value of portfolio gold holdings has in fact more than doubled since October 2022, even taking into account the forced liquidation of some physical holdings in past months.
Most asset classes advanced during the month, with the exception of international shares, which fell around 2 per cent.
This month saw a further investment into Australian shares, with additions to the ETF VAS. This partially re-invested the final March quarter distributions discussed below.
I have taken the decision to seek to reinvest a fixed proportion of accumulated paid out distributions and additional excess cash built up from previous distributions on a proportional basis each month, until the current expected termination of paid employment, around the end of 2026.
At the moment, the level of this investment is set by calculating the full investable amount, and dividing this by the number of months remaining.
As an example, whatever investable sum remains 6 months out from the end of a regular paycheck, I would expect to invest 1/6th of amount. This is a rough and ready rule, but it accounts and adjusts for uncertainty around the absolute level of future distributions, and avoids any deliberate market timing.
It also mitigates, for the moment, the after-tax erosion of purchasing power that occurs from keeping excess amounts in cash or cash equivalents.
First quarter distributions: the enjoyments of living
First quarter distributions were finalised at the end of last month, and paid out through this month.
While estimated ETF distributions were available at the time of the last monthly update, the final distributions from the retail funds from Vanguard were not.
The result is that actual distributions were slightly higher than forecast, at $28,500 – about $4,000 higher than estimated as likely.
The chart below sets out the level and composition of the final paid distributions for the first quarter.
What is not included in the table above is the payments of interest from the Plenti Capital Notes holdings, which represent a further flow of income of around $7,500 per year, or $1,900 per quarter. This income is time limited, and as each investment comes to its maturity this income will reduce, and the funds will likely then be reinvested in equity-based investments.
The chart below sets out the full history of quarterly payments since the commencement of the record.
As noted last month, this suggests that as the portfolio moves into the second quarter, distributions of between $30,000 to $40,000 might be expected in July.
Trends in average distributions and expenses
The chart below measures distributions against an estimate of total expenses.
The total expenses figure is based on actual credit card spending, with the addition of a notional monthly allowance for other fixed expenses.
This month average total expenses (red line) has continued to rise. These expenses currently are just under $8,600 per month.
The three year moving average of distributions (the blue line) has stabilised at around $7,900.
This leaves the deficit between expenses and average distributions of around $1,000, close to the largest gap experienced to date.
This month these figures include some revisions for out-turn and expected distributions, as well as a taking into account for the first time of monthly interest payments for the Plenti Capital notes.
These revisions means that mathematically, distributions have been sufficient to have met 100 per cent of all incurred credit card bills since late 2013.
Progress
| Measure | Progress |
| Portfolio objective – $3,000,000 | 159% |
| Financial portfolio income as % of total average expenses (3 yr average) – $99,600 | 108% |
| Target equity holding in portfolio – $2,400,000 | 107% |
| Financial portfolio income as % of target income – $103,500 pa | 104% |
Summary
This month has seen high levels of volatility across the asset classes held in the portfolio. The performance of gold and Bitcoin has been strong, throughout this volatility.
In January and February I examined the record of both assets through time as sources of volatility and diversification benefits, through the whole portfolio. Additionally, I have previously noted the startling fact of the outperformance of gold, compared to equities over a substantial recent period. As an example, gold has outperformed equities over the past 5 years, and all equities, domestic and global, held in the portfolio’s ETFs since late 2017.
The instability in markets this month has been dulled by gold and Bitcoin holdings to an unusual degree. Through most of month the financial assets in the portfolio were experiencing falls similar in magnitude to the previous two months, yet, the overall portfolio was still registering overall growth. This is a relatively rare occurrence, having happened only in four individual months since the start of 2017.
In markets, this month, more than most, has felt like one where two or more alternative futures vied to come into existence.
One, a pathway of greater stability, where slowly markets and global geopolitical developments calmed and settled from a possible re-ordering, and another, where that re-ordering accelerated at an unexpected pace. The sources for this second future could be a combination of a rebasing of global tariffs, a systematically higher required return for US Treasuries, or a once in a generation re-emergence of gold as a fundamental reserve asset.
It is at times such as these, as possible inflection points, that portfolios heavily leveraged to common accepted investment ‘truths’ and to the particular experienced historical ‘runs’ that have occurred carry a subtle, hidden risk. Most times, by definition, are relatively normal, and long trends can reassert themselves. Alarms can prove, once again, false, and purveyors of a narrative of ‘unchanging’ investment truths can relax back into comforting verities.
Yet, at times, these hidden risks can reassert themselves sharply. The truth of ‘equities always outperform’ for example, was true, until it wasn’t, for US investors between around 1929 to 1954. These are often described as regime changes, in asset and investment markets.
None of this is to say that we should not gather the best evidence we can from the historical record, and apply it intelligently to construct an investment portfolio with the best chance of long-term success – which is likely to involve a substantial ongoing exposure to equities and global diversification.
Months like this, however, should serve as a reminder that equities earn a premium not due to a historical law, nor by moral right.
Rather, the equity premium arises due to the exposure of investors to not only daily or monthly volatility, or business cycle risks over decades, but also other more existential economic and geopolitical risks. In short, the risks of abrupt, irreversible changes in economic conditions imposing perhaps permanent changes in the foreseeable levels of profitability, or the complete eradication of previous sources of business profits.
These risks are ever present – they do not dissipate through investors only encountering them on time scales that make their remembrance by living investors challenging. In such times, as in all times, one is best to wait, and hope.
Note for readers
Over the last few months, there has been a noticeable degradation in the useability of my standard blogging interface. As an alternative, and because I am not interested in becoming a coder, plug-in or website management expert, I have created a rough and ready backup Substack and imported past posts. The formatting of past posts may not be as tidy as here, but should the blog ever seem to ‘disappear’ or cease, it will likely just be a signal that I have switched entirely to Substack and started posting there.
Disclaimer
The specific portfolio allocation and approach described has been determined solely based on my personal circumstances, objectives, assessments and risk tolerances. It is not personal financial advice, or recommendation to invest in any particular investment product, security or asset, and investors considering these issues should undertake their own detailed research or seek professional advice.