The seeming truth that cunning times put on
Shakespeare, The Merchant of Venice
To entrap the wisest.
This is my one hundred and sixteenth 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 $3,250,000. This should be capable of producing an annual income from total portfolio returns of about $112,000 (in 2026 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 $2,600,000.
Portfolio summary
| Vanguard Lifestrategy High Growth Fund | $998,136 |
| Vanguard Lifestrategy Growth Fund | $49,458 |
| Vanguard Lifestrategy Balanced Fund | $83,617 |
| Vanguard Diversified Bonds Fund | $89,059 |
| Vanguard Australian Shares ETF (VAS) | $680,920 |
| Vanguard International Shares ETF (VGS) | $1,121,833 |
| Betashares Australia 200 ETF (A200) | $348,791 |
| Gold ETF (GOLD.ASX) | $258,017 |
| Bitcoin | $1,012,682 |
| Plenti Capital Notes | $84,000 |
| Financial portfolio value (excluding Bitcoin) | $3,713,831 (-$21,738) |
| Total portfolio value | $4,726,513 (+$28,959) |
Asset allocation
| Australian shares | 30.1% |
| Global shares | 33.3% |
| Emerging market shares | 1.2% |
| International small companies | 1.3% |
| Total international shares | 35.8% |
| Total shares | 65.9% (-14.1%) |
| Australian bonds | 2.7% |
| International bonds | 3.7% |
| Total bonds | 6.4% (+1.4%) |
| Gold | 5.5% |
| Bitcoin | 21.4% |
| Gold and alternatives | 26.9% (+11.9%) |
Presented visually, the pie chart below is a high-level view of the current asset allocation of the full portfolio.
Comments
This month the overall portfolio was relatively flat, increasing only nominally by $29,000 or 0.6 per cent.
In contrast to last month, value of the financial portfolio fell by a small amount – $22,000 – but this was cushioned at the overall portfolio level by some positive price movements for Bitcoin.
The chart below sets out the performance of both the full and ‘financial assets only’ portfolios since the commencement of the journey.
Across the month the largest falls were in the value of global shares, with a capital loss of around 1.7 per cent. Australian equities rose slightly in capital value terms by around 1.6 per cent.
Complicating the story here somewhat, is the fact that distributions from retail funds and ETFs were equivalent to between 0.5 – 0.8 per cent of each funds value, meaning that the global equity capital falls to some extent simply reflected the payout event, a transference effectively from the securities capital price, to the income column. As an indication of this effect, $33,000 of distributions were paid out across this month, from second quarter distributions, constituting more than the headline ‘loss’ of the financial portfolio.
Equity markets appear to be still responding to ongoing uncertainty around conflict and long-term prospects for freedom of navigation in the Persian gulf, as well as higher bond rates, in the absence of strong growth impulses across much of the developed world.
Gold was flat across the month and is at values that were seen almost a year ago. In addition, over the month, bond holdings lost around 4.1 per cent, although once again, this partially reflected the large distributions recently report in the portfolio income update.
The month, as previously, small additional new investments were made in global equities (through the Vanguard exchange traded fund VGS), in accordance with the decision to regularly reinvest excess distributions and cash holdings.
Trends in average distribution, portfolio income and expense measures
Every month I track evolving trends across average distributions, notional portfolio income and total expenses, with the analysis below focusing on the financial portfolio only, consistent with previous updates.
The chart below primarily measures distributions against an estimate of total expenses.
The total expenses figure (set out in the red line) is based on actual credit card spending, with the addition of a regularly updated notional monthly allowance for other large fixed expenses.
The chart also has a series of ‘safe’ portfolio income. This is marked in green and is calculated as the product of the financial portfolio (i.e. excluding Bitcoin) and the selected safe withdrawal rate of 3.45 per cent.
This value can be viewed as the notional ‘safe withdrawal income’ currently provided by financial assets in the portfolio. It is estimated on a three-month moving average basis.
Included in this chart is also an equivalent to this safe withdrawal income series, but calculated on all financial assets – that is, all financial portfolio assets (excluding Bitcoin) but including superannuation. This is denoted by the purple line.
This month average total expenses remained steady at around $9,000 per month. Total estimated annual expenses remains steady at around $109,000.
Using the most recent estimates of the three year moving average of distributions (the blue line), paid out distributions have continued their recent rise to reach just nearly $8,200 per month.
This leaves the monthly deficit between total expenses and average distributions continuing to narrow to about $900.
The ‘SWR portfolio income’ measure increased to around $10,500 per month. This is around $1,500 per month higher than total expenses, meaning a slight growth of a positive ‘safety margin’.
If superannuation assets are added to the calculation and considered, the margin between the ‘safe withdrawal rate’ income from all financial assets and superannuation and expenses rises to around $5200 per month.
The chart above sets out the ‘margin of safety’ on a monthly basis across the history of this record, showing that at its commencement a deficit of around $4,000 per month has been gradually moved to a surplus of around $5,000. By this definition, the financial independence ‘cross over’ point was reached in around February 2021.
Progress
| Measure | Progress |
| Portfolio objective – $3,250,000 | 145% |
| Financial portfolio income as % of total average expenses (3 yr average) – $108,900 pa | 118% |
| Target equity holding in portfolio – $2,600,000 | 120% |
| Financial portfolio income as % of target income – $112,000 pa | 114% |
Summary
This month has been one of near full time work, based on project timings and milestones, which has meant less focus on the journey or portfolio. Now, however, that is past, and for the next few months there will be a return to the ‘new normal’ of part-time work.
Such time as I have had, I have spent on other pursuits, such as a rekindled interest in ancient Greek plays, history, and The Iliad and The Odyssey. Thus long walks in weak winter sunshine have been spent in the company of the Orestan Trilogy, and the ‘man of many turns’ Odysseus. In part, this has been a kind of ad hoc preparation for the recent film adaptation.
Odysseus’s journey can be read in different ways through time, and has even earlier antecedents in the recorded Egyptian tale ‘The Shipwrecked Sailor’. Both centre on a return to home – or nostos – where one is changed by the journey undertaken.
In some ways, I have found that financial independence does represent a kind of ‘homecoming’ also. That is, one has launched out, at times struggled, at times felt broken by the sea, but finally returned to home, of a kind.
In this case, a return to a phase of life where daily work was not required to meet everyday needs. In this sense, there is something a little akin to a revisitation of one’s teenage existence under the surface – where the world is a relatively new map to explore and experience. This is of course tempered by experience, and such insights as have been gathered along the way, and a lower capacity for absolute surprise.
Yet, as The Odyssey teaches, the homecoming is never quite as envisaged.
This does not mean it is worse, it is simply beyond most human’s capacity to precisely imagine feelings and future selfs across intervening decades. One can only experience directly that which is lived, rather than the future imagined, in this case perhaps dimly in a hotel room in my first year of work, during one of my first work trips, starting the very first row of a detailed spread sheet with around $817 in the bank.
What I imagined then, at its core, however, was what I have reached. It was not specific numbers, a lavish lifestyle, or consumption. Instead, it was an inner sense of autonomy, a capacity to self-direct, freed from the constraints of any particular occupation or employer. In truth, and this will differ for others less middle class at heart, I simply could not contemplate any other goal as being consistent with how humans should aspire to live. By contrast, mere career progression and achievement, and perhaps even a lifetime of uncomplaining service to a noble but remote goal seemed rather alien, or incomplete.
No doubt this reflects deeply personal factors – or arguably failings – that this was so.
Yet it is undoubtedly the case that I have achieved a nostos of some kind, and that the journey has shaped me. What is interesting to contemplate is the ‘after’. In the tale of Odysseus, the homecoming is not the end. It is prophesied in the epic poem itself that after the homecoming, Odysseus will have further to wander. He is instructed to walk inland, with an ships oar, until he encounters a people who know nothing of oars, and mistake the oar as a tool for winnowing fan – for working the products of the land. There he is instructed to make a sacrifice for Poseidon
One might interpret this as an instruction to move beyond one’s areas of expertise, the areas of one’s worldly conquests, in search of the final ‘after’, a way to outwit the seeming truths that the times puts upon us.
Note for readers
Over the past two years, 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 and maintain a mirror Substack which you can subscribe to and have 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.