The fishermen know that the sea is dangerous and the storm is terrible, but they have never found these dangers sufficient reason for remaining ashore.
Vincent Van Gogh
Year in Review
This year just passed was a landmark in the journey so far, with the movement to a part-time dedicated role, following over 25 years of full-time work.
In early 2024, the portfolio met its target goals. This meant that further investment contributions became optional, and effectively represented choices around where additional – though potentially unnecessary -funds were best ‘stored’ to preserve their value.
The focus for 2024 remained on assembling a cash reserve equal to typical total spending across a year, and this was achieved through that year.
Reviewing progress on goals and measures
In turn, this means that 2025 began with an updating of targets which were already met, and the setting out of conditions to monitor continued compliance with, rather than aspirational new financial goals.
These conditions were the continued achievement of the overall portfolio target ($3.0 million) and the secondary equity target ($2.4 million) and having a cash reserve of the equivalent of normal expenditure over a year in place.
These were all maintained through the year, as reflected below.
| Measure | Progress over 2025 |
| Portfolio objective – $3,000,000 | 161%→169% |
| Financial portfolio income as % of total average expenses (3 yr average) – $106,500 pa | 103%→116% |
| Target equity holding in portfolio – $2,400,000 | 109%→124% |
| Financial portfolio income as % of target income – $103,500 pa | 106%→120% |
Given this, the focus of this year in review is not around whether targets were met, but rather observations on the slowly changing shape of the portfolio, including by my actions, and external forces from markets.
Waves against the moving prow: inertia and the portfolio
There is one subtle truth about the financial independence portfolio. As the portfolio size grows, and especially its traditional financial asset components, inertial and mathematical forces impose a kind of stability.
Part of this stability is that actions upon the portfolio and assets are less likely to dramatically reshape its parts, or whole. As an example, new savings and investments will make an incremental impact, but the portfolio’s size also means that even significant events will usually not alter the portfolio size or its allocation overnight.
A small example of this is found in the story of the extraordinary performance of the gold component of the portfolio. This part of the portfolio experienced a 54 per cent return through the year, gaining over $100,000 in nominal dollar terms, but even so this raised the gold allocation only up to around its median level over past decades.
Assessing different perspectives on portfolio progress
At a headline level, the portfolio gained around $239,000 over the year.
This is more in dollar terms than any of annual gains in the years up to 2017, and was made despite a less concentrated focus on investing. This headline figure picks up a substantial ‘downdraft’ effect of falling Bitcoin values over the second half of 2025.
All of this is smoothed out through the charts of the overall portfolio performance over the years.
By contrast, the underlying financial portfolio of traditional assets (excluding Bitcoin) increased by just over $420,000 through the year.
This is the second highest increase in the journey – with only 2024 exceeding it in absolute gains. The increase equates to an expansion of the financial portfolio by 13 per cent over the year.
Looking beyond the financial portfolio, other elements also continued to grow.
Taking into account superannuation, for example, total financial assets actually expanded by over $570,000 over the year. This equates to a slightly unfathomable $11,000 per week.
This reflects another quiet shift over past years. In 2019 superannuation assets totalled around 20 per cent of the current portfolio target. Now, as 2026 begins, it constitutes nearly 45 per cent – becoming a less and less marginal element in planning and future considerations, as compounding occurs.
As with last year, the most significant and enduring change through the year, in terms of achievement and sustaining of FI goals, has been the expansion and evolving shape of the equity portfolio. This is the core engine for the generation of both long-term returns, and the protection of the real, after-inflation, value of wealth.
This expanded by $353,000, or 13.5 per cent, to $2.97 million, from $2.62 million at the start of 2025.
Largely due falls in the value of Bitcoin, the equity portfolio rose from representing 54 per cent to making up 59 per cent of the financial independence portfolio.
Contributions and growth in the equity portfolio has led to the Vanguard global equities ETF (VGS) becoming the second largest single portfolio holding, outside of Bitcoin.
This year I also accelerated the simplification of the portfolio holdings, by exiting individual shares holdings such as Telstra and IAG, and winding up prior exploratory investments in micro-investing platforms Spaceship and Raiz, as well as BrickX.
Changes in fee levels across some of these products, which made them uncompetitive to direct ETF holdings, and the lack of my continuing need for their features meant that the benefits of this simplification became too compelling. Collectively, also, they were too small to capture any of the marginal diversification benefits they offered.
The evolving story on spending and the portfolio
A further feature of this year is the continued growth in total average spending.
This can be tracked each month, but from the beginning of the year to the end, the annual total expenses I might expect based on a three year trailing average measure has increased by 4.2 per cent, from around $102,000 to just under $107,000.
This level of expenditure is around the current level of average adult full-time earnings.
In calendar year 2024 the measure of a three year moving average of total expenses rose 8.5 per cent. This rise – and the 4.2 per cent figure in 2025 – do not reflect purely an inflation-driven increase, as the methodology used to calculate this effectively takes a constant real dollar approach to regular expenses.
Over the longer term, on a slightly mixed real and nominal measure, expenditure has shifted up significantly from unusual lows experienced across 2020 to 2021, rising from around $80,000 per annum. Looking further back, however, levels today are not significantly higher, given the passage of time, than across 2017 and much of 2018, for example.
The trend in expenses is correctly a regular monthly focus to monitor, but the trend is not one I am consciously seeking to shape at this point.
As it has a range of causes, my major focus has been the adjustment to a different pace of day to day living, accepting that this is very likely to lead to changes in expenses that are difficult to predict, and which could conceivably go in both directions
Portfolio allocation
The year just passed sees the portfolio allocation close in a manner quite consistent with the last few years. Since 2007 a significant portion (around 60-70 per cent) of the portfolio has always been equity exposed.
From around 2017 the growth in Bitcoin and a consistent direction of reinvestments into equities saw the portfolio representation of gold and bonds decline, while Bitcoin exposure gradually, and unevenly, rose. This uneven growth path also had the effect of capping the portfolio allocation to equities in allocation terms, even as the absolute value of equities held increased.
Monthly Portfolio Update – December 2025
This is my one hundred and ninth 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 | $979,082 |
| Vanguard Lifestrategy Growth Fund | $49,360 |
| Vanguard Lifestrategy Balanced Fund | $85,2017 |
| Vanguard Diversified Bonds Fund | $94,343 |
| Vanguard Australian Shares ETF (VAS) | $667,005 |
| Vanguard International Shares ETF (VGS) | $1,005,279 |
| Betashares Australia 200 ETF (A200) | $340,406 |
| Gold ETF (GOLD.ASX) | $289,315 |
| Bitcoin | $1,466,670 |
| Plenti Capital Notes | $84,000 |
| Financial portfolio value (excluding Bitcoin) | $3,594,007 (+$27,985) |
| Total portfolio value | $5,060,677 (-$51,917) |
Asset allocation
| Australian shares | 27.7% |
| Global shares | 28.7% |
| Emerging market shares | 1.1% |
| International small companies | 1.3% |
| Total international shares | 31.0% |
| Total shares | 58.7% (-21.3%) |
| Australian bonds | 3.1% |
| International bonds | 3.5% |
| Total bonds | 6.6% (+1.6%) |
| Gold | 5.7% |
| Bitcoin | 29.0% |
| Gold and alternatives | 34.7% (+19.7%) |
Presented visually, the pie chart below is a high-level view of the current asset allocation of the full portfolio.
Comments
The portfolio fell by $52,000 this month, or by 1.0 per cent, continuing the weak performance from last month.
Similarly to last month, the major component of this fall was further reductions in the price of Bitcoin, with the price falling around 5 per cent.
Outside of this impact, the underlying financial portfolio performed better, expanding by around $28,000 to reach its highest ever level of just under $3.6 million.
The chart below sets out the performance of both the full financial independence and the narrower ‘financial assets only’ portfolios since the commencement of the journey.
This month equities have shown a divergent path, with Australian equities gaining slightly (up 1.4 per cent), while international equities fell around 0.8 per cent.
A strong feature of the month was a substantial movement in bond yields, or fall in bond prices. Japanese, Australian and US bond yields have been rising, a story that has not really been apparent even in much of the financial media. Many developed economies have not supported bond yields at this level for some number of years.
In a sense, it represents a possible marker for a ‘regime change’, perhaps signalling finally the emergence from a period ushered in by the Global Financial Crisis in 2008, and the macroeconomic and monetary policies which were further intensified through economic shutdowns across early 2020.
Gold has been a strong beneficiary of the rising levels of uncertainty and doubts over the fiscal sustainability of the existing budget and policy order across developed economies.
Compounding this, US and European actions around central reserve holdings of other nations, culminating in freezing of reserve assets has seemingly incentivised a renewed level of interest in physical gold assets. This has even extended to the Australian sovereign wealth fund further extending its holdings of gold assets. Over the month, gold holdings increased in value by 1.4 per cent.
This month saw a further investment of excess cash holdings in the Vanguard global equity ETF (VGS). As the month closed, the early estimated distributions from several of the ETFs were reported, at levels around expectations. These will be more fully reported through the middle of January, due to some intervening holidays.
Trends in average distribution, portfolio income and expense measures
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 regularly updated notional monthly allowance for other large fixed expenses.
The chart also has a ‘safe’ portfolio income series included. 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. To provide a smoother view through time it is estimated on a three month moving average basis.
This month average total expenses (red line) rose again slightly to around $8,900 per month, or around $106,500 on an annual basis as noted above.
Using the most recent estimates of the three year moving average of distributions (the blue line), paid out distributions have continued to slowly rise to sit just under $7,500 per month.
This leaves the monthly deficit between total expenses and average distributions at about $1,400.
Using the newer ‘SWR portfolio income’ measure, however, portfolio income has continued to grow to around $10,300 per month. This is around $1,400 per month higher than total expenses, continuing to sustain a positive ‘safety margin’ that has been expanding since around March 2024.
Progress
| Measure | Progress |
| Portfolio objective – $3,000,000 | 169% |
| Financial portfolio income as % of total average expenses (3 yr average) – $106,500 pa | 116% |
| Target equity holding in portfolio – $2,400,000 | 124% |
| Financial portfolio income as % of target income – $103,500 pa | 120% |
Summary
This month the issue of spending has occupied my attention. Spending was a significant early focus in the accumulation stage. By controlling spending, this affected the trajectory of the journey, and markedly increased my capacity to save and invest.
Over time, inflation, and some consumption choices has seen that spending drift upwards consistently, as seen above. It is not my expectation that this will occur indefinitely, although this could be an error. What has occupied my recent thoughts is something different, however. It is the shift required to move from the residue of that mindset to a stage of effectively ‘finding out’ what my level of optimum spending is under my new life circumstances.
As a small example, in May I will undertake some minor interstate travel, to follow an interest I have, something I would not have had the spare time to manage under a full time work schedule. It is in a sense ‘new’ travel, arising from the different pace of life now available. As such, no part of it shows up under past records of spending, that inform future estimates of expenditure.
So I have consciously decided to step back and, for awhile at least, not seek to so deliberately calibrate my individual spending decisions through comparisons to the past.
It may be that I undertake this travel and decide that, while interesting, the specific purpose of the visit was not one that will regularly form part of my future life. The only way to find this out, however, is to do, as imagining an experience can only take one so far.
Quite obviously, carried to excess, this insouciant approach to spending would undo financial progress and independence. For the moment, however, it seems a necessary new exploration of its own kind.
It is a journey I recognise I am privileged to be able to make, in which spending choices gradually form less of an allocation of a constrained, scarce resource, to rather feeling like more like assigning to different objectives and purposes ‘tokens’ of life energy. And at times that may require experimentation, and, indeed, failed experiments.
This month I have been reading David McWilliam’s Money: A Story of Humanity, which traces the development of money and credit through Sumerian tablets, through to modern day, with enjoyable chapters on the history of credit across the Dutch, Spanish and British empires, as well as Hamilton’s America. I have also read the Wealth Ladder, from Nick Maggiulli. This book addresses the issues of the changing issues and concerns at different levels of wealth.
Both, in their way, provide a perspective on the unchanging mathematical truths of both macroeconomics, government finance, and personal finance. As the new year commences, and as financial markets appear delicately poised, both serve as a reminder that while not all dangers can be foreseen, people in the past – just like Van Gogh’s intrepid fishermen have nonetheless daily ventured their safety – and prospered.
Note for readers
Over the last year, 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.
Also, if you are reading this article on a website called “Geldmountain”, please be aware that this and other updates have been reproduced without any contact or permission. Please feel free to view the original site, and subscribe if you wish, here.
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.