A person often meets his destiny on the road he took to avoid it.
Jean de la Fontaine
This is my one hundred and tenth 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).
A secondary focus will be maintaining the minimum equity target of $2,600,000.
Portfolio summary
Vanguard Lifestrategy High Growth Fund
$984,041
Vanguard Lifestrategy Growth Fund
$49,548
Vanguard Lifestrategy Balanced Fund
$85,395
Vanguard Diversified Bonds Fund
$94,309
Vanguard Australian Shares ETF (VAS)
$673,809
Vanguard International Shares ETF (VGS)
$986,442
Betashares Australia 200 ETF (A200)
$343,574
Gold ETF (GOLD.ASX)
$330,966
Bitcoin
$1,340,262
Plenti Capital Notes
$84,000
Financial portfolio value (excluding Bitcoin)
$3,632,084 (+$38,077)
Total portfolio value
$4,972,346 (-$88,331)
Asset allocation
Australian shares
28.4%
Global shares
28.8%
Emerging market shares
1.1%
International small companies
1.4%
Total international shares
31.3%
Total shares
59.7%(-20.3%)
Australian bonds
3.2%
International bonds
3.5%
Total bonds
6.7%(+1.7%)
Gold
6.7%
Bitcoin
27.0%
Gold and alternatives
33.6%(+18.6%)
Presented visually, the pie chart below is a high-level view of the current asset allocation of the full portfolio.
Comments
This month the portfolio fell by around $88,000, or 1.7 per cent.
This reflected significant declines in the price of Bitcoin (of nearly 9 per cent), against an unsteady period for most equity-based assets. There was relatively high volatility through the month under a variety of geopolitical strains.
The financial portfolio sits at the highest ever level, of $3.6 million, despite the overall ‘headline’ portfolio value being below the absolute levels of a year ago.
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, geopolitical instability has driven market nervousness, and the rise in bond yields in Japan continues to signal an important regime shift in the deepest elements of the global financial architecture.
Yields on government debt are rising across Western economies, even as inflation is relatively contained in many jurisdictions. The fundamental price of ‘risk-free’ assets is changing, at a rather unanticipated pace, bringing with it question of ‘financial dominance’ and central bank independence. Developments in commodity markets and strategic metals, such as silver, were also in focus.
Australian equities benefited from some of these developments, rising around 1 per cent through this month. International equities fell modestly, by around 3 per cent, as US markets in particular reacted to the changing global trade and debt market conditions. Despite this, US market valuations, on this view, appear to remain relatively anchored when earnings growth and cash yield considerations are taken into account.
Gold has increased by an extraordinary 14 per cent over the month, exceeding the gains by Australian and international equities over the past twelve months.
Increasingly private investors, and central banks alike are rediscovering – at least temporarily – some of the hedging properties of gold. Over the past year, gold holdings have returned above 66 per cent. This has pushed the allocation to gold to the highest level in about 5 years, and in nominal dollar terms, means movements from here exert a far stronger impact than previously.
By contrast, Bitcoin has fallen by 28 per cent over the past year, and as mentioned fell sharply this month.
This month saw portfolio distributions received, of around $16,000, from the last quarter of 2025. These have been added to a cash fund that is proportionally reinvested through this year, with a portion also being set aside to meet expected tax liabilities.
Wings of time: portfolio compounding theory meets real-world data
Part of the function of this record has been to ‘test’ the theory of reaching financial independence in the real world, as opposed to the cells of an Excel spreadsheet, with their neat eliding of reality.
Tracking expenses and the portfolio’s safe withdrawal income is one dimension of this. Another is examining whether what is often called the ‘miracle of compounding’ occurs in quite the same manner as often presented in materials on financial independence or wealth-building more generally.
Recently, algorithms assisting, I have been interested to see a lot of Youtube financial independence themed content in my feed about various defining acceleration points, or milestones in the journey.
Typically, these relate to concepts like the portfolio assuming its own gradual momentum or central role in wealth generation, compared to new investments. That is, one’s portfolio ‘working harder’ than one’s own contributions.
Twice a year I prepare a summary of total income from my financial independence portfolio. This is my nineteenth portfolio income update since starting this record. As part of the transparency and accountability of this journey, I regularly report this income.
As discussed in my recent post, my primary goal is to maintain a portfolio of at least $3,250,000 which is capable of providing a passive income of around $112,000 (in 2026 dollars).
Portfolio income summary
Investment
Amount
Vanguard Lifestrategy High Growth (retail fund)
$9,366
Vanguard Lifestrategy Growth (retail fund)
$417
Vanguard Lifestrategy Balanced (retail fund)
$792
Vanguard Diversified Bonds (retail fund)
$668
Vanguard Australian Shares ETF (VAS)
$11,750
Vanguard International Shares ETF (VGS)
$5,387
Betashares Australia 200 ETF (A200)
$6,223
Plenti Capital Notes
$3,790
Total Portfolio Income – Half-Year to December 31, 2025
$37,922
The chart below sets out the distributions received on a half-yearly basis from the financial independence portfolio over the past eight years.
Little islands are all large prisons; one cannot look at the sea without wishing for the wings of a swallow.
Sir Richard Francis Burton
This recorded journey towards financial independence started nine 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 targets being achieved from January 2024 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 post talks about reflections arising from this annual review, updates my portfolio goal, and reviews the measures and assumptions I will use. It also discusses how I will approach management of the portfolio and associated finances given the current achievement of each of my past portfolio goals.
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.
Little island? Reflecting on a post-journey agenda
The objective of this record at its commencement was to seek to test whether there were any hidden or invisible barriers to the actual achievement of financial independence, given a path of consistent investing over a long period.
Early posts around future goals were largely focused on setting specific financial targets, to put in place the foundations of financial independence, such as achieving a certain portfolio level, or amount of distributions.
At this point in the journey, following the formal meeting of past goals and targets, arguably the approach of setting yearly goals has less to recommend it. The task of a record is to focus on what is occurring, and may occur, rather than becoming trapped in formalities and rituals now existing beyond their natural utility.
Uncertainty and the potential for major market movements, and financial crises, do mean that all progress in quantity terms is provisional.
It would be within the expected run of financial markets for the portfolio’s equity component to fall 40-50 per cent in an exceptionally poor year. Similarly, more volatile components of the portfolio could suffer even larger falls, without falling anywhere outside of historical precedents. And of course, there is always the potential for entirely new precedents to be set, including ones that undermine the entire basis of the FIRE exploration.
This remains true, and yet there is another emerging, less urgent truth emerging over past years. This is that perhaps the main task is shifting from forging the portfolio, to a role of observing and monitoring its own internal processes, applying judicious action only where necessary.
A reason for this is the growing part played by internally generated compounding forces within the portfolio. Put simply, this means that the portfolio has grown to a level where it is less affected by small ongoing decisions or investment choices made. The goal perhaps switches to a more negatively framed one – of not acting in a way that interrupts, or disrupts this self-sustaining process of portfolio growth.
Again, humility is required, because compounding in equity markets does not occur by virtue of smooth annual 7 per cent glide-paths. It occurs in between brutal, sharp upward and downward saw-tooth moments in markets.
These movements themselves are demonstrations of the movement of the journey from one of deliberate, calibrated, controlled choices to a different stage. A stage requiring a greater sense of detachment from the impacts of market forces on the portfolio. And a stage that redirects energy from goal-setting in the financial sphere to other aspects of life.
The tasks that seem most relevant to this stage continue to be evolutions of the two set out for the last two years.
First, to provide for a reasonably assured passive income which is consistent in real after-inflation terms with the target chosen.
Second, to maintain reserves of cash that will be essential to future movement to entire reliance on investment returns and the application of the safe withdrawal rate to the portfolio over an extended multi-decade period.
Should financial markets fall substantially, it is possible I will use reserves in excess of the above requirements, as well as any regular distributions, to purchase new investment assets to restore in particular the targeted level of equity holdings.
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).
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.
