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 shares	33.8%
Global shares	30.7%
Emerging market shares	1.3%
International small companies	1.6%
Total international shares	33.6%
Total shares	67.4% (-12.6%)
Total property securities	0.1% (+0.1%)
Australian bonds	2.1%
International bonds	4.5%
Total bonds	6.6% (+1.6%)
Gold	4.7%
Bitcoin	21.2%
Gold and alternatives	25.9% (+10.9%)

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

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.

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”

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

Investment	Amount
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.

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

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”

It is difficult to say what is impossible – for the dream of yesterday is the hope of today and the reality of tomorrow.

Robert Goddard

Year in Review

This year has been one of the most significant in the journey to financial independence so far.

Following the set-backs of 2022, the portfolio achieved strong forward momentum through most of the past year.

The original guiding goals set for this year were three-fold:

• achieving and maintaining the overall portfolio target of $2.75 million;

• achieving a minimum equity portfolio target of around $2.2 million; and

• building a cash reserve of at least one year of normal expenditure.

The first of these goals was achieved in March. The second was just achieved in the last month, following upward movement in equity markets and a final regular investment for the year.

The cash reserve targeted has not yet been built, though this may change over the coming year.

This means that two of the three pre-conditions which were set for any movement from my current work arrangements have been met, while the last is still a little way off.

Taking a look at movement against the financial independence benchmarks set through this past year highlights the significant progress made in the past 12 months.

Progress against FI measures through 2023

Measure	Portfolio	All Assets
Portfolio objective – $2,750,000 (or $94,800 pa)	89%→121%	117%→154%
Total average expenses (2013-present) – $87,800 pa	96%→130%	127%→167%
Target equity holding in portfolio – $2,200,000	83%→102%	N/A

The past few years have seen major oscillations in the final portfolio value.

Last year saw a loss of around $500,000 across the calendar year, immediately following a strong portfolio performance in 2021.

This past year has seen the portfolio grow by over $870,000, or 35 per cent of its initial value at the start of the year.

This is the largest dollar value gain in a calendar year over the history of the portfolio, and a percentage growth of a similar scale to growth in 2019 and 2017.

Each of these previous advances changed fundementally the type of portfolio which was being managed – and the gains this year will do the same.

Progress of the journey

This year has been in its essentials a resumption of the trend of growth, assisted by compounding and bouyant markets, that has been a feature of the journey since 2007.

This growth has reversed the losses of 2022, and restored something that looks quite close to a consistent geometric style expansion in the portfolio.

Continue reading “Year in Review and Monthly Portfolio Update – December 2023”