Monthly Portfolio Update – January 2020

Posted on February 1, 2020July 14, 2020 by The FI Explorer

The day advanced as if to light some work of mine

Thoreau, Walden

This is my thirty-eighth portfolio update. I complete this update monthly to check my progress against my goal.

Portfolio goal

My objective is to reach a portfolio of $2 180 000 by 1 July 2021. This would produce a real annual income of about $87 000 (in 2020 dollars).

This portfolio objective is based on an expected average real return of 3.99 per cent, or a nominal return of 6.49 per cent.

Portfolio summary

Vanguard Lifestrategy High Growth Fund – $813 282
Vanguard Lifestrategy Growth Fund – $45 802
Vanguard Lifestrategy Balanced Fund – $83 162
Vanguard Diversified Bonds Fund – $110 472
Vanguard Australian Shares ETF (VAS) – $178 121
Vanguard International Shares ETF (VGS) – $34 965
Betashares Australia 200 ETF (A200) – $272 399
Telstra shares (TLS) – $2 046
Insurance Australia Group shares (IAG) – $8 970
NIB Holdings shares (NHF) – $6 492
Gold ETF (GOLD.ASX) – $106 701
Secured physical gold – $17 252
Ratesetter (P2P lending) – $14 755
Bitcoin – $153 530
Raiz app (Aggressive portfolio) – $18 365
Spaceship Voyager app (Index portfolio) – $2 534
BrickX (P2P rental real estate) – $4 477

Total portfolio value: $1 873 325 (+$94 067)

Asset allocation

Australian shares – 42.8% (2.2% under)
Global shares – 22.6%
Emerging markets shares – 2.4%
International small companies – 3.1%
Total international shares – 28.1% (1.9% under)
Total shares – 70.9% (4.1% under)
Total property securities – 0.2% (0.2% over)
Australian bonds – 4.5%
International bonds – 9.5%
Total bonds – 14.0% (1.0% under)
Gold – 6.6%
Bitcoin – 8.2%
Gold and alternatives – 14.8% (4.8% over)

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

Pie alloc Jan 20

Comments

This month saw exceptional growth in the portfolio, with a net increase of $94 000 after a small fall last month. Monthly prog Jan 20 This is the fastest growth in the past half year. It is also the second largest absolute increase in over three years of measurement.

As the histogram below – which counts the frequency of occurrences in a specified range of monthly value changes (with red denoting losses) – makes clear, this is one of the most positive outcomes in the three year record.

Continue reading “Monthly Portfolio Update – January 2020”

Fair Winds and Following Seas – Income and Capital in Portfolio Distributions

Posted on January 18, 2020February 14, 2021 by The FI Explorer

IMG_20190123_185425_992

It is impossible for a man to learn what he thinks he already knows.
Epictetus

Portfolio distributions that have been tracked in the journey so far have had two important but distinct components: investment income (such as interest or dividends), and realised capital gains.

What ultimately matters for reaching any financial independence target is total returns – which are the sum of capital gains and investment income. These two components, working together, push forward progress on the voyage. Distributions through the journey, however, provide an important and tangible measure of progress.

This longer read post explores through past portfolio data the level and significance of realised capital gains I have received in regular Vanguard retail fund distributions. It also analyses the level of ‘pure’ income – that is, counting only interest and dividends – produced by the FI portfolio and discusses what this means for managing the portfolio in the future.

Analysis of the two distinct components – capital gains and income – of my Vanguard retail fund distributions helps in understanding past and future variations in the level of these distributions, and the sustainable long-term income potential from the portfolio.

How these Vanguard distributions are structured, have behaved, and what they can be expected to do in the future is an important question for my financial independence portfolio – as by value Vanguard funds currently constitute over half its total value.

Continue reading “Fair Winds and Following Seas – Income and Capital in Portfolio Distributions”

Portfolio Income Update – Half Year to December 31, 2019

Posted on January 8, 2020January 6, 2021 by The FI Explorer

Screenshot_20200104-113404_Photos

Whoever wishes to read the future has to leaf through the past.

André Malraux

Twice a year I prepare a summary of total income from my portfolio. This is my seventh passive 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 Between Wind and Water, my goal is to build up a portfolio capable of providing a passive income of around $87 000 by July 2021 (Portfolio Objective).

Passive income summary

Vanguard Lifestrategy High Growth – $9 024
Vanguard Lifestrategy Growth – $517
Vanguard Lifestrategy Balanced – $490
Vanguard Diversified Bonds – $86
Vanguard ETF Australian Shares ETF (VAS) – $2 904
Vanguard ETF International Shares ETF (VGS) – $299
Betashares Australia 200 ETF (A200) – $5 845
Telstra shares – $43
Insurance Australia Group shares – $349
NIB shares – $156
Ratesetter (P2P lending) – $862
Raiz app (Aggressive portfolio) – $130
Spaceship Voyager app (Index portfolio) – $0
BrickX (P2P rental real estate) – $45

Total passive income in half year to December 31, 2019: $20 750

The chart below sets out the passive income received on a half-yearly basis from the portfolio over the past three and a half years. PIU HY Bar progress Dec 19

The following chart is a breakdown of the percentage contribution of each investment type to the total half-year income.

PIU HY Dist Pie - Dec19

Comments

The total half year passive income from the portfolio was $20 750, or the equivalent of around $3 460 per month. This was around the bottom of the range of my expectations, and it continues the pattern of lower December half distributions.

This result, however, is still around a third higher than the previous comparable December half, and almost double that of three years ago.

Continue reading “Portfolio Income Update – Half Year to December 31, 2019”

Between Wind and Water – Setting a New Portfolio Goal and Timeline

Posted on January 4, 2020February 14, 2021 by The FI Explorer

Screenshot_20200103-214959_Photos

We shall not cease from exploration
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time.

T S Eliot, Little Gidding

This exploration began three 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, enabling the bringing forward an achievement of this initial goal.

Each year at this time I have spent time reviewing investment goals and how I plan to reach them.

This post explains findings from my annual review, details my updated portfolio goals and assumptions, and discusses how I will approach my financial independence voyage through 2020 and beyond.

The aim 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. The process also enables the updating of plans and assumptions for changes in circumstances, thinking, as well as data and evidence.

Initial landfall and the beckoning final voyage

Last year saw the reaching and passing of the updated Objective #1 more than a year earlier than targeted. This leaves the previous Objective #2 (set at $1 980 000 in 2018 dollars) as the only one left to reach, barring a significant equity market fall.

So to recognise this I intend to reconfigure my goal, simplifying it to a single Portfolio Objective.

This new single objective is to reach a portfolio of $2 180 000 by 1 July 2021. This would produce a real annual income of about $87 000 (in 2020 dollars).

Continue reading “Between Wind and Water – Setting a New Portfolio Goal and Timeline”