Monthly Portfolio Report – July 2023

Posted on August 1, 2023July 31, 2023 by The FI Explorer

The farther back you can look, the farther forward you are likely to see.
Winston Churchill

This is my eightieth monthly portfolio update. I complete this regular update to check progress against my goal.

Portfolio goal

My objective is to achieve and maintain a portfolio of at least $2,750,000 by 31 December 2024 or earlier. This should be capable of producing an annual income from total portfolio returns of about $94,800 (in 2023 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 $2,200,000.

Portfolio summary

Vanguard Lifestrategy High Growth Fund	$776,574
Vanguard Lifestrategy Growth Fund	$40,530
Vanguard Lifestrategy Balanced Fund	$72,853
Vanguard Diversified Bonds Fund	$87,316
Vanguard Australian Shares ETF (VAS)	$404,668
Vanguard International Shares ETF (VGS)	$592,416
Betashares Australia 200 ETF (A200)	$286,699
Telstra shares (TLS)	$2,270
Insurance Australia Group shares (IAG)	$7,513
NIB Holdings shares (NHF)	$9,936
Gold ETF (GOLD.ASX)	$131,560
Secured physical gold	$20,805
Bitcoin	$488,404
Raiz app (Aggressive portfolio)	$21,631
Spaceship Voyager app (Index portfolio)	$3,549
BrickX (P2P rental real estate)	$4,451
Total portfolio value	$2,951,175 (+$22,458)

Asset allocation

*Australian shares*	*35.1%*
Global shares	32.4%
Emerging market shares	1.4%
International small companies	1.8%
Total international shares	35.7%
Total shares	70.8% (-9.2%)
Total property securities	0.2% (+0.2%)
Australian bonds	2.2%
International bonds	5.1%
Total bonds	7.3% (+2.3%)
Gold	5.2%
Bitcoin	16.5%
Gold and alternatives	21.7% (+6.7%)

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 increased modestly at a ‘headline’ figures level, with an increase of 0.8 per cent, or around $22,000.

What may be easily missed, however, is that this relatively modest headline movement compared to last month obscures a set of wider incremental changes that continue to subtly reshape the portfolio from within.

As an example, looking at only the non-Bitcoin ‘financial portfolio’ shows a growth of around $48,000 – which is actually a greater level of expansion than the equivalent movement in financial assets last month. The equity portfolio has advanced to 95 per cent of its eventual target, or $2.09 million.

So beneath the apparent steadiness of the monthly portfolio value this month there sits some emerging, and no doubt some ebbing or changeable, trends.

Australian equities advanced around 2.0 per cent in capital growth terms through the month, while international equities posted similar gains of around 2.2 per cent over the same period.

Portfolio Income Update – Half Year to December 31, 2021

Posted on January 9, 2022March 24, 2022 by The FI Explorer

Do nothing for money
Periander of Corinth, Diogenes Laertius, Bk I.97

Twice a year I prepare a summary of total income from my portfolio. This is my eleventh 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 $2,620,000 which is capable of providing a passive income of around $91,600 (in 2022 dollars).

Portfolio income summary

Investment	Amount
Vanguard Lifestrategy High Growth (retail fund)	$10,390
Vanguard Lifestrategy Growth (retail fund)	$489
Vanguard Lifestrategy Balanced (retail fund)	$756
Vanguard Diversified Bonds (retail fund)	$453
Vanguard Australian Shares ETF (VAS)	$8,199
Vanguard International Shares ETF (VGS)	$1,939
Betashares Australia 200 ETF (A200)	$5,787
Telstra shares (TLS.ASX)	$43
Insurance Australia Group shares (IAG.ASX)	$165
NIB Holding shares (NHF.ASX)	$168
Plenti/Ratesetter (P2P lending)	$59
Raiz app (Aggressive portfolio)	$191
Spaceship Voyager app (Index portfolio)	$0
BrickX (P2P rental real estate)	$42
Total Portfolio Income – Half-Year to December 31, 2021	$28,680

The chart below sets out the income or distributions received on a half-yearly basis from the financial independence portfolio over the past five and a half years.

Line of Position – Superannuation and the Financial Independence Portfolio

Posted on September 14, 2021September 14, 2021 by The FI Explorer

A ship should not ride on a single anchor, nor life on a single hope.
Epictetus, Golden Sayings, Fragment xvi

Setting out: looking beyond the horizon

In sea navigation, lines of position allow the fixing of the true position of a ship by helping to account for drift from wind or currents.

Each month this record regularly assesses the position reached with a relatively narrow focus on changes and trends affecting the financial independence portfolio. This is consistent with the intention of documenting a journey towards financial independence, and retirement well before the traditional age.

The primary focus on financial independence has meant that until the beginning of 2019, I did not regularly record the impact of superannuation on the achievement of the portfolio’s objectives.

From that time, I recorded a simple ‘All Assets’ measure of progress, which effectively counted the impact of superannuation on the measures. Typically, super has recently represented around 30 per cent of additional ‘buffer’ on progress against the goals set.

In this longer post, the aim is to look beyond the FI portfolio which is reported on, and provide more detail on what the whole financial asset picture looks like – taking into account both superannuation and the FI portfolio.

Measuring the changing position across the journey so far

The goal and plan has always been to target financial independence through my private investment portfolio alone, with superannuation perhaps providing an additional margin of safety.

Reflecting this, superannuation – the approximate Australian equivalent to 401K accounts in the US – has been a quietly evolving part of this financial journey in the background, since the earliest phases.

Over time, I have generally sought to contribute beyond the minimum guarantee amounts, making voluntary contributions with the approximate target of reaching an average 15 per cent of earnings in overall contributions.

This has resulted in a steady growth in the superannuation across time, as can be seen in Figure 1 below.

Clearly evident above are the impact of some market declines – in the second half of 2018, and the most recent March 2020 market falls. Yet also as apparent is the overall trend of steadily compounding returns across time.

Monthly Portfolio Update – January 2021

Posted on February 1, 2021March 24, 2022 by The FI Explorer

The most difficult thing is the decision to act, the rest is merely tenacity.
Amelia Earhart

This is my fiftieth monthly portfolio update. I complete this regular update to check progress against my goal.

Portfolio goal

My objective is to reach a portfolio of $2,585,000 by 31 July 2022. This would produce a real annual income of about $90,500 (in 2021 dollars).

This portfolio objective is based on an assumed safe withdrawal rate of 3.5 per cent.

Portfolio summary

Vanguard Lifestrategy High Growth Fund	$775,158
Vanguard Lifestrategy Growth Fund	$43,025
Vanguard Lifestrategy Balanced Fund	$79,641
Vanguard Diversified Bonds Fund	$107,429
Vanguard Australian Shares ETF (VAS)	$269,445
Vanguard International Shares ETF (VGS)	$117,712
Betashares Australia 200 ETF (A200)	$257,703
Telstra shares (TLS)	$1,662
Insurance Australia Group shares (IAG)	$6,144
NIB Holdings shares (NHF)	$6,624
Gold ETF (GOLD.ASX)	$109,475
Secured physical gold	$17,648
Plenti (P2P lending)	$5,480
Bitcoin	$494,160
Raiz app (Aggressive portfolio)	$19,508
Spaceship Voyager app (Index portfolio)	$3,106
BrickX (P2P rental real estate)	$4,447
Total portfolio value	$2,318,367 (+$52,337)

Asset allocation

Australian shares	37.4%
Global shares	20.9%
Emerging market shares	1.8%
International small companies	2.3%
Total international shares	25.0%
Total shares	62.4% (-12.6%)
Total property securities	0.2% (+0.2%)
Australian bonds	3.4%
International bonds	7.2%
Total bonds	10.5% (-4.5%)
Gold	5.5%
Bitcoin	21.3%
Gold and alternatives	26.8% (+16.8%)

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

Comments

This month the portfolio has increased by over $52,000, extending the strongest period of growth since this record started.

This has contributed to an expansion in the overall portfolio of over 25 per cent since the beginning of October last year. In this month alone the portfolio grew around 2.3 per cent.

Increases in the price of Bitcoin have provided the key motive force for the portfolio both this month and since October. Equities have made a smaller contribution since October, but the value of equity holdings actually fell slightly this month.

Part of this is related to the reduction in value arising from the payout of substantial distributions earlier this month, which will be averaged back into the portfolio over the next six months. The value of gold and fixed interest holdings have also marginally declined.

Stepping back, the result of this is the strongest consecutive four month performance of the portfolio on record, based quite narrowly on the fortunes of just two of its components, equities and Bitcoin.