Economists set themselves too easy, too useless a task, if in tempestuous seasons they can only tell us, that when the storm is long past, the ocean is flat again

John Maynard Keynes, A Tract on Monetary Reform (1923)

This is my third portfolio update. I aim to update this monthly to check my progress against my original goals.

Portfolio goal

My current portfolio objective is to reach a portfolio of $1 476 000 by 1 July 2021. My plan is that this should produce a real income of about $58 000. This is based on a real return of 3.92%, or a nominal return of 7.17%.

Portfolio summary

• Vanguard Lifestrategy High Growth – $588 585
• Vanguard Lifestrategy Growth  – $42 099
• Vanguard Lifestrategy Balanced – $75 478
• Vanguard Diversified Bonds – $111 580
• St Andrews ‘Top 200’ Australian shares (indexed) – $12 179
• Telstra shares – $6 425
• Insurance Australia Group shares – $14 988
• NIB Holdings – $6 396
• Gold ETF (GOLD.ASX)  – $75 466
• Secured physical gold – $3 640
• Ratesetter (P2P lending) – $55 072
• Bitcoin – $15 207
• Acorns app (Aggressive portfolio) – $4 256
• BrickX (P2P rental real estate) – $2 277

Total value: $1 013 648

Asset allocation

• Australian shares – 31%
• International shares – 20%
• Emerging markets shares – 3%
• International small companies – 3%
• Total shares – 57% (8% under)
• Australian property securities – 4%
• International property securities 3%
• Total property – 7%
• Australian bonds – 13%
• International bonds – 12%
• Total bonds – 26% (11% over)
• Cash – 1.7%
• Gold and alternatives – 9.3%

Comments

The overall portfolio is up around $25 000 this month, which is definitely ahead of my goals and expectations. My non-FI life has kept me busy, so that it barely seems possible a month has passed by.

The increases in the portfolio have come from shares, gold and bitcoin holdings. Markets have seemed like a flat and calm ocean on the surface, but the movements that have occurred do not seem to be indicators of the continuation of low volatility in debt and equity markets. I continued to be concerned that US markets are topping out and that a correction may occur. Perhaps this is too much undisciplined Youtube consumption. In any case, I  have not acted to create a cash buffer for this eventuality.  Instead, I would hope to continue my regular equity fund purchases through Vanguard.

Something I have noticed which has gradually changed over the past few years is that the impact of my twice monthly investments has begun to be swamped by even small day to day shifts in market valuations.

Earlier on the journey, my net worth reliably followed a ‘saw tooth’ pattern of contribution during my salary weeks, a fall in net worth on ‘off’ pay weeks. Psychologically, this break between known effort and actions and reflected result is tricky. It will be even tougher in a consistent down market. My goal is to think about and consciously shape my responses to these circumstances, to mentally and emotional practice how I might react.

Progress

Progress to goal: 68.5%

Summary

Having passed the $1 000 000 mark earlier this month, I am enjoying the feeling of achievement. Finding more time for this blog, and for thinking through what is still needs to be done are the priorities. Some advice reading in FI literature this week emphasised the benefits of ‘looking back from the fixed point of your goal’ has me thinking about how to best to reframe my task around what is left to achieve, rather than the long and gradual progress to date.