Life is not an illogicality; yet it is a trap for logicians. It looks just a little more mathematical and regular than it is; its exactitude is obvious, but its inexactitude is hidden; its wildness lies in wait.

G K Chesterton

This is my eighth portfolio update. I complete this update 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 – $619 834
• Vanguard Lifestrategy Growth  – $40 712
• Vanguard Lifestrategy Balanced – $72545
• Vanguard Diversified Bonds – $104 665
• Vanguard ETF Australia Shares (VAS) – $12 093
• Telstra shares – $5 465
• Insurance Australia Group shares – $16 661
• NIB Holdings – $6 888
• Gold ETF (GOLD.ASX)  – $73 240
• Secured physical gold – $6 108
• Ratesetter (P2P lending) – $57 251
• Bitcoin – $34 125
• Acorns app (Aggressive portfolio) – $6 276
• BrickX (P2P rental real estate) – $4 166

Total value: $1 060 029 (-$37 729)

Asset allocation

• Australian shares – 31%
• International shares – 20%
• Emerging markets shares – 3%
• International small companies – 3%
• Total shares – 56.6% (4.4% under)
• Australian property securities – 4%
• International property securities 3%
• Total property – 7.0%
• Australian bonds – 13%
• International bonds – 11%
• Total bonds – 24.2% (5.2% over)
• Cash – 1.6%
• Gold and alternatives – 10.7% (0.7% over)

Comments

The absolute level of the portfolio fell this month, by over $37 000. This is largely a result, however, of the distributions from the previous financial year, and choices made around those payments. Around a quarter has been set aside for meeting the likely tax liability, arising from the distribution. Another quarter has been invested in a Vanguard ETF (VAS). The remaining half is set aside for two further investments in ETFs, on a dollar cost averaging basis over the next six months.

Holding funds outside of the portfolio affects the measured equity component of the asset allocation, slightly understating the future equity holdings (which would otherwise sit at around 58% closer to my target).

My leap into Vanguard ETFs was one of my primary investment goals for the year, and has been easy to execute so far. The choice of VAS (Australian shares) was based on low fees, access to tax-advantaged dividend payments and exposure to Australian dollar denominated equity assets. Future ETF purchases are likely to be in that same security, or an internationally exposed Vanguard ETF. Valuations in equity markets still appear stretched, making me comfortable with a more cautious averaging in approach. Wildness does seem to lie in wait, a sense only enhanced by my current post-apocalyptic audiobook fare, The Mandibles.

Aside from the payments of dividends, and reduction of the capital value of fund assets, there have been only minor changes in valuations. There has been some further volatility, and further appreciation of the Bitcoin holdings in the portfolio, while new available properties on the Brickx real estate platform has meant a small expansion in holdings.

Progress

Progress to goal: 71.8% (+5.5% ahead of target) or $415 971 further to reach goal.

Summary

Last month I hoped that distributions payments would provide signposts of how far I still have to travel. The large distributions didn’t really clarify that, as they were so far above expectations that it is hard not to discount their reoccurrence. Positively, however, they provide the interesting opportunity to trial equity ETFs, and continue my goal of exploring different investment vehicles.