Till noon we quietly sailed on,
Yet never a breeze did breathe:
Slowly and smoothly went the ship,
Moved onward from beneath.
Samuel Taylor Coleridge, The Rime of the Ancient Mariner, Part V
This is my fifty-sixth 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 | $810,231 |
| Vanguard Lifestrategy Growth Fund | $43,713 |
| Vanguard Lifestrategy Balanced Fund | $79,464 |
| Vanguard Diversified Bonds Fund | $101,270 |
| Vanguard Australian Shares ETF (VAS) | $351,101 |
| Vanguard International Shares ETF (VGS) | $200,090 |
| Betashares Australia 200 ETF (A200) | $290,938 |
| Telstra shares (TLS) | $2,014 |
| Insurance Australia Group shares (IAG) | $6,144 |
| NIB Holdings shares (NHF) | $8,568 |
| Gold ETF (GOLD.ASX) | $112,261 |
| Secured physical gold | $17,980 |
| Plenti (P2P lending) | $1,918 |
| Bitcoin | $628,750 |
| Raiz app (Aggressive portfolio) | $21,014 |
| Spaceship Voyager app (Index portfolio) | $3,412 |
| BrickX (P2P rental real estate) | $4,558 |
| Total portfolio value | $2,683,426 (+$87,183) |
Asset allocation
| Australian shares | 37.2% |
| Global shares | 21.7% |
| Emerging market shares | 1.7% |
| International small companies | 2.1% |
| Total international shares | 25.4% |
| Total shares | 62.6% (-12.4%) |
| Total property securities | 0.2% (+0.2%) |
| Australian bonds | 2.8% |
| International bonds | 6.1% |
| Total bonds | 8.9% (-6.1%) |
| Gold | 4.9% |
| Bitcoin | 23.4% |
| Gold and alternatives | 28.3% (+18.3%) |
Presented visually, the chart below is a high-level view of the current asset allocation of the portfolio.
Comments
The financial independence portfolio has grown by just over $87,000 since the last monthly update, or around 3.2 per cent.
This means that it continues to sit notionally above the portfolio goal, and expand, tracking towards its previous highs.
Yet this month has some peculiarities that affect the interpretation of these results.
The portfolio distributions received from the second quarter have led to a notional decrease in the level of equity holdings, because these have not immediately been reinvested.
In reality, around $52,000 of these distributions are aside in cash. They have yet to be put back into the portfolio, and are not recorded in the portfolio report.
Rather, these will continue to be placed into equity exchange traded funds (ETFs) on a fortnightly basis through to December, balanced between Vanguard’s Australian shares (VAS) and international shares funds (VGS).
This process will represent a significant underlying current pulling the portfolio in a positive direction over the next five months. For the current month, however, it means that the headline monthly portfolio movement is somewhat artificially lowered, and the absolute value of the equity portfolio is actually temporarily lower than a month ago.
With these caveats, there was price growth of 2.5 per cent in the international shares holdings, and Australian equities also increased in price by just less than 1.0 per cent. As a result, total equities holdings now sit at around 87 per cent of the intended target allocation (of $1.9 million, or around 75 per cent of the total portfolio goal).
Gold increased in value by around 5.3 per cent as global interest rates recommenced a downward movement, and bonds also increased in total value, despite their second quarter distributions.
The single largest positive contributor to the portfolio movement was once again Bitcoin, where holdings grew in value by over 17 per cent or $90,000.
Continue reading “Monthly Portfolio Update – July 2021”