The house of delusions is cheap to build but drafty to live in.

A. E. Housman

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

Portfolio goal

My objective is to maintain a portfolio of at least $2,870,000. This should be capable of producing an annual income from total portfolio returns of about $99,000 (in 2024 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 $2,300,000.

Portfolio summary

Vanguard Lifestrategy High Growth Fund	$855,315
Vanguard Lifestrategy Growth Fund	$43,951
Vanguard Lifestrategy Balanced Fund	$77,576
Vanguard Diversified Bonds Fund	$90,252
Vanguard Australian Shares ETF (VAS)	$542,025
Vanguard International Shares ETF (VGS)	$735,030
Betashares Australia 200 ETF (A200)	$314,298
Telstra shares (TLS)	$2,100
Insurance Australia Group shares (IAG)	$9,375
NIB Holdings shares (NHF)	$9,036
Gold ETF (GOLD.ASX)	$167,038
Secured physical gold	$26,286
Bitcoin	$1,127,990
Raiz app (Aggressive portfolio)	$24,310
Spaceship Voyager app (Index portfolio)	$3,980
BrickX (P2P rental real estate)	$4,731
Plenti Capital Notes Market Loan	$43,000
Total portfolio value	$4,076,293 (+$177,439)

Asset allocation

Australian shares	30.3%
Global shares	27.9%
Emerging market shares	1.1%
International small companies	1.4%
Total international shares	30.5%
Total shares	60.8.% (-19.2%)
Total property securities	0.1% (+0.1%)
Australian bonds	2.8%
International bonds	3.9%
Total bonds	6.7% (+1.7%)
Gold	4.7%
Bitcoin	27.7%
Gold and alternatives	32.4% (+17.4%)

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

Comments

The portfolio reached the highest level in its history this month, with a growth of 4.6 per cent, or around $177,000.

This has been achieved in significant part by an increase in the value of Bitcoin holding, with holdings in equity making up the rest of the movement through the period.

Even ascribing no value at all to the entirety of the Bitcoin holdings, the financial portfolio still remains about the portfolio target.

The monthly movement of various asset classes outside of the Bitcoin holdings were not particularly significant, with increases of 4 per cent in Australian equities and slightly larger increases in the value of gold holdings (around 6 per cent).

An interesting feature to note is that quite frequently, directionally, the subcomponents of the entire portfolio has tended to move in a correlated manner, with this month, for example, bonds, equities and gold all advancing – even if with different strengths.

This month, the same as last, I invested some surplus funds that would in the past have been invested in equity index funds, into a further purchase of Plenti Capital Notes, at an approximate yield of 9.0 per cent.

As previously highlighted, yields of this kind are not available without a material risk to the safe return of the capital. At this stage and in my personal circumstances, however, this is a useful relatively short-term vehicle for funds I am happy to put at some risk, and which I have no need to access. Importantly, it represents only around 1 per cent of portfolio holdings.

Trends in average distributions and expenses

As reported in the portfolio income report last month, the three year moving averages of total expenses and average distributions crossed this month.

The chart below measures distributions against an estimate of total expenses. The total expenses figure is based on actual credit card spending, with the addition of a monthly allowance for other fixed expenses.

This month average total expenses (red line) continued to rise. These expenses sit at around $7,600 per month.

The three year moving average of distributions (the blue line) continues to decline, as it has since early 2023, to be at around $7,400.

This leaves a deficit between distributions and total expenses of around $200 per month, compared to a surplus of around $2,000 per month in early 2023.

Due to the operation of the three year averaging approach, I expect the deficit to continue to grow over coming months, highlighting that distributions alone are unlikely to meet my portfolio income target over the medium term.

Progress

Measure	Progress
Portfolio objective – $2,870,000	142%
Financial portfolio income as % of total average expenses (2013-present) – $88,700	115%
Target equity holding in portfolio – $2,300,000	108%
Financial portfolio income as % of target income – $99,000 pa	103%

Summary

This month has been taken up with preoccupations around work, and associated travel. This entry will go live on another day of travel, in a hotel room, prior to a busy day of meetings and gatherings.

Without delving into specifics, the outlines of a post-work future are becoming much more visible, or rather, the circumstances and forces that bring that into being are. Part of this is external, stochastic, a confluence of random choices by other parties, timings, and the shape of likely further projects.

Some is entirely internal, however.

A sense of increased weariness as I look out upon the current set of circumstances and repeated patterns. In particular, patterns of organisational pathologies, and behaviours. The size and development of the portfolio has played its own silent part in this. To such a degree, in fact, that I do not think I would feel this sense of weariness, this capacity to imagine an alternative and less time pressured future, without it being present.

There is an arresting truth buried in this sentiment.

It is that earlier in the journey, and unfortunately for many less lucky than myself and many of the readers – this choice of perspective, this potential ‘letting go’ was not a feasible response to the unyielding demands of any workplace, and of meeting daily expenses.

I was bound to continue, but perhaps less aware of, and troubled by, the ties that did bind me. In an early career, where there were definite and strong sources of extrinsic and instrinsic motivation, these did not chafe.

An obvious response to this is to take a break and a holiday, or perhaps an extended sabbatical. I am not sure this is the answer, since although it might provide some shorter term perspective, the ‘returning to’ would remain similar.

This has my thoughts developing more around the exploration of lower impact, more ‘hobby-based’ approaches to future work in my fairly specialised area. This would be able to be explored without any specific need to have this work remunerated, or for a new business to succeed. And so my thoughts have more turned toward how the pieces of that future might be pulled together gradually but deliberately over coming months.

In some senses, this phase of ‘letting go’ is intriguing. I find myself noticing and focusing more on what are the longer term systems or institutional features I have not previously paid attention to that will drive good outcomes in the future, compared to placing on myself the burden of working harder, or longer, to fix or overcome issues in the short term. Enabling other people to reach their potential, rather than individual achievements, enabling others ‘firsts’, or successes assume a much greater focus.

There is also a need for acceptance that there are limits to control – one’s legacy in any small area (and mine is small indeed), will always be hostage to events and a human capacity for error.

This month I have focused less on market movements than for many previous. With no new equity based investments, I am seeing the true performance of markets, and their fluctuations play out on the portfolio on a daily basis. No doubt coming US elections and geopolitical events will continue to exert a close influence on these movements.

In Will Durant’s History of Civilisation, the historian modestly notes something to the effect that ‘history would not recognise herself in its pages’. It is a recognition in shorthand of the impossibility of capturing the truth of any complex series of events in a narrative told after the fact. This month I have been consuming its telling of the classical Greek world.

As the ship’s prow turns to the future it is as well to think about the incapability of any of us to fully conceive and bring into being even a carefully imagined future. Perhaps, especially a carefully imagined future. Rather, events will buoy and jar us, in turn, and markets will do the same in this case. To imagine otherwise is to expose ourselves to the cold drafts of illusion.

Disclaimer

The specific portfolio allocation and approach described has been determined solely based on my personal circumstances, objectives, assessments and risk tolerances. It is not personal financial advice, or recommendation to invest in any particular investment product, security or asset, and investors considering these issues should undertake their own detailed research or seek professional advice.