To think is easy. To act is hard. But the hardest thing in the world is to act in accordance with your thinking.

Goethe

This is my ninety-third 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	$861,536
Vanguard Lifestrategy Growth Fund	$44,380
Vanguard Lifestrategy Balanced Fund	$78,502
Vanguard Diversified Bonds Fund	$91,760
Vanguard Australian Shares ETF (VAS)	$544,300
Vanguard International Shares ETF (VGS)	$722,096
Betashares Australia 200 ETF (A200)	$315,649
Telstra shares (TLS)	$2,094
Insurance Australia Group shares (IAG)	$9,565
NIB Holdings shares (NHF)	$7,512
Gold ETF (GOLD.ASX)	$165,774
Secured physical gold	$26,132
Bitcoin	$973,512
Raiz app (Aggressive portfolio)	$24,201
Spaceship Voyager app (Index portfolio)	$3,980
BrickX (P2P rental real estate)	$4,704
Plenti Capital Notes Market Loan	$43,000
Total portfolio value	$3,918,689 (-$157,604)

Asset allocation

Australian shares	31.6%
Global shares	28.7%
Emerging market shares	1.2%
International small companies	1.5%
Total international shares	31.5%
Total shares	63.1.% (-16.9%)
Total property securities	0.1% (+0.1%)
Australian bonds	2.9%
International bonds	4.1%
Total bonds	7.0% (+2.0%)
Gold	4.9%
Bitcoin	24.8%
Gold and alternatives	29.7% (+14.7%)

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

Comments

This month the portfolio underwent significant losses at the headline level, with a loss of around 3.0 per cent, or $158,000.

This was largely a function of a fall in the value of Bitcoin holdings.

This has left the overall portfolio of traditional financial assets virtually unchanged on a monthly basis, and still comfortably above the portfolio goal.

Equities performance across the month were mixed, with a capital growth of 2.2 per cent for Australian holdings, and a small loss of around 0.4 per cent for international equities.

Gold appreciated around 1.4 per cent over the same period while Bitcoin holdings, as mentioned, declined around 14 per cent.

The bond holdings of the portfolio continued to recover as global rates eased, reaching their highest absolute value in more than two years.

This month no new investments were made, with the regular income produced by the Plenti Capital Notes being added to a contingent cash reserve.

Trends in average distributions and expenses

This month the trend continues of total expenses rising above the moving average of distributions.

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 $7,700 per month.

By contrast, the three year moving average of distributions (the blue line) continues to decline, as it has since early 2023, to be at around $7,100.

Presently, this leaves a gap between distributions and total expenses of around $500 per month, compared to a surplus of around $2,000 per month in early 2023.

As noted previously, from the operation of the three year averaging approach, I expect the gap to continue to grow over coming months. This is an indication that paid out distributions by themselves are unlikely to meet my portfolio income target over the medium term.

Progress

Measure	Progress
Portfolio objective – $2,870,000	137%
Financial portfolio income as % of total average expenses (2013-present) – $88,800	114%
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 one of low relative focus on the portfolio, which is now at the interesting stage of having no new regular additions to it, and floating therefore on its own currents, borne by market movements.

Rather, this month has been one of stronger focus on work, and some potentially important changes in team structures and focus that may ultimately presage the movement to the ‘retire early’ element of FIRE.

Some proposed changes – in the wings for some time – are moving to centre stage, presenting some choices to consider over coming weeks and months. Having advised against them, the next step is to see how they transpire, and over what timeframe, and then to make my response to them.

Change is inevitable. As I look out on the prospects for the next 2-3 months, I am acutely conscious that a future self, looking back on any changes that do occur, might well conclude that all was ultimately for the best, and that the unsought for changes were themselves a blessing in disguise. In passing, this reminds one of Winston Churchill’s riposte to his wife, after she observed the same about an election defeat: ‘At the moment, it seems quite effectively disguised’.

What has been interesting to observe is the conscious adjustment, and self-reminding it has taken that in the various scenarios that could play out, I have a backstop, an alternative to a negotiated outcome, which in many ways may turn out to be superior to my current status quo. Part of this difficulty has been I think the need to overcome the habit of mind to be as useful to, and as conscious of, my organisation’s best interests as I can be. This has not been a blind or selfless choice, part of it is bound up in my own early role in its creation and growth – a sense of responsibility, legacy, and to some degree ownership.

Now, however, I must make conscious and clear choices about what is in my interests in a situation where this could differ from those of the organisation, after around 20 years of this not being such an evident or pressing trade-off. Interesting tactical issues arise, as well, about exactly what to reveal when about one’s own plans and capacity to leave rather than stay and endure organisational changes one has advised against.

Through the month this has resulted in some interesting and stressful conversations with upper management. What is evident, however, is that the portfolio and its income potential provide a key empowering force in my own decision-making. It has given me the platform to set my views out honestly, without a need to consider quite as closely how this might affect my career development and opportunities in 2, 5 or 10 years.

I have probably not yet fully explored its potential for leverage in achieving what I prefer in this particular situation, and I will need to think carefully about all possible outcomes before I do so. This is because others are in the same situation as myself – once I act, they can respond, and a quite probable outcome is that the change occurs anyway in a way I find to be unsatisfactory.

As might be imagined, these events have only increased the sense of a phase of ‘letting go’ that was noted last month. A kind of growing distance between my own sense of self, and the current work role I play. This has been a much longer term trend, however. In a sense, the seeds of that feeling were the very cause of my setting out to pursue financial independence.

It was from this intuition that my corporate, work identity was not sufficiently interesting, or complete enough to fully emcompass my overall identity that I would sit in a hotel room, 25 years ago, hungrily reading books on investment or financial independence, rather than lose myself in other pursuits or additional career ‘busy work’.

Now that phase of maintenance of that dualistic identity may be drawing to a close. Goethe’s observation is a welcome reminder that this next phase, of consciously choosing to act in accordance with one’s thinking, where high stakes are involved, is difficult.

What will ultimately make it easier, however, is that a quarter century of practice of acting in according with my thoughts – e.g. regular investing through time, and deliberately living below my means – have provided a uniquely privileged position of safety from which to act in this particular domain.

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.