Portfolio Analysis

These posts contain analysis of investment and portfolio issues on the journey to FI

Portfolio Income Update – Half Year to December 31, 2024

Posted on by The FI Explorer

Still round the corner there may wait

A new road or a secret gate,

And though we pass them by today,

Tomorrow we may come this way

And take the hidden paths that run

Towards the Moon or to the Sun.

J.R.R Tolkien, ‘Walking Song’, The Lord of the Rings

Twice a year I prepare a summary of total income from my financial independence portfolio. This is my seventeenth portfolio income update since starting this record. As part of the transparency and accountability of this journey, I regularly report this income.

As discussed in my recent post, my primary goal is to maintain a portfolio of at least $3,000,000 which is capable of providing a passive income of around $103,500 (in 2025 dollars).

Portfolio income summary

InvestmentAmount
Vanguard Lifestrategy High Growth (retail fund)$11,622
Vanguard Lifestrategy Growth (retail fund)$497
Vanguard Lifestrategy Balanced (retail fund)$792
Vanguard Diversified Bonds (retail fund)$279
Vanguard Australian Shares ETF (VAS)$10,919
Vanguard International Shares ETF (VGS)$5,797
Betashares Australia 200 ETF (A200)$6,146
Telstra shares (TLS.ASX)$48
Insurance Australia Group shares (IAG.ASX)$215
NIB Holding shares (NHF.ASX)$168
Plenti/Ratesetter (P2P lending)$3,052
Raiz app (Aggressive portfolio)$324
Spaceship Voyager app (Index portfolio)$0
BrickX (P2P rental real estate)$13
Total Portfolio Income – Half-Year to December 31, 2024$39,872

The chart below sets out the distributions received on a half-yearly basis from the financial independence portfolio over the past eight years.

Continue reading “Portfolio Income Update – Half Year to December 31, 2024”

Portfolio Income Update – Half Year to December 31, 2022

Posted on by The FI Explorer

Things do not change; we change.

Henry David Thoreau

Twice a year I prepare a summary of total income from my financial independence portfolio. This is my thirteenth portfolio income update since starting this record. As part of the transparency and accountability of this journey, I regularly report this income.

My primary goal is to maintain a portfolio of at least $2,750,000 which is capable of providing a passive income of around $94,800 (in 2023 dollars).

Portfolio income summary

InvestmentAmount
Vanguard Lifestrategy High Growth (retail fund)$9,782
Vanguard Lifestrategy Growth (retail fund)$438
Vanguard Lifestrategy Balanced (retail fund)$551
Vanguard Diversified Bonds (retail fund)$98
Vanguard Australian Shares ETF (VAS)$9,059
Vanguard International Shares ETF (VGS)$2,901
Betashares Australia 200 ETF (A200)$6,890
Telstra shares (TLS.ASX)$45
Insurance Australia Group shares (IAG.ASX)$63
NIB Holding shares (NHF.ASX)$132
Plenti/Ratesetter (P2P lending)$0
Raiz app (Aggressive portfolio)$192
Spaceship Voyager app (Index portfolio)$0
BrickX (P2P rental real estate)$20
Total Portfolio Income – Half-Year to December 31, 2022$30,171

The chart below sets out the income or distributions received on a half-yearly basis from the financial independence portfolio over the past seven years.

Chart - Half-Yearly Portfolio Income
Continue reading “Portfolio Income Update – Half Year to December 31, 2022”

Constant Bearing – Reviewing the Portfolio Goal and Investment Plan

Posted on by The FI Explorer

Be what you were before;

Or weigh the great occasion, and be more.

Homer, Iliad, Bk.1.155

This recorded journey towards financial independence started six years ago, with an initial objective of building a passive income of $58,000 per annum by July 2021.

Since that time, goals have evolved and changed, with the most recent target actually being temporarily achieved through March 2021 to May 2022.

Each year in early January I spend time reviewing my investment goals and how I plan to reach them.

This longer post talks about reflections arising as part of this annual review, updates my portfolio goal and assumptions, and discusses how I will approach my financial independence journey through 2023 and beyond.

The aim, as always, is to have a clear written record of the objectives, approaches and reasoning underlying the plan, to serve as a reference point through the year to come. The process also enables the updating of plans and assumptions for changes in circumstances, thinking, as well as available data and evidence.

A reversal of course on the voyage to financial independence

For the past seven months, the total portfolio has been below the overall portfolio objective.

The previous reaching of the target was therefore a fleeting state of affairs, a function of temporarily surging Bitcoin prices.

Excluding Bitcoin, the portfolio only ever reached around 86 per cent of its target of $2,620,000. At the close of last year the equity portfolio sat at about 88 per cent of its intended final target amount of around $2,100,000.

The target for the year just past was based around a benchmark of the portfolio producing a real annual income of $91,600 in 2022 dollars. The level was chosen because it reflected an amount equal to Australian adult full-time ordinary earnings, and was close to my (then) estimated spending of around $84,000 per annum.

The target has been primarily a short-hand way to measure progress towards the goal of financial independence. It was never designed to act as a crude countdown clock or trigger to immediate early retirement once that dollar value was exceeded.

The target, for example, was notionally exceeded in the first five months of last year, but this did not result in retirement – and for the better as markets turned out, and in terms of reducing sequence risks.

A key benefit of the process of setting a specific target has been to help define what type of post-financial independence is actually envisaged and sought.

Continue reading “Constant Bearing – Reviewing the Portfolio Goal and Investment Plan”

Year in Review and Monthly Portfolio Update – December 2022

Posted on by The FI Explorer

I was waiting for something extraordinary to happen, but as the years wasted on nothing ever did unless I caused it.

Charles Bukowski

Year in Review

This year has represented a significant pause, or lacunae, in the journey to financial independence.

This is not unexpected, indeed many prior entries have meditated on exactly this potential – for a significant delay or reversal of progress.

The engine of this significant reversal is market volatility, combined with the growing size of the portfolio. This means the direction and pace of travel is less within one’s choosing than at any other time.

At the start of this year, the portfolio goal was notionally met. The focus of this year was intended to be:

  • maintaining the overall portfolio target of $2.62 million;
  • achieving a minimum equity portfolio target of around $2.1 million; and
  • building a cash reserve of at least one year of normal expenditure.

The original focus of this year was on the latter two objectives, but in fact, none of the objectives have survived contact with markets this year.

For the past half a year, the portfolio has slipped significantly below the target. The minimum equity portfolio has not been reached. Further investments to achieve the first two objectives has meant no meaningful progress on building a cash reserve.

In turn, this means that the three essential pre-conditions which were set for any movement from my current work arrangements are not within immediate reach.

The concerted negative movement against the financial independence benchmarks through this year is summarised below.

Progress against FI measures through 2022

MeasurePortfolioAll Assets
Portfolio objective – $2,620,000 (or $91,600 pa)113%→93%144%→123%
Total average expenses (2013-present) – $84,700 pa122%→101%156%→133%
Target equity holding in portfolio – $2,100,00088%→87%N/A

2021 was an exceptional year of growth in the portfolio. This year was the reverse of this, an unprecendented period of major contraction in the portfolio.

The portfolio was reduced in value by around $500,000 this year, or around 17 per cent of its size on 1 January 2022. This is both the largest dollar loss – and proportional loss of portfolio value – in a single calendar year.

The only other year of loss over a calendar year period was in 2018, where around a 3 per cent (or around $40,000) loss was suffered.

Chart - Year in Review - Portfolio Level 2007-22

Sailing against the wind: the course of the voyage

This year has felt like sailing against a strong wind. Progress has not been apparent, and temporary periods of advances have invariably been succeeded by backward pushes.

Most starkly, despite regular investments and reinvestments of earnings, the overall equity portfolio remains below where it started the year, despite a modest recovery through the second part of this year.

Highlighting this point, 2022 has been the only calendar year in which there has been a overall reduction in value of equities on the journey to date.

Continue reading “Year in Review and Monthly Portfolio Update – December 2022”