Monthly Portfolio Update – January 2021

Posted on February 1, 2021March 24, 2022 by The FI Explorer

The most difficult thing is the decision to act, the rest is merely tenacity.
Amelia Earhart

This is my fiftieth 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	$775,158
Vanguard Lifestrategy Growth Fund	$43,025
Vanguard Lifestrategy Balanced Fund	$79,641
Vanguard Diversified Bonds Fund	$107,429
Vanguard Australian Shares ETF (VAS)	$269,445
Vanguard International Shares ETF (VGS)	$117,712
Betashares Australia 200 ETF (A200)	$257,703
Telstra shares (TLS)	$1,662
Insurance Australia Group shares (IAG)	$6,144
NIB Holdings shares (NHF)	$6,624
Gold ETF (GOLD.ASX)	$109,475
Secured physical gold	$17,648
Plenti (P2P lending)	$5,480
Bitcoin	$494,160
Raiz app (Aggressive portfolio)	$19,508
Spaceship Voyager app (Index portfolio)	$3,106
BrickX (P2P rental real estate)	$4,447
Total portfolio value	$2,318,367 (+$52,337)

Asset allocation

Australian shares	37.4%
Global shares	20.9%
Emerging market shares	1.8%
International small companies	2.3%
Total international shares	25.0%
Total shares	62.4% (-12.6%)
Total property securities	0.2% (+0.2%)
Australian bonds	3.4%
International bonds	7.2%
Total bonds	10.5% (-4.5%)
Gold	5.5%
Bitcoin	21.3%
Gold and alternatives	26.8% (+16.8%)

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

Comments

This month the portfolio has increased by over $52,000, extending the strongest period of growth since this record started.

This has contributed to an expansion in the overall portfolio of over 25 per cent since the beginning of October last year. In this month alone the portfolio grew around 2.3 per cent.

Increases in the price of Bitcoin have provided the key motive force for the portfolio both this month and since October. Equities have made a smaller contribution since October, but the value of equity holdings actually fell slightly this month.

Part of this is related to the reduction in value arising from the payout of substantial distributions earlier this month, which will be averaged back into the portfolio over the next six months. The value of gold and fixed interest holdings have also marginally declined.

Stepping back, the result of this is the strongest consecutive four month performance of the portfolio on record, based quite narrowly on the fortunes of just two of its components, equities and Bitcoin.

Dead Reckoning – Setting a New Portfolio Goal and Safe Withdrawal Rate

Posted on January 7, 2021January 8, 2021 by The FI Explorer

To unpath’d waters, undream’d shores
Shakespeare A Winters Tale, Act 4, Scene 4

This exploration began four 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 enabling bringing forward the achievement of this initial goal.

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

This post explains the findings from my annual review, details my updated portfolio goal and assumptions, and discusses how I will approach my financial independence journey through 2021 and beyond.

The aim 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. The process also enables the updating of plans and assumptions for changes in circumstances, thinking, as well as data and evidence.

Ports of call and the future of the voyage

In the middle of December 2020 I passed the single portfolio objective I set myself in early 2020, six months earlier than targeted.

Standing to Port – Year in Review and Monthly Portfolio Update – December 2020

Posted on January 1, 2021March 24, 2022 by The FI Explorer

In order to arrive at what you do not know
You must go by a way which is the way of ignorance.
T. S. Eliot, Four Quartets – East Coker

Year in Review

The year past has been extraordinary in so many ways, entirely separate from the progress to the goal of financial independence.

Part of the structure of the year has been seeing elements of this new reality bleed into markets and economic developments, affecting the portfolio in profound ways.

At the the broadest level, the year saw the passing of my portfolio objective, in a rapid unexpected way in December. In fact, as can be seen below, this year saw the crossing of the last two outstanding portfolio measures.

Progress against FI measures through 2020

Measure	Portfolio	All Assets
Portfolio objective – $2,180,000 (or $87,000 pa)	82%→104%	112%→136%
Credit card purchases – $71,000 pa	100%→127%	136%→166%
Total expenses – $89,000 pa	80%→102%	109%→133%

On an ‘All Assets’ basis – taking into account superannuation assets – the year saw further progress, to be well above the minimum levels required to sustain the portfolio income objective.

Course of the voyage

The progress of the year was steeped in volatility. This year saw the largest ever fall in the value of the portfolio, and also two of the largest ever monthly gains.

This volatility is clearly evidenced in the variations in the total end of month portfolio values in the chart below.

Overall the portfolio increased by over $500,000 through the full year. This is the largest rise in the value of the portfolio over a single year on record.

Quite simply, it has moved the portfolio to a different magnitude and scale of operation. The chart below of the overall value of the portfolio on a calendar year basis illustrates this alteration starkly.

It cannot be escaped that the largest single contributor to the increase over this year was a surge in the price of Bitcoin, leading to over $300,000 of the gains.

Equity markets, however, also pushed forward in the second half of the year, and the equity portfolio finished around $175,000 higher than the beginning of the year. The gold component of the portfolio also ended the year higher.

As the set out in the In Way of Harbour post two weeks ago, combined this progress resulted in the passing of the portfolio objective in mid-December.

Monthly Portfolio Update – November 2020

Posted on December 1, 2020March 24, 2022 by The FI Explorer

Footfalls echo in the memory
Down the passage which we did not take
Towards the door we never opened
T. S. Eliot, Four Quartets – Burnt Norton

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

Portfolio goal

My objective is to reach a portfolio of $2 180 000 by 1 July 2021. This would produce a real annual income of about $87 000 (in 2020 dollars).

This portfolio objective is based on an expected average real return of 3.99 per cent, or a nominal return of 6.49 per cent.

Portfolio summary

Vanguard Lifestrategy High Growth Fund	$787,739
Vanguard Lifestrategy Growth Fund	$44,262
Vanguard Lifestrategy Balanced Fund	$82,197
Vanguard Diversified Bonds Fund	$109,841
Vanguard Australian Shares ETF (VAS)	$262,908
Vanguard International Shares ETF (VGS)	$88,620
Betashares Australia 200 ETF (A200)	$255,235
Telstra shares (TLS)	$1,636
Insurance Australia Group shares (IAG)	$6,525
NIB Holdings shares (NHF)	$6,168
Gold ETF (GOLD.ASX)	$108,902
Secured physical gold	$17,569
Ratesetter (P2P lending)	$6,712
Bitcoin	$281,180
Raiz app (Aggressive portfolio)	$18,793
Spaceship Voyager app (Index portfolio)	$3,061
BrickX (P2P rental real estate)	$4,454
Total portfolio value	$2,085,802 (+$186,847)

Asset allocation

Australian shares	41.0%
Global shares	22.4%
Emerging market shares	2.1%
International small companies	2.7%
Total international shares	27.2%
Total shares	68.2% (-6.8%)
Total property securities	0.2% (+0.2%)
Australian bonds	3.9%
International bonds	8.2%
Total bonds	12.0% (-3.0%)
Gold	6.1%
Bitcoin	13.5%
Gold and alternatives	19.5% (+9.5%)

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

Comments

This month has seen the largest ever monthly increase in total portfolio in this four year record.

The overall portfolio has increased by over $186,000, pushing past the previous portfolio values achieved at the end of January. As a result, the portfolio has grown 9.8 per cent in total from the previous month, to reach over two million dollars for the first time.

The major contributor to the overall growth in the portfolio has been rapid rises in equity markets in the lead up to, and following, the US Presidential election.

There has also been a 29 per cent increase in the price of Bitcoin which has attracted further significant media and commentary.

The fixed interest components of the portfolio have remained stable, while the value of gold holdings has fallen around 10 per cent as other markets moved upwards.