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.

Monthly Portfolio Update – October 2020

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

Sometimes, I feel the past and the future pressing so hard on either side that there’s no room for the present at all.
Evelyn Waugh, Brideshead Revisited

This is my forty-seventh 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	$728,112
Vanguard Lifestrategy Growth Fund	$41,606
Vanguard Lifestrategy Balanced Fund	$78,564
Vanguard Diversified Bonds Fund	$109,495
Vanguard Australian Shares ETF (VAS)	$231,548
Vanguard International Shares ETF (VGS)	$75,298
Betashares Australia 200 ETF (A200)	$231,199
Telstra shares (TLS)	$1,428
Insurance Australia Group shares (IAG)	$6,043
NIB Holdings shares (NHF)	$4,992
Gold ETF (GOLD.ASX)	$121,009
Secured physical gold	$19,482
Ratesetter (P2P lending)	$7,363
Bitcoin	$218,040
Raiz app (Aggressive portfolio)	$17,488
Spaceship Voyager app (Index portfolio)	$2,841
BrickX (P2P rental real estate)	$4,447
Total portfolio value	$1,898,955 (+$73,218)

Asset allocation

Australian shares	40.8%
Global shares	22.4%
Emerging market shares	2.1%
International small companies	2.7%
Total international shares	27.3%
Total shares	68.1% (-6.9%)
Total property securities	0.2% (+0.2%)
Australian bonds	4.1%
International bonds	8.6%
Total bonds	12.8% (-2.2%)
Gold	7.4%
Bitcoin	11.5%
Gold and alternatives	18.9% (+8.9%)

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

Comments

This month the portfolio expanded by around $73,000, continuing the strong overall pattern of recovery since March. This has resulted in portfolio growth of 4 per cent, which has taken the value of the portfolio to a new monthly high.

The portfolio was affected by small price falls across global shares, a modest increase in Australian share values, with limited movement in gold and bond holdings.

This means that the majority of gains in the portfolio have been from an appreciation in the price of Bitcoin, which in fact made up more than 90 per cent of the total monthly gains. This appears to be based on some early steps by Paypal to increase use of Bitcoin, and some recent corporate decisions by a US technology firm to seek to employ it as a corporate treasury store of value.

Outward Bound – Trends in Taxable Investment Income

Posted on October 18, 2020October 18, 2020 by The FI Explorer

But who wants to be foretold the weather? It is bad enough when it comes, without our having the misery of knowing about it beforehand.
_{Jerome K Jerome, Three Men in a Boat (1889)}

Tracking taxable investment income produced by the financial independence portfolio provides a useful external benchmark of progress on the journey.

So far, reviewing past dividends and distributions has been the primary way of tracking progress in portfolio income towards the financial independence goal.

Yet having this additional externally validated estimate of what my taxable income would be if I stopped working tomorrow is valuable. It helps illustrate the underlying income generating potential of the portfolio and also allows for broader trends over time to be observed.

Taxable investment income remains stable for now

Taxable investment income for financial year 2019-20 totalled around $42,500. This is a level which is close to the record of the past four years.

Figure 1 below sets out the fuller record over the past decade. It is based on the total of taxable income from the tax assessment categories of partnerships and trusts, foreign source income, franking credits and ‘other income’. That is, it takes in the totals of Items 13, 20 and 24 on the 2020 tax return, whilst not including capital gains.

Monthly Portfolio Update – September 2020

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

When the rest of the world is mad we must imitate them in some measure.
John Martin, 1720

This is my forty-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 $2 180 000 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	$724,599
Vanguard Lifestrategy Growth Fund	$41,459
Vanguard Lifestrategy Balanced Fund	$78,259
Vanguard Diversified Bonds Fund	$111,658
Vanguard Australian Shares ETF (VAS)	$224,190
Vanguard International Shares ETF (VGS)	$63,441
Betashares Australia 200 ETF (A200)	$228,870
Telstra shares (TLS)	$1,481
Insurance Australia Group shares (IAG)	$5,549
NIB Holdings shares (NHF)	$4,896
Gold ETF (GOLD.ASX)	$120,877
Secured physical gold	$19,452
Ratesetter (P2P lending)	$8,326
Bitcoin	$168,470
Raiz app (Aggressive portfolio)	$16,979
Spaceship Voyager app (Index portfolio)	$2,772
BrickX (P2P rental real estate)	$4,459
Total portfolio value	$1,825,737 (-$23,159)

Asset allocation

Australian shares	41.7%
Global shares	22.6%
Emerging market shares	2.2%
International small companies	2.8%
Total international shares	27.6%
Total shares	69.4% (-5.6%)
Total property securities	0.2% (+0.2%)
Australian bonds	4.4%
International bonds	9.0%
Total bonds	13.4% (-1.6%)
Gold	7.7%
Bitcoin	9.2%
Gold and alternatives	16.9% (+6.9%)

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

Comments

The portfolio has suffered a modest decline over the past month and fallen in value by $23,000. This has broken a five month period of overall recovery and growth, with the portfolio experiencing a contraction of around 1.3 per cent.

These falls have occurred simultaneously across major components of the portfolio, including Australian and international shares, gold and Bitcoin. This is a relatively rare occurrence.