Twice a year I prepare a summary of total income from my financial independence portfolio. This is my sixteenth 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 $2,870,000. This should be capable of providing a passive income of around $99,000 (in 2024 dollars).
A secondary focus is maintaining a minimum equity target of $2,300,000.
Portfolio income summary
Investment
Amount
Vanguard Lifestrategy High Growth (retail fund)
$20,096
Vanguard Lifestrategy Growth (retail fund)
$907
Vanguard Lifestrategy Balanced (retail fund)
$1544
Vanguard Diversified Bonds (retail fund)
$199
Vanguard Australian Shares ETF (VAS)
$8,149
Vanguard International Shares ETF (VGS)
$18,386
Betashares Australia 200 ETF (A200)
$4,622
Telstra shares (TLS.ASX)
$48
Insurance Australia Group shares (IAG.ASX)
$127
NIB Holding shares (NHF.ASX)
$180
Raiz app (Aggressive portfolio)
$316
Spaceship Voyager app (Index portfolio)
$0
BrickX (P2P rental real estate)
$16
Total Portfolio Income – Half-Year to June 30, 2023
$54,993
The chart below sets out the income or distributions received on a half-yearly basis from the financial independence portfolio over the past eight years.
And therefore I have sailed the seas and come To the holy city of Byzantium
W. B. Yeats, Sailing to Byzantium
This is my ninety-first 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).
A secondary focus will be achieving the minimum equity target of $2,300,000.
Portfolio summary
Vanguard Lifestrategy High Growth Fund
$852,923
Vanguard Lifestrategy Growth Fund
$43,791
Vanguard Lifestrategy Balanced Fund
$77,301
Vanguard Diversified Bonds Fund
$89,201
Vanguard Australian Shares ETF (VAS)
$524,203
Vanguard International Shares ETF (VGS)
$730,180
Betashares Australia 200 ETF (A200)
$303,515
Telstra shares (TLS)
$1,929
Insurance Australia Group shares (IAG)
$9,046
NIB Holdings shares (NHF)
$8,820
Gold ETF (GOLD.ASX)
$157,415
Secured physical gold
$24,605
Bitcoin
$1,009,797
Raiz app (Aggressive portfolio)
$23,565
Spaceship Voyager app (Index portfolio)
$4,011
BrickX (P2P rental real estate)
$4,552
Plenti Capital Notes Market Loan
$34,000
Total portfolio value
$3,898,854 (-$64,355)
Asset allocation
Australian shares
30.9%
Global shares
29.0%
Emerging market shares
1.2%
International small companies
1.5%
Total international shares
31.7%
Total shares
62.6.%(-17.4%)
Total property securities
0.1%(+0.1%)
Australian bonds
2.7%
International bonds
4.1%
Total bonds
6.7%(+1.7%)
Gold
4.7%
Bitcoin
25.9%
Gold and alternatives
30.6% (+15.6%)
Presented visually, the pie chart below is a high-level view of the current asset allocation of the portfolio.
Comments
This month an important series of benchmarks were narrowly passed, despite a fall in the overall portfolio headline of over $64,000.
The portfolio has now passed its target level, when only traditional financial assets are counted.
Previously – taking into account the substantial current value of Bitcoin holdings – the overall target was easily met, but from this month, even excluding the entire value of these volatile holdings, the target has been met.
In other words, assessed as a more conventional portfolio, the journey of asset accumulation has this month reached its notional end point.
It did this through some small movements in Australian shares, and through a slightly larger growth in the value of international equities (around 2.4 per cent).
Gold continued to fall slightly this month, and there was significant fall in the value of Bitcoin holdings – of around 12 per cent. Bonds produced a capital gain of around 1 per cent.
This month I invested some surplus funds, which 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.
It deserves noting that yields of this kind are not offered without an appreciable risk to 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.
But the sea, the sea in the darkness calls; The little waves, with their soft, white hands, Efface the footprints in the sands, And the tide rises, the tide falls.
Longfellow, The Tides Rises, the Tide Falls
This is my ninetieth 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).
A secondary focus will be achieving the minimum equity target of $2,300,000.
Portfolio summary
Vanguard Lifestrategy High Growth Fund
$836,087
Vanguard Lifestrategy Growth Fund
$43,023
Vanguard Lifestrategy Balanced Fund
$76,120
Vanguard Diversified Bonds Fund
$88,343
Vanguard Australian Shares ETF (VAS)
$519,490
Vanguard International Shares ETF (VGS)
$705,525
Betashares Australia 200 ETF (A200)
$300,417
Telstra shares (TLS)
$1,849
Insurance Australia Group shares (IAG)
$7,855
NIB Holdings shares (NHF)
$8,928
Gold ETF (GOLD.ASX)
$158,241
Secured physical gold
$24,981
Bitcoin
$1,143,698
Raiz app (Aggressive portfolio)
$23,177
Spaceship Voyager app (Index portfolio)
$3,926
BrickX (P2P rental real estate)
$4,549
Plenti Capital Notes Market Loan
$17,000
Total portfolio value
$3,963,209 (+$90,350)
Asset allocation
Australian shares
30.0%
Global shares
27.7%
Emerging market shares
1.2%
International small companies
1.5%
Total international shares
30.3%
Total shares
60.3%(-19.7%)
Total property securities
0.1%(+0.1%)
Australian bonds
2.2%
International bonds
3.9%
Total bonds
6.1%(+1.1%)
Gold
4.6%
Bitcoin
28.9%
Gold and alternatives
33.5% (+18.5%)
Presented visually, the pie chart below is a high-level view of the current asset allocation of the portfolio.
Comments
This month delivered a small lift in the overall value of the financial independence portfolio, with gains of around $90,000 or 2.3 per cent.
This partially reverses the losses of last month, leaving the portfolio slightly below the value reached at the end of March. The portfolio continues to be strongly ahead – by around $1 million – of its position twelve months ago.
Australian and international shares performed modestly well over the month, growing in value around 1.2 per cent.
Gold fell slightly over this month, following a strong previous performance. In fact, over the past 5 years, gold has been the best performing of the traditional asset classes in the portfolio.
Bitcoin grew in value by around 6.5 per cent, while bond holdings also mildly recovered, returning around 0.4 per cent.
For a brief period at the beginning of the month, the Australian component of the equity portfolio fell below its target level (of $1.15 million). In response, new purchases of the Vanguard ETF (VAS) were made.
The portfolio remains above its formal headline target by some margin. The financial portfolio, excluding Bitcoin, remains around $50,000 below the final target level of $2.87 million.
Consider the subtleness of the sea; how its most dreaded creatures glide under water, unapparent for the most part, and treacherously hidden beneath the loveliest tints of azure.
Herman Melville, Moby Dick
This is my eighty-ninth 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).
A secondary focus will be achieving the minimum equity target of $2,300,000.
Portfolio summary
Vanguard Lifestrategy High Growth Fund
$829,474
Vanguard Lifestrategy Growth Fund
$42,725
Vanguard Lifestrategy Balanced Fund
$75,673
Vanguard Diversified Bonds Fund
$88,028
Vanguard Australian Shares ETF (VAS)
$505,498
Vanguard International Shares ETF (VGS)
$701,541
Betashares Australia 200 ETF (A200)
$297,692
Telstra shares (TLS)
$1,956
Insurance Australia Group shares (IAG)
$8,159
NIB Holdings shares (NHF)
$8,940
Gold ETF (GOLD.ASX)
$159,700
Secured physical gold
$25,127
Bitcoin
$1,079,961
Raiz app (Aggressive portfolio)
$22,918
Spaceship Voyager app (Index portfolio)
$3,920
BrickX (P2P rental real estate)
$4,547
Plenti Capital Notes Market Loan
$17,000
Total portfolio value
$3,872,859 (-$176,669)
Asset allocation
Australian shares
30.2%
Global shares
28.2%
Emerging market shares
1.2%
International small companies
1.5%
Total international shares
30.8%
Total shares
61.0%(-19.0%)
Total property securities
0.1%(+0.1%)
Australian bonds
2.2%
International bonds
4.0%
Total bonds
6.2%(+1.2%)
Gold
4.8%
Bitcoin
27.9%
Gold and alternatives
32.7% (+17.7%)
Presented visually, the pie chart below is a high-level view of the current asset allocation of the portfolio.
Comments
This month has seen a signficant fall in the value of the portfolio, with losses of around $177,000 – or around 4.4 per cent.
This follows a strong period of growth of the last six months – and returns the portfolio to just above the level it was at around the end of February.
The portfolio losses this month were broad-based.
Bitcoin corrected following the ‘halvening’ event, down around 9.5 per cent, constituting the majority of the losses. From here, the halvening will act to restrict the growth of newly mined Bitcoin relative to the existing stock to below the historical growth in the supply of gold.
Australian shares also fell around 3.8 per cent, and now sit just above the sub-target for domestic equities – of $1.15 million. Some of this fall can be attributed to the paying out of distributions, but a significant element reflects less confidence on the path of future interest rate reductions.
Global equities also fell with prolonged concern around the pace of inflation reductions across the United States. This led to a fall in the value of international equties of around 3.0 per cent.
Towards the end of this month, Japan’s currency also experienced significant rapid depreciation, in circumstances where their prevailing debt position makes raising rates to defend the currency problematic. This event has the potential to send out waves of destabilising impacts to other developed economies financial markets.
Added to this, bond holdings in the portfolio performed poorly, with losses of 1.9 per cent.
Amidst this growing instability, the gold holdings performed extremely strongly, rising nearly 6 per cent. This is likely due to a combination of factors, but interestingly historical correlations between the inverse yield of US real rates and gold prices have recently broken down, portending that the future of rates may have little to no influence on gold prices in this current phase.
A further move from the US Congress to seize Russian central bank assets held in the United States, liquidate these, and use the proceeds to fund aid to Ukraine is also likely resulting in a longer-term re-appraisal by sovereign actors of the safety of US Treasury bills and bonds as a safe asset, and a continuing reinvigoration of gold purchases by central banks.
Taken together, these moves leave the overall portfolio above its target, but still in losses for the month. The financial portfolio (completely excluding Bitcoin) sits at around $80,000 below its target level.
