If you have a garden and a library, you have everything you need.

Marcus Tullius Cicero

This is my fourth portfolio update. I aim to update this monthly to check my progress against my original goals.

Portfolio goal

My current portfolio objective is to reach a portfolio of $1 476 000 by 1 July 2021. My plan is that this should produce a real income of about $58 000. This is based on a real return of 3.92%, or a nominal return of 7.17%.

Portfolio summary

• Vanguard Lifestrategy High Growth – $608 318
• Vanguard Lifestrategy Growth  – $42 808
• Vanguard Lifestrategy Balanced – $76 407
• Vanguard Diversified Bonds – $111 730
• St Andrews ‘Top 200’ Australian shares (indexed) – $12 294
• Telstra shares – $6 211
• Insurance Australia Group shares – $15 112
• NIB Holdings – $7 104
• Gold ETF (GOLD.ASX)  – $75 087
• Secured physical gold – $4 146
• Ratesetter (P2P lending) – $55 516
• Bitcoin – $13 509
• Acorns app (Aggressive portfolio) – $4 652
• BrickX (P2P rental real estate) – $2 277

Total value: $1 035 183

Asset allocation

• Australian shares – 31%
• International shares – 20%
• Emerging markets shares – 3%
• International small companies – 3%
• Total shares – 57% (8% under)
• Australian property securities – 4%
• International property securities 3%
• Total property – 7%
• Australian bonds – 13%
• International bonds – 12%
• Total bonds – 25% (10% over)
• Cash – 1.7%
• Gold and alternatives – 9.0%

Comments

The overall portfolio is up around $21 000 this month from a combination of new investments and market movements. I remain as concerned as in past months about both equity markets and property markets. Pilots of fast jets, passenger and military, are taught about the aerodynamic concept of the ‘coffin corner’  – an extreme combination of altitude and speeds, at which the ‘stall’ speed at which an aircraft will fall out of the sky approaches the maximum functioning speed of an aircrafts wings.  Equity, and Australian property markets feel like they are creeping up on that corner.

Despite this, I continue to buy new units in Vanguard’s high growth index fund twice a month. These conditions have deterred me from expanding my BrickX holdings further, despite being impressed with the accessibility and features of the product they offer (including investor webinars, which I participated in a few weeks ago). Should the updraft continue, it brings me closer to my goals, should there be a sharp correction, I hope to feel easier about new contributions of capital.

Over the next month, these types of choices will become less theoretical, because an AMP owned  Australian equity index fund (‘Top 200’) is due to close, and return the capital to investors. There will also be some dividend income and bond fund payments. This will be the trigger for my next exploration, this time into Vanguard exchange traded funds, which I have been looking more closely at recently.

This past month has been very busy, so my main FI activities has been podcasts. I made my way through Aussie Firebug’s back catalogue of podcasts. It is amazing to hear an Australian turning out some really interesting interviews, so thank you!

Progress

Progress to goal: 70.1%

Summary

This is the first quarter which I have tracked through this blog. I am still intending to post more frequently, between monthly reviews. Increasingly, as dates in the medium term future are mentioned, I’m consciously wondering ‘what will I be doing at that time, will I have reached FI? and left work?’. Will a garden and a library suffice – as Cicero would say they should?

Progress does seem incremental and slow at this stage, but I realise this is an illusion. Annualised, my current trajectory would see my net worth increase by $200 000 this year, which seems impossible to conceive.

 

 

Why, look at me. I’ve worked my way up from nothing to a state of extreme poverty.

Groucho Marx

About two years ago, I started measuring my investment portfolio separately to my total net financial worth. The reason was to have a more stable measure to look at, in my progress towards my goal, one unaffected by the monthly flow of major house or other expenses.

The concept worked, and I noticed this past week that I sailed past an important milestone, of a $1,000,000 portfolio.  As other FI bloggers have experienced, the feeling on looking at the excel spreadsheet and joining the so-called ‘double comma’ club was a little unreal. My first thought was not large cigars, scenes from The Great Gatsby, or luxury pools. Instead, very little seemed different. I had work to do, a schedule to keep up with, and the ordinary business of life.

Part of the feeling of unreality was the knowledge of how fragile and arbitrary the measure was. A downward gust of equity markets, a slight movement in bond markets, either would be enough to push the portfolio back down under this measure. Also, the inevitable march of inflation means that the concept of one million dollar is simply not what is used to be.

What has been more noticeable over the past year is the feeling of momentum building. The feeling of being able to look up from time to time and notice the goal, once so distant and theoretical, is now plausibly within reach over the next four years.

This is my second portfolio update. I aim to update this monthly to check my progress against my aims.

Portfolio goal

My current portfolio objective is to reach a portfolio of $1 476 000 by 1 July 2021. My plan is that this should produce a real income of about $58 000. This is based on a real return of 3.92%, or a nominal return of 7.17%.

Portfolio summary

• Vanguard Lifestrategy High Growth – $573 304
• Vanguard Lifestrategy Growth  – $41 563
• Vanguard Lifestrategy Balanced – $74 829
• Vanguard Diversified Bonds – $110 759
• St Andrews ‘Top 200’ Australian shares (indexed) – $11 949
• Telstra shares – $6 665
• Insurance Australia Group shares – $14 413
• NIB Holdings – $5 532
• Gold ETF (GOLD.ASX)  – $73 254
• Secured physical gold – $3 187
• Ratesetter (P2P lending) – $54 628
• Bitcoin – $12 543
• Acorns app (Aggressive portfolio) – $3 973
• BrickX (P2P rental real estate) – $2 279

Total value: $988 678

Asset allocation

• Australian shares – 31%
• International shares – 20%
• Emerging markets shares – 3%
• International small companies – 3%
• Total shares – 57% (8% under)
• Australian property securities – 4%
• International property securities 3%
• Total property – 7%
• Australian bonds – 14%
• International bonds – 12%
• Total bonds – 26% (11% over)
• Cash – 1.8%
• Gold and alternatives – 9.0%

Comments

This month has been one where I have had less focus on my overall portfolio, with the major choices around how to allocate the dividend investments paid in early January. Overall, the portfolio has increased about $12 000, which is ahead of the projections in my investment plan.

The increases in my portfolio have mainly been from movement of some surplus funds into my Ratesetter P2P account, which has consistently offered 8-9% returns for terms of 3-5 years. This has pushed my fixed interest/bond asset allocation out further, so that it is significantly above my target level.

According to my plan I should be directing all new investment to equities, however, in the current environment of the Trump rally, Dow 20,000, I am quite cautious about this step and happy to let my share allocation be lifted by more regular dollar cost averaged investments into equities through the year. This is a reminder of how psychologically difficult it can be to stick to a plan.

Progress

Progress to goal: 67.0%

Summary

While I have been at the beach, and mostly concentrating on other things in my life the portfolio has pleasingly continued to grow. The next major objective I hope to hit is a portfolio value of $1 000 000.