Monthly Portfolio Report – February 2023

Posted on March 1, 2023February 28, 2023 by The FI Explorer

The ship that will not obey the helm will have to obey the rocks.
Publilius Syrus

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

Portfolio goal

My objective is to achieve and maintain a portfolio of at least $2,750,000 by 31 December 2024 or earlier. This should be capable of producing an annual income from total portfolio returns of about $94,800 (in 2023 dollars).

This portfolio objective is based on an assumed safe withdrawal rate of 3.45 per cent.

A secondary focus will be achieving the minimum equity target of $2,200,000.

Portfolio summary

Vanguard Lifestrategy High Growth Fund	$733,047
Vanguard Lifestrategy Growth Fund	$38,883
Vanguard Lifestrategy Balanced Fund	$70,131
Vanguard Diversified Bonds Fund	$86,372
Vanguard Australian Shares ETF (VAS)	$370,609
Vanguard International Shares ETF (VGS)	$485,700
Betashares Australia 200 ETF (A200)	$281,250
Telstra shares (TLS)	$2,217
Insurance Australia Group shares (IAG)	$5,891
NIB Holdings shares (NHF)	$9,120
Gold ETF (GOLD.ASX)	$121,597
Secured physical gold	$19,290
Bitcoin	$386,363
Raiz app (Aggressive portfolio)	$20,535
Spaceship Voyager app (Index portfolio)	$3,266
BrickX (P2P rental real estate)	$4,480
Total portfolio value	$2,638,751 (+$30,840)

Asset allocation

*Australian shares*	*37.0%*
Global shares	31.5%
Emerging market shares	1.5%
International small companies	1.9%
Total international shares	34.9%
Total shares	71.9% (-8.1%)
Total property securities	0.2% (+0.2%)
Australian bonds	2.4%
International bonds	5.5%
Total bonds	7.9% (+2.9%)
Gold	5.3%
Bitcoin	14.6%
Gold and alternatives	20.0 (+5.0%)

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

Comments

This month the portfolio grew slowly, expanding in value around $31,000 or approximately 1.2 per cent.

The growth was primarily driven by an increase in the value of international equities, and a continued rise in the price of Bitcoin.

Global equities increases in value by around $27,000, or 3.7 per cent over the month. By constrast, Bitcoin holdings increased by around 7.5 per cent. Australian equities fell slightly over the month, by around 2.6 per cent.

This has all left the overall portfolio above its target for last year.

Amidst rising yields globally, the value of bond holdings continued to fall, decreasing by 1.8 per cent. The value of the gold component of the portfolio also was reduced, falling around 1.2 per cent.

Monthly Portfolio Report – January 2023

Posted on February 1, 2023January 31, 2023 by The FI Explorer

The wave that is always turning

Right into the front of the ship

Is said to cause everyone’s heart

The most trouble
Pindar, Nemean, VI.52-56

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

Portfolio goal

This portfolio objective is based on an assumed safe withdrawal rate of 3.45 per cent.

A secondary focus will be achieving the minimum equity target of $2,200,000.

Portfolio summary

Vanguard Lifestrategy High Growth Fund	$734,301
Vanguard Lifestrategy Growth Fund	$39,255
Vanguard Lifestrategy Balanced Fund	$70,774
Vanguard Diversified Bonds Fund	$87,970
Vanguard Australian Shares ETF (VAS)	$380,543
Vanguard International Shares ETF (VGS)	$456,983
Betashares Australia 200 ETF (A200)	$288,097
Telstra shares (TLS)	$2,179
Insurance Australia Group shares (IAG)	$6,189
NIB Holdings shares (NHF)	$9,414
Gold ETF (GOLD.ASX)	$123,055
Secured physical gold	$19,529
Bitcoin	$361,020
Raiz app (Aggressive portfolio)	$20,910
Spaceship Voyager app (Index portfolio)	$3,215
BrickX (P2P rental real estate)	$4,477
Total portfolio value	$2,607,911 (+$166,421)

Asset allocation

*Australian shares*	*38.2%*
Global shares	30.8%
Emerging market shares	1.5%
International small companies	1.9%
Total international shares	34.3%
Total shares	72.4% (-7.6%)
Total property securities	0.2% (+0.2%)
Australian bonds	2.5%
International bonds	5.6%
Total bonds	8.1% (+3.1%)
Gold	5.5%
Bitcoin	13.8%
Gold and alternatives	19.3 (+4.3%)

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

Comments

The portfolio has had a significant month of growth over January – expanding by 6.8 per cent – or $166,000.

This is the largest increase since March last year, and the seventh largest monthly increase on record. It returns the portfolio to the levels last seen through the middle of last year.

Last month the portfolio goal was revised from $2.62 million to $2.75 million to reflect inflation and a slight lowering of the safe withdrawal rate. The increase in the portfolio this month exceeded that lift in the target, meaning the end goal is nearer in net terms than at the end of last year.

Just over half of the monthly growth was due to a rebound in the price of Bitcoin, which increased in value by 33 per cent since the beginning of the year.

The other substantial contribution was from an expansion in the value of Australian and global equities. These increased around 5 per cent and 1.2 per cent respectively.

Gold holdings also recorded a small increase in price (1.8 per cent), and bonds also made a minor gain – of 2.1 per cent – following previous sustained falls.

Portfolio Income Update – Half Year to December 31, 2022

Posted on January 10, 2023January 10, 2023 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

Investment	Amount
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.

Constant Bearing – Reviewing the Portfolio Goal and Investment Plan

Posted on January 5, 2023January 6, 2024 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.