Monthly Portfolio Update – August 2022

The wind sits within the shoulder of your sail

And you are stay’d for.

Shakespeare, Hamlet, Act I: Scene 3

This is my sixty-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 $2,620,000 through 2022. This should be capable of producing an annual income from total portfolio returns of about $91,600 (in 2022 dollars).

This portfolio objective is based on an assumed safe withdrawal rate of 3.5 per cent.

A secondary focus through 2022 will be achieving the minimum equity target of $2,100,000.

Portfolio summary

Vanguard Lifestrategy High Growth Fund$714,600
Vanguard Lifestrategy Growth Fund$38,340
Vanguard Lifestrategy Balanced Fund$69,879
Vanguard Diversified Bonds Fund$88,511
Vanguard Australian Shares ETF (VAS)$359,644
Vanguard International Shares ETF (VGS)$359,544
Betashares Australia 200 ETF (A200)$271,514
Telstra shares (TLS)$2,116
Insurance Australia Group shares (IAG)$5,891
NIB Holdings shares (NHF)$9,816
Gold ETF (GOLD.ASX)$112,897
Secured physical gold$17,951
Bitcoin$327,060
Raiz app (Aggressive portfolio)$19,478
Spaceship Voyager app (Index portfolio)$3,121
BrickX (P2P rental real estate)$4,632
Total portfolio value$2,404,994
(-$36,598)

Asset allocation

Australian shares39.5%
Global shares28.9%
Emerging market shares1.6%
International small companies2.1%
Total international shares32.6%
Total shares72.1% (-7.9%)
Total property securities0.2% (+0.2%)
Australian bonds2.6%
International bonds6.0%
Total bonds8.6% (+3.6%)
Gold5.4%
Bitcoin13.6%
Gold and alternatives19.0% (+4.0%)

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

Chart - Asset Allocation

Comments

This month overall losses of around $36,000 were sustained in the value of the portfolio, reducing the portfolio by around 1.5 per cent in total.

With this outcome, over a third of the increases of July were essentially lost. Over the past 12 months, the majority of months have now registered as delivering portfolio losses.

The portfolio now sits below the overall revised portfolio goal of $2.62 million at the end of the month, as it has since the end of May.

Chart - Monthly portfolio value

Losses occurred broadly across much of the portfolio through the month.

Bitcoin holdings were reduced in value by around 14 per cent, as the prospect of higher interest rates were absorbed by financial markets. These losses were principally responsible for the total fall in portfolio value.

The value of international equities also fell from some initial gains within the month, to end lower, by around 0.8 per cent. Australian shares managed to end the month around 1.0 per cent higher. Bonds also fell in value sharply, by 2.4 per cent and gold holdings fell by 0.7 per cent also.

Continue reading “Monthly Portfolio Update – August 2022”

Monthly Portfolio Update – July 2022

Tomorrow we’ll sail the wide seas again

Horace, Odes, Bk I:VII

This is my sixty-eighth 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 $2,620,000 through 2022. This should be capable of producing an annual income from total portfolio returns of about $91,600 (in 2022 dollars).

This portfolio objective is based on an assumed safe withdrawal rate of 3.5 per cent.

A secondary focus through 2022 will be achieving the minimum equity target of $2,100,000.

Portfolio summary

Vanguard Lifestrategy High Growth Fund$714,803
Vanguard Lifestrategy Growth Fund$38,546
Vanguard Lifestrategy Balanced Fund$70,603
Vanguard Diversified Bonds Fund$90,727
Vanguard Australian Shares ETF (VAS)$355,563
Vanguard International Shares ETF (VGS)$348,094
Betashares Australia 200 ETF (A200)$268,999
Telstra shares (TLS)$2,073
Insurance Australia Group shares (IAG)$5,663
NIB Holdings shares (NHF)$8,688
Gold ETF (GOLD.ASX)$113,675
Secured physical gold$18,168
Plenti (P2P lending)$6
Bitcoin$378,820
Raiz app (Aggressive portfolio)$19,389
Spaceship Voyager app (Index portfolio)$3,125
BrickX (P2P rental real estate)$4,650
Total portfolio value$2,441,592
(+100,776)

Asset allocation

Australian shares38.6%
Global shares28.1%
Emerging market shares1.6%
International small companies2.0%
Total international shares31.7%
Total shares70.2% (-9.8%)
Total property securities0.2% (+0.2%)
Australian bonds2.6%
International bonds6.0%
Total bonds8.6% (+3.6%)
Gold5.4%
Bitcoin15.5%
Gold and alternatives20.9% (+5.9%)

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

Chart - Asset Allocation

Comments

This month the portfolio grew strongly, gaining around $100,000 following the three preceding consecutive months of large losses.

A growth of this size is a relatively unusual event in the record since 2017, having only happened around ten times previously. It is similar in size to the the recovery shortly after the March 2020 coronavirus induced market uncertainty.

The portfolio has grown by around 4.3 per cent, to recover to a level first reached across early 2021. It remains, however,well below the revised portfolio goal of $2.62 million at the end of the month.

Chart - Monthly portfolio value

The majority of gains over the month were caused by a 20 per cent increase in the price of Bitcoin, off June lows. These increases represented around two-thirds of the portfolio’s movement this month.

Both Australian and international equities also increased.

Global shares increased in value by 4.7 per cent through the month, with some of this gain likely related to the impact of a falling Australian dollars on the unhedged component. Australian equities increased by around 3 per cent.

At the same time, dividends of around three per cent were paid out in the case of Australian shares, and less than one per cent in the case of international equities. As these are generally held for regular reinvestment, this can introduce an apparent downward movement in the case of distribution months such as January and July.

Bonds continued a recent pattern of correlation with equities, rising in value around 3 per cent. Gold underwent a significant price decline this month, of around 4.5 per cent.

Continue reading “Monthly Portfolio Update – July 2022”

Portfolio Income Update – Half Year to June 30, 2022

Ships and sails proper for the heavenly air should be fashioned.

Johannes Kepler, Letter to Galileo (1609)

Twice a year I prepare a summary of total income from my financial independence portfolio. This is my twelfth 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 $2,620,000 which is capable of providing a passive income of around $91,600 (in 2022 dollars).

Portfolio income summary

InvestmentAmount
Vanguard Lifestrategy High Growth (retail fund)$32,182
Vanguard Lifestrategy Growth (retail fund)$1,539
Vanguard Lifestrategy Balanced (retail fund)$1,871
Vanguard Diversified Bonds (retail fund)$187
Vanguard Australian Shares ETF (VAS)$17,129
Vanguard International Shares ETF (VGS)$3,224
Betashares Australia 200 ETF (A200)$11,230
Telstra shares (TLS.ASX)$43
Insurance Australia Group shares (IAG.ASX)$76
NIB Holding shares (NHF.ASX)$132
Plenti/Ratesetter (P2P lending)$25
Raiz app (Aggressive portfolio)$260
Spaceship Voyager app (Index portfolio)$47
BrickX (P2P rental real estate)$24
Total Portfolio Income – Half-Year to June 30, 2022$67,968

The chart below sets out the income or distributions received on a half-yearly basis from the financial independence portfolio over the past six years.

Chart - Half-Yearly Portfolio Income
Continue reading “Portfolio Income Update – Half Year to June 30, 2022”

Monthly Portfolio Update – June 2022

Begin doing what you want to do now. We are not living in eternity. We have only this moment, sparkling like a star in our hand and melting like a snowflake.

Sir Francis Bacon

This is my sixty-seventh 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 $2,620,000 through 2022. This should be capable of producing an annual income from total portfolio returns of about $91,600 (in 2022 dollars).

This portfolio objective is based on an assumed safe withdrawal rate of 3.5 per cent.

A secondary focus through 2022 will be achieving the minimum equity target of $2,100,000.

Portfolio summary

Vanguard Lifestrategy High Growth Fund$722,974
Vanguard Lifestrategy Growth Fund$38,832
Vanguard Lifestrategy Balanced Fund$70,238
Vanguard Diversified Bonds Fund$88,101
Vanguard Australian Shares ETF (VAS)$345,217
Vanguard International Shares ETF (VGS)$318,198
Betashares Australia 200 ETF (A200)$262,967
Telstra shares (TLS)$2,052
Insurance Australia Group shares (IAG)$5,524
NIB Holdings shares (NHF)$8,856
Gold ETF (GOLD.ASX)$119,070
Secured physical gold$18,961
Plenti (P2P lending)$12
Bitcoin$313,070
Raiz app (Aggressive portfolio)$18,915
Spaceship Voyager app (Index portfolio)$3,110
BrickX (P2P rental real estate)$4,719
Total portfolio value$2,340,816
(-$281,221)

Asset allocation

Australian shares39.6%
Global shares28.1%
Emerging market shares1.7%
International small companies2.1%
Total international shares32.0%
Total shares71.6% (-8.4%)
Total property securities0.2% (+0.2%)
Australian bonds2.7%
International bonds6.2%
Total bonds8.9% (+3.9%)
Gold5.9%
Bitcoin13.4%
Gold and alternatives19.3% (+4.3%)

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

Chart - Asset Allocation

Comments

This month has seen the third largest decline in the portfolio since this record began in 2017 – with a loss in total value of over $281,000.

These falls follow two previous consecutive monthly losses, marking an unprecedented period of continuous losses extending since April.

Overall, the portfolio lost 10.7 per cent of its starting value in the past month. This has drawn it back to levels last seen in early 2021.

The portfolio has consequently fallen below the revised portfolio goal of $2.62 million at the end of the month, meaning the notional option to cease paid work has evaporated quickly, and perhaps for some time.

Chart - Monthy portfolio value

Just over one-third of the losses this month occurred in the traditional assets of equities, with some additional losses in fixed interest. A little less than two-thirds of the monthly fall in value is a function of some major price falls in the Bitcoin portfolio (of around 36 per cent).

Australian equities were one of the areas of most substantial losses, with falls of around 8.5 per cent. By comparison, international equities (and particularly US equities on an unhedged basis) fell around 5.0 per cent.

Bonds continued to perform poorly, losing around 2.7 per cent, while gold holdings slightly increased in value (around 2 per cent).

Continue reading “Monthly Portfolio Update – June 2022”