Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning. Winston Churchill (1942)

This is my eleventh portfolio update. I complete this update 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 – $675 810

Vanguard Lifestrategy Growth – $42 490

Vanguard Lifestrategy Balanced – $76 253

Vanguard Diversified Bonds – $102 734

Vanguard ETF Australia Shares (VAS) – $50 768

Telstra shares – $4 699

Insurance Australia Group shares – $16 499

NIB Holdings – $7 572

Gold ETF (GOLD.ASX) – $76 360

Secured physical gold – $7 881

Ratesetter (P2P lending) – $58 025

Bitcoin – $85 113

Acorns app (Aggressive portfolio) – $7 704

BrickX (P2P rental real estate) – $4 402

Total value: $1 216 310 (+$75 648)

Asset allocation

Australian shares – 32%

International shares – 19%

Emerging markets shares – 3%

International small companies – 3%

Total shares – 56.5% (4.5% under)

Australian property securities – 3%

International property securities 3%

Total property – 6.6%

Australian bonds – 11%

International bonds – 10%

Total bonds – 21.6% (2.6% over)

Cash – 1.5%

Gold – 6.9%

Bitcoin – 7.0%

Gold and alternatives – 13.9% (3.9% over)

Comments

This month the portfolio increased by over $75 000. This increase reflects three primary factors. First, a further increment of investment in ETFs, second, an expansion in the valuation of Bitcoins, and third, regular ongoing investments in my Vanguard funds.

This results in my crossing the important threshold of my portfolio value being over 80% of the way to my target goal, compared to 66% when I started this blog, and around 50% in 2015. Progress has been much faster that I had any reason to expect at the time of starting recording my explorations. Preparing my tax return has provided an alternative even more objective marker of progress. Based on my 2016-17 tax return, investment income (distributions and realised capital gains) was $40 076, or around 70% of my final target.

In late October I put the last increment of my July distributions into the Vanguard Australian shares ETF (VAS), adding to that some of my recent distributions from shares and Vanguard’s diversified bond funds. Received my first set of VAS distributions as well, which felt like a minor landmark occasion given it was my first ETF purchase. Another first is that I have started slowly withdrawing funds from the Ratesetter P2P account. This is not so because I fear how it will perform over coming years, as to seek to quicken my return to my preferred asset allocation between equities and fixed interest.

US markets continuing to hit record highs provided a strong discouragement to expanding my ETF exposure to international shares. I have continued to think about the issue of international diversification in equities, because as a proportion of the total portfolio, they have reached the lowest value since 2007. Sometimes, this doesn’t seem wise, at others, like after watching this type of prediction, it is more of a comfort.

Bitcoin continues to increase in value, and introduce volatility into my portfolio. There is news of a second ‘forking’ event in the offing, which may result in another small windfall gain from conversion of a new digital currency back into Bitcoin. The extra non-correlated diversification this holding brings is welcome, and so far it represents a relatively low proportion of my overall portfolio, so I am happy to leave it to its sharp up and (just as possible) downward movements.

Progress

Progress to goal: 82.4% (+12.5% ahead of target) or $259 690 further to reach goal.

Summary

The progress over the past few months has reinforced that I am, at least while markets hold up, entering a different phase. That of drawing towards the end of a defined plan, and being closer to the end of the journey than the beginning.

With some holidays coming up, part of what I will be doing is reflecting on what coming to the ‘end’ of the plan means for my day to day life, including whether the target is sufficiently ‘safe’ for current market conditions, and how my current career and its trajectory could feasibly look over the next 2-3 years with my FI target behind me.

As others have commented the ‘one more year’ syndrome is a real concern, but, then, there is definite value in a feeling of personal assurance and a ‘margin of safety’.

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