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Investment Update

Reflections on our investment portfolio

Chris Tham Chris Tham Wednesday, 5 October 2022 at 12:00:00 pm AEDT 2 min read

Finally did our finances - a task I have been dreading. Although we retired in 2020, last financial year was the first year we had to survive purely on investment income.

As you may remember, this time last year I was in a bit of a panic. Many companies in our portfolio had slashed their dividends due to the COVID-19 pandemic, and at one stage it seemed we may not have enough income to live on.

I brushed up my Python skills, and ran a number of portfolio optimisation algorithms in an attempt to rebalance our portfolio to generate more income.

I was mainly focused on ASX quality stocks that paid a steady stream of fully franked dividends, or high income ETFs. Some people criticised my approach on social media. Apparently I should be investing in globally diversified funds, or cryptocurrency, and I am missing out on the massive growth in tech stocks. Investing in Australian stocks was seen as old fashioned and parochial.

Of course, I ignored them. It just goes to show - never trust investment advice from social media, Youtube videos or podcasts. I couldn’t have predicted Russia invading Ukraine, but it was obvious tech stocks were overvalued and the era of cheap capital was ending.

So it turned out our rebalanced portfolio did rather well. I was targeting 5% dividend return, in the spend we achieved around 7%. Our total return was over 20% last financial year. Of course, global markets have tanked this financial year, but even on a rolling 12 month basis we are still tracking slightly positive return, which is amazing given the price decline in most asset classes.

Going forward, we are entering into a very difficult investment climate. Inflation and high interest rates are here to stay. I am still pretty happy with our current portfolio composition, but eventually there will be good buying opportunities, just like post GFC when our portfolio doubled.

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