$1.43 mil Daedalus Income Portfolio Update – August 2024

Here is the update for my Daedalus portfolio for August 2024. If work is not too busy, I will try to provide an update where possible.

I explain how I constructed this portfolio in Deconstructing Daedalus Income Portfolio. If you haven’t read this post, you might not understand what I wrote below.

All my personal planning notes such as income planning, insurance planning, investment & portfolio construction will be under my personal notes section of this blog. You can also find the past updates in the section.

Portfolio Change Since Last Update

The portfolio was valued at $1.442 million at the end of July and is currently at $1.436 million at the end of August.

We reported a portfolio change of -$6,000 for August 2024.

Here are the primary security holding returns for the month-to-date and year-to-date:

The returns of Dimensional funds are in SGD, with the rest in USD. I have also listed the major index ETF performance for comparison.

The big difference between July and August is the broadening out of the equities to non-Mag seven large-cap companies. The US small cap recovered from the early month plunge but is still below where we ended in July.

The portfolio lost 2.2% to the strengthening of the SGD against the USD.

Role of Portfolio

The goal of the portfolio is to provide consistent, inflation-adjusted income for my essential and basic spending. The portfolio is sized based on a conservative 2-2.5% Initial Safe Withdrawal Rate (SWR) so that the income can last even considering challenging historical sequences such as the Great Depression, external war and 30 years of high inflation averaging 5.5-6% p.a.

The timeframe that the income stream to be planned for: 60 years to Perpetual

I am currently not drawing down the portfolio.

For further reading on:

1. My notes regarding my essential spending.
2. My notes regarding my basic spending.
3. My elaboration of the Safe Withdrawal Rate: Article | YouTube Video

Based on the current portfolio of $1.436 million, the projected starting income is:

The lower the SWR, the more capital is needed, but the more resilient the income is.

Nature of the Income I Planned for

Suppose when I start drawing the income, the previous year’s inflation goes in this sequence and here is the corresponding income to be drawn out:

The income strategy is constructed to withstand this high inflation

Investment Strategy & Philosophy

After trying my best to learn how to invest for a while, the portfolio expresses my thoughts about investing at this point.

The portfolio is run in a

1. Strategic: allocation doesn’t change by short-term events.
2. Systematic: rules/decision-tree-based implemented either myself or an external manager.
3. Low-cost: investment implementation cost is kept reasonably low both on the fund level and also on the custodian level.
4. Passive: I spend relatively little effort mentally considering investments and also action-wise.

You can read more in this note article: Deconstructing Daedalus My Passive Income Investment Portfolio for My Essential & Basic Spending.

Portfolio Change Since Last Update (Usually Last Month)

After learning that VanEck had launched a UCITS version of the non-ESG US Wide Moat ETF, I decided to make a switch. So I switched from VanEck Morningstar US Sustainable Wide Moat UCITS ETF (MOAT) to VanEck Morningstar US Wide Moat UCITS ETF (MOTU).

Take $5,046 cash and start a position in SPDR MSCI Emerging Markets Small Cap UCITS ETF (EMSD) to add to my Emerging Market allocation.

Current Holdings

The following table is grouped based on general strategy, whether they are:

1. Fixed Income / Cash to reduce volatility.
2. Systematic Passive, which tries to capture the market risk in a systematic manner.
3. Systematic Active, which tries to capture various, proven risk premiums such as value, momentum, quality, high profitability, size in a systematic manner.
4. Long-term sectorial positions.

Portfolio by Account Location

Portfolio by Region of Securities

Portfolio by Fund, Cash or Individual Security

Portfolio by Strategy.

Main Custodians

The current custodians are:

1. Cash: Interactive Brokers LLC (not SG)
2. SRS: iFAST Financial

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If you want to trade these stocks I mentioned, you can open an account with Interactive Brokers. Interactive Brokers is the leading low-cost and efficient broker I use and trust to invest & trade my holdings in Singapore, the United States, London Stock Exchange and Hong Kong Stock Exchange. They allow you to trade stocks, ETFs, options, futures, forex, bonds and funds worldwide from a single integrated account.

You can read more about my thoughts about Interactive Brokers in this Interactive Brokers Deep Dive Series, starting with how to create & fund your Interactive Brokers account easily.