Wholesale Investor Certification

As part of participating in the Aura Group capital raise, I had to get a new wholesale investor certificate. You have to do this every 2 years to remain current. There are two main ways to qualify: Show you have more than AUD 250k in income per year in the last two years or show you have more than AUD 2.5 million in net worth. You need an accountant to certify this. The test is on an individual not household basis. I am using the net worth approach.

I was certified in 2020, but when I tried to renew in 2022, the accountant I used said I didn't qualify, as she wouldn't count my superannuation including my SMSF towards the amount as I was under 60. This didn't stop me from continuing to meet capital calls for my existing Australian venture capital investments. 

Now I meet the required level with or without superannuation. I also argued that I am receiving a TTR pension from each of my superannuation accounts and am over 60 and about to retire. Anyway, I qualified. It cost AUD 550. 

It is much easier to qualify as an accredited investor in the US. You only need USD 1 million net worth and you don't need an accountant to prove it, so it is free. A couple can qualify with just USD 1 million between them. However, primary residences are excluded, which is not the case in Australia. Moominmama qualifies as an accredited investor for our investments via Angellist and the Unpopular Ventures syndicate. 

Required Withdrawal Rate

Following up from the discussion on the safe withdrawal rate here is the history of our required withdrawal rate. This is the past twelve months spending divided by net worth minus housing equity, assuming that we have no other sources of income:

 

Retirement first looked possible in 2018 when we received the inheritance. Without that, we would likely be only just on the cusp of the 4% SWR currently. But then expenditure rose around the birth of our second child and the stock market fell in the pandemic and we went back above the 4% level. There was a voluntary redundancy scheme at my workplace in 2020, but I decided I couldn't afford to do it. 

Since then, we dropped back to a fairly consistent 3% till recently. I was waiting for another voluntary redundancy scheme though I thought about going part-time from age 60. Early this year there was a new scheme and  I submitted my application. Then I panicked and didn't take it up. Meanwhile, markets rebounded and we are now near 2%. My employer reopened the scheme and this time I am doing it. 

My forward projections assume that real expenditure will continue to grow linearly, though actually it looks like it has flattened out:

 

I do assume step downs in spending when each of my children reach age 21. In my worst case scenario, if we only made zero real investment returns after 2026, then our net worth would about halve in real terms by 2050. Our required withdrawal at that point would be 5.5%. That assumes that we don't downsize our house or cut spending.

In the best case scenario–historic rates of return of 8.4% nominal per year–we would have 4 times our current net worth in real terms in 2050.

Something people in the FI community don't talk about is that if you annuitise your wealth you can then withdraw much more than 4%. Maybe 6-7%. This is because you pool longevity risk with other people. 

 

Retirement Update

So, I now have a copy of the contract for my retirement and severance package, following it previously being approved. I will hand in the document in person on Monday. I will still be employed for the next six weeks. The severance package follows a standard formula and amounts to about AUD 255k after tax. That would be similar to working another two years full time. I think Financial Samurai would approve: 

1. I reached financial independence - I will only need to spend less than 2% of net worth initially. That is Ed Thorp's retirement rule. Still, I don't go 100% in equities. I don't want to go through the GFC holding all equities again. I think it is possible to get equity-like returns with much lower volatility.
2. I'm retiring early - at 60, which is less than 67 and very early for people in academia. 
3. I got a severance package.
4. My wife is still working part time. 😎

My life won't change that much, actually. I won't have to teach or go to meetings I don't want to go to. I won't feel guilty about doing other stuff when I am supposed to be doing my job. Like right now 😀 But I wasn't scheduled to teach again till next July, once I finish this year's teaching in late November. I was actually scheduled for 2 months leave in December and January, to use up my "leave balance". But I will still be supervising PhD students, doing journal editing for the next year, and doing some research stuff.

What will change at Moomin Valley? I will probably going back to tracking net worth regularly, as this will be an important number. Obviously, I have been tracking it, but I haven't been reporting on it in the blog except on the NetworthShare widget. The "retirement number" - net worth at the end of November, plus the severance that I will get in December will also be important to keep in mind.

P.S. 

Interesting discussion with Karsten Jeske, where he admits that he hasn't sold any shares and would find it difficult to do, despite all his research on safe withdrawal rates:

 

Another Australian Dollar Milestone

In just under a year we went past another milestone. It's only a rough intra-month calculation. I only try to calculate things accurately at the end of each month. Hope this doesn't jinx it. 😐

The main driver is the insane move in gold this month.

Aura Pre-IPO Capital Raise

I am trying to get in on this capital raise. Some details still need ironing out. I have investments in two of their venture capital funds. Valuation relative to revenue and EBITDA seems similar to Regal Partners, which I am a shareholder of.

September 2025 Report

In September, the Australian Dollar rose from USD 0.6540 to USD 0.6613 meaning that USD investment returns are better than AUD investment returns. International stock markets rose yet again, though the Australian market was down (total returns including dividends):

US Dollar Indices

MSCI World Index (gross): 3.66%

S&P 500: 3.65%

HFRI Hedge Fund Index: 0.83% (forecast)

Australian Dollar Benchmarks

ASX 200: -0.52%

Target Portfolio: 2.70% (forecast - depends on HFRI result)

Australian 60/40 benchmark: 0.83%

We gained 3.63% in Australian Dollar terms or 4.79% in US Dollar terms. So we beat all benchmarks!

Our SMSF returned 3.42% beating both Unisuper (0.60%) and PSS(AP) (0.81%).

Here is a report on the performance of investments by asset class:

The asset class returns are in currency neutral terms as the rate of return on gross assets and do not include investment expenses such as margin interest, and so the total differs from the Australian Dollar returns on net assets mentioned above. All asset classes gained. Gold had the greatest return, but hedge funds made the largest contribution to total returns.

Things that worked well this month:

• The following investments gained more than AUD 10k: Gold (AUD 86k), Pershing Square Holdings (PSH.L, 35k), Tribeca Global Resources (TGF.AX, 31k), Regal Investment Fund (RF1.AX, 28k), WAM Capital (WAM.AX, 16k), Platinum Capital (PMC.AX, 11k).

What really didn't work:

• No investment lost more than AUD 10k.

Here are the investment performance statistics for the last five years:

The top three lines give our performance in USD and AUD terms, while the last three lines give the same statistics for four benchmarks. The middle block gives our performance relative to the indices. 

Our alpha relative to the ASX200 is 3.0% with a beta of only 0.49. We have much lower volatility, resulting in a information ratio of 1.49 vs. 1.19. We capture much less of the downside moves than the upside moves in the market. We also have very good performance relative to the Vanguard 60/40 portfolio with the same volatility but 4% p.a. more return. We captured 100% of the upside of this portfolio but only 60% of the downside. But as we optimize for Australian Dollar performance, our USD statistics are much worse. We do beat the HFRI hedge fund index in terms of return, but at the expense of far higher volatility. Our USD volatility is at least less than that of the MSCI index, but our return is more than four percentage points lower.

We moved a little bit away our target allocation. Our actual allocation currently looks like this:

About 65% of our portfolio is in what are often considered to be alternative assets: real estate, art, hedge funds, private equity, gold, and futures. A lot of these are listed investments or investments with daily liquidity, so our portfolio is not as illiquid as you might think.

We receive employer superannuation contributions every two weeks. We make monthly concessional contributions to Moominmama's superannuation to reach the annual cap on contributions. We contribute USD 10k each quarter to the Unpopular Ventures Rolling Fund and less frequently there will be capital calls from Aura Venture Fund II. I am now receiving TTR pension payments from both Unisuper and our SMSF and contributing more than the total of these back to my superannuation accounts. I made the following additional moves this month:

• I bought 15k WAM Strategic Value (WAR.AX).
• I bought 15k shares of Defi technologies (DEFT.AX), a stock I previously held until April. 
• I bought 4,555 shares of Cadence Opportunities (CDO.AX). 
• I did a trade in gold, buying 500 PMGOLD shares and then selling 750.
• bought 375 Metrics Income Opportunities shares (MOT.AX).