Retirement Journey Update for April 2022
April was a terrible month for equities. But what made April a truly horrible month is that almost all other asset classes went down badly as well. Nothing explains better than looking at the month-to-date performance breakdown below.
Only the consumer staples sector ETF (XLP) was able to generate a positive performance in April. Below is the breakdown by assets and geographies of the multi-strategy model maintained with iFAST as of the end of April.
Although the multi-strategy model had some exposure to the consumer staples sector for April, it was only a small slice of the entire portfolio and hence it was not enough to cover the losses from elsewhere. In the end, the overall portfolio was down 5.8% for the month. This brings the year-to-date loss to 9.0%.
Let's see how our retirement heroes are faring at the end of April 2022.
John, 31 years old, looking to retire in 19 years
John invested USD 40K upfront at the beginning of November 2020 and he contributed USD 500 every month subsequently. As of the end of Apr 2022, he has contributed USD 48.5K and he is currently sitting on some profits of around USD 3K. If he sticks to his plan, he can expect to withdraw USD 7.5K every month when he retires in 19 years without ever depleting his retirement nest egg.
Paul, 51 years old, looking to retire in 9 years
Like John, Paul invested USD 40K upfront at the beginning of November 2020. However, he knows he has a shorter runway than John to compound his portfolio. The good thing is that he has a higher income than John so he contributes USD 4K every month subsequently. As of the end of Apr 2022, he has contributed USD 108K. If he sticks to his plan, he can expect to withdraw USD 9.5K every month when he retires in 9 years without ever depleting his retirement nest egg.
Sam, 66 years old, already retired
Sam doesn’t have any runway to compound his wealth as he is already retired. Fortunately for him, he had accumulated USD 1M of savings which he invested upfront at the beginning of November 2020 and started to draw out USD 10K every month from this portfolio. As of the end of Apr 2022, he has already drawn a total of USD 180K but his portfolio is still worth about USD 920K. He can expect to continue drawing USD 10K every month while his portfolio value remains about the same. This is a 12% withdrawal rate in a retirement account that never depletes.
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