This month, all asset classes dived except for soft commodities. Sentiments are back to where they were early this year. Stocks had seemingly priced in an optimistic scenario in contrast with bonds since mid-June. But things reversed after Jackson Hole when Jerome Powell made clear that rates will go higher and likely stay high for longer.
Below is the breakdown by assets and geographies of the multi-strategy model maintained with iFAST as of the end of August.
Asset allocation was of limited use in this kind of climate. Only volatility trading provided profits to offset some of the losses from the rest of the portfolio. Overall, the portfolio is down 2.9% in August, bringing the year-to-date loss to 17.2%.
Let's see how our retirement heroes are faring at the end of August 2022.
John, 31 years old, looking to retire in 19 years
John invested USD 40K upfront at the beginning of November 2020 and he regularly contributed USD 500 every month subsequently. As of the end of August 2022, he has contributed USD 50.5K. 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 August 2022, he has contributed USD 124K. 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 August 2022, he has already drawn a total of USD 220K but his portfolio is still worth about USD 794K.
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