Retirement Journey Update for August 2021
Updated: Nov 7
In our earlier post, we talked about how you can build an "auto-pilot" portfolio for retirement through our collaboration with iFAST Global Market. We introduced three fictional individuals who started on their retirement journey at the beginning of November 2020, by implementing AllQuant's multi-strategy approach through iFAST. And here, we will be updating the progress of their journey on our blog each month. But first, let's look at how markets performed in August.
August has continued to be a good month for equities and REITs both of which have been on a winning streak for months. Treasuries, on the other hand, incurred a slight loss this month coming under pressure from tapering talks. Below is the model performance of large accounts maintained with iFAST.
Now, let's see how our retirement heroes are faring at the end of August 2021.
John, 30 years old, looking to retire in 20 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 Aug 2021, he has contributed USD 44.5K and he is currently sitting on some comfortable profits of USD 8K. If he sticks to his plan, he can expect to withdraw USD 7.5K every month when he retires in 20 years without ever depleting his retirement nest egg.
Paul, 50 years old, looking to retire in 10 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 Aug 2021, he has contributed USD 76K and currently sits on some comfortable profits of USD 10K. If he sticks to his plan, he can expect to withdraw USD 9.5K every month when he retires in 10 years without ever depleting his retirement nest egg.
Sam, 65 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 Aug 2021, he has already drawn a total of USD 100K but his portfolio is still worth USD 1.1M. In fact, 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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