The Omicron variant of COVID 19 seems to be more contagious but less deadly compared to the Delta variant. As a result, risk assets got a boost for the month. The S&P 500 was up 4.6% while VNQ was up even more at 9.7%. Even gold was up 3.3%. The only casualty was US Treasuries, especially for longer-term treasuries. Below is the breakdown by assets and geographies of the multi-strategy model maintained with iFAST as of the end of December.
The multi-strategy model benefitted from the surge in equities, REITs, and gold. However, losses from US treasuries as well as volatility trading detracted from gains. All in, the overall portfolio gained 1.2% for the month. For the full year, the portfolio made 10.9%.
Let's see how our retirement heroes are faring at the end of December 2021.
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 Dec 2021, he has contributed USD 46.5K 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 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 Dec 2021, he has contributed USD 92K and currently sits on some comfortable profits of USD 11K. 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 Dec 2021, he has already drawn a total of USD 140K but his portfolio is still worth USD 1.05M. 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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