The volatility persisted into February on the backdrop of rising inflation. This continued to add pressure across most asset classes. This lasted until the Ukraine crisis unfolded in the later part of the month. And as the crisis deepens, we saw some normalization across the relationship between risky and safe haven assets. Investors sold off risky assets and flocked to safe haven assets such as Treasuries and Gold. And we also see a corresponding rise in the USD against other currencies. For this month, the only asset that thrived is Gold which is up 6.1%. Treasuries managed to claw back a good part of the losses sustained in the earlier part of the month, but still ended down. Stocks and REITs are down, but fared relatively better than January. Below is the breakdown by assets and geographies of the multi-strategy model maintained with iFAST as of the end of February.
The multi-strategy model's allocation to Gold helped to offset some of the losses from the other asset classes. Profits from volatility trading during the month helped reduce losses further. In the end, the overall portfolio only lost 0.3% for the month. This brings the year to date loss to 4.6%.
Let's see how our retirement heroes are faring at the end of February 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 Feb 2022, he has contributed USD 47.5K and he is currently sitting on some comfortable profits of around USD 6K. 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 Feb 2022, he has contributed USD 100K and currently sits on some comfortable profits of around USD 6K. 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 Feb 2022, he has already drawn a total of USD 160K but his portfolio is still worth about USD 1.0M. 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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