Retirement Journey Update for July 2021
Updated: Oct 3, 2021
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 July.
Most asset classes were up in July. However, the bullish mood was dampened by China cracking down on the tech and education sectors. This led to sharp sell-offs in China and Hong Kong. As a gauge, the Hang Seng Index lost 10% in July. 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 July 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 Jul 2021, he has contributed USD 44K and he is currently sitting on some comfortable profits of USD 7.8K. 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 Jul 2021, he has contributed USD 72K and currently sits on some comfortable profits of USD 9.7K. 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
Unfortunately for Sam, he 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 Jul 2021, he has already drawn a total of USD 90K 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.
Note: We are working with iFAST Global Market to implement the multi-strategy portfolio for clients. If you are interested in knowing more. Please click here.
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