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Retirement Journey Update for May 2022

Market sentiments turned around near the end of the month as the Fed tampered down rate hike expectations of 75 bps or more which the market priced in the month before. And the inflation data, while still high, slowed down this month. As these twin pressures lifted, it provided some relief. This month, both S&P 500 and the 10-year note were up slightly. The rest of the asset classes, however, still headed south.


Asset Class ETF Performance in May 2022
Asset Class ETF Performance in May 2022

Below is the breakdown by assets and geographies of the multi-strategy model maintained with iFAST as of the end of May.


iFAST multi-strategy allocation

The multi-strategy portfolio was mainly dragged down by long-term US Treasuries, Gold, and VNQ. Volatility trading also added to losses. In the end, the overall portfolio was down 2.3% for the month. This brings the year-to-date loss to 11.4%.


iFAST multi-strategy performance

Let's see how our retirement heroes are faring at the end of May 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 May 2022, he has contributed USD 49K and he is currently sitting on some profits of around USD 2K. 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.


John retirement journey

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 May 2022, he has contributed USD 112K. 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.


Paul retirement journey

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 May 2022, he has already drawn a total of USD 190K but his portfolio is still worth about USD 880K. 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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