October was the complete opposite of September. Most asset classes were up, especially for risk assets. Both S&P 500 and US REITs were up 7%. Volatility also went down drastically from the brief spike in September. US yield curve flattened quite a bit with yields at the long end coming down while the short end went up. Below is the breakdown by assets and geographies of the multi-strategy model maintained with iFAST as of the end of October.
The multi-strategy model benefitted from the surge in equities and REITs. A short volatility positioning also did very well. Gold contributed a little to gains. Gains from long-term US treasuries outweighed small losses from shorter-term US treasuries to add further gains. All this culminated in the overall portfolio gaining 4.1% for the month.
It has been exactly one year since our retirement heroes started their retirement journey using the multi-strategy approach. Let's see how they are faring at the end of their first year.
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 Oct 2021, he has contributed USD 45.5K 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 Oct 2021, he has contributed USD 84K 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 10 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 Oct 2021, he has already drawn a total of USD 120K but his portfolio is still worth USD 1.07M. 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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