September turned out to be worse than August. All asset classes slumped. Even soft commodities could not escape the carnage. The Fed kept up with the hawkish rhetoric. Things got so bad that BoE had to do a U-turn and start buying long-term gilts.
Below is the breakdown by assets and geographies of the multi-strategy model maintained with iFAST as of September month end.
Asset allocation failed miserably in this climate where cross-asset correlation remained high. Thankfully, a well-timed tail hedge was triggered to protect the portfolio somewhat. Overall, the portfolio is down 4.2% in September, bringing the year-to-date loss to 21%.
Let's see how our retirement heroes are faring at the end of September 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 September 2022, he has contributed USD 51K. 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 September 2022, he has contributed USD 128K. 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 September 2022, he has already drawn a total of USD 230K but his portfolio is still worth about USD 748K.
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