Almost like clockwork, the new year marked a significant shift in markets as fortunes shift among the various asset classes. In 2022, the winning trade was the inflation trade, namely long commodities, long USD, short stocks, and short bonds. January saw the big unwind of the inflation trade as stocks and bonds surged, leaving commodities in the dust and USD weakened.
Below is the breakdown by assets and geographies of the multi-strategy model maintained with iFAST as of January month end.
Everything went well in the portfolio, from asset allocation to volatility trading to country allocation. As a result, the portfolio is up 6.5% in January.
Let's see how our retirement heroes are faring at the end of January 2023.
John, 32 years old, looking to retire in 18 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 January 2023, he has contributed USD 53K. If he sticks to his plan, he can expect to withdraw USD 7.5K every month when he retires in 18 years without ever depleting his retirement nest egg.
Paul, 52 years old, looking to retire in 8 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 January 2023, he has contributed USD 144K. If he sticks to his plan, he can expect to withdraw USD 9.5K every month when he retires in 8 years without ever depleting his retirement nest egg.
Sam, 67 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. He started to draw out USD 10K every month from this portfolio. As of the end of January 2023, he has already drawn a total of USD 270K but his portfolio is still worth about USD 807K.
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