Q. What is sequence of returns and why it is important for investors?
A. When we plan for investment growth, especially for long term growth, we often assume average rates of return such as 7% or 8% of average stock return over a period of time.
However, this could give you a false sense of security, because the timing, or sequence, of returns directly affects the performance of your portfolio.
This is especially important for people who count the performance of the portfolio for retirement funding, because if you happen to have a bad sequence, your money could disappear in front of your eyes quickly.
In our next blog post, we will present 3 scenarios to illustrate why the sequence of returns is very important.
A. When we plan for investment growth, especially for long term growth, we often assume average rates of return such as 7% or 8% of average stock return over a period of time.
However, this could give you a false sense of security, because the timing, or sequence, of returns directly affects the performance of your portfolio.
This is especially important for people who count the performance of the portfolio for retirement funding, because if you happen to have a bad sequence, your money could disappear in front of your eyes quickly.
In our next blog post, we will present 3 scenarios to illustrate why the sequence of returns is very important.
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