Sequence of returns risk as of
In a household notebook, Sequence of returns risk is judged from . The line is “Name the cash flows” and the figure in the sum is 1. A blinking gain on a screen is not the reason. The same average return can fund or break a plan depending on the order of good and bad years.
Sequence risk is the damage from poor returns early in a spending phase, when withdrawals lock in losses before markets recover. Sequence of returns risk sits in the horizons family of this atlas: mechanisms first, products second, hype never. Use the calculator for scenarios, then return to the section pages when you want the vocabulary behind the curve.
What is sequence of returns risk in one sentence? No. Tool-Lifes pages are educational atlases. Decisions need your goals, constraints and, when appropriate, a licensed adviser. Do I need a high return for compounding to matter? Higher net rates help, but time and contributions often dominate — especially early. Costs and behaviour can erase a “good” rate.
Treat outputs as scenario sketches. Vary contribution, rate, fees and inflation to see which lever moves your goal date. Always ask whether a figure is nominal or real. A high nominal path can still lose purchasing power. No. Illustrations use round teaching numbers. Markets, inflation and taxes change.
For Sequence of returns risk in , the figure that stays is 1, named “Name the cash flows.” Sparkle is not a figure.1
Figures to keep
- Year of the rule
- 1
- Figure in the sum
- 1
- Item
- Sequence of returns risk
- Reason kept
- Name the cash flows