Chasing returns is a popular form of the game called, “I can tell when it’s time to get in the stock market, and when it’s time to get out,” a favorite of amateur investors for many decades. This is a dangerous game for many proven reasons. However, it’s particularly dangerous for those nearing retirement for a rather unique reason.
It’s called “Sequence of Returns”. The idea is that income needs are generally constant while investment returns are the opposite. Portfolio returns can vary wildly, and are unpredictable.
The reason a constant income taken during market downturns is more costly to an investment portfolio is because, when markets are down, more assets are required to do the same job.
Retirement is about a safe, secure income stream rather than a dollar value of your portfolio. How do you make sure that you have a safe and secure income? It’s about more than getting lucky.
At Goostree Financial Group, we have helped clients experience safe and secure retirement incomes for over four decades. We believe we can help.