The sequence of return risk also called sequence risk, is the risk that comes from the order in which your investment returns occur.
According to Forbes, the sequence of return risk is the risk that the market declines in the early years of retirement, paired with ongoing withdrawals, which could strongly reduce the longevity of a portfolio.
If you are taking withdrawals from your portfolio, the order or the sequence of investment returns can significantly impact your portfolio’s overall value.
In this video, the legendary investor, Vanguard Group founder Jack Bogle talked about what investors can do to manage the sequence of return risk in their investment.
Warning: This video is to show you Jack Bogle’s view about the sequence of return risk. Please do your research before doing any investment. A good balance between return and risk is the key to investment success.
Source: Finance Jane (Shared via CC-BY)
